How To Lose Everything By “Saving Money” On Caregivers (Part 4)

saving money caregivers

A Cautionary Tale, Based On A True Story

Tom and Helen Conway had a live-in housekeeper named Greta, who met a labor lawyer online, who said that the Conways had been paying Greta far less than they should have for the past eight years.  They were in a meeting at the offices of the law firm of Greta’s lawyer, John McDonald.

McDonald had just explained to the Conways how California labor laws required them to pay Greta as a live-in caregiver, and their heads were spinning.  They knew that a big, bad financial demand was coming and they tried to be emotionally ready for what was coming.

“I’m sure that you want to do the right thing”, McDonald said.  “You are nice people and you have a comfortable life and much to be thankful for.  As you have heard, this all comes down to a matter of numbers and pay rates and hours worked.  Fortunately, I have taken the time to help by calculating the amount of back pay and overtime that you owe Greta, so that you won’t have to do so.”

Upon saying that, he handed them a letter on the law firm letterhead, signed by him and saying the following:

Dear Mr. and Mrs. Conway:

As you have now heard, you have not paid Greta correctly under the laws of California and now you owe her for the difference.  Greta has worked 24×7 every week for eight years for your family.  Even at minimum wage, that works out to the following amount that you owe her:

Amount owed per week:

Days 1 through 6:   (8x$8)+(4x$12)+(12x$16)=$304
Day 7: (8x$8)+(16x$16)=$320

Total pay due per week: (6x$304)+$320=$2,144
Amount actually paid per week, average: $400
Net amount still owed per week: $2,144-$400=$1,744

Number of weeks worked:  (8 years x 52 weeks per year)-6 weeks vacation=410 weeks
Amount of back pay owed, before interest and penalties: 410 x $1,744 = $715,040

We can calculate the interest and penalties separately, but they are substantial.  The total amount that you owe, including interest and penalties, may be in excess of $1,5000,000.

We are willing to settle this claim on behalf of Greta for a compromise amount of $1,000,000 if you agree to this settlement after reading this letter.

What shall we do about this?

John J. McDonald,
Attorney at Law

Helen began crying after reading this.  Tom felt a lump in his throat and then a dull ache in his chest.  They didn’t understand how this had happened to them.

They both looked up at Greta, who had been looking out the window, not facing them.   Helen sobbed, “Greta, you are like family.  How could you do this?” To be continued……..

Please read Part 1, Part 2 & Part 3 of this tale

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About Tim Colling

Tim Colling has more than 30 years of experience in management in a variety of industries and has served in the past as a member of the statewide steering committee for the Home Care Aide Section of the California Association for Health Services At Home (“CAHSAH”). He is a Certified Public Accountant (licensed but not actively in practice), and received his Bachelor’s Degree in Accounting from California State University at San Diego. He has held the credential Care Manager Certified ("CMC") from the National Academy of Certified Care Managers, and has practiced actively as a Professional Geriatric Care Manager. Tim has worked as a CPA in Public Accounting, a corporate Chief Financial Officer for a chemical manufacturing company, and a software engineering manager for several private and public software companies, in addition to working as an eldercare manager, in-home caregiver agency administrator and professional geriatric care manager since 2003. Learn more about his in-home caregiving company at A Servant's Heart In-Home Care

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