Offering employees a flexible workday with unlimited, yet unpaid, time off, can be a beneficial policy for employers and employees. In such circumstances, employees have the freedom to take breaks whenever needed for any reason, and employers do not have to compensate employees for time not spent performing services for the employer. However, in Secretary United States Department of Labor v. American Future Systems, 873 F.3d 420 (2017), the Third Circuit held that employers must compensate employees for short break periods as hours worked, regardless of what these breaks are called.

The Employer's “Flex Time” Policy

American Future Systems, d/b/a Progressive Business Publications, creates and sells business publications. Progressive's sales representatives are non-exempt, hourly employees who are incentivized with a bonus structure that pays them based on the number of sales per hour while they are logged onto their computer workstation. Progressive also pays the sales representatives an additional amount if they sustain their sales-per-hour numbers over a two-week period.