Per diem payments made to traveling healthcare workers by AMN Healthcare should be considered part of the workers’ regular pay when it comes to calculating overtime, according to an opinion released this week by the US Court of Appeals for the Ninth Circuit.

Traveling clinicians in the lawsuit had argued the staffing firm had improperly excluded per diem payments from their regular rate of pay which resulted in decreasing their wage rate for overtime hours. The suit had been brought by named plaintiffs Verna Maxwell Clarke and Laura Wittmann.

The opinion reversed a district court ruling.

Clinicians, including nurses and technicians, receive per diem payments when working away from home, but the court found the per diem functioned as compensation rather than as a reimbursement for expenses incurred by the clinicians.

“AMN’s commitment to its healthcare professionals is unwavering. We are disappointed and disagree with the Ninth Circuit’s ruling and are evaluating our legal options,” AMN Healthcare said in a statement.

“We believe that AMN’s payment of per diems for reimbursement of expenses incurred by healthcare professionals traveling away from their homes as they serve the needs of our communities across the country are appropriate and common within our industry and many other industries that pay per diems,” AMN said. “We will continue to support our healthcare professionals and clients to meet the healthcare challenges of today as we work together for a healthier future.”

The Appeals Court cited several factors and indicated how AMN’s per diem payments operate is central to the case.

In one factor, the Appeals Court noted that traveling healthcare workers typically work 12-hour shifts three days a week but receive per diem for seven days because they are unlikely to return home during that time. However, AMN prorated the amount of per diem received if a worker misses a shift, regardless of the reason. If a clinician was too ill to work and missed a shift, the clinician would not receive per diem payments although the person would still incur living expenses.

“The through line here is that AMN’s pro rata deductions from its per diem payments are unconnected to whether the employee remains away from home incurring expenses for AMN’s benefit,” according to the opinion. “Instead, the deductions connect the amount paid to the hours worked while still away from home, thereby functioning as work compensation rather than expense reimbursement.”

Second, the court cited traveling clinicians’ ability under company policy to offset missed or incomplete shifts when they have hours “banked.” Workers were able to bank hours if they worked extra time during a week.

“There is no plausible connection between working extra hours one week and incurring greater expenses the next,” according to the opinion. “AMN offers no explanation for why ‘banked hours’ should affect whether a clinician receives the maximum per diem payment during a week she works less than the minimum required hours. The only reason to consider ‘banked hours’ in calculating a weekly per diem payment is to compensate employees for total hours worked, rather than for reasonable expenses incurred on days spent away from home for work.”

The court also cited company policy that contingent healthcare workers also receive per diem payments when they are working on a local basis within 50 miles of their homes rather than traveling. Per diems were paid to local workers as incentives to work the required hours.

Clarke and Wittman worked as traveling clinicians for AMN from January 2016 to April 2016 and from December 2014 to March 2015, respectively. AMN’s fixed mean and incidental per diem allowance was $245 per week, or $35 per day, for all clinicians during the time period, according to court filings.