Written by: Don Benson, Esq. 

A December 16, 2015, federal court decision found that the pay of telemarketing employees was improperly docked for taking water, bathroom and rest breaks- virtually all time not spent making sales calls was treated as unpaid time. Perez v. American Future Systems, Inc., civ. No. 12-6171 (E.D. Pa. 2015).

This unpaid time when added to the actual time paid for work, brought the employees below the minimum wage in many work weeks.

With 6,000 employees subject to these rules and the company’s decision not to change its policies for an additional two years during the litigation, unpaid hours worked plus an equal amount for liquidated damages under the FLSA may reach $1.75 million. Adding insult to injury down the road will also likely be an award of attorney’s fees to Plaintiff’s counsel.

The employer maintains a timekeeping system that requires its sales representatives to log-on and log-off its computer and telephone systems at certain times. When representatives arrive at work during a branch’s hours of operation, they log-on to the branch’s computer system.  Representatives remain logged-on to the computer system while making outbound sales calls, documenting the results of those calls, receiving training, and other approved tasks. Progressive sales representatives are only paid for the time that they are logged into the timekeeping system. The computer system paid for non-work breaks only if the break lasted 90 seconds or less. Anything longer was treated as unpaid time.

In July 2009, Progressive implemented a written compensation policy stating, among other things, that: “Representatives may take personal breaks at anytime for any reason. Personal break time is NOT paid because it is a disadvantage to the representative to do so.”

The Wage and Hour Division of the U.S. Department of Labor has enforced its break-time Regulations despite a changing workplace and modern technology. “By ensuring that employees do not have their wages withheld when they take short breaks of 20 minutes or less to visit the bathroom, stretch their legs, get a cup of coffee, or simply clear their head after a difficult stretch of work, the regulation undoubtedly protects employee health and general well-being by not dissuading employees from taking such breaks when they are needed.”

As modern technology allows for more precise record keeping of actual work time, employers should not be miss-led into ignoring the obligations under Wage and Hour Regulations to pay for breaks 20 minutes or less.

With such widely publicized large verdicts, more and more Wage and Hour lawsuits can be expected. Prudent employers are smart to review their pay practices and exemption classifications carefully in 2016.