Practical Considerations for Employing Private Household Caregivers
Last June, Bender’s California Labor & Employment Law Bulletin published an article I co-wrote with a colleague, Carmela Woll, regarding employing private household caregivers. The article contains a lot of useful information for employers and employees to consider when hiring or working as a caregiver, and is similar to other articles I’ve posted. I thought I’d pass along some of the useful information in the article.
Families often times come to us after they already hired one or more caregivers, with varying employment arrangements including straightforward arrangements such as payment for services or not so straightforward arrangements such as free room and board in exchange for services. These deals are often made with a handshake and the family members believe they are entering a fair agreement where the caregiver works for limited hours and gets a free place to live and some meals. Everyone sees it as a win-win situation, and may not appreciate the importance of a written agreement or having the caregiver record hours worked.
Well-intentioned, family members can open themselves up to significant personal liability with these handshake arrangements. California’s broad definition of “employer” puts individual family members at risk for a host of wage and hour issues. Failing to maintain accurate records, misunderstanding pay obligations, and unwritten agreements regarding meals and lodging can lead to costly mistakes. Most family members are not prepared to take on the responsibilities of an “employer,” and are not familiar with some of the unique aspects of employing a private household caregiver. Wage and hour claims can be filed up to four years after the wages were due and the liability can be staggering, particularly for a family trying to make ends meet and care for a loved one.
The purpose of this article is to identify some common “red flag” areas that you should know when you or your client wants to hire a private household caregiver.
Credit for Lodging and Meals
In California, Wage Order No. 15-2001 applies to “Household Occupations,” including most workers employed by the household owner. Although an employer may use meal and lodging as a credit against minimum wage, Wage Order No. 15-2001 limits the amount that can be used to offset the employer’s minimum wage obligation, and the amount of the credit depends on the type of lodging provided. Moreover, the credits may only be applied if the employer and employee enter into a voluntary written agreement before the work is performed. A handshake or verbal agreement won’t suffice. The written agreement must specify the amounts that will be deducted, and cannot be more than the amounts set forth in the Wage Order.
Domestic Workers Bill of Rights
Wage Order No. 15-2001 defines “personal attendant” as any person employed by a private householder or by any third-party employer recognized in the health care industry to work in a private household, to supervise, feed, or dress a child, or a person who by reason of advanced age, physical disability, or mental deficiency needs supervision. The status of personal attendant applies when no significant amount of work other than the foregoing is required. For these purposes, “no significant amount of work” means work other than the foregoing did not exceed 20 percent of the total weekly hours worked. Prior to January 2014, “personal attendants” were exempt from many of the typical wage and hour obligations under Wage Order No. 15, including overtime premium pay. However, if a caregiver spent more than 20% of his/her time doing non-personal attendant work, the employee did not qualify as a personal attendant and was entitled to overtime.
This changed in September 2013, when the Governor signed the Domestic Workers Bill of Rights (DWBR), which created California Labor Code sections 1450 to 1454, and extended overtime protection to “personal attendants.” Employers have always been required to pay at least minimum wage for all hours worked, but until adoption of the DWBR, “personal attendants” were not entitled to overtime regardless of the number of hours worked.
Under the DWBR, personal attendants are entitled to overtime compensation at one and one-half times the employees’ regular rate of pay for all hours worked in excess of 9 hours per day or 45 hours per week. The overtime obligation applies regardless of whether the worker is employed by the family or a third-party employment agency. The only exception is if the wages are paid through one of the listed state or county programs (i.e., In-Home Supportive Services, Lanterman Developmental Disabilities Services Act, California Early Intervention Services Act, etc.) or if the person providing the services is the “parent, grandparent, spouse, sibling, child, or legally adopted child of the domestic work employer.”
The DWBR Broadly Defines “Employer”
For purposes of the DWBR, “domestic work employer” is any person, including corporate officers or executives, who directly or indirectly, or through an agent or any other person, including through the services of a third-party employer, temporary service, or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of a domestic work employee. This definition provides a strong argument that a family member could be considered an employer whenever the family member directly or indirectly exercises control over the wages, hours and working conditions. In Guerrero v. Superior Court, the court found the County of Sonoma was the employer because the county was obligated to ensure the work was actually performed and because the County “held the purse” strings. This same logic could be used to sue a family member that hires, pays or otherwise directs the employment of a caregiver.
Since its inception, the Fair Labor Standards Act (FLSA) exempted certain domestic workers (i.e., persons employed about the home) from its provisions. In 1974, Congress amended the FLSA to include some, but not all, domestic workers. Companions, sometimes referred to as “elder sitters,” or “personal attendants,” were never covered by the FLSA. Recent revisions to FLSA regulations eliminated the companion exemption for any worker employed by a third-party employer. This means that if a family uses a third-party agency to provide companion care for a family member, the companion must be paid one and one-half times the employee’s regular rate of pay for any hours worked in excess of 40 hours per week. Companions employed directly by the family are still exempt from the FLSA’s overtime requirements. Although the overtime obligations do not apply to companions employed directly by the families, families are required to maintain accurate records of the hours worked and wages paid.
Suggestions for Minimizing Risk When Hiring Caregivers
From a liability standpoint, it is almost always safer for families to use a care agency rather than hire a caregiver directly. Reputable care agencies pay their employees according to state and federal law, and have required and recommended insurance coverage in case of problems. Using a care agency also eliminates the problem of finding replacement personnel if the caregiver does not work out or calls in sick. Using a care agency is more expensive than hiring directly, but care agencies are now required to conduct background checks, Tuberculosis tests, and provide minimum training.
Caregivers should only be hired directly when the family members, or the elderly person, are prepared to take on the responsibilities of an employer. That means setting up payroll, keeping track of hours worked, maintaining adequate workers’ compensation insurance and all the other responsibilities and liabilities that come with being an employer. If a care agency is prohibitively expensive, and the family has an aversion to taking on the responsibilities and liabilities of being an employer, a third party employer could be an option. There are a few third party employers catering to the homecare industry, but very few.
It’s best to avoid paying caregivers a daily, weekly or monthly salary. A salary only compensates the employee for the regular hours worked. If the personal attendant works more than 9 hours in a day or more than 45 hours in a week, the salary does not cover the overtime hours. Caregivers should be paid an hourly rate—and overtime should be paid when it is worked.
When the caregiver is required to remain on the premises, the caregiver must be paid for the time spent on the premises even if the caregiver is sleeping. In Mendiola v. CPS Security Solutions, Inc., the court confirmed that an employee must be paid for all hours worked, including when the employee is subject to the employer’s control—even if the employee is sleeping. Unless the employee is relieved of all duties and free to leave the premises, the employee is still subject to the employer’s control.
Have a written employment agreement. California Labor Code section 2810.5 requires the basic pay information, including the paid sick leave policy, to be in writing, signed by the employee. A written employment agreement should—at a minimum—confirm the at-will nature of the employment, the hourly rates to be paid, and the types of duties the employee is expected to perform.
When seeking to apply credit for lodging or meals towards payment of wages, be sure to have a written agreement with the caregiver before the work begins. Refer to Wage Order No. 15-2001 to determine the maximum amount of credit that may be applied.
Caregivers should not be hired as independent contractors. Different agencies use different tests to determine whether a worker should be classified as an employee or an employer. Regardless of which test applies, it will be difficult for any caregiver to qualify as an independent contractor. Aside from the tax implications, California Labor Code section 226.8 imposes a fine of between $5,000 and $25,000, for “willfully” misclassifying someone as an independent contractor.
To avoid more exposure to payment of overtime, do not let personal attendants perform medical procedures or clean the house and other housekeeping chores. A personal attendant is there to provide fellowship and protection, and to assist the care recipient with the activities of daily living. When a caregiver performs work that should be done by a licensed medical professional, or if the caregiver spends more than 20% of her/his time doing laundry and cleaning the house, the caregiver will not qualify as a personal attendant thus resulting in greater exposure to liability for payment of overtime wages.
About the Authors
Carmela Woll is the principal attorney at the Law Office of Carmela J. Woll, in Santa Cruz, California. She represents and advises both employees and employers in labor and employment law matters, with a focus on providing counsel to small businesses and non-profit corporations. Ms. Woll also conducts private and public sector workplace investigations.
Robert Nuddleman is the principal attorney at the Nuddleman Law Firm, P.C., representing individuals and companies in federal and state court and before various administrative agencies, focusing on overtime claims, breach of contract, trade secret protection, claims of sex, race, age, and pregnancy discrimination and/or harassment and accommodating persons with disabilities. Mr. Nuddleman is the current chairperson for the Alameda County Bar Association’s Labor & Employment Law Section and the former chairperson for the Santa Clara County Bar Association’s Labor & Employment Law Section.
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