Co-authored by Lorie Almon and Dana Howells

In the 24/7 healthcare industry, thirty-six hour workweeks comprised of three 12-hour shifts are popular with nurses – more free time, ability to pick up additional shifts, and less time spent commuting are some of the advantages. Different pay for different shifts – more desirable versus less desirable – is commonplace, and it is not uncommon to work for multiple rates of pay in a single pay period. Falling under the heading of “no good deed goes unpunished,” accommodating popular 12-hour shifts while trying to keep the menu of shift options cost-neutral resulted in an FLSA class action for unpaid overtime against a California hospital. Parth v. Pomona Valley, Case No. 08-5502 (9th Cir. November 18, 2010)

Pomona Valley Hospital has utilized a 12-hour shift option in an “eight and 80” arrangement since 1993. Under 8/80 arrangements, overtime is paid for hours worked over eight in a day, and over 80 in a 14-day period. FLSA Section 7(j), 29 C.F.R. 778.601.  Base pay is calculated so that 36 hours per workweek (three 12-hour shifts with eight hours of straight time plus four hours of overtime each) roughly equals compensation for 40 hours of straight time. Nurses opting for 8-hour shifts earn slightly higher rates of base pay. In 2003, the nurses organized. The union negotiated to keep the shift options in place. Pay rates were raised across the board, but the differential between 8-hour and 12-hour shifts continued. The nurses ratified the CBA, including the different base pay rates for 12-hour versus 8-hour shifts.

Just two years after the vote, a nurse named Louise Parth brought a putative class action, arguing that the lower base hourly rate for 12 hours shifts was a subterfuge that denied unionized employees FLSA overtime. She claimed the hospital’s original reduction of the base hourly rate for the 12-hour shift option was an “artifice” designed to avoid the FLSA’s requirements for overtime and maximum hours, citing 29 C.F.R. § 778.500(a). The District Court conditionally certified the class, then granted summary judgment for the hospital. The nurses appealed. The case raised issues of first impression. On November 18, the Ninth Circuit ruled that the pay plan was legal, and that Plaintiff had no FLSA cause of action. Parth v. Pomona Valley, Case No. 08-5502 (9th Cir. November 18, 2010)

The Ninth Circuit looked to historical cases analyzing pay changes keeping overall compensation roughly the same when employers first became subject to FLSA overtime. See, e.g., Walling v. A.H. Belo Corp. 316 U.S. 624, 628-30 (1942). Regulations at 29 C.F.R. §§ 778.316, and 778.500 through 778.503 contain numerous examples of overtime-escaping subterfuges, but this situation differed. Having been in place for over a decade, negotiated, and agreed to with the union, the 12-hour shift base rate was lower than the 8-hour shift base rate, but was not artificial. The Ninth Circuit concluded that the weighted average method of calculating the regular rate of pay where different rates of pay are earned during the same pay period was permissible.

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Dana Howells

Dana is of counsel in the Labor and Employment Department in the Los Angeles office of Seyfarth Shaw LLP. Ms. Howells focuses her practice on advising businesses on all aspects of employment relationships from pre-hire screening to terminations and reductions-in-force. Areas of concentration…

Dana is of counsel in the Labor and Employment Department in the Los Angeles office of Seyfarth Shaw LLP. Ms. Howells focuses her practice on advising businesses on all aspects of employment relationships from pre-hire screening to terminations and reductions-in-force. Areas of concentration include ERISA and employee benefits, discrimination, wage and hour, contacts, severance, compensation, FMLA and mandated leaves, disability/reasonable accommodations, harassment/internal investigations, privacy and workplace violence prevention. In addition to advising employers on compliance and problem-solving, Ms. Howells has represented employers before administrative agencies, self-regulatory agencies, in jury and bench trials, and before state and federal appellate courts. Depending on the client’s goals, she has resolved many disputes through arbitration, mediation and negotiation.