On November 24, 2015, the Court of Appeals for the Third Circuit ruled in Babcock v. Butler County, that a meal period is not compensable under the Fair Labor Standards Act (“FLSA”) when the “predominant benefit” of the mealtime belongs to the employee. The decision announces the standard for determining whether a union or non-union employee of a private or public employer in the Third Circuit (which includes Pennsylvania, New Jersey, Delaware, and the Virgin Islands) is entitled to compensation during a meal period.
Legal Background And Facts
Under the FLSA regulations (which are not legally binding but highly-persuasive guidance), rest periods of five minutes to about twenty minutes “must be counted as hours worked.” On the other hand, “bona fide meal periods” of thirty minutes or more are ordinarily “not worktime” although shorter periods may qualify as unpaid meal periods under special circumstances. See 29 C.F.R. § 785.18; id. § 785.19.* Against this backdrop, a group of correctional officers (“officers”) sued their employer alleging that they were not properly compensated under the FLSA. The officers’ collective bargaining agreement (“CBA”) specified a shift length of eight and one-quarter hours, including a one hour meal period. In practice, the one hour meal period was broken into a paid forty-five minute period and an unpaid fifteen minute period. The CBA was silent on the compensability of the fifteen minute period, and the officers contended that the fifteen minute period should be compensated because during it they were bound by certain restrictions. In particular, during the meal period the officers were:
not permitted to leave the employer’s premises without permission
required to remain in uniform
obliged to stay in close proximity to emergency response equipment, and
on call to respond to emergencies.
The Third Circuit Adopts The “Predominant Benefit” Test
The Third Circuit first decided which of two tests determines meal period compensability. The Court quickly rejected the “relieved from all duties during the mealtime” test. It should be noted that this is the test in the DOL regulation on this issue. The regulation provides, in pertinent part, that during a “bona fide meal period,” the “employee must be completely relieved from duty for the purposes of eating regular meals. . . . The employee is not relieved if he is required to perform any duties, whether active or inactive, while eating.” 29 C.F.R. § 785.19(a). Instead, the Court adopted the “predominant benefit” test. The Court noted that its conclusion was consistent with the majority of the courts of appeals to have addressed the issue. The parties notably did not dispute that the predominant benefit test applied. The Court then explained the predominant benefit test, describing it as a fact-intensive, totality-of-the-circumstances inquiry that requires analysis of “whether the [employee] is primarily engaged in work-related duties during meal periods.” Slip. Op. at 6. The Court canvassed factors that other courts have looked to when applying the test, including whether employees are:
permitted to leave the premises during a meal period
disrupted frequently during a meal period
allowed to take a meal period without first seeking permission
limited in what they may read during the meal period
bound by any meal period provision in a CBA that evidences an “agreed-upon characterization” of the meal period, id. at 10.
The Panel Splits On How The Test Applies To The Officers’ Allegations
The majority, in an opinion by Judge Sloviter, concluded that, on balance, the officers’ alleged meal period restrictions did not predominantly benefit the employer and thus the fifteen minute meal period was not compensable. For this reason, the majority affirmed the district court’s grant of the employer’s motion to dismiss. The majority’s conclusion was grounded on two major premises. First, the officers’ alleged restrictions were insufficient as a matter of law to thwart their ability to pass the mealtime without being primarily engaged in official responsibilities, especially when compared to the “cadre of case law addressing mealtime compensability in the law enforcement context[.]” Id. at 9. The majority placed great stock in the officers’ ability to both request authorization to leave for lunch and eat away from their desks. Second, the majority found that the CBA provided officers “with the benefit of a partially-compensated mealtime and mandatory overtime pay if the mealtime is interrupted by work.” Id. The majority concluded that the FLSA required no more. Id. Judge Greenaway, in dissent, would have reversed the district court’s dismissal of the Complaint. The dissent’s balancing of the restrictions on the officers’ use of the fifteen minute portion of the meal period led it to the conclusion that the meal period was compensable. Judge Greenaway reasoned that because the officers were required to be prepared to serve at a moment’s notice for the entirety of the meal period, they were required to maintain a physical and mental readiness for the employer’s benefit regardless of the CBA. Judge Greenaway also was troubled by the majority’s resolution of this fact-specific inquiry before the officers’ had an opportunity to conduct discovery.
What Babcock Means For Employers
Babcock makes clear that, although the predominant benefit test applies in the Third Circuit, it is not a bright-line rule. The test turns on the balancing of multiple factors that could lead reasonable minds to reach divergent conclusions about whether the employer or the employee is the predominant beneficiary of a meal period. Indeed, the majority and dissenting Babcock opinions reached opposite conclusions on the same facts. The decision should nevertheless give employers some comfort that modest restrictions on their employees’ use of an uncompensated meal period will not convert it into a compensated meal period under the FLSA. Although the frequency and nature of mealtime interruptions was not an issue squarely before the Third Circuit in Babcock, the majority opinion suggests that de minimis interruptions to a meal period may be insufficient to transmute a non-compensable meal period into a compensable one. As noted earlier, the Babcock decision is inconsistent with the DOL regulation on this issue. It is reasonable, therefore, to assume that the DOL will apply the Babcock factors in a way that favors compensability of meal periods. If an employee experiences more than a de minimis interruption during a meal period, an employer wanting to avoid legal risk should pay for the break. It is also important to remember that applicable state wage and hour laws may have rules and requirements that are more stringent than the FLSA’s requirements. By way of example, under Pennsylvania and California wage and hour laws, when an employee is required by the employer to remain at the employer’s premises, that time is compensable. Under New York law, in contrast, there is no rule that requires an employee to be permitted to leave the work premises during an uncompensated meal period. Remember: employees get the benefit of federal or state law, whichever is more favorable. Babcock also has an impact on employers with a unionized workforce. Although a CBA’s characterization of a meal period is not dispositive of FLSA liability (or a defense to it), Babcock allows the characterization to be used as one factor in the predominant benefit analysis. Employers who find themselves negotiating CBAs must similarly view the proposed compensation and meal period restrictions in total to determine whether there is any risk of FLSA meal period liability. In summary, the predominant benefit test may be a powerful employer defense that will enable an employer to maintain uncompensated meal periods and still impose some restrictions on their usage (at least under federal law). Nevertheless, an employer taking cover behind the predominant benefit test still may incur large litigation costs to prevail on this defense in any individual or collective or class action litigation. Employers, therefore, should remain vigilant with regard to their policies and practices when it comes to compensating for meal and other breaks.
* Employers should also be aware that attorneys in Duane Morris’ Employment, Labor, Benefits and Immigration practice group have represented employers in Department of Labor (“DOL”) audits where the DOL’s position has been that any break that is fewer than thirty minutes must be paid. Further, this is the law and/or enforcement position in some states, such as New Jersey. For this reason, generally, we advise employers ordinarily to compensate employees for all meal periods that are fewer than thirty minutes or that are thirty minutes or more but interrupted.