The US Department of Labor has obtained a consent judgment that will recover $9.3 million in back wages and liquidated damages for 1,756 employees of a Pennsylvania healthcare staffing company that misclassified them and willfully denied them their overtime pay. The judgment requires the staffing company to pay $4,650,000 in back wages and an equal amount in liquidated damages, and a civil money penalty of $700,000, for the willful nature of its violations. The action follows a complaint the department filed on Sept. 2, 2022.
The judgment follows an investigation by the department’s Wage and Hour Division that found — from at least Sept. 24, 2017, through at least May 22, 2022 — the employer willfully denied the affected employees their overtime pay. The division determined the company paid the employees straight time for all hours worked and failed to pay time and one-half the required rate for hours over 40 in a workweek, in violation of the Fair Labor Standards Act. In addition, in some cases, investigators determined that the employer claimed falsely to be a registry through which the company’s clients solely employed the workers. In other cases, the company misclassified employees as independent contractors.
The company provides staff to various agencies, including schools and group homes for individuals with disabilities. The employees worked in numerous occupations, including direct support and intellectual disabilities professionals, residential aides, personal care assistants, home health aides, and licensed practical nurses.
Following the division’s investigation, the department’s Office of the Solicitor engaged in months of negotiation with the company, after which the employer agreed to the complaint’s filing and a consent judgment.
Compliance Perspective
Issue
A worker is entitled to minimum wage and overtime pay protections under the Fair Labor Standards Act (FLSA) when there is an employment relationship between the worker and an employer and there is coverage under the FLSA. The FLSA requires that, among other things, covered employers pay their nonexempt employees at least the federal minimum wage for every hour worked and overtime pay for every hour worked over 40 in a workweek, and it mandates that employers keep certain records regarding their employees. It is essential that individuals who determine workers’ classifications are knowledgeable about the differences between employees and independent contractors. Misclassification of an employee’s status can lead to violations of the FLSA which can result in fines and other penalties.
Discussion Points
- Review your policies and procedures on fair wages, overtime pay eligibility, and recordkeeping. Determine if your policies clearly state the differences between an independent contractor and an employee. Update your policies as needed.
- Provide training for staff who have responsibility for ensuring accuracy of overtime pay and recordkeeping, and ensure they demonstrate competence with the requirements of your policy and procedures and the FLSA, including the difference between an employee and an independent contractor. Document that these trainings occurred, and file each signed document in the employee’s education file.
- Periodically audit to ensure that overtime pay eligibility and recordkeeping are accurate and being reported and paid correctly.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
