As we have discussed, federal courts generally interpret the FLSA in conformity with longstanding FLSA principles stated in, among other seminal cases, United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1960). Under the Klinghoffer rule, the FLSA generally just mandates: 1) the payment of overtime at the regular rate for hours in excess of 40; and, 2) that employees receive en toto at least minimum wage for all hours of work in a workweek. Thus, an employee who is paid for 35 hours at a rate above the minimum wage, and then later alleges that he or she worked 36 hours, has a claim under the FLSA only if inclusion of that additional hour pushes his or her regular rate for the 36 compensable hours below the minimum wage (currently $7.25/hour). A new decision calls this longstanding rule into question. Norceide v. Cambridge Health Alliance, 2011 U.S. Dist. LEXIS 103686 (D. Mass. Aug. 28, 2011).
In reviewing Defendant’s motion to dismiss a non-overtime off-the-clock claim under Klinghoffer, Judge Nancy Gertner observed that the courts following the Klinghoffer rule have “mostly done so by citing to Klinghoffer without any further analysis of whether, in fact, the weekly average rule effectuates the legislative intent of the FLSA’s minimum wage law.” Id. at * 12. Observing that the First Circuit (encompassing Massachusetts) has not had cause to rule on the issue, the judge concluded that “the plain language of the minimum wage provision, the remaining parts of the FLSA, and the Congress’ primary goal of protecting workers buttresses the conclusion that Congress intended for the hour-by-hour method to be used for determining a minimum wage violation.” Id. at * 19.
While many state laws already provide employee protection for gap time by requiring an agreed upon rate to be paid for all hours worked, Norceide is an adverse decision for all employers, particularly those with operations in jurisdictions regulated predominately or exclusively by the FLSA, and those within the First Circuit (Massachusetts, Rhode Island, New Hampshire, Maine and Puerto Rico). Such employers are not only liable for gap time claims but also the additional 100% liquidated damages available under the FLSA. Proper tracking of hours worked remains of paramount importance for all employers.