A federal district court was mistaken in granting summary judgment to manufacturer DuPont in a dispute regarding employee overtime claims, according to the U.S. Court of Appeals for the Third Circuit. In Smiley v. El DuPont de Nemours & Co., the appellate panel ruled the company can’t use the compensation it gave workers for meal breaks (which it was not required to do) as an offset for overtime compensation due.
This was true even though the meal break pay during the 12-hour shift often exceeded the 30-to-60 minutes for which workers weren’t paid for donning/ doffing their uniforms and protective gear and conducting “shift relief,” that involved incoming and outgoing workers to share information about the status of the work. The federal Fair Labor Standards Act (FLSA) doesn’t authorize this kind of offsetting for overtime compensation, the court ruled, citing its 2005 precedential holding in Wheeler v. Hampton Twp. In that case, the court held that offsetting overtime pay is confined to situations in which employers are paying “extra compensation” at the premium rate of 1.5 times the regular hourly.
According to court records, employees at the plant routinely worked 12-hour shifts. They were required to be on site for a period of time before and after each shift in order to participate in “shift relief” and to don and doff their protective gear and uniforms. Typically in total this took a half hour to an hour.
Meanwhile, the company took the step of compensating workers during their meal breaks over the course of their 12-hour shift. There is no provision in the FLSA that requires this, so it was considered a perk. This additional time was factored into the workers’ regular rate of pay for overtime purposes, and it was included on their paychecks as part of the total weekly hours worked.
The paid break time always was higher than the amount of time plaintiff’s spent putting on and taking of their gear and participating in shift relief.
Subsequently, plaintiffs filed this class action lawsuit against the company, claiming it violated the FLSA and the state’s Wage and Payment Collection Law by requiring employees to work before and after their shifts without paying them overtime (time-and-a-half) compensation. Plaintiffs – more than 160 of them – opted into the lawsuit.
Following discovery, the company filed for summary judgment, which the district court granted. The court ruled the FLSA gave the company the right to use paid non-work time to offset the required overtime. The lawsuit was dismissed in its entirety. The court ruled that while the FLSA doesn’t expressly allow employers the right to use paid non-work time to offset unpaid work time, neither does it expressly prohibit it either. The Third Circuit reversed.
The primary issue was the fact that the company was using payment at the regular rate to offset payment at the overtime rate. It was not disputed that compensation for meal breaks was included at the regular rate and therefore didn’t count as “extra compensation.” With its reversal, the Third Circuit sent the wage/hour dispute back to the lower court for further proceedings.
Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 949.375.4734.
Smiley v. El DuPont de Nemours & Co., Oct. 21, 2016, U.S. Court of Appeals for the Third Circuit
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