Minnesota Staffing Agency Pays $400,000 To Settle Nurse Overtime Lawsuit

A nurse staffing agency based in Minnesota will pay more than $400,000 in unpaid wages to nearly 100 healthcare employees who believe they were shorted on overtime pay for years, according to the US Department of Labor.

Staffing Company Stole Overtime, Fed Officials Say

The case, led by the Labor Department’s Wage & Hour Division, accused Minneapolis-based All Temporaries Midwest Inc. of devising a complex scheme to violate federal labor laws.

After a lengthy investigation and (extremely brief) court proceedings in the US District Court for the District of Minnesota, the staffing agency agreed to settle claims leveled by current and former workers, who are primarily registered nurses, licensed practical nurses and certified nursing assistants. District Judge Joan N. Ericksen approved the settlement on October 11, 2017.

Lawsuit: Complex Wage Scheme Hid Violations

The overtime scheme alleged in the civil lawsuit against All Temporaries Midwest is strange in part because it appears to admit that many of the company’s employees were entitled to at least some of their overtime wages.

As the US Secretary of Labor, Alexander Acosta, wrote in the complaint filed under his name, All Temporaries Midwest would pay workers overtime wages at the correct rate, one-and-a-half times the regular rate of pay, for hours worked between 40 and 47 in the same workweek. But for employees who worked longer than 47 hours, the overtime would stop. The wage would revert back to the worker’s regular rate of pay, even though they were being compensated for hours well beyond the basic 40-hour workweek that doesn’t entail overtime.

To get past federal oversight, the lawsuit claims, the company used an “adjusted pay calculator” to fudge the numbers. On paper, it looked like the employee’s were still being paid overtime, the complaint continues, but in reality, All Temporaries Midwest had doctored the regular rate of pay. So each employee was receiving time-and-a-half wages, but those wages were being calculated using a fake regular rate of pay.

Back Wages & Liquidated Damages

As the eventual settlement agreement makes clear, neither All Temporaries Midwest nor its owner Mark Liveringhouse admit or deny any of these allegations. And the fact that the staffing agency has settled the claims, for exactly $401,384.70, doesn’t mean a court or jury has looked over the evidence or legal arguments.

In fact, All Temporaries Midwest never submitted a formal answer to the government’s complaint, so we can’t even guess how the company would have attempted to defend itself. The case has not been adjudicated. It’s been settled, which is what usually happens when the US federal government sues you in open court.

It also means that 92 current and former employees of the staffing agency will receive compensation. The settlement includes a sum of $248,651.97, which covers all of the overtime wages still due to the workers from their stints at the company between 2014 and 2016. Alongside this direct compensation, the employees have been awarded $152,732.73 in liquidated damages, plus interest. The liquidated damages are to be paid in two installments over the next two years.

Nurse Staffing Shortage & Temporary Employment

How widespread is wage theft in staffing agencies? Very common. As we’re often told, the medical industry is facing a staffing shortage. “Fewer nurses are entering the workforce,” Nursing World writes, even as the American population becomes older. That’s left health systems on the East and West coasts struggling and forced employers to find creative solutions to staffing issues.

Central to the problem, however, is that a hospital or nursing home’s staffing needs are entirely dependent on the demand for their services. Thus nursing shortages become most acute when patient intake is high, but the problem wanes when fewer patients require attention. A temporary (or, more accurately, intermittent) problem requires a temporary solution, many medical facilities have reasoned.

That kind of thinking has driven an explosion in the nurse staffing industry. Health care employers now make up the fifth-most reliant industry on workers who come from staffing agencies, according to the American Staffing Association. And 9% of all the employees in the country who go through a staffing agency find work in the medical field. While these new staffing agencies can meet the needs of hospitals, nursing homes and other healthcare facilities, they don’t always take care of workers.

The Case Of Broadway Healthcare Management

One particularly bad example comes in the form of Broadway Healthcare Management LLC, a company in Hackensack, New Jersey. Over the course of a decade, investigations conducted by the Department of Labor have repeatedly found that Broadway illegally withholds overtime pay, bonuses and shift differentials from paychecks.

In the latest case, which wrapped up in 2015, federal labor officials won $730,000 in back wages for around 150 nurses who had worked at New Jersey nursing homes through Broadway Healthcare Management. The company’s first run-in with the law was in 2008. But because Broadway had been found responsible for the exact same wage violations each time, a federal judge in New Jersey deemed the company in contempt of court.

Wage & Hour Violations In Staffing Agencies

As long as labor attorneys have studied the issue, staffing agencies have been trying to circumvent federal overtime rules. In many cases, their defense can be summed up in a single question: “who actually employs these workers?” Only employees are entitled to overtime wages, according to the Fair Labor Standards Act, or FLSA. Here, “employee” refers to a specific legal term, not the word as it’s thrown around in casual conversation.

The Fragmented Workforce

The nation’s foremost federal labor law, which governs the minimum wage, overtime pay and company record-keeping practices, separates these true “employees” from independent contractors. Unlike employees, independent contractors are in business almost exclusively for their own interests, marketing their skills actively to a group of potential clients, making large investments in their work and controlling how (and often when) they do the job.

Employees don’t usually don’t do any of that. But staffing companies, like All Temporaries Midwest, often argue that they don’t actually employ any of the workers who they place in jobs. It’s a third-party company, the agency will say, who should be considered the real employer – and thus be on the hook for any owed overtime wages.

Who’s Winning The Temp Economy?

These arguments aren’t always persuasive in court. Most newer companies that form the core of the “sharing” economy, like Uber, take a similar line, arguing that, instead of employing anyone, they simply provide a technology that allows people who want to work to find people who need work done. The courts have split, however, on whether or not this argument accurately represents reality. Courts in California, New York and elsewhere have all found in isolated cases that people who use Uber and other employment apps should be considered employees, not independent contractors. Other states have made different decisions.

It’s unlikely, though, that this question would have entered court proceedings in the case of All Temporaries Midwest. After all, the company was the one paying the nurses, not the medical facilities where they ended up working.

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