A federal court is requiring a Pennsylvania staffing agency and its owner to pay $208,044 in back wages and liquidated damages to 96 home health workers misclassified as independent contractors by the employer who, in turn, failed to pay them their full wages.
Wage and Hour Division investigators from the US Department of Labor found, and litigation established, that the company and its owner misclassified the affected workers as independent contractors and shortchanged their hard-earned wages as a result. Specifically, the Division determined the employers:
- Failed to pay one employee for three separate 8-hour shifts over a 2-week period.
- Paid straight-time rates instead of the required rate of time-and-one-half for hours over 40 in a workweek, and paid overtime wages only for hours over 80 in a bi-weekly pay period.
- Did not pay overtime on non-discretionary bonuses given as various pre-announced incentives.
- Failed to maintain payroll and timekeeping records as required.
The employers’ actions violated the Fair Labor Standards Act (FLSA) and led the Department to litigate to recover wages owed to the affected workers. In its summary judgment, the court ordered the company and its owner to pay $104,022 in back wages and an equal amount in liquidated damages to the affected workers. The court also issued an injunction forbidding the employers from violating the FLSA in the future.
“When employers misclassify employees as independent contractors and fail to pay workers their hard-earned wages, the US Department of Labor will hold them legally accountable,” said Acting Regional Solicitor of Labor Samantha Thomas in Philadelphia.
Compliance Perspective
Issue
Direct care workers employed by agencies and other third-party employers are entitled to receive at least the federal minimum wage and overtime pay. The FLSA sets minimum wage, overtime pay, recordkeeping, and youth employment standards for employment subject to its provisions. Unless exempt, covered employees must be paid at least the minimum wage and not less than one and one-half times their regular rates of pay for overtime hours worked. Every covered employer must keep certain records for each non-exempt worker. The Act requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate. 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, and that they clearly address non-retaliation for reporting of concerns. Update if 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. Audit employees for understanding in how they can report any concerns to their supervisor or through the hotline, including anonymously.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
