The U.S. Department of Labor has updated guidance that its field staff will use in investigating home care registries to determine whether they are directly employing workers.
It is a “longstanding position” of the DOL that the typical home care registry does not directly employ caregivers, according to the July 13 bulletin. However, registries become direct employers of caregivers—subject to Fair Labor Standards Act (FLSA) requirements—if they engage in certain common business practices, the memo states.
Therefore, to aid in FLSA enforcement, the Labor Department memo describes a number of business practices which could signal that a home care registry is in fact directly employing caregivers.
In the usual business model described in the bulletin, a home care registry simply maintains a list of caregivers and connects them with potential clients, essentially acting as a disinterested matchmaker. The client would have the option to hire a registry caregiver or not, would negotiate pay rates and handle day-to-day supervision and management issues, while also maintaining the power to fire the worker.
A registry might also typically provide administrative services for a fee, such as keeping records or invoices and handling certain payroll responsibilities. Offering such services would not necessarily make the registry a direct employer of the caregiver.
But registries sometimes go much further in how they screen caregivers, match them up with clients, and manage the caregiver on an ongoing basis—and in these situations, the FLSA might indeed come into play, the bulletin emphasizes.
One example involves caregiver screening practices. Conducting a general background check on caregivers in order to allow them onto a registry is a common practice and does not “by itself” indicate that the registry is a direct employer, according to the memo.
“If a registry’s background screening evaluates additional subjective criteria, however, it may indicate that the registry (instead of the client) is selecting the caregiver,” the document states. “This may occur, for example, if a registry interviews a prospective caregiver to evaluate subjective factors that the registry values (such as whether the registry finds the caregiver likeable).”
Red flags would also be raised by registry practices such as:
—Conducing caregiver performance evaluations or supervision visits in the home
—Preventing caregivers from working with other registries
—Designating a set wage range for caregiver pay
—Charging clients ongoing fees based on the number of hours that a caregiver works
—Directly paying a caregiver from its own funds
There are nuances, though. For instance, a registry is probably in the clear if it simply provides information on market rate wages in a given area to clients and caregivers. Furthermore, the “totality of circumstances” must be considered in each individual case to determine the nature of the employment relationship between a registry and caregiver, the bulletin states.
The bulletin is “useful guidance” for home care registries, but it “misses the mark” in one regard, according to attorney Richard Reibstein, who specializes in labor and employment law as a partner in the New York office of Locke Lord LLP.
“The bulletin states that a registry’s decision to terminate a caregiver ‘for failing to comply with the requirements and standards established by the industry, the client, or the law’ indicates that the registry is an employer of the caregiver,” Reibstein noted in a written analysis of the bulletin, provided to Home Health Care News. “This view is contrary to many court decisions under the FLSA involving a variety of industries.”
If a caregiver mentally or physically abuses a client, for example, a registry should be free to terminate the caregiver without such an action indicating an employment relationship, he wrote.
Reibstein urges the DOL to correct this aspect of the bulletin.
Additionally, maintaining proper documentation of an independent contractor relationship is crucial for registries, and this issue is also not addressed in the bulletin, he noted.
Written by Tim Mullaney
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