Just when you thought the race to cut labor costs couldn’t get any more ridiculous, a lawsuit brought by the Department of Labor proves there is no end to some employers’ creative attempts to cut corners. As one company and its owner recently found out, cutting corners can get very expensive.

The DOL brought a lawsuit against American Future Systems which had instituted a policy that employees must punch out, and therefore not receive compensation, for any time they were not making sales calls at 14 call centers in Pennsylvania, New Jersey, and Ohio. Any time an employee wanted to take a drink of water or use the restroom, they were forced off-the-clock and not paid. Breaks, even as short as two minutes, went unpaid.

Under the Fair Labor Standards Act, short breaks up to twenty minutes are compensable. 29 CFR § 785.18. Such breaks promote efficiency and are considered working time. Although American Future Systems argued that the employees were completely free from work during these short breaks, the District Court deferred to the DOL’s interpretation of their regulations which have been on the books since 1940.

It is important to note that in Wisconsin, an unpaid meal period must be at least thirty minutes in length. Wis. Admin. Code § DWD 274.02(3). Anything less than thirty minutes is compensable. Moreover, in Wisconsin, where an employer prohibits its employees from leaving the premises during the meal period, the meal period is compensable. These regulations provide employees with important additional protections from employer intrusions on their personal time.

American Future Systems and its owner were found liable for violating the FLSA in Federal District Court in Pennsylvania. The DOL estimated that, through July 2013, American Future Systems was liable for $1.75 million in unpaid wages and liquidated damages. Because American Future Systems didn’t change their practices during the litigation, damages continued to increase and will far eclipse the $1.75 million amount.

The Court’s opinion can be found here.

If your employer deducts from your pay for unpaid breaks less than thirty minutes or prohibits you from leaving your premises during your break, contact the attorneys at Hawks Quindel, S.C. at 414-271-8650 as soon as possible.

Larry Johnson
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