This court's opinion filed October 22, 2009, and reported at 584 F.3d 794, is withdrawn, and is replaced by the attached Opinion.
The petition for rehearing and the petition for rehearing en banc, filed November 9, 2009, is DENIED.
The full court has been advised of the petition for rehearing en banc and no judge of the court has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.
No further petitions for rehearing or rehearing en banc will be accepted.
N.R. SMITH, Circuit Judge.
When an employer changes its shift schedule to accommodate its employees' scheduling desires, the employer may reduce the employee pay rate to pay its employees the same wages they received under the former schedule, so long as the rate reduction was not designed to circumvent the provisions (including overtime) of the Fair Labor Standards Act ("FLSA").
Pomona Valley Hospital Medical Center ("PVHMC") is a hospital located in Pomona, California that has at all relevant times been an "employer" subject to the FLSA. The FLSA requires an employer (such as PVHMC) to pay its employees at one-and-one-half times the employees' "regular rate" for any "employment in excess of eight hours in any workday and in excess of eighty hours in [a] fourteen-day period." 29 U.S.C. § 207(j).
Prior to 1989 or 1990, PVHMC scheduled its nurses to work almost exclusively in 8-hour shifts. However, many PVHMC nurses preferred working 12-hour shifts in order to have more days away from the hospital. The nurses, therefore, requested 12-hour shift schedules. In response to these requests, PVHMC developed and implemented an optional 12-hour shift schedule and pay plan in 1989-90. The pay plan provided nurses the option of working a 12-hour shift schedule in exchange for receiving a lower base hourly salary (that at all times exceeded the minimum wage set forth by the FLSA) and time-and-a-half pay for hours worked in excess of eight per day. The plan prohibited PVHMC from requiring nurses to work additional shifts, absent a medical emergency. If nurses voluntarily work longer than the 12-hour shift, they are paid double the regular rate. The result: nurses, who volunteered for the 12-hour shift schedule, would make approximately the same amount of money as they made on the 8-hour shift schedule (while working the same number of hours over a 14-day period and performing the same duties). After PVHMC made the 12-hour shift schedule available, many PVHMC nurses (though not all) opted to work 12-hour shifts.
In 1993, Louise Parth worked as a nurse in PVHMC's emergency room ("ER"). The nurses in PVHMC's ER (including Parth) voted to implement 12-hour shifts. Parth favored the 12-hour shift format, because it provided her more flexibility in her personal schedule, enabling her to (1) care for her mother, (2) pursue a second nursing job at other facilities, and (3) pick up additional shifts at PVHMC. After voting to implement 12-hour shifts in the ER, Parth subsequently entered into a voluntary agreement with PVHMC that reduced her base hourly wage rate from $22.83 to $19.57 in exchange for the 12-hour shift schedule. Parth has worked the 12-hour shift schedule without interruption since 1993.
In 2003, the PVHMC nurses voted to unionize. Accordingly, PVHMC and the nurses' certified bargaining representative, Service Employees International Union, Local 121 ("Local 121"), negotiated a collective bargaining agreement ("CBA") over a nine-month period. Parth was a member of Local 121's Bargaining Committee and therefore attended most of the negotiation sessions. The resulting agreement provided that PVHMC would increase all nurse salaries—for 8-hour shift employees and 12-hour shift employees alike— by 10% during the CBA's first year, followed by a 5% acrossthe-board increase for the second and third years. The CBA also reaffirmed PVHMC's practice of paying nurses working the 12-hour shift schedule a lower base hourly rate than nurses working 8-hour shifts.
The CBA set the base hourly rate for Parth's position at $34.644 (the "base rate"). When Parth works a weekday night, her hourly rate is $39.84 (the "weeknight base rate"). When she works a weekend night, her hourly rate is $46.929 (the "weekend night base rate"). Anytime Parth works more than 8 hours in a shift or 80 hours in a 14-day work period, she receives 1.5 times her "regular rate" of pay for those hours. If Parth works beyond 12 hours in a shift, she is paid "double-time"—double the "regular rate" of pay. If she works an additional shift beyond her regular schedule, she is paid at the higher rate applicable to eight-hour shift employees. PVHMC calculates the "regular rate" of pay by multiplying the total number of hours Parth works at each of the corresponding base rates (base rate + weeknight base rate + weekend night base rate), adding those numbers together, then dividing the total base rate pay by the total number of base rate hours worked. The "regular rate" of pay is therefore something more than the weeknight base rate of pay and will vary according to the number of hours worked at the various base rates. This method is known as the "weighted average method" of determining the "regular rate." Gorman v. Consol. Edison Corp., 488 F.3d 586, 596 (2d Cir. 2007). After PVHMC calculates the "regular rate" of pay, it multiplies that number by 1.5 to arrive at the overtime rate.
In 2004, all Local 121 members employed at PVHMC (and in good standing with the union) voted on the proposed CBA after being advised of its contents and being provided the opportunity to review its provisions. After Local 121 ratified the CBA, Local 121 representatives and PVHMC executed the agreement. Parth was a signatory to the agreement. She also testified during her deposition that she was aware the CBA continued PVHMC's pay rate practices. Parth continued to work the 12-hour shift schedule at PVHMC.
Just two years later, Parth filed a putative class action Complaint against PVHMC. She alleged that PVHMC's use of different base hourly rates violates the FLSA in that it denies unionized employees overtime pay, to which they are statutorily entitled. The district court found that Parth met the requirements for conditional class certification to bring the FLSA claim. PVHMC then filed a motion for summary judgment, asserting that its pay practices comply with the FLSA. The district court found that Parth did not adduce evidence or law sufficient to support her claims and therefore granted PVHMC summary judgment. We affirm.
We review de novo the district court's order granting summary judgment. See, e.g., Universal Health Servs., Inc. v. Thompson, 363 F.3d 1013, 1019 (9th Cir. 2004). On review, we must determine, viewing the evidence in the light most favorable to Parth, "whether there are any genuine issues of material fact and whether the district court correctly applied the [relevant] substantive law." Olsen v. Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). "[T]he plain language of Rule 56(c) mandates the entry of summary judgment. . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Parth argues that PVHMC violated the FLSA by creating a pay plan that pays nurses working 12-hour shifts a lower base hourly rate than nurses who work 8-hour shifts. In support of her argument, Parth contends that: (A) PVHMC cannot reduce the base pay for nurses working the 12-hour shift, (B) the 12-hour base pay rate is an "artifice" designed to avoid the FLSA's overtime and maximum hours requirements, and (C) PVHMC cannot justify the base hourly pay rate differences between the 8-hour and 12-hour shifts, because nurses working both shifts perform the same job duties.
The Eleventh Circuit followed Belo's holding in a case involving a municipal employer. See Wethington v. City of Montgomery, 935 F.2d 222 (11th Cir. 1991). "When passed in 1938, the FLSA did not apply to any state or local employers." Id. (citing Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 533 (1985)). Congress expanded the FLSA's definition of "employer" in 1974 to include municipalities. In Garcia, the Supreme Court reversed its previously-established precedent and held that state and local governments could be liable for FLSA violations. Wethington, 935 F.2d at 224-25. Given the potential for sudden liability, Congress delayed application of the FLSA to municipal employers until April 15, 1986. Id. At 225 (citing Fair Labor Standards Amendments of 1985, Pub. L. No. 99-150, § 2(c), 99 Stat. 787, 788). Accordingly, municipal employers such as the City of Montgomery (the "City") became subject to the FLSA as of April 15, 1986.
In Wethington, the City endeavored to create and implement a "budget-neutral" plan that would ensure FLSA compliance before April 15, 1986. Wethington, 935 F.2d at 225. Prior to Garcia, the City paid its fire fighters on a salary basis, which covered "a cycle of three pay periods, each involving varied hours over 14 days: one 104-hour period, one 112-hour period, and one 120-hour period. For this 42-day, 336-hour cycle, a typical fire fighter would receive $2,208.45. The actual working time within these periods consisted of rotations of duty in which the fire fighters worked 24 hours, were off duty for 48 hours, worked another 24 hours, and so on." Id. This scheme did not provide for overtime, so in June 1985, the City adopted a new hourly wage scale to comply with the FLSA. Id.
The City determined that under the FLSA, 316 of the 336 hours in the 42-day cycle would be considered regular hours, while 20 would be considered overtime. Id. In order to create a new, yet "budget-neutral," pay plan that incorporated timeand-a-half overtime pay, the City, "for the purpose of calculation, increased the [20] overtime hours by 50%. [It] then took the fictitious total hours of 346 (316 regular plus 30 adjusted overtime) and divided them into the fire fighters' total pay for that period to produce a per-hour wage of $6.3828." Id. The revised system ensured that City fire fighters would work the same hours and shifts as before, but would receive $6.3828 per hour for 316 regular hours, and $9.5742 ($6.3828 multiplied by 1.5 as required by the FLSA) per hour for 20 hours of overtime, totaling $2,208.4488. Id. "Therefore the total salary and total hours did not change. The payment system and the equivalent hourly rates of pay, however, did change. Under the prior, salary system, the converted hourly rate amounted to $6.57. Under the revised system, the effective rate was decreased to $6.38." Id. The fire fighters sued the City, making an argument similar to Parth's.
Citing Belo, the Eleventh Circuit held that, if a new pay plan "actually employed is valid under the [FLSA], the fact that the regular rate adopted prior to the [FLSA's] effective date produces a total pay no greater than the total pay under a prior system is not enough to establish a violation of the FLSA." Id. at 229. The court "read the Belo language to support the City's argument that it is not a violation of the [FLSA] to reduce, prior to the effective date of the [FLSA], the hourly rate paid employees in order to avoid greater payments upon application of the FLSA." Id.
Parth is correct that PVHMC was under no obligation to reduce the regular hourly rate of nurses who opted for the 12-hour shifts. PVHMC could have maintained the hourly rate paid to those employees when they were working 8-hour shifts prior to the agreement and absorbed the greater wage costs. However, we do not decide whether the agreement was an ideal, or even preferred, method of contracting; we decide only whether the agreement in question was permissible under the FLSA.
Parth also argues that the 12-hour shift pay plan is essentially an artifice to avoid paying overtime. The district court examined this argument. It noted that Parth could cite "no authority for the proposition that these facts show the 12-hour rate was a subterfuge that violated the FLSA." We agree.
Parth's argument hinges on two issues: first, whether PVHMC's pay plan contravenes the FLSA's purpose; second, whether the revised "regular rate" is unrealistic and artificial.
An employee's "regular rate" of pay is "the hourly rate actually paid the employee for the normal, non-overtime workweek for which [s]he is employed." Youngerman-Reynolds, 325 U.S. at 424. See also United States v. Rosenwasser, 323 U.S. 360, 363-64 (1945) (holding that "Section 7(a) [of the FLSA] refers to a `regular rate' which we have defined to mean `the hourly rate actually paid for the normal, non-overtime workweek.'" (quoting Helmerich & Payne, Inc., 323 U.S. at 40)). PVHMC's regular rate for 12-hour shift nurses is the rate it pays for the first eight hours of a 12-hour shift. Thereafter, the nurses are paid time and a half pay for the next four hours of their shift and double pay for any work they volunteer to perform after the 12-hour shift.
Lastly, Parth and the other nurses are paid overtime under the PVHMC plan when due. Their overtime wages are calculated according to the standards set forth in 29 C.F.R. § 778.115 and the CBA, (a regular rate for the first eight hours, time and a half for the next four hours, and double pay for any additional hours for which the nurse volunteers). Parth appears to take issue with the manner by which her "regular pay" is calculated, and basically argues that instead of using the weighted average method of determining the regular rate, PVHMC should be required to use the "average blended rate" of pay. The "average blended rate" is the total pay earned by a nurse in a 12-hour shift, divided by 12. To the extent Parth's argument is that average blended rate calculation is the only permissible "regular rate" of pay under the FLSA, we reject it. The weighted average method of calculation is not prohibited by the FLSA, and has been upheld by other circuits. See, e.g., Gorman, 488 F.3d at 596 ("This Court has already validated the weighted average method of determining the regular rate, which we described as `properly calculated by adding all of the wages payable for the hours worked at the applicable shift rates and dividing by the total number of hours worked.'") (quoting Brock v. Wilamowsky, 833 F.2d 11, 14 (2d Cir. 1987)).
Parth also argues that PVHMC's pay plan is unlawful, because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates. We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary. We do, however, find ample authority from other circuits that supports PVHMC's argument that workers working different shifts may be paid different rates. See, e.g., Gorman, 488 F.3d at 595-97; Conner, 428 F. Supp. 2d at 636-37; Allen v. Bd. of Pub. Educ., 495 F.3d 1306, 1312-13 (11th Cir. 2007). As the Supreme Court has noted, employers and employees are generally free to set the pay rates if minimum wages and overtime payments are paid when due. See Youngerman-Reynolds, 325 U.S. at 424.
We conclude, as did the district court, that Parth failed to adduce any evidence or authority to support her claim that PVHMC's pay plan violates the FLSA. We conclude that PVHMC was justified in responding to its employees' requests for an alternative work schedule by adopting the sought-after schedule and paying the employees the same wages they received under the less-desirable schedule. There is no evidence to suggest that PVHMC is attempting to avoid paying its employees overtime wages, nor can we find any authority that prohibits PVHMC from paying employees different hourly rates when they are assigned different shifts.