On February 13, 2026, a federal district court in Pennsylvania entered summary judgment against a home health company, Amazing Care Home Healthcare Services LLC, and its owner and manager, in a lawsuit brought by the U.S. Department of Labor (DOL), finding the defendants liable for misclassifying both licensed practical nurses (LPNs) and home health aides (HHAs) as independent contractors (ICs) instead of employees. This post focuses on nurses as ICs, a topic we have addressed on other occasions on this blog, most recently on December 3, 2024. As we noted in that post, classifying nurses as ICs “runs the risk of very substantial misclassification liability if the IC relationships are not structured, documented, and implemented in a manner that enhances compliance with applicable laws and minimizes this type of legal exposure.” As we discuss below, the court held in the Amazing Care case that the IC relationships with LPNs (and HHAs) failed to satisfy the applicable test for IC status under the federal Fair Labor Standards Act (FLSA). As a result, the DOL is seeking nearly $12 million in unpaid overtime and statutory liquidated damages from the corporate and individual defendants, personally. Nursing agencies, health care systems, and other businesses using nurses can take steps to minimize this type of legal jeopardy by using a process such as IC Diagnostics (TM) to maximize IC compliance in a customized and sustained manner.

The Amazing Care Case

The DOL commenced this lawsuit against Amazing Care and its owner and manager in 2024. After pretrial discovery, the DOL made a motion for summary judgment, arguing that Amazing Care and the individual defendants misclassified the LPNs and HHAs as ICs instead of employees and failed to pay them overtime as required by the FLSA for all hours worked over 40 in a workweek.

The court, in entering summary judgment in favor of the DOL on liability, applied a six-part test for IC status under the FLSA, holding that all but one of the factors favored employee status. The first factor addresses the degree of the alleged employer’s right to control the manner in which the work is to be performed. Finding that the company unilaterally dictated the wage rates of the nurses, supervised them by monitoring patient care notes and visiting job sites, and created and instructed the LPNs to follow detailed patient care plans, the court concluded that this factor supported employee status.

The second factor was whether LPNs had an opportunity for profit or loss depending on each worker’s managerial skill. While the court noted that LPNs could decline work opportunities and could engage their own replacements, they did this infrequently and, in any event, any “managerial skill” they exercised was far outweighed by the defendants’ management of Amazing Care’s operations. The court concluded that this factor also favored employee status, although the court’s decision seems less than persuasive on this factor.

The third factor involves the workers’ investment in required equipment or materials and the workers’ employment of helpers. The court found that this factor favored IC status, “albeit slightly,” because the LPNs supplied their own PPE equipment.

The fourth factor addresses the use of special skills. Despite the fact that LPNs require considerable training and clinical experience, the court found that this factor favored employee status. It concluded that the skills were not used in an “independent way” because Amazing Care required them to adhere to care plans. Like the second factor involving opportunity for profit or loss, the court’s reasoning seems somewhat strained, but there is no indication in the court’s decision of any evidence submitted by the defendants as to how the LPNs applied their advanced skills.

The fifth factor is the permanence of the working relationship. The court found that this factor also favored employee status because 90% of the LPNs worked exclusively with Amazing Care and the company’s goal was to staff LPNs on a long-term basis in patients’ homes. The court concluded that the overwhelming majority of LPNs did not have a “transitory” working relationship with Amazing Care. Of interest here, those LPNs that did have a “transitory” working relationship seem to have been lumped together with those that did not for purposes of summary judgment.

The sixth and final factor is one that most often favors employee status: whether the services provided by the workers are integral to the alleged employer’s business. Not surprisingly, the court found that this factor also favored employee status.

The court also considered additional facts in the record bearing on the independence of the LPNs, but found most of them favored employee status. Those facts included that Amazing Care gave LPNs performance reviews like employees, directed LPNs to use the same time sheets as employees, subjected LPNs to Amazing Care’s employee handbook, employed some LPNs as W-2 employees despite the fact that they performed similar tasks, and used workplace forms that referred to all LPNs as “employees,” even those paid on a 1099 basis.

Finally, the court determined whether the owner, who served as President and Administrator, and the principal manager, who served in the position of Director of Nursing, were also “employers” under the FLSA and equally liable to the LPNs as Amazing Care itself. The court found the Nursing Director to be an “employer” because she participated in deciding whether LPNs would be classified as ICs or employees, supervised the LPNs, reviewed their notes, disciplined them, and conducted their performance reviews.

While the court did not determine damages, because it was unclear if a two-year or three-year statute of limitations applies, the DOL submitted evidence that unpaid overtime exceeded $5.9 million and that the defendants should also be liable for an equal amount of liquidated damages under the FLSA. The issue of damages will be submitted to a jury. Thus, the corporate and individual defendants, personally, could face a judgment of nearly $12 million. Su v. Amazing Care Home Healthcare Services LLC, No. 2-24-cv-00190 (E.D. Pa. Feb. 13, 2026).

Lessons for Businesses Classifying LPNs and Other Nurses as ICs

Businesses can learn quite a lot from the court’s decision in Amazing Care, especially those that use LPNs and other nurses they classify as ICs. While this case is somewhat different from a lawsuit against a large health care system operating in seven states west of the Mississippi that was the subject of the December 2024 blog post referenced above, there are similarities worth mentioning. That health care system was sued in a class action for allegedly misclassifying registered nurses (RNs) as ICs instead of employees. The proposed class action was filed in a federal district court in Washington state by an RN who alleged that the health care system that engaged him as an IC and paid him on a 1099 basis had directed and controlled him and other similarly situated contract RNs, despite the fact that he and the other 1099 RNs performed duties quite similar to RNs working for the system but paid as W-2 employees. Ward v. Providence St. Joseph Health, No. 2-24-cv-01528 (W.D. Wash. Sept. 24, 2024).

The plaintiff nurse alleged in his complaint filed in that case that the health care system controlled and directed all aspects of the work by RNs that have been classified as ICs; required adherence to company policies and procedures; and maintained control, oversight and direction of the contract RNs, including their hiring, firing, and discipline. According to the latest court filing in that case, the parties have reached a settlement agreement that will soon be presented to the court for approval. It is anticipated that the settlement agreement will be for a substantial amount.

There are steps that nursing companies and health care systems can take to minimize their exposure to these types of lawsuits and place themselves in a position to successfully defend against legal challenges to their IC relationships — or settle such cases on modest terms.

First, it is critical to assess whether the role being classified as an IC and paid on a 1099 basis can likely be legally classified in that manner. Some nursing positions are simply not susceptible to being classified legally as ICs, although many are, as long as all of the i’s are dotted and t’s are crossed. Once determined that a role can likely be legally structured, documented, and implemented as an IC as a general matter, there are a variety of federal and state tests for IC status that may be applicable. In some situations, the position may be classified properly under some state laws but not under others.

Documentation of the IC relationship is often key. A February 8, 2022, article published in Law360 Employment Authority, titled “Nurses Are Becoming Gig Workers, Raising Wage Concerns,” discussed the nationwide nursing shortage and how online staffing platforms are seeking to meet that need with opportunities for nurses to provide their services as ICs. Regarding the specter of IC misclassification claims and the need for robust agreements that set forth details of the relationship between the business and IC nurses, the author of this blog post was quoted as follows: “You can have nurses who are independent contractors legitimately, and you can have nurses who are not legitimately independent contractors, who are misclassified. You shoot yourself in the foot if you don’t have an independent contractor agreement that is state-of-the-art.”

Where a health care system uses both employees and ICs to perform similar roles, as was the case with Amazing Care and the hospital system that was the subject of our December 2024 blog post, meaningful distinctions need to be implemented so that it is abundantly clear that the differences support the classification of some workers as ICs and others as employees.

Finally, structuring and documentation alone are not sufficient. Implementing an IC relationship in a compliant manner can be critical, and was something that Amazing Care did not do well, according to the court. Communications with ICs need to recognize and reflect that they are their own bosses. Health care systems need to treat them that way — and not in the same way management communicates with its employees.

Communicating in “IC-speak” does not come naturally to many, so management training is important. So, too, is eliminating “employee-centric” terms from documents used to communicate with ICs themselves and with patients that receive their nursing services. Giving internal documents an “IC bath” is a lot less challenging than it seems, but can and should be done. If not, a business’s own words will be used against it in a lawsuit, as was the situation in the Amazing Care case.