Third Circuit Held Paid Meal Breaks Cannot Offset Unpaid Overtime

Nicholas Fortuna, October 14, 2016

In Smiley v. EI DuPont, decided on October 7, 2016, the Third Circuit ruled that DuPont’s policy of paying employees for meal breaks cannot be used to satisfy its obligation to pay for overtime under the Federal Labor Standards Act (FLSA). The unanimous three judge panel sent the case back to the lower court for further proceedings.

Prior to the appeal, the District Court had found DuPont’s argument persuasive that its voluntary payment for thirty minute breaks could be used to offset overtime liability and dismissed the plaintiffs’ action. The Third circuit reversed and remanded the District Court’s grant of summary judgment in favor of DuPont.

The plaintiffs, Bobbi-Jo Smiley, Amber Blow, and Kelsey Turner filed a putative collective action and class action against DuPont seeking overtime compensation for time spent donning and doffing before and after their shifts. One hundred sixty workers opted into the class action.

The plaintiffs worked twelve-hour shifts at a DuPont Manufacturing plant in Towanda, Pennsylvania. Employees were required to be onsite before and after their shifts to put on and take off uniforms and protective gear. The employees were also required to participate in “shift relief” which involved sharing of information and status updates before and after shifts. The extra time spent totaled between thirty and sixty minutes a day.

Although DuPont chose to compensate Plaintiffs for meal breaks, the FLSA has no such requirement. The company policy is to give employees who worked four twelve-hour shift schedules a thirty-minute paid lunch break and two non-consecutive thirty minute breaks. The paid break-time always exceeded the amount of time plaintiffs spent donning and doffing and providing shift relief. The compensation for the breaks was included as part of the employees’ regular rate of pay and the total hours worked each week.

For the Third Circuit, the fact that the break-time compensation was part of the employees’ regular rate of pay was a determining factor under the FLSA. The Court looked to the circumstances as to when an employer may use certain compensation already given as a credit against overtime owed to the employee under the FLSA. The Act explicitly permits offsetting against overtime in three categories of compensation: (1) compensation given by a premium rate because an employee worked in excess of an eight-hour day; (2) premium compensation paid for work done on weekends and holidays; (3) premium payments made pursuant to a contract, such as a collective bargaining agreement. The premium had to be at least one and a half times the employee’s regular rate of pay.

The Court found that nothing in the FLSA authorizes the type of offsetting DuPont advocated in this instance. Since payment for breaks was part of the employees’ regular rate of pay and did not fall into one of the statutory exemptions, it could not be used to offset overtime owed. The Third Circuit further stated that the District Court erred in finding that since there was no prohibition in the Act for the type of offsetting DuPont sought to do, it would be permitted.

It is interesting to note that the Third Circuit did not consider it relevant that break-time payments were voluntary on the part of DuPont and could be stopped at any time. The Court reasoned that once a decision was made to pay for non-work time as part of the employees’ regular pay, it could not be used toward overtime credit, despite that the payment for breaks was not required.