3 Steps to Minimize Risks with Auto-Deducted Meal Breaks

​Auto-deductions for nonexempt employees' meal breaks can be less risky if employers take these three steps:

• Provide a method for workers to cancel auto-deductions if they work during meals.
  
• Reduce the chance that meal breaks will be interrupted.
  
• Train employees and supervisors about the auto-deduction policy.
  

The safest way for an employer to ensure that it satisfies its obligations to pay hourly employees for all time worked is to require nonexempt workers to clock in and out not only at the beginning and end of each shift or workday but also at the start and finish of each meal break, said Adriana Kosovych, an attorney with Epstein Becker Green in New York City.

Weigh Benefits and Risks of Auto-Deductions

An auto-deduction policy nevertheless can yield several benefits. Auto-deduction can simplify record-keeping when nonexempt employees are regularly able to take their full meal breaks. It also may eliminate the administrative work and potential for error when employees forget to clock back in after meal breaks, she noted.

Auto-deductions typically lower labor costs, noted Stephen Jones, an attorney with Nixon Peabody in Rochester, N.Y. Without auto-deductions, employers can wind up paying for the meal breaks of those who fail to clock out for breaks, even if the employees aren't performing work during them.

In addition, many state laws require meal breaks. Auto-deductions help employers demonstrate that they complied with these requirements.

"There has been significant class-action litigation involving auto-deductions over the years, however, so there certainly are risks associated with implementing such a system," Jones said.

University Medical Center in Lubbock, Texas, settled a Fair Labor Standards Act (FLSA) claim with the Department of Labor (DOL) on June 29 for $119,175 in back wages to emergency room health care employees to resolve overtime and recordkeeping claims. The employer automatically deducted 30 minutes for lunch from the emergency room staff's timesheets regardless of whether they took meal breaks, according to the DOL. The center also allegedly violated the FLSA's record-keeping provisions by failing to track break time accurately.

"Make no mistake, auto-deductions for lunch breaks is a risky practice because the employer does not have undisputed records of work time," said David Barron, an attorney with Cozen O'Connor in Houston. "The employee can always claim to have worked during lunch breaks, and the employer must resort to other means to prove a negative, such as testimony, cameras or other records of work activity like e-mail or log-in data."

Provide a Method for Canceling Auto-Deductions

Even when an employer instructs employees to record and report meal breaks that they work through, employees may fail to do this. The employer then might be sued for unpaid compensation, including overtime.

One way to limit this legal risk is to provide a method for employees—not supervisors—to cancel auto-deductions, Barron noted. Or an employee could be allowed to notify the employer in writing that the deduction should not apply on a particular shift.

In FLSA lawsuits alleging that employees were required to work through lunch, it's common for employees to claim that they did not know the procedure for canceling auto-deductions, he cautioned.

So, the procedure should be in writing and distributed. An employee should sign or acknowledge any modification to his or her time records. Plus, the worker should receive a full accounting of his or her work time, including deductions each pay period, he added.

Employees also should have clear complaint procedures to follow if the employer fails to override an erroneous auto-deduction, Jones recommended.

Reduce Interruptions

Barron noted that an employer can take steps to make it less likely that employees' meal periods will be interrupted, such as:

• Staggering meal periods.
  
• Shutting down or reducing operations during meal periods.
  
• Evaluating supervisors partly based on how they manage subordinates' meal periods.
  

"Auto-deductions work well in environments where the schedule is reasonably certain and the risk of employees deviating from the lunch schedule for operational reasons is low," he said.

Manufacturing, production and inside sales jobs are good examples of that, Jones observed.

On the other hand, emergencies arise more frequently in health care and information technology and often interrupt meal breaks.

Train Employees and Supervisors

An employer that adopts an auto-deduction policy should reinforce it through training at the time of hire and annual mandatory training, according to Kosovych.

Inform employees that they:

• Are to be completely relieved from their duties during meal breaks.
  
• May not work voluntarily during meal breaks.
  
• May be subject to discipline for performing unauthorized work during a meal break. However, any employee who performs such work still must be paid for that time.
  

An employer may require that employees eat their meals away from their work stations, she added.

Supervisors should receive separate training, Kosovych recommended. Supervisors must strive for employees to take their full, uninterrupted meal breaks, but also instruct those who work during meals that they must record that work time accurately so that they are paid for it.

Barron said that supervisors should actively monitor employee adherence to the policy. For example, if a production line shuts down at noon, a supervisor should be assigned to sweep the work area to ensure employees are not lingering in areas where they could potentially work.

Managers should be trained to respect the meal period and interrupt it only when necessary, Jones said.