The operator of a Tennessee senior living community agreed to pay $81,008 in back wages and liquidated damages after the U.S. Department of Labor’s Wage and Hour Division said the community’s sales employees should have been classified as nonexempt.

“As a 26-year veteran in the senior housing arena, I have always operated the communities with the understanding that sales team members have been classified as exempt-level employees,” Hearth Management Chief Operating Officer Kevin Hunter told McKnight’s Senior Living. The case involved 38 employees at the company’s independent living, assisted living and memory care community called The Hearth at Hendersonville.

“The primary finding was that Hearth’s sales team members did not meet the qualification as exempt and needed to be re-classed as non-exempt level employees,” Hunter said. “This change was made immediately, as The Hearth has always operated within the parameters of the Fair Labor Standards Act.”

In fact, he said, Health fully cooperated with the Labor Department when it was notified of the audit.

“The Hearth has been operating in the senior housing and hospitality space for 20 plus years and is proud of its commitment to its residents, team members and families,” Hunter said. “When Hearth was notified of the Department of Labor audit, we fully cooperated with the DOL and have always been compliant with both federal and state regulations.”

Hearth also paid a $10,719 civil money penalty for other violations.

Labor Department investigators said that the company deducted time from workers’ time cards for meal breaks even when the employees worked through those breaks. These practices resulted in overtime violations when the unpaid time occurred in workweeks longer than 40 hours and the employees remained unpaid for this time, the department said.

Hearth disputed the characterization.

“It is always a challenge to meet our residents’ scheduled and unscheduled needs and at the same time ensure all team members enjoy a 30-minute uninterrupted break,” Hunter said. “The Hearth never deducted time from employees’ timesheets that was not reflected from them punching out.”

Investigators also said that the facility did not include on-call and other nondiscretionary bonuses in its calculations of employees’ overtime rates. Excluding these amounts from the calculations, and basing overtime pay only on employees’ hourly base rates, resulted in overtime pay at rates lower than those required by law, the department said. 

Also, the Labor Department said that because Hearth did not keep accurate records of the number of hours employees worked, the company violated recordkeeping provisions of the Fair Labor Standards Act.

“The statement regarding the employer’s failure to keep accurate records on the number of hours employees worked is inaccurate,” Hunter said. “The Hearth in Hendersonville enjoys an exceptional reputation with experienced on-site leadership.”

Resources for employers

“The U.S. Department of Labor is committed to ensuring a level playing field for operators of these facilities and guaranteeing that employees receive the wages they legally earned,” said Wage and Hour Division District Director Nettie Lewis. “We encourage all employers to reach out to us for assistance and to use the variety of tools we offer to ensure that their pay practices comply with federal law.”

The Labor Department said it offers resources designed to help employers understand their responsibilities and comply with federal law, including online videos as well as confidential telephone calls and in-person visits to local Wage and Hour Department offices.