Judge ignores wage rule, finds for hospital workers

A group of hospital employees who allegedly were dissuaded from seeking payment for work done during meal breaks and before and after their shifts had grounds to pursue a class action claim under the Fair Labor Standards Act, a U.S. District Court judge in Boston has ruled.

The defendant employer argued that the claim should be dismissed based on the widely recognized Klinghoffer Rule, which holds that even if an employee is not paid for certain hours worked, the FLSA is not violated so long as the employee’s total weekly paycheck meets the minimum wage threshold.

Judge Nancy Gertner declined to recognize the rule, despite the fact that appellate courts across the country have done so for nearly half a century.

“Plaintiffs have alleged that [the defendant] intentionally paid its workers $0 for each unrecorded hour worked during their meal breaks and before/after their shifts,” Gertner wrote. “This allegation is sufficient to state a claim for a minimum wage violation.”

The 19-page decision is Norceide, et al. v. Cambridge Health Alliance.

Tough to interpret

To survive a motion to dismiss, Peter F. Russell, who represented the hospital workers, said he had to convince Gertner to ignore the Klinghoffer Rule, which has been accepted by at least five other circuit courts.

When the FLSA was enacted in 1938, Congress said it was meant to be interpreted broadly, according to the Needham, Mass., lawyer.

Russell acknowledged that the 1st U.S. Circuit Court of Appeals has never addressed the appropriateness of deciding FLSA minimum wage questions by measuring an employee’s weekly earnings. However, the legislative intent of the statute requires employees to be paid for every hour they actually spend working, he said.

Russell said his clients were discouraged by their supervisors from reporting the extra work time and clearly fell within the class of people intended to be covered by the law.

“What [Gertner] held is that the FLSA, construed the way it’s supposed to be, is inconsistent with the Klinghoffer Rule and the way a lot of courts have been deciding these cases,” he said. “If an employer knows that work is being performed and allows that work to be preformed, it must pay for that work. It’s as pure and simple as that.”

Layla G. Taylor, a management-side lawyer from Springfield, Mass., who handled a seminal 2010 FLSA case, said the statute is a tough one for employment lawyers to interpret. For that reason, she said, the law has been the subject of much litigation in federal court.

“It’s a statute that, in my experience, employers really need to be mindful and proactive about in terms of self-audits and internal audits,” she said. “Even technical violations involving accidental things can expose you to a lot of liability.”

Taylor, who practices at Sullivan, Hayes & Quinn and was not involved in the case before Gertner, said the FLSA, unlike many other employment statutes and regulations, does not contain easy-to-follow black letter law.

“You would think that something like the FLSA, with an exhaustive preamble, would be very clear about what its intent was, but it’s not,” Taylor said. “Most people would agree that, at its minimum, it was designed to help prevent exploitation in the wage arena, but what that means really depends on who you’re talking to.”

The employer’s counsel, Donald W. Schroeder of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo in Boston, declined to comment.

Give me a break

The defendant, Cambridge Health Alliance, is a 4,200-employee health care company comprised of three hospitals in Massachusetts.

The three named plaintiffs, Barbatine Norceide, Narces Norceide and Jack Walsh, were current or former non-exempt, hourly employees.

From 2007 through 2010, the plaintiffs and similarly situated CHA workers alleged that they routinely worked before and after their shifts and during their 30-minute meal breaks, often at the request of supervisors.

In October, the plaintiffs filed a wage and hour class action complaint accusing the defendant of depriving them of compensation. The plaintiffs alleged that they were required to carry cell phones and pagers during meal breaks and instructed to respond immediately to all calls.

They claimed that employees often took “meals at their desks or in locations convenient so that they [could] be contacted by their supervisors and co-workers for work-related matters during their meal breaks.”

Although the company used different timekeeping systems over the years, CHA staffers said they routinely were paid only for hours worked during their pre-scheduled shifts, which allotted 30 minutes for an unpaid meal break.

CHA allegedly pressured its employees not to record time worked outside their shifts, thereby routinely stripping them of wages.

While the company’s timekeeping system theoretically enabled employees to report time worked during meal breaks or before and after shifts, they said CHA created an atmosphere in which time worked outside the schedule was “swept under the rug” and not paid.

Their suit claimed in part that the company violated the FLSA and the Massachusetts Wage Act.

The 18-page decision is Feeney, et al. v. Dell Inc., et al.

Protecting the worker

In denying CHA’s motion to dismiss, Gertner said the FLSA was enacted to guarantee employees be paid at least minimum wage for each hour they worked. Any time over 40 hours, she wrote, entitled them to a rate of not less than time-and-a-half.

Although the Klinghoffer Rule would warrant a finding in favor of the employer, Gertner said it should not be the measuring stick for deciding if a violation occurred.

“Since the court’s decision in 1960, several other circuits have adopted the Second Circuit’s approach,” she said. “However, they have mostly done so by citing to Klinghoffer without any further analysis of whether, in fact, the weekly average rule effectuates the legislative intent of the FLSA’s minimum wage law.”

When a statute like the FLSA is susceptible to two opposing interpretations, it must be read in a manner that effectuates, rather than frustrates, the major purpose of the legislative intent, Gertner wrote.

“While the Senate and House reports do not indicate whether Congress had in mind a formula for determining the amount necessary for ‘a minimum livelihood,’ they do reveal that Congress considered the test to be whether a worker received ‘a fair day’s pay for a fair day’s work,’” she said. “Congress’ primary concern with protecting workers — not employers — buttresses the above conclusion that the plain language of the minimum wage provision should be read as an endorsement of the hour-by-hour method.”

In addition to the FLSA ruling, Gertner also agreed to conditional class certification of the employees’ claims.

“Employers and employees do not have equal bargaining power,” she said. “Employees, often fearing that they may lose their jobs if they do not oblige, regularly succumb to employer pressure to perform uncompensated labor.”