As a small or midsize business owner, it is crucial to be aware of the potential penalties for violating employment laws. A recent case in Philadelphia serves as a stark reminder of the consequences that can be incurred. Prestige Home Care Agency, a local provider of home care services, and its owner, Alexander Dorfman, have been ordered by a federal court to pay more than $7 million in back wages and damages to 1,230 current and former employees.
This article aims to shed light on the case and emphasize the importance of complying with employment laws to protect your business and employees.
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After two years of litigation, the U.S. Department of Labor’s finding was affirmed that Prestige Home Care Agency willfully failed to pay overtime wages to its employees. This violated the overtime and recordkeeping provisions of the Fair Labor Standards Act.
The violations primarily involved the failure to include work-related travel time when calculating wages. Some key findings from the court’s ruling include:
Failure to pay the required overtime rate for hours over 40 in a workweek, neglecting to compensate home health aides for time spent traveling between clients’ homes and between the agency’s administrative office and clients’ homes in the same workday.
Payment of straight-time hourly rates for all hours worked, including those exceeding 40 in a workweek, instead of the required overtime rate.
Segregation of different types of work performed by certain employees during a workweek, leading to the miscalculation of overtime wages.
Failure to maintain accurate time and payroll records as mandated by law.
Judge Chad F. Kenney of the U.S. District Court for the Eastern District of Pennsylvania ruled in favor of the affected employees, ordering Prestige Home Care Agency and Alexander Dorfman to pay $3,538,360 in back wages and an equal amount in liquidated damages. The court’s decision affirmed the Department of Labor’s position and emphasized that employers must compensate employees for travel time, which is an essential part of their job duties.
Lessons for Small and Midsize Business Owners
This case highlights the importance of understanding and adhering to employment laws. Here are some key takeaways for small and midsize business owners:
Ensure that employees receive the appropriate overtime rate for hours worked beyond 40 in a workweek. This includes accounting for work-related travel time if applicable.
Travel Time Compensation
If employees are required to travel between different work locations or client sites, it is crucial to include this time when calculating wages. Failure to do so may result in violations and potential legal consequences.
Maintain accurate and up-to-date time and payroll records for all employees. This practice is not only a legal requirement but also helps protect your business in case of any disputes or investigations.
Stay informed about employment laws and regulations that apply to your industry. Seek guidance from legal professionals or payroll and HR experts to ensure compliance and avoid potential penalties.
The case of Prestige Home Care Agency serves as a powerful reminder that breaking employment laws can have severe financial and reputational repercussions. As a small or midsize business owner, it is essential to prioritize compliance and ensure fair treatment of your employees.
By understanding and adhering to employment laws, you can protect your business, maintain a positive industry reputation, and provide a safe and fair working environment for your workforce.
Asure works with over 90,000 small and midsize businesses to provide payroll and HR services. Connect with an HR expert here.