TOP TIP: Be Careful That Your Handbook Policies Don’t Create FLSA Obligations

In drafting handbook policies, employers should be careful to ensure that they do not inadvertently create additional obligations for pay under the Fair Labor Standards Act. One employer’s experience provides a cautionary tale.

In Meadows v. NCR Corp, the employer’s handbook created a problem for the employer, that  might otherwise have escaped liability under the Portal-to-Portal Act. As discussed above, the Portal-to-Portal Act excludes compensation for activities that are preliminary or postliminary to the principal activity. The statute also provides, however, that an employer will be liable under the FLSA if it fails to compensate an employee for activities for which the employer otherwise agreed to compensate the employee through “contract, custom, or practice.”

In the present case, the handbook stated that employees would be compensated for the pre- and post-shift tasks if they took more than a minute or two. Such activities, otherwise not compensable because of the Portal-to-Portal Act, became compensable because the activities were performed under a “contract, custom, or practice.”