Walsh v. Med. Staffing of Am., LLC

580 F.Supp.3d 216

Martin J. WALSH, Secretary of Labor, United States Department of Labor, Plaintiff,

v.MEDICAL STAFFING OF AMERICA, LLC, d/b/a Steadfast Medical Staffing, and Lisa Pitts, Defendants.

Case No. 2:18–cv–226

Case No. 2:19–cv–475

United States District Court, E.D. Virginia, Norfolk Division.

Signed January 13, 2022

Filed January 14, 2022

Ryma Naje Lewis, Chervonti Jones, Pro Hac Vice, Mohamed Elnour Seifeldein, U. S. Department of Labor Office of the Solicitor, Arlington, VA, for Plaintiff.

Joshua Lee Jewett, Julia Amato Rust, Aaron Daniel Siegrist, Pierce McCoy, PLLC, Patrick Hugh O'Donnell, Kaufman & Canoles PC, Norfolk, VA, Christopher D. Davis, Davis Law, PLC, Chesapeake, VA, for Defendant Medical Staffing of America, LLC, Lisa Ann Pitts.

MEMORANDUM OPINION AND ORDER

Raymond A. Jackson, United States District Judge

The Court issues this Memorandum Opinion and Order after a bench trial in the above-styled matter to resolve the U.S. Department of Labor's ("Plaintiff" or "DOL") claims against Medical Staffing of America, LLC, d/b/a Steadfast Medical Staffing, and Lisa Pitts ("Defendants") for failing to pay overtime and maintain pay records in accordance with the Fair Labor Standards Act ("FLSA"), as amended, 29 U.S.C. § 201, et seq. For the reasons below, the Court FINDS that the nurses employed by Defendants are employees of Defendants. Accordingly, the Court FINDS Defendants liable for violating the FLSA and enters judgment for Plaintiff.

I. PROCEDURAL HISTORY

On May 2, 2018, Plaintiff filed the Complaint in this matter, initiating an enforcement action against Defendants for willfully misclassifying their workers as independent contractors and violating the FLSA. Complaint ("Compl."), ECF No. 1. Defendants answered the Complaint on July 11, 2018. Answer, ECF No. 8. On July 23, 2020, after full briefing by the parties, the Court denied the parties’ cross-motions for summary judgment. Summary Judgment Order ("Summ. J. Or."), ECF No. 251. The Court held a bench trial, which commenced on August 31, 2021. Note, ECF No. 301–311. The parties filed post-trial briefs, and this matter is now ripe for judicial determination. The Court issues the following Findings of Fact and Conclusions of Law, as required by Rule 52(a) of the Federal Rules of Civil Procedure.

II. FINDINGS OF FACT

A. Stipulated Facts

The parties have stipulated to the following facts, which the Court accepts and finds:

1. Since at least August 18, 2015, Steadfast Medical Staffing ("Steadfast") has been a limited liability corporation with a place of business at 5750 Chesapeake Boulevard, Norfolk, Virginia 23513, and under the ownership of Lisa Ann Pitts ("Ms. Pitts"). Id. at 2. Joint Pretrial Or. ("J. Pretrial Or."), ECF No. 261 at 1.

2. Since at least August 18, 2015, Steadfast has had an annual gross volume of sales made or business done of not less than $500,000.00. Id.

3. The individuals listed in Schedule A were paid straight-time hourly for all hours worked, including for all hours worked over 40 hours in a workweek. Id.

4. Lisa Pitts has maintained 100% ownership interest in Medical Staffing of America, LLC since at least August 2015. Id.

5. Since August 18, 2015, Steadfast has negotiated and established contracts with healthcare facilities. J. Pretrial Or. at 2.

6. Steadfast's negotiated contracts established an hourly rate Steadfast would receive for placing nurses, including the individuals listed in Schedule A. Id.

7. Since August 18, 2015, "Medical Staffing of America" appears on the earnings statements of individuals listed in Schedule A. Id.

B. Additional Factual Findings

The Court makes the following additional factual findings (unless otherwise noted, the facts below are reflective of Defendants’ business practices since August 18, 2015):

Steadfast's Relationship with the Nurses

1. Lisa Pitts is responsible for the day-to-day operations of Medical Staffing of America, LLC ("Steadfast"). Trial Transcript ("Tr.") at 517:25–518:5.

2. Steadfast is a nursing registry that maintains a database of licensed nurses and connects those nurses with work opportunities at healthcare facilities. Tr. at 23:9–11, 227:14–15, 514:5–16, 520:6–19, 907:1–6; Plaintiff's Trial Exhibit ("PX") 24.

3. Specifically, Steadfast receives staffing requests from healthcare facilities with which it has contracted ("client-facilities" or "facilities"), identifies nurses on its registry who satisfy the facilities’ needs, then provides the nurses with the opportunity to accept or reject assignments (or "shifts") with those facilities. J. Pretrial Or. at 2; Tr. at 907:1–6, 920:4–921–4, 945:11–946:12, 947:11–948:16; Defendants’ Trial Exhibit ("DX") 58–59.

4. The individuals listed in Schedule A of the Complaint include individuals who worked for Steadfast as Certified Nursing Assistants ("CNA"), Licensed Nurse Practitioners ("LPN"), and Registered Nurses ("RN")¹ at some point between August 18, 2015 and June 27, 2021. Tr. at 55:13–18, 86:7–9, 114:1–6, 520:5–19; Tenth Revised Schedule A, ECF No. 287 at Ex. 1; PX-7; PX-7a; PX-21; PX-22; PX-24.

5. Steadfast compensated the nurses for work performed on behalf of or for the benefit of Defendants at some point between August 18, 2015 and June 27, 2021. PX-7; PX-7a; PX-8; PX-22.

6. Steadfast does not pay the nurses overtime (a rate of one and one-half times their regular rate of pay for hours worked over 40 hours in a week). Tr. at 32:23–25, 94:21–25, 95:1–6, 121:12–17, 176:7–10, 200:22–25,231:11–20,316:9–20, 551:1–14, 677:17–23; PX-7; PX-7a.

7. Steadfast pays the nurses straight-time for all hours worked (except for holidays). Tr. at 527:11–15, 551:10–25; PX-21.

8. "Medical Staffing America" appears on the nurses’ paystubs and earnings statements. Joint Pretrial Statement ("J. Pretrial Statement"), ECF No. 84 at 2.

9. The nurses provide staffing services for businesses located across state lines. Tr. at 128:11–17, 820:6–9.

10. The nurses render services that are integral to Steadfast's business. Joint Pretrial Statement. J. Pretrial Statement at 2.

11. The nurses do not have opportunities for profit or loss depending on their managerial skill. Tr. at 292:18–20, 317:13–15; PX-17.

12. The nurses do not own their own businesses and have not advertised their services. Tr. at 92:8–12, 140:25–141:5, 176:25–177:5, 290:18–23; 715:10–716:3.

13. Steadfast classifies the nurses on its registry as independent contractors. Tr. at 522:11–17.

14. Before a nurse is added to Steadfast's registry, the nurse is required to complete an application that includes questions about the nurse's employment history, skill set, and references. Tr. at 87:14–88:13; PX-26. Steadfast repeatedly refers to itself as an "employer" and the nurses as "employees" in the application. PX-26. Steadfast occasionally refers to the application as an "application for employment" in the application and related documents. Id.

15. Steadfast also pays for the nurses to undergo a credentialing process, in which Steadfast (1) performs a background check; (2) confirms that the nurse is properly licensed; (3) conducts a drug screening and tuberculosis test; (4) has the nurse sign a Health Insurance Portability and Accountability Act ("H1PAA") compliance form; and (5) confirms that the nurse has a negative COVID test or proof of vaccination. Tr. at 246:3–10, 282:2–19, 289:24–25, 290:1–2, 916:24–917:11; J. Pretrial Statement at 2.

16. Once a nurse applies and passes the credentialing process, Steadfast enters into an "independent contractor" agreement with the nurse and adds the nurse to its registry. Tr. at 522:11–17, 1009:8–10; PX 25.

17. Nurses must obtain and maintain their own licensure. Tr. at 83:23-25, 84:15–18, 99:5–10, 184:24–185:4, 211:6–17. Steadfast does not pay for or reimburse nurses for licensing or educational expenses. Tr. at 83:4–8.

18. Once a nurse is added to Steadfast's registry, Steadfast trains the nurse on the following topics: HIPAA compliance, substance abuse, and harassment. Tr. at 66:7–25; PX-32.

19. The nurses are also covered under Steadfast's insurance policy, and Steadfast is responsible for processing all workers’ compensation claims for any injuries the nurses incur while working at a facility. Tr. at 42:25–43:15; PX-28.

20. Steadfast does not have an "employee handbook." Tr. at 919:15–16.

21. Nurses on Steadfast's registry are required to wear badges bearing the name, "Steadfast Medical," while working at client-facilities. Tr. at 72:16–73:3, 99:25–100:5, 124:14–20.

22. Steadfast does not provide the nurses with any equipment. Tr. at 84:1–14, 98:8–16, 635:1–3, 682:19–21, 700:16–19, 812:5–8.

23. During the 2020-2021 COVID-19 pandemic lockdowns, Steadfast provided the nurses with letters that the nurses could present to government officials, permitting them to travel to work. Tr. at 1002:12–1003:25.

24. Steadfast's relationship with the nurses is permanent in nature, even if a term limit is stated in a nurse's contractor agreement. See e.g. Tr. at 86:5–11,81 1:19–25; PX-11; PX-16; PX-25.

25. Steadfast maintains "employee change" forms for the nurses that document each nurse's "hire/term date" and "tax jurisdiction." PX-16.

26. Steadfast's agreements with the nurses include "non-competition" clauses, in which the nurses are prohibited from working for Steadfast's competitors without Steadfast's express, written consent. PX-10; PX-12; PX-25.

27. The nurses are not permitted to hire other nurses, employees, or contractors to work for them at client-facilities. Tr. at 73:24–74:7, 122:15–25, 141:12–18, 270:7–16, 823:23–824:5.

28. Steadfast identifies available shifts and then communicates with nurses regarding available shifts via phone, email, text, and/or a mobile application that Steadfast launched in January 2021 to digitize the scheduling process (the "Zira app"). Tr. at 74:8–13, 96:12–16, 744:7–745:9.

29. In the Zira app, Defendants are notified whenever a nurse accepts a shift, and Defendants can edit/decline shifts. Tr. at 800:23–801:2.

30. Because Steadfast gives nurses the

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