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An estimated $1.75 million award against an employer for requiring call center employees to log out for any break, including bathroom breaks, will be appealed, according to Sarah Bouchard, an attorney with Morgan Lewis in Philadelphia.
Bouchard is representing the defendant in the case, American Future Systems Inc., which owns Progressive Business Publications in Malvern, Pa. Progressive publishes subscription-driven newsletters on business management, sales and marketing, human resources, and employment law.
While the logging out requirement may sound onerous, Bouchard said in an interview that Progressive Business Publications actually has a “very flexible environment.”
Logging Off Required
After the U.S. Department of Labor’s (DOL’s) Wage and Hour Division discovered that telemarketers at the company had to log off their computers and were not paid for any break time, even for breaks as short as two to three minutes, it filed a lawsuit against American Future Systems and its owner, Edward Satell, on Nov. 1, 2012.
The DOL argued that Progressive’s conduct violated Section 785.18 of the Fair Labor Standards Act’s (FLSA’s) regulations. That section states, “Rest periods of short duration, running from 5 minutes to about 20 minutes, are common in industry. They promote the efficiency of the employee and are customarily paid for as working time. They must be counted as hours worked.”
The defendants maintained that the court instead should apply Section 785.16 to Progressive’s break policy. Section 785.16 states, “Periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not hours worked. He is not completely relieved from duty and cannot use the time effectively for his own purposes unless he is definitely told in advance that he may leave the job and that he will not have to commence work until a definitely specified hour has arrived. Whether the time is long enough to enable him to use the time effectively for his own purposes depends upon all of the facts and circumstances of the case.”
On Dec. 16, 2015, the U.S. District Court for the Eastern District of Pennsylvania ruled that American Future Systems violated the FLSA’s minimum wage requirements. Although the exact amounts of damages have not yet been determined, the Labor Department estimates them at $1.75 million in back wages and liquidated damages to more than 6,000 employees working at 14 call centers in Pennsylvania, New Jersey and Ohio.
Bouchard said that the telemarketers weren’t chained to their desks and that the workers could “come and go as they pleased.” They could work in small part-time increments and take breaks that were as long as they liked, from 5 minutes to an hour and a half. “The owner was trying to do something different so they can get back to work,” she said, noting that the workforce included students and individuals returning to the workforce after a period of imprisonment.
As long as the minimum wage requirement was met, even if the logging-off policy remained unchanged, there would be no violation, she said, adding that the business was exploring policies that could help it maintain its flexibility.
Bouchard challenged the DOL’s position that breaks of 20 minutes or less always have to be paid. “In this unique circumstance, I disagree” with the DOL, she said. “If the employee is afforded all this discretion, the employer shouldn’t have to pay for breaks.”
She added that employees “could say they’re going to the bathroom and then could go to lunch. There is no case like this. It’s a novel issue.”
The DOL didn’t see it that way, though. Neither did the district court judge.
Jim Cain, district director for the department’s Wage and Hour Division, said in a Jan. 4 news release, “For far too long, American Future Systems penalized its employees for taking breaks to meet the most basic needs during the workday—stretching their legs, getting a glass of water or just using the restroom. 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.”
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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