PITTSBURGH – The damages phase of an employee compensation case pitting acting U.S. Secretary of Labor Julie Su against more than a dozen health care operating companies - defendants which she is attempting to prevent from selling some of their care facilities - is slated for trial in the U.S. District Court for the Western District of Pennsylvania Monday.
Su’s action, initially filed in 2018 and brought against the operating companies of 13 health care facilities in Pennsylvania, deals with alleged unlawful compensation practices of those same nursing and personal care facilities.
“The Acting Secretary filed a collective action on behalf of thousands of employees working for these facilities, alleging that the facilities and some of their leadership individually and collectively violated various provisions of the Fair Labor Standards Act of 1938, by under-compensating their employees and failing to maintain accurate pay records. Within the five years that this suit has been pending before the Court, defendants have admitted joint and several liability under the FLSA, and thus, the only issue left for the Court to determine is the allocation of liability and amount of damages to be awarded,” U.S. District Court for the Western District of Pennsylvania Judge William S. Stickman IV said, in a memorandum opinion issued on Oct. 6.
“Four weeks before trial was to commence [in September], the Acting Secretary learned from a non-party source that at least four facility defendants were to be sold by Sept. 1, 2023. An emergency status conference occurred on Aug. 22, 2023. Defendants confirmed that they had a plan to sell seven facility defendants with an official closing date of Oct. 1, 2023, but discussed the possibility that the transaction may close on an earlier date. On Aug. 29, 2023, the Acting Secretary filed a motion for temporary restraining order and order to show cause why preliminary injunction should not issue. The Court granted the initial temporary restraining order on Aug. 30, 2023, and issued its modified version on Sept. 2, 2023, to preserve the status quo pending a decision on the motion.”
Stickman explained that since February 2023, at the latest, sales of the facility defendants have been in the works with potential buyers, with a sale of seven care facilities proceeding in order for the facilities to remain in operation and not displace hundreds of patients. The sale would include the property on which the facilities sit, as well as a transfer of the facilities’ operating licenses, for a total of $56 million.
“The Acting Secretary asserts that defendants are seeking to opportunistically offload assets to an ‘insider’, in order to frustrate, if not fully thwart, the Acting Secretary’s ability to recover a judgment,” Stickman said.
Ultimately, Stickman denied granting Su the injunction, in that same Oct. 6 opinion. The judge found that Su had not demonstrated immediate or irreparable harm would take place if the injunction were not to be granted, a crucial element to obtaining such relief. Now, the damages portion of Su’s case will proceed before Stickman this Monday, Jan. 8.
Su, appointed to the post of U.S. Secretary of Labor last March by President Joe Biden, has yet to be confirmed by the U.S. Senate, due to not having the votes required for such a confirmation – even though the Senate and the White House are currently controlled by the Democratic Party.
Under the Federal Vacancies Reform Act, unconfirmed Cabinet appointees are permitted no longer than 210 days to occupy their positions. Though Su’s tenure has exceeded that limit, the Biden Administration cited an exception to the limit contained in the Labor Department’s Succession Act as its rationale for Su keeping her post for the time being.
During her prior tenure as Secretary of the California Labor and Workplace Development Agency from 2019 to 2021, Su helped to enforce AB5, a controversial statute which re-classified thousands of independent contractors as employees, enabling them to receive benefits, overtime compensation and be subject to labor union dues – though subsequent legal challenges and a voter referendum provided numerous exceptions in the statute.
Su also resurrected an expansion of overtime pay eligibility that would raise the overtime pay exemption threshold of yearly income from overtime pay from $35,568 to $55,068, and including automatic updates every three years – though a court had previously stricken the initiative.
Senate Republicans warn that if permitted to remain at her post, Su may continue to pursue measures which they contend would hamper the rights of both independent contractors and businesses.
U.S. District Court for the Western District of Pennsylvania case 2:18-cv-01608
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com