$195,000 in Back Wages for Minimum Wage and Overtime Violations by Residential Care Facilities

Friday, November 13, 2015

In Orange County, more than a dozen workers at six residential care facilities, whose employer claimed they were "care-partners" or business partners, were denied pay and benefits to which they are lawfully entitled.

An investigation by the U.S. Department of Labor's Wage and Hour Division found that Agape Cottages misclassified its employees as "care partners" or business partners, rather than employees and treated them as though they had none of the legal rights that are afforded to them as employees under the Fair Labor Standards Act and other labor laws. An investigation of six of the company's residential care facilities in Placentia, Fullerton and Santa Ana has uncovered significant violations of the minimum wage and overtime provisions of the FLSA and revealed that the workers were economically dependent on the employer, and that they were employees. As a result, the business will pay 17 workers more than $45,000 in back wages for minimum wage violations and more than $150,000 for overtime violations.

Whether a worker is an employee under the FLSA is a legal question determined by the economic realities of the working relationship between the employer and the worker, not by job title or any agreement that the parties may make. The Wage and Hour Division often finds misclassification in a variety of low-wage industries, including health care, hotels and construction. The misclassification of employees as independent contractors presents a serious problem for affected employees, employers and the economy. Misclassified employees often are denied access to critical benefits and protections — such as family and medical leave, overtime, minimum wage and Unemployment Insurance — to which they are entitled. Employee misclassification generates substantial losses to the U.S. Treasury and the Social Security and Medicare funds, as well as to state Unemployment Insurance and workers' compensation funds. Misclassification also creates a competitive disadvantage for employers who comply with the law. Wage and Hour Division Administrator Dr. David Weil issued official guidance to employers about the misclassification of workers and the FLSA. 

The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour, as well as time and one-half regular rates for every hour worked beyond 40 per workweek. The FLSA also prohibits employers from retaliating against employees for exercising their rights and requires employers to maintain accurate records of wages paid and hours worked.

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