By Dana Stripling, J.D., Of Counsel, Garlo Ward, P.C.
www.garloward.com
Includes All Facilities
Posted November 10, 2003
Representatives of the U.S. Department of Labor (DOL) recently announced at a national conference that they plan to improve Fair Labor Standards Act (FLSA) compliance in the nursing home industry over the next few years. Cynthia Watson, the DOL’s acting southwest regional administrator, confirmed that the agency has already committed “extensive compliance assistance resources” for ferreting out FLSA violations in the health care industry.
DOL kicked off this effort by filing two lawsuits against nursing homes allegedly failing to pay overtime to employees working more than 40 hours per week, as required under the FLSA. DOL already settled with one of the defendants, a New York nursing home, which agreed to pay $50,000 in back wages and damages; DOL sued it for failing to pay 23 employees overtime wages between January 1999 and April 2002. The other suit was filed against a nursing home in Massachusetts, which is still pending.
So How Can Your Facility Best Avoid
Being Hit for Back Pay and Penalties?
While there is no way for facilities to completely protect themselves from DOL investigations or employee lawsuits, you can give your facility greater protection from FLSA disputes by performing an internal audit, examining timekeeping policies and practices, training managers about the FLSA and creating a plan of action in case of investigation.
First – Get Legal Advice
Consult with your facility’s legal counsel while reviewing current employee classifications and recordkeeping policies. Your conversations should remain privileged as attorney-client communications. It is critical, however, for your facility to promptly change a company policy if it is in violation of the FLSA. If an employer knowingly maintains a policy that violates the law, there is a higher risk the company will be charged with “willfully violating” the law, extending the scope of a DOL investigation by several additional years and increasing penalties.
Second – Re-evaluate Employee Classifications
Facilities should analyze each employee’s job description and actual job duties to make sure the exemption classification is accurate. It is helpful to examine job descriptions during exit interviews or an employee’s annual performance review. Be sure that have the manager and employee sign a statement stating that the job description is an accurate description of the current duties.
For example, in a DOL letter ruling from 1999, the Department concluded, based on the specific job duties described by a home for the disabled, that the facility’s intake coordinator, program coordinator and supported living coordinator were all non-exempt employees and subject to the overtime provisions of the FLSA. By contrast, DOL concluded that the duties and responsibilities of the facility’s behavior management specialist and the nurse II-RN met the requirements for the professional exemption and were, thus, not entitled to overtime. In that case, by way of illustration, the intake coordinator was described as spending approximately 75% to 85% of his or her time: (1) serving as initial service coordinator for services throughout the eligibility determination process; (2) assessing service needs of potential new enrollees and families and explaining program eligibility requirements and service options; (3) assisting applicants in completing necessary intake materials and gathering data and records; (4) assuming responsibility for computerized applicant tracking system and waiting lists for programs and services; (5) coordinating development and maintenance of case files, records, reports and other communications; (6) completing an intake summary and social history for each applicant; (7) testing to determine eligibility of applicant for services; (8) serving as service coordinator for admissions team to review eligibility of applicant for services; and (9) analyzing consumer needs and coordinating transition into appropriate services/programs or onto appropriate waiting lists.
Third – Check Records and Enforce Policies
Make sure your facility has all the documentation the DOL would request in an investigation. To ensure accuracy, conduct random employee interviews and reviews of files to see if company policies are being followed. Managers and supervisors should be tested on their knowledge of timekeeping and pay policies to ensure that they are enforcing the company’s policies.
Review timekeeping policies and practices. To ensure accuracy, have both the supervisor and employee sign off on time sheets each pay period. And the amount of overtime worked should be approved, in writing, for each pay period and noted on time sheets.
Four – Keep a Record of Your Audit
You should document your facility’s internal audit and keep it readily accessible. Under the direction of company attorneys, the audit may be protected under the attorney-client privilege.
Five – Plan Ahead
All managers should be trained on how the FLSA works and the company’s pay policies. Remember: your managers will be interviewed by DOL during an investigation and will be your primary fact witnesses in an administrative or judicial proceeding. Your facility should also have a plan of action in case it is investigated by DOL, including who will be responsible for dealing with DOL and where relevant information will be stored.
Inside a DOL Investigation
Typically, a DOL Wage and Hour Division audit (or investigation) has three stages: First, the DOL auditor holds fact-finding interviews with the facility, during which the parties discuss company practices and policies. Second, the DOL auditor reviews facility records. A facility will have approximately 72 hours from the time it receives the initial DOL audit notice to prepare its wage and hour records for review by DOL. Third, the DOL auditor will conduct employee interviews which remain confidential because of DOL’s stated concern for potential retaliation by employers. Upon completing the investigation, the DOL will conduct a final conference with facility representatives to discuss any alleged violations and proposed remedies.
If DOL establishes that a violation occurred, the facility may agree to pay an amount determined by DOL (either directly to the affected employees or to the agency), agree to comply with DOL’s recommendations, and enter into a DOL-authorized settlement. The only other option is for the facility to litigate the matter. In such cases, DOL notifies all employees affected by the violations.
New Rules Pending
Ironically, while DOL is hunting down purported violators, it is also in the throws of revamping the rules defining FLSA exemptions. DOL has proposed new federal regulations that would drastically change, for the first time in half a century, which workers qualify for overtime wages. The regulatory proposals, which are still pending public comment, require no congressional action and could become official by the end of this year or early next. As the proposed rules now stand, any worker earning less than $425 per week – or $22,100 a year – automatically would be entitled to overtime pay, despite their management status. Indicative of the controversy surrounding the proposal, the U.S. House of Representatives voted last month 221-203 to block the proposed changes governing overtime pay to “white-collar” workers.
Additionally, a bill now pending before the Senate proposes amending the FLSA to let workers choose between paid time off (“comp” time) and overtime pay when they work extra hours. A worker could bank up to 160 hours of overtime to use for compensatory time under the bill (H.R. 1119), which has already been approved by a House committee and awaits a vote by the full House of Representatives. If enacted as law — the bill’s prospects for passage are still unclear — the bill would amend federal law to allow employees who have worked a requisite number of hours to voluntarily agree to take comp time as payment for working overtime hours.
All information in this article is informational only and is not legal advice. Should you have any questions or a situation requiring advice, please contact an attorney.
Copyright 2004 by Garlo Ward, P.C., all rights reserved
Austin, Texas 78752-3714 USA
Telephone: 512-302-1103
Facsimilie: 512-302-3256
Email: Info@Garloward.com
