Background - Employer: American Future Systems (Progressive) paid sales reps hourly plus bonuses only for time logged into workstation; reps could "log off" anytime but were paid only for logged-on time (except under 90 seconds). - Prior paid-break policy (two 15-minute breaks) was replaced in 2009 by a "flex time" policy allowing unrestricted short breaks but compensating only logged-on time. - Reps set estimated biweekly hours, faced discipline for not meeting commitments, could be sent home for low sales, and had some fixed-schedule requirements; typical paid time ~5 hours/day at federal minimum wage. - Secretary of Labor sued for FLSA minimum-wage and recordkeeping violations and sought unpaid wages, liquidated damages, and an injunction; District Court granted partial summary judgment for Secretary on minimum-wage liability and liquidated damages. - Key legal question: whether the FLSA requires employers to compensate employees for rest breaks of 20 minutes or less when employees are logged off and free of duties. ### Issues | Issue | Plaintiff's Argument (Secretary) | Defendant's Argument (Progressive) | Held | |---|---:|---:|---:| | Are short (≤20 min) rest periods while logged off compensable hours worked under FLSA? | Short rest periods are "hours worked" under 29 C.F.R. §785.18 and must be paid. | "Flex time" periods are not "breaks" but personal time; employer need not pay because FLSA does not require breaks. | Held: Such short rest periods are compensable; Progressive's policy violated FLSA. | | Level of deference owed to DOL/WHD interpretation (29 C.F.R. §785.18) | WHD’s long-standing interpretation merits substantial Skidmore deference and is persuasive. | WHD interpretive rule lacks the force of law and should not receive controlling weight. | Held: Apply Skidmore; WHD’s interpretation is highly persuasive and entitled to substantial deference. | | Whether §785.16 (fact-specific relief for being "completely relieved") or §785.18 (bright-line ≤20 min rule) controls | §785.18 governs short rest periods and displaces §785.16 for breaks ≤20 minutes. | §785.16’s fact-intensive "completely relieved" test should apply because breaks benefit employees. | Held: §785.18 is the specific rule for short rest periods and applies here. | | Whether liquidated damages were appropriate (good-faith defense) | Employer failed to show subjective good faith and reasonable grounds; liquidated damages proper. | Progressive sought legal advice and researched DOL materials; district court abused discretion by denying good-faith relief. | Held: District Court did not abuse discretion; liquidated damages affirmed given inadequate showing of good faith/reasonable grounds. | ### Key Cases Cited Skidmore v. Swift & Co., 323 U.S. 134 (1944) (informative agency interpretations merit weight based on persuasiveness) Armour & Co. v. Wantock, 323 U.S. 126 (1944) (use of predominant-benefit test for compensability of certain on-premises time) IBP, Inc. v. Alvarez, 546 U.S. 21 (2005) (FLSA governs compensation for all hours worked) United States v. Mead Corp., 533 U.S. 218 (2001) (framework for evaluating weight of agency interpretations) Mitchell v. Greinetz, 235 F.2d 621 (10th Cir. 1956) (deferred to DOL interpretation on short rest periods; acknowledged fact-specific factors but afforded weight to WHD) Cooper Elec. Supply Co. v. Martin, 940 F.2d 896 (3d Cir. 1991) (standards for employer showing good faith and reasonable grounds to avoid liquidated damages)