How to Correctly Hire Caregivers
Dangers of Hiring Caregivers
Many families hire caregivers to provide in-home assistance to their elderly or disabled relatives. While hiring a caregiver can ease burdens, it also comes with risk because of the extent to which California law protects employees, including in-home caregivers, and that the failure to follow the law creates substantial liabilities.
These risks often become problems when a caregiver takes advantage of innocent mistakes by well-intentioned family members, friends and trustees. Most people don’t realize that by hiring caregivers they are opening themselves to personal liability for a variety of claims.
There are law firms dedicated to representing caregivers in these cases but, unfortunately, there are few law firms familiar with representing the families working with caregivers. Websites that connect you with possible caregivers do not advise you of the potential exposures and risks, let alone how to avoid violating the law.
I help families, trustees, conservators, attorneys and others navigate the oftentimes confusing process of hiring and employing household workers including caregivers. I educate professional fiduciaries and others regarding how to hire and employ caregivers correctly and affordably. Whether you are considering hiring a caregiver, have already hired a caregiver or have received a demand letter from a law firm representing the caregiver for allegedly unpaid overtime, I am available to help you.
Essential Dos and Don’ts When Hiring a Caregiver
To educate as many people as possible, I’ve put together the following list of things to do and not do when hiring and working with caregivers:
Use a reputable care agency
Not all agencies are created equal. If the care agency uses “independent contractors,” don’t use them. If the care agency is charging an artificially low fee for the level of care needed, don’t use them. Talk to neighbors, friends, relatives and others to find out agencies they recommend. Using a reputable care agency significantly limits your personal risk.
Understand that Domestic Referral Agencies are not employers
Many families don’t realize that a “referral agency” is not the employer. The referral agency merely provides you a list of persons that may qualify to care for your loved one. Do not be lulled into thinking hiring from a referral agency absolves you of liability.
Always pay by the hour and never pay a daily rate, shift rate or other salary
California law says a salary does not compensate the employee for overtime hours. This means if you have an employee working 24-hours a day and you pay the worker a “daily rate” or a “salary,” then you have not compensated the employee for the overtime hours. This creates enormous liability because the law also says the employee’s regular rate of pay for overtime purposes is the salary divided by the non-overtime hours worked. For an example of how expensive this mistake can be, read my article on Why You Should Never Pay a Caregiver a Salary.
Keep an Accurate Record of Hours Worked
Even if the employee typically works the same schedule every day or every week, having the employee accurately report the start and stop times every day creates a clear record of the hours worked. In some cases, when the employer fails to keep an accurate record of hours worked, the employee’s testimony alone is sufficient to establish the hours worked. The burden then shifts to the employer to prove the employee’s testimony is inaccurate. Keeping contemporaneous records of the actual hours worked ensures no one can misreport the hours.
Pay Overtime
Most caregivers are entitled to overtime when they work more than 9 hours in a day and/or more than 45 hours in a week. There can be exceptions, but those exceptions usually mean the worker gets paid more overtime and double time. Also, caregivers employed by agencies are entitled to overtime after 40 hours in a week. Overtime must be paid at 1.5x the employee’s regular rate of pay.
Keep a Record of Wages Paid
Some caregivers insist on being paid cash. This creates several problems. It deprives you of the ability to prove you paid the wages and it likely means the employee is not paying taxes on the wages. If an employee insists on being paid “under the table,” walk away. An employee that is willing to defraud the government may also be willing to engage in other fraudulent behavior. The record of wages should identify the hours worked, the rate of pay (preferably distinguishing between regular and overtime hours), the total wages paid and any deductions (i.e., taxes, health insurance premiums, etc.).
Do Not Hire Caregivers as Independent Contractors
It would be very difficult for a caregiver to be an independent contractor under state law. Incorrectly assuming a worker is an independent contractor leaves the family vulnerable to penalties for failing to withhold and pay taxes required by state and federal law.
Pay the Caregiver for all Hours Worked
California law defines “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work whether or not required to do so.” This includes time the caregiver is sleeping, reading books, watching TV, surfing the internet or talking with friends and family. If the employee is required to be on the premises, you must pay the employee.
Be Aware of Limitations on Deductions
There are times when an employer can offset their minimum wage obligations by deducting for room and board. The applicable Wage Order sets limits on the maximum amounts an employer can deduct for room and board, and it is far below the reasonable market value for room and board. Any deductions must be explicitly written out in an agreement between the employee and the employer and reflected on the pay stub.
Put it in Writing
The Department of Labor created some sample agreements for in-home care, and there are likely a variety of versions that can be found on the internet. I am not a fan of either option as some of those agreements hurt, rather than help, the situation. Do not be penny-wise and a pound foolish. Meeting with an attorney to help write out the terms is a relatively inexpensive way to avoid bigger problems in the long run.
a. Identify the employer and the employee;
b. Describe the basic job duties;
c. State the hourly rate of pay;
d. Identify how the relationship can end (i.e., at-will clause).
Get Professional Assistance for Legal Compliance
Whether you have a formal contract drafted by an attorney or you write out the agreement on a scrap of paper, it is important to clearly communicate and agree on the basic terms of employment. The minimum terms should:
- Identify the employer and the employee;
- Describe the basic job duties;
- State the hourly rate of pay;
- Identify how the relationship can end (i.e., at-will clause).
Keep in mind, you can be personally liable if something goes wrong with how the employee is paid, even if you are not the care recipient. The definition of “employer” under the Domestic Workers Bill of Rights is very broad. This means your savings, your car, your house could be at risk if you fail to follow the law. And ignorance of the law is no excuse.
You are going to pay the caregiver good money to take care of your loved ones. If you don’t take appropriate steps now, you may end up paying the caregiver and their attorneys four or five times that amount to resolve a wage claim. Even if you believe you are going to hire someone you can trust, there is no reason to do things incorrectly. Making small adjustments at the beginning of the relationship can help ensure you do things correctly and avoid potentially costly litigation.
If you have questions about hiring, employing or paying household employees or caregivers, contact the Nuddleman Law Firm. We help families, agencies and others hiring workers in and about the home.