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DOL's Proposed Changes to FLSA Would Have Big Impact on Home Healthcare Industry

Last week, the DOL issued a proposed rule which would extend FLSA overtime and minimum wage coverage to a group of employees who have previously been exempt - home healthcare workers employed by third-party companies.  I have spoken with friends in the home healthcare industry, who have told me that this would amount to a major change in that industry.

A little background - the FLSA covers companies/workers engaged in interstate commerce.  In 1974, Congress amended the FLSA to extend coverage to many domestic workers - maids for example - under the guise that these individuals, even if employed in private homes, affect interstate commerce.  There has been, however, a total exemption (from both overtime and minimum wage) for employees employed "to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves".  These are home healthcare workers.

The DOL proposed rule, among other things, will do away with the exemption for employees employed by a third-party company to provide "companionship services" in private homes.  If, however, the employee is employed directly by the private household, the employee would still be exempt from overtime and minimum wage.

The DOL says that these changes are warranted because of changes in the home healthcare industry.  The DOL stated: "[d]ue to significant changes in the home health care industry over the last 35 years, workers who today provide in-home care to individuals are performing duties and working in circumstances that are markedly different than when the companionship services regulations were first promulgated." 

The proposed rule will be subject to comments, and no doubt the home healthcare industry will vigorously oppose this.  We will have to wait and see what happens, but this could have a big impact on the healthcare industry in Florida.

The DOL also proposed a couple of other important changes:  (1) extending overtime and minimum wage coverage to live-in maids employed by third party companies; and, (2) requiring employers (including private households) of live-in help to keep time records for their live-in employees. 

I have represented several employers in cases filed by domestic workers, and they are always complicated.  Anyone who has the means to employ live-in help should contact an employment attorney to make sure that they are properly paying their employees.  In my experience, a number of local Florida plaintiff's attorneys are targeting these types of workers as potential clients.


Using a Lie Detector Test to Settle an FLSA Case? What Will They Think of Next?

I recently came across an interesting Report and Recommendation from the Middle District involving a very creative proposed FLSA settlement.  The District Judge later adopted the R & R. 

As often (always?) happens in FLSA cases, in this case there were great discrepancies between the plaintiff's and defendant's versions of the number of hours worked by the plaintiff.  Usually when the parties want to settle such a case, they agree on a fair number somewhere in the middle and are done with it. 

Here, however, the parties struck a much more creative bargain.  The plaintiff agreed to sit for a lie detector test, and be asked "whether he worked five, ten, and finally, fifteen hours per week, on average, of overtime".  If the plaintiff "passed" the test, the defendant would pay the overtime amount, plus a fee amount to be determined by the court.  If the results were inconclusive, the defendant would pay $10,000 total.  If the plaintiff failed the test, the plaintiff would get nothing, and would have to pay 1/2 of the cost of the test.

The parties asked the court to approve this scheme before they went forward with the lie detector test.  The court denied the motion without prejudice, under the thinking that "the parties are not asking the court to approve a settlement - they are asking the court to approve a method of reaching a settlement".  The court acknowledged that the parties' plan would be "quicker and cheaper than a jury", but said that would also be true of “dueling and coin flips".  In other words, it doesn't matter how you reach the settlement - it can be totally arbitrary - but the court will not analyze the settlement unless the terms are concrete. 

The case is still pending so it is possible that the parties might go forward with the test.  One thought that I had was this - I used to be a public defender in Ohio.  In some cases, the prosecutor's office would suggest having the criminal defendant undergo a lie detector test.  Sometimes we would agree, but only after we had our own lie detector operator administer a test, under the cover of privilege, and the defendant passed with flying colors.  I wonder if the plaintiff's attorney did the same thing here before agreeing to this settlement?


Eleventh Circuit Decision Rejecting Catalyst Theory May Alter the Way FLSA Cases Are Litigated

Last week, in Dionne v. Floormasters Enterprises, Inc., the Eleventh Circuit Court of Appeals issued a decision that is sure to affect how attorneys represent their clients in wage and hour matters.  Florida leads the nation in wage and hour suits filed under the Fair Labor Standards Act (“FLSA”), largely because the plaintiff’s bar here decided over a decade ago to aggressively pursue these suits.  FLSA cases are attractive to plaintiff’s lawyers because the statute includes a one-way prevailing party fees provision that is applicable to plaintiffs only.  If a plaintiff files suit and prevails, the plaintiff gets his/her fees paid by the other side.  There is no reciprocal provision that applies if the defendant wins.

Because of this one-way fee shifting provision, Defendants who deny liability still often find it cost-effective to settle FLSA suits at their outset.  The amount the plaintiff seeks in unpaid wages is usually much less than the attorney’s fees that a defendant will have to pay its own lawyers to defend the suit.  And, if the plaintiff prevails on only a small portion of his claim, the defendant will have to also pay the plaintiff’s attorney’s fees.  It does not take a rocket scientist to understand the “Catch 22” situation that defendants are in.

One defense tactic that lawyers have long considered has been to offer to pay the plaintiff all damages (double the amount of claimed unpaid wages, plus interest) that the plaintiff could hope to receive in the suit, in order to “moot” the cause of action, and to avoid having to pay the plaintiff’s fees.  Unlike other types of case, in FLSA matters most Florida federal courts require that plaintiffs provide a sworn estimate of their claimed damages early in the case, so it is not difficult for the defendant to calculate the precise amount at issue. The problem, though, with tendering the full amount at issue has been that the plaintiff’s attorneys still claim that the plaintiff is the prevailing party in the case, and that the defendant should have to pay the plaintiff’s attorney’s fees.

The Eleventh Circuit in Dionne flatly rejected that argument.  There, after the suit was filed, the Defendant “tendered” full payment to the Plaintiff.  The Defendant also moved to dismiss for lack of subject matter jurisdiction, under the theory that the payment mooted the case because no claim or controversy existed going forward.  The Plaintiff  admitted that the case was now moot, but filed a motion for prevailing party attorney’s fees.  The court rejected the fee application, and awarded the Plaintiff’s counsel nothing.

The Plaintiff appealed, arguing that filing the suit served as a the “catalyst” for the Defendant’s eventual payment, and that the plaintiff was the “prevailing party”.  The Eleventh Circuit disagreed, and stated:  “Dionne is not a ‘prevailing party’ in this action because, in granting Floormasters’ motion to dismiss this lawsuit for lack of subject matter jurisdiction, the District Court did not award a judgment in his favor.”  In other words, unless the court issues a judgment in favor of the plaintiff, the plaintiff has not become the “prevailing party”.

The likely result of this decision is that in single-plaintiff FLSA cases in which the amount in controversy is relatively small, defense attorneys will recommend that their clients tender full payment in order to end the case.  In short, this Eleventh Circuit decision will likely change the way that small, single-plaintiff FLSA cases are handled, and could eventually lead to a decline in the number of these suits filed. 




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Michael W. Casey III, Kevin E. Vance, Mark J. Beutler, and Teresa M. Maestrelli practice labor and employment law, with a particular focus on labor and employment litigation, including Title VII, ADEA, ADA, Florida Civil Rights Act, and whistleblower claims, as well as non-compete litigation, in state and federal trial and appellate courts in Florida and throughout the United States. They also represent employers before the National Labor Relations Board (NLRB), the National Mediation Board (NMB), the U.S. Department of Labor, including the Wage and Hour Division and the Occupational Safety and Health Administration (OSHA), the Equal Employment Opportunity Commission (EEOC), and various state and local agencies, as well as in arbitrations, collective-bargaining negotiations and union representation elections. Hector A. Chichoni practices in the area of US and global immigration law. He chairs Duane Morris's Florida Immigration Practice. The editors of Chambers USA 2010 also selected Mr. Chichoni as a "Leader in the Immigration Field." He has represented a vast number of corporate and individual clients throughout his career ranging from premier US health care organizations, Fortune 100 and Fortune 500 companies, multinational corporations and universities to doctors, professors, researchers and students. His international experience includes handling matters relating to export controls and global corporate compliance and business transactions. He has represented clients in a wide variety of cases before the US Immigration Court.
© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.
The opinions expressed on this blog are those of the author and are not to be construed as legal advice.