Legal Blog

Compensable Time: Do I Owe My Employees Overtime?

overtimeWhen running a business, one of the few seemingly straightforward requirements is, when the employee is supposed to be paid by the hour, to keep track of that employee’s time spent working.  This is required by the Fair Labor Standards Act (“FLSA”), which is the federal law that requires non-exempt employees to be paid minimum wage for all hours worked and time and one-half for hours worked over forty in a week, and various state laws.  However, in the last few years hourly wage disputes have been on the rise.  Two of the more common discrepancies involve determining what does and does not count as compensable time, and ensuring that all compensable time is recorded accurately. Both of which have proven to be a challenge for employers and employees alike. In the recent decision of Babcock v. Butler County, the Third Circuit Court of Appeals reiterated the standard that, with respect to meal breaks, the employee’s break time is compensable only if it is spent primarily for the employer’s benefit.  In this particular case, the Third Circuit, applying what is commonly referred to as the predominant benefit test, found that prison guards that were not permitted to leave the premises during meal breaks and had to remain on call to respond to emergencies during lunch were engaged in activities that primarily benefitted themselves, not their employer.  As a result, the Court found that the employer was correct in not compensating the employees for this time.  However, as was made evident by the Court’s decision, as well as a dissenting opinion, the application of the predominant benefit test is very fact-specific.  For example, an administrative assistant who eats lunch at her desk while waiting for the phone to ring might be treated differently than the security guards waiting for the emergency call.  For this reason, it is important to assess whether each specific employee’s conduct during meal breaks is predominantly for the benefit of the employee or the employer. Disputes over compensable time and what is actually work time are not limited to the context of meal breaks.  For example, a group of line cooks employed at different restaurants by noted chef Bryan Voltaggio and his companies have filed a lawsuit alleging that they were required to work off-the-clock prior to clocking in and after clocking out on the official time clock.  While the specific facts of this case are in dispute, it is evident that, even when a time clock is used, it must be used properly and that use should be verifiable in order to avoid disputes over off-the-clock work. In conclusion, it is critical for employers to not only properly classify employees and to properly calculate overtime premiums, but also to ensure compliance with something as basic as accurately recording all hours worked.  Failure to do so may not only result in litigation but may also leave an employer without sufficient documentation to refute a claim of additional hours worked.  Accordingly, pragmatic employers should review time recordation policies and practices in order to ensure compliance and mitigate the risk of litigation.


Russell Berger | 410.209.6449 Russell Berger is an accomplished labor and employment attorney who is well-versed in litigating in both state and federal courts, as well as providing counsel to employers on employee matters. He represents employers, businesses and professional clients in employment disputes throughout the country. Mr. Berger primarily focuses on litigating and counseling clients regarding matters of minimum wage and overtime under the Fair Labor Standards Act and state laws, wrongful termination, non-compete agreements, and employment and severance agreements. You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.