US Department of Labor finds employer’s pay practices denied 7 Michigan residential healthcare workers $94K in back wages

LANSING, MI – Residential healthcare workers often provide around-the-clock assistance with essential daily living tasks for some of our most vulnerable people. Theirs, however, is an industry where employers’ errant pay practices too often place these caregivers among our nation’s most vulnerable wage earners, as a recent U.S. Department of Labor investigation of a Lansing employer’s pay practices has found.

Investigators with the department’s Wage and Hour Division found Gracious Adult Foster Care misclassified its residential healthcare providers as independent contractors, and by doing so, paid them a fixed monthly salary for all hours worked. The action denied seven workers at the employer’s two Lansing locations their full overtime wages, in violation of the Fair Labor Standards Act.

The division’s investigation led to the recovery of $94,706 for the affected workers.

In addition to shorting workers’ wages, misclassifying employees as independent contractors deprives them of other important employee protections such as unemployment insurance and worker’s compensation. It also makes workers fully responsible for paying Social Security and tax withholdings.

From 2019 to 2021, Wage and Hour Division investigations recovered more than $22.7 million for Midwest healthcare workers as a result of violations of worker protections under the Fair Labor Standards Act.

“Residential healthcare workers provide vital services to adults unable to care for themselves and allow families some peace of mind knowing their loved one’s basic living needs are being addressed,” explained Wage and Hour Division District Director Mary O’Rourke in Grand Rapids, Michigan. “In return, these workers deserve to be paid all of their hard-earned wages. Industry employers that fail to pay wages as the law requires have to remember that retaining and recruiting the people they need to do these jobs is more difficult as workers in today’s labor market can choose where, and for whom, they work.”

In February 2022, the Bureau of Labor Statistics reported that the 699,000 healthcare and social services workers left their positions. As the aging U.S. population grows and demand for home healthcare services increases, employment in a variety of healthcare sectors is projected to grow 16 percent from 2020 to 2030 – faster than the average for all occupations – adding about 2.6 million new jobs.

The department’s essential workers, essential protections initiative focuses resources on educating essential care workers and their communities about their rights to minimum wage and overtime pay and how to file a complaint if they believe their rights have been violated. The initiative also targets misclassification of workers as independent contractors, an illegal practice that may deprive workers of legally earned wages, and other protections.

For more information about the FLSA and other laws enforced by the Wage and Hour Division, contact the division’s toll-free helpline at 866-4US-WAGE (487-9243). Calls can be addressed in over 200 languages. Learn more about the Wage and Hour Division, including a search tool to use if you think you may be owed back wages collected by the division.