Parth v. Pomona Valley Hospital: FLSA Allows Employer to Change Regular Rate of Pay to Accommodate Alternative Workweek Schedule

In Parth v. Pomona Valley Hospital Medical Center, --- F.3d ----, 2010 WL 4643846 (9th Cir. November 18, 2010), the Ninth Circuit held:

When an employer changes its shift schedule to accommodate its employees' scheduling desires, the employer may reduce the employee pay rate to pay its employees the same wages they received under the former schedule, so long as the rate reduction was not designed to circumvent the provisions (including overtime) of the Fair Labor Standards Act (“FLSA”).

Slip op. at 1. Defendant hospital offered its nurse employees the option of working 8-hour or 12-hour days. Defendant paid those who worked 12-hour days a lower regular rate and daily overtime compensation, so that their weekly pay approximated the pay of those who worked 8-hour days.

In 2003, defendant's nurse employees unionized. The CBA incorporated defendant's shift pay differentials. In 2004, plaintiff filed a collective action, alleging that the shift differentials violated the FLSA. The Court (Morrow, C.D.Cal.) conditionally certified a class, then granted summary judgment in favor of the employer. The Ninth Circuit affirmed.

Parth argues that PVHMC violated the FLSA by creating a pay plan that pays nurses working 12-hour shifts a lower base hourly rate than nurses who work 8-hour shifts. In support of her argument, Parth contends that: (A) PVHMC cannot reduce the base pay for nurses working the 12-hour shift, (B) the 12-hour base pay rate is an “artifice” designed to avoid the FLSA's overtime and maximum hours requirements, and (C) PVHMC cannot justify the base hourly pay rate differences between the 8-hour and 12-hour shifts, because nurses working both shifts perform the same job duties.

Slip op. at 3. The Court disagreed. It held that FLSA does not prevent an employer from lowering its employees' regular rate of pay so that their weekly pay when they work an alternative workweek schedule -- including overtime compensation -- approximates their weekly pay when working a regular schedule. See, e.g., Walling v. A.H. Belo Corp., 316 U.S. 624, 628-30 (1942).

Next, the plaintiff argued that the the 12-hour shift pay plan was "essentially an artifice to avoid paying overtime." Again, the Court disagreed. It held:

First, the reduced rate was agreed to by the employees through the collective bargaining agreement, in which there appears no evidence of improper influence or inequality of bargaining position. The plan provides employees more scheduling flexibility, allows them to spend less time commuting to work (because they spend fewer days at work), and ensures that PVHMC does not retain an incentive to ask the nurses to work longer hours. Second, the rate has been in place since 1989 or 1990 (and applied to Parth since 1993). Third, the rate paid nurses working the 12-hour shift far exceeds the Act's minimum wage.

Slip op. at 7.

Finally, plaintiff argued that defendant's pay plan was unlawful "because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates." Slip op. at 8. Again, the Court disagreed.

We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary. We do, however, find ample authority from other circuits that supports PVHMC's argument that workers working different shifts may be paid different rates. As the Supreme Court has noted, employers and employees are generally free to set the pay rates if minimum wages and overtime payments are paid when due.

Ibid.

The opinion is available here.