The University Health System discovered Friday that it was in violation of federal standards that dictate employee payment. The Medical Center will work to reimburse all underpaid staff members .
Making up the wages likely will cost several million dollars, said Dr. Robert Cofield, associate vice president for hospital and clinics operations.
The University self-reported that it was noncompliant in several different areas, which affected about one-third of the employees. Cofield said that the University will be paying employees the money they should have received during the past two years. The several million dollars it will cost to repay workers is significantly less than one percent of the Medical Center's annual payroll.
"We want to do right by our employees," Cofield said.
The University first noticed the problem about six months ago, and has been evaluating it since. University Medical Center Vice President R. Edward Howell sent an e-mail to employees Friday about the changes.
"Effective February 6, 2011, adjustments and changes will be made to our compensation program," Howell wrote in the e-mail.
Cofield said the changes will not affect anyone's base pay. It will, however, change the way bonuses and overtime works for certain employees. Cofield said he expects to fully repay all wronged employees by the end of March.\nThe Health System violated the Fair Labor Standards Act, a law that regulates how workers engaged in interstate commerce are treated. Some employees are exempt from the FLSA, but the Medical Center made the mistake of exempting too many of its employees, Medical Center spokesperson Peter Jump said.
Generally, exempt workers are salaried, whereas non-exempt workers are paid hourly, Cofield said. The workers for whom the University thought the Act did not apply were sent home when there was not enough work to occupy them. The Hospital mistakenly docked their pay in those cases.
The FLSA also affects overtime rules. The Medical Center bases overtime for exempt workers on a two-week period, while for non-exempt workers overtime must be based on a one-week period. Cofield said that by wrongly treating some workers as exempt, they were occasionally underpaid for overtime.
Finally, the Medical Center has not been including bonuses in the calculation of overtime rates, a practice the act mandates. Many Medical Center employees have been affected by some or all of these issues, making the calculation of corrected payment a laborious task.
Nurses were most affected by the human resources problems. Many pharmacists and information technology employees were also paid too little.
The University Medical Center has not identified any cases in which employees were overpaid, but does not correct mistakes of that manner, Cofield said.
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