In a startlingly sweeping decision that should send shivers down the spine of any home care agency that uses freelance labor, a federal court in Florida ruled on April 12 that a home health care worker who provided home care home health and support services for the elderly and disabled adults was in fact an employee and not a contractor. As a result of this misclassification, the worker will be entitled to three years’ unpaid overtime pay, plus damages equal to twice her unpaid wages owed – not to mention that the door is now open for that workers in a similar situation line up on the courthouse steps as well. This finding also exposes the employer to risk of related consequences with the IRS and under other employment laws that are not before the Court. What can your business learn from this dramatic development to avoid facing the same consequences?
Home healthcare worker wins big win
In the case of Mason vs. Pathfinders for Independence, Inc., Janet Mason worked for over three years, from April 2015 to November 2018, both as a personal support staff member (live-in companion) and as a supportive living coach for Pathfinder clients in the Tampa area. She was classified by her agency as an independent contractor and therefore not entitled to overtime pay if she worked more than 40 hours in a one-week pay period. If she had been classified as an employee, of course, she would have been entitled to earn overtime pay when she did. Most home care employees are eligible for overtime, except for some registered nurses who may qualify for an exemption. Mason was paid $1,500 a month as a personal support staff member and $20 an hour as a living support coach.
Mason claimed that she routinely provided round-the-clock care to Pathfinders clients, often working up to 84 hours a week, and maintained that she was never paid for overtime. Pathfinders maintained that she was an independent contractor and therefore not entitled to overtime pay. Failure to properly pay overtime to a non-exempt worker is a violation of the Fair Labor Standards Act (FLSA), and Mason sued under federal law alleging she was wrongfully filed as a contractor. On April 12, the court ruled in her favor and determined that she had proven her case enough to win a full court victory.
6-part legal test pointing to employee status
The judge analyzed the applicable facts and law under the 11th Circuit’s version of the six-part “economic realities” test to determine employee versus contractor status. He found that Mason had passed five of the six classification tests as an employee, which was more than enough to warrant a decision in his favor.
- The nature and degree of control of the alleged employer over the work of the alleged employee.
The judge found that Pathfinders exercised significant control over Mason’s job by requiring him to follow several policies in their employee handbook (though many were state-mandated requirements), giving him a cell phone company, requiring her to notify Pathfinders of any changes in a patient’s medications with documentation, requiring her to notify management if she had to leave a patient unattended, and requiring that she obtain Pathfinders’ approval before send documents on behalf of a patient. Additionally, Mason had to call his manager on certain days to report his hours worked or leave a voicemail, and had to submit multiple monthly reports, field logs, and incident reports.
- The possibility of profit or loss of the alleged employee depends on his management skills.
Additionally, the court found that Mason had do not have an opportunity for profit and loss based on their own management skills. Pathfinders facilitated his placement with families even though the family had the final say and Mason’s rates were set based on the agency’s maximum reimbursement rate.
- If the services of the alleged employee required a special skill.
The court also found that Mason did not possess any special skills learned on her own to perform her duties, but rather learned to do her job through Pathfinder training.
- Jthe permanence and duration of the employment relationship.
Mason has also shown permanence in his relationship with Pathfinders given his three and a half year tenure with the company.
- The extent to which the services are an integral part of the alleged employer’s business.
Finally, the court found that Mason’s services to patients were an integral part of Pathfinders’ business.
- The alleged employee’s investment in equipment or materials and the employment of other workers.
The only factor the court did not find Mason met was having made substantial investments in his business to help him succeed. Pathfinders did not provide Mason with any equipment or materials. However, when considering a six-factor balancing test, the fact that a single item fell in the company’s favor (or tied) was not enough to that the court rejects Mason’s request.
Adding a costly insult to injury
In every wage and hour dispute, the court must determine whether the employer’s actions were “deliberate”, that is, they knew how to pay their workers properly, but did not still haven’t done it. With deliberate discovery comes the danger of damages, which double the base amount of overtime pay owed to a worker as a penalty for preventing the worker from using the overtime pay they had earned. but which had been refused to him. Further, the FLSA generally only allows a court to assess damages retrospectively two years from the date of the plaintiff’s complaint – unless the employer acted deliberately in not paying. correctly the workers, in which case it can go back three years.
Surprisingly, the court found that Pathfinders “had reason to know they were violating FLSA overtime provisions” because, from June 2014 to August 2016, the U.S. Department of Labor (DOL) conducted an investigation in depth on the classification of workers by Pathfinders. occupying the same positions as Mason. The DOL found that the Personal Support Staff and Support Living Coaches were employees, not independent contractors, and ordered Pathfinders to pay 12 employees nearly $45,000 in overtime arrears. Pathfinders did not agree to pay these back wages.
Worse, this investigation was the second time the DOL has investigated Pathfinders for violation. In 2007, the DOL found that the home health care agency owed three workers nearly $1,500 in back pay for overtime, which Pathfinders paid. The court said, “Given these two investigations, the defendants had reason to know that they violated the FLSA,” thus ruling in favor of Mason on his claim for damages. and require willpower.
The DOL has placed more emphasis on surveys of customers in the home healthcare industry.
The court has yet to calculate the amounts owed to Mason, but they are likely to be substantial. It will also be entitled to recover the fees and costs of its lawyers. And worse for Pathfinders – the door is now wide open for additional claims from workers in a similar situation, so they can expect to file more claims in the months ahead.
Takeaways for Home Care Agencies
The two key takeaways for home care agencies are starkly clear. First, if you have home healthcare workers in your workforce that you classify as independent contractors, use this decision as a warning to audit your practices. You’ll want to hire your legal counsel to make sure you know the independent contractor classification law in your jurisdiction – unfortunately there are several different tests that exist across the country – and then work with them to assess your workforce. ‘work. Just because you do business the same as others in the industry doesn’t mean you’re protected in any way from these issues. This is true even if you are a Registered Nurse in Florida: State law that deems your workers to be independent contractors will not exempt you from potential liability under the FLSA. Doing such an audit with your legal advisor could offer you some protection in the form of solicitor-client privilege. Although you may be nervous about your system given the harsh ruling in this case, there are some strategies that can be deployed to solve your problems while minimizing the damage, and burying your head in the sand about a possible legal liability is never a good approach.
Second, if the DOL is on or in your premises twice in a decade to investigate, and tells you twice you are not paying workers properly, listen to them and take appropriate corrective action. Correct what they tell you is wrong, even if you disagree with their analysis. Pay your workers properly or watch their working hours religiously, so you can cut or at least reduce their overtime. It is understandable, of course, that it is difficult, if not impossible, in the current environment to find a sufficient number of workers to fill all the hours that must be worked. But you need to work harder to recruit or fix your relationship with their workers, so you don’t watch the barrel of multiple hour-wage claims for unpaid overtime.