B-256408.3 May 5, 1995

B-256408.3: May 5, 1995

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A Senator asked GAO to respond to constituent's question whether patient workers at Department of Veterans Administration (VA) hospitals are subject to the Fair Labor Standards Act. The Senator is advised that. Patient workers are not excluded from coverage under the act. There are statutory and regulatory exemptions that exclude some types of work from coverage under the act and which provide for special lower minimum wages for some disabled patient workers. Brown asks whether patient workers at Department of Veterans Affairs (VA) hospitals are covered by the FLSA and thus are entitled to the minimum wage provided by that act. Are not thereby considered federal employees and. Are not considered covered by the FLSA.

B-256408.3 May 5, 1995

A Senator asked GAO to respond to constituent's question whether patient workers at Department of Veterans Administration (VA) hospitals are subject to the Fair Labor Standards Act. The Senator is advised that, as a general matter, patient workers are not excluded from coverage under the act. However, there are statutory and regulatory exemptions that exclude some types of work from coverage under the act and which provide for special lower minimum wages for some disabled patient workers.

The Honorable Daniel Patrick Moynihan United States Senator The Guaranty Building 28 Church Street, Suite 203 Buffalo, NY 14202

Dear Senator Moynihan:

This further responds to your February 24, 1995, letter requesting our consideration of questions concerning the application of the Fair Labor Standards Act (FLSA) raised by Mr. Ross W. Brown in correspondence enclosed with your letter. Specifically, Mr. Brown asks whether patient workers at Department of Veterans Affairs (VA) hospitals are covered by the FLSA and thus are entitled to the minimum wage provided by that act.

As you know, also in response to questions from Mr. Brown, by letter of February 3, 1995, we advised you that patients who perform tasks under VA's Incentive Therapy Program, pursuant to 38 U.S.C. Sec. 1718, are not thereby considered federal employees and, therefore, are not considered covered by the FLSA. Mr. Brown states that he does not disagree with this conclusion, but he is questioning whether patients not under section 1718 programs who perform work at VA facilities are covered by the FLSA.

Mr. Brown refers to a 1973 decision of a United States District Court holding that patient workers in nonfederal hospitals are "employees" covered by the FLSA's minimum wage and overtime pay provisions. Souder v. Brennan, 367 F. Supp. 808 (1973). In that case, the court, applying the "economic benefit" test, concluded that patients who work as "dishwashers, kitchen helpers, messengers and the like" are employees for FLSA purposes. Id. at 813. At that time, the federal government, as an employer, was not subject to the FLSA. That changed in 1974 as a result of the Fair Labor Standards Act Amendments of 1974, [1] which extended the FLSA's coverage to federal employees. It appears to be Mr. Brown's position that patient workers in VA hospitals now are covered by the FLSA's minimum wage and overtime pay provisions. He states, however, that the Office of Personnel Management (OPM) does not consider them to be covered.

The Department of Labor issues regulations implementing the FLSA and administers it for nonfederal employees. For federal employees, as we advised you in our February 3 letter, the administration of the FLSA, including making determinations of eligibility under it, is assigned by statute to OPM. 29 U.S.C. Sec. 204(f). Because this authority is lodged in OPM, in cases where individuals have filed claims with our Office based on the FLSA, we have consistently declined to review OPM's determinations as to individuals' eligibility under the act. 69 Comp.Gen. 17 (1989). We are however, providing the following information in response to your request.

The 1974 FLSA amendments themselves, which brought federal workers within the coverage of the FLSA, did not exclude patient workers from the act's coverage. However, other legislation and implementing regulations have exempted certain types of workers from some or all requirements of the FLSA.

The Department of Labor has issued regulations under the FLSA, including the Fair Labor Standards Amendments of 1986, [2] which apply specifically to "patient workers." These regulations, found in 29 C.F.R. Part 525 (1994), define a patient worker as a worker with a disability (one whose earning or productive capacity is impaired by a physical or mental disability, including those related to age or injury) employed by a hospital or institution providing residential care where such worker receives treatment or care without regard to whether such worker is a resident of the establishment. 29 C.F.R. Sec. 525.3(d) and (e). In determining whether an employment relationship exists that would bring such an individual within the coverage of the FLSA, the regulations specifically exempt individuals who voluntarily participate in activities such as making craft products which become the property of the individual or all the funds resulting from the sale of the products are divided among the participants in the activity or are used in purchasing additional materials to make craft products. 29 C.F.R. Sec. 525.3(g). The regulations also state that a patient worker does not become an employee by merely performing personal housekeeping chores, such as maintaining his or her own quarters or receiving a token remuneration in connection with such services. 5 C.F.R. Sec. 525.4. In addition, with respect to a patient worker where an employment relationship is deemed to exist, and the individual's earning or productive capacity is impaired to the extent that the individual is unable to earn at least the applicable FLSA minimum wage, the regulations provide that the individual may be paid a special lower minimum wage upon the Department of Labor issuing a certificate authorizing such lower wage. 29 C.F.R. Secs. 525.5(a) and 525.7, et seq.

The regulatory provisions referred to above appear to apply to patient workers in both nonfederal and federal institutions, unless such workers are otherwise exempted by law, such as in the case of VA Incentive Therapy Program participants discussed earlier.

We note that Mr. Brown, on behalf of a disabled veteran patient at the Canandaigua, New York VA Center, has stated that in the past VA treatment staff placed disabled veterans in work assignments that were not exempt from FLSA coverage, but for which the veterans were not paid FLSA wages. However, Mr. Brown has not presented evidence to support his allegations. We have no independent information in regard to the types of work assignment to which Mr. Brown refers or to whether such assignment would be considered exempt from FLSA coverage or subject to the special reduced wage under the FLSA regulations discussed above, or exempt under the VA Incentive Therapy Program discussed in our February 3, 1995, letter. Also, as noted in our February 3 letter, the agencies with primary jurisdiction over this matter, VA and OPM, have responded to Mr. Brown's concerns, and neither has found support for his position.

As you requested, we are enclosing a duplicate of this letter and the correspondence from Mr. Brown you forwarded to us. We also are enclosing two copies of the regulations referred to above.

We trust this is responsive to your inquiry.

1. Pub. L. No. 93-259, 88 Stat. 55, April 8, 1974.

2. Pub. L. No. 99-486, 100 Stat. 1229, Oct. 16, 1986, codified at 29 U.S.C. Sec. 214(c) (1988), which includes provisions applicable to patient workers.