Company pays millions for OT screwup
October 15, 2009 by Christian SchappelPosted in: Employment law, In this week's e-newsletter - benefits, Latest News & Views, Money, Pay and benefits
Small overtime foul-ups can grow into giant liabilities.
Three hospitals in Orange County, CA, owned by Tenet Healthcare, recently settled a class action lawsuit for $85 million.
Here’s what happened:
The suit alleged that to avoid OT costs, Tenet lowered the hourly pay rate for nurses and other employees when they worked more than eight hours a day.
So while the employee technically earned OT, their net wages remained the same as if they hadn’t.
The suit also alleged Tenet used as many as five different hourly pay rates — depending on the length of an employee’s shift.
Roughly, 23,000 current and former employees statewide qualify for settlement payments.
“It’s not enough for an employer to demonstrate that it pays overtime on paper. They have to pay overtime in money, not math,” said Frank Coughlin, a Santa Ana attorney representing one of the employees who brought the suit.
Tags: $85 million, Don Pagaduan, lawsuit, Orange County, overtime, Tenet Healthcare
October 22nd, 2009 at 12:38 pm
You would think a company that size would do everything in it’s power to comply with regulations. Sooner or later that kind of employee abuse was going to get them into trouble and I am glad they got nailed. I am surprised they got away with it for as long as they did. You know a company that size probably had at least 4 or 5 HR professionals working for them, and for each of them not to fight tooth and nail to have the policies changed is beyond me. They all got what they deserved.
October 22nd, 2009 at 1:07 pm
Wow. I can’t believe how the company could have thought they were behaving ethically in this circumstance, and that they would get away with this behavior.
October 22nd, 2009 at 1:53 pm
I would be surprised if the tactics used by the company owning these hospitals didn’t cause substandard patient care. How can a health care professional feel good about their job if they know another in the same line of work makes as much money as they do, and never works any OT? DUH.
October 26th, 2009 at 11:05 am
In response to Tricia’s comment about the HR Professionals: I am an HR/Payroll professional and just because nothing was done doesn’t mean an effort wasn’t made. Often Management are told they are breaking the law management refuse to follow/listen to the advise given. Hopefully the payroll professional was aware of the law; if not it was their responsibility to know and advise. If management was warned hopefully the person(s) kept documentation of that warning.
Some organizations think because they have gotten away with it so long that they will continue to get away with it. I am a believer that things come full circle. I am glad they got caught! I wonder if it was worth it to Tenet?