A federal court in Virginia ordered a Norfolk-based medical staffing agency, that worked with nursing homes and others across the healthcare continuum, to pay more than $7.2 million in back pay and liquidated damages after it was found to have intentionally violated federal laws by denying 1,105 health care workers overtime wages.
The defendant, Medical Staffing of America LLC – doing business as Steadfast Medical Staffing — was ordered to pay at least $3,619,716 in back wages and at least $3,619,716 in liquidated damages to the employees. The final amount is expected to be higher, according to a Department of Labor news release announcing the judgment.
“When employers misclassify employees as independent contractors and fail to pay workers their hard-earned wages, the U.S. Department of Labor will hold them legally accountable,” U.S. Secretary of Labor Marty Walsh said in the release. “In this case, Medical Staffing of America LLC willfully violated the law and shortchanged more than 1,100 aides and nurses of their rightful wages. The court’s judgment means we can finally recover these essential workers’ wages.”
In addition to nursing homes, Steadfast Medical Staffing works with assisted living facilities, group homes, hospitals, physician offices, urgent care, rehab facilities, home health agencies, dialysis centers, medical clinics and correctional facilities.
The ruling comes as staffing agencies have faced intense scrutiny from the long-term care sector in recent months as accusations of them price gouging and taking advantage of a global pandemic continue to be sent to White House officials and federal agencies.
Just this week nearly 200 members of Congress signed a letter to Jeffrey Zients, White House COVID-19 Response Team Coordinator, urging him to coordinate an investigation into nurse staffing agency conduct over the course of the pandemic.
“We have received reports that the nurse staffing agencies are vastly inflating prices, by two, three or more times pre-pandemic rates and then taking 40% or more of the amount being charged to the hospitals for themselves in profits,” the letter said.
On Thursday, the American Health Care Association/National Center for Assisted Living along with the American Hospital Association sent a similar joint letter urging White House officials to act on the matter.
In its ruling this month, the Virginia court determined that since at least Aug. 18, 2015, Steadfast Medical Staffing willfully misclassified the aides and nurses as independent contractors in violation of federal law.
It was found to have violated the Fair Labor Standards Act when it paid 1,105 certified nursing aides, licensed practical nurses and registered nurses straight-time wages instead of time-and-a-half when they worked over 40 hours in a workweek.
The company also failed to maintain accurate records of total weekly hours worked.
“The court sent an unequivocal message to Steadfast and other healthcare industry employers that the Solicitor of Labor and the Wage and Hour Division will work together to recover stolen wages when employers violate the law,” Solicitor of Labor Seema Nanda said in the news release. “The U.S. Department of Labor will not hesitate to bring legal action, pursuing all available remedies, when it finds that an employer has willfully violated the law.”
According to the court’s decision, Steadfast did not pay nurse overtime and nurses straight-time for all hours worked by classifying them as independent contractors.
The company also did not pay for or reimburse nurses for licensing or educational expenses.
Steadfast determines the nurses’ hourly pay rate and nurses cannot negotiate their pay rate with Steadfast unless it would benefit the company, according to the court’s ruling.
“By not paying overtime Steadfast can charge client-facilities lower rates for their services than their competitors who do pay overtime,” the court said. “These lower rates make Steadfast’s services more desirable to healthcare facilities than their competitors’ services, creating unfair competition in interstate commerce.”
Steadfast also disciplines nurses for a variety of reasons including, but not limited to, discussing compensation with a co-worker or client-facility; attempting to contact client-facilities to set their own schedules or rates; being recruited by a client facility; working for a competitor; declining or canceling shifts; and being intoxicated or otherwise engaged in unprofessional conduct while working at a client-facility, according to the court. Steadfast reportedly never contacted any personnel within the U.S. Department of Labor to determine whether their compensation policies complied with the Fair Labor Standards Act.
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