Why There are More Payroll Lawsuits in Home Care

Home health care providers have been hit with several new regulations over the past few years, increasing operational challenges. And with more regulations on the books, some providers are finding themselves on the hook for not being compliant with the latest pay roll practices.

Since 2015, the Department of Labor (DOL) has mandated that in-home care workers are eligible for overtime and minimum wage protections, bringing forth a wave of compliance issues coupled with rising wages around the country.

“There is an extreme spike in litigation,” Angelo Spinola, shareholder at law firm Littler Mendelson, told Home Health Care News. “We’re probably getting really close to 1,500 cases filed since October 2015, in just over two years. [We’re seeing] more sophisticated claims that state [caregivers] are not being paid overtime.”


In addition, as the rules become increasingly complex for providers, more attorneys are jumping into the field.

“We’re seeing a double-whammy,” Spinola said. “More attorneys are focused on you and so is the government.”

Top issues


Contributing to the complexity of paying care staff correctly is the nature of in-home care, which requires workers to drive from place to place, provide care at a client or patient’s home and keep track of their specific hours for travel, meal times and work.

“We’re in a situation where employees are difficult to manage and to know exactly what they are doing,” Spinola said. “The employer now has responsibility to ensure they’re tracking meals, and when workers are not working when they are not supposed to be working. This stuff is very hard to do remotely. It’s very, very challenging for the industry as a whole.”

As the challenges mount, so do the lawsuits. Fortunately, one overtime law that was recently delayed may finally be defeated soon, according to Spinola. The white collar overtime exemption, which exempts some employees from overtime pay based on their salary under the Fair Labor Standards Act (FLSA), was originally scheduled to increase the salary threshold at the end of 2016.

The change would have vastly boosted the number of workers eligible for overtime by moving the salary cut off to $47,476 annually, or $913 per week. A U.S. District Court judge paused the impending rule before it went into effect December 1, 2016. Since then, the Labor Department in the Trump era has sought to lower that threshold and the Obama-era rule “could be officially dead” soon, according to Spinola.

However, the overtime salary cap could still be raised from its current level of $23,660 annually, or $455 per week, to a salary in the low $30,000s, Spinola said. The change would still increase the number of workers eligible for overtime, but reduce that figure by millions.

“This is the Trump DOL,” he said. “We’re probably looking at $31k, $33k, or even $35k. That’s the expectation.”

Multiple jurisdictions

Even with some good news for providers dealing with rising wage pressures, those operating in multiple jurisdictions are still facing tough times.

“If you’re operating in California and you’re across multiple cities, the minimum wage changes depending on what city the individual caregiver is working in,” Spinola said. “The caregiver will move around depending on where the client is—that might be in San Francisco then to San Jose. It’s really challenging to keep up with all of it and understand the regulations across multiple jurisdictions.”

As such, pay-per-visit models in home health and home care are quickly becoming a thing of the past. Instead, providers looking to fully comply with new standards are looking at adapting salary-plus models, according to Spinola, which consist of a base salary and added bonuses for productivity.

“You don’t have to worry about uniqueness [of visits] or time racking, whether there is a time element, and bonus can paid based however you want—visits, time—but only for salaried employees,” he said.

Live-in care

Another major complication is the live-in caregiver, as some states have seen some disagreements in how to pay for care shifts that are 24 hours or longer.

In California, for example, caregivers must be paid for all hours. In New York, a recent judge ruled in a lawsuit that caregivers should also be paid for all 24 hours of an overnight, or live-in shift, including back pay. However, since then, the state’s Department of Labor put forth an emergency rule to keep the “13-hour rule” in place, which mandates caregivers are paid for 13 hours of care and not the hours they spend sleeping and eating.

Going forward, other states may see similar issues arise, according to Spinola.

“What you can expect to see is states, where they have their own wage and hourly laws, you can expect to see plaintiffs at least exploring this kind of theory,” Spinola said of litigation over 24-hour shifts. “The  question is, does the state accept the standard dedicating for sleep and meal times?”

Written by Amy Baxter

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