The U.S. Department of Labor (DOL) announced that it will recover $9.3 million in back wages and liquidated damages. The funds stem from a Philadelphia health care staffing company misclassifying 1,756 employees, including home health aides, and depriving them of overtime wages.
A consent judgment in the U.S. District Court for the Eastern District of Pennsylvania orders U.S. Medical Staffing Inc. to pay $4,650,000, in back wages and the same amount in liquidated damages, as well as a civil money penalty of $700,000, for the “willful nature of its violations.”
U.S. Medical Staffing is a company that provides staffing to a variety of agencies and organizations throughout Pennsylvania in Berks, Bucks, Chester, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties. The company employed personal care assistants, residential aides, home health aides and licensed practical nurses.
An investigation by the DOL’s wage and hour division found that U.S. Medical Staffing failed to pay these employees overtime. This took place from roughly Sept. 24, 2017, through at least May 22, 2022.
The investigation also found that the company compensated employees straight time for all hours worked and did not pay time and one-half, which is the required rate for hours over 40 in a workweek. This is a violation of the Fair Labor Standards Act.
Plus, in some instances, the company falsely presented itself as a registry through which its clients solely employed the workers, and at other times it incorrectly classified employees as independent contractors.
Broadly, the consent judgment signals a warning to health care companies, Solicitor of Labor Seema Nanda said in a press release.
“This consent judgment makes clear to all health care industry employers that just like U.S. Medical Staffing, they will be held accountable when they fail to pay employees their legally earned wages,” she said. “The U.S. Department of Labor is prepared to use every tool available, including litigation, to prevent employers from violating workers’ rights.”
After the investigation, the DOL’s office of the solicitor and U.S. Medical Staffing went into months of negotiation. This concluded with the company agreeing to the complaint’s filing and a consent judgment.
“Too often we find workers denied wage protections, such as the right to overtime pay and other benefits, by employers who misclassify them as independent contractors,” Jessica Looman, wage and hour principal deputy administrator, said in the press release. “The Wage and Hour Division will hold employers accountable when they misclassify employees to cut labor costs and gain an unfair advantage over the competition.”
Last year, the wage and hour division collected $13.8 million in back wages for more than 17,000 workers in the health care industry.
Ultimately, Looman believes that companies that violate wage laws will be plagued with staffing challenges.
“As employers struggle to find the people they need to operate their businesses, those who ignore workers’ rights to full wages and benefits are likely to struggle to retain and recruit workers,” Looman said. “Employers who abide by the law will certainly have a greater appeal than those who do not.”
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