Labor & Employment – Bid for overtime ‘gap pay’ revived

Where a woman alleged that she was underpaid for non-overtime hours during weeks in which she also worked overtime, the district court erred in granting her employer judgment on the pleadings. In accordance with the Department of Labor’s interpretation of a regulation and a prior decision from this circuit, overtime gap time claims are cognizable under the Fair Labor Standards Act, or FLSA.

Background

Sara Conner appeals from the district court’s order granting judgment on the pleadings to her employer, the Cleveland County Emergency Medical Services, which is a department of Cleveland County, North Carolina. Conner’s complaint alleged that Cleveland County underpaid her for straight (i.e., non-overtime) hours worked during weeks in which she also worked overtime. At issue is whether this alleged underpayment is a violation of the overtime provision of the FLSA under the theory of “overtime gap time.”

Conner argues the district court misinterpreted and misapplied (1) Department of Labor official interpretation 29 C.F.R. § 778.315 and (2) this court’s holding in Monahan v. County of Chesterfield, 95 F.3d 1263 (4th Cir. 1996).

Analysis

“In addition to seeking unpaid overtime compensation, employees may seek to recover wages for uncompensated hours worked that ‘fall between the minimum wage and the overtime provisions of the FLSA,’ otherwise known as ‘gap time.’” Gap time “refers to time that is not [directly] covered by the [FLSA’s] overtime provisions because it does not exceed the overtime limit, and to time that is not covered by the [FLSA’s] minimum wage provisions because … the employees are still being paid a minimum wage when their salaries are averaged across their actual time worked.”

There are two types of gap time—pure gap time and overtime gap time. In pure gap time claims, the employee seeks to recover for unpaid straight time in a week in which they worked no overtime. In overtime gap time claims, the employee seeks to recover unpaid straight time for a week in which they did work overtime.

While direct minimum wage and overtime violations can clearly be addressed by the FLSA, no provision of the FLSA explicitly governs employee claims to recover for unpaid gap time. This court has agreed with other courts that “there is no cause of action under the FLSA for pure gap time when there is no evidence of a minimum wage or maximum hour violation by the employer.” Rather, a “claim to [pure] gap time compensation is enforceable only under” state law related to the parties’ employment agreement.

To be sure, courts may be united in rejecting pure gap time claims under the FLSA but they are divided on whether an employee can bring an overtime gap time claim for unpaid straight time worked in an overtime week. The FLSA does not include language about overtime gap time, but that does not end this court’s inquiry. Given the FLSA’s silence regarding overtime gap time, the court turns as a “resort for guidance” to the “interpretations and opinions of the [Department of Labor] under [the Fair Labor Standards] Act.” It concludes that the department’s guidance in § 778.315 has significant “power to persuade.” Accordingly, the court will follow the department’s guidance and will look to its interpretation of the overtime provision to analyze overtime gap time claims.

This court’s decision in Monahan recognized there is a cause of action under the FLSA for overtime gap time claims. Although the Second Circuit summarily concluded that § 778.315 was owed no deference after finding it unpersuasive, this court respectfully disagrees with that decision. Accordingly, the court holds that overtime gap time claims are cognizable under the FLSA.

Consistent with § 778.315 and Monahan, the court now lays out the standard for determining whether a plaintiff has pled sufficient factual allegations of an FLSA overtime gap time violation to overcome a Rule 12(b)(6) motion to dismiss. To do so, the facts in the complaint must support a reasonable inference that: (1) the employee worked overtime in at least one week and (2) the employee was not paid all straight-time wages due under the employment agreement or applicable statute. Because Connor has pleaded sufficient facts to support each prong, the court holds that she has sufficiently pleaded allegations of an overtime gap time violation under the FLSA.

Vacated and remanded.

Conner v. Cleveland County, North Carolina (Lawyers Weekly No. 001-001-22, 30 pp.) (James A. Wynn Jr., J.) Case No. 19-2012, Jan. 5, 2022. From W.D.N.C. at Asheville (Martin K. Reidinger, C.J.) Philip J. Gibbons Jr. for Appellant. Christopher S. Edwards for Appellee.