On January 31, 2025, the Third Circuit Court of Appeals issued a unanimous opinion in Secretary of United States Dept. of Labor v. Nursing Home Care Management Inc. 128 F.4th 146 (3d Cir. 2025). This lawsuit was brought by the government against a home health provider operating under the trade name “Prestige” and alleged that the company violated the Fair Labor Standards Act (“FLSA”) by failing to pay home health aids for time spent traveling between clients’ homes. After the district court found in the government’s favor, Prestige appealed.
The resulting opinion addressed several important questions, each of which is summarized below:
First, the Court considered whether the Portal-to-Portal Act (“PPA”) limitations on compensable time applied to the home health aids travel between clients during the workday. As is widely known, the PPA renders non-compensable any time spent “walking, riding, or traveling to and from the actual place of performance of the [employee’s] principal activity or activities” and doing “activities which are preliminary to or postliminary to said principal activity or activities.” 29 U.S.C. § 254(a). However, the Court deemed the PPA irrelevant to its analysis because the statute is strictly limited to time spent at the beginning and end of the workday rather than time spent traveling during the workday:
But the PPA only covers transport to the job site “which occur[s] either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities.” [29 U.S.C. § 254(a)]. The time that elapses between the day’s start and end is not implicated by the text of the PPA. The Department’s regulations confirm this. It defines a workday as “the period between the commencement and completion on the same workday of an employee’s principal activity or activities.” 29 C.F.R. § 790.6(b). The PPA does not cover any “time within that period,” even if an employee does not “engage[] in work throughout all of that period” and has “a rest period or a lunch period” instead. Id.
128 F.4th at __; 2025 U.S. App. LEXIS 2219, at *5-6.
Second, the Court addressed the compensability of the intra-workday travel time during period when the aids are “on-duty.” The Court explained that such travel time is clearly compensable: “So where an employee is on duty and traveling, he is entitled to compensation.” 2025 U.S. App. LEXIS 2219, at *8. Moreover, the Court recognized a “general rule” for determining when an employees is on-duty: “so long as ‘the employee is unable to use the time effectively for his own purposes,’ he is on duty and entitled to compensation.” Id. (quoting 29 C.F.R. § 785.15).
Third, the Court asked “[w]hen, if ever, is travel from a period of off-duty rest compensable?” Id. The Court answered this question as follows: “We conclude that an employer must compensate an employee for time spent in travel after an off-duty period, but only for the time necessary to travel between job sites.” Id. at *8-9. That’s because “when an employee is entering or exiting an off-duty period, travel time is compensable if it is ‘part of [the employee’s] principal activity.’” Id. at *10 (quoting 29 C.F.R. § 785.38). Moreover, travel is part of an employee’s “principal activity” when it is “an intrinsic element of those activities and one with which the employee cannot dispense if he is to perform [the principle] activities.” Id. at *10 (quoting Integrity Staffing Solutions, Inc. v. Busk, 574 U.S. 27, 35 (2014)). As such, a home health aid’s “marginal travel that is unnecessary to move between job sites is not compensable.” Id. at *11. Examples of “marginal travel” include time spent during the workday “travel[ing] home, [traveling] to another job, or [going] shopping.” Id. at * 11-12.
Fourth, the Court generally affirmed the district court’s conclusion that a three-year – rather than a two-year—limitations period applied to the home health aids’ FLSA claim. See id. at *14-19. As is widely known, FLSA claims must be commenced within two years ‘except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.” 29 U.S. C. § 255(a) (emphasis suppled). A violation is willful if “the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the [FLSA].” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988).
This brings us to the Third Circuit’s decision. While the Court generally affirmed the district court’s “willfulness” findings, it made some important observations regarding the willfulness analysis. First, the Court observed that a finding of willfulness cannot be based entirely on the employer’s refusal to follow the Department of Labor’s legal opinions in the underlying wage investigation. See 2025 U.S. App. LEXIS 2219, at *16-17. Otherwise, the Department would enjoy an “unlimited fiat to decide the legal, statutory interpretation question of what conduct the FLSA prohibits so far as willfulness is concerned.” Id. at *16. Next, the Court explained that a finding of willfulness cannot be based entirely on the employers “breach of ‘the clear black letter law of the FLSA.’” Id. at *17. If an employer’s breach, standing alone, could trigger a willfulness finding, then § 255(a) would be rendered “superfluous.” Id.
Fifth, the Court provided a helpful summary of the standard of proof necessary to prove FLSA damages when the employer fails to maintain accurate timekeeping records. See id. at *19-21. The Court recognized the rule – first established in the Supreme Court’s seminal opinion in Anderson v. Mount Clemens Pottery Co., 328 U.S. 680 (1946) – that employees who establish damages “as a matter of just and reasonable inference” shift the burden of proof to the employer, who then must “come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence.” Id. (quoting Mount Clemens, 328 U.S. at 687-88). The Court expounded on this principle:
The Supreme Court has never contended that a damages calculation under Mount Clemens must be perfectly accurate, because, inevitably, these cases pit employees who might have access to work records against companies who should but do not. When an employer’s inadequate records create “an evidentiary gap,” the Supreme Court has held that “representative evidence” forms a “permissible” basis for determining damages. That includes “employee testimony,” video evidence of the unpaid-for work, and estimates of work time provided by an expert witness.
Id. at *21 (quoting Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442 (2016)).
Sixth, the FLSA provides that a district court “may, in its sound discretion, award an FLSA plaintiff liquidated damages in an amount equal to the unpaid wages. See 29 U.S.C. § 216(b). However, a district court may decline or limit liquidated damages “if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA]. 29 U.S.C. § 260. Importantly, however, the Court explained that, as a matter of law, this good faith defense cannot be proven when the employer’s conduct is sufficiently “willful” to justify the three-year limitations period under 29 U.S.C. § 255(a). See 2025 U.S. App. LEXIS 2219, at *22-23.
In sum, the Third Circuit’s January 20205 decision contains important insights that are sure to guide Pennsylvania wage lawyers for years to come. --PW