A Fair Day's Pay for a Fair Day's Work': Why Congress Should Amend the Fair Labor Standards Act to Include an Actual Time Test for Retroactive Damages

• Author: Leslie E. Barron
• Position: J.D. Candidate, The University of Iowa College of Law
• Pages: 1297-1328

1297

“A Fair Day’s Pay for a Fair Day’s Work”:

Why Congress Should Amend the Fair

Labor Standards Act to Include an Actual

Time Test for Retroactive Damages

Leslie E. Barron

ABSTRACT: In 1938, Congress passed the Fair Labor Standards Act

(“FLSA”) with the support of President Franklin D. Roosevelt, who said

every worker deserved “a fair day’s pay for a fair day’s work.”1 In an Eighth

Circuit case decided in 2012, the court addressed an important and

persistent ambiguity in the FLSA regarding calculating compensable time,

but failed to clarify the issue. The question that has split the federal circuits

is whether a “reasonable time” test or an “actual time” test is the appropriate

calculation method for compensable time when a plaintiff successfully sues

for unpaid wages in violation of the FLSA. One likely reason neither

Congress nor the Supreme Court has yet resolved the issue is that

disagreement over the calculation method for damages is usually not the

primary impetus for a FLSA case. Courts are more concerned with making

the proper decision for the preliminary issue: whether the alleged activities for

which the employees were not paid are compensable. Nonetheless, the

appropriate test for retroactive damages is an important issue and one that

Congress can easily resolve. To resolve this circuit split, this Note proposes

changes to the FLSA that would incorporate the actual time test as the

appropriate calculation method to use for retroactive damages. This Note

suggests that Congress should codify the actual time test because it is the

more logical of the two tests under current law, because it will result in more

desirable practical implications for the modern working world, and because

it is supported by public policy.

 J.D. Candidate, The University of Iowa College of Law, 2014; B.A., University of Illinois

at Urbana-Champaign, 2011. I would like to thank the student writers and editors of Volumes

98 and 99 of the Iowa Law Review for their hard work on this Note.

1. Message From Franklin D. Roosevelt to the Congress (May 24, 1937), The President

Recommends Legislation Establishing Minimum Wages and Hours, in 1937 THE PUBLIC PAPER AND

ADDRESSES OF FRANKLIN D. ROOSEVELT 209, 210 (1941).

1298 IOWA LAW REVIEW [Vol. 99:1297

I. INTRODUCTION ................................................................................... 1299

II. HISTORY AND INTERPRETATION OF THE FAIR LABOR STANDARDS

ACT ...................................................................................................... 1299

A. HISTORY AND OVERVIEW................................................................. 1300

B. “COMPENSABLE TIME” AMBIGUITY ................................................. 1302

1. Early Supreme Court Cases ................................................. 1303

2. Subsequent Supreme Court Interpretation and

Statutory Expansion of “Compensable Time” ................... 1304

3. Further Clarification of “Compensable Time” ................... 1306

C. THE SUPREME COURT’S LATEST INTERPRETATION: IBP, INC. V.

ALVAREZ ....................................................................................... 1308

III. THE CIRCUIT SPLIT OVER COMPENSABLE TIME CALCULATION ........... 1309

A. REASONABLE TIME TEST ................................................................ 1309

B. ACTUAL TIME TEST ........................................................................ 1312

IV. CONGRESS SHOULD CODIFY THE ACTUAL TIME TEST ......................... 1315

A. THERE IS STRONGER LEGAL SUPPORT FOR THE ACTUAL TIME TEST . 1316

1. The Actual Time Test Is the Most Logical Interpretation

of Existing Precedent ........................................................... 1317

2. The Actual Time Test Better Effectuates the Purpose of

the FLSA ............................................................................... 1319

B. APPLICATION OF THE ACTUAL TIME TEST WILL RESULT IN MORE

DESIRABLE PRACTICAL IMPLICATIONS ............................................. 1321

1. The Actual Time Test Will Create Better Incentives for

Employers ............................................................................. 1322

2. The Actual Time Test Is the More Straightforward and

Objective Legal Standard for Courts to Apply ................... 1325

V. CONCLUSION ....................................................................................... 1327

2014] “A FAIR DAY’S PAY FOR A FAIR DAY’S WORK” 1299

I. INTRODUCTION

Imagine that you are an elderly, hourly factory worker who is a member

of a class action lawsuit against your corporate employer to recover unpaid

wages for activities you thought were compensable. Now imagine after

months or even years of litigation that you are successful and the court holds

that your employer owes all employees in the class action suit retroactive

damages for those unpaid wages. Finally, imagine that, because your

employer did not keep accurate time records, you do not receive back pay

for the actual amount of time it took you to perform the work. Instead, you

only receive a reasonable amount of back pay based on the time it took the

majority of much younger workers to complete the same work tasks.

Uncertainty over how to determine the correct amount of retroactive

damages or back pay for activities deemed to be compensable time is just

one issue that has permeated the vast amounts of litigation surrounding the

Fair Labor Standards Act (“FLSA”) since its implementation. Each time the

Supreme Court attempted to clarify “compensable time,” additional

ambiguities surfaced. After the last Supreme Court decision interpreting the

FLSA, IBP, Inc. v. Alvarez,2 there remain unanswered questions including the

issues in the scenario above. What happens after a court determines that an

employer owes back pay to many of its employees for FLSA overtime

violations? How should courts calculate that back pay? Should employers pay

for all the time employees were actually working or should they pay for the

amount of time that would have been reasonable for the employee to

complete the particular activity?

Although the issue of how to calculate the amount of retroactive

damages employers owe to employees for wages and overtime is not the

primary issue addressed in FLSA cases, it remains a question in each and

every case requiring back pay and therefore merits examination. Part II of

this Note discusses Congress’s enactment of the FLSA and courts’ attempts

to clarify the numerous ambiguities relating to “compensable time”

provisions through case law and statutory interpretation. Part III outlines the

current circuit split regarding the appropriate test courts should use to

calculate compensable time. Finally, Part IV outlines the legal, practical, and

policy reasons why courts should use an actual time test and recommends

that the best way to resolve the circuit split is with a congressional

amendment to the FLSA.

II. HISTORY AND INTERPRETATION OF THE FAIR LABOR STANDARDS ACT

In litigation surrounding FLSA provisions, the Supreme Court has

consistently interpreted the statute to ensure that employers are treating

2. IBP, Inc. v. Alvarez, 546 U.S. 21 (2005).