Pay Actual Hours, Protect Meal Breaks, Rebuild Regular Rate

The ruling narrows one federal theory, not the payroll problem

If your payroll still pays the scheduled week when the clock shows extra time, the gap-time ruling is not the fix. In Secretary of Labor v. In the June 3, 2026 decision involving Comprehensive Healthcare Management Services, LLC, the Third Circuit concluded that the Fair Labor Standards Act does not supply a claim for overtime gap time. The court concluded that the Fair Labor Standards Act gives no recovery for overtime gap time if the employee's regular pay is high enough that the missed hours do not breach the minimum-wage rule. That removes one federal exposure for employers whose rates are already above the floor, but it does not approve the payroll practices that create the gap.

The case history matters because the gap-time issue arrived with other payroll failures. The Department of Labor sued in 2018 on behalf of nearly 6,000 employees, alleging multiple FLSA violations. After a January 2024 bench trial, the district court awarded $35,804,438.20 in damages to the DOL. The lower court found that the employer paid scheduled hours instead of actual hours, automatically deducted meal-break pay even when work continued, and handled recovery inconsistently and inaccurately. It also found that overtime was miscalculated because the regular rate omitted shift differentials, bonuses, and other additional compensation.

Read the holding as a narrowing of federal exposure, not a payroll amnesty. Employees who lose an FLSA gap claim may still pursue state wage-and-hour or breach-of-contract theories. For a multi-state payroll, the federal question is only the first screen. The durable fix is to correct the payroll inputs that created the gap in the first place.

The three-line audit belongs in the next payroll cycle

The checklist below is the part of the ruling that belongs in payroll operations. Each item is testable on a single employee, a single week, and a single pay stub.

The items target the failures the district court found. Scheduled hours can hide worked time. Automatic deductions can convert a working meal into unpaid time. A base-rate-only regular rate understates overtime.

• Compare paid hours to actual worked hours, not scheduled hours. If the time record shows work beyond the scheduled shift, the pay record should show it too.
• Check meal-break deductions against the break record. Do not deduct meal-break pay unless the break was truly uninterrupted.
• Recompute the regular rate for one overtime week. Include shift differentials, bonuses, and other nondiscretionary compensation before calculating overtime.

Payroll design should carry the fix forward

The checklist works best when it is built into the payroll feed, not left as a manual year-end exercise. Timekeeping should capture the actual start, stop, and break events that drive the pay record. If a scheduled shift ends early, a late start changes the total, or a meal period is interrupted, the exception should be visible before the pay run closes. Payroll should not have to infer the answer from the schedule.

Meal-break controls need the same discipline. The break record should show whether the break was truly uninterrupted, not just whether a deduction was selected. If the employee remains on call or continues work, the deduction is the problem. The payroll system should flag that condition for review before the check is cut.

The regular-rate calculation should pull from the same compensation feed that pays the employee. If a bonus, shift differential, or other nondiscretionary payment is paid in one period and overtime is paid in another, the rate needs a documented allocation method. The calculation should be reproducible from the pay data, not rebuilt from memory during an audit.

Residual state and contract theories need a short screen

The federal gap-time holding leaves the remaining questions jurisdictional and contractual. State wage-payment laws can supply a separate recovery path. Contract claims can reach unpaid gap time. Keep a short memo for each residual gap: employee group, unpaid period, state or contract theory, and the payroll fix already made.