Case Explained: SECRETARY UNITED STATES DEPARTMENT OF LABOR v. COMPREHENSIVE HEALTHCARE MANAGEMENT SERVICES LLC; MAYBROOK-C KADE OPCO, LLC; MAYBROOK-C EVERGREEN OPCO, LLC; MAYBROOK-C WHITECLIFF OPCO, LLC; MAYBROOK-C LATROBE OPCO, LLC; MAYBROOK-C OVERLOOK OPCO, LLC; MAYBROOK-C SILVER OAKS OPCO, LLC; MAYBROOK-C BRIARCLIFF OPCO, LLC; MT LEBANON OPERATIONS LLC; MURRYSVILLE OPERATIONS LLC; SOUTH HILLS OPERATIONS LLC; CHESWICK REHABILITATION AND WELLNESS CENTER, LLC; MONROEVILLE OPERATIONS LLC; NORTH STRABANE REHABILITATION AND WELLNESS CENTER, LLC; NORTH STRABANE RETIREMENT VILLAGE, LLC; CHMS GROUP LLC; SAMUEL HALPER, an individual 2

Court: United States Court of Appeals for the Third Circuit

Filed: 2026-06-03

Docket: 2:18-cv-1608)

The Third Circuit reversed the District Court’s award of damages for “overtime gap time” and remanded the case regarding the classification of certain employees as exempt from overtime requirements. The court held that the Fair Labor Standards Act (FLSA) does not provide a remedy for overtime gap time, which refers to compensation for non-overtime hours worked in a pay period where an employee has also worked overtime hours but was not paid for all those non-overtime hours. Relying on the clear text of 29 U.S.C. §§ 206 and 207, the court determined that the FLSA mandates payment only for minimum wages and overtime wages, and does not contemplate a remedy for unpaid straight-time hours when an employee has already worked overtime. The court further declined to afford deference to Department of Labor interpretive guidance supporting gap time claims under *Skidmore v. Swift & Co.*, finding the guidance unpersuasive due to its lack of reasoned explanation and conflict with statutory silence. Regarding other claims, the court affirmed the District Court’s factual findings that Comprehensive Healthcare Management Services failed to maintain accurate records, paid employees for scheduled hours rather than actual hours worked, miscalculated regular overtime rates by excluding shift differentials and bonuses, and allowed employees to work through meal breaks without compensation. The court found these findings supported by credible testimony and documentary evidence, rejecting arguments that the District Court applied an improper burden of proof under *Anderson v. Mt. Clemens Pottery Co.* or committed clear error in its factual determinations. However, the court agreed with Comprehensive that the District Court applied erroneous legal standards to the exemption analysis for certain employees. The District Court incorrectly required employers to prove exempt status by a “plainly and unmistakably” standard and instructed that exemptions be construed narrowly against the employer. Citing *Encino Motorcars, LLC v. Navarro* and *E.M.D. Sales, Inc. v. Carrera*, the Third Circuit clarified that exemptions must be given a fair reading and proven by a preponderance of the evidence. Because the District Court failed to make necessary findings regarding the salary basis criterion under these corrected standards, the court vacated the exemption determinations for specific job titles and remanded for further proceedings consistent with the proper legal framework.

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