Healthcare entities have faced increasing pressure from the Department of Labor regarding wage and hour issues. Some of this is a hangover from COVID and the long hours many healthcare workers endured trying to meet the needs of their communities, but other issues are longstanding. Particularly in Iowa, there has been a continuing pattern of the issues and concerns raised both by the state and federal DOL.

The Rounding Rule

As everyone in healthcare knows, a hospital system in Washington state had a significant wage and hour case which was based both on issues under the rounding rule as well as specific rules for paid breaks which are part of Washington state law. This case made it increasingly clear that the DOL will assess the rounding rules requirements very carefully, specifically that any rounding done must benefit the employer and employee equally.. Even minor deviations, by a percentage point or two, could lead to penalties and backpay through the DOL. 

While the rounding rule has historically made sense, particularly when someone with an adding machine was doing payroll, this case denotes a shift to no rounding given the computerized nature of payroll and clocking in as well as the increasing specificity of how we track employees. Given DOL’s stated position, rounding is likely to create a red flag in any DOL review. 

Automatic Clock-outs and Mealtimes

 The DOL has long indicated that it is not a fan of the automatic clock-out. In many instances, the DOL feels that this undervalues the time employees actually work and the DOL always looks at the automatic clock out with a side-eye.

These problems are compounded by the fact that, when interviewed, employees rarely remember the extra time they took, the time they left early, or that they had an extra break, but always remember the day that they were called back in or had to work their meal period. When the DOL is onsite and doing a review, employees focus on all this extra work which leaves the DOL, in many instances, to believe that the employees are never getting the allotted meal break. 

This could also be problematic in certain healthcare entities such as long-term care, where the payroll-based journal (PBJ) has different rules for how facilities record time than the FLSA. Clocking in and out for specific breaks and time off mitigates these risks but can also be logistically problematic depending on how you do your time recording. However, in most healthcare facilities, including long-term care communities and hospitals, everyone doesn’t take a break at the same time so there tends to be less time lost in the process to clock in and out.

Relieved of Duties

In many instances, healthcare employees are requested to remain on campus or easily reachable in case of an emergency involving a patient or resident. However, the question becomes whether or not this truly means they are being relieved of duties. If you are not allowed to leave the facility for your unpaid half-hour meal period, are you truly relieved of your duties? This also becomes problematic if the employee receives several calls when they are on their unpaid meal break. To the DOL, all of this indicates that the meal break should be paid. Some employers have been told previously, particularly in workers’ compensation matters, that they should always require an employee who is leaving the facility to clock out even if it is for five minutes to run across the street and grab a soda. The argument is because they are leaving the facility they should clock out to show that it is not on work time for the purposes of workers’ compensation. 

While you can have an employee clock in and out for short breaks, time must be still counted as worked time. Typically breaks of less than 30 minutes are considered time worked and as such must be paid. If you are deducting for 5- and 10-minute breaks, you will be considered to be in violation of both state and federal wage and hour laws. Also note that if employees need a lot of small breaks, you can’t aggregate those breaks to create unpaid time. That means if an employee takes five 10-minute breaks, that is not 50 minutes of unpaid time, it is all paid time. 

The PUMP Act 

The PUMP Act, while supporting women who are lactating, has created some uncertainty within the wage and hour rules. Under the PUMP Act, the employer is not required to pay the employee for time spent pumping or engaged in activities around pumping. There are other requirements of the law such as private space to pump, hygienic facilities and similar items, but the pay issue has also created concerns. Employees who utilize short breaks such as a 15-minute break for pumping might be replacing a “coffee break” with a PUMP Act break and clearly should be paid for that time. However, if employees are utilizing extra breaks or extended time periods such as 30 minutes to an hour to pump, it becomes more difficult for the employer to determine whether or not those breaks should be paid or if the employee may be required to clock out. This can potentially also be considered an accommodation under the Pregnant Workers Fairness Act and like any other accommodation needs to be individually assessed. For questions such as these, you should coordinate with your legal counsel.

Bonuses and Overtime True Up

 As is a common healthcare practice, employees often earn bonuses and/or receive premium shift pay for working additional/undesirable shifts; yet all too often, employers do not take these additional payments into account when calculating an employee’s overtime pay. Unfortunately, the DOL is noticing and penalizing employers.

The Fair Labor Standards Act (FLSA) requires that non-exempt employees be paid one and a half times their “regular rate” of pay for all hours worked more than 40 hours in a single workweek. Subject to some narrow exceptions, an employee’s “regular rate” includes “all remuneration for employment paid to . . . the employee.”¹ While one of the exceptions is for “discretionary bonuses,” “non-discretionary bonuses” must be included in the “regular rate” for purposes of calculating overtime. A “non-discretionary bonus” is one that is based on a pre-determined formula or achievement of a certain metric, like a bonus or premium paid for attendance or working an additional shift. Accordingly, employers who award non-discretionary bonuses to non-exempt employees should ensure that the bonus is accounted for in the “regular rate” or “true up” the overtime payments made to these employees—meaning recalculating the employee’s regular rate for the period covered by the bonus and “truing-up” the employee for any unpaid amounts.

Bottom Line

Given the Department of Labor’s heightened scrutiny for issues like rounding rules, automatic clock-outs, and overtime calculations, now is the time for Iowa healthcare providers to review policies, update timekeeping practices, and ensure compliance with both state and federal laws. By staying ahead of these evolving requirements, healthcare providers can protect their workforce, maintain regulatory compliance, and focus on delivering quality patient care. When in doubt, consulting with legal counsel can help navigate these complex wage and hour concerns effectively.

1. See 29 U.S.C. § 207(e).↩