Health care employers are the next target of the Department of Labor's (DOL) Wage and Hour Division, the DOL announced earlier this week. The DOL's initiative will focus on the health care industry in New York to promote compliance with the Fair Labor Standards Act (FLSA). According to the DOL, close to 65% of health care employers in New York who had been investigated in the last five years were not in compliance with federal wage hour laws, resulting in those employers owing $2.2 million in back wages to approximately 4,700 employees.

The FLSA prescribes the federal standards for minimum wage and overtime pay. Under the FLSA, employees who are considered "non-exempt" must be paid at least the federal minimum wage and must receive overtime pay of at least one and one-half times their regular pay rate for hours worked over 40 per workweek. On the other hand, employees who are considered "exempt" are not subject to these requirements, provided they meet certain tests regarding their job duties and responsibilities. Thus, determining which employees are exempt and which are non-exempt should be an ongoing concern for health care employers, as misclassifying a non-exempt employee as exempt can result in significant financial penalties, including back pay of up to two years (or three years for a willful violation). Moreover, a single misclassification can trigger a loss of exempt status for an entire group of employees if the whole group has been treated similarly under the organization's policies and practices. Classification issues also extend to the appropriate determination of an employee vs. independent contractor status, which has been – and will continue to be – a large focus of the DOL's enforcement efforts.

Health care employers must also ensure that employees are properly compensated during meal periods. Under the FLSA, an employee must be completely relieved from duty during their unpaid meal periods. An employee is not completely relieved from duty during a meal period if he or she is required to perform any duties, whether active or inactive. Thus, an employer who requires an employee to eat at his or her desk during a meal period so that he or she can respond to patient inquiries, calls or emails must compensate that employee for that time. Total compliance with uninterrupted meal periods is difficult for employers to achieve with many employees voluntarily working or conducting some tasks during their meal break without authorization from their supervisor.

Now, more than ever, health care employers must have programs in place to insure the validity of their classifications of workers as exempt from overtime, and must have a clear strategy for handling government audits and enforcement actions. The appropriate first step to limit liability and to best protect the health care industry from a DOL government investigation or a class action from employees is to conduct thorough targeted reviews and internal "attorney-client privileged" audits. These audits are designed to ensure that we (1) identify any significant exposure on wage hour claims; (2) implement steps to fix errors where necessary; and (3) prepare to defend against any actions where necessary