Generosity in pay does not relieve an employer from overtime obligations

by Michael Haberman on October 13, 2016 · 0 comments


Overtime pay cannot be offset by generosity in other areas.

Overtime pay cannot be offset by generosity in other areas.

In a case in Pennsylvania, that may have national implications, the U.S. Court of Appeals for the Third Circuit has reversed a prior District Court decision and said that the DuPont companies owes workers overtime despite the company’s generosity in other areas pay.

The situation

The workers at a DuPont plant regularly worked 12 hour shifts. During that period they were given three 30 minute meal breaks, for which they were paid. Under the Fair Labor Standards Act (FLSA) the company was NOT required to pay for those meal breaks if the workers were fully relieved of their duties. Despite this allowance DuPont opted to pay the workers and count as work-time those three meal periods.

Additionally, at the beginning and end of their shifts, workers had to put on and take off protective gear that would normally take 30 minutes to do. DuPont did not pay for that time and said that the paid for meal times offset the need to pay for the donning and doffing of safety equipment. The workers on whole were paid an extra 30 minutes or so as a result. No one lost.

No-no

Unfortunately for the company several workers thought they should be paid for this time spent dressing and undressing and filed a lawsuit. Indeed the FLSA says that donning and doffing of protective clothing that is integral to the job does have to be considered compensated time. However, DuPont argued in court that by paying for meal times that do not have to be considered compensated time they were keeping the employees whole and in fact were giving them more than was necessary.

The district court agreed with DuPont, but the case was appealed and the ruling was overturned by the Third Circuit Court. According to Adam Long of the firm McNees Wallace & Nurick LLC “The Court concluded that nothing in the FLSA authorized the offsetting of discretionary compensation that the employer included in calculating the employee’s regular rate of pay.”

 A newsletter of the IMLA summed it up by saying “The Third Circuit’s detailed decision under the Fair Labor Standards Act (FLSA) clarifies that employers cannot avoid paying wages due under the FLSA by taking a “credit” for break time pay the employer had already paid and then using it to offset the employer’s overtime obligations under the FLSA for off-the-clock work.”

No reward for generosity

Even though DuPont overpaid the workers by paying for their meal times they could not offset overtime pay. My guess is they will be correcting that policy, unless that provision is written into a union contract, at which point that may be revisited at contract negotiation.

The lesson in this is that pay practices need to adhere to the law. Generosity in one area cannot offset a violation in another area. With the changes due in December with the new salary level for nonexempt employees that may be something you want to remember.

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