Employment Law Alert: Washington High Court Issues Important Decision on Rest Breaks and Overtime Pay

The Washington Supreme Court’s October 2012 decision in Wash. State Nurses Ass'n v. Sacred Heart Med. Ctr., 175 Wn.2d 822 (2012), is particularly noteworthy for local government employers (and other employers) and their non-exempt employees.

Generally speaking, a non-exempt employee under the Fair Labor Standards Act (FLSA) and otherwise under Washington law is an hourly employee who is due overtime pay for working more than 40 hours in a work week. In Sacred Heart Medical Center, the court held that the employees at issue were due overtime pay because they worked through rest periods that their employer was required by law to provide. In so holding, the court ruled on an issue that could have significant impacts on local government (and other) employers.

As an initial matter, note that Washington’s Minimum Wage Act (MWA), chapter 49.46 RCW, applies to public as well as private employers. Also, although a collective bargaining agreement is referenced by the court in Sacred Heart Medical Center, the court makes clear that its decision is based on state law, not the collective bargaining agreement.

Note, too, that there is a key provision in state law that applies to public (but not private) employers and employees. That provision, RCW 49.12.187, provides in relevant part:

Employees of public employers may enter into collective bargaining contracts, labor/management agreements, or other mutually agreed to employment agreements that specifically vary from or supersede, in part or in total, rules adopted under this chapter regarding appropriate rest and meal periods.

Although not at issue in this court decision, RCW 49.12.187 specifically authorizes public employees and their employers to mutually agree to rules related to rest and meal periods that differ from what is required in chapter 49.12 RCW, as long as such agreement is set forth in a collective bargaining agreement, labor/management agreement, or some type of mutually agreed upon employment agreement. From discussions with employment law attorneys who work with local governments in Washington state, RCW 49.12.187 is most commonly implicated, if at all, in the context of employee unions and collective bargaining agreements (CBAs).

For example, it may be that bus drivers would rather take an extended lunch break than the 10-minute rest break that is required every four hours under chapter 49.12 RCW (see below for more detail). Pursuant to RCW 49.12.187, those drivers may mutually agree through a CBA with their public employer to vary from this general rule. For this reason, if a municipality is assessing a dispute regarding a particular activity (e.g., rest and/or meal periods) and the parties involved have entered into a CBA or like agreement, that agreement needs to be reviewed to determine whether it has a provision applicable to the activity at issue.

That said, if the non-exempt public employees at issue are not governed by the type of agreements specified in RCW 49.12.187, or if such employees are parties to such an agreement but that agreement does not differ from what is required in chapter 49.12 RCW related to rest (or meal) periods, the decision in Sacred Heart Medical Center will apply similarly to public and private employers.

What specific situation did the court address in Sacred Heart Medical Center, what did the court conclude, and why does this matter?

Under the WMA and regulations administered by the Washington State Department of Labor and Industries (“L&I”), the general rule is that employers must provide non-exempt employees with a paid rest period of at least 10 minutes for every four hours worked. WAC 296-126-092(4). If an employer requires a covered employee to return to work during a rest period or if such an employee works through a rest period, the employee generally has the option of either taking the remainder of the rest period later in the same work day or receiving compensation for the missed rest period. If a non-exempt employee works more than 40 hours in a work week as a result of working through rest periods, overtime pay considerations are implicated.

In Sacred Heart Medical Center, at 829, the court explains:

According to WAC 296-126-092(4), “Employees shall be allowed a rest period of not less than ten minutes, on the employer’s time, for each four hours of working time. … No employee shall be required to work more than three hours without a rest period.” “‘Hours worked’ shall be considered to mean all hours during which the employee is authorized or required by the employer to be on duty on the employer’s premises or at a prescribed work place.” WAC 296-126-002(8). “An analysis of ‘hours worked’ must be determined on a case-by-case basis, depending on the facts.” Wash. Dep’t of Labor & Indus., Admin. Policy ES.C.2 § 1, at 1. Under federal law, rest periods “must be counted as hours worked” and “may not be offset against other working time.” 29 C.F.R. § 785.18; see also Inniss v. Tandy Corp., 141 Wn.2d 517, 525, 7 P.3d 807 (2000) (this court may consider the Code of Federal Regulations as persuasive authority when construing provisions of the MWA).

The court noted the following key facts described in the trial court’s decision:

… Vivian Mae Hill and the nurses represented by WSNA … who worked through their rest periods provided their employer Sacred Heart Medical Center (SHMC) with additional time worked. Although SHMC provides nurses with a 15-minute rest period for each four hours of work, state law requires only a 10-minute rest period. Therefore, for purposes of this case, ten minutes of nurses’ missed rest break is at issue here and must [be] compensated at the appropriate time and one-half rate of a nurse’s “regular rate of pay” when it results in overtime pursuant to RCW 49.46.130.

Id. at 827-28.

After analyzing the specific facts at issue and considering the parties’ arguments, the court held that the nurses were entitled to overtime compensation for the first 10 minutes of each break they missed. In so holding, the court explains:

Because both the rest break time and additional labor time constitute “hours worked,” nurses’ workdays were extended by 15 minutes when they missed breaks. A nurse who misses a break is already compensated by Sacred Heart for the 15 minute break as well as 15 minutes for the labor. Although the nurses worked during rest periods, the nurses were still entitled to compensation for 10 minutes of “hours worked” for each missed break. WAC 296-126-092(4). The additional labor Sacred Heart received when the nurses worked through their breaks was the equivalent of labor Sacred Heart otherwise would have secured by requiring nurses to work overtime only at the end of their shifts. By putting nurses in a situation where they could not take their breaks, in violation of WAC 296-126-092(4), Sacred Heart effectively “authorized or required” nurses “to be on duty on the employer’s premises” to perform work equivalent to an overtime shift after the end of their normal workday. WAC 296-126-002(8). Even though the nurses did not physically remain past the time they would normally go home, Sacred Heart may not avoid its obligation to provide 10 minutes of “hours worked” for rest or to treat time spent working as “hours worked.”

Id. at 831.

The court also held that the employer was required to pay the employees’ attorneys’ fees and costs, relying on RCW 49.48.030 and RCW 49.46.090(1). However, the court reversed the trial court’s ruling that the employees were entitled to double the amount of missed overtime pay. The court concluded that the employer had complied in good faith with the collective bargaining agreement and a prior arbitration award approving the payment of “straight time” pay for the missed rest periods, and that there was a “bona fide dispute” between the employer and the employees regarding the appropriate method of compensation for the missed rest periods.

What about intermittent rest periods?

Requiring 10 minutes of rest break every 4 hours may sound a bit rigid and impractical for some employees. To address this issue, L&I provides in WAC 296-126-092(5) that employees may, where the nature of the work allows, take “intermittent” rest periods equivalent to 10 minutes for each 4 hours worked. If an employee takes such an “intermittent” rest period, scheduled rest periods are not required.

Although intermittent rest periods are not addressed by the court in Sacred Heart Medical Center, the court does reference other provisions in the same WAC section (WAC 296-126-092). It’s important that municipal employers have clear policies and accurate record keeping regarding intermittent rest periods as contemplated by WAC 296-126-092(5) to ensure that employees understand if and when such rest breaks are appropriate.

What lessons can be learned from this court decision?

In discussing with employment law experts the possible implications of the decision in Sacred Heart Medical Center for local governments in Washington, a few points, I think, deserve particular emphasis.

As a practical matter, local government employers in Washington state must provide to non-exempt employees the mandated 10-minute rest breaks for every four hours worked, unless mutually agreed to otherwise under RCW 49.12.187. Where the nature of the work allows, scheduled rest periods are not required if such employees take “intermittent” rest periods equivalent to 10 minutes for each four hours worked.

Employers also need to ensure their non-exempt employees don’t work more than 40 hours in a work week (including time worked during the required rest periods), or pay overtime. Keep in mind that, in the situation in Sacred Heart Medical Center, the employees were paid for working through their rest breaks, but the court held that the employees were nonetheless entitled to overtime pay, at time and one half, because the employer put the employees in a situation in which they could not take their rest breaks and the employees worked more than 40 hours in a work week.

Additionally, local government employers should carefully review with legal counsel their current policies and practices regarding rest and meal breaks to ensure, for example, that non-exempt employees are taking these breaks, and, if they aren’t, to determine why they aren’t, and to ensure that such activity is accounted for and documented. The Washington MWA requires employers to maintain accurate record keeping of all non-exempt employees’ straight and overtime hours. To this end, it’s advisable for employers to develop effective methods and documentation to ensure accurate reporting of missed rest and meal breaks, proper calculation of pay for missed rest and meal periods, and strategies to account for paid rest breaks that are provided on an “intermittent” basis.

As a closing caution, I recommend that local governments seriously consider the potential financial ramifications that can result from failure to comply with the MWA. As discussed in the Sacred Heart Medical Center decision, if an employer willfully withholds wages that are due to an employee, a court could order the employer to pay the employee twice the amount of the unlawfully withheld or unpaid wages. And, even if, as in Sacred Heart Medical Center, a court finds that the employer didn’t act “willfully,” the employer could still be ordered to pay for a prevailing party’s attorneys’ fees and costs for its failure to pay required overtime compensation. Therefore, it’s very important that employers review with legal counsel their policies, practices, and record keeping in this regard to ensure compliance and avoid unnecessary disputes and litigation.

Which begs the question: What specific recommendations do I have regarding such policies, practices, and record keeping? Stay tuned. I have asked one of the contributors to our HR Advisor column, employment/litigation attorney Bruce Schroeder of the Summit Law Group, to address this issue from a practical, "how to" perspective. The plan is for that article to be published in our HR Advisor in the next month or so.