Based on evidence presented in a bench trial in this FLSA enforcement action, the defendants are jointly and severally liable for $128,446 in back pay and liquidated damages. This litigation stems from a dramatic shift in the treatment of third-party providers of home care services, articulated in amended regulations effective in 2015.
Here, the defendants concede that all but five of 44 personal-care aides worked at least some overtime for which they were not compensated at a time-and-a-half rate. Contrary to the defendants’ arguments, each o f the six factors under the “economic realities” test weighs in favor of finding that the contested aides were “employees” subject to the FLSA’s protections.
That an industry is heavily regulated does not mean that those working in the industry are not “employees.” Medicare and Medicaid may place a ceiling on how much the defendant may be compensated for the services performed by aides, but the defendant still determines each aide’s pay rate based not only on that ceiling but also on the company’s other costs. Similarly, Medicare and Medicaid may determine a patient’s eligibility for services and hours, but the employer trains its aides as to how to perform those services and goes to great lengths to ensure that they provide those services and work within the allotted hours.
The contested aides are also employees even if they care primarily or only for their own family members. Whatever feelings of love or obligation may have motivated the aides at issue to care for elderly or disabled family members, they also decided to enter into a mutually beneficial, compensated arrangement with the defendant. The defendant profited by billing for the services those aides provided and, as a side benefit, their patients reaped the benefits of obtaining care through a professionalized company from a loved one rather than a stranger.
The defendants were generally aware of the FLSA and made some effort to abide by its requirements. However, the company owner had reason to doubt her conclusion that the aides at issue could properly be considered independent contractors. Many of the sources of information on which she relied were ambiguous at best. And the Virginia Workers’ Compensation Commission advised her that it was difficult to determine whether the aides were employees or independent contractors and that it would be safer to secure workers’ compensation coverage for all aides. Yet she didn’t consult an attorney or the Department of Labor.
In short, the defendant was neither willfully ignorant nor reasonably diligent as to finding out what the law required, so the statutory default of liquidated damages equal to backpay is appropriate. As the sole owner and president, the company owner clearly qualifies as an equally liable employer. She exercised substantial control over the policies, job responsibilities, and day-to-day functioning of the aides at issue, and her name and signature appear all over the personnel records as the aides’ “supervisor.” She was intimately involved in decisions to hire, fire, and discipline aides.
The Department has demonstrated that defendants failed to maintain appropriate records. However, injunctive relief is not warranted here. Once the Department began investigating, the defendant company reclassified all aides as employees and immediately began treating them as such.
Judgment granted for the plaintiff.