There’s No Such Thing as a Free Working Lunch

Many federal contractors employ workers to perform a variety of services for the federal government. Many of those workers will be covered by the Service Contract Act (“SCA”) and almost always will be non-exempt employees who are covered by the Fair Labor Standards Act (“FLSA”). Taking these laws together, these workers will, among many other things, be entitled to be paid a minimum prevailing wage and receive overtime pay if they work more than 40 hours during their workweek. Keeping accurate records for the hours your employees work is crucial - especially when it comes to tracking work breaks.

If someone is at their workstation and doing work, they’re entitled to be paid. If on the other hand, an employee is at lunch, is not at their workstation, is free to do whatever they want, and to go wherever they wish, all for a period greater than 30 minutes, then (generally) the employer does not need to pay them. There can be some areas that are kind of gray – for example, if a worker is required to keep their phone and be on the lookout for texts, then they might be entitled to be paid for that time. My partner blogged about this a few years ago. I won’t delve into that more now.

Rather, what’s of interest today should fall in the zone of the obvious. Earlier this month, the Department of Labor (“DOL”) announced that it had filed suit against a number of skilled nursing operators alleging that they had failed to pay a large number of personnel for many hours including a significant amount of overtime. Now I don’t want to pass judgment since the suit has just begun and the employer presumably will disagree with DOL’s allegations. However, there are a couple of things that, if true, should perhaps raise an eyebrow.

Here's the gist of what DOL alleged: the operators of a number of nursing facilities had a policy that ostensibly permitted employees to take a lunch break of 30 minutes or more for which they would not be paid. So far, that’s fine. If an employer provides a lunch break of 30 minutes or more in which the worker is completely relieved of their duties and is free to leave their work station, the employee almost always need not be paid.

According to DOL, these workers regularly worked through their lunch breaks because there were staff shortages. Accordingly, they would not sign out for lunch. If the employers had paid them for this time, there (likely) would not have been a problem. Here, however, DOL asserts that the employers actually automatically deducted 30 minutes from the employees’ time records if they had not clocked out regardless of whether the employee actually had taken a break or not. And, apparently, the employers lacked any records that supported the deduction of the hours. Further, DOL alleges that the employers failed to pay many hours of overtime due to the fact that the employees’ paid hours were arbitrarily reduced.

If all this is true, then there are several problems here. First, if the employer “suffered or permitted” the employees to work, then it should have paid them for this time. But suppose that the employer actually required the workers to take a break and further suppose that the employees did take those breaks but failed to clock out, then the employer shouldn’t be required to pay them for the time. Right? However, documentation is crucial – thus, these employers’ practice of automatically marking hours down by 30 minutes was a risky proposition. No doubt DOL filed suit because the lack of records to support the time deductions led them to find that the workers were underpaid.

So, here’s our general advice: if you have an hourly nonexempt workforce, implement a system that requires employees to accurately clock in and out when they arrive at work, when they take breaks – especially unpaid meal breaks – and when they leave work for the day. While most employers and employees follow their respective rules, sometimes supervisors wrongfully require their staff to clock out but continue working, or, on the other hand, some workers take breaks while staying on the clock. We’ve seen both.

It's all well and good to have a strict break policy in which the employer requires a break be taken. If you’re concerned that breaks aren’t being taken or that records are being falsified, the best solution is to investigate the situation and counsel your workforce where needed. But an automatic deduction of time in the absence of good records is a poor substitute for careful management.

Otherwise, you might discover there’s no free working lunch.