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Recent Third Circuit decision shows that employers may face significant penalties for failing to pay employees for work-related travel

2/11/25

By: Shane Miller

In Pennsylvania, New Jersey, and Delaware, employers must compensate employees for work-related travel during the workday, including travel time from one job site to another. Employers may face significant monetary penalties if they fail to do so.

That is the key lesson from a recent decision by the Third Circuit Court of Appeals (which serves Pennsylvania, New Jersey, and Delaware) in Sec’y United States Dep’t of Lab. v. Nursing Home Care Mgmt. Inc. A company employed home health aides who traveled to various clients’ homes during the day to provide healthcare services. Critically, the company did not compensate the home health aides for time spent traveling between clients’ homes. The U.S. Department of Labor sued the company for neglecting to pay for this travel time. The district court ruled that the company willfully violated the Fair Labor Standards Act (FLSA). The court awarded approximately $7 million in damages against the company.

The company appealed, but the Third Circuit upheld the judgment. The Third Circuit ruled, “[t]he most natural reading of the FLSA and its accompanying regulations requires compensation for work-related travel during the workday,” including travel time necessary to travel between job sites. The Third Circuit noted that employee travel that occurs either before the start of an employee’s workday or after an employee’s workday ends is generally not compensable. Conversely, the “continuous workday rule” requires that work-related travel that occurs between the start and end of an employee’s workday is compensable. Accordingly, the home health aides must be paid for time spent traveling to clients’ homes between the start of their first client appointment and the end of their last client appointment. The company failed to pay them for this time, so the Third Circuit upheld the $7 million judgment against the company.

Complying with the FLSA and related state and local laws can be complicated for employers, but even minor errors can lead to significant monetary penalties. Employers thus should consider seeking legal counsel if they have questions about these issues to avoid expensive mistakes.

For more information, please contact Shane Miller at shane.miller@fmglaw.com or your local FMG attorney