What happened
On June 3, 2026, the U.S. Court of Appeals for the Third Circuit issued a precedential opinion in Secretary, U.S. Department of Labor v. Comprehensive Healthcare Management Services LLC, No. 24-2842. The Third Circuit covers Pennsylvania, New Jersey and Delaware.
The Department of Labor sued a group of nursing and care facilities in western Pennsylvania on behalf of nearly 6,000 employees. After a bench trial, the district court awarded $35,804,438.20. Part of that award was for “overtime gap time.”
Gap time is unpaid time that is not overtime and that does not push pay below the minimum wage. The court gave an example. A worker earns well above minimum wage and works 43 hours in a week. The employer pays for 38 regular hours and 3 overtime hours. The 2 unpaid regular hours are overtime gap time, because they fall in a week with overtime.
The court held that the Fair Labor Standards Act (FLSA) does not give a remedy for overtime gap time. It read the FLSA as requiring two things: a minimum wage, and overtime pay for hours over 40. It declined to defer to Department of Labor guidance that said otherwise. The court agreed with the Second Circuit’s 2013 decision in Lundy v. Catholic Health System. It disagreed with the Fourth Circuit’s 2022 decision in Conner v. Cleveland County. Judge Roth dissented on this point.
The court rejected the employer’s other challenges to the burden of proof and to the district court’s fact findings. It sent the exemption issues back for a new analysis. Under E.M.D. Sales v. Carrera (2025), an employer must prove an exemption by a preponderance of the evidence. Exemptions also get a fair reading, not a narrow one.
What it means for workers
In Pennsylvania, New Jersey and Delaware, a federal FLSA claim covers minimum wage and overtime. It does not cover unpaid straight-time hours when your average pay stays above minimum wage. That does not mean the hours are free. The court said workers are not left without recourse and may turn to state law. It pointed to the Pennsylvania Minimum Wage Act and the Pennsylvania Wage Payment and Collection Law as examples.
What it means for employers
The ruling narrows federal exposure for unpaid straight time. It does not remove state-law duties to pay wages that were earned. The district court had found other violations too. Employees often worked through meal breaks that were deducted from their pay. Overtime rates left out shift differentials, bonuses and other extra pay. The Third Circuit found no clear error in the district court’s findings.
What to do now
Workers: check your pay stubs against the hours you worked, including missed meal breaks. Write down dates and times.
Employers: review automatic meal deductions and how you calculate the regular rate of pay.
A wage-and-hour lawyer can explain which law fits your facts.
This summary is general information, not legal advice. Usher Law Group was not involved in this matter.
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