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Au Pairs Can Bargain for Pay After $65.5 Million Settlement (1)

Jan. 9, 2019, 9:10 PM

More than a dozen companies that serve as sponsors for the U.S. Au Pair program agreed to pay $65.5 million to settle a lawsuit in which they were accused of colluding to suppress wages and discourage families from paying more.

The settlement will give au pairs the freedom to bargain for fair-market wages, lawyers for the plaintiffs said in a statement Wednesday. The sponsors also agreed to adequately inform future au pairs about their rights under U.S. laws.

“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, a Denver-based nonprofit that represented the foreign workers.

The Alliance for International Exchange, a trade group for cultural exchange companies based in Washington, didn’t immediately respond to a request for comment on the settlement.

The au pairs claimed in the lawsuit that the agencies violated the 1890 Sherman Antitrust Act, telling them they would get the exact same rate regardless of whom they worked for and falsely claiming the government set their maximum weekly wage at $195.75.

In court filings, the sponsors denied any wrongdoing, saying the stipend amount is set by the U.S. State Department.

One agency, InterExchange Inc., wrote that “the central element of the au pair program is not work, but rather the cultural knowledge and experience gained” by the au pair.

A trial was scheduled to start Feb. 25 in Denver.

Under the au pair program, foreign workers under the age of 27 can enter the U.S. on a J-1 visa to provide live-in child care to families. The visas were created in the 1960s to help encourage “cultural exchange” between the U.S. and other countries. They have been controversial for decades, with critics saying they promote underpaid and underregulated guest-worker labor, and President Donald Trump had vowed during his campaign to replace them with a jobs program for urban youth.

The plaintiffs said nearly all host families reported paying their au pairs $195.75 a week, while the average pay for a full-time nanny ranges from $521 to $705 a week. The settlement is subject to court approval.

The case is Beltran v. InterExchange Inc., Colo. Dist. Ct., No. 14-cv-3074, notice of settlement 1/9/19.

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To contact the reporter on this story: Chris Dolmetsch in Federal Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net Joe Schneider, Peter Jeffrey