Moorestown Company's Docking Of PTO Didn't Violate U.S. Law: Appeals Court

MOORESTOWN, NJ — Bayada Home Health Care publicly touts its employees as "heroes." But behind the scenes, the Moorestown-based company battled in court to maintain the ability to dock compensation from salaried workers who don't meet productivity quotas — and recently scored a major victory.

A federal appeals court in Philadelphia sided March 15 with Bayada, stating that the policy doesn't violate U.S. labor law. The case — the latest decision in a seven-year legal battle — marked the first time a federal appeals court was asked whether paid time off counts as part of an employee's salary. The three-judge panel's decision could have future implications for salaried workers throughout the nation.

The case centered around a group of Bayada employees — including nurses, social workers and physical therapists — who sued the company in federal court in 2016 out of Pennsylvania. Bayada, which specializes in home health-aide services, employs about 29,000 people in 24 states, according to the company's website.

According to court documents, Bayada deducted PTO from employees who didn't meet a weekly "productivity minimum." Bayada's clinicians received a base salary from which the company didn't deduct pay. But the plaintiffs argued that docking PTO for failing to meet quotas violates federal law, as the benefit has monetary value.

The appeals court ruled that salary and benefits are distinct under the Fair Labor Standards Act (FLSA) — a seminal U.S. law passed in 1938 which established minimum wage, overtime pay and other key regulations of American labor. Therefore, Bayada's policy is fair game, the judges determined in the 3rd U.S. Circuit Court of Appeals.

"That an employee might at some point be able to convert her PTO into cash does not alter that fact," the court opinion states. "The regulation requires only that the employee receive a predetermined amount of money each pay period that is 'part of the employee’s compensation[.]' So long as the employer does not dock that pre-determined part of the employee’s compensation, the employer has satisfied the salary basis test."

The ruling upheld a 2021 decision from Federal Judge Jennifer P. Wilson, who President Donald Trump appointed.

Bayada has put workers at the forefront of its public relations. The company calls its staff "heroes on the home front" on its website's homepage. Much of the nonprofit's social-media presence includes positive testimonials from employees.

The company has earned several awards for its work environment, as well. The accolades include Newsweek recently placing Bayada on its 2023 list of America's Greatest Workplaces for Women — comprised through a survey of 37,000 women and 224,000 company reviews.

Asked whether tying PTO to productivity quotas — and the seven-year court battle to maintain the policy — contradicts Bayada's publicly supportive messaging of its employees, company spokesperson Missy Roth told Patch the following via email:

"At BAYADA, we are a people-first organization, and are committed to our clinicians who provide care in the home. The ruling in this case reaffirms that we have always provided our employees with pay and Paid Time Off (PTO) benefits in compliance with the Fair Labor Standards Act and all other relevant federal and state laws and regulations.

Our employees have always been and continue to be our greatest asset and we're committed to them far beyond our promise of fair pay and PTO. We go to great lengths to recognize and reward our employee commitment, offering nearly a dozen employee recognition programs, providing scholarships, and fostering employees’ individual growth with a variety of professional development and educational programs."

Patch contacted the law firm representing the plaintiffs — Stephan Zouras, LLP — but didn't receive comment in time for initial publication.

Bayada's policy required salaried clinicians to accumulate a certain amount of "productivity points" each week, according to court documents. The employer rewarded each point — equivalent 1.33 hours of work — for the completion of work tasks. For instance, a routine visit to a patient's home generated one point.

Staff could request an increase or decrease in their weekly productivity minimums, which corresponded to increases or decreases in pay. If an employee anticipated that they wouldn't meet their productivity target, they could make up the deficit by performing office work or additional home visits.

Bayada would only reduce an employee's salary if they voluntarily took a day off without sufficient PTO, the court opinion states.

The plaintiffs argued that, through the PTO policy, Bayada treats its salaried employees as wage earners, whose compensation is determined by the number of hours worked. Under federal law, salaried employees don't receive overtime pay. But wage earners, if they work more than 40 hours in one week, must receive overtime compensation of at least 1.5 times the regular rate of pay for that time.

The judges, however, ruled that the legal classification of workers "is not (determined by) whether a pay structure approximates an hourly wage or even whether an employer threatens to dock a salaried employee’s base pay; it is whether an employer made an actual deduction from an employee’s base pay."

The 3rd Circuit panel included Judges Anthony Scirica (an appointee of President Ronald Reagan), Michael Chagares and Kent A. Jordan (both appointed by President George W. Bush).