HR Policy urged the Supreme Court in an
amicus brief to overturn an expansive decision by the Ninth Circuit Court of Appeals holding that per diem allowances for traveling expenses are wages for purposes of calculating overtime under the Fair Labor Standards Act.
The case, AMN Services, LLC v. Clarke, has potentially significant implications for all employers who regularly provide per diem allowances for traveling expenses to their employees. The plaintiff, AMN Healthcare, is a health care staffing company that places temporary workers in longer-term assignments at facilities around the country that are facing staffing shortages. Like many other health care staffing companies, AMN provides per diem allowances to cover work-related travel expenses for the duration of such assignments, which it reduces if the employee fails to report for scheduled shifts.
Under the FLSA, “reasonable payments for travel expenses, or other expenses incurred by an employee in furtherance of his employer’s interests,” are excluded from calculating an employee’s “regular rate” of pay. Calculating an employee’s regular rate of pay is crucial for purposes of determining overtime pay under the FLSA.
The Ninth Circuit nevertheless ruled that AMN’s per diem payments are compensation for hours worked, and thus part of the employee’s “regular rate” of pay for overtime purposes. The Ninth Circuit cited AMN’s policy of reducing per diem payments for employees who miss scheduled shifts.
HR Policy argues that the Ninth Circuit’s decision ignores statutory text under the FLSA and the Internal Revenue Code, which clearly dictates that such reimbursements are not part of an employee’s regular rate of pay. Further, our brief asserts that the Ninth Circuit’s decision upsets longstanding industry practices and threatens to further exacerbate the current staffing shortage crisis plaguing the health care industry, at a time when health care workers are particularly crucial.
Outlook: The Supreme Court will soon decide whether to take up AMN’s petition. In the meantime, health care staffing companies or similarly situated employers with operations in California and other jurisdictions under the Ninth Circuit should review their compensation structures to ensure that they are in compliance with the Ninth Circuit’s ruling.
