Fair Labor Standards Act (FLSA) claims have been popping up against hospitals around the country because healthcare workers often put the needs of their patients first, even when it means working through a break or coming in a bit early or leaving a bit late to get the job done. In addressing a proposed class action against a large Boston hospital, the 1st Circuit recently provided some good guidance for employers in all industries.

What happened

Three nurses and an administrative assistant sued Boston Regional Medical Center, claiming they hadn’t been paid for overtime work for years. The nurses asserted that they frequently worked through their meal breaks or before and after their shifts charting, performing administrative tasks, monitoring patients, and providing treatment as needed.

The administrative assistant made and answered phone calls, wrote letters, and did her filing during her breaks. The employees were forced to cut into their break time because the hospital was understaffed. However, they weren’t paid for the extra time because the hospital automatically deducted break time from their hours worked.

The employees claimed the hospital administration knew that the hospital was understaffed and there was no way employees could complete all the tasks they were assigned without putting in extra hours when they weren’t supposed to be working. They claimed the hospital intentionally took advantage of their dedication and commitment to their patients, knowing that they wouldn’t abandon their caregiving responsibilities just because their shifts were over or they were due for a break.

Although FLSA claims by four employees might be relatively small potatoes, the nurses and the administrative assistant asked to be allowed to represent a class of more than 4,000 people, including nurses, medical assistants, technicians, physical therapists, custodians, and administrative staff.

What the court said

The lower court actually kicked the employees out of court, not once, but twice on the grounds that they hadn’t alleged a valid claim under the FLSA. The 1st Circuit saw things differently, however. Although the case is far from decided, the court of appeals indicated that if the employees’ claims are correct, they could be entitled to additional compensation from the hospital.

One of the issues the 1st Circuit addressed was whether the administration had “actual” or “constructive” knowledge of the extra time employees were putting in. The employees explained that not only did they perform the extra work in full view of managers and supervisors, but they also had repeated conversations about the issue with their superiors. Sometimes managers would even set specific deadlines for completing tasks, knowing they could be accomplished only if employees worked through their breaks.

Another issue that the 1st Circuit delved into was whether the hospital’s CEO and HR manager could be held individually liable for any FLSA violations. The court held that the CEO mightbe individually liable if the employees could prove that she controlled the company’s purse strings by making budget decisions, participating in decisions to reduce staffing, and being involved in other decisions that could cause the hospital not to compensate employees fairly. However, the HR manager was more of a senior-level employee, and the 1st Circuit was less willing to pin individual liability on someone who wasn’t directly responsible for the hospital’s financial decisions.

Finally, the court wrestled with the hospital’s argument that unionized employees are required to arbitrate their claims under their union contract rather than going to court. The 1st Circuit found that although a u n ion cont rac t could require the employees to arbitrate rather than litigate, it had to mandate arbitration through a specific waiver of federal statutory claims. The hospital’s union contract didn’t contain such a waiver, so the employees could move their claims forward in court.

What to remember

FLSA claims often originate from what seem to be small or even mundane details and practices. For example, a receptionist might eat lunch at her desk, a secretary might frequently interrupt his break so he can help with something his manager needs, or an IT person might come in a few minutes early each day to catch up on paperwork before the daily rush. Anytime you have conscientious employees who put getting the job done before watching the clock, you run the risk of underpaying them.

A wage and hour claim by one employee might be quite modest. But if several other employees are in the same situation, you could face a collective action, which creates much greater exposure for your company. All it takes is one disgruntled employee, and you might end up going down the FLSA liability road, spending hundreds of thousands of dollars just to defend your practices.

It’s critical that your nonexempt employees understand that they must work only after punching in and that all time worked must be recorded. With today’s advances in technology—allowing employees to check office e-mail on smartphones, for example—the issue becomes even bigger. The most important message from this case is, don’t turn a blind eye to the situation when you know employees are working extra minutes and not getting paid.

This article was written by attorneys from Brann & Isaacson (http://www.brannlaw.com).