Court Orders Staffing Firms that Split Pay to Avoid Overtime to Pay $2.4 million for Wages and Liquidated Damages

The United States Department of Labor announced that a court ordered the owners of two staffing firms to each ay $2.4 million in back wages and liquidate damages after the court found that the firms had manipulated paychecks so that an employee received two paychecks (one from each firm) and neither paycheck showed more than 40 hours even though the employee had worked 50 or 60 hours. 

PITTSBURGH – A federal court has ordered a Pennsylvania mother and daughter to pay more than $2.4 million in overtime back wages and liquidated damages, after a three-day trial confirmed the pair used illegal pay practices to avoid paying full wages to 345 workers who provided daily living assistance and home healthcare in the Pittsburgh area.

On Aug. 5, 2022, Judge Christy Criswell Weigand of the U.S. District Court for the Western District of Pennsylvania found Anna Zaydenberg, owner of Elder Resource Management Inc., operating as ComForCare Home Care, and her daughter Marsha Simonds, owner of Staff Source, liable for $1,242,146 in back wages and an equal amount in liquidated damages. Both companies are also liable for the full amount.

The ruling follows an investigation and litigation by the U.S. Department of Labor’s Wage and Hour Division. The investigation found that Zaydenberg and Simonds set up Staff Source and then violated the Fair Labor Standards Act when they redirected workers’ overtime hours to the staffing company’s pay records to avoid paying overtime.

The division determined that while ComForCare hired the workers and they worked only for the company’s clients, the workers received two separate checks from ComForCare and Staff Source. Investigators discovered that ComForCare staff handled payroll for both companies and manipulated the payrolls repeatedly so that each check showed less than 40 hours a week and often the company paid no overtime, even when employees worked 50, 60 or more hours some weeks.

Following the probe, the department’s Office of the Regional Solicitor filed a federal lawsuit against Zaydenberg, Simonds and their companies. The court ruled the workers were jointly employed and both companies owed them overtime.

In addition to back wages and damages, the division assessed $434,268 in civil money penalties given the willful nature of the employers’ FLSA violations.

“While ComForCare workers delivered essential round-the-clock, daily living assistance to people in need, the companies went to great lengths to deny these workers their hard-earned overtime wages,” said Principal Deputy Wage and Hour Division Administrator Jessica Looman. “The U.S. Department of Labor works diligently to prevent employers like these from harming workers and their families. Their actions were illegal and unconscionable.”

“The U.S. District Court in Pennsylvania’s finding sends an important message to employers in the home healthcare industry,” said Solicitor of Labor Seema Nanda. “Employers must pay workers overtime when the law requires and they cannot evade the law by trying to hide their violations. The Solicitor’s Office will continue to focus on this industry and show those who defy the law that there are costly consequences to such actions.”

In fiscal year 2021, the division recovered more than $13.8 million for more than 17,000 healthcare industry workers. The Bureau of Labor Statistics projects that there were more 1.9 million job openings in the healthcare and social assistance industry, and that more than 728,000 industry workers quit their jobs in June 2022 – all of which is forcing employers to compete hard to retain and recruit the people they need to operate.

Elder Resource Management Inc. is an independently owned franchise of ComForCare Home Care, a nationwide network of more than 200 in-home healthcare companies. Elder Resource Management provides personal care, companionship, respite care, cleaning and meal preparation to residents in Allegheny County.

For more information about the FLSA and other laws enforced by the division, contact the agency’s toll-free helpline at 866-4US-WAGE (487-9243). 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. The division protects workers regardless of immigration status and can communicate with workers in more than 200 languages. Download the agency’s new Timesheet App, now available for android devices, to ensure hours and pay are accurate.

Source: Court finds mother, daughter tried to avoid paying overtime to Pittsburgh-area healthcare workers, orders payment of $2.4M in overtime back wages | U.S. Department of Labor