What happened. After sustaining work-related injuries, an hourly employee at the Jefferson City, Missouri, plant for ABB, Inc., received extensive medical treatment.

Gallagher Bassett Services, Inc. served as ABB's third-party workers' compensation administrator. In separate letters, Gallagher advised the employee's physician and her workers' compensation attorney that Gallagher had scheduled a September 3, 2004, appointment to have an injury to the employee's upper right extremity re-evaluated. She was told to arrive 45 minutes early for the 2 p.m. appointment.

Her employer said she could tap into her accrued paid leave benefits to cover her time away from work to attend the appointment, but the employee decided to take an unpaid excused absence instead. As a result, she was not compensated for 3.8 hours of work.

Later, she sued, claiming that ABB should have compensated her for the 3.8 hours, because that time is considered "hours worked" under the Fair Labor Standards Act (FLSA). A district court granted partial summary judgment to the employee, saying that, as ABB's agent, Gallagher had scheduled the appointment and directed her to attend it.

The court awarded attorneys' fees and costs and told ABB to pay the employee for the uncompensated time and to determine any impact on her overtime compensation. ABB appealed to the 8th Circuit, which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

What the court said. ABB maintained that it did not have to compensate the employee for the 3.8 hours, because it did not direct her to attend the doctor's appointment. The court noted, however, that Gallagher, as ABB's third-party worker's compensation administrator, scheduled the appointment and instructed her to attend.

Quoting Department of Labor regulations, the court noted that "[t]ime spent by an employee in waiting for and receiving medical attention on the premises or at the direction of the employer during the employee's normal working hours on days when he is working constitutes hours worked." As a result, the hours that she missed, constituted hours worked under FLSA, and "therefore she must be compensated for that time," the court said.

ABB argued that the employee waived her FLSA rights when she opted to take an unpaid excused absence, but the court said that FLSA rights generally "are statutory and cannot be waived." Copeland et al. v. ABB, Inc., U.S. Court of Appeals for the 8th Circuit., No. 06-3403, (2008).

Point to remember. If you contract with a third party to administrate your worker's compensation claims, keep in mind that the administrator could be viewed as an agent of your company. If the administrator directs an employee to attend a medical appointment during his or her shift, then a court could consider the time to be hours worked under the FLSA.