Healthcare staffing firms fined $2.4Mn for overtime violations in U.S.
WASHINGTON D.C., UNITED STATES — Two prominent healthcare staffing firms, Gate Solution Systems and Healthcare Services Group, have been ordered to pay a total of US$2.4 million in back wages and damages.
This legal action follows their failure to properly compensate employees for overtime work, as mandated by U.S. federal labor laws.
The U.S. Department of Labor initiated the lawsuit, which culminated in a consent judgment in the District Court for the District of Massachusetts on November 25, 2024.
Worker misclassification issues
The court found that Gate Solution Systems, based in Malden, Massachusetts, misclassified its workforce as independent contractors from March 19, 2022, through February 17, 2023. This misclassification resulted in employees receiving straight-time pay rather than the required overtime rate for hours exceeding 40 per week. The firm staffed workers for cleaning, laundry, and dietary services across healthcare facilities in New Hampshire, Vermont, Maine, and Massachusetts.
Jessica Looman, the Wage and Hour Administrator at the Department of Labor, said, “misclassification of employees as independent contractors remains a serious concern for the Department of Labor.”
Her statement highlights the department’s ongoing efforts to combat such practices that deny workers their rightful wages and benefits.
Financial impact and penalties imposed
Gate Solution Systems is liable for US$717,788.05 in back wages and an equal amount in liquidated damages.
At the same time, Healthcare Services Group must pay US$495,000 in both back wages and liquidated damages. These substantial financial penalties reflect the serious nature of the violations and serve as a deterrent to other employers.
Additionally, the judgment prevents Gate Solution Systems and its officers from future violations of the Fair Labor Standards Act (FLSA), including failing to maintain accurate employment records. The Department of Labor’s regional Office of the Solicitor in Boston filed the complaint against key figures from both companies.
Wider implications for the healthcare sector
This case is part of a broader initiative by the Department of Labor to ensure compliance within the healthcare industry.
In fiscal year 2024 alone, the Wage and Hour Division concluded 2,376 investigations in healthcare settings, recovering over $37 million in back wages for nearly 30,000 workers.
Seema Nanda, Solicitor of Labor, emphasized that this outcome serves as a crucial reminder to employers about their obligations under labor laws: “The U.S. Department of Labor will take appropriate action, including legal action, to protect workers whose employers deny them proper pay under the Fair Labor Standards Act.”
This ruling not only highlights the importance of adhering to labor laws but also warns other employers about the severe consequences of misclassifying employees and neglecting to pay due wages.
