From the Massachusetts Nurse Newsletter
September 2010 Edition
By Tom Breslin
Associate Director, Labor Education & Training
You may have read recently that large employers like Wal-Mart and Staples have had to pay large fines, sometimes into the millions, for violations of overtime standards and for requiring their employees to “work off the clock,” that is, not paying employees for all hours worked.
Of all the federal laws governing work and the work place, one you should be familiar with and that affects almost everyone is the Fair Labor Standards Act (FLSA). This law establishes the minimum wage, sets standards for overtime pay, governs things like youth employment and applies to both the public and private sectors. It applies to most workers in a majority of industries. The FLSA also identifies certain types of employees who are “exempt,” in that they do not qualify for overtime pay.
While the FLSA covers many areas, it is important to note what it does not cover. The FLSA does not require that employees receive vacations, holidays, sick leave, meal breaks, premium pay for weekend or holidays worked or other benefits. These are bargained in your contract and any changes must be addressed in negotiations (yet another reason to be glad you have a contract). Further, the FLSA does not limit the number of hours in a day or a week that a person can or must work if the employee is at least 16 years old.
One of the most important components of the FLSA is the section which describes what is counted for the calculation of overtime pay. As we all know, overtime is pay at one and one half a person’s regular rate of pay for work performed in excess of 40 hours in a seven-day pay period. It is just as important to know, however, what must be included in the overtime calculations for registered nurses and health care professionals.
Since most MNA members work in acute care settings where there are a variety of types of premium and differential payments, members should make sure that these payments are included in their base rate of pay for the purpose of calculating the correct overtime rate. For registered nurses and health care professionals the “regular rate” includes an employees’ hourly rate plus other types of compensation such as bonuses and differentials.
Under the FLSA the only types of compensation excluded from the regular rate are specific payments such as discretionary bonuses, gifts, contributions to certain types of welfare plans, payments from profit sharing plans and pay for not taking vacations and holidays. A common error in calculating overtime in the health care industry involves the failure to include differentials and premium pay in the base rate.
Shift differential
If an RN or health care professional works an evening or night shift, the differential paid for those shifts must be included in the base hourly rate for those hours for the calculation of overtime. Under the FLSA, the additional half-time compensation (the overtime amount), must be paid on the regular rate which is defined as “the total remuneration divided by the total hours worked.” Remember that the regular rate for the purpose of calculating overtime is not the hourly rate if a member works a shift for which shift differential is paid.
Bonuses
For the purpose of calculating overtime, the FLSA requires that non-discretionary bonuses be included in the regular rate of pay. Nondiscretionary bonuses are those which are “announced to employees to encourage them to work more steadily, rapidly or efficiently and bonuses which are designed to encourage employees to remain with a facility.” Under the FLSA, few bonuses are discretionary. Consequently, most bonus payments must be included in the base rate.
The classic example is the facility which pays a bonus for not calling in sick or for otherwise working all scheduled hours. The same applies for bonuses like extra shift bonuses, retention bonuses, etc. That bonus payment must be included with the regular rate for calculating the overtime rate.
Eight and 80-hour standard
Most MNA contracts contain language which describes a 40-hour standard for overtime purposes. That is, when a RN or HCP works in excess of 40 hours in a seven-day period, the additional hours are paid at the overtime rate.
The FLSA also contains language which permits the health care industry to utilize a different overtime standard than the 40 hour standard that we are accustomed to. Hospitals and residential care facilities are permitted to utilize an overtime standard in which overtime is paid after either eight hours in a day or 80 hours in a 14-day pay period. This is used in health care primarily because of the weekend scheduling pattern in hospitals. It permits employees to work more than 40 hours in a week and not be paid overtime provided they do not work more than eight hours in a shift or if they work fewer than 40 hours in the next week.
To use this standard, the employer is required to have an agreement with the union representing affected employees before the work is performed. An employer is permitted to utilize both the 40 hour and the eight and 80 in the same facility depending on the scheduling patterns for employees, but they must use one standard for individual employees. It must also be applied consistently; the employer may not change the standard week to week or pay period to pay period to their advantage.
The FLSA also applies to issues like travel time for those employees for whom travel is part of their principal activity, such as travel from job site to job site like VNA nurses. This does not apply to travel to and from work either before or after the work day.
Attendance at lectures, meetings, training programs, etc is considered hours of work unless all the following criteria are met:
- Attendance is outside the employee’s regular hours
- Attendance is voluntary
- The course material is not directly related to the employees’ job
- The employee does not perform any productive work during such attendance
Among other questions that frequently come up regarding the FLSA is one regarding meal breaks. Bona-fide meal breaks are not considered work time and the employee should not be paid for them. In exchange for that, however, the employee must receive a break which is duty free. If they are interrupted and they perform work duties during this time, they should be paid for their meal break time at the overtime rate if applicable.
The FLSA is administered by the Wage and Hour Division of the U.S. Department of Labor. Questions about pay practices and complaints can be directed to their office. They have the ability to investigate a complaint and go back as far as two years, three years for willful violations. If a complaint is substantiated, they can order back pay and, in some cases, damages.
Questions about the FLSA or DOL procedures should be directed to your labor division associate director.
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