On June 3, 2026, the U.S. Court of Appeals for the Third Circuit issued a significant precedential decision in Secretary U. S. Department of Labor v. Comprehensive Healthcare Management Services LLC, No. 24-2842, 2026 WL 1582064 (3d Cir. June 3, 2026), narrowing the scope of wage-and-hour liability under the Fair Labor Standards Act (FLSA). The court held that employees cannot recover “overtime gap time” wages under the FLSA, aligning with the Second Circuit and rejecting the broader interpretation adopted by the Fourth Circuit.

The case involved an enforcement action brought by the Secretary of the U.S. Department of Labor against Comprehensive Healthcare, a Pennsylvania employer and its related entities. The Third Circuit includes Pennsylvania, New Jersey, Delaware, and the Virgin Islands.

The employer owned and operated 15 residential nursing, rehabilitation, and assisted living facilities and was accused of widespread FLSA violations affecting nearly 6,000 employees. Following a bench trial, the district court awarded more than $35.8 million in damages, including compensation for alleged unpaid overtime resulting from the miscalculation of the regular rate, as well as misclassification of certain employees, meal-break violations, and overtime gap time.

On appeal, the Third Circuit reversed in part, affirmed in part, and remanded, addressing several significant FLSA issues. Aside from reversing the overtime gap time award and remanding the exemption analysis, the Third...

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