Is it legal for my employer to not honor a MD restriction?

It depends on what the usual or typical hours for an LPN in this nursing home are. First, bear in mind that the doctor's restriction has no inherent power or authority over your employer. It is evidence of a medical need, but no more than evidence.
Second, while an employer must make a "reasonable accommodation" to an employee's disability or other provably medical needs, as a general matter, a reduction or restriction in hours is not considered a reasonable accommodation. That is because the point of a reasonable accommodation--a change in rules, or provision of assistive device, which is not too expensive or disruptive for the employer--is to let the employee do his/her job. Letting him or her work shortened hours is by definition not doing fully his or her job; and is potentially quite expensive or disruptive to an employer if as a result, the employer needs to hire someone else to cover the missed hours.
That said, the employer may not also demand that an employee with a disability work more than the typical hours for his/her job: all the employee needs to be able to do is to work the hours he or she was essentially hired for. 
So if a typical day for an LPN in this home is 8 hours, then working 8 hours is fine: the employer cannot make you work more than that if that's not a usual part of the job, in the face of work restrictions. But say that this is a location where LPN's normally work, say, three or four 12-hour days per week; if you are seeking to work less than the job normally entails, the employer is allowed to say "no" to that.
Also note that even with a doctor's note, the employer may exercise reasonable judgment to evaluate if the need is legitimate; after all, some doctors can and do write notes for their patients claiming they have medical needs when that is not a valid medical need--I have seen that in my own practice. (E.g. subsidized public housing tenants, who are required by law, in exchange for getting a housing subsidy, to maintain only one residence--but who present doctor's notes claiming they have medical need to spend 6 months/year at their condo in Florida.) If the alleged medical need to not work more than 8 hours in a day does not seem valid, the employer does not have to take it at face value.
If you believe that your restriction is medically valid and does not infringe on the normal hours and terms of your job, if your employer disallows it, try contacting the federal EEOC.