A home care provider’s pay practices could mean the difference between a company with a pristine reputation and one facing crushing lawsuits, penalties and more.

That’s why it’s crucial for home care leaders to understand overtime calculation, on-call rules and travel time, according to a webinar hosted by law firm Polsinelli on Tuesday.

One of the common mistakes that home care companies make regarding pay practices is failing to recognize that the regular rate is the applicable rate. Regular rate includes all remuneration, according to Angelo Spinola, home health, home care and hospice chair at Polsinelli.

“Not the hourly rate — it’s the regular rate that must be paid,” he said during the webinar. “The minimum wage under federal law is $7.25 presently, and state minimum wages are often higher than that, and sometimes you have cities that have higher minimum wages than the states do. The rule of thumb is that wherever the individual is working, that’s where the minimum wage is in effect.”

Spinola also noted that in cases where the state law is more favorable to the employee, state law trumps federal law. For example, the federal minimum wage may be $7.25, but if a state’s minimum wage is $15, employers must pay the latter wage or they’re violating the law.

Another common pay practice error is incorrectly calculating overtime.

“There’s only one way to really calculate overtime correctly, and that is the weighted average,” Spinola said.

Providers that decide to calculate overtime using the rate-in-effect method instead of weighted average are often saddled with additional administrative burdens.

“It’s really difficult administratively,” Spinola said. “On top of that, the [U.S. Department of Labor] (DOL), even though there’s an argument for it, doesn’t accept it. If you had a DOL audit, they’re going to make you recalculate overtime pay on the weighted average, even in a state where you were technically allowed to use a rate-in-effect.”

Spinola also warned providers against adopting a pay-per-visit as a compensation method for non-exempt employees.

“What’s the point of paying by the visit, when you’re just reconverting it into an hourly rate anyway?” he said.

Pay-per-visit is typically seen in home health settings with exempt employees, such as registered nurses, physical therapists, occupational therapists and medical social workers.

Providers may also run into legal hot water if they don’t have a strong understanding of on-call rules.

Oftentimes, employers make the mistake of putting non-exempt staff members on call.

“All you’ve done is increase the cost of that employee, if [they] ever [sue] you, or the DOL comes and looks at that,” Spinola said.

Providers should make sure they are consistently logging hours and recording on-call hours as well.

Travel time is another area that can be a pain point for providers; it can often be confusing for home care leaders, according to Spinola.

“The general rule of thumb on travel time … is typically, when somebody is leaving from their home to the first workplace, as long as they haven’t performed any work at home, then that commute time, if it’s an ordinary commute, not excessive, is not compensable,” he said. “Likewise, the travel from the last work site, whether that’s a client home or your office, back to the individual’s home is not compensable time, as long as that person doesn’t perform any work once they get home.”

Once a staff member arrives at the work site, all other travel that occurs during the same work shift on the same day is compensable.

Spinola advises home care leaders to have employees record their travel time, but acknowledges that this can be difficult.

He also discourages home care leaders from paying a stipend for travel as a substitute.

“If the stipend isn’t high enough to cover all the travel, then you still have liability, and why take the risk of that?” he said. “If you’re trying to estimate what the travel time is anyway, then just pay the travel time. Don’t do anything exotic. That’s going to get you sued.”