Failure To Pay Overtime Results In Significant Loss
 
September 11, 2000
 
Mark G. Alexander- Jacksonville

Several different employers recently faced claims for overtime wages, and in some of these cases the employer did not fare well. The majority of the claims involve improperly categorizing employees as “exempt” rather than “non-exempt.” An “exempt” employee is not entitled to overtime wages, whereas an employer must pay a “non-exempt” employee overtime.

Domestic/Companionship Services

In Johnston v. Volunteers of America (10th Cir. 2000), the court considered whether workers who provide “domestic services” to developmentally disabled persons are entitled to overtime. The employer treated these workers as exempt from overtime wages pursuant to the “domestic services” exemption to the Fair Labor Standards Act.

“Domestic services” are defined by the Department of Labor as services of a household nature performed by an employee in or about a private home of the person by whom he or she is employed. Such employees are exempt from overtime. In this case, the workers claimed that they were not employed in a “private home,” and therefore, they were entitled to overtime wages. The court held that the employee is not entitled to overtime when employee goes into a family home where the developmentally disabled person resides with his or her parents or other family members.

However, the employee is entitled to overtime when the disabled person does not reside with a family member. Where the worker provides assistance to the disabled person in a setting other than the family home, the worker must be paid overtime. The employer argued that requiring it to pay overtime wages would reduce the service to developmentally disabled individuals. In response, the court said that such an argument is not relevant to the legal analysis, and to address the matter to Congress.

Resident Site Manager of Apartment Complex

In Jarrett v. ERC Properties (8th Cir. 2000), the court evaluated whether a resident site manager of an apartment complex was exempt from overtime wages under the “administrative” exemption to FLSA. The employee had a managerial sounding title, but the focus was on the actual work of this employee. In this case, the dispute regarding the nature of the employee’s duties was submitted to a jury. The evidence showed that the employee did cleaning work, yard work, janitorial work, and other tasks of a non-managerial nature. Following the jury’s determination for the employee, the trial court ruled that the exemption did not apply and that the employee was entitled to overtime wages.

However, the appellate court held that the trial judge did not go far enough. Based on the jury findings, the appellate court held that the employer also willfully violated the FLSA. The evidence showed that the employer failed to pay overtime wages when it knew the employee should be treated as non-exempt. Therefore, the employer was liable for double overtime wages as a penalty, plus attorney's fees incurred by the claimant. The employer was fortunate that only one employee made a claim, rather than an entire class of employees. Overtime wages for three years for an entire class of employees, times two, plus attorney's fees, could be huge.

Home Care Nurses

In Fazekas v. Cleveland Clinic Foundation Health Care Ventures (6th Cir. 1999), the court addressed claims by home care nurses for overtime wages. The nurses performed home health visits for patients, and were paid on a “per-visit” basis without regard to the amount of time they spent working. The employer argued that the registered nurses were exempt from overtime wages because they are “professional” employees. The claimants conceded that their work as registered nurses making home health care visits required advanced knowledge and the consistent exercise of discretion and judgment and that it was predominantly intellectual and varied in character. However, the “professional” exemption only applies if the professional employee is paid on a “salary or fee basis at a rate of not less than $170 per week.” The nurses in this case argued that they were entitled to overtime because the “per-visit” manner of payment was not a “salary or fee.” The court concluded that paying nurses “per-visit” is a “salary or fee.” Therefore, the nurses were exempt from overtime as “professionals” and not entitled to overtime wages. Although the employer prevailed, this case demonstrates the possibility that an exempt employee might lose the exemption because of the manner in which the employee is paid.

Nurse Working in the Office

In Flood v. Premier Internal Medicine Associates (M.D. Fla. 2000), the court addressed whether a nurse working in a medical office was entitled to overtime wages. The court clearly stated that a registered nurse qualifies as a “professional” who is not entitled to overtime wages if performing “professional” tasks. On the other hand, if the professional employee is performing non-professional tasks such as clerical work the exemption does not apply even though the employee has professional credentials. In this case, the court sustained the employee’s claim for overtime wages based on the allegation that the nurse was performing non-professional tasks. The court also sustained the employee’s claim for double overtime on the basis that the employer willfully violated the overtime requirements of the FLSA. This case demonstrates the possibility that an exempt employee might lose the exemption because of the nature of the employee’s duties.

The actual duties of the worker are most important for determining whether the worker is exempt from overtime. In Fazekas a registered nurse was properly treated as exempt, but in Flood a registered nurse successfully made a claim that she should be treated as non-exempt. Titles and education are helpful, but the actual job duties are key.

For more information please contact Mark G. Alexander at 1-888-688-8500 or at malexand@hklaw.com.