Nurse Overtime Pay
Registered nurses who are paid on an hourly basis must be paid overtime pay under the Fair Labor Standards Act (“FLSA”) for working more than 40 hours in a week. RN’s who are licensed, who meet the duties requirements for the learned professional exemption, and who are also paid on a salary basis of at least $455 per week, may be classified as exempt. It is important to understand that RNs must be paid on a “salary basis” to be considered exempt from (or not entitled to) overtime pay. That means that registered nurses (RN’s) who are paid on a combination salary or fee basis (such as being paid per house visit) and hourly basis (for attending meetings and completing paperwork) are generally not considered to be paid on a “salary basis” and are generally entitled to overtime pay.
Licensed practical nurses (LPN’s) and other similar health care employees generally must be paid overtime pay. LPN’s do not qualify as exempt learned professionals, regardless of work experience and training, because possession of a specialized advanced academic degree is not a standard prerequisite for entry into such occupations. LPN’s are generally entitled to overtime pay, even if paid a salary.
Home Health Care Workers Overtime
Overtime Rules for Caregivers, Companions and Home Health Care Workers
Effective January 1, 2015, home care staffing agencies and third party employers are required to pay at least the federal minimum wage and overtime pay to any direct care workers, regardless of the worker’s duties. Thus, only individuals, families, or households that solely or jointly employ the worker may avoid paying overtime pay (and only under certain circumstances). Home care staffing agencies must pay their direct care workers the federal minimum wage and overtime.
Direct care workers are workers who provide home care services, such as certified nursing assistants, home health aides, personal care aides, caregivers, and companions. Even though additional federal protections exist as of January 1, 2015, various state laws — including Illinois, California, Colorado, Hawaii, Maine, Maryland, Massachusetts, Minnesota, Montana, Nevada, New Jersey, New York, Pennsylvania, Washington, and Wisconsin — may have already protected the right to minimum wages and overtime pay for companions and certain other direct care home health care workers.
The term companionship services does not include services performed by trained personnel such as registered or practical nurses.
Also effective January 1, 2015, agencies and other third party employers may no longer claim the overtime pay exemption for live-in domestic service workers.
Important: The lawfulness of the federal regulations are currently challenged in the case in Home Care Association of America v. Weil, Civil Action No. 14-967 (D.D.C.). A decision by the United States Court of Appeals for the District of Columbia is expected soon. In the interim, state laws may still entitle home care workers to overtime pay.
Frequently Asked Questions Regarding Home Health Care Workers
Q: Under the new Department of Labor rules, can third party employers, such as home care or staffing agencies, claim the companionship services or live-in domestic service worker exemptions to not pay overtime pay?
A: No, third party employers are not entitled to claim either the companionship services or live-in domestic service employee exemptions to not pay overtime pay.
Q: What are the obligations of third party employers, such as staffing agencies?
A: Third party employers, such as staffing agencies, must pay at least the Federal minimum wage and overtime pay to all workers employed to perform domestic service employment, including workers who perform companionship services or are live-in domestic service employees.
Third party employers must pay home care workers for all hours those employees work. Hours worked include time spent traveling between multiple individuals receiving services if the third party employer is an employer as to each individual; for example, if a home care agency assigns a worker to provided services to one of its clients in the mornings and another in the afternoons, the time the worker spends driving from one client’s home to the other’s must be paid. In addition, a third party employer is responsible for any overtime generated by working for multiple individuals receiving services; for example, if a state administering a Medicaid-funded, consumer-directed program is a joint employer of the care providers hired through the program, a worker who provides 30 hours of services to one Medicaid recipient enrolled in the program and 20 hours of services to another must ensure that the worker receives 10 hours of overtime compensation.
Q: Do state and federal overtime laws apply to home care workers who are independent contractors?
A: Most persons providing home health care services for staffing agencies are “employees” and not “independent contractors.” Federal overtime law defines “employer” and “employee” broadly. But workers who are truly independent contractors, meaning they are in business for themselves rather than economically dependent on an employer, are not employees and do not have to be paid according to the requirements of the Act. Many home care workers are misclassified as independent contractors. To determine whether the worker is an independent contractor or an employee, factors to consider include:
- The extent to which the services rendered are an integral part of the principal’s business.
- The permanency of the relationship.
- The amount of the alleged contractor’s investment in facilities and equipment.
- The nature and degree of control by the principal.
- The alleged contractor’s opportunities for profit and loss.
- The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
- The degree of independent business organization.
Most home care workers will be employees, and not independent contractors, of the individual who receives services (or the individual’s family, household, or other representative) and/or a third party agency that arranges the home care.
Q: I am employed by someone other than the person who I assist or that person’s family or household (for example, a home care agency or other entity), must I be paid minimum wages and overtime pay?
A: If you work for or are employed by an agency, you must be paid minimum wages and overtime pay. If you work solely for the person being assisted or that person’s family or household, you may or may not be entitled to minimum wages and overtime pay.
Q: I provide domestic services that are primarily on behalf of other members of the household, such as doing laundry for another family member or preparing meals for someone other than the person being assisted, must I be paid minimum wages and overtime pay?
A: It depends. If the work you perform primarily benefits only the person being assisted, then you may or may not be entitled to the federal minimum wage and overtime pay.
Q: What is a “live-in” domestic service employee?
A: Employees providing domestic services in a private home who reside on the employer’s premises are live-in domestic service employees exempt from the overtime requirements of the FLSA. Employees reside on the employer’s premises if they work and sleep there on a “permanent basis” or for “extended periods of time.” Employees who work and sleep on the employer’s premises seven days per week and therefore have no home of their own other than the one provided by the employer under the employment agreement are considered to reside on the employer’s premises on a “permanent basis.” Employees who work 120 hours or more each week and work and sleep on the employer’s premises five days a week reside on the employer’s premises for “extended periods of time.” Employees who work and sleep on the employer’s premises for five consecutive days or nights each week would also qualify as residing on the premises for “extended periods of time” even if they do not work 120 or more hours each week. Employees who work for only a short period of time for the household are not considered live-in domestic service workers, because residing on the premises implies more than temporary activity. Employees who work 24-hour shifts but are not residing on the employer’s premises “permanently” or for “extended periods of time” are not considered live-in domestic service workers, and the employers are not entitled to the overtime pay exemption. Employees who work 24-hour shifts but are not live-ins must be paid at least minimum wage and overtime for all hours worked unless they are otherwise exempt.
Q: What are employers’ obligations to live-in domestic service employees?
A: Domestic service workers who reside in the employer’s home and are employed by an individual, family, or household are exempt from the overtime pay requirement, although they must be paid at least the Federal minimum wage for all hours worked. Third party employers, such as home care agencies, may not claim the overtime exemption for live-in domestic service workers, and must pay such workers at least the Federal minimum wage for all hours worked and overtime pay at one and a half times the regular rate of pay for all hours worked over 40 in a workweek.
Q: For an overnight shift, does the home care worker have to be paid when he or she is asleep?
A: It depends.
Less than 24 Hours
Under the FLSA, an employee who is required to be at work for less than 24 hours must be paid even though he or she is permitted to sleep or engage in other personal activities when not busy. All the time is counted as work time that must be paid.
24 Hours or more
If an employee is required to be on duty for 24 hours or more, the employer and employee may agree to not count as hours worked a bona fide regularly scheduled sleeping period of not more than eight hours, provided that (1) adequate sleeping facilities are furnished by the employer, and (2) the employee’s time spent sleeping is usually uninterrupted.
There are different rules for employees who live in the household where the services are provided. See the questions and answers regarding rules that apply to live-in domestic service employees.
Q: Can a third party employer enter an agreement with a live-in domestic service employee that excludes sleep time and other off-duty time?
A: Yes, subject to the existing rules about excluding such time. Although third party employers may not claim the live-in domestic service employee exemption from the FLSA’s overtime requirement, the other special rules for live-in employees, such as the ability to enter a reasonable agreement setting out what time is hours worked and what is excluded from hours worked, such as sleep time, still apply.
Q: May a home care provider be paid a daily or shift rate?
A: A home care provider entitled to the protections of the Fair Labor Standards Act (FLSA) can be paid an hourly rate, daily rate, shift rate, monthly stipend, or on a salary basis as long as the employee’s overall earnings for the workweek result in a “regular rate” of pay for all hours worked that is at least the current Federal minimum wage. The “regular rate” under the FLSA is an hourly rate of pay determined by dividing the employee’s total compensation in the workweek by the total number of hours actually worked in that workweek. For example, a worker who earns $50.00 per day and works 5 hours on Day 1 and 6 hours on Day 2 (and no other days that week) has been paid in compliance with the FLSA’s $7.25 minimum wage requirement because the employee’s “regular rate” of pay is $9.09 per hour ($100 of pay divided by 11 hours of work). An employee’s “regular rate” of pay is used to determine any additional overtime compensation owed if an employee works more than 40 hours in a workweek. IMPORTANT: state minimum wage laws may require a regular rate higher than the federal minimum wages of $7.25 per hour.
Q: How is overtime calculated when a home care provider is paid different hourly rates for different types of work?
A: Under the FLSA, an employer may pay the same employee different rates for different types of work as long as the employee’s regular rate of pay is at least the minimum wage. As in all circumstances, an employer may not manipulate rates or payment methods for the purpose of avoiding its obligation to pay overtime compensation. For example, it is not permissible to pay a lower rate for all hours over 40 in a workweek or for all hours in a workweek in which the employee works more than 40 hours.
If an employee receives different rates of pay for work in a single workweek, the employee’s “regular rate” for that week is the weighted average of such rates (or “blended rate”). That is, each workweek, the earnings from all hourly rates are added together and the sum is then divided by the total number of hours worked at all jobs for the same employer, and the overtime pay due is one-half of that result times the number of hours worked over 40.
For example, assume an employee of a home care agency is paid $10.00 per hour for time spent providing care and $8.00 per hour for travel time. In a particular workweek, the employee worked 45 hours providing care and 5 hours traveling. The calculations for computing the overtime compensation due in this workweek using the weighted average are as follows:
($10.00 × 45 hours) + ($8.00 × 5 hours) = $490.00 of straight time pay
$490.00 ÷ 50 total hours = $9.80 is the weighted average (regular rate)
50 total hours – 40 hours = 10 overtime hours worked
$9.80 × .5 × 10 overtime hours = $49.00 in overtime compensation
$490.00 + $49.00 = $539.00 is the total amount due
Alternatively, an employer may calculate the overtime obligation based on the rate for the particular task(s) performed during the hours over 40 in the workweek (i.e., the “rate in effect” or “applicable rate”), but only if there is an agreement or understanding with the employee (made in advance of the performance of work), the hourly rate(s) upon which the overtime is computed are at least the Federal minimum wage, and the hourly rate(s) are actually paid for such work when performed during non-overtime hours.
Using the scenario above, the calculations for paying overtime based on the rate in effect are as follows:
($10.00 × 45 hours) + ($8.00 × 5 hours) = $490.00 of straight time pay
$10.00 × .5 × 5 hours = $25.00 in overtime compensation for hours of care services over 40 total hours in the workweek
$8.00 × .5 × 5 hours = $20.00 in overtime compensation for hours of travel time over 40 total hours in the workweek
$25.00 + $20.00 = $45.00 total overtime compensation due
$490.00 + $45.00 = $535.00 is the total amount due