COALITION TO PRESERVE OVERTIME
RIGHTS FOR REGISTERED NURSES
May 3, 2004
United States Senate
Washington, DC 20515
Dear Senator:
As representatives of registered nurses, we write to inform you of the serious impact the new Part 541 White Collar Exemption (overtime rules) issued by the U.S Department of Labor will have on these workers. The new rule threatens the right of registered nurses to receive overtime compensation and eliminates any incentive for hospitals to address inadequate staffing resulting from the national nurse shortage. We believe that it is essential to preserve the right to overtime compensation for registered nurses and urge you to support the Harkin amendment that would remedy this problem.
The Part 541 regulations issued by the Labor Department redefine which workers are salaried professionals, administrative managers and executives, and, therefore, exempt from federal overtime protections. A worker can be exempted from overtime protections under one of these categories if he or she meets a two-pronged test: her/his qualifications and duties must meet the standards outlined in the regulations; and s/he must be paid on a salary basis an amount more than $455 per week.
Registered Nurses May Lose Overtime Compensation
Although the Labor Department correctly notes that the status of salaried registered nurses remains unchanged by this new rule [i] , it ignores the impact on the vast majority of registered nurses paid on an hourly basis. Registered nurses have long met the "duties test" to be considered learned professionals; however, because most registered nurses are paid on an hourly basis, they do not meet the second prong of the existing rules, i.e., the salary component, and therefore are entitled to overtime compensation [ii] .
While the duties test has not changed under the new rules, the definition of salary has been altered. For the first time in the history of the Fair Labor Standards Act (FLSA), hourly paid employees, including registered nurses, may be denied overtime compensation. Section 541.604 of the new rules states that an "exempt employee's earning may be calculated on an hourly, daily or a shift basis, without losing the exemption or violating the salary basis requirement. [iii] " This new definition exempting hourly employees from federal overtime protection would directly affect the outcome of several court cases in which hospitals were forced to pay overtime to registered nurses who were paid on an hourly basis [iv] . This would result in a significant loss of income for those workers. A registered nurse who earns $25 per hour and typically works 50 hours per week, for example, will lose $6,500 per year as a result of this rule [v] .
Unpaid Mandatory Overtime May Compromise Patient Care
This rule will cut the pay of registered nurses who already are forced to work mandatory overtime. Because of a national shortage of registered nurses willing to work in hospitals, mandatory overtime is routinely used to make up for inadequate staffing [vi] . This practice alone contributes significantly to nurse dissatisfaction and burnout, and denying these employees overtime pay will worsen the situation and cause more registered nurses to leave the field. And, as a recent report by the Institute of Medicine concludes, the shortage of registered nurses in hospitals throughout the nation compromises the attention and quality of care each nurse is able to deliver to patients. [vii]
Unionized Nurses at Risk
The Labor Department also incorrectly asserts that unionized nurses will not be harmed. Many union contracts define overtime eligibility by referencing the FLSA [viii] . As a result, the terms of these contracts will be changed when the new regulation takes effect. Even where the union contract explicitly states the terms of overtime eligibility, workers may be forced to make other concessions during the next contract negotiations to maintain overtime rights. In fact, throughout recent contract negotiations, employees consistently have been forced to agree to smaller wage increases and greater employee contributions for healthcare and pension benefits. On top of this, workers should now not have to bargain for something that federal law has protected since the enactment of FSLA.
The Harkin Amendment
The amendment sponsored by Sen. Tom Harkin (D-Iowa) would reverse the harm to workers caused by this new regulation without unraveling the provisions expanding overtime protections to some workers earning less than $23,660 per year. The Harkin amendment simply provides that no category of worker, including hourly-paid registered nurses, that is currently eligible for overtime compensation loses that right. If, as proponents claim, the new rule is intended to expand rather than reduce overtime protections for workers, the Harkin amendment would achieve such an end. We therefore urge you to vote "yes" on the Harkin amendment.
Sincerely,
American Federation of State, County and Municipal Employees (AFSCME)
American Federation of Teachers (AFT)
American Nurses Association (ANA)
Communications Workers of America (CWA)
Department for Professional Employees, AFL-CIO (DPE)
International Brotherhood of Teamsters (IBT)
International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW)
Service Employees International Union (SEIU)
United American Nurses (UAN)
[i] See Statement of the Honorable Elaine L. Chao before the Committee on Education and the Workforce, U.S. House of Representatives, Hearing on "Assessing the Impact of the Labor Department's Final Overtime Regulations on Workers and Employers," April 28, 2004.
[ii] Employment Policy Foundation, Contemporary Issues in Employment and Workplace Policy, Sept. 9, 2003.
[iii] Federal Register, Vol. 69, April 23, 2004: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees; Final Rule, Section 541.604(b). Section 541.604 of the new rules states that an "exempt employee's earning may be calculated on an hourly, daily or a shift basis, without losing the exemption or violating the salary basis requirement." The provision continues that if an employee is guaranteed a minimum amount of compensation for any week in which s/he performs any work, her/his actual pay need only be reasonably related to amount of the guarantee. The DoL example states that this reasonable relationship test is satisfied when an employee who typically earns between $600 and $750 weekly, is only guaranteed $500. While the rule does not set an outer limit for how close the guarantee must be to the actual amount of compensation to be considered a salary, the example indicates that a 50% difference is permissible. Such a wide discrepancy between the guarantee and the actual amount of compensation is contrary to the common understanding of the term "salary" and permits the employer to exercise a level of control over the employee's schedule indicative of a non-exempt hourly employee.
[iv] See Klein v. Rush-Presbyterian-St. Luke's Medical Center, 990 F.2d 279 (7th Cir. 1993), and Elwell v. University Hospitals Home Care Services, 276 F.3d 832 (6th Cir. 2002).
[v] A registered nurse who earns $25 per hour and typically works 50 hours per week would lose $6,500 per year. The nurse would earn $1,000 for the first 40 hours worked. Under current rules the nurse would be paid $37.50 per hour (1.5 times the normal hourly rate of $25 = $37.50) for the next 10 hours for a total of $375 of additional pay. Under the new rules, the nurse would only be paid $25 per hour for the next 10 hours for a total of $250. The $125 weekly difference over the course of a 52 week year amounts to $6,500 for the year.
[vi] The State of the Healthcare Workforce 2003, AFT Healthcare, 2003.
[vii] Keeping Patients Safe: Transforming the Work Environment of Nurses, Institute of Medicine, Nov. 4, 2003.
[viii] An example of a contract that incorporates the terms of the FLSA rules may be found in the collective bargaining agreement of the Vermont Federation of Nurses and Health Professionals. The relevant provisions read "Eligibility for Overtime- 1. Exempt Employees Individual employees who meet the definition of exempt employee under the Fair Labor Standards Act (FLSA), as determined by Human Resources, are not eligible to receive overtime pay." When the new overtime rules take affect, hourly registered nurses may be determined to be exempt by the hospital and lose overtime pay immediately.