Day-Care Company Must Pay for Overtime Violations

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By Lisa Nagele-Piazza

April 7 — A Missouri day-care company and an affiliated staffing service must pay $92,400 in unpaid overtime wages and interest, as calculated by the Labor Department's Wage and Hour Division, the U.S. Court of Appeals for the Eighth Circuit ruled.

A district court didn't err in finding the Labor Department produced sufficient evidence that Endless Possibilities LLC and Contingent Care LLC violated the Fair Labor Standards Act's minimum wage, overtime and record-keeping requirements, the Eighth Circuit said in an April 7 opinion.

The federal appeals court rejected the day-care company's argument that it wasn't a covered “preschool” under the FLSA. The company provides child care and offers reading and math lessons to children of preschool age, which fits within the meaning of “preschool” under the FLSA, the court said.

Addressing the issue for the first time, the Eighth Circuit noted that the U.S. Courts of Appeals for the Sixth and Tenth circuits have found that custodial day-care centers are preschools under the FLSA.

The relevant section of the act (29 U.S.C. § 203(s)(1)(B)) includes both custodial-care entities, such as hospitals, and educational centers as covered entities, the Eighth Circuit said.

Day-Care Company Is Covered Preschool

The Labor Department investigated the wage and hour practices of Endless Possibilities three times between 2005 and 2010, according to the court.

During each investigation, the department found that the day-care company violated the FLSA by failing to pay employees one-and-a-half times their regular rate of pay for hours worked in excess of 40 in a workweek.

During the third investigation in November 2010, the department discovered record-keeping, overtime and minimum wage violations. It also concluded that employees were provided untimely wage payments.

The investigator calculated that $92,402.35 in back wages were owed to employees. And in September 2011, the Labor Department filed a lawsuit against Endless Possibilities, Contingent Care and their common owner.

Although preschools must comply with the FLSA, the companies argued that Endless Possibilities is a licensed day-care center, not a preschool within the meaning of the act.

But the district court disagreed. The day-care center creates curriculums and lesson plans, calls employees “teachers,” advertises that it offers reading and math services and “admits that the average age of the children served is three,” the court said.

Affirming the lower court's decision, the Eight Circuit said that the FLSA lists both custodial-care and educational enterprises as covered employers.

Thus, “because the court found that Endless Possibilities provides educational services to children of preschool age, the court did not err in finding that Endless Possibilities fits within the meaning of ‘preschool' as used in § 203(s)(1)(B),” the appeals court said.

The companies alternatively argued that the relevant employees qualify as teachers who are exempt from the FLSA’s overtime requirements.

But the companies failed to raise that argument before the district court, and thus, waived their right to argue it on appeal, the Eighth Circuit held.

The Labor Department represented itself. Arnold Law Firm represented the companies.

To contact the reporter on this story: Lisa Nagele-Piazza in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at