A Lansing, MI, adult foster care company’s practice of treating its residential healthcare workers as independent contractors will cost it $94,000 in back wages.
An investigation into Gracious Adult Foster Care’s pay practices by the Department of Labor’s Wage and Hour Division said the company’s misclassification of its residential healthcare workers denied employees full overtime wages, unemployment insurance and workers’ compensation in violation of the Fair Labor Standards Act. The practice also made workers fully responsible for paying Social Security and tax withholdings, the agency said.
The investigation led to the recovery of $94,706 for the affected workers.
Stella Ekwuaju, principal of the adult foster care home, declined to comment when reached by McKnight’s Senior Living.
According to the DOL, a worker is entitled to minimum wage and overtime pay protections under the FLSA “when there is an employment relationship between the worker and an employer and there is coverage under the FLSA.”
According to the Wage and Hour Division, which determines whether an employee has been misclassified as an independent contractor, there are key differences between employees and independent contractors. Those key differences include who runs the business, who assigns the work and when that work is performed.
“Residential healthcare workers provide vital services to adults unable to care for themselves and allow families some peace of mind knowing their loved one’s basic living needs are being addressed,” Wage and Hour Division District Director Mary O’Rourke said in a statement. “Industry employers that fail to pay wages as the law requires have to remember that retaining and recruiting the people they need to do these jobs is more difficult as workers in today’s labor market can choose where, and for whom, they work.”
The DOL announced in November the launch of an ongoing education, outreach and enforcement initiative to ensure that senior living and care facilities pay caregivers their “rightful” wages.
In January, a Virginia staffing agency serving long-term care providers was ordered to pay $7.2 million in back wages and damages for misclassifying employees as independent contractors. Wage and Hour Division investigations recovered more than $22.7 million for Midwest healthcare workers resulting from violations of FLSA worker protections.
Earlier this year, a district court in the Eastern District of Texas found that the FLSA independent contractor rule became effective March 8, 2021.