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News | Jan 01, 2011

Hospital and Nursing Home Workers can Benefit from FLSA “Workweek Averaging” Litigation

A Pennsylvania hospital recently delivered checks to hundreds of workers who elected to participate in an FLSA collective action settlement negotiated by The Winebrake Law Firm and approved by the United States District Court.  The lawsuit alleged that the hospital calculated overtime in violation of detailed federal regulations by improperly “averaging” overtime workweeks with non-overtime workweeks.  It sure is nice when the “fine print” of complex federal rules and regulations can be used to benefit – rather than exploit – American workers and their families.  So you should be aware of the following legal principles:

The FLSA requires that covered employees receive overtime compensation of “not less than one and one-half times” the employee’s regular rate of pay.  See 29 U.S.C. § 207(a)(1).  Under the FLSA, overtime pay generally accrues whenever an employee works over 40 hours in a “workweek” consisting of a fixed and recurring period of seven consecutive days.  See 29 C.F.R. §§778.103, 778.105.  In calculating overtime hours, each individual workweek generally stands alone, and the “averaging” of workweeks is not permitted.  See 29 C.F.R. §778.104.

However, the FLSA provides an exception to the 7-day workweek rule for certain health care employees.  In particular, section 7(j) of the FLSA provides:

No employer engaged in the operation of a hospital or an establishment which is an institution primarily engaged in the care of the sick, the aged, or the mentally ill or defective who reside on the premises shall be deemed to have violated subsection (a) if, pursuant to an agreement or understanding arrived at between the employer and employee before performance of the work, a work period of fourteen consecutive days is accepted in lieu of the workweek of seven consecutive days for purposes of overtime computation and if, for his employment in excess of eight hours in any workday and in excess of eighty hours in such fourteen-day period, the employee receives compensation at a rate not less than one and one-half times the regular rate at which he is employed.

29 U.S.C. §207(j) (emphasis supplied); accord 29 C.F.R. §778.601; see also 29 C.F.R. §516.23(b).  This exception is known as the “8-and-80 Rule.”

Practically speaking, the 8-and-80 Rule enables hospitals and nursing homes to avoid paying overtime when they implement 14-day work schedules wherein employees work a “long” week followed by a “short” week.  Such schedules are popular because they enable hospitals and nursing homes to inexpensively cover weekend shifts.  For example, many hospital/nursing home employees are assigned recurring schedules in which they work a 6-day, 48-hour week followed by a 4-day, 32-hour week.  In the absence of the 8-and-80 Rule, these employees would be entitled to 8 hours of overtime pay during each 6-day, 48-hour week.  This translates to approximately 200 hours of overtime pay per year.  Under the 8-and-80 Rule, however, such employees receive no overtime pay because, within each 14-day period, the hospital/nursing home is allowed to “average” the long week with the short week.

But here’s the catch:  The 8-and-80 Rule can be utilized only “pursuant to an agreement or understanding arrived at between the employer and employee before performance of the work.”  29 U.S.C. §207(j).  Importantly, “[t]he agreement or understanding between the employer and employee to use the 14-day period for computing overtime must be entered into before the work to which it is intended to apply is performed.”  29 C.F.R. § 778.601(c).  Moreover, the agreement or understanding “need not be in writing, but if it is not, a special record concerning it must be kept as required by part 516 of this chapter.”  Id.  Finally, Part 516 requires “[a] copy of the agreement or understanding with respect to using the 14-day period for overtime pay computations or, if such agreement or understanding is not in writing, a memorandum summarizing its terms and showing the date it was entered into and how long it remains in effect.”  Id. at §516.23(b).

The Winebrake Law Firm believes that many hospitals and nursing homes throughout the country overlook the technical requirements of the 8-and-80 Rule and do not properly obtain or document the “agreement or understanding” as required by the above federal regulations.

If you know or represent hospital or nursing home workers, you should ensure that their FLSA rights are not being violated.  Of course, The Winebrake Law Firm would be delighted to consult with you or your clients concerning potential violations of the 8-and-80 Rule.

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