Trinity Health Corporation and Subsidiaries Accused of Violating Overtime Laws

Trinity Health Corporation (“Trinity”) and two of its subsidiaries, Mercy Health System (“Mercy”) and Lourdes Health System (“Lourdes”), have been named defendants in a putative collective action[1] lawsuit in the U.S. District Court for the Eastern Pennsylvania. The complaint against the health systems alleges that they have failed to pay Trinity employees for their overtime work, in violation of federal Fair Labor Standards Act and Pennsylvania’s Minimum Wage Act.  The case is Layer v. Trinity Health Corp. et al., E.D. Pa. Case No. 2:18-cv-02358-PD.  The named plaintiff, Layer, is a Medical Technician.

Pursuant to both federal and (Pennsylvania) state law, employees must be compensated at the rate of 1.5 times the amount of an employee’s regular pay rate for hours worked over 40 in a seven-day week.  See 29 U.S.C. §207(a)(2); 43 P.S. §333.104(c).  For hospitals and many other health care entities, the overtime compensation rule is applied to hours worked over 80 in a 14-day period. See 29 U.S.C. §207(j).

Layer’s Complaint explains:

  • During one 14-day pay period, Layer worked 80 and ¼ hours at Mercy facilities;
  • During the same pay period, Layer worked another 16 and ¾ hours at Lourdes facilities, for a total of 97 hours worked during the two-week pay period;
  • However, Layer received just ¼ hour overtime on his paycheck: the ¼ hour over the 80 he worked at Mercy facilities over the 14-day pay period.

Layer of course contends that he should have received 17 hours of overtime during the 14-day pay period described above.  His Complaint cites a Regulation promulgated by the U.S. Labor Department’s Wage and Hour Division, which states in pertinent part as follows:

“A single individual may stand in the relation of an employee to two or more employers at the same time under the [FLSA], since there is nothing in the act which prevents an individual employed by one employer from also entering into an employment relationship with a different employer. A determination of whether the employment by the employers is to be considered joint employment or separate and distinct employment for purposes of the act depends upon all the facts in the particular case. If all the relevant facts establish that two or more employers are acting entirely independently of each other and are completely disassociated with respect to the employment of a particular employee, who during the same workweek performs work for more than one employer, each employer may disregard all work performed by the employee for the other employer (or employers) in determining his own responsibilities under the Act. On the other hand, if the facts establish that the employee is employed jointly by two or more employers, i.e., that employment by one employer is not completely disassociated from employment by the other employer(s), all of the employee’s work for all of the joint employers during the workweek is considered as one employment for purposes of the Act. In this event, all joint employers are responsible, both individually and jointly, for compliance with all of the applicable provisions of the act, including the overtime provisions, with respect to the entire employment for the particular workweek… .

29 C.F.R. §791.2(a). (Emphasis added)

Layer contends that Mercy and Lourdes are not “entirely independent of each other” or “completely disassociated” with respect their employment of him, and, as such, the respective hours he worked for each employer should be considered “one employment,” i.e., added together for purposes of calculating his total number of hours worked during a pay period, and thus his overtime.

In Department of Labor parlance, Layer appears to be saying that Mercy and Lourdes are “horizontal joint employers.”  As the Labor Department explains, “horizontal joint employment should be considered when an employee is employed by two (or more) technically separate but related or overlapping employers.”  See Department of Labor Administrator’s Interpretation (AI) No. 2016-1.  In the 2016 Interpretation cited in the preceding sentence, the Labor Department identified factors which will frequently come into play in determining whether a horizontal joint employment exists:       

  • “Who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners);
  • Do the potential joint employers have any overlapping officers, directors, executives, or managers;
  • Do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs);
  • Are the potential joint employers’ operations inter-mingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for);
  • Does one potential joint employer supervise the work of the other;
  • Do the potential joint employers share supervisory authority for the employee;
  • Do the potential joint employers treat the employees as a pool of employees available to both of them;
  • Do the potential joint employers share clients or customers; and
  • Are there any agreements between the potential joint employers.”

Id.

In support of his horizontal joint employer argument, Layer’s Complaint notes:

  • Mercy and Lourdes have a common owner – Trinity;
  • Trinity touts itself as a “comprehensive integrated network,” and as a sophisticated, national healthcare conglomerate;
  • Mercy and Lourdes, along with the other facilities in Trinity’s network, combine their revenues, expenses, and profits in a consolidated financial statement; and
  • Human resources, payroll, employee benefits, and insurance functions are consolidated and centralized.

The Defendants’ counter-arguments to Layer’s position are not known at this time, as they have not responded to Layer’s Complaint as of yet.  The Defendants may certainly cite factors from the above-quoted list which cut in their favor, or they may point to other criteria which augur against a finding of horizontal joint employment.  (Indeed, the Labor Department’s Interpretation notes that the above-quoted list of factors is not exhaustive, i.e., other factors may also be relevant.)

In any case, as the health care merger boom continues, and as entities continue to seek ways to consolidate and co-mingle their resources, including their human resources, expect cases like Layer’s to proliferate.

Stephen Alvstad

Beautyman Alvstad, LLP

1201 Bethlehem Pike

Flourtown, PA 19031

Tel.:  (c) (215) 640-9968

(o) (215) 836-7000

Fax:        (215) 836-6886

E-mail: salvstad@beautyman.com

[1]  A “collective action” is akin to a class action in that it involves a group of people with similar claims against a particular defendant, i.e., the plaintiffs are “in the same boat” as one another.  One of the primary differences between class and collective actions relates to how a plaintiff gets “in” or “out” of the class – or collective.  In a class action, the “default” position is that a plaintiff who meets the criteria of class membership will be in the lawsuit unless he or she affirmatively opts out.  Conversely, in a collective action, a plaintiff will be out of the collective, and therefore the lawsuit, unless he or she affirmatively opts in.