A recent federal appeals court decision affirming that workers are entitled to be paid for breaks of 20 minutes or less under the Fair Labor Standards Act is a warning to employers to make sure their policies follow the law, according to legal experts. 

Malvern, Pennsylvania-based American Future Systems Inc., which does business as Progressive Business Publications, a firm that publishes and distributes business publications and sells them through its sales representatives, pays its salespeople an hourly wage and bonuses based on their number of sales per hour while they are logged onto the computer at their workstations, according to the Oct. 13 ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Secretary United States Department of Labor vs. American Future Systems Inc. et al. 

“The (Department of Labor) has explicitly and repeatedly stated that employees must be paid for breaks of twenty minutes or less,” the court said in its opinion. “Selective interpretation of its rulings may establish wishful thinking or obstinacy, but it certainly does not establish that the District Court abused its discretion in declining to find good faith and awarding liquidated damages.”

Alfred Putnam Jr., a partner with the Philadelphia-based firm Drinker Biddle & Reath L.L.P., which represented Progressive, said in an email that “we’re disappointed with the result, and we think it was wrongly decided. We’re evaluating our options.”

In 2009, Progressive introduced a policy that said employees are only paid for time they are logged on and does not pay them if they are logged off for more than 90 seconds, according to the ruling. Progressive previously had a policy that gave employees two 15-minute paid breaks per day.

“The FLSA does not require employers to provide their employees with breaks,” the ruling said. “However, if an employer chooses to provide short breaks of five to twenty minutes, the employer is required to compensate employees for such breaks as hours worked.”

The Labor Secretary filed suit against the company alleging in part that the company and its owner had violated the FLSA by failing to pay the federal minimum wage to employees who are subject to this policy.

“If you’re a nonexempt employee and you take a break for 20 minutes or less, then you get compensated for that time, notwithstanding any creative attempts by an employer to call that break time something else, whether you call it flex time or anything else,” said Eric B. Meyer, a partner with Dilworth Paxson L.L.P. in Philadelphia.

Mr. Meyer said the issue in the case wasn’t actually about the employees getting their overtime.

“It was whether these guys were making the minimum wage because these folks were working a couple hours a week, and if they’re not being paid for that 20-minute time, then their hourly rate may fall below the minimum wage and that is a Fair Labor Standards Act violation,” he said. 

Mr. Meyer added that “the big overarching takeaway is that when it comes to breaks short and long, have policies, make sure the policies follow the law, and make sure your employees and your managers understand those policies.”

In an alert, published on its website, the law firm Duane Morris L.L.P. said “the decision is a reminder that employers should periodically review wage-and-hour policies and practices to make sure appropriate records are being maintained and employees are properly compensated for all types of breaks (short breaks and meal period breaks) in accordance with federal and state law.” Employees get the benefit of federal or state law, the alert said, whichever is more favorable.

In addition, Duane Morris said, the case warns employers that when an employee abuses workplace wage-and-hour policies regarding breaks, the employer is still obligated to compensate the employee for all hours worked. If the employer determines that any corrective action is necessary, the employer may impose discipline or terminate the employee as appropriate. 

The ruling increases the risk that final certification will be granted to employees in costly, high-risk FLSA collective actions, the alert continued, because nonexempt employees who do not receive compensation for all breaks 20 minutes or less are now more likely to be deemed “similarly situated” regardless of the reasons employees take such breaks. 

“This case may also increase the risk of class certification in cases involving similar break-related state wage and hour claims,” Duane Morris said.