Klein v. Rush-Presbyterian-St. Luke's Medical Center, RUSH-PRESBYTERIAN-ST

• Decision Date: 29 March 1993
• Docket Number: RUSH-PRESBYTERIAN-ST,No. 92-1933,92-1933
• Parties: 124 Lab.Cas. P 35,790, 1 Wage & Hour Cas.2d (BNA) 537 Janet KLEIN, Plaintiff-Appellee, v.LUKE'S MEDICAL CENTER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 279

990 F.2d 279

124 Lab.Cas. P 35,790, 1 Wage & Hour Cas.2d

(BNA) 537

Janet KLEIN, Plaintiff-Appellee, v. RUSH-PRESBYTERIAN-ST. LUKE'S MEDICAL CENTER, Defendant-Appellant.

No. 92-1933.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 4, 1992.

Decided March 29, 1993.

Richard J. Tupper (argued), Cornfield & Feldman, Chicago, IL, for plaintiff-appellee.

Bruce R. Alper (argued), Carla Rendina Owen, Vedder, Price, Kaufman & Kammholz, Chicago, IL, for defendant-appellant.

D. Tyner Brown, Management Ass'n of Illinois, Westchester, IL, for amicus curiae.

Before BAUER, Chief Judge, CUDAHY, Circuit Judge, and WOOD, Jr., Senior Circuit Judge.

HARLINGTON WOOD, Jr., Senior Circuit Judge.

Plaintiff Janet Klein, a registered nurse, claims that while employed by the defendant Rush-Presbyterian-St. Luke's Medical Center ("Rush") she was entitled to overtime pay for hours worked in excess of forty hours a week under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 207, and the Illinois Minimum Wage Law, Ill.Ann.Stat. ch. 48, para. 1004a (Smith-Hurd 1992). Rush, however, claims that Klein was employed in a professional capacity and was not entitled to overtime pay because she was exempt from the FLSA's and Illinois's overtime requirements. Both parties moved for summary judgment in the district court. Plaintiff's motion was granted in part and denied in part, and defendant's motion was denied.

We must resolve whether Klein is entitled to overtime pay, or if she fits the professional employee exemption. Further, if she is entitled to overtime pay, may Rush use the "window of correction" in the Department of Labor's regulations to avoid liability under the FLSA? ¹ We agree with the district court that Klein does not qualify as a professional employee within the meaning of the Department of Labor's regulations, though our reasoning is based upon additional factors not considered by the district court. We also do not believe that Rush may use the window of correction. Thus for the reasons given below, we affirm the district court's grant of summary judgment for the plaintiff.

I. FACTS

Klein worked at Rush as a staff nurse in a locked psychiatric acute care unit for patients with severe psychological disorders from December 1979 until October 1990 when she was fired. She has a bachelor of science in nursing and is certified and licensed to practice nursing in Illinois.

When Klein was hired in 1979, Rush paid Klein and other staff nurses on an hourly basis. Klein punched a time clock and was paid only for hours actually worked. She received overtime for any time, in increments of fifteen minutes, she worked over eight hours a day.

In July 1983, Rush changed its compensation plan which applied to Klein and other staff nurses. Klein no longer punched a time clock but instead prepared handwritten time cards. The nurses were paid biweekly for an expected eighty-hour pay period consisting of ten shifts. Instead of being paid only for hours worked, Klein received a set amount based upon eighty hours of work. This pay would change with any additional hourly premium for evening, weekend, or holiday shifts.

Rush introduced a comp or flex time policy in 1983 to replace the old paid overtime. Now, any hours worked in excess of eight hours on a shift are put in a comp time "bank" as positive comp time. Subject to approval by the unit leader and scheduling demands a nurse may draw on her comp time "bank" for additional time off. If a nurse worked more than four hours extra on a shift, the nurse could choose to be paid for those hours instead of putting them in the comp time bank. Rush changed the four hour requirement to two hours in late 1990. A nurse who works less than eight hours on a shift must use accrued positive comp time or else go into negative comp time to maintain an eighty-hour total for each pay period. The nurses are discouraged from amassing numerous hours of negative comp time. But while a nurse can be paid for extra hours, a nurse's pay is never reduced because of negative comp time. Furthermore, when a nurse leaves Rush, she is compensated for any positive comp time, but is not required to pay back any negative comp time. Klein was subject to the comp time policy like all other nonmanagement employees. Her direct supervisors, the unit leader and assistant unit leader, were not.

Employees also must follow the hospital's Code of Conduct or else they risk being disciplined. The Code of Conduct defines "[s]tandard practices and regulations which all employees are expected to accept and follow as a condition of employment." The rules cover an employee's appearance, identification cards, name tags, personal lockers, telephone calls, and punctuality, as well as more serious offenses like theft, forging documents, assault, and possession of a weapon. An employee is subject to Rush's Disciplinary Procedures for violation of any of the Code's rules; possible discipline includes verbal warnings, written reprimands, suspensions without pay, and discharge.

Klein was subject to the Code of Conduct and Disciplinary Procedures while she worked at Rush and was disciplined several times. ² From April 23 to October 7, 1984, Klein was on a formal discipline plan for tardiness. If Klein was more than ten minutes late a fourth time after three verbal and written warnings, she would be suspended for one day; if late a fifth time, she would be terminated. ³ She was put on a similar plan for behavioral problems. Klein was never suspended in this period. Then on September 27, 1989, Klein was suspended for being rude, abrupt, and irritable to fellow staff members, as well as an incident with a patient's visitor. Klein was paid for one hour of work on September 27, but was not paid for the other seven hours of the suspension. Klein was again suspended on January 31, 1990, for three days, for performance problems, specifically being rude, argumentative, and stomping around the unit, as well as being rude to a patient's son and not assisting another patient who was walking unsteadily. Klein was paid for one and one-half hours of work on January 31, but was not paid for the remaining hours of that shift or the next two days. Klein received a six-day suspension beginning on August 26, 1990, for poor judgment and an unsafe nursing practice when she failed to respond properly to a patient who was causing problems, as well as questioning the amount of medication another patient should receive. Following a series of serious safety problems occurring on September 27, 1990, Klein was suspended on September 28 until she was terminated on October 3, 1990, for job performance and conduct problems.

Throughout her employment at Rush, Klein received regular raises in her salary. Since at least 1986, these raises were given after a merit evaluation. Klein was informed what her percentage of increase was in terms of her hourly rate, her biweekly salary, and her annual salary. In 1988 and 1989, Klein's merit evaluation resulted in 1.5% and 1.715% increases, which was less than half the increase in 1987. In Klein's suspension letters, the unit leader indicated that the merit evaluations resulted in lower raises because of Klein's poor job performance.

Klein filed her complaint on December 27, 1990, to recover unpaid overtime. The case was referred to a magistrate to make a Report and Recommendation. Both parties filed motions for summary judgment in September 1991. In its motion for summary judgment, Rush stated that it was clarifying its Disciplinary Procedures to ensure that exempt employees are not placed on unpaid disciplinary suspension unless for infractions of safety rules of major significance. Rush further promised to compensate Klein for the unpaid suspensions if she requests it or if the court decides the suspensions were impermissible pay deductions.

II. ANALYSIS

We affirm the district court's grant of summary judgment because we do not find that Klein was a salaried employee within the meaning of the FLSA's exemption for professional employees. The FLSA is a remedial act and exemptions from its coverage are to be narrowly construed against employers. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960). Rush's compensation plan for Klein with its comp time policy in combination with its Disciplinary Procedures which subject an employee to unpaid suspension for the employee's tardiness, rude behavior, or even appearance indicate that Klein in fact was not paid on a salaried basis. Rush, moreover, has since changed its disciplinary procedures in order to ensure that exempt employees are subject to unpaid suspension only for infractions of safety rules of major significance. For all of these factors, we affirm the entry of summary judgment since Klein is an employee entitled to overtime under the FLSA and its Illinois counterpart.

A. Standard of Review

We must review the record and the controlling law de novo in the grant of a summary judgment motion. A.V. Consultants, Inc. v. Barnes, 978 F.2d 996, 1000 (7th Cir.1992); Becker v. Tenenbaum-Hill Assoc., Inc., 914 F.2d 107, 110 (7th Cir.1990). We can uphold the entry of summary judgment only if the moving party is entitled to judgment as a matter of law, and there is no genuine issue of material fact. Appley v. West, 929 F.2d 1176, 1179 (7th Cir.1991). We may affirm summary judgment upon any basis in the record and, therefore, may decide the motion without deference to the district court's decision. See Tobey v. Extel/JWP, Inc., 985 F.2d 330, 332 (7th Cir.1993); Owen v. Wangerin, 985 F.2d 312, 315 (7th Cir.1993).

Summary judgment is made upon the pleadings, depositions, affidavits, and any answers to interrogatories. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). If the moving party initially shows the court that there is an absence of a question of fact, the nonmoving party has the burden of...