Grandma is getting on a bit in years, and now needs some additional help. She can get around with her walker, but she can’t drive and sometimes she needs help getting up from the chair, or using the restroom, or getting meals ready. The only family members living nearby also have day jobs, but we want someone there throughout the day in case she falls down or needs some extra assistance. So, the family has decided to bring in someone from outside to provide that extra care.

We’re law abiding citizens and want to do things right. We want to make sure there is appropriate insurance coverage in case of injury, that the person caring for grandma is qualified and doesn’t have a history of abusing elders, and that the person is paid according to the law. We don’t want to hire the person directly because grandma is in no place to act as an employer, and the family members cannot take on that responsibility. With the increased fines and enforcement against employers who mistakenly misclassify employees as independent contractors, we just don’t want to take that risk.

So we’ve decided to use an outside agency to find, place and supervise the right employee, but we also want to make sure the worker is getting paid correctly. Unfortunately, it's not clear whether the employee is entitled to overtime premiums.

Most employees working in California are entitled to overtime pay if they work more than 8 hours in a day or 40 hours in a week. Although many people are familiar with the “big three" exemptions (administrative, executive, and professional), many of the lesser-known exemptions contained in the wage orders receive little or no attention by the courts. One such exemption is the personal attendant.

Two wage orders contain exemptions for persons performing services as “personal attendants" - Wage Orders 5 and 15 - but they are slightly different. In order to qualify as an exempt personal attendant under Wage Order 5, the employer must be a non-profit organization. There is no such restriction under Wage Order 15.

Wage Order 15 applies to workers employed in “household occupations," whereas Wage Order 5 applies to workers employed in the “public housekeeping industry [1]." It is important to know which wage order applies because the wage orders regulate when and whether an employee is entitled to overtime and which employees are exempt from those regulations. Remember, personal attendants employed under Wage Order 5 are entitled to overtime unless the employer is a non-profit organization.

There is some confusion as to whether Wage Order 15 applies when the employer is someone other than the household owner. The confusion stems from contradictory definitions within the wage order. Wage Order 15 defines “household occupations" as:

all services related to the care of persons or maintenance of a private household or its premises by an employee of a private householder. Wage Order 15-2001, subsection 2.(I) [emphasis added].

Under this definition it appears as though the wage order only applies if the person is “an employee of a private householder." Does that mean that Wage Order 15 does not cover a personal attendant employed by a third party employer? Not necessarily.

The very next definition in Wage Order 15 defines a “personal attendant" as:

any person employed by a private householder or by any third party employer recognized in the health care industry to work in a private household, to supervise, feed, or dress a child or person who by reason of advanced age, physical disability, or mental deficiency needs supervision. The status of “personal attendant" shall apply when no significant amount of work other than the foregoing is required. Wage Order 15-2001, subsection 2.(J) [emphasis added].

Under this definition, a personal attendant can be employed by a “private householder" OR by “any third party employer recognized in the health care industry to work in a private household."

Put aside, for the moment, the fact that the wage order does not indicate which third party employers are “recognized" in the health care industry, or even what the “health care industry [2]" means. If a third party employer provides personal attendants to work in private households, would Wage Order 15 apply even though the definition of “household occupations" only applies to employees of a private householder?

I presented this question to several hearing officers at the local Department of Labor Standards Enforcement (a.k.a., Labor Commissioner), but none of them knew the answer. I sent a letter to the Labor Commissioner herself asking for clarification, but received no response. There was an Interpretive Bulletin from 1986 that said personal attendants working in private households are exempt even if they are employed by a third party agency, but those Interpretive Bulletins are invalid. See section 1.1.6.3 of the DLSE Manual.

The answer to the question “Which wage order applies?" is very important, because if Wage Order 15 does not apply, then the agency paying grandma’s little helper must pay the employee overtime when she works more than 8 hours in a day or more than 40 hours in a week. Assuming the employee is paid $12.00 per hour and the employee works 12 hours a day, 5 days a week, the difference between being exempt or non-exempt is $120.00 per week. It may seem small, but don’t forget the third party employer must include the additional overtime costs into its margins. Assuming a typical 1.4x cost to cover basic wages, employment taxes and minimal benefits, the additional overtime will cost the employer an additional $168.00 per week if the employee is not exempt from the overtime regulations. With grandma’s only source of income coming from social security and a small pension from her days working in the steel mill, every penny counts.

Well, what do the court cases interpreting Wage Order 15 have to say about the issue? They don’t. There are only two reported cases dealing with the personal attendant exemption in California, and neither of them answers my question.

In 1991, a California Court of Appeals took a cursory look at the personal attendant exemption under Wage Order 15, as it applied to a babysitter employed to take care of the household and two small children. See Cardenas v. Mission Industries (1991) 226 Cal.App.3d 952. The case relied heavily on a DLSE Interpretive Bulletin (86-1) and the DLSE manual for its interpretation of the personal attendant exemption. As I’ve mentioned, subsequent court decisions made it clear that the DLSE manual and the Interpretive Bulletins are entitled to no weight whatsoever. See Morillion v. Royal Packing Co.(2000) 22 Cal.4th 575, 581–582. The Cardenas case was also subsequently overruled on other grounds.

More recently, in Cash v. Winn, 2012 WL 1662629, the only other case to discuss California’s personal attendant exemption, the employee was hired directly by the employer so the court did not need to address this issue. The case is extremely helpful regarding other issues surrounding the personal attendant exemption [3], but it doesn’t confirm whether wage order 15 applies to third party employers.

So, which wage order applies when a worker is employed by a third party employer to provide personal attendant services to a private householder? I think the better argument is that wage order 15 applies even though the definition of “household occupation" does not seem to allow for employment by third party employers. Because the definition of “personal attendant" under Wage Order 15 includes workers “employed by any third party employersrecognized in the health care industry to work in a private household," the wage order must apply to third party employers. Additionally, it is possible that the phrase “by an employee of a private householder" in the definition of “household occupations" refers only to services related to the “maintenance of a private household or its premises," and not to “services related to the care of persons." While it would be nice to have a few commas in the regulation to confirm my interpretation, at least my interpretation is not inherently contradictory.

Determining which wage order applies can be confusing, but it’s an important part of ensuring employers comply with the law. Given the significant rise in overtime lawsuits, and the prediction that homecare providers will soon face a significantly more such suits, understanding the intricacies of the overtime exemptions and following the law will save employers hundreds of thousands of dollars in costly litigation.

If you have any questions about the information in this article, please feel free to contact our office at your convenience.

[1]Public Housekeeping Industry means “any industry, business, or establishment which provides meals, housing, or maintenance services whether operated as a primary business."

[2] The DLSE Manual has a definition of health care industry, but courts give the DLSE manual no weight whatsoever. See Morillion v. Royal Packing Co.(2000) 22 Cal.4th 575, 581–582.

[3] If you employ personal attendants, whether as a private householder, family member or as a third-party employer, I highly recommend reviewing Cash v. Winn, or speaking with your employment counsel about this case as it clarifies under what circumstances a personal attendant can provide health related services and still be exempt from overtime regulations.