January 14, 2022

FLSA Faux Pas: Intentional Misclassification Costs One Employer $7M+

On January 14th, a U.S. District Court in Virginia found an employer misclassified more than 1,100 workers (staffing nurses and aides) as independent contractors instead of employees. How did the court reach that determination?  It looked at the relationship the nurses, the company, and the client-facilities all had with one another, listing 65 factors for making its determination.  A few included:

  • The nurses provided services that were integral to the company’s business.
  • They did not have opportunities for profit or loss depending upon their skill.
  • They did not own their business or advertise their services.
  • They had to complete an “employment” application that referred to the company as the “employer.”
  • They were covered under the company’s workers’ compensation policy.
  • They had to wear name badges that bore the company’s name.
  • They had to sign a non-compete agreement.
  • The company “disciplines” nurses for violations of various company policies.

Even attorneys get it wrong in the DOL’s eyes
.  The company never sought legal guidance on the workers’ classification until after some nurses complained.  When they did, the attorney never conducted an “independent factfinding” and relied only on what the client told him when he advised “to a very high degree of confidence” that their classification was correct.

But wait, there’s more.  The court award DOUBLE damages because it found evidence of the employer’s “intent to continue misclassifying the nurses on their registry despite their familiarity with DOL guidance and law to the contrary.” If you find an “Oops,” don’t make it a “Shhhh.”  Fix it.  Good faith and due diligence might have saved this employer more than $3.6M!!

Want more information and tips? Join us for the March 23rd webcast, “Pay Them Now or Pay Them MORE Later: A Wage and Hour Update.”