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U.S. Court in North Dakota Says Hospital Need Not Pay Minimum Wage to On-Call Employees


HLD, v. 28, n. 3 (March 2000)

U.S. Court in North Dakota Says Hospital Need Not Pay Minimum Wage to On-Call Employees

Many current and former nurses ("plaintiffs") sued their employer, Champion Healthcare Corporation ("Champion") d/b/a/ Dakota Heartland Health Systems ("Hospital"), for violating the Fair Labor Standards Act ("Act"), 29 U.S.C. � 201 et seq. The plaintiffs specifically alleged that Champion had (1) failed to compensate them at the applicable federal minimum wage for time spent on off-premises "on-call" shifts, (2) failed to use the proper formula for computing overtime wages, and (3) failed to properly include all remuneration in the employees' overtime rate. Both parties moved for summary judgment.

The U.S. District Court for the District of North Dakota, Southeastern Division, granted summary judgment in favor of Champion on all counts except the count regarding calculation of overtime compensation. First, the court held that Champion was not required to pay the plaintiffs minimum wage for "on-call" shifts because the plaintiffs were not "working." Although acknowledging that the Act guarantees a minimum hourly wage to covered employees who are "working," the court noted that relevant case law interpreting the Act defined "work" as "physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business." Tennessee Coal, Iron & R.R. v. Muscoda Local No. 123, 321 U.S. 590, 598 (1944). The court further noted that time spent waiting for an event to occur can constitute work if the employer hires the employee for that function, see Skidmore v. Swift & Co., 323 U.S. 134, 136-37, but explained that the determination must be made only after examining all the circumstances surrounding the employment, the nature of the work and its relation to the waiting time, and restrictions placed on the employee from personally using the time. The court then examined the evidence in the instant case and concluded that Champion had not regularly placed its employees "on-call" and that the employees had not spent their "on-call" time predominantly for the benefit of Champion. In addition, the court found that, besides restricting the "on-call" employees from using alcohol, Champion had not placed any significant limitations on the "on-call" employees that one could use to characterize the time as "work." Accordingly, the court granted summary judgment in favor of Champion on the plaintiffs' "on-call" claim.

Next, the court closely examined the plaintiffs' calculation for computing overtime compensation [(regular hours x hourly rate) + (overtime hours x regular rate) + (overtime hours x � regular rate) + (production bonus)] and found that the plaintiffs had incorrectly included the "production bonus" rate twice in the overtime calculation: once to determine the employees' "regular rate" and then again to determine the overall final overtime calculation. The court observed that Champion's method of calculating overtime compensation [(total hours x regular rate) + (overtime hours x � regular rate)] was correct and in accordance with federal regulations. See 29 C.F.R. � 778.110. Accordingly, the court granted summary judgment in favor of Champion on the claim.

Finally, the court explained that summary judgment on the claim of Champion's failure to include all remuneration in calculating the employees' "regular rate" for overtime compensation was appropriate because Champion had admitted the problem. The court noted, however, that Champion had detected the error in 1996, had corrected its computer systems' error, and was making repayments to all affected employees. Accordingly, the situation forced the court to determine which litigant was the "prevailing party" on summary judgment. The court reviewed the events leading to the plaintiffs' suit and noted that "just as [the plaintiffs'] claims began to clearly crystallize, Champion voluntarily corrected the errors;" thus, the court concluded that the plaintiffs' suit pressured Champion to make the necessary corrections. Accordingly, the court held that the plaintiffs were entitled to prevailing party status on that claim.

Wisnewski v. Champion Healthcare Corp., No. A3-96-72 (D.N.D. Jan. 11, 2000) (14 pages).

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