Healthcare Employers On The Defensive: The Continuing Threat Of Class Action Lawsuits And Regulatory Scrutiny Of Overtime Practices For Nurses

Over the past decade, healthcare employers have faced a wave of wage and hour lawsuits challenging common industry pay practices for nurses and other workers. Many healthcare providers continue to defend against a variety of overtime suits. Over the same time period, the United States Department of Labor ("DOL") has worked to expand the overtime protections of the Fair Labor Standards Act ("FLSA") and has been increasingly active in conducting enforcement investigations targeting the overtime pay practices of healthcare providers. Recent settlements resulting from DOL investigations include a $4 million settlement on behalf of over 4,500 nurses and hospital technicians who claimed they were not paid the proper amount of overtime. See U.S. DOL W Release No. 13- 1852-DAL. Similarly large settlements have been struck in state and federal class action litigation across the country.

The surge of wage and hour litigation and regulatory activity has hit healthcare providers at a time when the industry's efforts to control costs, improve efficiencies, respond and adjust to healthcare reform legislation, and retain employees are being tested more than ever before. Long-term care and home healthcare providers, in particular, have been a target of increased DOL scrutiny. As the wave of overtime litigation continues, it is critical that employers monitor these developments and ensure that nurses and related employees are classified and paid correctly.

Focus on "Automatic" Meal Break Deductions

The vast majority of these overtime lawsuits filed allege that hourly paid nurses and other employees routinely perform work "off-the-clock" for which they are not properly compensated. The complaints most often focus on healthcare employers' use of a so-called "automatic" meal break deduction, which assumes that the employee received an entire uninterrupted unpaid meal period. The DOL takes the position that an employee does not need to be compensated for a "bona fide" meal period, but an employee must be completely relieved from duty during a meal period which ordinarily should be at least 30 minutes in duration. See 29 C.F.R. §785.18 (2009). The lawsuits allege that when timekeeping systems are structured to build in an assumption that full meal breaks will be taken, they result in a deduction from employees' pay when the employee has, in fact, not received an uninterrupted meal break, allegedly resulting in failure to pay for work in excess of forty hours per...