April 24, 2019
The Labor Department continues to go after home care companies for minimum wage and overtime pay violations, putting to rest, for now, any debate over whether Congress meant for the rapidly growing industry to be covered by federal wage law.
The DOL recently won a nearly $130,000 judgment against a Virginia home care company that department lawyers said misclassified workers as independent contractors and failed to pay them overtime.
The verdict is a relative drop in the bucket for a $103 billion industry. It’s likely to get some attention, however, because the court made the owner of the company—At Home Personal Care Services LLC—personally liable for the unpaid wages and additional liquidated damages.
The department in the last month has also secured a $1.2 million victory against another home care business and filed similar lawsuits against at least three other providers. The DOL’s Wage and Hour Division is seeking to hold the owners of those companies in Missouri, Pennsylvania, and Wisconsin personally liable for unpaid overtime.
“By taking an evidence-based approach, WHD consistently prioritizes compliance assistance and enforcement resources in areas where the agency is most likely to uncover violations,” department spokeswoman Megan Sweeney said in an email. “WHD continues to use a multi-pronged approach to compliance through investigations in high-violation industries, engagement and education of private and public stakeholders, and the use of communications tools and compliance assistance.”
All the lawsuits cite an Obama-era regulation that extended wage-and-hour protections under the Fair Labor Standards Act to a majority of the roughly 3 million home health and personal service aides working across the country. Although some expected the Trump administration to scrap that rule, industry representatives tell Bloomberg Law they’ve pivoted to urge the DOL to tackle more discrete issues about how hours are recorded and wages are calculated.
“The home care industry continues to seek clarification and guidance from the U.S. Department of Labor on enforcement of the companion exemption rule,” Phil Bongiorno, Executive Director of the Home Care Association of America, said via email. “While HCAOA members continue to comply with this rule despite limited guidance, we welcome the Department’s efforts to enforce worker misclassification regulation for entities that are misclassifying workers that comes as a result of loopholes in the rule.”
That’s in part a recognition that the department is unlikely to try to roll back the Obama regulation. The Supreme Court in 2016 decided not to review the rule after an appeals court upheld it. Industry representatives and the International Franchise Association at the time argued that home care workers provide “companionship” services, which are specifically exempt from the Fair Labor Standards Act.
‘See No Evil’ At Home was one of five home care businesses the Labor Department sued during a three-week stretch last year.
Robin Wright, the company’s owner, told Bloomberg Law that the department misinterpreted pay records in a hunt for overtime violations. She said DOL investigators bullied her by threatening liquidated damages and other penalties if she didn’t settle the case. At Home and other companies that have recently been the target of DOL investigations are considering “legal action” against the department, Wright said.
The DOL has won judgments or entered settlements requiring four of those companies to pay nearly $1.5 million in unpaid overtime, liquidated damages, and other penalties. That includes the recent $1.2 million ruling against Access Home Care Inc., which admitted in court that it failed to pay workers nearly $625,000 in overtime.
The FLSA requires businesses to pay certain workers at least $7.25 per hour and 1.5 times their normal pay rate for all hours worked beyond 40 a week. The DOL recently proposed a rule to increase the annual salary threshold under which workers are automatically entitled to overtime pay to $35,000 from 24,000 per year.
New York Legal Aid Society lawyer Richard Blum says the home care industry is ripe for abuse, thanks to downward cost pressures from state Medicaid agencies and insurance providers workers. Home care businesses often overlook or misconstrue hours reported by workers at the end of their shifts, he said.
“There’s a lot of this ‘see no evil’ that goes down the chain,” Blum said. “It’s up to you to tell us your hours. But then they make it very difficult to tell them or they just ignore what you tell them.”
The Obama regulation made clear that home care aides hired by third-party agencies aren’t covered by an FLSA exemption for “companionship” service providers. It left uncertain, however, whether registries that link aides with end users should be considered “employers” responsible for ensuring that the workers are paid minimum wages and overtime.
The Labor Department last year issued a Field Assistance Bulletin to help DOL investigators make that call. It instructed investigators to consider a range of factors, including whether the registry controls an aide’s work, schedule, pay rates, and equipment, as well as whether it has the power to hire or fire a home care worker.
The move came in response to calls from industry groups and Sen. Marco Rubio (R-Fla.) for clarity on the issue.