LegalEase
Overtime pay: Per-visit nurses exempt, court says
What went into that decision?
By John C. Gilliland II
Health Care/Employment Attorney
Gilliland & Associates
Covington, KY
Late last year, the U.S. District Court of Ohio held that registered nurses who were paid on a per-visit basis fell within the federal Fair Labor Standards Act’s (FSLA) professional exemption from minimum wage and overtime pay. Although the decision has been appealed, it is the first court decision to address whether registered nurses who are paid on a per-visit basis are exempt from minimum wage and overtime pay (Fazekas v. Cleveland Clinic Health Care Ventures, Inc.).1
Agencies that are subject to the FLSA must pay their covered employees the minimum wage required by law and overtime pay at the rate of 1½ times the employee’s regular hourly rate for hours worked in excess of forty hours in a work week. Similar requirements may exist under state law. Failure to pay minimum wage and overtime pay when required can result in substantial liability for not only the unpaid wages but for significant penalties and the employee’s attorney’s fees as well.
The FLSA, however, contains a number of exemptions for particular types of employees. The most commonly used exemptions for all employers, including home health agencies, are the so-called "white collar" exemptions for executive, administrative, and professional employees. If the requirements for one of the white collar exemptions are met, the employee is exempt from both minimum wage and overtime pay (i.e., the employee is called an exempt employee). If the requirements of the exemption are not met, the employee is entitled to receive at least minimum wage and overtime pay for hours worked in excess of forty hours in a work week (i.e., the employee is known as a nonexempt employee).
Each of the white collar exemptions have specific criteria which must be met before the employee is exempt and the burden is on the employer (not the employee) to prove the requirements for the exemption. One requirement for all of the white collar exemptions concerns how the employee is paid. For the professional exemption, the employee must be paid on either a salary basis or a fee basis.
With regard to registered nurses paid on a per-visit basis, the primary question as to whether or not the registered nurse is exempt is whether the per-visit pay constitutes "fee basis of payment" for purposes of the professional exemption under the FLSA.
Fee basis refers to the payment of an agreed sum for a single job which is unique rather than for a series of jobs which are repeated an indefinite number of times.
Prior to the Fazekas decision, only one legal interpretation addressed fee basis of payment. In a 1982 opinion letter, the administrator of the Wage and Hour Division of the United States Department of Labor concluded a registered nurse would not be compensated on a fee basis if she were paid a certain amount for each stress test evaluation she performed. The wage and hour administrator believed the nurse was simply performing a series of jobs, which were not unique but repeated an indefinite number of times for which identical payments would be made over and over again.
Whether per-visit payment is fee basis of payment for purposes of the professional exemption has been an important, unresolved issue for home health agencies. Per-visit pay of registered nurses has been quite popular and, typically, agencies treat such nurses as exempt from minimum wages and overtime pay. The government, however, has taken a different enforcement position over the past few years saying per-visit pay does not constitute fee basis of payment for the professional exemption. Consequently, it has been the government’s position that registered nurses who are paid on a per-visit basis are entitled to overtime pay. In effect, the Fazekas decision rejected the government’s position.
In Fazekas, four registered nurses, former employees of Cleveland Clinic Health Care Ventures Inc., sued Cleveland Clinic for overtime compensation under the FLSA. It was a private suit brought by the employees personally through their own attorney rather than by the government through the Wage and Hour Division.
The facts of the case were not in dispute. Cleveland Clinic is a certified Medicare home health agency. The registered nurses provided home nursing services to Cleveland Clinic’s patients. They were responsible for assessing, planning, implementing, and case-managing home care nursing. They treated patients suffering from various serious and/or chronic health conditions, educated and trained the patients in the treatment and monitoring of their conditions, and coordinated the treatment of various other health care providers. In their initial visit to examine the patient and, based upon the attending physician’s orders and the nurse’s own observations, they were responsible for developing a plan of treatment.
The registered nurses at the clinic were expected to make 25 home visits per week and were assigned 15 hours per week of beeper call. Cleveland compensated the nurses for their work at a set per-visit rate. They were reimbursed $32 per visit during the weeks they were scheduled for beeper call and $30 per visit when not so scheduled. Higher per-visit amounts were paid for visits requiring infusion or a visit for a new patient. The per-visit rate constituted the nurses total compensation for each patient visit including payment for all duties and responsibilities associated with the visit such as travel time, documentation, and scheduling treatment by other providers.
The nurses asserted that, for various reasons, they were unable to limit their visits to 25 visits per week and they regularly worked between 55 and 65 hours per work, sometimes working as much as 80 hours per week. They sought to recover from Cleveland Clinic overtime compensation under the FLSA for hours worked in excess of forty hours per week.
Cleveland Clinic defended the lawsuit by arguing the nurses were not entitled to overtime compensation because they fell within the professional exemption to minimum wage and overtime pay under the FLSA. The court agreed with Cleveland Clinic stating:
"The court finds that the plaintiffs were paid on a "fee basis" within the meaning of [the fee basis regulation]. No case has been brought to the Court’s attention which has addressed the issue of whether lump sum payments to registered nurses for patient home visits constitutes payment on a "fee basis" as characterized in the regulation. The regulation provides that payments are made on a fee basis when an agreed sum is paid for a single job regardless of the time required for its completion. There is no dispute that [Cleveland Clinic] paid the plaintiffs in this case an agreed-upon sum for each patient visit they made regardless of the time required for each visit. The regulation also indicates that payments on a fee basis are made when payment is made for a job is "unique" rather than "for a series of jobs which are repeated an indefinite number of times and for which payment on an identical basis is made over and over again."
What the court had to say
This court finds that the jobs plaintiffs performed were "unique." The nurses testified that their jobs required them to assess each individual patient’s circumstances and develop and implement a plan of care unique to each patient. They testified that in performing this job, they were required to assess a variety of factors, including the particular medical condition of each patient, the attending physician’s instructions, the patient’s home and family situation, and the patient’s emotional or mental status.
Plaintiff’s characterization of their jobs are distinguishable from the situation considered in [the prior Wage and Hour opinion letter] where the nurse at issue was not required to make any professional assessment of patient situations but was merely paid a set fee for administering stress tests over and over again. The evidence in this case indicates that the plaintiffs were responsible for applying their professional skills and judgment to each unique patient situation. They were not, as the nurse in [the Wage and Hour opinion letter] merely performing a "set" job over and over again."
Although the Fazekas decision applies only to the northern district of Ohio and has been appealed, it is a very important decision for home heath agencies everywhere who pay their registered nurses on a per-visit basis. The situation it addressed is common in home care and, subject to the outcome before the court of appeals, the decision is an excellent precedent to argue for the same result in other parts of the county.
If your agency treats nurses who are paid on a per visit basis as being exempt from minimum wage and overtime pay, remember these points:
• As it concerns nurses, the professional exemption is available only for registered nurses; it cannot be used for licensed practical nurses.
• You must consult applicable state law, if any, in addition to the FLSA. Even if a registered nurse is exempt under federal law, he or she still may be entitled to overtime pay under state law.
• Your agency must prove that all of the elements of the exemption are met. If you cannot do so, the nurse will be entitled to overtime pay. Just as Cleveland Clinic did, you will need to prove that the duties of your registered nurses are unique and they are not being paid to perform the same job over and over again.
(Any agency that treats its per-visit registered nurses as exempt from minimum wage and overtime pay should read the Fazekas decision. Ask your attorney for a copy. A copy also can be downloaded over the Internet from Gilliland & Associates’ Web page at: www.gilliland.com.)
Reference
1. Fazekas v. Cleveland Clinic Health Care Ventures, Inc., 29 F. Supp. 2d 839 (N. Dist. Ohio 1998).
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