The US Department of Labor (DOL) announced on February 7, 2023, that the operator of three Detroit-area nursing homes’ pay practices denied 45 managers their full and proper wages by regularly alternating the managers’ status from hourly to salary in an attempt to evade overtime obligations.
The DOL’s Wage and Hour Division recovered $69,022 in back wages and damages owed to managers at the three nursing homes after finding the employer paid the managers hourly wages when they worked fewer than 40 hours in workweek and paid salaried wages when they exceeded 40 hours. By regularly alternating the managers’ status from hourly to salary, the owner voided their claim that the managers were overtime exempt.
The division assessed and received payment of $7,938 in civil money penalties for the employer’s repeat violations of the Fair Labor Standards Act (FLSA). In 2018, federal investigators found the owner violated overtime regulations when she failed to pay drivers for all their travel and wait times. In 2015, she failed to pay employees for attending mandatory trainings.
In total, the division recovered $17,173 in back wages for 12 employees at Facility 1, $14,205 in back wages for 21 employees at Facility 2, and $3,133 in back wages for 12 employees at Facility 3. The employer also paid an equal amount in liquidated damages, for a total of $69,022. The facilities all provide skilled nursing and physical and occupational therapy.
In fiscal year 2022, the Detroit district office recovered nearly $2.2 million in back wages and liquated damages for almost 3,000 workers in Eastern Michigan, of which nearly $500,000 was owed to healthcare workers.
Compliance Perspective
Issue
The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. It is a violation of federal laws for business operators to casually decide to pay workers as salaried in some weeks and hourly in others.
Discussion Points
- Review your policies and procedures on fair wages, overtime pay eligibility, and recordkeeping. Determine if your policies clearly state the differences between an hourly and salaried employee. Update your policies as needed.
- Train all staff who have responsibility for ensuring fair wages, overtime pay eligibility, and recordkeeping about your policy and procedures, and ensure they demonstrate competence with the requirements. Document that these trainings occurred, and file each signed document in the employee’s education file.
- Periodically audit to ensure that employees are properly classified and that overtime pay eligibility, bonuses, and recordkeeping are accurate and being reported correctly.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
