In December 2009, Baker Hostetler alerted clients and friends of the firm about the explosion of collective actions in the healthcare industry alleging violations of federal and state wage/hour practices. Subsequently, in March of this year, the U.S. Department of Labor (DOL) announced an initiative to promote compliance in the healthcare industry with pay practices under the Fair Labor Standards Act (FLSA). Eight months later, it appears the DOL initiative is moving forward. High profile cases in Boston, St. Louis and California recently resulted in the payment of millions of dollars in backpay to hospital employees.

Specific payroll practices under scrutiny include:

  • Failure to properly pay employees for meal periods and breaks in which the employee continues to work;
  • Failure to aggregate overtime hours for employees who work for more than one facility within a healthcare system;
  • Failure to compensate employees who work before and after their scheduled shifts;
  • Failure to compensate employees for training sessions, travel time or off-premises work;
  • Improper classification of workers as employees or independent contractors;
  • Failure to ensure that automated payroll software complies with federal and state wage hour law; and
  • Failure to include incentives, bonuses and pay premiums in calculating overtime.

The DOL has hired more than 250 investigators to conduct compliance audits nationally and throughout the healthcare industry. In order to ensure compliance, it is critical to review how your company administers pay policies and implements day-to-day pay practices by managers and employees.