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Home Healthcare Employer Settles Wage Lawsuit for $700,000

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When is that promotion to “manager” bad news?

Newark, NJOn October 20, Bayada Home Health Care Inc. agreed to pay home healthcare workers $700,000 to settle an unpaid wage lawsuit. Ivanovs v. Bayada Home Health Care Inc. was a 6-year legal battle. The workers' awards will range from $300 to $6,000, according to the settlement.

At its heart, the lawsuit was about whether workers who were paid on salary were doing work that would have legally entitled them to an hourly wage plus overtime, which might have amounted to more money. At first glance, most folks would rather be salaried workers than wage workers. It seems like a promotion, a step up in the world. But the dollars don’t necessarily work out that way. A wage earner who gets overtime can earn more than a low-paid salary worker who doesn’t.

The economic issue is muddy. The legal issue is about who is entitled to overtime pay and why.

The Fair Labor Standards Act and overtime rules

The Fair Labor Standards Act (FLSA)  requires that covered nonexempt employees receive overtime pay for hours worked over 40 per workweek at a rate not less than one and one-half times the regular rate of pay. The tricky question is who is an exempt employee. (The language of the law is convoluted and employer-focused. For employees, “exempt from the law,” means “not protected,” rather than “free from constraints.” It is the employer who is free from the burden of calculating and paying overtime wages.)

FLSA section 13(a)(1) takes minimum wage and overtime pay protections away from executive, administrative, and professional workers, presumably on the theory that they can negotiate decent salaries anyway. For high-rollers in C-suite jobs, this may be true, but it’s a fiction for folks on the first rungs of the prosperity ladder, like many home healthcare workers.

To be considered an exempt employee, a worker must:
  • make more than a certain amount; AND
  • primarily perform executive, administrative, or professional duties, as provided under the DOL’s “duties test.”
The duties test is very fact-specific, and that is what Ivanovs, like many unpaid wage lawsuits, is about.

A hard legal slog for home care workers

Client service managers at Bayada Home Health Care allege that they were misclassified as exempt workers and so not eligible for overtime payments. They worked more than 40 hours per week and said that between 70 and 95 percent of their work went towards nonexempt duties, which should have entitled them to a wage and overtime pay under the FLSA. Bayada, however, alleged that each client service manager was subject to different employment conditions depending on where and under whom they worked.

The class action lawsuit has gone up and down through the court system since 2017. There were arguments about who might be included in the class of litigants. There was a mistrial on several counts. The fact that the home healthcare workers persisted was testimony to their persistence. Ultimately, both parties agreed that the $700,000 settlement seemed like a good choice.

History and a Foggy Future

In 2016, the DOL proposed a rule to nearly double the salary threshold for EAP employees from $455 per week to $913 per week. That rule was challenged shortly after its publication, and was ultimately withdrawn. A 2020 increase in the salary thresholds, which is currently in effect, was far more modest.

On August 30, the Department of Labor announced a notice of proposed rulemaking that would extend overtime protections to an additional 3.6 million salaried workers. The proposed rule would guarantee overtime pay for most salaried workers earning less than $1,059 per week, or $55,000 a year beginning in the middle of 2024. Two things are important:
  • This is a big increase. Since 2020, the salary threshold has been $684 per week or $35,568 annually; and
  • The new thresholds would be updated every three years to remain current with new wage data. The updates would be automatic and would not require further rulemaking;
The new limits of $1,059 per week, or $55,000 a year are no sure thing. On the other hand, if they do become effective, mid-2024 is not so far away.

The plight of home healthcare workers

According to the AMA Journal of Ethics, the median wage in 2019 for home health aides was $11.57 per hour. This wage is only slightly higher than the minimum wage that employers must pay in most states. In 2017, 15 percent of direct care workers lived below 100 percent of the federal poverty level, and 42 percent relied on public assistance to make ends meet. The data suggests that the value of many health care workers’ compensation is incommensurate with the value of their contributions.

They often work alone in a patient/client’s home and can easily find themselves in unsafe or abusive working conditions. The fact that they may also be deprived of the wage and hour protections of the FLSA is very troubling.


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