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Sunday, October 20, 2019

Minnesota Supreme Court rules Baywood Home Care has to pay more than $1 million for failure to pay overtime

State Supreme Court

By Charmaine Little | Sep 26, 2019


ST. PAUL, Minn. (Legal Newsline) – Minnesota’s Supreme Court has reversed a ruling from the state's Court of Appeals in a wage dispute case involving a home health care agency.

The Sept. 18 ruling states that Minnesota Living Assistance, doing business as Baywood Home Care, used a split-day plan to pay its employees. Under this method, workers were paid at one specific pay rate for the first 5.5 scheduled hours of a 16-hour workday, and then paid one-and-a-half times that rate for the rest of the 10.5 hours. 

The issue in this case is that this plan was used even for employees that worked more than 48 hours a week and accrued overtime.

The Department of Labor and Industry responded to complaints that Baywood was not paying its workers for overtime hours worked. The commissioner of the department ordered Baywood to pay $550,000 in unpaid overtime wages, plus another $550,000 in liquidated damages. 

Baywood filed an appeal and the Court of Appeals reversed, stating that the commissioner’s ruling that split-day loans aren’t allowed under the Minnesota Fair Labor Standards Act "was based on a unpromulgated rule," the ruling states.

The Supreme Court ultimately determined that Minnesota Fair Labor Standards Act does call for employers to pay their workers a minimum of time-and-half if they work more than 48 hours a week, and that time-and-a-half payments for a regular work week that happens before a worker clocks in for 48 hours in a work week can’t be deducted from an employee’s remuneration in order to calculate the regular pay rate. 

“Although the commissioner’s failure to promulgate interpretive rules to that effect means that we will not give defense to the department’s interpretation, the department may nevertheless advocate in favor of its interpretation, and we may adopt the interpretation when our de novo consideration of the statute and rule leads us to conclude that the Department’s interpretation is correct,” Justice Natalie E. Hudson wrote.

Justice G. Barry Anderson, Chief Justice Lori Skjerven Gildea and Justice Paul C. Thissen dissented.

"Relying on a previously unannounced interpretation of the administrative rule that allows an employer to exclude 'premium payments for overtime work' when calculating an employee’s 'regular rate of pay,' appellant Department of Labor and Industry contends that Baywood did not do so. See Minn. R. 5200.0140 (2017)," Anderson wrote. "Because I conclude that the interpretation of Rule 5200.0140 advanced by the Department is an unpromulgated rule and that it does not have the legal authority to enforce this unpromulgated rule on a case-by-case basis, I respectfully dissent."

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