US court rules on back pay case for unpaid breaks

Compliance-court-2015A US Court has ruled that publishing firm American Future Systems, which operates as Progressive Business Publications, is liable to pay staff back wages for unpaid rest breaks.

The employees, who worked in telemarketing roles, claim that their pay was docked for virtually all time not spent making sales calls, which on occasion brought their wages below the federal minimum wage of $7.25 an hour.

In the case of Thomas E. Perez, secretary of labor at the US Department of Labor v. American Future Systems, Progressive Business Publications, et al., a federal judge found that the defendants were in violation of the Fair Labor Standards Act (FLSA) and are therefore liable to pay employees back wages resulting from these unpaid breaks, plus an equal amount in liquidated damages.

The ruling, delivered on 16 December 2015, granted the plaintiff’s partial motion for summary judgement with respect to FLSA minimum wage liability, FLSA record-keeping liability, liquidated damages and principal owner Edward Satell’s role as an employer under the FLSA. The plaintiff’s partial motion for summary judgement with respect to the wilfulness of the FLSA violations was denied.

Although the precise amount of compensation has yet to determined, the US Department of Labor estimates that for violations occurring through June 2013, American Future Systems is liable for at least $1.75 million in back wages and liquidated damages to more than 6,000 employees who worked in 14 call centres throughout Pennsylvania, New Jersey and Ohio.

The plaintiff Perez filed the suit on behalf of the workers for alleged violations of the minimum wage and record-keeping provisions of the FLSA. The claim comes as a result of Progressive Business Publications’ policy that its employees have to log off its computer and telephone systems while they take a break during the working day, meaning that employee will not be paid during that specific time.

The alleged record-keeping violations are the result of Progressive Business Publications’ failure to maintain and produce employee time records from certain branch locations for various time periods.

The FLSA does not require lunch or coffee breaks. However, when employers do offer short breaks, usually lasting between 5 and 20 minutes, the law considers the breaks compensable work hours that must be included in the sum of hours for the work week and considered in determining overtime.

The FLSA also requires that covered, non-exempt employees be paid at least the minimum wage of $7.25 an hour for all hours worked, plus 1.5 times their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond a 40 hour week.

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Employers must also maintain accurate time and payroll records. Employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Both back wages and liquidated damages are paid directly to the affected employees.

Jim Cain, district director of the US Department of Labor’s wage and hour division, said: “The judge’s decision reaffirms how clear the FLSA is about short breaks being compensable, and goes a long way in making these employees whole by awarding liquidated damages.”