(Over)Time is Not Fungible
In a recent decision by the U.S. Court of Appeals for the Third Circuit, Smiley et al. v. E.J. DuPont De Nemours and Co. (Oct. 7, 2016), the court held that an employer was not permitted under the law to "offset" compensation it owes employees by crediting itself for free time it gave employees against "compensable work" time.
In the DuPont case, the employer knew that the manufacturing employees must be paid for "donning and doffing" - which is labor speak for putting on and taking off gear before and after a shift. The employer unilaterally decided that it could make up for that time by giving its employees meal breaks during their shift -something that the employer was not required to do.
From the looks of it, everything was going great until the employees filed a class action lawsuit to be paid for the "donning and doffing time". The employer's defense was predictably that, if the court were to subtract the donning and doffing time from the meal break time the employees received, the employees did not deserve any extra pay.
The District Court thought that the employer's argument made sense. After all, time is time. The employees lost time donning and doffing, but they got it back in their meal breaks. No harm, no foul. It all comes out in the wash, right? Wrong, according to the Court of Appeals, which reversed the District Court's decision.
The takeaway: the Fair Labor Standards Act or FLSA (e.g. minimum wage and overtime laws) is not to be played with by employers. When in doubt, an employer should not get creative and assume anything when it comes to wages and hours. We now know that in the Third Circuit (e.g. New Jersey, Pennsylvania, Delaware and the Virgin Islands) for FLSA purposes, time is not fungible. If an employer is not sure whether it owes its employees for time worked based on its own inventive theory, it is rolling the dice. The best solution is to contact labor counsel, and make sure that the employer's practice is by the book, or risk paying the penalty.