Home Care Becomes No. 1 Target for Labor Lawsuits

The home health industry has been hammered with new requirements over the last few years, particularly when it comes to labor laws. And even as providers scramble to comply with new regulations, the number of lawsuits against them has soared.

Between new overtime requirements, higher wage rates and salary exemption changes, the home health industry has found itself under more scrutiny to comply with the Federal Labor Standards Act (FLSA) than ever before.

Recently, the Supreme Court decided not to hear a case challenging minimum wage and overtime protections that were extended to home health care and other domestic workers from a Department of Labor rule in 2013. The decision settled the legal battle over these protections, which took effect in October 2015 despite major backlash from the home health industry.

In addition, a final rule was issued in May, 2016 that puts additional pressures on employers by increasing the salary requirements for overtime exemptions. Beginning December 1, 2016, salaried employees that earn less than $47,476 a year, or $913 per week, will be eligible for overtime wages—1.5 times an employee’s regular rate.

Since these new regulations have come into effect or been announced, the number of lawsuits alleging wage and salary violations targeting home health care has skyrocketed.

“Home care is now the No. 1 target for FLSA and collective action lawsuits,” said Angelo Spinola, a lawyer with employment benefits specialty firm Littler, during a webinar presented by the National Association for Home Care & Hospice (NAHC).

In federal court, nearly 200 lawsuits alleging violations of the FLSA have been filed in the last eight months, according to Spinola. On a state-by-state basis, the number of cases tops 600 for wage hour lawsuits. A large portion of these cases stem from compensation concerns over sleeping time, meal time and/or travel time, according to Littler.

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Safeguarding from Suits

In an environment of intensely close scrutiny on this issue, home health companies need to be proactive, rather than reactive to protect themselves of non-compliance, says Spinola. At this point, it may be safer to assume that a company will be slapped with a wage dispute or even a lawsuit, and it’s better to be prepared.

“Prepare and assume it will happen to you,” Spinola warned. “If the DOL does come in, engage your council immediately. Do not wait.”

With new requirements, shifting away from certain payment models for employees can likely help ensure compliance, and there are some models that may make it easier for home health agencies to meet new compliance requirements than others, according to Spinola.

While the home health industry has traditionally paid home care aides on a pay-per-visit basis, paying employees this way can actually leave a company more vulnerable to FLSA violations. From a litigation standpoint, pay-per-visit is more likely to end in a lawsuit, according to Spinola.

“Pay-per-visit is an exceedingly difficult compensation practice to utilize effectively,” Spinola said. “If you are using pay-per-visit for exempt employees, I strongly urge you to consider some alternative. It’s a practice that is being litigated significantly.”

Switching to a salary basis that takes into account things like travel and meal times is more likely to be successful and fully compliant.

“The common practice is probably pay-per-visit, but it is rapidly moving to this salary-plus model,” Spinola said. “That means you are paying some form of minimum salary irrespective to the number of visits performed. [Employees] are also entitled to an incentive or bonus if they perform additional visits. That program works well and has been upheld with the Department of Labor and the courts.”

Written by Amy Baxter



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