US Department of Labor obtains judgment to recover $9.3M in back wages, damages for 1,756 workers misclassified by Philadelphia staffing company

PHILADELPHIA – The U.S. Department of Labor has obtained a consent judgment that will recover $9.3 million in back wages and liquidated damages for 1,756 employees of a Philadelphia healthcare staffing company that misclassified them and willfully denied their hard-earned overtime pay.

Obtained by the department’s Office of the Solicitor in Philadelphia on Sept. 26, 2022, the judgment in the U.S. District Court for the Eastern District of Pennsylvania requires U.S. Medical Staffing Inc. to pay $4,650,000, in back wages and an equal amount in liquidated damages, and a civil money penalty of $700,000, for the willful nature of its violations. The action follows a complaint the department filed on Sept. 2, 2022.

“This consent judgment makes clear to all healthcare industry employers that just like U.S. Medical Staffing, they will be held accountable when they fail to pay employees their legally earned wages,” said Solicitor of Labor Seema Nanda. “The U.S. Department of Labor is prepared to use every tool available, including litigation, to prevent employers from violating workers’ rights.”

The judgment follows an investigation by the department’s Wage and Hour Division that found – from at least Sept. 24, 2017, through at least May 22, 2022 – the employer willfully denied the affected employees their overtime pay. The division determined U.S. Medical Staffing paid the employees straight time for all hours worked and failed to pay time and one-half the required rate for hours over 40 in a workweek, in violation of the Fair Labor Standards Act. In addition, in some cases, investigators determined that the employer claimed falsely to be a registry through which the company’s clients solely employed the workers. In other cases, U.S. Medical Staffing misclassified employees as independent contractors.

U.S. Medical Staffing provides staff to various agencies, including schools and group homes for individuals with disabilities. The employees worked in numerous occupations, including direct support and intellectual disabilities professionals, residential aides, personal care assistants, home health aides and licensed practical nurses. 

Following the division’s investigation, the department’s Office of the Solicitor engaged in months of negotiation with U.S. Medical Staffing, after which the employer agreed to the complaint’s filing and a consent judgment.

“Too often we find workers denied wage protections, such as the right to overtime pay and other benefits, by employers who misclassify them as independent contractors,” said Wage and Hour Principal Deputy Administrator Jessica Looman. “The Wage and Hour Division will hold employers accountable when they misclassify employees to cut labor costs and gain an unfair advantage over the competition.”

The division’s Philadelphia District Office conducted the investigation. Senior Trial Attorney Andrea Luby with the department’s Office of the Solicitor in Philadelphia filed the complaint and secured the consent judgment.

In fiscal year 2021, the division recovered $13.8 million in back wages for more than 17,000, workers in the healthcare industry, where low wages and high rates of violations are common. As the U.S. population ages 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.  

“As employers struggle to find the people they need to operate their businesses, those who ignore workers’ rights to full wages and benefits are likely to struggle to retain and recruit workers,” added Looman. “Employers who abide by the law will certainly have a greater appeal than those who do not.”

U.S. Medical Staffing Inc. provides mental health, behavioral health and school staffing to clients throughout Pennsylvania in Berks, Bucks, Chester, Delaware, Lehigh, Montgomery, Northampton and Philadelphia counties.

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. Workers can call the Wage and Hour Division confidentially with questions or concerns – regardless of where you are from – and the department can speak with callers in more than 200 languages. Help ensure hours worked and pay are accurate by downloading the department’s Android Timesheet App for free.