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Eastern District of Pennsylvania Finds a Provider’s Nurses Were Misclassified as Independent Contractors Pursuant to the FLSA
On February 13, 2026, a Judge in the Eastern District of Pennsylvania ruled that home healthcare provider misclassified its Licensed Practical Nurses (LPNs) as independent contractors. The case, Chavez-Deremer v. Amazing Care Home Healthcare Services, was filed by the U.S. Department of Labor under the Fair Labor Standards Act (FLSA) alleging that the home healthcare company unlawfully denied the LPNs’ overtime compensation under the FLSA, which they would have been entitled if properly classified as employees.
The Department of Justice moved for summary judgment in May, arguing that the undisputed facts prove that the company was a covered enterprise under the FLSA and the healthcare workers at issue are employees owed approximately $6 million in overtime pay. When hired, the LPNs were identified as independent contractors, the company issued them IRS Form 1099s instead of W2s, and all documents identified the LPNs as independent contractors. Nonetheless, the court agreed that the nurses were employees as a matter of law, applying the FLSA’s “economic realities” test.
According to the record, the company determined pay rates for the nurses, handled scheduling and patient assignments, recruited the nurses, and retained authority over job expectations. The nurses also were found to have performed core services central to the company’s business model and worked under policies and procedures established by the company. These were key factors considered by the court supporting the employee designation, in addition to evidence indicating that the lack of meaningful opportunity for entrepreneurial profit or loss, the relative permanence of the working relationships, and the fact that the nurses did not operate independent businesses of their own.
While the court’s decision resolved the classification issue, questions of fact remain as to whether the employees were ever denied overtime pay, and in what amount during the actionable period and whether the violations were willful.
Key Takeaways: This decision is an important reminder for employers that tax and contractual designations are not determinative of employee status. Instead, the employer should consider the degree of control it exercises over the worker and whether the worker is operating an independent business. Employers should consider audits of contractor relationships with counsel to avoid litigation or agency enforcement.