Neither the federal Fair Labor Standards Act nor wage payment laws in place in most states require that employers provide non-exempt employees with paid meal and other breaks. However, employers commonly offer employees paid breaks during the working day as part of their overall compensation packages. Earlier this month, the Third Circuit Court of Appeals refused to allow an employer to offset these voluntary paid break amounts against unpaid overtime obligations to its employees.

In Smiley v. E.I. DuPont de Nemours and Co., DuPont employees filed a collective action overtime claim alleging that they were not paid for time spent donning and doffing protective clothing, as well as other pre and post-shift work. In response, DuPont noted that the company provided multiple paid breaks during the work day, and counted such breaks as working time. Therefore, the company argued that it should receive credit for such paid breaks against any overtime judgment. The district court agreed, dismissing the complaint on summary judgment.

The Third Circuit disagreed, reversing and remanding the claim. The court relied on Department of Labor regulations to conclude that if the employer treats paid break time as working time under its policies, such breaks also will be considered working time for purposes of calculating overtime liability under the FLSA. In addition, paid meal breaks do not fall within any of the overtime offsetting credit premium payments contained within the DOL rules.

Based on this decision, employers should consider immediately amending any policies or payroll practices that treat paid break periods as working hours for purposes of calculating overtime. The policy should clearly state that while the breaks are paid, the time spent not actually working will not count toward the 40 hour weekly threshold for beginning overtime obligations. The paid breaks cannot be used to offset overtime obligations, but the breaks themselves should not be treated as working time.