Home Health & Hospice Week

Now’s the time to make sure you are operating on the right side of labor laws when it comes to paying your workers overtime.

On May 5, the Department of Labor announced that it has withdrawn the Trump-era “‘Independent Contractor Rule,’ to maintain workers’ rights to the minimum wage and overtime compensation protections of the Fair Labor Standards Act,” according to a DOL release.

“By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” DOL secretary Marty Walsh said in the release. “Workers lose important wage and related protections when employers misclassify them as independent contractors. We remain committed to ensuring that employees are recognized clearly and correctly when they are, in fact, employees so that they receive the protections the Fair Labor Standards Act provides.”

In March, the DOL postponed the effective date of the rule and took comments on its complete withdrawal until April 12, note attorneys with law firm Husch Blackwell in online analysis. That month, the U.S. Senate also confirmed the former two-term Boston mayor as DOL Secretary in a 68-29 Senate vote.

The move is generally viewed as targeting large-scale gig economy employers such as Uber, DoorDash, etc., but will also sweep up home care providers.

Employment lawyers expect the DOL to aggressively go after companies that misclassify workers. "I anticipate that the Biden administration will create challenges for both the traditional 1099 registry models and the virtual market place care delivery models,” attorney Angelo Spinola with law firm Polsinelli in Atlanta tells AAPC. “It is clear that the Biden administration holds the same view on 1099 models as the DOL did during the Obama administration, which forecasts a challenging road ahead for the 1099 models.”

The AFL-CIO applauds the withdrawal. “Employers have consistently used misclassification as a tool for abdicating their responsibilities, with workers paying the price,” said the labor union on Twitter. “We should be cracking down on this practice, not making it easier.”

Do this: With no new guidance replacing the pulled rule, “employers will have to rely on the DOL’s previous guidance, such as that contained in Fact Sheet 13, when classifying workers as independent contractors or employees,” noted attorney Snigdha Mamillapalli with law firm Pullman & Comley ahead of the official withdrawal. “Employers who misclassify employees may be liable for significant damages under both federal and state law and should review the law in their respective jurisdictions to ensure accurate classification,” Mamillapalli warned.

Outcome: “It appears that issues that were once the subject of heated litigation in FLSA overtime actions may be put to rest through administrative rule-making,” attorneys Lindsey Camp, Peter Hall, Daniel Buchholz, and Todd Wozniak with Holland & Knight observe in online analysis.

“The big concern with this change is whether the DOL will issue a new rule now that mirrors the California ABC rule, which basically negates any possible independent contractor status,” attorney Liz Zink-Pearson with Pearson & Bernard in Edgewood, Kentucky tells AAPC.

Home health providers don’t have to wait for a crackdown in this area. Several cases in the last few months have emphasized the importance of this often confusing point of law:

• In Tennessee. Fifty workers misclassified as independent contractors by Oliver Springs-based home health care provider Servant’s Quest received $358,675 in back wages to resolve overtime violations, the DOL said in an April 20 release. “The misclassification of employees as independent contractors cheats workers out of wages and benefits they are entitled to under the law, hurts other employers who play by the rules, and subsequently hurts our economy,” said Acting Wage and Hour Division District Director Kenneth Stripling in the release.

More ahead: “The Wage and Hour Division is pursuing corrective action vigorously in those situations when workers are, in fact, employees to ensure that they receive every penny of their hard-earned wages,” Stripling added.

• In Pennsylvania. In March, the DOL announced that a Pennsylvania federal court issued a consent order requiring Christian Home Healthcare Corp. in Pittsburgh and its owner, India Christian, to pay more than $1.6 million in back wages and damages to 546 home health aides. “The Pittsburgh home health care agency misclassified the aides as independent contractors and failed to pay required overtime wages in violation of the Fair Labor Standards Act,” the DOL noted in a release. The court also ordered payment of $20,000 in civil money penalties.

Work weeks for some employees were as long as 90 hours, reports The Pittsburgh Post-Gazette.

The $1.6 million order was based on more than $812,000 in unpaid wages. “We encourage other employers in this industry to evaluate their own pay practices to ensure they comply with the law, and avoid violations like these,” said DOL WHD principal deputy administrator Jessica Looman in the release.

• Also in Pennsylvania. In March, the DOL recovered $2.1 million in back wages for 456 workers employed by Good Family Support Services Inc., a nonprofit home care provider in Philadelphia. “Home health care workers provide essential services and have remained on the front lines, taking care of our loved ones and keeping us moving forward,” said Senior Counselor to the Secretary M. Patricia Smith in a release.

“This case demonstrates our commitment to protecting and respecting vulnerable workers, in home health care and all low-wage industries,” Looman said in the release.