By Dana Stripling, JD, Of Counsel
Garlo Ward, P.C. www.garloward.com
Posted Wednesday, June 1, 2005
Even though nurse practitioners and physician assistants, who have standardized licensing requirements and perform direct patient care, may provide a higher level of “professional” healthcare services, they remain non-exempt “hourly” employees in the eyes of the U.S. Department of Labor (DOL) unless they also meet the Department’s stringent “salary” requirement. As explained last month by the U.S. District Court in Tyler, Texas, these healthcare workers who are paid hourly for performing exempt “professional” duties will nevertheless be entitled to overtime wages.[1]
The Fair Labor Standards Act (FLSA) has long recognized a complete exemption from its minimum wage and overtime provisions for certain types of physicians and “other practitioners licensed and practicing in the field of medical science and healing,” whether paid hourly, by visit, by salary or otherwise. (29 C.F.R. � 541.304.) But for nearly all other types of medical practitioners, workers must be paid on a “salary basis” in addition to performing their “professional” duties in order to be exempt. For those of you who have not made it to one of our recent training seminars, the DOL’s new rules dictate that an employee is paid on a “salary basis” if he or she regularly receives each pay period a predetermined amount of compensation (now at least $455 per week). Exempt employees may not be paid by the hour, and an exempt employee’s salary cannot be subject to reductions based on the quality or quantity of their work. Finally, the exempt employee must receive his or her full salary for any week in which he or she performs any work, regardless of the number of days, hours or minutes worked, subject to a few very limited exceptions.
In sum, simply paying a physician assistant hourly or deducting three hours from a nurse practitioners’ weekly paycheck because s/he left to attend a nephew’s birthday party could costs you back overtime, penalties and interest for two to three years. This is just what happened in the class action Belt v. Emcare, Inc., when physician assistants and nurse practitioners were not paid a salary and were found to be entitled to back wages for all overtime worked. (Belt v. Emcare, Inc., E.D. Tex., Cause No. 6:03-CV-73, Jan. 13, 2005) Here’s how the court in Tyler explained it.
To satisfy the former professional exception to the overtime requirement, workers employed in a professional capacity must satisfy certain work descriptions and be compensated on a salary or fee basis. 29 C.F.R. � 541.3 (1979). An exception is made to the salary-basis test for employees who hold “a valid license or certificate permitting the practice of law or medicine or any of their branches and who is actually engaged in the practice thereof. . . .” Id. � 541.3(e). Thus, the question before the court was whether physician assistants and nurse practitioners were exempted from the salary-basis test because they were engaged in “the practice of law or medicine or any of their branches.” The new rules implemented in 2004 continue to exempt teachers, lawyers and medical practitioners from the salary requirement. (29 C.F.R. � 541.600(e) (2004); 69 Fed. Reg. at 22269.)[2]
The employees who sued their employers Emcare, Inc. and Texas Em-1 Medical Services, P.A., worked in multiple states and were paid hourly. The employers argued that, because they must meet the same medical licensing requirements as physicians, physician assistants[3] and nurse practitioners were covered by the “physician’s” salary test exception as “other practitioners licensed and practicing in the field of medical science and healing.” Neither the old nor the new rules specifically address how physician assistants or nurse practitioners might qualify for the “physician’s” salary test exception. Both versions of the rules, however, state that medical doctors such as general practitioners and osteopathic physicians, as well as podiatrists and dentists, are exempt from a “salary” basis requirement. Conversely, the salary test exception is not available for pharmacists, nurses, therapists and other employees who work in the medical profession.
After an exhaustive review of the legislative and regulatory history of the salary test exemption, District Judge Leonard Davis found no indication that the salary test requirement was waived for nurse practitioners or physician assistants. In its decision that the employees were entitled to overtime pay, Judge Davis concluded that the workers were subject to the salary test requirement because they were not the high-level medical professionals contemplated by 29 C.F.R. � 541.304.
Advice: Set up nurse practitioners or physician assistants on either a straightforward salary basis or with a guaranteed base salary of at least $455 per week with incentive pay for the number of patients seen or visits conducted beyond the base guarantee. Note that deductions from these workers pay are very limited, and random reductions in pay for missed work, errors, unapproved absences or the like may effectively convert an otherwise exempt employee into an hourly worker entitled to overtime. This “deduction” problem is completely circumvented by simply deducting accrued leave time rather than wages, as permitted under the new DOL rules. Any leave deductions should, however, be incorporated into any written policies or handbooks defining available leaves and their accrual. There are other pay structures that meet the DOL requirements and may be advantageous, depending upon the type of provider services or workweek utilized. Please feel free to contact us for more information.
[1] If an employee works more than forty hours in one work week, the FLSA requires an employer to pay the employee one and one-half times the employee’s regular wage for each hour over forty the employee works. 29 U.S.C. � 207(a)(1). This overtime requirement does not apply to “any employee employed in a bona fide executive, administrative, or professional capacity” as these terms are defined by the DOL. Id. � 213(a).
[2] In the case of professional employees, the compensation requirements in this section shall not apply to employees engaged as teachers (see � 541.303); employees who hold a valid license or certificate permitting the practice of law or medicine or any of their branches and are actually engaged in the practice of thereof (see � 541.304); or to employees who hold the requisite academic degree for the general practice of medicine and are engaged in an internship or resident program pursuant to the practice of the profession (see � 541.304). In the case of medical occupations, the exception from the salary or fee requirement does not apply to pharmacists, nurses, therapists, technologists, sanitarians, dieticians, social workers, psychologists, psychometrists, or other professions which service the medical profession.
[3] Under the DOL’s new rules, physician assistants generally meet the “duties” requirements for the learned professional exemption if they have successfully completed four academic years of pre-professional and professional study, including graduation from a physician assistant program accredited by the Accreditation Review Commission on Education for the Physician Assistant, and they are certified by the National Commission on Certification of Physician Assistants. (29 C.F.R. � 541.301(e)(4).) Nurse practitioners are not specifically mentioned in the 2004 Regulations or the final rule’s preamble, although nurses are specifically addressed and are not exempt from the professional exemption’s “salary” test.
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 2005 by Garlo Ward, P.C., all rights reserved.
Lakeway, Texas 78734 USA
Telephone: 512-302-1103
Facsimilie: 512-302-3256
Email: Info@Garloward.com
