Home Health Care Firm Violates FLSA By Denying Pay for Travel Time

Takeaway: Employers should take care to comply with the FLSA’s recordkeeping regulations requiring them to make, keep, and preserve records of their employees’ wages, hours, and other conditions and practices of employment. In cases like this one, where the employer was already on notice of shortcomings in its recordkeeping and compensation practices and chose not to comply, courts are unlikely to be sympathetic in subsequent litigation.

A home health care service willfully violated the Fair Labor Standards Act (FLSA) by failing to compensate its home health aides for time spent traveling between clients’ homes, the 3rd U.S. Circuit Court of Appeals held Jan. 31.

Philadelphia-based Nursing Home Care Management Inc., which does business as Prestige Home Care Agency, had been investigated by the U.S. Department of Labor (DOL) earlier regarding its overtime compensation practices. At that time, the DOL had sent the firm’s president guidelines on rules for compensating employees.

The DOL, pursuing a larger investigation in 2018, sued the firm for:

• Failing to pay aides for time spent traveling between clients’ homes and for not keeping proper records of travel time.
• Failing to pay for breaks of 20 minutes or less.
• Compensating employees for time worked over 80 hours in a biweekly period rather than 40 hours per week. 

The district court granted summary judgment for the DOL on every claim, and the firm appealed.

Examining the question of whether an aide’s travel time between client sites is compensable, the 3rd Circuit said “the most natural reading” of the FLSA and its accompanying regulations requires compensation for work-related travel during the workday. 

The employer asked the appeals court to apply the Portal-to-Portal Act (PPA), a 1947 amendment to the FLSA that eliminates liability for employers that do not compensate employees for time spent traveling “to and from the actual place of performance of the employee’s principal activity or activities” and doing activities preliminary to or postliminary to their principal activities. 

The 3rd Circuit responded that the PPA only addresses transport to the jobsite occurring prior to the time at which an employee commences, or subsequent to the time at which an employee ceases, their principal activities. “The time that elapses between the day’s start and end is not implicated by the text of the PPA,” the court said. The time at issue arose within the workdays of the aides, the court said, noting that the DOL didn’t challenge travel time before or after the start of home health care, but only travel between the start of the first client’s appointment and the end of the last client’s appointment. “When travel occurs during a continuous workday … it is covered by the FLSA and the FLSA alone,” the court found.

Under the FLSA and DOL regulations, the 3rd Circuit continued, travel time is compensable when an employee lacks the time to go off-duty. The established general rule, the court said, is that so long as “the employee is unable to use the time effectively for his own purposes, he is on-duty and entitled to compensation.” The district court was mistaken in asking only whether travel time for on-duty employees is a principal activity, the court said, noting that the DOL’s travel regulation Section 785.38 provides that travel that is a principal activity “must be counted as hours worked.” 

The regulation does not bar compensation for travel hours that are not part of the principal activity but only refers to the PPA’s bar on post-work travel compensation. When an employee is on duty and traveling, they are entitled to compensation, the 3rd Circuit concluded.

Turning to the question of when travel from a period of off-duty rest is compensable, the court stated an employer must compensate an employee for time spent in travel after an off-duty period, but only for the time necessary to travel between jobsites. 

The 3rd Circuit noted that FLSA regulations state that an employee goes off-duty when “completely relieved from duty” for a period “long enough to enable him to use the time effectively for his own purposes.” In most cases, an employee is either on-duty and compensated or off-duty and not compensated. However, because the firm’s aides can go wherever they want and begin their travel to a client’s home from wherever they want, the court acknowledged that it is harder to say when they return to on-duty status.

The court noted that the DOL’s travel rule provides a test to evaluate compensability: when an employee is entering or exiting an off-duty period, travel time is compensable if it is part of their principal activities, defined as those activities “which the employee is employed to perform.” Further, the court cited the Supreme Court’s finding in IBP v. Alvarez that “any activity” is a principal activity if it is “integral and indispensable” to another principal activity.

When the firm’s home health aides travel prior to or following an off-duty rest period, they must be compensated because these are employees who could not provide their services of caring for clients in clients’ homes without at least some travel, the 3rd Circuit held. “That must be ‘integral and indispensable,’ because an aid must always spend time traveling on a workday if he or she has multiple clients in different locations,” making such travel “integral and indispensable; and thus, a compensable ‘principal activity,’ ” the court noted.

The 3rd Circuit rejected the employer’s argument that this theory of compensation would require estimation of the compensable portion of travel in violation of the FLSA, saying that the FLSA’s accompanying regulations provide room for estimation to ensure employees are fully compensated. “The ‘particular circumstances’ of this case and ‘common sense’ dictate that travel is integral and indispensable to providing in-home health care,” the court found.

Considering the district court’s finding that the employer willfully violated the FLSA, the 3rd Circuit said a violation is willful if the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute. Willfulness is “voluntary, deliberate, [or] intentional,” the court said. 

The employer had acted with reckless disregard of the DOL having earlier informed it that its aides’ necessary travel was protected and compensable under the FLSA, the 3rd Circuit held. Further, the employer behaved with reckless disregard in failing to compensate breaks of 20 minutes or less as the record showed the employer had notice of FLSA regulations that provided compensation for breaks. The employer also knew or had reckless disregard for the fact that its overtime compensation scheme violated FLSA because it was on notice that employees were to be paid on a weekly, 40-hour schedule. Finally, the court found reckless disregard in the employer’s failing to properly compensate its “dual-service” employees for overtime and in its failure to keep records of travel time. 

In response to the employer’s claim that the DOL had not met its burden in calculating back wages owed, the 3rd Circuit said that, where the employer has inadequate records, the employee’s initial burden “is merely to present a prima facie case” and nothing more. The Supreme Court has never insisted that a damages calculation be perfectly accurate; when an employer’s records are inadequate, representative evidence, such as estimates of work time provided by an expert witness, may be used as a basis for determining damages, the court said. This employer neglected to include travel time in its employee work records. Although the DOL can estimate the travel time for some employees, the estimate is more difficult for others. The DOL presented a prima facie case that the back wages are what it estimated, and the employer failed to counter. “The department’s approximation, though not perfect, is sufficient,” the court held. 

The court affirmed the lower court’s conclusion that the travel time was compensable.

U.S. Department of Labor v. Nursing Home Care Management Inc., 3rd Cir., No. 23-2284 (Jan. 31, 2025), petition for panel and en banc rehearing denied (Feb. 25, 2025).

Rosemarie Lally, J.D., is a freelance legal writer based in Washington, D.C.