On December 5, 2007, the United States District Court, Central District of California, granted Sheppard, Mullin, Richter & Hampton, LLP’s Motion for Summary Judgment filed on behalf of Defendant Pomona Valley Hospital Medical Center ("PVHMC") in one of the most significant wage and hour class action lawsuits currently pending before any federal or California state court.  In Parth v. Pomona Valley Hospital Medical Center, the healthcare industry received a major victory against plaintiffs’ counsel who have challenged 12-hour shift overtime pay practices.  The Parth decision is likely to be widely cited in other cases against California hospitals and should greatly benefit the entire healthcare industry.

The pay practice at issue in Parth was developed and first implemented in the early 1990s and is similar to the overtime pay practices of numerous Southern California hospitals.  PVHMC implemented a 12-hour shift overtime pay practice in response to the Registered Nurses’ ("RNs") request to work 12-hour shifts. 12-hour shifts are popular among RNs because full-time status constitutes six shifts in a 14-day work period whereas full-time status for 8-hour shifts constitutes ten shifts in a 14-day work period.  As part of the 12-hour shift implementation process, PVHMC reduced the base pay rates for RNs transferring to 12-hour shifts ("12-hour rate").  The base pay rates for RNs who continued to work 8-hour shifts remained the same ("8-hour rate").

In Parth, the plaintiff, on behalf of herself and similarly situated RNs, alleged that: (1) it was illegal for PVHMC to reduce the base rate of pay for 12-hour shift RNs; (2) that the 12-hour rate is an artifice designed to avoid the Fair Labor Standards Act’s ("FLSA") overtime and maximum hours requirements; and (3) that the difference between the 8-hour and the 12-hour rates cannot be justified because, regardless of the length of their shift, RNs perform the same type of work.  The District Court soundly rejected all three of plaintiff’s arguments.

The plaintiff’s most vigorous challenge to PVHMC’s pay practice was her argument that it was designed to give the appearance of paying overtime while ensuring that the transition to 12-hour shifts was cost neutral to the hospital.  The District Court dismissed plaintiff’s argument, finding that employers and employees are free to establish any rate of pay so long as it is not below the minimum wage.  See Allen v. Board of Pub. Ed. for Bibb County, 495 F.3d 1306, 1312 (11th Cir. 2007).  The District Court further found that, regardless of the timing of the pay reduction, there is nothing inherently improper about an employer and employee agreeing to an hourly rate lower than previously paid.

With respect to plaintiff’s artifice and subterfuge arguments, the District Court determined that the only relevant question when assessing an alleged FLSA violation is whether overtime was correctly calculated based on an appropriately determined "regular rate" of pay.  In Parth, the plaintiff presented no argument or evidence for the proposition that the regular rate of pay for 12-hour shift RNs was not properly determined, or that overtime thereon was not properly calculated.  Rather, the plaintiff argued that the 8-hour rate should be deemed the regular rate for calculating 12-hour shift RN overtime payments.  The District Court found plaintiff’s argument unavailing and concluded that as a matter of law the 12-hour rate was the legal basis for calculating overtime in accordance with the dictates of the FLSA.

Lastly, the District Court confirmed that courts have routinely approved the payment of different base rates of pay for work that is identical in nature but performed during shifts of different lengths.  See Allen, 495 F.3d at 1312.  In Parth, the undisputed facts demonstrated that there is no qualitative difference between the work performed by 8-hour shift RNs and 12-hour shift RNs.  However, the District Court determined that although the work of 8-hour shift RNs and 12-hour shift RNs is identical, the "job" itself is not.  As clearly noted by the District Court, "[f]ew would argue that there is no difference between a job that allows two days off versus a job that allows four days off. . . [the] personal choice about when to work (and how long to work) carries a wage rate consequence."

The District Court’s extensive analysis of PVHMC’s pay practice, the FLSA, and legal precedents, provides much-needed guidance for employers facing litigation concerning 12-hour shift pay practices.  The decision should benefit employers defending against these cases.