How can a company manage its overtime policy in compliance with California law? A recent decision by a federal district court in California certified a class action involving claims of unpaid overtime, and the court’s reasoning shows what factors employers may want to consider—and to avoid—when designing an overtime policy. In Shaw v. AMN Healthcare, Inc., a putative class of traveling nurses (employed by a labor contractor, AMN Healthcare, Inc., that recruits and places traveling nurses at healthcare facilities nationwide) claimed that they were not paid for overtime when they worked at Kaiser hospitals in California. The court certified the class action, finding that the plaintiffs met the commonality and predominance requirements as to their overtime claims.

THE COURT’S ANALYSIS

The judge emphasized that California law requires employers to compensate employees for all time they are “suffered or permitted to work, whether or not required to do so.” As such, it is the duty of management to “make every effort” to enforce a rule against uncompensated work, including “tak[ing] reasonable steps to investigate” suspected work that is done without compensation. Employers cannot “sit back” or “stand idly by” while employees do uncompensated work.

In reviewing the facts, the judge found that common policies and communications were sent to traveling nurses that conveyed to them that Kaiser has a “strict policy against overtime.” Handbook policies at some facilities expressly stated that overtime is not authorized. Other policies provided an approval process for overtime that the plaintiffs claimed was too burdensome because it required the preapproval and signatures of two different managers. Some plaintiffs testified that they were exhausted after a 12-hour shift and that “it was often an ‘impossible task’ to track down a manager or charge nurse to authorize overtime.”

The court also found that Kaiser requires all of its nurses (its own nurses as well as the traveling nurses) to perform the same core duties and requires that they uphold the same ethical and professional obligations with respect to patient care. However, the court noted that Kaiser’s overtime policy for its own nurses permits them to work up to two hours of overtime each week without supervisor approval, while travel nurses must be preauthorized for any overtime. The court cautioned that this situation could evidence a “structural problem” of failing to pay overtime to traveling nurses, giving employers of such nurses something to analyze and consider.

KEY TAKEAWAYS

There are many steps a company may want to consider taking to manage overtime within the requirements of California law, including the following:

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