$637,048 in Back Wages and Penalties for Minimum Wage, Overtime, and Classification Violations

Friday, December 19, 2014

The U.S. Department of Labor reached an agreement with owners of five Bay-Area facilities who will pay $637,048 in total to 24 employees providing care for the elderly and ill. The amount includes $318,524 in minimum wage and overtime back wages, plus an additional $318,524 in liquidated damages. The facilities are Retirement Plus of San Carlos I; Retirement Plus of San Carlos II; Laurelwood Care Home; Three Sisters Care Home; and Three Sisters Care Home II. The department's Wage and Hour Division began a two-year investigation of the firms beginning in February 2012 to spot Fair Labor Standards Act violations.

San Francisco District Office investigators found that the firm paid most employees a weekly salary without regard to hours worked. Entitled to minimum wage and overtime, many affected employees received as little as $5 per hour and worked up to 11 hours per day, five to six days a week. The owners also failed to keep accurate and complete records of employee hours. Additionally, a caregiver was misclassified as an independent contractor and worked long hours without minimum wage and overtime pay. 

The FLSA requires that covered employees be paid at least the minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records.

The misclassification of workers as something other than employees, such as independent contractors, presents a serious problem for affected employees, employers and the entire economy. Misclassified employees are often denied access to critical benefits and protections, such as family and medical leave, overtime, minimum wage and unemployment insurance. Employee misclassification also generates substantial losses to state and federal treasuries, and to Social Security and Medicare funds, as well as to state unemployment insurance and workers' compensation funds.

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