The New Jersey Employment Law Firm Blog
A significant new decision by the United States Court of Appeals for the Third Circuit has clarified the limits of the Fair Labor Standards Act (FLSA), ruling that employees cannot use the federal statute to sue for “overtime gap time.” In Secretary United States Department of Labor v. Comprehensive Healthcare Management Services LLC, decided on June 3, 2026, the court determined that the FLSA’s plain text does not provide a remedy for unpaid, non-overtime hours worked during a pay period.
The case involved Comprehensive Healthcare Management Services, which operated fifteen healthcare facilities across Pennsylvania. Following an investigation, the Department of Labor sued the company on behalf of nearly 6,000 employees for systemic wage and hour violations. At trial, the District Court found that Comprehensive utilized an inaccurate time clock system, which led to employees being paid for their scheduled shifts rather than the actual hours they worked. The court also found that employees regularly worked through meal breaks without compensation and that the company miscalculated overtime rates by failing to include bonuses and shift differentials. The District Court initially ruled in favor of the Secretary of Labor, awarding over $35.8 million in damages.
Unfortunately, the Third Circuit reversed a crucial portion of this award related to “overtime gap time.” Overtime gap time refers to unpaid, non-overtime hours worked in a week where an employee also exceeds the overtime threshold. The appellate court firmly held that the FLSA only mandates two things: the payment of a minimum wage and the payment of overtime for hours worked over 40 in a week. Because the statute does not expressly contemplate compensation for “gap time,” the court ruled that employees cannot recover straight-time wages under the FLSA, provided their average hourly pay does not fall below the minimum wage. The court noted that aggrieved employees are not left without recourse, as they may bring basic contract actions or pursue claims under state wage laws to recover these unpaid wages. For example, in New Jersey, employees are covered by the New Jersey Wage Payment Law, which mandates treble damages for wages not paid on time and in the correct amount.
The appellate court also remanded the case regarding the classification of certain employees, such as Directors of Nursing and Maintenance Directors. The Third Circuit found that the trial court applied an outdated legal standard by construing FLSA exemptions “narrowly against the employer.” Relying on recent Supreme Court precedent, the court emphasized that exemptions must instead be given a “fair reading” and that employers bear the burden of proving an employee’s exempt status by a preponderance of the evidence.
Fortunately, wage payment laws in New Jersey and New York are stronger than their federal counterparts. If your employer fails to accurately record your time, refuses to pay you for hours worked through meal breaks, miscalculates your overtime pay, or misclassifies your exemption status, your rights may have been violated. Contact the Resnick Law Group today at (973) 781-1204 to provide your preliminary information and schedule a consultation with one of our experienced employment attorneys.