In Parth v. Pomona Valley Hospital Medical Center, the Ninth Circuit Court of Appeals found a pay plan that allowed nurses to work a 12-hour shift at a lower base hourly pay rate than nurses who worked an eight-hour shift, did not run afoul of the FLSA.  The nurses at Pomona Valley Hospital Medical Center, who had previously been scheduled to work almost exclusively in 8-hour shifts, requested the hospital provide a 12-hour shift option so they could have more free days.  The hospital agreed and provided a pay plan under which nurses who volunteered to work the 12-hour shift would receive a lower hourly rate than they had previously received when they worked an 8-hour shift, plus time-and-a-half for all hours worked in excess of eight per day.  The result was cost-neutral in that the 12-hour shift nurses earned approximately the same amount they had previously earned, while working the same number of hours per week and performing the same duties.  

Two years after the pay plan was instituted,  one of the nurses filed an FLSA collective action claiming that  the 12-hour shift pay rate was artificially low and violated the intent of the FLSA and the regulation that prohibits employers from avoiding the FLSA’s overtime provisions “by setting an artificially low hourly rate upon which overtime is to be based.” The Ninth Circuit disagreed.   First, the court gave weight to the fact that the 12-hour shift schedule was initiated at the nurses’ request and the schedule and pay practice was then memorialized in the collective bargaining agreement, which had been negotiated at arm’s length between the hospital and the nurses’ union. 

Second, after examining the history of the FLSA’s overtime provisions, and the regulations and case law interpreting them, the Ninth Circuit concluded that there was no authority to suggest that a voluntary base rate reduction made in exchange for a 12-hour shift schedule was unlawful.  The court found there was no evidence or authority to suggest that the pay plan was contrary to Congress’s goals in enacting the FLSA or was an artifice to avoid paying overtime.  On the contrary, the court found it was “perfectly reasonable” for the hospital to respond to the nurses’ requests for an alternative work schedule by adopting the schedule they requested and paying them the same wages they received under the less-desirable schedule. 

While it is too soon to determine what effect this holding will have in other Circuits, hospital employers should take encouragement from this decision, and the court’s approval of a compensation plan to which both the employees and the employer agreed in order to accommodate the desires of the employees and the business needs of the employer.  

This entry was written by Blake Andrews