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An Ohio federal judge has ruled in favor of the U.S. Department of Labor (DOL) in a lawsuit accusing Americare Healthcare Services LLC and its owner, Dilli Adhikari, of violating the Fair Labor Standards Act (FLSA) by failing to pay overtime wages to home care aides. The court granted summary judgment, ordering the company to pay $15 million in unpaid wages and damages.

Judge Edmund A. Sargus made the ruling Thursday in the DOL's October 2021 lawsuit. Adhikari argued that he had received legal advice from attorneys who told him overtime payments were not required for his home care aides, but he failed to provide supporting evidence or identify the attorneys. The judge acknowledged that Adhikari might have received conflicting legal advice, but concluded that by 2018, the company should have known it was violating the FLSA.

The DOL's case dates back to a 2018 investigation by the Pennsylvania Department of Labor into Adhikari's other agency's pay practices. A class action had been filed over unpaid wages, prompting the agency to begin paying overtime wages. However, despite changes in Americare's policies in 2019, the DOL argued that the company continued to violate the law by reducing aides' hourly rates based on the number of hours worked, paying overtime on the lower rate, and thereby undermining the intent of the FLSA.

Adhikari contended that the company was financially unable to pay aides overtime without reducing their rates. The judge disagreed, emphasizing that while employers have the right to set a worker's regular rate of pay, they cannot artificially reduce it to circumvent FLSA requirements. Judge Sargus noted that the FLSA's intent is to ensure fair compensation for overtime work and prevent employers from adopting schemes to evade these obligations.

Americare's pay practices involved a strategy where the hourly rate for employees decreased as the number of hours worked increased. For example, an employee working 77 hours in a two-week period was paid $12.50 per hour, but if the employee worked 96 hours, the rate dropped to $11.45. The court found this scheme violated core FLSA policies and had a detrimental impact on the workers' pay.

The judge pointed out that Americare had other options, such as hiring more aides or not offering overtime, but chose to continue the unlawful practices. As a result, Americare is required to pay approximately $7.5 million in unpaid overtime wages and an equal amount in liquidated damages.

Counsel for Americare and Adhikari declined to comment, and representatives for the DOL did not immediately respond to a request for comment.

The case is Department of Labor v. Americare Healthcare Services LLC et al., case number 2:21-cv-05076, in the U.S. District Court for the Southern District of Ohio.