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I'm an Employer, You're an Employer, We are Employers All! - Lessons for the Care Provider Industry

Posted by attorney Robert Nuddleman

In early 2013, a California appellate court rendered its decision in Guerrero v. Superior Court. The decision significantly impacts elder care providers and serves as a warning to ensure you, your clients and their service providers follow California and Federal wage and hour laws.

Guerrero was employed to provide in home support services (IHSS) to eligible recipients in Sonoma County under the In-Home Support Services Act. The County and the Public Authority are separate agencies that work in conjunction to administer and oversee services rendered under the Act. Buenrostro was a disabled person eligible to receive benefits. The County and the Public Authority authorized Buenrostro and Amezcua to hire and engage an IHSS provider, and they engaged Guerrero to provide services 7 hours a day, 7 days a week. Guerrero worked for Buenrostro for three months, under Amezcua’s supervision, but was never paid. Guerrero sued Buenrostro, Amezcua, the County, and the Public Authority for unpaid overtime and minimum wage as well as breach of contract claims.

After a thorough examination of the applicable law, the court came to several important conclusions:

  1. Everyone’s an employer.

Even though the state paid the service provider’s wages, maintained workers’ compensation insurance for the service provider and contributed to the state and federal unemployment and disability funds on behalf of the service provider, the court concluded that the County, the Public Authority, Amezcua and Buenrostro were all “joint employers" for wage and hour purposes.

Although the IHSS regulations give the recipient ultimate authority to hire, fire and supervise the service provider, because the County and the Public Agency “control the purse strings," they both indirectly had the ability to hire and fire the service provider. Not only could the County and Public Authority refuse to authorize services thereby effectively forcing the recipient to fire the service provider, the County and Public Authority also controlled the method of payment and were required to maintain certain employment records regarding the hours worked. The County and Public Agency were also required to ensure the recipient actually received the services and could conduct spot home checks without notification. The court felt this level of control was sufficient to establish the County, the Public Authority as employers under state and federal law.

The court pointed out that under California’s much more liberal definition, an “employer" is anyone that: 1) engages someone to work, OR 2) directly or indirectly controls the hours, wages OR working conditions of the worker, OR 3) suffers or permits the employee to work. Consider a trustee that authorizes payment for wages or has the ability to cut off payment if the trustee believes the care provider’s services are unnecessary or too expensive. Or the conservator who is responsible for ensuring the provider is not abusing the care recipient and that the care recipient is receiving adequate care. Or the family member that checks up on mom and tells the caregiver how to get mom to eat her veggies. All these people, including the care recipient, are potential employers.

  1. The service provider was not exempt from federal or state wage and hour laws.

Because the case went to the appellate court at the pleading stage, the court assumed that all allegations in the complaint were true. Guerrero alleged she spent more than 20% of her time performing general household work. Both the federal “companion" exemption and the state “personal attendant" exemption cannot apply if the employee spends more than 20% of his/her time performing general household work.

The court distinguished between work related to the care of the recipient, such as meal preparation, bed making, laundry, and other similar services," and household work that is unrelated to the care of the recipient, such as dusting. Household work related to the care of the individual would not be counted toward the 20% threshold, whereas “dusting or cleaning the client’s bedroom or living room" would be routine, general household work that would be counted. The court used an example from McCune v. Oregon Senior Services Div. (D.Or. 1986) 643 F.Supp.1444, where in the court found that cleaning up a spill made by the recipient is related to the care of the client, but cleaning the house in general is not related to the care of the client.

The court specifically referenced an opinion letter from the California Division of Labor Standards Enforcement (Labor Commissioner) clarifying what activities fall within the “feeding, dressing and supervising" activities under the personal attendant exemption. The Labor Commissioner has taken varying positions regarding exactly which duties are part of included within the exemption. The Labor Commissioner’s 2005 opinion letter states:

We cannot provide you with a comprehensive list of acceptable duties for a personal attendant. However it is instructional, and not inconsistent with the long-standing DLSE position, to consider those duties included by the U.S. Department of Health and Human Services National Center for Health Statistics’ definitions for activities of daily living. Such activities relate to personal care and include, but are not limited to, such duties as bathing, showering, getting in or out of a bed or chair and using a toilet. “Supervising" may also include assistance in obtaining medical care, preparing meals, managing money, shopping for groceries or personal items, using a telephone or performing housework when such activities are related to the independent living of the person and cannot be performed by him or herself alone due to a health or age limitation. It must be noted, however, that any general housekeeping duties performed should not exceed 20%of the weekly working time spent by the personal attendant to maintain his or her exemption under IWC Wage Order 15.

As far as I can tell, this is the first published decision affirming the Labor Commissioner’s latest opinion in this matter.

  1. Wage Order 15 may apply whenever the private householder is also considered the employer. There is significant confusion regarding which wage order applies when a care provider is employed by a third-party employment agency.

Which wage order applies can make a significant difference in a wage and hour claim. Wage Order 15 is the only wage order that exempts personal attendants from California’s overtime requirements. While the exemption does not exclude the employee from California’s minimum wage requirements, it does avoid overtime liability.

Additionally, a different wage order that might apply, Wage Order 5, is the only wage order that does not require an employee to be paid for all time that the employee spends on the premises. Under Wage Order 5, if the employee is required to reside on the premises (like a live-in caretaker), the “hours worked" are only those hours that the employee actually spends performing his or her duties, thereby allowing an employer to exclude personal time or sleeping time from the employee’s working hours. Wage Order 5 applies to any business that provides meals. So, then, which wage order applies?

The court rejected the County’s and the Public Agency’s argument that Wage Order 15 did not apply. Defendants argued that Wage Order 15 only applies to someone who is “an employee of a private householder." According to the defendants, if the provider is employed by a public agency then by the wage order’s own definition Wage Order 15 cannot apply. The court, with very little analysis, concluded that Wage Order 15 applies because Guerrero was an employee of the recipient (e.g., the private householder) and the mere fact that the County and the Public Authority are also considered joint employers should not change the fact that Guerrero was “an employee of a private householder.

There is still an argument that Wage Order 5 could apply because Wage Order 15, which is an “occupation" order, says that it applies “unless such occupation is performed for an industry covered by an industry Order of this Commission." Wage Order 5 is an “industry" order. Wage Order 5 applies to any business that “provides, meals, housing or maintenance services whether operated as a primary business or when incidental to other operations." If the caregiver provides meals to the client, then arguably Wage Order 5 applies. If Wage Order 5 applies then Wage Order 15 would not apply because industry orders take precedence over occupation orders.

Which wage order applies will determine when, and if, the employee is entitled to overtime.

If you or someone you know works with caregivers, familiarize yourself with the rights and responsibilities of an employer. Take steps to protect yourself and your loved ones by ensuring you hire reputable businesses to help minimize liabilities.

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