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Is it Legal to Automatically Deduct Employee Lunch Time?

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Lunchtime can be a tricky thing to track. Some employees forget to clock out, adding minutes to their paychecks daily, while others forget to clock back into work once they return. This leads to inaccurate timestamps and, even worse, inaccurate payroll. You will end up either overpaying employees or underpaying employees, which can lead to issues down the line. In order to keep timestamps more accurate, some employers choose to implement automatic lunch deductions for hourly employees. This ensures that employees get lunch breaks deducted, no matter the circumstance. This is great for employers who want to avoid overpaying employees, but many people still have questions about the legality of lunch deductions. 

Are automatic lunch deductions legal?

Yes! According to the Department of Labor (DOL) and the Fair Labor Standards Act (FLSA), it is legal for employers to automatically deduct lunch time. That is, of course, if the employee actually takes lunch. The federal government actually doesn’t have any rules when it comes to break times; they only want employers to track employee’s hours accurately. This means that an employer must track all hours worked as well as any work performed during lunch (if applicable). 

State laws and lunchtime deduction policy

Although the federal government doesn’t require any meal or break periods, state governments have their own break laws. For instance, California labor laws require that employers provide employees with a meal period of no less than a 30-minute when they work more than five (5) consecutive hours. Meanwhile in Montana, they do not have any laws requiring an employer to provide a meal period or breaks to employees, so the federal rule applies. States have varying laws, so you’ll want to check to see what rules your business has to follow. When creating your meal or break time policy, keep your state’s laws in mind.

FLSA and DOL break time deduction rules

If you end up giving your employees break and meal times, you do have to follow FLSA regulations. Although they don’t require break time, they still have certain guidelines that you must follow:

  • Rest periods are usually 20 minutes or less. Small break periods like these are typically paid and count as hours worked.
  • Bona fida break periods (30 minutes or more) generally do not count as hours worked. Therefore, you do not need to compensate the hours and minutes spent on break.
  • Break time only counts when the employee is relieved from all work duties. If the employee is required to perform work duties, it does not count as a break.

Why an employer shouldn’t automatically deduct lunch time

Although automatic lunch deductions are a convenient way to track breaks, it’s not always the best idea. Here’s why:

  1. If employees aren’t aware that break times are automatically deducted, they may clock out for break in addition to the automatic deduction. This means that the employee could have two break periods on their timesheet for a given workday. Clearly communicate that the break time is automatic on days automatic break periods are applied. 
  2. An employee who works through a break period is not on technically on break, which invalidates the break period. The employee would end up not getting paid for hours they worked, which may lead to underpaying staff.
  3. Employees may take breaks for a shorter or longer duration than the allotted break time. If this happens, their automatic break time is invalid because it doesn’t truly reflect their hours. For an employer, this means that they will end up either overpaying or underpaying an employee. Additionally, the employer may need to make manual adjustments to timesheets.
  4. If an employee feels as though their lunch time has not been accurately tracked, they can start an investigation with the DOL. This can lead to penalties for the employer.

How to make sure that you’re prepared

Employers will want to make sure that they are following all state and federal government rules, that way they don’t face any trouble with the DOL and FLSA. Additionally, employers will want to create a clear meal and break time policy that employees understand. When employees understand the process, it’s more likely that time will be tracked accurately. Lastly, if an employer decides to implement automatic lunch deductions, make sure that the time keeping system has an audit trail to show all timestamp records and lunch deductions. It’s the best way to ensure that all records are transparent for the employee and employer – and to steer clear of legal trouble. 

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