HLD, v. 28, n. 3
U.S. Court in
North Dakota Says Hospital Need Not Pay Minimum Wage to On-Call
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).