FLSA Case Study: XYZ Home Health Care Coordinators – Administrative Exemption, Hours Worked, Overtime and Compliance

Introduction

The Fair Labor Standards Act of 1938 (FLSA) requires covered employers to pay non-exempt employees at least the federal minimum wage and overtime at one and one-half times their regular rate for hours worked over 40 in a workweek (29 U.S.C. § 207(a)). Employers may exempt certain “white-collar” employees, but only if each employee meets both a salary test and a duties test. The XYZ Home Health Services scenario shows a common compliance failure: a company relies on a job title, a salary and a polished job description, while the employees actually perform routine, closely supervised clerical work for 50–55 hours a week. This analysis evaluates the administrative exemption, identifies compensable time, explains overtime and state-law obligations, assesses XYZ’s liability given its missing records, and recommends steps to achieve compliance. Because the assignment allows any state, California is used as the state example; it has some of the most protective wage-hour laws in the country.

1. FLSA exemption analysis

The administrative exemption

To qualify for the administrative exemption, an employee must (a) be paid on a salary basis at least the regulatory minimum, which is again $684 per week after the Department of Labor (DOL) restored the 2019 threshold in 2026 following court decisions invalidating the 2024 rule (Phillips Lytle LLP, 2026); (b) have a primary duty of office or non-manual work directly related to the management or general business operations of the employer or its customers; and (c) have a primary duty that includes the exercise of discretion and independent judgment with respect to matters of significance (29 C.F.R. § 541.200; U.S. Department of Labor, Wage and Hour Division [WHD], n.d.-a). The salary test is the easiest part. XYZ pays a fixed weekly salary, and if it meets $684 per week the first element is satisfied. But salary alone never creates an exemption; the duties tests must also be met.

Job description versus actual duties

Courts and the DOL look at what employees actually do, not at titles or written descriptions. The regulations state that “a job title alone is insufficient to establish the exempt status of an employee”; exemption depends on salary and actual duties (29 C.F.R. § 541.2). An employee’s primary duty is the “principal, main, major or most important duty,” judged by the character of the job as a whole, including the amount of time spent on exempt work and the employee’s freedom from direct supervision (29 C.F.R. § 541.700).

Discretion and independent judgment

Discretion and independent judgment involve comparing and evaluating possible courses of conduct and acting or making a decision after the possibilities have been considered, on matters of significance (29 C.F.R. § 541.202(a)). Relevant factors include whether the employee has authority to formulate or implement policies, to commit the employer in significant matters, to deviate from established policies without prior approval, and to negotiate or resolve important matters (29 C.F.R. § 541.202(b)). The regulations exclude “the use of skill in applying well-established techniques, procedures or specific standards described in manuals or other sources” (29 C.F.R. § 541.202(e)). Care Coordinators who follow scripts and must obtain approval for any exception have little or no real discretion.

Administrative work versus clerical work

The exemption covers employees whose work relates to running the business, such as human resources, budgeting, compliance or quality control, not employees who carry out its routine production work. The regulations specifically state that the exemption does not apply to clerical employees who perform “recording or tabulating data” or other mechanical, repetitive or routine work (29 C.F.R. § 541.202(e)). Inputting visit notes, making reminder calls and processing standard forms are textbook examples of clerical work.

Conclusion on classification

The HR director’s reasoning fails on each point. Being salaried satisfies only one element; working in the field does not equal independent judgment; and “serving an administrative function” is not the legal test. Because the coordinators’ primary duty is routine clerical work performed under close supervision, the administrative exemption is likely invalid, and XYZ has probably misclassified them. Although the Supreme Court held in E.M.D. Sales, Inc. v. Carrera (2025) that employers need only prove an exemption by a preponderance of the evidence, and in Encino Motorcars, LLC v. Navarro (2018) that exemptions should receive a “fair reading” rather than a narrow one, the facts here still do not support the exemption. XYZ should also confirm that no other exemption applies; none appears to, since the coordinators do not manage employees (executive exemption) or perform work requiring advanced knowledge in a field of science or learning (professional exemption).

2. Hours worked and compensable time

How the FLSA defines work

The FLSA does not define “work” in detail, but the Supreme Court has described it as physical or mental exertion “controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business” (Tennessee Coal, Iron & Railroad Co. v. Muscoda Local No. 123, 1944, p. 598). Work that the employer does not request but “suffers or permits” is also working time: if the employer knows or has reason to believe the work is being performed, it must count the time (29 C.F.R. §§ 785.11–785.13). Management cannot “sit back and accept the benefits without compensating for them,” and it has a duty to stop work it does not want performed (29 C.F.R. § 785.13). Under the continuous workday rule, once the first principal activity begins, all time until the last principal activity ends is generally compensable (IBP, Inc. v. Alvarez, 2005; WHD, n.d.-b).

Applying the definition to XYZ

• Evening and weekend work: Supervisors expect coordinators to “finish the workload,” especially at the end of billing cycles. This work is required by and benefits the employer, so it is hours worked. Even if it were not expressly required, XYZ knows it occurs.
• After-hours phone calls: Work calls handled at home or in the evening are compensable. Brief, occasional calls might be argued as de minimis, but regular calls that XYZ encourages cannot be disregarded.
• Driving between patient homes: Ordinary commuting from home to the first work site and from the last site home is generally not compensable under the Portal-to-Portal Act (29 U.S.C. § 254(a)). However, travel from one work site to another during the workday is part of the day’s work and must be counted as hours worked (29 C.F.R. § 785.38). Driving between client homes is therefore compensable, and answering work calls while driving makes it even more clearly work.
• Off-the-clock work: Evening documentation, weekend paperwork, calls while driving and any work done before or after official hours are all off-the-clock work because they are unrecorded and unpaid. XYZ’s informal encouragement of calls while driving to “maximize productivity” is strong evidence that the company knew of and benefited from this time.

3. Overtime and state-law issues

Federal overtime obligations

If misclassified, coordinators are entitled to overtime at 1.5 times their regular rate for all hours over 40 in a workweek. At 50–55 hours per week, each coordinator may be owed 10–15 overtime hours weekly. Back wages may be recovered for 2 years, or 3 years if the violation was willful, meaning the employer knew or showed reckless disregard for whether its conduct violated the FLSA (29 U.S.C. § 255(a)). XYZ’s failure to investigate despite complaints and its practice of not tracking hours may support a willfulness finding.

State law: California as an example

California law adds several requirements beyond the FLSA:

Coordinators who answer calls while driving are unlikely to receive duty-free rest breaks, which supports the rest-break claim. California also bans holding and operating a handheld phone while driving (Cal. Veh. Code § 23123.5), so XYZ’s informal practice creates safety and liability risks beyond wage claims.

How federal and state rules interact

The FLSA sets a floor, not a ceiling. Its savings clause preserves any state or local law that establishes a higher minimum wage or a shorter maximum workweek (29 U.S.C. § 218(a)). When federal and state laws both apply, the employer must follow the standard that is more protective of the employee. A coordinator might be exempt under federal law but non-exempt under California law, for example if paid less than $70,304 per year. In California, XYZ would owe daily overtime, meal and rest period premiums and expense reimbursements in addition to federal overtime.

4. Recordkeeping and employer liability

Employers must keep accurate records of hours worked each day and week and wages paid for non-exempt employees (29 U.S.C. § 211(c); 29 C.F.R. § 516.2). XYZ’s decision not to track hours, based on its assumption that the coordinators were exempt, leaves it exposed in several ways.

• Ability to defend itself: Without time records, XYZ cannot show how many hours coordinators actually worked, how much time was spent on travel or calls, or that any particular week involved 40 hours or fewer.
• Burden-shifting: In Anderson v. Mt. Clemens Pottery Co. (1946), the Supreme Court held that when an employer’s records are inaccurate or inadequate, an employee meets their burden by proving that they performed uncompensated work and producing “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference” (p. 687). The burden then shifts to the employer to produce precise evidence or to negate the reasonableness of the inference. Courts accept estimates based on employee testimony, emails, phone logs, electronic system log-in times, GPS and mileage records and billing-cycle schedules, even if the result is only approximate.
• Calculation of back pay: Courts can extrapolate from a representative sample of coordinators to the whole group in a collective action (Tyson Foods, Inc. v. Bouaphakeo, 2016). For example, if a coordinator earns $900 per week, a regular rate of $22.50 ($900 ÷ 40) and 12 unpaid overtime hours per week, back pay is about $405 per week. For 150 coordinators over 2 years, that is roughly $6.3 million. Some federal courts instead allow the “fluctuating workweek” half-time method for misclassified salaried employees, which produces a smaller figure, while California calculates a salaried non-exempt employee’s regular rate as 1/40th of the weekly salary (Cal. Lab. Code § 515(d)).
• Liquidated damages: The FLSA adds an equal amount as liquidated damages, effectively doubling back pay, unless the employer proves it acted in good faith with reasonable grounds to believe it was compliant (29 U.S.C. §§ 216(b), 260). XYZ will find good faith hard to prove because it never analyzed the actual duties or tracked hours. Prevailing employees also recover attorneys’ fees and costs.
• State penalties: In California, XYZ could face meal and rest period premiums, wage-statement penalties, waiting-time penalties for former employees (Cal. Lab. Code § 203) and representative claims under the Private Attorneys General Act.
• Retaliation: Because employees have complained, any adverse action against them could trigger separate retaliation claims (29 U.S.C. § 215(a)(3)).

5. Recommendations for compliance

1. Correct the classification. Conduct a privileged audit with employment counsel of every Care Coordinator’s actual duties. Reclassify those whose primary duty is clerical as non-exempt hourly employees, or as salaried non-exempt employees who receive overtime. If XYZ wants some exempt coordinators, it should redesign those roles to give real authority over care plans, staffing and service decisions, and pay at least the higher of the federal and state salary thresholds.
2. Implement accurate timekeeping. Use a mobile timekeeping app that records start and end times, travel between clients, meal and rest periods and after-hours work. Require employees to certify their time each pay period and give them an easy way to correct errors.
3. Train supervisors. Teach managers what counts as hours worked, that they may not ask or allow employees to work off the clock, how to approve overtime, and how to handle complaints without retaliation. Hold supervisors accountable for compliance, not just for workload completion.
4. Adopt policies that prevent off-the-clock work. Prohibit unrecorded work in writing; require pre-approval of overtime but pay for all overtime worked, disciplining policy violations separately; prohibit handheld phone use while driving and require hands-free devices or calls only when parked; and schedule meal and rest breaks.
5. Fix the workload. Review staffing levels and billing-cycle peaks. Hiring more coordinators or redistributing work may cost less than ongoing overtime and litigation.
6. Remediate past violations. With counsel, calculate and pay back wages. A settlement supervised by the DOL’s Wage and Hour Division can resolve FLSA claims, though private settlements generally require court or DOL approval to bind employees.
7. Cooperate with the regulatory inquiry and preserve all relevant documents.
8. Monitor ongoing compliance through periodic classification audits, review of time records against system log-ins and an anonymous reporting channel.

Scholarly perspective

Misclassification at XYZ reflects a broader pattern. Weil (2014) describes how cost pressures in “fissured” workplaces push employers toward practices that shift costs to workers, including unpaid hours and misclassification, especially in service industries such as home care. Research on wage theft also shows that compliance depends heavily on enforcement and employer incentives; strong state laws and active enforcement are associated with better compliance (Galvin, 2016). For XYZ, the lesson is that compliance must be built into job design, scheduling and supervision, not just into job descriptions.

Related reading: global talent acquisition strategy, nurse manager staffing scenario and managed care vs. accountable care organizations.

Conclusion

XYZ Home Health Services has likely misclassified its Care Coordinators. Their primary duties are routine clerical tasks performed under strict scripts and supervisor approval, which do not meet the administrative exemption’s requirement of discretion and independent judgment on matters of significance. Evening and weekend work, after-hours calls and driving between client homes are compensable hours, and the resulting overtime of 10–15 hours a week per employee creates substantial back pay and liquidated damages exposure. State laws such as California’s add daily overtime, meal and rest break and recordkeeping obligations, and the more protective rule controls. Because XYZ kept no time records, courts will rely on employees’ reasonable estimates. Reclassification, accurate timekeeping, supervisor training, clear policies and remediation of past violations are needed to resolve the inquiry and prevent recurrence.

References

Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).

Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012).

California Labor Code §§ 203, 226, 226.7, 510, 512, 515, 1174, 2802.

E.M.D. Sales, Inc. v. Carrera, 604 U.S. 45 (2025).

Encino Motorcars, LLC v. Navarro, 584 U.S. 79 (2018).

Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201–219.

Galvin, D. J. (2016). Deterring wage theft: Alt-labor, state politics, and the policy determinants of minimum wage compliance. Perspectives on Politics, 14(2), 324–350. https://doi.org/10.1017/S1537592716000050

IBP, Inc. v. Alvarez, 546 U.S. 21 (2005).

Tennessee Coal, Iron & Railroad Co. v. Muscoda Local No. 123, 321 U.S. 590 (1944).

Phillips Lytle LLP. (2026, May 15). Overtime exemptions under Fair Labor Standards Act rolled back to 2019 standards. https://phillipslytle.com/overtime-exemptions-under-fair-labor-standards-act-rolled-back-to-2019-standards/clientalert-laboremployment-flsa-2026-05-15-mobile/

Thompson Coburn LLP. (2025, November 3). New California 2026 minimum wage will also increase salary threshold for many exempt employees. https://www.thompsoncoburn.com/insights/new-california-2026-minimum-wage-will-also-increase-salary-threshold-for-many-exempt-employees/

Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442 (2016).

U.S. Department of Labor, Wage and Hour Division. (n.d.-a). Fact sheet #17C: Exemption for administrative employees under the Fair Labor Standards Act (FLSA). https://www.dol.gov/agencies/whd/fact-sheets/17c-overtime-administrative

U.S. Department of Labor, Wage and Hour Division. (n.d.-b). Fact sheet #22: Hours worked under the Fair Labor Standards Act (FLSA). https://www.dol.gov/agencies/whd/fact-sheets/22-flsa-hours-worked

Weil, D. (2014). The fissured workplace: Why work became so bad for so many and what can be done to improve it. Harvard University Press.

29 C.F.R. Part 516; Part 541; Part 785 (2024).