The Fair Labor Standards Act (FLSA) is a federal law which requires that employers pay overtime pay to employees. Generally, overtime pay equals one and one half times an employee’s regular rate of pay. But, not all employees are entitled to overtime pay. The FLSA sets forth various exemptions to the overtime pay requirement. One such exemption is the professional exemption. In January 2020, the Second Circuit Court of Appeals considered whether registered nurses are exempt from overtime pay pursuant to the professional exemption. Today’s Long Island employment law blog discusses the decision.
In Isett v. Aetna Life Insurance Company, the plaintiff-employee worked as an appeals nurse for an insurance company. Isett was required to hold a license as a registered nurse. Her job involved reviewing appeals for authorization for medical services which were initially denied by the health insurance claims department. Isett made a clinical determination about whether the service is medically necessary. For her work, Isett was paid on a salary.
To perform her duties, Isett reviewed the patient file, including clinical documents, as well as the initial insurance review documents. Isett then compared the information to the company’s guidelines to determine whether the service is medically necessary. If the patient’s coverage did not meet the company’s criteria, the file was forwarded to a medical director (a doctor) for further review. In other words, Isett did not work in a clinical setting.
Isett worked from home with little supervision. She relied on her knowledge and experience as a nurse, to perform her duties.
Isett sued Aetna alleging that the company misclassified her as a non-exempt employee who was not entitled to overtime. The trial court disagreed and dismissed the case.
On appeal the Second Circuit had to determine whether or not the professional exemption applies to nurses in Isett’s position. The FLSA requires employers pay overtime to workers who work more than 40 hours in a week. Excluded from this requirement, are classes of workers, including those employed in a bona fide professional capacity.
The Department of Labor furthers defines professional capacity as a worker whose primary job duties requires knowledge of advanced type in a field of science or training acquired by prolonged course of specialized intellectual instruction. Federal regulations explicitly address the professional exemption’s application to nurses noting registered nurses who are licensed by the state are generally exempt, whereas licensed practical nurses generally do not meet the exemption’s requirements.
The Court determined that Isett’s job met two important elements which suggest the professional exemption applies. First, the Second Circuit determined that registered nurses, such as Isett, require acting independent of direction. Second, Isett’s primary duties required her to use the discretion and judgment of a registered nurse and to act independently. Accordingly, her primary duties met the professional exemption.
But, the Court also had to determine whether her position required specialized instruction. The Court had little difficulty finding that Isett had advanced knowledge received from the core of her specialized training and this training enabled her to perform her job. In sum, the appeals nurses at issue in the Aetna case were exempt from the FLSA’s overtime requirements.
Notably, many employers and employees believe that the test for whether an employee receives overtime is whether the employee is salaried or not. Sometimes, salary is a factor in determining whether an employee is exempt or not, but it is never the sole factor. Classifying employees as exempt verse non-exempt can be tricky. Employers can find themselves in deep financial trouble if employees are misclassified causing employees who should have received overtime, to not receive overtime.
If you have questions about the classification of registered nurses as exempt or non-exempt from overtime, or about the requirement for other categories of workers to receive overtime, contact a Long Island overtime lawyer at Famighetti & Weinick PPLC. Our wage and hour attorneys are available for free consultation. Overtime violations can result in significant actual, liquidated, and statutory damages, as well as attorneys fees. Our overtime attorneys are available at 631-352-0050. More information about New York’s wage and hour laws is available on our website at http://linycemploymentlaw.com.