Long-term staff who were not paid for 56 hours of sleep time under an employer’s sleep-time policy were entitled to compensation for that time where the employer failed to meet the “conditions” to carve worksite sleep out of an employee’s hours worked.
A group home operator unlawfully failed to pay its long-term staff for eight hours of nightly sleep time, ruled the First Circuit. In this instance, the employer made no attempt to show that its LTS resided on its premises for 120 hours within a payroll workweek as required by a 1988 DOL memorandum addressing whether an employer may carve worksite sleep out of an employee’s hours worked. Rather, the employer challenged whether the memorandum intended to make the workweek the baseline for determining whether an employee resided on the employer’s premises for “extended-periods-of-time.” The appeals court rejected that argument, finding that the DOL “consciously” established the workweek standard (Giguere v. Port Resources Inc., June 19, 2019, Lynch, S.).
Sleep-time policy. The employer runs group homes that provide housing and services to adults with developmental disabilities and behavior health challenges. It uses a long-term-staff (LTS) model to care for program clients. Staff members at the facilities worked seven days on, and seven days off work. The LTS’s weeklong shift included four four-hour unpaid breaks and eight hours of nightly unpaid sleep time. This sleep-time arrangement was governed by a written “Sleep Time Agreement.” It was contested how often LTS must attend to the program clients during scheduled sleep time.
The payroll period for LTS spans two payroll workweeks. Thus, the employer paid LTS for 40 hours of work during the first payroll workweek and for 56 hours of work during the second payroll workweek. The employer did not pay LTS for their 56 hours of sleep time.
An employee brought an FLSA collective action and an individual action under analogous Maine labor laws, to recover what were alleged to be unpaid overtime wages. The employee alleged that the employer’s sleep-time policy violated the FLSA and Maine Wages and Medium of Payment Act, and the Maine Minimum Wage Law.
The district court granted conditional certification of an FLSA collective action. Thereafter, both parties moved for summary judgment. The district court granted the employee’s motion on the FLSA collective action and to the employee on his individual claims under Maine law. It awarded him treble damages under the Wages Act. Both parties appealed.
Sleep period carve out. On appeal, the employer argued that the district court erred in concluding that it had violated the FLSA by not compensating its LTS for their sleep time. Department of Labor (DOL) regulations provide that if “certain conditions” are met, an employer may carve worksite sleep out of an employee’s hours worked, 29 C.F.R. § 785.20. In this instance, the employer relied on one such sleep-time regulation, 29 C.F.R. § 785.23, which covers “live-in” employees, if such employee “resides on his employer’s premises on a permanent basis or for extended periods of time,” he and the employer may enter into “any reasonable agreement” about the payment for sleep time.
Extended-periods-of-time standard. The DOL stated in a 1988 memorandum that an employee meets the extended-periods-of-time standard, when he “resides on the premises for a period of at least 120 hours in a workweek. Here, the employer conceded that it “established” a Sunday-to-Sunday workweek for payroll purposes. It made no attempt to show that its LTS resided on its premises for 120 hours within that payroll workweek.
Instead, the employer argued that the DOL did not in its memorandum intend to make the workweek the baseline for determining whether an employee resided on the employer’s premises for “extended-periods-of-time.”
However, the appeals court concluded that the employee had the better argument. First nothing in the language in the memorandum that the employer relied on repudiated the DOL’s statement that the extended-periods-of-time standard requires “reside[nce] on the employer’s premises for a period of at least 120 hours in a workweek.” Second, the 1988 memorandum has not been superseded. It remains the most comprehensive of DOL’s analyses of Section 785.23, and DOL’s later documents do not deviate from its analysis.
Third, the employer’s argument required the court to assume that the DOL did not “consciously” establish the workweek standard. However, the appeals court concluded that the better reading of DOL’s memorandum is that the agency analyzes Section 785.23 with reference to an employer’s workweek.
Fixed workweek standard. Next, the employer argued that a fixed workweek standard goes against the principle that an employee’s work schedule need not coincide with his payroll period. However, the appeals court found that that principle does not carry the day. The question was not whether the employer could structure its employees’ shifts to minimize its overtime obligations, but whether those employees reside on the employer’s premises for “extended periods of time.” Under the most likely reading of DOL’s interpretation, the employees did not.
Arbitrary standard. Finally, the employer argued that implementing a workweek standard is arbitrary. Again, the appeals court disagreed. It pointed out that the workweek is the “basic unit” of the FLSA. Thus, there was nothing arbitrary about using the FLSA’s “basic unit” of time in interpreting the phrase “extended periods of time.” Measuring “extended periods of time” with reference to the workweek “established” under Section 778.105 also made sense within the DOL’s regulatory scheme. The agency has instructed that the FLSA “takes a single workweek as its standard,” 29 C.F.R. § 778.104. From this, the appeals court concluded that the workweek the employer has chosen is the workweek the employer has chosen.
Finding that the employer had not carried out its burden to invoke 29 C.F.R. § 785.23, the appeals court affirmed the district court’s judgment that its sleep-time policy violated the FLSA.
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