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Department of Labor Issues Second Report on Nursing Home Compliance

By Roger P. Gilson Jr.
  • January 30, 2001

In fiscal year 2000, investigators from the U. S. Department of Labor Employment Standards Administration/Wage and Hour Division investigated nearly 200 nursing and other personal care facilities to determine the level of compliance with the minimum wage, overtime and child labor provisions of the Fair Labor Standards Act (FLSA). This effort, the second survey among nursing home facilities since 1997, is being reported as a measurement of the industry's overall compliance status and should be of concern to long term care providers as a foreshadowing of further DOL investigation. The DOL reported its findings in a press release published on its web site and excerpted below:

Compliance Level With Federal Labor Laws In The Nursing Home Industry Falls To New Low

A second investigation-based compliance survey of the nation's nursing home industry by the U.S. Department of Labor's Wage and Hour Division found only 40 percent of nursing homes in compliance with the Fair Labor Standards Act (FLSA). This is a sharp drop from the 70 percent compliance level reported by the department in 1997.

"We are clearly disappointed with the declining compliance levels in this industry," declared Bernard E. Anderson, assistant secretary for the Employment Standards Administration. "We understand and appreciate the significant challenges faced by the nursing home industry in securing and maintaining sufficient staffing levels, but we cannot excuse the industry's failure to comply with this country's most basic labor standards protections."

Survey findings

The Wage and Hour Administration's Year 2000 nursing home compliance survey found the following:

  • The level of compliance with FLSA minimum wage, overtime and child labor provisions was 40% (55 of 136).
  • Eighty-four percent (84%) of employers were in violation of the FLSA overtime regulations.
  • Fifteen percent (15%) of facilities investigated were in violation of the child labor provisions (108 minors were found illegally employed in 20 facilities).

Background and approach

Since 1997, the Wage and Hour Administration has focused on FLSA compliance in the long-term care segment, including nursing homes and home health care. The first survey found that 70% of nursing homes were in compliance with FLSA requirements in the employment of their low-wage workforce. In conducting the 2000 compliance survey, the Administration randomly selected a sample of skilled and intermediate care facilities, as well as a random selection of facilities that had been investigated in the past and found to have violations (i.e., the recidivism sample). The main random sample consisted of 136 establishments, and the recidivism sample consisted of 58 cases.

In each of the survey cases completed, Wage and Hour Administration investigators visited the establishment; met with the employer or his/her representative; reviewed pertinent records; and, interviewed employees. The results were then analyzed to determine what, if any, particular patterns of violative behavior were common in the industry.

Investigation findings

Of 136 investigations completed in the main survey sample, 81 disclosed minimum wage, overtime, and/or child labor violations yielding an overall level of compliance of 40%. Violations of the FLSA overtime provisions were the most frequent at 84% of violators; minimum wage violations occurred at a rate of 11%; child labor violations were more frequent at 25%.

Most overtime violations occurred because the employer misclassified workers as exempt administrative or professional personnel. On the other hand, more employees were due overtime back wages because their employer did not compensate them for hours worked during their meal periods. The total amount of back wages due for overtime violations was also greatest for uncompensated meal periods. Other overtime violations occurred when employers failed to include bonuses or shift differential payments into the employees' regular rate of pay (base rate for "time-and-half" computation); paid straight time for overtime hours worked; and, failed to pay for pre- and post-shift work.

Minimum wage violations tended to occur most often when the employer illegally deducted the cost of uniforms from their workers' pay.

Most illegally employed minors were working as dietary aides or food service workers for too many hours or too late in the evening. Several violations were as a result of minors operating power-driven dough mixing or meat slicing equipment.

Over $432,000 in minimum wage and overtime back wages were found due to 1,576 employees.

Violations occurred in order of frequency in the following occupations: certified nurses assistants, dietary aides and other food preparation staff, and maintenance workers. Other care providers, including licensed practical nurses and registered nurses, were also the subject of violations.

Forty-one percent (41%) of the 58 companies in the recidivism sample had come into compliance. Of the companies still in violation, most (70%) were found with violations of a different nature. Fewer (30%) were found violating the law in the same manner as in the prior investigation.

Comparison to 1997 nursing home audit results

The 1997 nursing home compliance survey established a 70 % baseline level of industry-wide compliance. Admittedly, says the Wage and Hour Administration, the parameters of the 2000 compliance survey are somewhat different than those used in the 1997 survey and a precise comparison is difficult. Nonetheless, the Administration has interpreted the results to suggest a decrease in overall FLSA compliance among nursing homes nationwide.

In violation cases, the percentage of nursing homes with child labor violations jumped from 18% in 1997 to 25% (20 of 81) in 2000. The percentage of firms with overtime violations remained fairly constant at 84% in 2000, compared to 81% in 1997, while minimum wage violations dropped slightly from 13 to 11%.

The nature of the overtime violations shifted somewhat from regular rate issues in the 1997 survey to misapplied FLSA exemptions in 2000, most likely as a consequence of expanding the scope of the survey to include all employee occupations. Certified nurses assistants and dietary aides were again the occupations most likely to be the subjects of a violation.

Nature of Overtime Violation in Descending Order of Frequency

1997 Baseline:

  • Improper Calculation of Regular Rate of Pay
  • Failure to Compensate for All Hours Worked
  • Employee Paid Straight Time for Overtime
  • Misapplied "541" Exemption

2000 Measure:

  • Misapplied "541" Exemption
  • Improper Calculation of Regular Rate of Pay
  • Failure to Compensate for All Hours Worked
  • Employee Paid Straight Time for Overtime Hours Worked

©2001 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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