Gap time wages

The wage payment provisions of the Fair Labor Standards Act (FLSA) are relatively simple. A nonexempt employee must be paid at least the minimum wage for all hours worked, plus overtime after 40 hours at no less than one and one half times the regular rate.

The “regular rate” is an hourly amount determined by dividing all compensation for a workweek by the hours worked in that workweek. The FLSA regulations define the regular rate as “the hourly rate actually paid” for non-overtime hours.

Employees might be paid piece rates, job rates, commissions, per mile rates, bonuses, or other forms of compensation. Any payment must be credited toward the regular rate, unless the payment qualifies for exclusion. For example, a profit sharing bonus would not normally count toward the hourly rate, but an attendance bonus must be counted.

While employees may allege unpaid overtime or failure to pay the minimum wage, courts usually reject claims for uncompensated non-overtime hours. This so-called “gap time” issue may arise when compensation is not determined on an hourly basis.

For example, a truck driver who is paid by the mile does not receive direct compensation while waiting for a truck to be loaded or unloaded. However, if the driver receives at least minimum wage (total weekly compensation divided by hours worked, including time spent waiting for loading or unloading), the driver would not have an FLSA claim for that “unpaid" waiting time.

Similarly, a mechanic might be paid job rates or book rates of preset amounts for specified tasks (installing brakes, changing oil, etc.). Between these tasks, the mechanic might perform other duties such as cleaning for which he does not receive direct compensation. Once again, his total weekly compensation would be divided by the hours worked. If this amount provides at least the minimum wage, there is no FLSA violation.

This “gap time” was at issue in a court case which noted that “Courts widely agree that there is no cause of action under the FLSA for pure gap time wages — that is, wages for unpaid work during pay periods without overtime.” (Davis v. Abington Memorial Hospital, Third Circuit, August 26, 2014)

Although back pay lawsuits are limited to unpaid overtime and minimum wage violations under the FLSA, state laws may allow claims for uncompensated time even if the employee did not work overtime and actually received the minimum wage. For example, a court in Washington state held that employees paid a piece rate for harvesting fruit were still owed minimum wage for break time, since breaks had to be paid and the piece rate did not cover breaks (Demetrio v. Sakuma Brothers Farms, Inc., 2015)

In addition, the “gap time” concept might not apply even under the FLSA if an employee is paid by the hour rather than by the job, mile, commission, or some other rate. Employees might argue that the uncompensated hours should have been paid at the agreed-upon hourly rate. Of course, failing to count all hours worked may also result in uncompensated overtime.