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Wage Theft: A Rapidly Growing Problem in Nursing Homes

Chris Murray
Posted on: July 3, 2019 by Chris Murray

Caregivers at our nation’s nursing homes and long term care facilities face many challenges. Complex patient care, the risk of injury, and an exhausting workload are some of the conditions these medical professionals deal with on a daily basis. Nurses and aides deserve to be paid fairly for the time they commit to the care of residents. Unfortunately, a growing problem in many nursing homes is that of wage theft; abuses of this nature are so rampant that the United States Department of Labor has recently published a fact sheet on wage theft. While nursing home insurance is designed to protect facilities, their staff, and their residents from many risks, it is imperative that insurance agents understand the common types of wage theft and to help their clients avoid the perils associated with this industry-wide practice.

What is Wage Theft?

When someone works, they expect to be paid for their time and the expenses involved in their employment. Workers deserve fair and equitable payments. In wage theft cases, workers often experience pay abuses at the hands of their employers. 

In nursing homes, registered nurses (RNs), nursing aides, and licensed practice nurses (LPNs) may not be reimbursed adequately for any overtime hours or expenses they incur as they deliver crucial services to the residents they are tasked to care for. In the U.S. Department of Labor fact sheet about wage theft, abuses reported included:

  • Rounding down of time in staff work hours.
  • Failing to reimburse staff members for attendance at training seminars, conferences, or continuing education courses.
  • Requiring staff to work through meal breaks without compensation, even if meal and rest breaks are mandatory.
  • Failing to adequately reimburse staff members for time and mileage expenses incurred during travel to assignments.
  • Forgoing reimbursement of expenses for uniform and equipment expenses of staff members.
  • Compensating staff at unfair pay rates for certain at-work duties, such as non-visit work hours. 

How Bad is the Wage Theft Problem in Nursing Homes?

Violations of labor laws have become extremely common throughout the healthcare industry. In one case study in California, employees of a prominent chain of nursing homes made the equivalent of $2.00 to $3.50 an hour for their work, far short of the federally-established minimum wage. The chain in question was fined about $1.6 million for labor violations and wage theft claims, but this is only one of many similar cases across the country. Another nursing home company that operated five facilities in the state of Massachusetts was fined almost $85,000 for failing to compensate workers fairly; these fines and numerous other violations resulted in the closure of all five facilities.

Ultimately, wage theft puts nursing home residents at risk. There are several factors to consider, including:

  • Staffing shortages as unfairly-compensated workers leave unfair employers.
  • Cutting corners on care delivery and routine maintenance of facilities due to shortfalls in pay and in staffing levels.
  • Low staff morale, leading to potentially serious or fatal consequences as medical errors, neglect, or negligence in care delivery. 

Solutions on the Horizon?

Lawmakers are scrambling to find solutions to this ever-growing problem. On both the state and federal levels, legislators have passed bills that reinforce existing protections like the Fair Labor Standards Act. From the caregiver perspective, class action lawsuits have been filed in an attempt to both recover wages and to stop nursing home facilities from continuing their unfair compensation practices. Nursing home insurance protects these facilities from the legal expenses associated with many legal claims, but wage theft or other activity that violates staff rights is typically not covered. For nursing home owners, a successful lawsuit can be devastating financially. Add in steep penalties imposed by state and federal regulators, and severe business risks loom large. 

Healthcare business operations must do what they can to protect their assets from loss, and this includes comprehensive nursing home insurance. Compensating staff fairly and honestly for their work efforts is a great risk management step, helping to head off any potential legal entanglements. Finally, adhering to established labor laws is the key to continued success, both for the facility and its staff as well as the safe and humane care of nursing home residents. 

About Caitlin Morgan

Caitlin Morgan specializes in insuring assisted living facilities and nursing homes and can assist you in providing insurance and risk management services for this niche market. Give us a call to learn more about our programs at 877.226.1027.

Posted in: blog Nursing Home