Are Automatic Meal Break Deductions Creating Wage and Hour Risk?

Punching an old-fashioned timecard to clock in and out has largely fallen by the wayside. Most hourly employees now clock in using an electronic timekeeping system, either at their job site or via an app or website. These systems sync to payroll, requiring far less oversight and significantly increasing efficiency. While automated payroll systems dramatically reduce the potential for human errors, they can raise other concerns.

Some employers automatically deduct a 30-minute meal break from the total hours an employee works rather than having them clock out and back in for long breaks. While this practice can simplify payroll and save time, it can also expose employers to liability under federal and state wage-and-hour laws.

An employee’s paycheck must accurately reflect the time the employee actually works. If an employer automatically deducts set periods of time, it must ensure the employee actually receives those breaks. In practice, this is often not the case.

How Automatic Meal Deductions Can Violate Federal Law

The federal Fair Labor Standards Act of 1938 (FLSA), which applies to most U.S. workers, establishes a 40-hour workweek and regulates overtime pay. The FLSA does not require employers to provide meal or rest breaks. However, if an employer provides breaks, it must comply with the FLSA meal and break requirements: 

• Employers must compensate workers for short breaks (those lasting between 5 and 20 minutes). Only “bona fide” meal periods of 30 minutes or more may be unpaid.
• During that time, an employee must be “completely relieved from duty” and cannot perform any work. This includes being on call, monitoring emails or texts, watching for notifications, covering reception, or any other type of “standby” responsibility.

Automatic meal break deductions are employer policies or timekeeping systems that deduct a fixed meal period regardless of whether the employee actually took an uninterrupted break. For these to be legal, an employer must ensure each employee is fully relieved of their duties and actually takes the deducted time for every shift with an automatic deduction.

The FLSA requires employers to maintain accurate time records reflecting the actual hours each employee works on every shift. Automatic deduction systems can create inaccurate records by reflecting breaks that employees did not take (and for which they were not paid) or non-compliant breaks. If the wrongfully deducted time reduces an employee’s total recorded hours to fewer than 40 in a workweek, they may be improperly denied overtime pay.

How Wage Theft Adds Up

Automatic deduction policies lead to many class-action wage and hour lawsuits. Although the amount of pay an employer improperly withholds from each employee may be relatively small, the total amount of wage theft across a large workforce can be significant. Class action suits allow groups of workers to sue their employers for unpaid wages, overtime premiums, and, in some cases, liquidated damages under the FLSA.

When an employer’s records are inaccurate or incomplete, they may not be sufficiently reliable proof to defend a wage theft lawsuit. Instead, the court may allow an employee to rely on reasonable estimates of the hours they actually worked. This makes it much harder for an employer to defend against substantial verdicts.

Michigan Employee Break Laws

State laws can provide additional protections and benefits for workers. Michigan employers must give employees under 18 a 30-minute uninterrupted break for every five hours of work. Employers must keep daily time records reflecting when this break occurs, as well as when their shifts start and end. Deducting an automatic 30-minute break from their hours worked would not satisfy the state’s recordkeeping requirement.

Michigan employers are not required to provide meal or rest breaks to employees aged 18 or older. If an employer allows employees to take breaks, it must comply with the FLSA standards (paid short breaks and unpaid bona fide meal breaks).

Why Automatic Deduction Policies Create Risk

Automatic meal break deductions are not inherently unlawful, but they can increase the risk of inaccurately reporting employees’ actual hours worked. Keeping accurate records of time in and time out for employee breaks is the best way to ensure your timekeeping records are correct.

Taking automatic deductions isn’t advisable if employees are routinely interrupted during meals, expected to remain on call, or required to remain at their workstations during breaks. Both federal and Michigan law are clear that for unpaid breaks to be legal, employees must be completely relieved of duty for a continuous period of at least 30 minutes.

Even well-intentioned policies can result in liability if they fail in practice, such as allowing employees to eat at their desks (giving them the opportunity to check their work email or messages). Employers that use automatic deduction systems must implement safeguards to ensure compliance and policies that allow employees to report when they miss or can’t take their full meal breaks. Supervisors must not discourage employees from reporting missed breaks or exert any pressure on employees to work through unpaid breaks.

Contact Sommers Schwartz, P.C., for Employment Claims

Michigan can impose legal and financial penalties on employers for violating state wage laws, including improperly calculating hours worked and break time. Workers may file complaints directly with the Michigan Wage and Hour Division, but it can be helpful to consult with a wage-and-hour attorney before filing your claim. An attorney can help you understand your rights and pursue the full value of the wages you’re owed.

Michigan workers can also pursue a civil lawsuit to recover wrongfully withheld or unpaid wages and other violations of Michigan and federal employment laws. If you suspect your employer is improperly calculating your pay or benefits, consult with an attorney. The experienced team of employment attorneys at Sommers Schwartz, P.C., has decades of experience protecting Michigan workers’ rights and ensuring workers receive the pay they deserve. Contact us today to schedule a free, confidential, no-obligation consultation.