Pay for Commuting and Meal Breaks Isn’t Included in Overtime


By Heather R. Bredeson May 21, 2019

​Although a logging company paid its workers an hourly wage during meal and commute times, that time was improperly included in the calculation of penalties for overtime violations under the Fair Labor Standards Act (FLSA), according to the 6th U.S. Circuit Court of Appeals.

The FLSA is the federal law that sets minimum wage, overtime and record-keeping requirements. The FLSA applies only to employers whose annual sales total $500,000 or more or who are engaged in interstate commerce.

The U.S. Department of Labor (DOL) investigated Timberline South LLC for record-keeping violations under the FLSA. This investigation led to a DOL lawsuit. The DOL claimed that the company had violated the FLSA overtime provisions because it did not pay its employees an overtime rate for hours worked over 40 per week. The company claimed that it was not subject to the FLSA and that the DOL incorrectly calculated unpaid overtime wages.

The employer is a small timber-harvesting company that only does business in Michigan. It harvests and transports timber in Michigan. It also purchased its equipment in Michigan, although the trucks and heavy equipment were manufactured outside of Michigan.

The company employed manual laborers, office workers and truck drivers. The company paid workers using a daily rate, an hourly rate or a cord (measurement of wood) rate. The company paid some employees for time spent commuting from home to work or for meal periods. It recorded hours worked for hourly employees but did not do so for most exempt workers, and it did not pay its employees an overtime rate for hours worked over 40 in a week. The company relied on a short conversation with an accountant in believing that it was exempt from the FLSA and used that as part of its defense in the litigation.

The lower court sided with the DOL in ruling that the FLSA applied to the employer and that the company violated the FLSA. It then awarded $439,437 in damages for unpaid overtime, plus the same amount for liquidated damages.

On appeal, the 6th Circuit affirmed that the company was subject to the FLSA and liable for unpaid overtime wages. Because the company's harvesting and logging equipment was manufactured outside of Michigan, the 6th Circuit held that the company was engaged in interstate commerce. The appeals court determined that the company also owed liquidated damages because its reliance on the accountant's advice was not reasonable considering the accountant did not hold himself out as a wage and hour expert.

[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]

However, the 6th Circuit decided that the lower court's damages calculation was incorrect because it included time employees spent commuting from home to work or for meal periods, which the lower court included in the overtime calculation after finding that the company had a custom or practice of compensating its employees for that time. The appeals court explained that time spent by workers commuting to work from home does not count as compensable time under the FLSA—regardless of whether an employer pays them for it.

"Any ordinary commute and bona fide meal time that can be established must not be included in determining how many hours of overtime each employee worked, although defendants may not use the amounts paid for those otherwise noncompensable work periods as offset against the amounts owed," the court stated.

The case was sent back to the lower court to recalculate the overtime damages, excluding commute and meal times.

Secretary of Labor v. Timberline South LLC, 6th Cir., No. 18-1763 (April 5, 2019).

Professional Pointer: This case is a reminder that the FLSA covers nearly all workplaces because of the broad application of the interstate commerce provision. Additionally, employers should keep careful records for the time they pay their employees. They also should consider separately tracking paid time for commuting from home or for meal breaks, since that time is generally not compensable under the FLSA's overtime provisions.

Heather R. Bredeson is an attorney with Seaton, Peters & Revnew, the Worklaw® Network member firm in Minneapolis.

[Visit SHRM's resource page on FLSA exemption classification.]


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