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Wage & Hour Issues Facing the Healthcare Industry

Sharlene Jooste

The healthcare sector has proved consistently to be a major target for Wage & Hour enforcement and litigation. The Wage & Hour Division of the US Department of Labor frequently publishes announcements of actions taken against and settlements reached with healthcare employers, often for very substantial amounts. Given the scale and complexity of many of their employment structures, healthcare employers present an inviting target for plaintiff lawyers and face collective and class actions alleging failures to comply with overtime or other compensation requirements.

The largest issue facing healthcare employers is arguably meal and rest breaks. The unpredictable and critical nature of healthcare provision, especially in a hospital setting, can lead to breaks being delayed or missed altogether. Subsequent issues can arise about whether the position has been recorded and followed up on for compensation purposes. For example, nurses could find themselves having to respond to a patient a few minutes before their meal break was scheduled to commence. The whole of the break period could be taken up with stabilizing the patient and the nurse would then have to continue with other work without having a break. Situations such as this arise regularly and can prove a particular issue during overnight shifts, when staffing levels can be lighter. We have seen instances where an employer or individual managers have placed the primary responsibility upon nursing staff to find a time within their shift for a meal or rest break and have failed to check that it has been taken, or have required staff to miss breaks to maintain adequate staffing ratios.

Issues around meal breaks can also arise with non-critical, administrative staff, for example, where they are regularly taking meals at their desks and continuing to respond to emails or calls. Many healthcare employers have time recording systems that deduct for meal and rest periods automatically and problems arise where that is not corrected for missed breaks, even where staff report them. It is essential that staff and their managers be trained properly around the requirements for meal and rest breaks and when and how they should be reported if missed.

Looking more broadly, the standard rule in the US is for overtime to be payable to non-exempt employees for any hours worked in excess of 40 hours per a 7 day working week. However, a significant number of healthcare employers use what is known as the “8 and 80” approach. This allows employers to assess an individual employee’s overtime period across 14 days. Overtime will be due where an employee works in excess of 8 hours per day and for more than 80 hours in total across the 14-day period. This allows shift patterns to be structured so that the employee could work 48 hours during the first 7 days and 32 hours during the second period without creating an overtime entitlement. However, the “8 and 80” rule is a narrowly defined exception to the standard approach and healthcare employers need to be very vigilant around its introduction, employee consent to it and its effective implementation. Any failures could lead to enforcement action and attract the attention of plaintiff lawyers. Healthcare employers also often have staff work at different facilities and the ability to track hours worked (and potentially travelled) accurately is even more critical in such circumstances.

Misclassification issues, particularly involving nurses, have also been a target of the Department of Labor and the plaintiffs’ bar. For example, some healthcare employers consider professional certification of nursing staff as sufficient of itself to make them exempt from overtime entitlement, while the exemption is also based on duties performed. Healthcare employers also often rely upon per diem and contract staff, as well as independent contractors, and there could be challenges around their wage treatment and classification.

Changes in the model of healthcare delivery in the US are also creating new areas for potential exposure to Wage & Hour claims. The patient population is increasingly elderly and/or requires the management and treatment of chronic conditions. Healthcare providers are often incentivized to provide more care outside acute settings, either in smaller units or in a patient’s own home. Healthcare employees will therefore need to be more mobile and to provide more care within their communities in the future, requiring even closer oversight and recording of time worked and duties performed.

About the author:

Sharlene started her actuarial career in 2008 after obtaining a degree in financial and actuarial mathematics from the University of Pretoria. Prior to joining Beazley, Sharlene worked in both life and non-life actuarial positions. In May 2012 Sharlene joined the Specialty Lines actuarial team as a pricing actuary. In January 2015 Sharlene transferred to the Management Liability team as an EPL underwriter.

Sharlene Jooste
Sharlene Jooste

Actuary & Underwriter - US Executive Risk