AMN Services, LLC v. Verna Clarke, et al.

The Fair Labor Standards Act (FLSA) makes determining an employee’s base pay or “regular rate” critical, because employers must pay overtime at oneand-one-half times an employee’s “regular rate.” The FLSA expressly excludes “reasonable payments for traveling expenses … incurred by an employee in the furtherance of his employer’s interests” from the “regular rate.” And it is both permissible and standard practice to provide workers with a reasonable per-diem allowance for traveling expenses, in lieu of requiring them to document and seek reimbursement for every expenditure. The Ninth Circuit nonetheless held that the per-diem allowances for traveling expenses Petitioner provided to its traveling healthcare workers (pegged to the federal government’s own per-diem allowances) were wages that are part of the workers’ “regular rate.” The court emphasized that per-diem allowances were reduced when workers did not report for assigned shifts, even though that commonsense limitation is driven by the FLSA’s text and tax-law requirements. The decision threatens employers with massive unanticipated liabilities and upsets longstanding business practices. It also harms workers who will either see their taxable income increase or be saddled with burdensome recordkeeping requirements. The question presented is: Whether, under the FLSA, per-diem allowances for traveling expenses, which are reduced when the employee fails to work a contractually required shift, are excluded from the employee’s “regular rate” as “reasonable payments for traveling expenses … incurred by an employee in the furtherance of his employer’s interests.”