Monday, August 15, 2005


An institution in Pasadena California, the Huntington Memorial Hospital, founded in 1892, recently discovered that it had to bring its overtime practices into the 21st Century.

The Case: Huntington Memorial Hosptial v. Irene Mutuc (Aug. 2, 2005).

The Facts: The Hospital paid a "short shift" differential. Specifically, it paid nurses who worked 8 hour shifts more per hour than nurses working 12 hour shifts. Nurses generally preferred 12 hour shifts because it gave them more free time during the week. The Hospital argued it paid the 8 hour nurses more because those shifts were more difficult to fill. The 12 hour shift nurses who sued the Hospital argued they were getting paid less per hour because the Hospital wanted to evade paying overtime based on a higher base rate per hour.

The Court: Don't monkey around with the overtime laws. There are laws and regulations regarding how to calculate the hourly rate, and basically, those laws require the rate to be set without manipulation or trickery to avoid overtime costs. So, a short shift differential looks fishy. After all, the real payroll costs are for the 12 hour workers, so the Hospital can appear to be generous to 8 hour shift workers with a higher hourly rate, but in fact save big money over time with a lower hourly rate for the 12 hour shift workers.

Bottom Line: Simple and uniform payroll rates can save you from a class action for overtime violations. Shift differentials are OK, for example, for night shifts, if the night shift overtime is based on the night shift hourly rate. But "short shift" differentials present a problem because they produce situations where the "hourly rate" drops for workers working longer hours--and that looks like an effort to evade overtime pay.

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