FLSA2019-3 — Whether a youth residential care facility may implement an "8 and 80" overtime pay system

U.S. Department of Labor Wage and Hour Division
Washington, DC 20210

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FLSA2019-3
April 2, 2019
Dear Name*:
This letter responds to your request for an opinion regarding whether an entity that operates a
youth residential care facility may implement an “8 and 80” overtime pay system under section
7(j) of the Fair Labor Standards Act (FLSA). This opinion is based exclusively on the facts you
have presented. You represent that you do not seek this opinion for any party that the Wage and
Hour Division (WHD) is currently investigating or for use in any litigation that commenced prior
to your request.
BACKGROUND
Your client operates a private “youth residential care facility” that is staffed 24-hours a day. You
represent that the county children services bureaus place adolescents in the facility. You further
represent that t he facility derives its “revenue ... mostly from residential county placement
contracts, some Medicaid for psychotherapy counseling and various mental health and substance
abuse therapeutic services.” You represent that the facility is not a traditional hospital or skilled
nursing facility.
GENERAL LEGAL PRINCIPLES
Employers “engaged in the operation of a hospital [or] an institution primarily engaged in the
care of the sick, the aged, or the mentally ill ... who reside on the premises of such institution”
are generally subject to the FLSA’s minimum wage and overtime requirements. 29 U.S.C.
§ 203(s)(1)(B). However, section 7(j) permits such employers to utilize the “8 and 80” overtime
system. See 29 U.S.C. § 207(j).
Under the “8 and 80” system, a hospital or residential care institution may, pursuant to a prior
agreement or understanding with their employees, compute overtime over a consecutive 14-day
period. Id. If the employer utilizes this method of payment, the employer must pay overtime for
all hours worked that are over 8 hours in any workday and over 80 hours in a 14-day period. Id.;
29 C.F.R. § 778.601.
WHD’s Field Operations Handbook (FOH) defines a residential care institution—other than a
hospital—as “an institution primarily engaged in (i.e., more than 50 percent of the income is
attributable to) providing domiciliary care to individuals who reside on the premises and who ...
have a disability or, if suffering from sickness of any kind, will require only general treatment or
observation of a less critical nature than that provided by a hospital.” FOH 12g02. “Such
institutions ... include those institutions generally known as nursing homes, rest homes,
convalescent homes, homes for the elderly, and the like.” Id.

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Moreover, “a private institution for the residential care of emotionally disturbed persons
[qualifies as a residential care institution] if more than 50 percent of its residents have been
admitted by a qualified physician, psychiatrist, or psychologist,” including for “evaluations of
mental or emotional disturbance.” FOH 12g12; see FOH 25i01. Youth residential care facilities
may qualify under this definition. See WHD Opinion Letter FLSA-143 (May 20, 1975).
Additionally, a private youth residential care facility qualifies as a residential care institution if it
retains a qualified physician, psychiatrist, or psychologist, who regularly engages in therapy with
adolescents who reside at the facility, and such adolescents constitute more than 50 percent of
the residents at the facility. See Bowrin v. Catholic Guardian Society, 417 F. Supp. 2d 449, 462–
64 (S.D.N.Y. 2006); WHD Opinion Letter FLSA2005-8NA, 2005 WL 5419044, at *3 (Sept. 2,
2005).
OPINION
Based on the facts you provided, WHD is unable to determine whether your client qualifies as
“an institution primarily engaged in the care of the sick, the aged, or the mentally ill ... who
reside on the premises of such institution,” allowing your client to use the “8 and 80” system to
compute overtime pay. See 29 U.S.C. §§ 203(s)(1)(B), 207(j).
You represent that your client’s revenue is primarily attributable to “residential county
placement contracts, some Medicaid for psychotherapy counseling and various mental health
and substance abuse therapeutic services.” (emphasis added). Some of these services—
psychotherapy counseling, mental health services, and substance abuse therapeutic services—
constitute “care of the sick ... or the mentally ill.” 29 U.S.C. § 203(s)(1)(b). However, it is
unclear whether the residential county placement contracts are placing adolescents in your
client’s facility primarily to receive general treatment or observation for a disability or sickness.
See FOH 12g02. It is also unclear whether more than 50 percent of the adolescents at the facility
are admitted by qualified physicians, psychiatrists, or psychologists. See FOH 12g12; FOH
25i01. Finally, it is unclear whether your client retains a qualified physician, psychiatrist, or
psychologist to provide regular therapy to more than 50 percent of the adolescents who reside at
the facility. See Bowrin, 417 F. Supp. 2d at 462–64; WHD Opinion Letter FLSA2005-8NA,
2005 WL 5419044, at *3.
If your client satisfies any of these three scenarios, then your client qualifies for the “8 and 80”
system. Without more facts, however, WHD cannot determine whether your client is “primarily
engaged in the care of the sick, the aged, or the mentally ill,” or primarily engaged in the
provision of other forms of charitable services—such as providing food and shelter to healthy
adolescents—that would not qualify for the “8 and 80” system.
We trust that this letter is responsive to your inquiry.

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Sincerely,

Keith E. Sonderling
Acting Administrator
*Note: The actual name(s) was removed to protect privacy in accordance with 5 U.S.C.
§ 552(b)(7).