For most of your staff, overtime work means overtime pay

Physicians are used to working a lot of extra hours without automatic overtime pay. However, labor attorneys and consultants say some physicians forget that if their office staff is working those extra hours, too, many of them should be getting extra pay.

Paying overtime is not a problem confined to physician offices -- all small businesses struggle with who gets paid overtime, and who doesn't. Revised overtime rules issued in 2004 clarified a few things -- for example, that office-based registered nurses, for the most part, would not have to be paid overtime -- but they haven't slowed the rush of overtime-related lawsuits flooding the court system.

The Administrative Office of the U.S. Courts reports the number of overtime cases being heard in federal courts has doubled over the last five years. Attorneys say that reflects the confusion and ignorance about overtime rules, and the Bush administration Labor Dept.'s increased focus on prosecuting overtime cases compared to past administrations' interest in discrimination cases.

In this environment, attorneys and consultants say it's paramount that physicians make sure they are clear about who gets paid overtime, and who doesn't -- and what to do if they discover they should have been paying overtime for years, but hadn't. Losing an overtime case can mean shelling out up to three years' back pay, an equal amount in punitive damages, and whatever attorneys' fees your employees rack up.

"The reality is that physicians, in starting up a practice, have so many things on their plate that wage and hour issues can fall by the wayside," said George Voegele, who has handled physician practices as an attorney for Cozen & O'Connor in Philadelphia. "And that happens at their peril."

When it comes to overtime, physicians have to figure out not only who gets paid, but how.

Regarding who gets paid, the quick answer for most small practices is: everybody but the doctors. Professionals, defined as someone who is in a job that requires a very specific course of study, are exempt from overtime. Anyone who is in a supervisory position can be exempt from overtime. Anybody making more than $100,000 a year isn't required to be paid overtime. But anybody making less than $23,000 a year (full-time) is. Experts say these rules apply to every employee, including the niece you might have hired for the summer.

However, not everything is so clean-cut. For example, what is a supervisor? Just because you call someone an office manager or supervisor doesn't make that person management under overtime law. "You can't make someone an exempt, salaried person just because you want to," said Debra Pharis, president of San Francisco-based Practice and Liability Consultants, who is a frequent lecturer about employment issues.

Attorneys and consultants say the key is whether employees report directly to the manager or supervisor, and whether that person makes decisions that materially affect the office. If managers or supervisors get to participate in picking the practice-management system, they would be making such decisions. If they're handed an office products guide to order paper clips, they wouldn't.

The question of what constitutes overtime can flummox physicians and other small businesspeople.

Generally, any hours worked that exceed 40 hours per week require overtime pay, at 1½ times the employees' regular rate. In some states, the clock on overtime starts after eight hours in a day, no matter the hours worked per week. For the so-called nonexempt employees, lunch hours (or half-hours) don't count as part of the payday. So if they're eating lunch, they're not on the clock. But if they're eating lunch and working at the same time, they are.

Also, states can vary on whether they allow you to compensate overtime with days off instead of cash. Even if you use so-called compensatory time, it's still paid at time-and-a-half.

Attorneys and consultants recommend physicians trying to figure out the nuances of overtime in their own offices check out the Dept. of Labor's Fair Pay Web site (link), which has many resources on overtime law. And, of course, attorneys and consultants recommend physicians talk to a labor lawyer or expert to make sure they are 100% in compliance.

Perhaps the trickiest thing about overtime is what to do if you realize you should have been paying overtime, but haven't.

Attorneys and consultants agree on one point -- you're stuck, and you shouldn't try to pussyfoot your way out of it. They recommend that you announce you're instituting overtime, don't make a big deal out of the fact you haven't paid it before, and hope no one sues you. And most definitely don't ask your employees to sign a release waiving the right to collect past wages. Attorneys say that has been tried, but the Dept. of Labor won't buy it unless you get a court's approval, which is not likely.

Fortunately for most small practices, announcing you're going to start paying overtime doesn't often lead to a court fight. "We've been able to resolve these informally," said Shay Zeemer, an attorney at Powell & Goldstein in Atlanta. "Informality cuts both ways -- sometimes it leads to problems ... but you also don't have people suing you as much."

Usually court fights come from a large group of employees seeking back overtime, she said.

If you are just starting to pay overtime, or even if you have paid it, attorneys and consultants say it's important that all employees keep a time card or punch in on a time clock, and that the physician keep concurrent records of employees' time to make sure there are no discrepancies.

The bottom line on paying overtime is this: unlike discrimination cases, overtime cases are easy to prove. Either an employee should have been paid and wasn't, or didn't need to be paid and has no complaint. In the murky world of employment law, paying or not paying overtime can be confusing, but it's about as clear as it gets.

"You don't have to prove anybody did anything intentionally wrong" in an overtime case, Zeemer said. "It's cleaner. Less emotional."