Wage and hour issues that frequently arise in the health care setting

Given the unique characteristics of the health care space, wage and hour compliance can be particularly challenging for health care employers. Round-the-clock operations, staffing shortages and patient demands can create an environment ripe for wage and hour missteps. In recent years, the health care industry has seen an uptick in wage and hour litigation, including class and collective actions. Two of the most common wage and hour issues that arise in the health care setting are described here, as well as tips on how to avoid liability.

Issue #1: Failure to include non-discretionary bonuses and similar types of incentive pay in overtime calculation
Health care employers frequently use non-discretionary bonuses and other types of incentive payments as a way to combat staffing shortages. For example, employers often pay shift differentials to compensate employees who work less-than-desirable shifts, such as nights or weekends. Similarly, employers often offer incentive or premium pay to encourage employees to pick up extra shifts or agree to be on call. Others offer attendance bonuses to help ensure adequate staffing levels.

Problems arise, however, when employers fail to include these types of incentive payments when calculating an employee’s regular rate of pay for purposes of overtime.

The Fair Labor Standards Act (FLSA) requires that employers pay non-exempt employees at least 1.5 times their regular rate of pay for all hours worked over 40 in the workweek. The regular rate is not simply the employee’s base hourly pay rate. Rather, it is the rate calculated by adding up all of an employee’s non-overtime compensation for each workweek and dividing that amount by the total hours worked during the workweek.

Given the intense scrutiny surrounding this issue, employers should review the various types of compensation being paid to non-exempt employees to ensure that the regular rate of pay is being calculated correctly.

Issue #2: Compliance errors related to automatic deductions for meal breaks
Another area that has been targeted by plaintiff attorneys in recent years is the practice of automatically deducting meal breaks from a non-exempt employee’s hours worked, instead of requiring the employee to clock in or out for the break. Although the FLSA allows employers to adopt auto-deduction policies, the employer must ensure that the employees are actually receiving the full meal break, or the employer may be liable for a FLSA violation.

This can be particularly challenging for healthcare employers because patient needs generally come first, which can prevent an employee from actually taking a meal break during his or her shift. For example, a nurse may be scheduled to take a meal break at 3:00 p.m., but her patient’s call alarm goes off at 2:55 p.m., and the nurse ends up working through her meal break. As a result, the employer’s automatic deduction of 30 minutes for a meal break results in the employee not being compensated for all hours worked, which, in turn, creates wage and hour liability for the employer.

To reduce the risks associated with automatic meal deduction policies, employers should instruct employees on how to record and report meal breaks that they work through. Employers should also consider requiring employees to confirm in writing that they received a meal break before allowing them to clock out for the day.