Labor & Employment Law Daily Wrap Up, WAGE-HOUR—WORKING TIME—8th Cir.: DOL revives suit over meal break deductions from employees’ pay, (Mar 27, 2025)

By Ronald Miller, J.D.

An employer’s reporting process must be reasonable, which at a minimum requires employees to know of the policy and how to use it.

The Eighth Circuit, in a 2-1 decision, reversed a district court’s grant of summary judgment in favor of an employer in a suit brought by the Department of Labor alleging that the employer deducted 30 minutes of pay for employees’ meal breaks, even though it knew or should have known its employees routinely worked through those breaks. The appeals court found that the employer failed to effectively communicate to employees the existence of a temporary time sheet policy and how to use it. Further, the appeals court concluded the Secretary met his burden to show the amount and extent of the overtime work as a matter of just and reasonable inference. Judge Grasz filed a separate dissenting opinion (Micone v. Levering Regional Health Care Center, L.L.C., No. 23-3683 (8th Cir. Mar. 26, 2025)).

Time sheet policy. The employer, a residential care facility, employs healthcare workers in its nursing department who provide direct care for its in-patient residents. During the relevant times, the employer automatically deducted 30 minutes from nursing-department employees’ time sheets for a lunch break every day. At the same time, it had an unwritten policy, the time sheet policy, for employees who missed their lunch so the employer could pay those who had to work through the break. The time sheet policy required employees to submit a Temporary Time Sheet, signed by their supervisor, indicating that they had worked during their lunch break.

DOL investigation. From March 2020 through January 2021, the Department of Labor investigated the employer for potential violations of the FLSA. During the investigation, more than 40 employees were interviewed, most of whom were employed in the nursing department. The employees reported that they either never received a lunch break or frequently had their lunch breaks interrupted.

There were also conflicting accounts about worker knowledge of the time sheet policy. Five of the nineteen employees interviewed did not know about the time sheet policy, and fourteen of them did.

Lunch break violations. Based on the investigation, the Secretary of Labor concluded that the employer had violated the FLSA by failing to pay its employees for missed lunch breaks.

After the close of discovery, the employer moved for summary judgment. It argued it was not liable for unpaid overtime wages because it did not have actual or constructive knowledge that its employees worked during lunch breaks and were not paid for that work.

The district court granted the employer’s motion for two primary reasons. First, relying on the employer’s time sheet policy and employees’ failure to use it, the district court concluded that no reasonable jury could find the employer had actual or constructive knowledge of its employees’ overtime hours. Second, even if the employer knew or should have known of the employees’ overtime work, the district court found that the Secretary failed to adequately establish the amount of overtime the employer owed. The Secretary appealed.

Compensable work. While an employee’s mealtimes ordinarily do not constitute “work,” a mealtime can constitute compensable work if the employee spends the time predominantly for the benefit of the employer, and the employer knew or should have known its employees performed such work. Constructive knowledge is enough to prove an employer’s liability under the FLSA.

Reporting process. One way an employer can show it has exercised reasonable diligence in ascertaining employees’ overtime work is by establishing a reasonable process for an employee to report it. If employees fail to follow that process, then an employer ordinarily is not deemed to have constructive knowledge of overtime work.

But the mere existence of a policy or process for reporting overtime work is not dispositive. An employer’s process must be reasonable, which at a minimum requires employees to know of the policy and how to use it. If the employer prevented employees from using the policy, pressured employees not to use the policy, or in some way discouraged them from using the policy, an otherwise reasonable policy does not negate constructive knowledge.

Audit period. Here, the record indisputably showed both that the employer established a temporary time sheet policy, and that none of its employees used it during the audit period. The employer failed to produce a single employee request under the time sheet policy that was submitted during the two-year audit period. A reasonable jury could find that the absence of any time sheets submitted during the two-year audit period, which contrasted with the over 800 time sheets submitted in a four-month period two years later, was evidence that the employer failed to effectively communicate its policy to employees during the audit period. Such an inference was further supported by the evidence that several employees did not know about the time sheets at all.

Hours worked. On appeal, the employer argued the Secretary cannot meet its burden to prove the amount and extent of overtime it asserts the employees worked. If the employer failed to accurately maintain records, its employees do not need to prove the precise extent of their uncompensated work to recover under the FLSA. Moreover, the Secretary does not need to show with exactitude how much overtime the employer owed. Rather, the Secretary only needs to submit “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”

The Secretary met his burden. During the investigation, over a dozen employees stated that because they were often the only ones working on the floor, they could not leave to take a lunch break. The appeals court found that a reasonable jury could find that staffing shortages were independent of the impact of COVID-19. Because some employees unequivocally stated they never got a lunch break, the appeals court concluded the Secretary met his burden to show the amount and extent of the overtime work as a matter of just and reasonable inference.

Dissent. In a dissenting opinion, Judge Grasz would find that the Secretary failed to create a genuine dispute of material fact as to whether the employer had a reasonable policy in place. According to the dissent, the relevant inquiry concerning the reasonableness of an employer’s policy is not whether an employer effectively communicated its policy to its employees.

Rather, the pertinent inquiry is whether employees knew of the policy and when to use it. Here, the dissent argued that the employer presented evidence its employees knew of the policy and when to use it. Thus, the dissent agreed with the district court that the Secretary failed to establish the employer had actual or constructive knowledge of overtime work.

The case is No. 23-3683.

Judge: Kelly, J.

Attorneys: Reynaldo Fuentes, U.S. Department of Labor, for Vince Micone. Andrew J. Martone (Law Offices of Andrew J. Martone) for Levering Regional Health Care Center, L.L.C.

Companies: Levering Regional Health Care Center, L.L.C.; Reliant Care Management Company, L.L.C.

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