February 03, 2020
When Irregular Becomes Regular (or the other way ’round?)
On January 24, 2020, a court gave preliminary approval for a healthcare staffing company to pay $3.2 million to a class of 406 nurses and other healthcare professionals. Why? To settle a lawsuit that alleged the company failed to properly pay them for overtime. The January edition of this newsletter announced the U.S. Department of Labor’s new “regular rate” rule that took effect January 15, 2020. This case is a good example and illustration of how irregular payments may be part of an employee’s regular rate of pay.
In addition to each employee’s hourly rate of pay, the company paid per diem stipends and certain bonuses. The company did not include those monetary values into each employee’s regular rate of pay when it calculated their overtime. The lawsuit included four other alleged wage and hour violations under California’s wage and hour law.
- The court noted that when, “per diem stipends constitutes compensation for hours worked that must be included in the ‘regular rate’.”
- The value of the bonus should have been included in the regular rate because it was “promised by contract and, therefore, non-discretionary.”
- Ouch – the court found the company willfully excluded the value of the bonus from overtime calculations. So, if the case had gone to trial, the employer would have been subjected to three, rather than two years’ back wages. (Did I say, “Ouch!”)
Want more information? If you missed FiveL’s January webcast you may want to check it out. “Wage and Hour Update: From WOW’s to Woes” covers the new regular rate with practical examples, plus other challenges including, on-call pay, payroll rounding practices, preliminary and post-liminary activities, and more! $25 pp and provides 1.25 credits pre-approved by SHRM and HRCI.