A federal court has ordered a Pennsylvania mother and daughter to pay more than $2.4 million in overtime back wages and liquidated damages, after a three-day trial confirmed the pair used illegal pay practices to avoid paying full wages to 345 workers who provided daily living assistance and home healthcare in the Pittsburgh area.
The mother owned a home healthcare company, and her daughter owned a staffing company. Both were found liable for $1,242,146 in back wages and an equal amount in liquidated damages. Both companies were also liable for the full amount.
The ruling follows an investigation and litigation by the US Department of Labor’s Wage and Hour Division. The investigation found that the pair set up the staffing company and then violated the Fair Labor Standards Act when they redirected workers’ overtime hours to the staffing company’s pay records to avoid paying overtime.
The Division determined that while the home healthcare company hired the workers and they worked only for the company’s clients, the workers received two separate checks. One was from the home healthcare company, and the other from the staffing company. Investigators discovered that the home healthcare staff handled payroll for both companies and manipulated the payrolls repeatedly so that each check showed less than 40 hours a week. Often the company paid no overtime, even when employees worked 50, 60, or more hours some weeks.
Following the probe, the Department’s Office of the Regional Solicitor filed a federal lawsuit against the pair and their companies. The court ruled the workers were jointly employed and both companies owed them overtime. In addition to back wages and damages, the division assessed $434,268 in civil money penalties given the willful nature of the employers’ FLSA violations.
“The US District Court in Pennsylvania’s finding sends an important message to employers in the home healthcare industry,” said Solicitor of Labor Seema Nanda. “Employers must pay workers overtime when the law requires, and they cannot evade the law by trying to hide their violations. The Solicitor’s Office will continue to focus on this industry and show those who defy the law that there are costly consequences to such actions.”
Compliance Perspective
Issue
The Fair Labor Standards Act must be followed by all employers. Employees with responsibility for determining rates of pay, deciding overtime pay eligibility, and performing recordkeeping of wages should be well trained in the FLSA provisions. All federal and state laws must be adhered to for the employee working overtime. Violations of the FLSA can result in fines and other penalties and sanctions.
Discussion Points
- Review your policies and procedures on fair wages, overtime pay eligibility, and recordkeeping. Update if needed.
- Train all staff with responsibility for determining fair wages, overtime pay eligibility, and recordkeeping so that they are knowledgeable about your policies and procedures to ensure they comply with federal and state requirements. Document that these trainings occurred, and file each signed document in the employee’s education file.
- Periodically audit to ensure compliance with minimum wage laws, and that overtime pay eligibility and recordkeeping are accurate and being reported correctly.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
