Court: Employer Can Lower Wages for 12-Hour Shifts

Friday, October 23, 2009

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Court: Employer Can Lower Wages for 12-Hour Shifts

By SHERRI M. OKAMOTO, Staff Writer

A Pomona hospital could reduce the hourly wages of the nurses who volunteered to work 12-hour shifts in an attempt to keep overall pay revenue-neutral without violating the Fair Labor Standards Act’s overtime pay requirements, the Ninth U.S. Circuit Court of Appeals held yesterday.

Affirming the decision of U.S. District Judge Margaret M. Morrow of the Central District of California, the panel said the Pomona Valley Hospital Medical Center was justified in responding to its employees’ requests for an alternative work schedule by adopting the sought-after schedule and paying the employees the same wages they received under the less-desirable schedule.

Louise Parth was an emergency room nurse at the hospital who was among those who voted in favor of implementing 12-hour shifts in 1993. She subsequently entered into a voluntary agreement that reduced her hourly wage from $22.83 to $19.57 so that she would be paid $19.57 for the first eight hours of her shifts, time-and-a-half for the remaining four hours, and “double time” for any hours beyond her shift.

In 2003, the hospital’s nurses voted to unionize. The nurses’ certified bargaining representative, Service Employees International Union Local 121, then negotiated a collective bargaining agreement with the hospital which provided that the hospital would increase all nurse salaries across the board, and reaffirmed the hospital’s practice of paying nurses working a 12-hour shift a lower base hourly rate than nurses working 8-hour shifts.

Two years later, Parth filed a putative class action complaint against the hospital alleging that its use of different base hourly rates for nurses performing the same duties violated the FLSA and was an artifice to avoid paying overtime.

After the district court found that Parth met the requirements for conditional class certification, the hospital moved for summary judgment, asserting that its pay practices were FLSA-compliant. Morrow agreed and granted the motion.

Writing for the appellate court, Judge N. Randy Smith noted that the question of whether an employer subject to the FLSA can alter its employees’ “regular rate” of pay in order to provide a schedule the employees requested was an issue of first impression for the circuit, although other courts have “dealt with similar matters, with conflicting results.”

After the FLSA was enacted, Smith said many employers altered their compensation schemes—by lowering base hourly rates—to ensure that they paid employees the same overall wages after complying with the FLSA’s overtime requirements, but the Supreme Court examined these practices in Walling v. A. H. Belo Corp. (1942) 316 U.S. 624 and ruled that even when the employer’s purpose in lowering hourly base rates “was to permit as far as possible the payment of the same total weekly wage after the [FLSA] as before…nothing in the [FLSA] bars an employer from contracting with his employees to pay them the same wages that they received previously, so long as the new rate equals or exceeds the minimum required by the [FLSA].”

He also explained that the purpose of the act was to ensure employees receive “[a] fair day’s pay for a fair day’s work,” and reasoned that the hospital’s pay practices in this case did not contravene the FLSA’s purpose.

Emphasizing that the 12-hour shift scheduling practice was first initiated at the nurses’ request and agreed to by Parth and the nurses’ union, again at the nurses’ request, Smith opined that “PVHMC’s actions seem perfectly reasonable.”

As the hospital’s pay practices ensured employees who worked more than eight hours a day received time-and-a-half for their efforts and allowed those who worked more than 12 hours a day to receive “double-time” pay, he reasoned that the employees were protected “from the evils of overwork and underpay” and that the hospital did not have an incentive to ask the nurses to work longer hours.

Although the jurist acknowledged that an employer cannot lawfully avoid the FLSA’s overtime provisions by setting an artificially low hourly rate upon which overtime pay is to be based, Smith said there was no evidence that the regular rates memorialized in the collective bargaining agreement were artificially low, or that the hospital was attempting to set rates in a manner that would relieve it of the obligation to pay time-and-a-half whenever an employee worked more than eight hours in a day.

Smith also rejected Parth’s claim that paying nurses at different rates for performing the same work was unlawful based on her failure to present any authority supporting her argument.

Judges William C. Canby Jr. and Johnnie B. Rawlinson joined Smith in his decision.

Frank J. Coughlin of Coughlin & Conforti represented Parth, while Douglas R. Hart of Sheppard Mullin Richter & Hampton represented the hospital with Los Angeles attorney Beth Anne Scheel.

The case is Parth v. Pomona Valley Hospital Medical Center, 08-55022.