Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Sponsoring agencies charged with fixing wages for au pairs working in the U.S. , (Nov 14, 2014)

By Linda O’Brien, J.D., LL.M.

A group of sponsoring agencies that implement the U.S. State Department cultural exchange program for au pairs who work for host families in the U.S. have engaged in a conspiracy to fix the wages paid to au pairs at rates that are below the legal minimums set by federal and state law, according to a complaint filed in the federal district court in Denver (Beltran v. Noonan, November 13, 2014).

The U.S. State Department administers the J-1 Visa program, a cultural exchange program for au pairs that allows young foreign adults to work for host families as child care workers for 45 hours per week in exchange for room, board, and a legal wage. The implementation of the program has been outsourced to non-profit agencies that recruit and place au pairs with host families, which pay sponsor fees to the agencies. Johana Paola Beltran was recruited in Colombia by the InterExchange agency to be an au pair in the United States.

According to the complaint, State Department regulations mandate that au pairs be paid in conformance with the requirements of the Fair Labor Standards Act. However, the program allegedly has been co-opted by an illegal cartel of the State Department approved sponsor agencies that colluded to set wage rates for the industry far below the market rate for domestic workers in the same industry. The sponsors are charged with agreeing to set au pair wages at the absolute minimum amount they believe is allowable under the Fair Labor Standards Act, while extracting premiums from host families seeking affordable child care. The sponsors use a sale pitch to host families that, even with significant sponsor fees, au pairs are significantly cheaper than other child care options available in the United States. In fact, the au pair wages set by the sponsors are below the legal minimums set by federal and state law.

The complaint states that, in 2011, Beltran applied with InterExchange to become an au pair in the U.S. and paid a $2,500 application fee. After an interview, she was matched with the Noonan family in Colorado and began work in August 2012. While working for the Noonans, in addition to child care duties, Beltran performed housework for the entire family, cooked meals, did laundry, worked in the garden, cared for the family’s eight chickens, and performed other tasks. Beltran was given a room in the basement of the Noonan home and was not allowed to eat meals with the family. Although Beltran was not given three meals per day and worked more than 45 hours per week, the Noonans always paid Beltran the exact stipend amount of $195.75, with no withholding. In November 2012, Beltran decided to stop working for the Noonans. During her time in Colorado, no one from Interexchange ever came to the Noonan house to check on Beltran.

In a competitive labor market, au pairs would be free to negotiate wages with multiple prospective employers. The defendants’ collusive activity had the effect of restraining trade in that au pairs were not able to negotiate their wage rates with their employers or potential host families. But for the collusion, wages would be at or near the prevailing wages for domestic workers doing similar work. Moreover, this restraint of trade has suppressed wages to the benefit of the sponsors and family employers and to the detriment of the young foreign workers and their domestic competitors, the complaint charged.

The plaintiffs assert claims for breach of fiduciary duty, failure to pay minimum wage, unpaid wages, restraint of trade, and violations of Section 1 of the Sherman Act, Fair Labor Standards Act, and the New York Wage Act. The action seeks declaratory relief, treble damages, unpaid wages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:14-cv-03074.

Attorneys: Alexander Hood (Towards Justice) for Johana Paola Beltran.

Companies: InterExchange, Inc.; USAAuPair, Inc.; GreatAuPair, LLC; Expert Group International, Inc.; Cultural Care, Inc.; AuPairCare Inc.; Au pair International, Inc.; American Cultural Exchange, LLC; A.P.EX. American Professional Exchange, LLC

News: Antitrust ColoradoNews