In Conversation with Joshua Vaughn, Attorney at Littler Mendelson, to Bring His Insights on Wage and Hour Laws in Home Care

Wage and hour law compliance can be complex, and the price for failure to comply can be catastrophic – both monetarily as well as to the company’s reputation. Home Care employers therefore have ample incentive to ensure they are in compliance.

To shed some light on the wage and hour risks Home Care employers face, we interviewed a wage and hour class and collective action litigation attorney who regularly works with and defends home care industry companies to bring his perspective on wage and hour laws in home care.

Let us now delve into what he has to say about wage and hour laws in home care:

Question 1: What are the key wage and hour laws that employers in the home care industry need to be aware of and comply with?

On a federal level, the Fair Labor Standards Act is the federal law that applies to covered employers nationwide. It’s also important to remember that many states have their own laws regulating wages and hours.

This can become complicated, because as a general rule, federal wage and hour laws do not preempt state laws. Thus, an employer must comply with each applicable law. Where the state and federal law impose different requirements, the employer must adhere to the standard that is most beneficial to the employee. When an employee works in more than one state, things get even more complicated as the employer must also consider which state law governs the employment relationship with the worker.

Question 2: What are some of the most common wage and hour violations you have seen in the home care industry, and how can employers proactively prevent these issues?

There are 10 to 15 common wage and hour mistakes I’ve seen home care employers make, but a few of the costliest are:

• Changing rates of pay from week-to-week based on the hours worked by the employee;
• Failing to pay for all hours worked; and
• Incorrectly calculating the regular and overtime rates by failing to include non-discretionary bonuses.

As a starting point to proactively prevent these mistakes, employers should have proper documentation (e.g., application, offer letter, arbitration agreement, Handbook, etc). They should also consider having their policies and practices reviewed or audited periodically by knowledgeable counsel who is familiar with the Home Care industry. Auditing can take a lot of forms, but here at Littler, we’ve created a payroll compliance audit specifically designed for home care that looks for the most common wage and hour violations. If we identify any mistakes, we help our clients implement fixes and set up a good faith defense that can reduce total exposure by up to two-thirds.

With regards to each specific mistake, number 1 is relatively easy to avoid. Once a base rate has been assigned for a type of work, that rate should not change from week-to-week. It is ok, however, to give raises, to make one-time rate changes intending it to be permanent, and to pay different pay rates for different types of work.

For number 2, the most common mistake I see Home Care employer’s make is failing to pay for time spent traveling between worksites in the say workday. So, for example, when a caregiver travels from consumer A to consumer B or from the office to a client’s house during the same continuous workday, they must be paid for travel time. Employers can also get into trouble if they fail to properly pay for work performed during on-call periods or for time worked outside of scheduled hours.

To proactively address number 3, employers can simply identify the different ways they pay non-exempt (e.g., shift differentials, on-call pay, performance bonuses, retention bonuses, sign-on bonuses, etc), and ensure they are correctly profiled in their payroll system as includable or excludable from the regular rate calculation.

Question 3: How do you advise home care employers to properly classify workers as exempt or non-exempt under the Fair Labor Standards Act (FLSA)?

First, it is important to remember that the Fair Labor Standards Act is just the first hurdle. Some states also have their own exemption laws/test.

Second, the answer to this question differs depending on (1) whether we’re talking about caregivers or office team members; and (2) whether caregivers are employed by the individual receiving care or by a third-party agency. For caregivers performing traditional non-clinical caregiver duties and who are employed by an individual care recipient, they can still be classified as exempt under the FLSA. For caregivers employed by third-party agencies, however, the FLSA regulations say those workers do not qualify as exempt and need to be treated as non-exempt. For office team members, the answer under the FLSA depends on whether the worker satisfies the salary level, salary basis, and duties tests for one or more exemptions.

Exempt classifications can also be very difficult because it’s so fact-specific. For example, a worker working in a Care Coordinator or Human Resources position in one company may meet the exemption tests based on their job duties and salary in that company. But a similarly titled worker in another company may have completely different job duties and responsibilities that would make their role non-exempt. So my recommendation, especially right now while the U.S. Department of Labor’s July 1, 2024 and January 1, 2025 salary level increases are in the picture, is to (1) create a list of exempt workers and work with experienced counsel to audit the classifications of those on your list; and (2) monitor the litigating challenging the July 1, 2024 and January 1, 2025 salary level increases.

Question 4: Based on your experience defending home care employers, what are the most effective strategies for responding to and resolving wage and hour lawsuits or audits?

The most effective strategy and actions an agency can take start before the litigation or the investigation even starts. And those are some of the things we’ve already discussed. These are easier situations to defend because we’ve helped the company set up compliant policies and practices, trained employees on those policies and practices, and consistently enforced them with the workforce.

Once a lawsuit or an investigation has begun, my recommendation is to dig in quickly and work with a knowledgeable counsel who can assess whether past practices reflect violations.

To the extent we believe the company’s practices are lawful and defensible, presenting the records and information necessary to in a simple and direct way can often end the lawsuit or audit. In Home Care, often overlooked records include GPS data, login/logoff times, time acknowledgements, social media activity, other online footprints, and declarations from other employees. We have successfully presented these records, and helped our clients save tens of millions of dollars in inappropriately alleged or assessed violations.

To the extent violations are identified, we recommend promptly implementing fixes to eliminate further exposure.

In Conclusion

Wage and hour violations are one of the most significant and expensive problems facing home care industry employers.

To prevent common mistakes, employers should maintain the required wage and hour records, use well-drafted employment documents, conduct periodic audits, train their workforce to ensure all understand the company’s policies and expectations, and seek knowledgeable and experienced legal counsel when necessary.

By proactively addressing their wage and hour compliance, home care employers can avoid costly violations and create a positive work environment for caregivers.