Boies Schiller Flexner and its co-counsel Towards Justice today announced a historic $65.5 million settlement in their au pair class action suit, Beltran v. Interexchange, Inc. The lawsuit, originally filed in November 2014, alleged that fifteen companies — all of the entities then authorized by the State Department to sponsor individuals to participate in the au pair program and to receive J-1 visas to work in the United States — conspired together to pay au pairs less than the minimum wage and to mislead au pairs about the wages they were entitled to receive under federal and state law. J-1 visas were created to foster cultural exchange between nations through a number of separate initiatives, including for au pairs, visiting students, camp counselors, and the like. Contrary to these goals, the lawsuit alleges that the au pair program was marketed and in practice operated as a source of below-minimum-wage childcare that pays lip-service to “cultural exchange.” As part of the settlement, in addition to paying $65.5 million, the sponsors have agreed to wide-ranging non-monetary relief, including the requirement that future au pairs be adequately informed about their rights under U.S. law. The settlement is subject to approval by the District Court.
“We’re pleased that our years of hard work will bring justice to so many young childcare workers and fundamentally change the way the au pair industry operates,” said Boies Schiller Flexner partner Peter Skinner.
“This settlement, the hard-fought victory of our clients who fought for years on behalf of about 100,000 fellow au pairs, will be perhaps the largest settlement ever on behalf of minimum wage workers and will finally give au pairs the opportunity to seek higher wages and better working conditions,” said David Seligman, Director of Towards Justice.
Background on the case:
At the time the lawsuit was filed, the State Department had designated fifteen agencies as the exclusive “sponsors” of J-1 visas. An au pair could not enter the country without the support of one of these fifteen sponsors, who controlled 100 percent of the market for au pair labor.
The vast majority of au pairs are paid the same rate of $4.35 per hour. The sponsor defendants allegedly conspired to illegally fix standard au pair wages at or near the $4.35 rate, lied about au pairs’ ability to negotiate a higher wage, and illegally set wages below the minimum wage. At the illegally-fixed rate, standard au pairs are paid about $9,980 per year. Sponsor agencies charge both au pairs and host families’ fees. One sponsor, for example, charged host families an $8,245 “Program Fee Annual” plus a $400 “Match Fee” — which means that the sponsor agencies are paid almost as much in fees as au pairs are for their labor.
In a survey of thousands of host families, nearly all reported paying their au pairs at or near the illegal wage, fixed by sponsor agencies, of $195.75 per week. In comparison, according to a 2012 INA study, the average gross weekly pay for a full-time, live-out nanny is $705; the average gross weekly pay for a full-time, live-in nanny is $652; and the average gross weekly pay for a full-time nanny with less than one year of prior experience is $521 per week. As a result of today’s settlement, au pairs will be free to bargain for fair-market wages.
The District of Colorado certified national classes that included roughly 100,000 au pair workers. After more than four years of hard-fought litigation, the case was scheduled to proceed to trial on February 25, 2019.
The Boies Schiller Flexner team was led by Peter Skinner, Matt Schwartz, Dawn Smalls, and Sean Rodriguez, and included Joshua Libling, Juan Valdivieso, Byron Pacheco, Laura Harris, Abigail Tudor, and Maria Guarisco. Colorado-based Towards Justice’s Alexander Hood and Andrew Schmidt initiated the lawsuit in November 2014 and served as co-counsel after Boies Schiller Flexner took over as lead counsel in June 2015.
The case is Beltran et al. v. InterExchange Inc. et al., case number 1:14-cv-03074, in the U.S. District Court for the District of Colorado.