Court warns: tracking unpaid hours while expecting work done creates serious liability
A federal appeals court revived a class action alleging Indian Health Service systematically stiffed nurses on premium pay for regular off-the-clock work during COVID-19.
The January 30 decision from the United States Court of Appeals for the Federal Circuit breathes new life into claims that could affect compensation for nurses across the federal health system, and carries broader lessons for any employer dealing with employees who routinely work beyond their scheduled hours.
Jillian Lesko worked as a registered nurse for IHS from November 2020 through July 2021, right in the thick of the pandemic. She sued on behalf of herself and other IHS nurses, claiming the agency required them to work long hours well beyond their scheduled shifts but rarely paid them for that extra time. According to her complaint, this happened at least weekly, often daily.
The work was not sporadic or unpredictable, Lesko alleged. The IHS electronic health record system pinged nurses around the clock with patient updates requiring immediate or timely responses. Nurses had to respond to patient notes within 48 to 72 hours. And when hospitals and clinics ran short-staffed, which was often, nurses had to stay past the end of their shifts.
Supervisors knew about this extra work, Lesko claimed. They pressured nurses to finish tasks on time, piled on more responsibilities, and disciplined anyone who failed to keep up. Meanwhile, IHS systems tracked exactly when nurses logged in and out, creating a digital record of all those unpaid hours.
A lower court tossed out the case, but the appeals court said that was premature. The panel found two problems with the dismissal.
First, the trial court relied on documents the government attached to its motion to dismiss to conclude that IHS had discretion to pick and choose which pay provisions applied to its nurses. That was improper, the appeals court said. At this early stage, courts must stick to what the plaintiff alleged in the complaint and any documents attached to it. If a court wants to consider outside evidence, it needs to convert the proceeding to summary judgment and give both sides a chance to gather facts through discovery.
Second, the lower court concluded the alleged work was too unpredictable to have been formally scheduled. The appeals court disagreed, saying that conclusion did not give Lesko the benefit of the doubt required at the motion to dismiss stage.
The decision points to a principle dating back more than 60 years. In a 1960 case called Aviles, a federal court held that just because an employer chooses not to put regular overtime on the official schedule does not make that overtime irregular. If the agency knows the work will happen and could schedule it, employees should get premium pay.
Federal regulations later adopted this principle. They say that when an agency head knows in advance about specific work requirements and has the chance to schedule employees accordingly but fails to do so, workers are still entitled to premium pay for that time.
The appeals court found Lesko alleged enough to clear that bar. She claimed the extra work was continuous, consistent, and regular. She said IHS had data proving when nurses worked after hours. And she alleged the unpaid time included not just emergency patient care but also routine paperwork with set deadlines and coverage for understaffed shifts that management knew would need filling.
Whether the work truly meets the legal standard will require fact-finding and discovery, the court said. But Lesko alleged enough to let the case proceed.
The decision sends the case back to the Court of Federal Claims for further proceedings.
For HR teams, the takeaway is clear. Employers cannot sidestep premium pay requirements simply by leaving predictable overtime off the official schedule. When managers know employees will regularly need extra hours to get the work done, and especially when systems track that time, courts may treat it as work that should have been scheduled and paid accordingly.
The case also highlights the risk of maintaining electronic records showing off-the-clock work while supervisors tacitly or explicitly expect that work to get done. That combination can be hard to defend.
