The Wage and Hour Division (Wage/Hour) of the U.S. Department of Labor (DOL), which administers and enforces the Fair Labor Standards Act (FLSA or the “Act”), hasn't exactly waged war on the long-term care (LTC) industry, but it has come close. In the late 1990s and early 2000s, Wage/Hour singled out “nursing homes” and “group homes” for an unprecedented audit of compliance with the FLSA's minimum wage, maximum hours (overtime), and child labor laws. Long-term care was targeted in large part because of the perceived presence of a large number of “low-wage workers” and a suspicion that substantial noncompliance with the Act may have existed. At first, DOL was focused on fact-finding and education. However, after finding an unacceptable level of violators in its first series of audits, DOL conducted a second round of investigations a few years later, only to find that matters had not improved and in some respects had gotten worse. At that point, Wage/Hour shifted its focus to enforcement and that's where we sit today. DOL believes, with good cause after the findings in its investigatory audits, that the LTC industry harbors an unacceptable number of FLSA violators and, as a result, is to a certain extent out to get us. LTC employers are squarely in the crosshairs of Wage/Hour and would be wise to clean up their FLSA acts before DOL comes a-knocking on the doors of their facilities.
Generally speaking, these laws govern minimum wage, overtime pay, and child labor. As all should know, under the FLSA, with very few exceptions, each employee must be paid at a just-increased minimum wage of $5.85 per hour. The federal minimum rate will increase to $6.55 in 2008 and eventually be at $7.25 in 2009. Because Congress acted so slowly increasing the $5.15 rate that was established in 1997, many states have already established a higher rate applicable to employers within their boundaries. LTC employers must pay the higher of the two.
The FLSA maximum hours provisions require that “nonexempt” employees be paid at one and one-half times their regular hourly rate of pay for all hours worked in a workweek in excess of 40 hours. Except as follows, there is no general requirement under the FLSA that employees be paid overtime on a daily basis for work in excess of eight hours. Also, nonexempt employees may be paid on a salary basis, but the salary must be reduced to an hourly equivalent for purposes of calculating overtime obligations. A special provision applicable only to healthcare facilities for which most (if not all) LTC employers qualify, Section 7(j) of the FLSA allows employers to measure overtime pay entitlement over a 14-day period to accommodate the need for 24/7 scheduling. Employers availing themselves of the benefit of Section 7(j) must pay overtime to employees who work more than 80 hours in the 14-day period but, to take advantage of this provision, they must also pay employees daily overtime premiums for all hours worked in excess of eight in a workday. (I recommend that employers taking advantage of an “8 and 80” program limit it to full-time employees for reasons that are somewhat beyond the scope of this article.) By statute and regulation, certain classes of employees may be exempted from overtime pay regardless of the number of hours worked. Some classes of employees are exempt from both minimum wage and overtime pay and others are exempt only from the overtime pay provisions.
The child labor laws place restrictions on the hours and types of work that may be performed by employees under the age of 18. Youth workers, except for family members, must be at least 14 to work in your facility.
Finally, by way of background, the FLSA, and the regulations issued thereunder, imposes certain recordkeeping requirements on employers with regard to the hours worked, timekeeping, and pay of employees. Employers found guilty of FLSA violations are liable for two years of back wages—three years in the case of “willful” violation—and, potentially, for liquidated damages that effectively double the amount owed. Criminal penalties can be sought, but rarely are, in the case of serious violations, and repeat violators can be, and frequently are, assessed “Civil Money Penalties” of $1,100 for each such violation. Child labor law violations also carry “fines” that can be relatively severe.
For this article, however, I would like to focus on the provisions of the FLSA which, in my experience over the past 30 years, have been most misunderstood or misapplied by LTC employers—the minefields.