Baron and Budd attorneys Allen Vaught and Roland Tellis, along with their co-counsel at Outten & Golden LLP and Lieff Cabraser Heimann & Bernstein, LLP,  are currently pursuing a class action lawsuit against MHN Government Services, Inc. (MHNGS) and Managed Health Network, Inc. (MHN) over the misclassification of employees as independent contractors and the failure to pay those employees overtime wages.  The case, filed in the United States District Court for the Northern District of California, alleges that MHNGS and MHN knowingly violated the Fair Labor Standards Act (FLSA) by misclassifying workers as “independent contractors” in order to avoid paying federally mandated overtime wages.

MHN (with its related entity, MHNGS) operates around U.S military bases as a subcontractor to the United States Department of Defense.  MHN employs individuals as Military and Family Life Consultants (MFLCs) as part of a service provided for military personnel.  Our lawsuit alleges that MHNGS and MHN misclassified MFLCs as independent contractors exempt from overtime pay.  We allege that, under federal and state law, the nature of the work MFLCs perform for MHN means that they should be paid for all overtime hours worked (hours over 40 each week under federal law).  In addition, the lawsuit alleges that MHN should pay all MFLCs double the overtime pay they are owed, to include “liquidated damages” under the law.

In November 2012, while this lawsuit was pending, MHN reclassified most MFLCs from independent contractor status to employee status.  However, MHN still does not pay MFLCs for overtime hours they work.

An employer and a worker cannot contractually waive the right to overtime pay.  So, even if a company makes you sign a document stating that you are an independent contractor and not due overtime pay, if the actual facts of the relationship show that you are, as a matter of economic reality, an employee instead of an independent contractor, then you may be entitled to back overtime pay, liquidated damages, legal fees and costs. Furthermore, that employer is required to keep an accurate record of each and every hour you worked.  If they did not keep accurate records, the federal law permits you to make a reasonable estimate of the hours you worked.

In November 2012, MHN asked the trial judge (Judge Susan Illston) to dismiss the case and require each MFLC to pursue his or her claims alone in a single confidential, private arbitration that we believe would be biased against you and much less efficient than the collective action and potential class action you are currently part of. In April 2013, Judge Illston rejected MHN’s request. MHN then appealed that ruling to the federal appellate court, the Ninth Circuit Court of Appeals. (That is the court between the level of the trial court and the United States Supreme Court).

We are pleased to report that in December 2014, the Ninth Circuit affirmed Judge Illston’s decision, siding with you and the MFLCs and allowing the case to stay as a collective action and potential class action in federal court. The Ninth Circuit’s Order is available by clicking the link below.

PDF – Ninth Circuit Court Order

If you, a friend or family member suspects that you have been misclassified as an independent contractor in violation of the FLSA, or if you believe that your employer is not paying the overtime you deserve, we want to speak with you. To learn about your overtime wage rights, please feel free to contact Allen Vaught at 866-495-1255 or via email at