Based on these qualifications, the courts have found that an LPN was not a learned professional. This left the door open that if the job description required an RN license, the UR nurse may still be a learned professional and thus not entitled to overtime.
A recent Wisconsin District Court case, Rego v. Liberty Mutual Managed Care, LLC,1 held that even where an RN license is required, the UR nurse is doing “standardized work,” applying guidelines from manuals to medical records, and not intellectual work requiring the consistent exercise of discretion and judgment. Based on this most recent case, employers that continue to maintain UR nurse positions as exempt will be open to risk.
Basis for Exemption Under the Fair Labor Standards Act’s Regulations
The FLSA creates the right for employees to receive overtime pay when they work over 40 hours a week unless an exemption applies. There are two exemptions that are potentially applicable to UR nurses:
- The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and requires the consistent exercise of discretion and judgment;
- The advanced knowledge must be in a field of science or learning and customarily acquired by a prolonged course of specialized intellectual instruction.
- An employee's primary duty must be the performance of work directly related to the management or general business operations of the employer and must include the exercise of discretion and independent judgment with respect to matters of significance.3
- To meet the requirement of “directly related to the management or general business operations” an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.4
- Work directly related to management or general business operations includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations, government relations; computer network, internet and database administration; legal and regulatory compliance; and similar activities.5
- The exercise of discretion and independent judgment must be more than the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources.6
Analysis Under the Learned Professional Exemption
The regulations make clear that RNs are generally considered learned professionals, while LPNs specifically are not.7 Therefore, courts have held that where a UR nurse job description requires a minimum of only an LPN license and, for example, a couple years of practical experience, the job is not a learned professional position. While RNs and nurses with more advanced degrees and certifications are also qualified and hired for these UR jobs, the courts' focus in analyzing the availability of the learned professional exemption is on the minimum requirements for the job.8 LPNs have historically not been treated as exempt because the education required to obtain an LPN license does not meet the level of education expected by the FLSA and its implementing regulations. The skills based practical training for LPNs does not rise to the level of prolonged academic study contemplated by the regulations. Even though some of the UR nurses held advanced degrees and certificates, the job does not require those advanced qualifications.9
Rego, the recently decided Eastern District of Wisconsin case, however, held that even though the employer’s minimum qualification for the UR position required an RN license, utilization review did not require advanced knowledge, since the work did not involve the consistent exercise of discretion and independent judgment.10 Rather, the court concluded that a more proper characterization of UR nurses’ duties of comparing medical information to guidelines was “specialized work along standardized lines involving well-established techniques and procedures, which may have been cataloged and described in manuals or other sources.”11 As a result, the UR nurses, even though they were all required to be RNs, did not meet the learned professional exemption.
Analysis Under the Administrative Exemption
Under the administrative exemption, courts focus on the primary duty being management/business operation and distinguish “between those employees whose primary duty is administering the business affairs of the enterprise from those whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.”12 Phrased another way, the question is whether the work is administrative, which must be done for a company regardless of the business or whether it is integral to the particular production of this company.13
The courts that have reviewed the issue have found that UR nurses are more “production” than “administration.” Where the role of the UR nurse is to analyze claims for payment, determine whether the requested procedure is medically necessary and appropriate, and either authorize payment or recommend denial of payment, it was found to be a core function of an insurance company’s business model. UR nurses are not accountants or compliance officers or human resource managers whose job descriptions could encompass jobs in any number of industries. Instead, they are uniquely positioned to “produce” the “product” — in this case, the service of ensuring that claims are paid appropriately.14 Rego had a similar conclusion: that UR work is not part of general business operations, does not require exercise of discretion and independent judgment and therefore does not qualify for the administrative exemption.15
This ruling in Rego supports classifying UR nurses as non-exempt regardless of minimum qualifications of the job description. This could engender additional scrutiny and Wage and Hour investigations if the government chose to follow this lead. While this is just one District Court ruling, it would be prudent, regardless of the required qualifications of the job description, for healthcare companies to review the exempt/non-exempt status of their UR nurses and, if they are currently exempt, consult counsel whether they should be changed to non-exempt.