Are you in compliance with the FLSA? - Fair Labor Standards Act

Nursing Homes, Sept, 1998 by John E. Lyncheski

The Federal Department of Labor is yet another Federal agency on the prowl for nursing homes. Here's how to stay on the safe side of compliance with the Fair Labor Standards Act

The U.S. Department of Labor has the long-term care industry in its crosshairs. The DOL's Wage and Hour Division recently concluded a special investigative effort targeting 288 nursing homes to determine industry adherence to the Fair Labor Standards Act and has more recently announced that it will now conduct a similar compliance survey in the residential "group home" segment of the long-term care industry. As with the nursing home survey, the upcoming initiative will involve investigation in some 250 randomly chosen facilities that provide care in community-like settings for the aged and disabled.

Previously, DOL Wage and Hour investigations had been largely limited to those arising from employee complaints. According to the DOL, by its current initiatives it is seeking to establish a baseline level of FLSA compliance within long-term care - an industry it sees as populated with low-wage occupations in need of special attention.

Although the Secretary of Labor, Alexis Herman, admitted that the level of compliance among nursing homes was higher than expected, she went on to state that the rate of violations uncovered in the audits (86 of the 288 homes), is "too high." According to Secretary Herman, this 30% rate of noncompliance translates into "tens of thousands" of nursing home employees who are not being properly compensated. She found this unacceptable and worthy of further attention. Nursing homes can expect to be much more closely scrutinized for FLSA compliance in the future and can anticipate that employee complaints will be given even more prompt and thorough attention by the DOL than in the past.

The violations uncovered in the DOL's random audit most frequently involved nurse assistants, food service workers and activity aides. Most of the violations involved insufficient pay for overtime work and misapplied overtime exemptions. A significant number of employers were miscalculating the employees' regular rate of pay for purposes of overtime pay by not including items such as shift differential on-call pay or bonuses. In some cases, employees were improperly being paid straight time or being given compensatory time for hours that should have been paid at time and one-half. Another problem area involved not paying employees on an "8 and 80" overtime pay plan under Section 7(j) of the FLSA governing daily overtime for hours in excess of eight.

Long-term care facilities may now very well be the DOL's number one target for FLSA violations and would be well advised to get the house in order before a Wage and Hour Division investigator comes knocking at the door.

The penalties for FLSA violations are steep. Employers found guilty of violating the Act must pay employees for unpaid wages for at least the two prior years and potentially three. Since the employer is obliged under the law to keep accurate records, and since when a violation is found the records are obviously not correct, strong presumptions run in favor of the employees' claims as to hours owed. In addition, if the DOL pursues litigation, it will invariably seek liquidated damages in an amount equal to the back wages due, effectively doubling the employer's liability. If this is not enough to get your attention, an employer who has previously admitted to or been found in violation of the FLSA is also subject to a penalty of up to $1,000 per violation for its repeat offenses.

Long-term care facilities should start by ensuring that they are not misclassifying "nonexempt" employees as "exempt" to avoid pay for overtime. An employer who mistakenly treats an employee as exempt and does not compensate for work in excess of forty hours can expect to pay dearly and is unlikely to have any reliable time records to contest the amount of the claim.

Unfortunately, we find that many employers still equate "salaried" employees with exemption from overtime under the FLSA. The FLSA provides for only a limited number of exemptions from overtime pay that may be applicable to a long-term care facility - the so-called "white-collar" exemptions for executive, administrative and professional personnel. The Wage and Hour Regulations spell out specific salary requirements, as well as tests based on the nature of the work performed, for employees to qualify for exempt status. Employers should not take these requirements lightly, as they are strictly construed by the DOL.

The minimum salary requirements in the Regulations are relatively low, easy to satisfy and usually are not an issue. However, under the FLSA, for qualifying employees to remain exempt from overtime pay requirements, they must receive the predetermined salary each pay period, "without reduction for variations in the quality or quantity of work performed." Exempt employees must receive the full salary for any week in which they perform any work, without regard to the number of hours worked, subject to a very limited number of exceptions: