Kindred Healthcare Settles Overtime Class Action For $12M

Home health aides made major progress in their pursuit of fair pay this month when Kindred Healthcare, a national operator of hospitals, nursing care centers and rehab facilities, agreed to pay $12 million in order to resolve allegations that the company had violated California labor law, the Louisville Business First reports.

$12 Million Settlement For Kindred Workers

The money, which will be placed in a settlement fund, goes to around 1,600 class members who say Kindred and subsidiary Gentiva Health Services, an in-home care provider, failed to pay them overtime wages and California minimum wage. Each class member can expect an average compensation award of $5,415; no more than $20,000 has been set aside for Valerie Cashon, the occupational therapist who started the class action back in 2016.

Occupational Therapist Says Kindred Violated CA Law

Cashon worked as a therapist for Gentiva Health (now known as “Kindred at Home” and “Kindred Hospice”), which was purchased by Kindred in 2015. Cashon, however, worked for the company from 2010 to 2016, serving as an occupational therapy in the homes of her patients.

Kindred pays its in-home care providers on a piece-rate basis, offering a fixed exchange in exchange for each task a worker completes. In her lawsuit, Cashon says that many physical therapists, registered nurses, licensed vocational nurses and speech therapists were paid in the same way, but the settlement itself also applies to hourly workers.

California’s OT Rules For Piece-Rate Employees

In 2016, California revised its wage laws for piece-rate workers. In addition to their piece-rate pay, the State’s law now reads, these workers should also be paid separate compensation for their rest and recovery breaks, along with “nonproductive time” spent “under the employer’s control.”

California’s new rules, codified at Section 226.2 of the California Labor Code, also dictated new guidelines for a piece-rate employee’s wage statements. Employers must now document a worker’s hours of rest, recovery and “nonproductive time,” as well as the gross wages paid for those breaks, and report these details in their wage statements.

Wage Reporting & Overtime Requirements

But Kindred didn’t do that, Cashon argued in her lawsuit. The occupational therapist accuses her former employer of failing to pay her and other clinicians for their rest and break periods. She also claims that Kindred’s wage statements were woefully inadequate, leaving out or misrepresenting important information like the wage rate she was paid and the total number of hours she worked. In understating the employee’s work hours, Cashon continues, Kindred went on to underpay them.

Due to the discrepancy between how many hours people actually worked, and how many hours Kindred allegedly recorded, many workers actually received a sub-minimum wage. Their overtime payments were thrown off, too, the plaintiff claims, because overtime calculations should be based on the number of hours an employee works.

The Most Worker-Friendly Laws In The Country

California is home to the most-generous overtime and minimum wage policies in the nation. Employees in California are entitled to a minimum wage no less than $11 per hour. The State’s overtime regulations are even more worker-friendly.

As in federal law, California workers are entitled to overtime wages (at 1.5-times their regular rate) for any hours worked over 40 in a week. But California also imposes a daily overtime obligation on employers; employees who work longer than 8 consecutive hours in one day are entitled to overtime pay, too, which increases to twice the worker’s regular rate after 12 consecutive hours. Employees who work long weeks also get a boost. On the seventh consecutive day of work, employees should be paid overtime for their first 8 hours of work, then double pay after that.

Kindred Denies Liability In Overtime Dispute

If Cashon’s allegations are true, if Kindred was really underpaying workers for their overtime hours, the company would be on the hook for a lot of money. Apparently, a settlement of $12 million seemed preferable to taking the case to trial.

Kindred hasn’t replied to requests for comment from the Louisville Business First. The company’s decision to settle, according to the settlement agreement, was borne from exhaustion, not guilt. Kindred continues to deny underpaying its workers, writing that “further proceedings in the action would be protracted and expensive.”