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Wage and Hour Division (WHD)

Residential Living Facilities 1998 Compliance Baseline Fact Sheet

Subheader

Overview  Background  Approach   Investigation Findings
Overtime  Minimum Wage  Comparison to Nursing Home

Overview

In fiscal year 1998, investigators from the Employment Standards Administration’s Wage and Hour Division conducted 221 investigations of residential living, group home and other community-based care facilities to determine the level of compliance with the minimum wage, overtime and child labor provisions of the Fair Labor Standards Act (FLSA). This initiative – undertaken pursuant to the agency’s strategic goal to increase compliance in low-wage industries – is a component of Wage and Hour’s overall strategic plan under the Government Performance and Results Act.

The Residential Living Facilities Compliance Survey yielded the following information:

  • Fifty-seven percent (57%) of residential living facilities investigated were in compliance with the FLSA.
  • Ninety-two percent (92%) of those employers found in violation of the FLSA violated the overtime regulations.
  • Three percent (3%) of the residential living facilities violated the FLSA’s child labor provisions.
  • Slightly over half (56%) of the 180 firms that had not been previously investigated by Wage and Hour were in compliance while a similar percentage (55%) of facilities with previous FLSA violations were now in compliance.

Background

The mission of the Wage and Hour Division is "to achieve and promote compliance with labor standards through enforcement, administrative and educational programs to protect and enhance the welfare of the Nation’s workers." The agency develops its strategic plan with a principal goal of achieving compliance in specified targeted low-wage industries.

Beginning in 1997, Wage and Hour’s efforts to promote FLSA compliance in the health care industry have been concentrated in the long-term care industry, which typically includes nursing homes, adult family care facilities, assisted living facilities, group homes and home health care. The 1997 component of this low-wage initiative in health care consisted of an education/outreach campaign and an investigation-based survey in the nursing home industry that demonstrated that some 70% of nursing homes comply with the FLSA requirements in the employment of their low-wage workforce. Wage and Hour has maintained its focus in the long-term care industry by targeting the residential care (group home) segment of the industry. These residential care facilities, which offer long-term care in home-like environments with community settings, compete directly with the traditional nursing home industry.


Approach

The compliance survey was designed to enable Wage and Hour to:

  • Determine the overall level of FLSA compliance in the residential living facilities segment of the industry;
  • Measure the effectiveness of prior Wage and Hour investigations; and
  • Establish a baseline level of compliance from which future educational and enforcement efforts could be designed and their effectiveness measured.

Prior to conducting the residential living facilities survey, the Department conducted education and outreach with stakeholders in the residential living facilities industry, including employer associations; employee representatives; industry advocacy groups and other interested parties. The Department discussed the criteria for targeting the residential living facilities industry; explained the procedures for conducting the investigation-based survey; and provided industry facts sheets and other compliance materials. The stakeholders, in turn, provided feedback and extended their cooperation.

In each of the 221 survey cases completed, Wage and Hour investigators visited the establishment; met with the employer or his/her representative; reviewed pertinent records and interviewed employees. The results were then analyzed to determine what, if any, particular patterns of violative behavior were common in the industry.


Investigation Findings

Summary of Results

  • Of 221 investigations completed, 95 disclosed FLSA violations yielding an overall level of compliance of 57 percent. This overall level of compliance contrasts with the 70 percent compliance rate found for the nursing home industry and may reflect the prevalence of smaller locally based facilities. Most of the facilities investigated had only one establishment and less than ten employees.
  • Fifty-six percent of residential living facilities investigated for the first time were in compliance. The same percentage held for those facilities that had prior FLSA violations – with only 55 percent now in compliance.
  • Violations of the FLSA overtime provisions were the most frequently found violation (92 percent). Minimum wage violations were common in 35 percent of the investigations that had violations, while child labor violations were rare at 3 percent. Most of the violations tended to occur because the companies paid their staff a fixed salary or a semi-monthly rate. The salary was often not sufficient to cover the hours that the employees worked even at the minimum wage. And, because of the fixed rate compensation arrangements, overtime hours were rarely compensated at the required time-and-one half. Other violations occurred when the facilities misclassified workers as FLSA exempt professional or administrative personnel.
  • Over $1.1 million dollars in minimum wage and overtime back wages were found due 1348 workers. The majority due back wages are workers who provide direct care to the elderly or disable: caregivers, resident counselors, nurses aides and nighttime relief workers.

Overtime

The greatest number of overtime violations occurred because employers improperly paid employees straight time for overtime hours-51 percent. Other common causes of overtime violations were:

  • Failure to compensate for all hours worked–sleep time, training time, breaks, interrupted meal periods, and pre- and post-shift work;
  • Misapplied executive, administrative and professional exemptions; and
  • Improper calculations of employees' "regular rate."

Minimum Wage

In 35% (33 of 95) of the residential living facilities where violations were found, employees were not paid the minimum wage. These violations occurred in large part because the employer:

  • Paid a fixed salary that was so low it failed to cover all hours worked at the minimum wage;
  • Failed to pay for all hours worked – usually for sleep time, training and meetings time, time for day trips, time spent before and after an employee’s shift began, and missed or interrupted meal breaks;
  • Illegally deducted money from the employees’ pay for uniforms and room and board; and
  • Misapplied professional/administrative/executive exemption.

Comparison to Nursing Home

With the exception of child labor, nursing homes were more likely to be in compliance with the FLSA requirements.

Compliance rates in nursing homes are generally higher than in residential care facilities. The only exception is the child labor category where Residential care is just slightly higher - 99% versus 96%

The findings on the overtime violations clearly demonstrate that the nature of the violations differs in frequency between the two types of establishments.

Most Common Overtime Violations by Frequency of Occurrence

Nursing Homes

Residential Living Facilities

Improper Calculation of Employees’ Regular Rate of Pay

Employees Paid Straight-time for Overtime Hours Worked

Failure to Compensate for All Hours Worked

Failure to Compensate for All Hours Worked

Employees Paid Straight-time for Overtime Hours Worked

Misapplied Professional/Administrative/ Executive Exemption

Misapplied Professional/Administrative/ Executive Exemption

Improper Calculation of Employees’ Regular Rate of Pay