3d Cir: Employers cannot use paid meal breaks to offset unpaid overtime

A few weeks ago, I blogged here about a federal agency — one that rhymes with EEOB — reaching a 7-figure settlement with its workers of alleged Fair Labor Standards Act overtime violations involving comp time.

Last week, the Third Circuit Court of Appeals issued an opinion, in which it addressed another tricky situation involving overtime offsets.

The facts alleged were rather straightforward. The plaintiffs claimed that they were scheduled to work 12-hour shifts. And, supposedly, the plaintiffs worked before and after their 12-hour shifts, time for which they were allegedly not paid. However, the plaintiffs conceded that their employer paid them for 30-minute meal breaks during their 12-hour shifts. Still, the plaintiffs argued that they were owed overtime.

The defendants argued that they should be allowed to offset what it paid the plaintiffs for meal breaks during their shift—for which they was not required to provide compensation under the FLSA—against such required overtime.

Break time and the FLSA.

Under the FLSA, when employers offer short breaks — generally anything less than 20 minutes — that’s considered compensable time. The time “worked” during those short breaks gets lumped in with the other hours worked during the work week and considered in determining if overtime was worked.

The FLSA does not require that employers provide any break time — let alone longer breaks such as meal breaks. Bona fide meal periods (typically lasting at least 30 minutes) are not work time and are not compensable. Put simply, the FLSA does not require that employees be paid for 30-minute lunch breaks.

Pay for lunch, offset overtime?

In a word, “nope.”

Here’s the money shot — see what I did there? — from the Third Circuit opinion:

Among the bedrock principles of the FLSA is the requirement that employers pay employees for all hours worked….The regulations also support limiting employers’ ability to offset overtime liability….Nothing in the FLSA authorizes the type of offsetting…, where an employer seeks to credit compensation that it included in calculating an employee’s regular rate of pay against its overtime liability….In essence, at the point at which compensation is included in the regular rate (regardless of whether the Act required it be included), an employer may not use that compensation to offset other compensation owed under the Act.

Let’s break it down…

If an employee works; an employee must be paid for that time.
There are limited exceptions to Rule No. 1; e.g., 30-minute meal breaks.
Heck, you don’t even have to provide meal breaks.
But if you provide meal breaks and pay employees for meal breaks, you cannot offset those payments against other hours — especially overtime hours — your employees work.