Overtime pay.

Home Health Columnist / Guide · Jul 11, 2014

Moved to our Travel Nursing forum for members advice.

NedRN · Jul 11, 2014

Was this a 48 hour contract? I'm not sure what the legal basis is, but it is not uncommon for such contracts to pay a flat rate for agencies like Fastaff perhaps (never done one myself). You do have to wonder what the legal basis could be because it is trivial to reduce base pay and have total weekly gross remain the same.

I've never seen a 36/48 hour contract pay less than time and a half on OT after 40. Very strange. Mind you most travel contracts have an artificially low base rate (to lower taxable compensation) with a truly insulting OT rate that while time and a half of base rate, is actually a pay drop when all compensation for hours to 40 per week are considered (housing, M&IE, travel, insurance and other categories).

Your post appears to have been edited by a moderator. Are you soliciting for a class action perhaps?

Barbara10172002 · Jul 12, 2014

This is NOT a solicitation for a class action case although I suspect this will eventually come to pass, if it has not already. I did read cases which were decided by the Supreme Court of TX. In Gagnon v UTI, the court ruled that UTI (employer) was wrong in not paying time and a half. In fact, that particular case is dead on point with what is happening in the travel agency industry. Whether hospitals are complicit in this practice is beyond my ability to know without any evidence. My gut tells me that this practice is now universal in our country. And honestly, many foreign nurses are probably not aware of the Fair Labor Standards Act which governs the payment of overtime. That being said, I'm guessing many native nurses are not aware either.

The tax advantage to the travel companies is similar to that of the nurse. Neither pays taxes on the "per diem" rate. Unless, of course, the "tax free" monies exceeds the amount allowed by federal statute. In that case, the nurse pays tax on the difference at filing time.

My research leads me to believe the IRS is scrutinizing travel agencies to determine whether they are paying their "fair share" or not.

The post was edited to be included in a category other than the one I posted to.

Thanks for your feedback.

NedRN · Jul 12, 2014

The hospital doesn't know how agencies are paying travelers. None of their business frankly and even if they knew, they have no control and cannot be complicit unless there is some requirement to report. I'm not sure where you are going with that.

There is no federal statute on the amount of tax-free money. Technically it is a reimbursement of expenses and so is without a limit. Now you can use GSA published amounts that the federal government allows their employees to be reimbursed without requiring receipts and I don't know of any agency that exceeds the GSA amounts.

Travelers will never pay the "difference", the liability is completely on the agency side. If they don't have a tax home and they get audited, then yes, they will owe back taxes, interest, and penalties on the tax-free reimbursements they received and were not eligible for. As a large percentage of traveler lie about their tax home, a fair number are caught if they are audited for any other reason. As reimbursements are not reported to the IRS, they are not a direct trigger for an audit.

Yes, there are a lot of agencies being audited right now for compensation practices by the IRS. But the IRS doesn't enforce overtime laws so it has nothing to do with that.

Barbara10172002 · Jul 13, 2014

You are correct in that there is no limit to reimbursement for per diem and M&I. You are also correct regarding your reference to GSA guidelines for federal employees. This is the metric used to determine, by location, the daily amount which is actually deductible for expenses when filing tax returns, when itemizing deductions. If one files a 1040 EZ, there is no issue.

If a travel claims MORE than that limit, without receipts, s/he is liable for the difference. The agency is NOT liable for an excess claimed by the traveler but may be held accountable for paying MORE than the guidelines allow. (Not having traveled in several years, I don't know if any actually DID but would not be surprised, as this is a way for the agency to minimize its tax liability.)

This issue is at the heart of the IRS investigations. If you believe that the IRS is disconnected from overtime pay issues, I don't know what to say except I am CERTAIN it is. More overtime pay means more tax liability for everyone.

To date, the IRS IS well aware of this amount paid to travelers as some companies abused the system and are under continued scrutiny by this agency. Furthermore, these company audits have led to individual audits, as you pointed out.

Please see: Gagnon v United Technisource Inc US Court of Appeals, Fifth Circuit, May 2010 (07 F.3d 1036; 2010 U.S. App) which I believe is the landmark case in which the court ruled overtime is to be paid on both the base and expenses.

I disagree with your assessment that a "large percentage of travelers lie about their tax home." I would be interested to see your references to support that observation.

Regarding the assertion that the hospitals do not know how much the traveler is being paid, I'm skeptical. This may have been true in the past but the stakes today are very different. Businesses work together to minimize their greatest expense...payroll.

Perhaps you might be able to explain why a facility in CA requires travel OR nurses to recover patients post-op rather than call in their own staff? This practice is CLEARLY not in the best interest of patient care, no matter how you look at it. My theory is that it costs the hospital less to pay overtime (at less than time and a half) to the agency than to pay a higher rate to staff.

Finally, it is painfully clear that NO ONE is enforcing the Fair Labor Standards Act. As hospitals and many other providers of health care face a continuous reduction in reimbursement by Medicare, Medicaid and private insurance companies, as regulatory processes become more and more complex, I can expect nothing less than the people in the trenches, including the patients, being shortchanged.

NedRN · Jul 13, 2014

You are mixing stuff up, the IRS has no sway over labor laws, their job is to collect taxes. They do that on reported income, whether that income comes from straight time or overtime is not reported to them.

You are also asking a number of questions that appear to make you a conspiracy freak. Hospitals cannot work with agencies to set pay, that would be illegal. They negotiate bill rates but have no control or knowledge of how travelers are paid (they are not privy to traveler contracts with the vendors), the responsibility is 100 percent the onus of the employer: the agency. Agencies are free to set pay as they wish, within a framework of what is legal in the federal and state labor laws.

What the heck does a hospital clinical practice have to do with these other issues? You are now talking about best interests of patients? What does that have to do with overtime? Who the heck pays overtime at less than time and a half? I have worked in many California hospitals as a traveler (in the OR as it happens), and I can tell you, they pay big money to the agency when I work overtime. How do I know? I bill the hospital directly (just like an agency). The most recent OT bill rate I received was over $100 an hour. Mind you, that might well be less than a senior nurse getting callback to come into the PACU, but you are getting all conspiracy freak about it when there are much simpler explanations. Yes, my working a couple of overtime hours does cost the hospital less than paying a nurse to come in callback for a minimum of four hours. My two hours cost less. So? That is just good sense and management.

I don't know that agency audits lead to traveler audits, in fact as I understand it, it just the reverse. The IRS often scrutinizes several traveler returns, some being actually audited (without the knowledge of the agency), before doing an agency audit as part of the discovery process. I get this information from TravelTax, who is the leading national expert on traveler taxation and who handles both traveler and agency audits and consults with both on how to avoid audits and proper taxation. If you really want to pursue getting your questions answered (hopefully focused questions), I would suggest talking to him.

Frankly, it sounds like you have never talked to other travelers. If you do, you will discover that many of them have no idea what a tax home is, and are just using an address of convenience. Others know what a tax home is, and how to manipulate the system by lying on their housing questionnaire. It is commonplace for recruiters to coach them and encourage them in this, "Just use your parent's address" for a number of competitive reasons. Virtually the only way travelers get into trouble with the IRS is because during an audit, it is discovered (often because the traveler freely let's them see their travel contract) that they are taking tax-free "reimbursements" and do not have a legitimate tax home. This is a tax liability for the individual traveler, not the agency.

As far as a good estimate of how many travelers are doing this on purpose or unknowingly, TravelTax would be a good person to ask. But it is a lot!

Barbara10172002 · Jul 14, 2014

Is there anyone else interested in joining this discussion WITHOUT resorting to accusations of "freaky..conspirator?"

If so, I would appreciate your feedback.

There are many activities which occur frequently that ARE illegal, per say, yet persist. For example, murder is illegal but still happens. Speeding is illegal.

CEO's of several hospitals in one community meet and "fix" wages despite the illegal nature of this act. This particular activity does not make the headlines but it still happens. (Austin, TX.)

Re-characterization of wages (the subject of this post) is also ILLEGAL (as decided by the TX supreme court) but is continuing in the travel industry across the nation.

Unless and until those who have standing to challenge this practice do so, at the federal level, it will continue.

The good news is that each person has the choice to remain in denial or not.

NedRN · Jul 14, 2014

What topic would you like to discuss further? The thread is titled overtime but there are enough topics raised for at least five threads. One of the new ones in your last post is recharacterization of wages, which is illegal per federal law. Simply paying per diems and housing tax-free within GSA published limits is not recharacterizing wages in the legal sense. It is illegal if you negotiate the tax-free amount. Which certainly does happen but less and less every year as the IRS continues auditing agencies. The have the standing to address this at the federal level and are doing so vigorously.

In any case, the practice benefits travel nurses and since any tax liability lies with the agency, most travelers have no reason to complain about it, denial has nothing to do with it.

Price fixing? For travel nurses, market forces fix it. The largest incident that I know of involved almost all hospitals in Arizona. They could only pay agencies bill rates that their hospital association published. As these were below fair market (the point of price fixing right?), hospitals could now longer fill their needs and started offering very large pass through completion bonuses to travelers.

To a large extent, those market forces correct a lot of issues that happen in our industry, from really crappy hospitals (having to pay much higher rates than good hospitals) to vendor managers trying to drop bill rates per their marketing (lasts only a short time because the quality of candidates drops off a cliff). Travel nursing is national, at best most price fixing efforts only affects a small region. Even large hospital chains such as HCA or Kaiser are having to raise rates to correct for market conditions.