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Employer Fined $162K: What the Wisconsin Back Wages Case Teaches Local Nonprofits and Healthcare Providers

UUnknown

2026-02-16

9 min read

A $162K DOL consent judgment against a Wisconsin healthcare provider shows how off-the-clock work and overtime errors cost nonprofits. Take action now.

Employer Fined $162K: What the Wisconsin Back Wages Case Teaches Local Nonprofits and Healthcare Providers

Hook: Few things unsettle nonprofit leaders and healthcare managers faster than an unexpected Department of Labor (DOL) claim that your staff were paid incorrectly. The December 2025 federal consent judgment against a Wisconsin healthcare partnership — ordered to pay $162,486 in back wages and liquidated damages — is a wake-up call: small mistakes around off-the-clock work, overtime calculation, and recordkeeping can cost organizations six figures.

Quick summary of the Wisconsin case and why it matters now

In a consent judgment entered Dec. 4, 2025, the U.S. District Court for the Western District of Wisconsin ordered North Central Community Services Program and Affiliates (doing business as North Central Health Care) to pay $81,243 in back wages and an equal amount in liquidated damages to 68 case managers. A DOL Wage and Hour Division investigation found that, between June 17, 2021, and June 16, 2023, case managers worked unrecorded hours and were not paid overtime in violation of the Fair Labor Standards Act (FLSA).

The case illustrates two recurring pitfalls for nonprofits and healthcare providers: unpaid off-the-clock work and miscalculation of overtime. In 2026, with DOL enforcement continuing at elevated levels and new workplace models (hybrid/remote, digital on-call, and AI-assisted scheduling), this ruling is a practical lesson for local employers hoping to avoid costly penalties.

What the ruling teaches: common wage-compliance pitfalls

1. Off-the-clock work is not harmless

Employees who check records, complete notes, or answer client messages before clocking in—or after clocking out—are likely still working under the FLSA. The DOL treats such time as compensable work when it is both controlled by the employer and for the employer's benefit.

2. Overtime miscalculation and the regular rate

Under the FLSA, nonexempt employees must be paid at time and one-half their regular rate for hours over 40 in a workweek. Employers often miscalculate the regular rate by ignoring bonuses, shift differentials, on-call pay, or piece-rate elements that must be included in the regular rate calculation.

3. Weak or inconsistent recordkeeping

The DOL enforces strict recordkeeping requirements. Failure to maintain accurate time and pay records makes it difficult to defend against claims and often results in back wage findings during an audit. Invest in secure storage and consider edge datastore strategies and retention plans for time and payroll data to ensure rapid production when investigators ask.

4. Misclassification of employees

Nonprofit and healthcare roles like case managers, social workers, and home health aides are often misclassified as exempt when job duties or pay structures do not meet the exemption tests. This leads to unpaid overtime and back pay liability.

Why nonprofit and healthcare employers are uniquely exposed

Client-centered work: Staff often prioritize client needs over clocking procedures, leading to off-the-clock tasks.
Complex schedules: On-call shifts, travel between client sites, and split shifts complicate time tracking—make sure your policies reflect what counts as compensable travel and when to log it; for budgeting and travel-policy parallels see budgeting and travel guidance.
Funding constraints: Smaller staffs and tight budgets can deprioritize investment in modern timekeeping and data storage systems or legal counsel. Nonprofits that run fundraising programs should also evaluate tools and CRM options used by small organizations (CRM for fundraisers).
Volunteer vs. employee confusion: Blurred lines between volunteers, interns, contractors, and employees create classification errors. When updating duties and documentation, include HR workflows and systems used for candidate and employee tracking (CRM for HR-adjacent needs).

Actionable compliance roadmap: 12 steps local employers should take now

1. Conduct a targeted timekeeping audit

Begin with a 12–24 month audit of time and payroll records for roles most at risk: case managers, social workers, home health aides, and on-call staff. Look for patterns of rounding, missing clock-ins, or regular short-duration tasks performed off the clock. Use the Wisconsin judgment window (June 2021–June 2023) as a model for the length of review in similar cases. To design defensible audit trails, review guidance on audit trail design and logs.

2. Update job classifications and job descriptions

Map each role to FLSA tests for exemption (executive, administrative, professional) and state exemptions. Ensure job descriptions accurately reflect daily duties, decision-making authority, and supervisory responsibilities—key evidence if classification is challenged.

3. Fix the regular rate calculation

Include all legally required components—bonuses, shift differentials, nondiscretionary incentive pay—in the regular rate. When in doubt, run sample pay calculations for overtime weeks and consult payroll software or counsel to verify formulas.

4. Tighten off-the-clock policies and train staff

Create a clear, written policy that prohibits off-the-clock work and requires employees to record all hours. Pair the policy with mandatory annual training and routine team reminders. Training should cover common scenarios: documentation time, travel between clients, phone calls, and after-hours charting. Consider manager coaching and micro-mentoring approaches to reinforce respectful handling of complaints and hours reporting.

5. Modernize timekeeping technology

Invest in systems built for healthcare and mobile staff: GPS-verified clock-ins, automatic overtime alerts, and mobile timesheets with manager approval workflows. In 2026, many local providers are adopting AI-assisted time reconciliation tools—useful, but pair them with human review to prevent algorithmic errors.

6. Establish clear rules for travel, on-call, and remote work

Define compensable travel time (ordinary commute vs. travel between job sites), on-call compensability, and expected response times. For hybrid staff, state whether pre-shift system checks or post-shift documentation are compensable and how to log them.

7. Review and correct past errors voluntarily

Voluntary self-audit and correction programs can limit exposure. The DOL sometimes considers voluntary remediation when deciding enforcement steps. Document corrections carefully—calculated back pay offers, repayment plans, and policy changes.

8. Keep robust records

Maintain timecards, schedules, pay calculations, and personnel files for at least three years (pay records) and two years (pay rate records) as required under the FLSA and related state laws. When audits happen, prompt production of accurate records strengthens your defense.

9. Use consistent rounding policies

If you round time, ensure the policy is neutral and does not consistently favor the employer. The DOL accepts rounding if it is to the nearest, up, or down in a manner that does not cause a loss of pay over time.

10. Build a response plan for DOL inquiries

Designate a point person (HR director or compliance officer), assemble payroll and timekeeping records, and engage counsel when a DOL Wage and Hour investigator requests information. Timing, cooperation, and transparency can affect outcome. Also track evolving employer obligations under new rules and recent regulatory updates (remote marketplace and state-level changes).

11. Train managers on non-retaliation and complaint handling

Employees who raise wage complaints must be protected from retaliation. Instituting an anonymous reporting channel and training managers reduces the chance of escalation to a DOL complaint.

12. Budget for compliance

Set aside a small contingency for unexpected wage adjustments; even modest underpayments across many employees can add up to large liabilities—as the Wisconsin case demonstrates. If funding is tight, nonprofits should explore fundraising and CRM tools that support compliance and operations (small-business CRM for fundraisers).

What to expect during a DOL Wage and Hour investigation (and how to limit harm)

The Wage and Hour Division will typically:

Issue a request for documents (payroll, time records, policies).
Interview employees and managers under oath.
Analyze pay calculations and identify alleged violations.
Propose back wages and possible liquidated damages.

How employers can limit harm:

Respond quickly and gather accurate records; design audit trails and logging that let you respond rapidly (audit trail design).
Show good-faith steps taken to comply—corrective pay, policy changes, and training.
Consider engaging labor counsel early to negotiate settlements or a compliance agreement.

2026 trends and what they mean for local employers

Several recent trends through late 2025 and early 2026 affect wage compliance strategy:

Persistent DOL enforcement focus: Wage-and-hour audits remained active into 2025—and regulators signaled continued scrutiny in 2026, particularly in healthcare and human services where off-the-clock and overtime concerns arise often.
Technology adoption: More employers use mobile timekeeping, GPS verification, and AI-assisted reconciliation. These tools reduce errors but require policies to avoid false positives or inadvertent invasions of privacy.
Joint-employer scrutiny: With outsourcing and shared staffing models, authorities increasingly examine joint-employer relationships, which can expand liability.
State-level changes: Several states updated overtime thresholds and recordkeeping rules through 2024–2025. Local employers must track both federal and state standards (see recent regulatory updates).

How the Wisconsin case would translate into an action plan for a local nonprofit or clinic

Use this three-step template to translate lessons into practice:

Immediate (30 days): Run a quick audit of last 24 months for high-risk roles. Put a temporary policy in place: all employees must log time for pre- and post-shift tasks and mobile documentation.
Short-term (90 days): Update job descriptions, reclassify roles if necessary, correct payroll calculations for the last year where errors are found, and offer back pay where appropriate. Start manager training and micro-coaching programs (micro-mentoring).
Ongoing (6–12 months): Install robust timekeeping and storage systems, conduct quarterly compliance spot checks, and formalize a DOL response plan with counsel.

Sample scenarios and how to handle them

Scenario A: Case manager completes client notes at home after shift

Policy: Treat documentation time as compensable. Require logging in the timekeeping app before starting notes. Make sure payroll captures the extra minutes and flags potential overtime.

Scenario B: Staff travel between client homes during the day

Policy: Pay for travel between assignments during the workday; do not count ordinary commute. Record travel start/end points in the timekeeping system to justify payments.

Scenario C: On-call staff receive sporadic messages overnight

Policy: Define on-call compensation—flat stipend vs. compensable time—based on actual interruption and response expectations. If the on-call time is compensable, track it and include it in the regular rate when calculating overtime.

Real-world example: How the DOL calculated relief in the Wisconsin judgment

The DOL's investigation found unrecorded hours for 68 case managers over a two-year period and asserted violations of overtime and recordkeeping provisions. The consent judgment required equal parts back wages and liquidated damages—totaling $162,486. This distribution is common when the DOL finds willful or negligent violations under the FLSA.

Under the FLSA, employers must pay nonexempt employees at least time and one-half their regular rate for all hours worked over 40 in a workweek.

Key takeaways

Small time errors have big costs: Routine off-the-clock tasks and improper overtime calculations can accumulate into large back pay obligations.
Proactive audits reduce risk: A targeted review and quick corrections signal good faith and often limit penalties.
Train, document, and modernize: Clear policies, staff education, and reliable timekeeping tools are the core defenses against DOL claims.
Get help early: When an investigation starts, involve counsel and prepare thorough documentation to control the narrative.

Resources for local employers

DOL Wage and Hour Division fact sheets on overtime and recordkeeping.
State labor department guidance for Wisconsin and neighboring states.
Local HR consultants experienced with nonprofit and healthcare payroll.

Final words — act now to protect your organization

The North Central Health Care consent judgment shows how quickly routine operational issues can become expensive legal problems. For nonprofits and healthcare providers operating on slim margins, prevention is the best medicine: audit, train, document, and invest in reliable timekeeping. Doing so not only reduces legal risk but also protects staff by ensuring they receive the wages they earned.

Call to action: Start today by running a 90-minute compliance check with your HR and payroll teams. If you find inconsistencies, prioritize fixes for the highest-risk roles and consult wage-and-hour counsel. Need a starter checklist or template policy tailored to clinics and nonprofit case management teams? Contact our newsroom for practical templates and local compliance referrals.

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