In a first of its kind opinion, the U.S. Court of Appeals for the Third Circuit (which hears appeals from the federal district courts in Delaware, New Jersey, and Pennsylvania) ruled that an employer does not violate the Fair Labor Standards Act (FLSA) when it deducts time from FLSA-exempt employees’ paid time off (PTO) banks for failing to meet productivity targets.
To understand the decision, we first need a refresher on the FLSA and how it requires employers to pay exempt employees. Employees are presumptively entitled to be paid a minimum wage for all hours worked, plus overtime – 1.5x their regular rate of pay – when they work more than forty (40) hours in a workweek. An exception to the overtime requirement applies when an employee’s salary and job duties fall within one of the recognized overtime exemptions. The so-called “white collar” exemptions apply to executive, administrative, and professional employees who not only perform exempt job duties but are paid a guaranteed salary of at least $684/week that is not subject to deduction based on the quality or quantity of work they perform.
With that primer in mind, we turn to the facts in Higgins v. Bayada Home Health Care Inc., No. 21-3286 (3rd Cir. Mar. 15, 2023), a class and collective action brought by clinicians who worked for a home health agency. The agency established productivity point targets for each clinician, which they satisfied by completing tasks such as routine home visits, office work, or scheduling...
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