A Day in the (Work) Life

Third Circuit Rules Overtime Gap Time Claims Not Cognizable Under FLSA: In Secretary of Labor v. Comprehensive Healthcare Management Services LLC, the US Department of Labor (DOL) sued a group of Pennsylvania healthcare facilities on behalf of nearly 6,000 employees, alleging widespread violations of the Fair Labor Standards Act (FLSA), including failures to maintain accurate wage and hour records, failures to pay for all hours worked, and failures to properly calculate overtime rates. Following a bench trial, the District Court found in favor of the secretary and awarded approximately $35.8 million in damages, including an award for “overtime gap time,” which is compensation for non-overtime hours worked during pay periods in which an employee also worked overtime. On June 3, 2026, the Third Circuit Court of Appeals held that overtime gap time claims are not cognizable under the FLSA, reasoning that the statute’s plain text only mandates minimum wage and overtime pay and does not contemplate a separate remedy for unpaid straight-time hours, even in workweeks where overtime was worked. The court declined to defer to long-standing DOL interpretive guidance supporting overtime gap time recovery, finding the guidance unpersuasive under the Skidmore framework because it provided no reasoned explanation for its position. The decision deepens a circuit split, as the Third Circuit aligned with the Second Circuit’s holding in Lundy v. Catholic Health System and diverged from the Fourth Circuit’s contrary ruling in Conner v. Cleveland County. Employers should note that while the Third Circuit foreclosed federal FLSA recovery for overtime gap time, the court emphasized that affected employees may still pursue remedies under state wage and hour laws or breach-of-contract claims.

DOL Issued Opinion Letter on Bonuses: On May 28, 2026, the DOL’s Wage and Hour Division issued Opinion Letter FLSA2026-6, addressing whether an employer’s quarterly bonus program complies with the overtime pay requirements of the FLSA. The DOL concluded that the employer’s quarterly bonus constitutes a “percentage of total earnings” bonus under 29 C.F.R. § 778.210, meaning it already includes the simultaneous payment of any overtime compensation due on the bonus and does not require the employer to recompute the regular rate or pay additional overtime. The bonus at issue is funded by a pool derived from the employer’s quarterly sales revenue, with each eligible employee’s share determined by calculating the percentage that the employee’s total gross compensation (straight time plus overtime) represents of the total gross compensation paid to all eligible employees for the quarter. The DOL confirmed that, because the same fixed percentage—the bonus pool divided by total earnings of all participating employees—is applied uniformly to each employee’s total earnings (both straight time and overtime), the bonus increases overtime earnings by the same percentage as straight-time earnings, thereby satisfying the FLSA’s overtime requirements as an “arithmetic fact.” Importantly, the DOL cautioned that employers must ensure such bonuses do not dilute overtime earnings—for example, by applying a higher percentage increase to straight-time earnings than to overtime earnings or by including amounts previously excluded from the regular rate. 

EEOC’s Subpoena Power Is Not Unlimited, Says Colorado Federal Judge: A Colorado federal judge denied the Equal Employment Opportunity Commission’s (EEOC) bid to enforce subpoenas seeking information from a job applicant screening company, ruling that the agency’s investigatory power is not “unlimited” and the bias probe had key deficiencies. The judge found that the EEOC failed to connect the basis of the subpoenas to the underlying discrimination charge filed by an applicant who claimed she lost out on a job offer due to prejudice. Central to the court’s reasoning was the fact that the charging party answered “no” to all the prehire assessment questions the EEOC challenged, yet the subpoenas sought information about applicants who answered “yes”—meaning the requested information had no connection to the claimant. The judge further noted that the claimant had been found suitable for the role and was offered a job before failing a separate post-offer exam unrelated to those questions, and on that basis the judge rejected the EEOC’s defense that its broad investigatory authority supported the subpoenas. The court stated it would not hold that “an individual’s claim that she lost a job opportunity due to discrimination opens the door to compelling a third party to produce information that has nothing to do with the discrimination allegedly suffered by the claimant.” The judge also dismissed the EEOC’s reliance on the claimant’s “pattern and practice” charge, reasoning that even if the challenged questions could reflect a discriminatory pattern, they did not impact the charging party herself.

Random Beatles Fact:
The Beatles auditioned for Decca Records on January 1, 1962. However, Decca Records rejected the Beatles and did not offer them a recording contract. Decca instead signed Brian Poole and the Tremeloes over the Beatles. Decca executives told Brian Epstein (the Beatles’ manager) that “guitar groups are on the way out” and “the Beatles have no future in show business.” Some of the songs the Beatles performed during their Decca audition were later released in 1995 on the Anthology 1 album.

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