Home Health & Hospice Week

Right when many home care agencies are reevaluating their compensation structures due to the pandemic and other factors, the Department of Labor has given them more flexibility on reimbursement visiting staff for mileage.

“The [Internal Revenue Service] business standard mileage rate is optional, not required,” the DOL Wage and Hour Division says in opinion letter FLSA2020-12 issued Aug. 31. “The plain language of the regulations allows employers to reasonably approximate an employee’s expenses through methods other than the IRS business standard mileage rate.”

The DOL WHD didn’t endorse specific alternative methods, but did note that the Fair Labor Standards Act’s “implementing regulations are flexible on this issue, requiring only that a method reasonably approximate employees’ actual expenses.”

The opinion letter “provides employers with substantial latitude when it comes to reimbursing employees who use their personal vehicles in connection with their jobs,” say attorneys Norman Leon, Joseph Piesco, and Garrett Kennedy with law firm DLA Piper. “In so doing, the WHD made clear that employers can utilize an array of calculations to determine appropriate reimbursements, rejecting entirely the notion that reimbursing employees at the IRS Standard Mileage Rate is the only method for calculating an employee’s vehicle expenses.”

The letter “affirms that employers have substantially greater leeway in determining a reasonable vehicle reimbursement rate, while also reducing the scope of potentially reimbursable expenses,” Leon, Piesco, and Kennedy note.

The letter comes amid an onslaught of litigation in the food delivery business sector, note attorneys Kathleen Caminiti, J. Hagood Tighe, and Sarah Wieselthier with law firm Fisher Phillips. But the letter also applies to home care providers’ visiting staff too.

“The DOL has answered a pivotal question facing employers,” Caminiti, Tighe, and Wieselthier say in online analysis. “While the Opinion Letter is not binding on courts or arbitrators, it is highly persuasive authority that will likely be relied upon by judges presented with mileage reimbursement litigation.”

When coming up with their own reasonable reim­bursement methodologies, employers won’t have to include fixed expenses, the DOL letter indicates. “It is likely that fixed expenses — such as lease payments, insurance (to the extent an employer does not require an insurance rider or greater coverage than state law), sales and use taxes, vehicle registration and license fees, and driver’s license fees — could be excluded from the expense calculation,” offer attorneys Tammy McCutchen, William Vail, and Rosa Trembour with law firm Littler in online analysis.

“Because mileage is often a company’s largest expense behind labor costs, this opinion letter could be tremendously helpful,” point out Vail and Littler attorney Angelo Spinola in analysis prepared for the National Association for Home Care & Hospice.

DOL Letters Address Salary+Pay, Fluctuating Workweek

Plus: The DOL also issued two other opinion letters on Aug. 31 that may affect home care providers. In one, FLSA2020-13, the DOL “noted that for employees guaranteed to receive at least the minimum required salary ($684) for each workweek on a salary basis, the employer may pay the employee additional compensation,” Vail and Spinola say. “This is great support for employers who use a salary basis pay method. Under this method, exempt field employees (usually registered nurses and physical/occupational therapists) earn a fixed weekly amount plus additional compensation for completing visits above their target goal.”

In the other, FLSA2020-14, the DOL WHD “clarified that employers may use the fluctuating workweek method of overtime compensation even when employees’ hours fluctuate above but not below 40 hours per workweek,” explain attorneys Jill Ripke and Aimee Raimer with law firm Perkins Cole. “WHD noted that it recently reaffirmed and solidified this interpretation in the preamble to the fluctuating workweek final rule, which was published on June 8, 2020, and took effect on August 7, 2020.”

“Some home care providers find this method useful for their live-in and extended shift workers,” Vail and Spinola point out.

Advice: “Employers considering the FWW method of overtime calculation must weigh the costs associated with higher salaries and paid absences over the corresponding calculation using an hourly rate alone,” advises attorney Laura Lawless with law firm Squire Patton Boggs. “But for those employers whose workers routinely work significant overtime with regular variability in hours, the opinion letter provides a welcome option for labor cost management,” Lawless notes.

FLSA2020-14 “also reiterates the limited instances in which deductions from employees’ pay for absences are proper,” Ripke and Raimer note in online analysis.

Caution: While they don’t have to be below 40 hours, the WHD letter states that the rule does require that “the employee’s hours fluctuate from week to week,” Fisher Phillips highlights. “We are left to continue to wonder how much the hours must fluctuate in order to take advantage of this method. Much like the final regulations published in June, the Opinion Letter did not answer this question.”

Note: Links to the Aug. 31 opinion letters are at www.dol.gov/agencies/whd/opinion-letters/search — scroll down.