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May 31, 2011
Retired Nurse Takes Employer to Court for ERISA Violations

A retired Pennsylvania nurse was very upset that her former employer had never kept track of the extra, unpaid hours during which she had worked. She believed they should have been included in hours worked for the purposes of her retirement benefits. So she sued her former employer in federal court for ERISA violations and in state court for violations of two state wage laws.

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What happened. “Anderson” testified that nurses at the University of Pittsburgh Medical Center (UPMC) were routinely asked to work through their 30-minute meal breaks. Further, she said, nurses were supposed to be able to spend the first half-hour of their shifts reviewing the charts of individuals for whom they were responsible. But patient loads gradually increased to the point that nurses were forced to arrive for work 30 to 40 minutes early to perform the review.

Despite their clocking in early—and not clocking out for meal breaks—the hospital refused to pay them until shift start and deducted 30 minutes for meal breaks. We’re not clear on how unpaid time could have affected pension payouts, but very similar lawsuits are quite common, as you’ll see. A federal district court judge, noting that the hospital’s retirement plans only required it to report hours for which employees were compensated, dismissed Anderson’s ERISA suit. She appealed to the 3rd Circuit, which covers Delaware, New Jersey, and Pennsylvania.

What the court said. Judges first pointed out that each of UPMC’s retirement plans (a 401(k), a 403(b), and an employer-funded pension) linked benefit payouts to employees’ “compensation,” which the plans defined as “W-2 wages.” So that limited the employer’s reporting duties under ERISA. Judges therefore affirmed the dismissal of Anderson’s suit, noting that the 6th (KY, OH, MI, TN), 7th (IL, IN, WI), and 11th (AL, FL, GA) Circuits and district courts in Michigan and Florida have all rejected this type of ERISA claim.

But judges added that if Anderson’s claims succeed under Pennsylvania’s wage laws, she can bring another federal suit under a different section of ERISA. Henderson v. UPMC, U.S. Court of Appeals for the 3rd Circuit, No. 10-1377 (4/5/11).

Point to remember: Judges agreed with the plaintiff that as an employer, the hospital was obligated to keep track of all hours worked, not just those it chose to compensate. But that obligation did not affect the hospital’s role as a pension administrator. We wonder why the plaintiff didn’t sue before she retired, for violation of the Fair Labor Standards Act (FLSA). A class action suit for all UPMC nurses might well have succeeded—and would have been extremely expensive for the employer.

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