Does a Domestic Employment Agency Have to Pay Overtime to Caregivers in California?
The Domestic Workers Bill of Rights (the new California law that requires personal attendants to receive overtime when they work more than 9 hours in a day or more than 45 regular hours in a week) says most employment agencies that comply with Civil Code section 1812.5095 are not considered Domestic Work Employers. But what does that mean?
Employees referred by a domestic employment agency are still entitled to overtime. The DWBA simply makes it clear that the employment agency is not the employer (assuming the agency complies with all of the qualifying requirements). The family or homeowner that contracts with the employee is likely still liable for overtime compensation.
Domestic employment agencies can still be considered a Domestic Work Employer if the agency fails to comply with Civil Code section 1812.5095 and Unemployment Insurance Code 687.2. In order to avoid being considered an employer, the employment agency must comply with all of the following:
- The agency must have a bond registered with the secretary of state.
- The agency must have a signed contract with the worker that specifies:
- The agency will assist the worker in securing work;
- How the agency’s referral fee is paid; and
- The worker is free to sign a contract with other employment agencies and perform work for other persons.
- The worker must inform the agency of any restrictions on the hours, location, conditions or type of work the worker will perform.
- The worker is free to renegotiate with the hiring person the amount to be paid for the work.
- The agency cannot provide any training regarding how the worker performs the work, but the agency can offer voluntary orientation training regarding the terms of the agreement.
- The agency cannot exercise “direction, control or supervision” regarding the manner and means of performing the work, but the agency can:
- Tell the worker about the services to be provided and the conditions of employment specified by the hiring party;
- Contact the hiring person to determine whether he/she is satisfied with the worker, but this contact should not be used to identify needed improvements in the worker’s performance and then to discipline or train the worker;
- Tell the worker regarding new referrals;
- As the worker to tell the agency if the worker is unable to perform the work.
- The agency cannot provide any of the tools, supplies or equipment to be used by the worker.
- The worker is not obligated to pay the agency’s fee, and the agency is not obligated to pay the worker, if the person that hires the worker fails to pay for the work.
- Payment for the work is made directly to the worker or the agency, but if the payment is made to the agency then the agency must deposit the funds into a trust account.
- The relationship between the worker and the person that hires the worker is only terminable by them, not the agency (although the agency is not required to make additional referrals)
- The agency must charge a reasonable, negotiable fee based on a fixed percentage of the job cost.
- The agency must inform the worker in writing that:
- The worker may be required to get business permits or licenses;
- The worker is not eligible for unemployment insurance, state disability insurance, social security insurance, or workers compensation through the agency
- If self-employed, the worker must pay self-employment tax, state tax and federal income tax.
- The agency must verify the worker’s legal status and authorization to work prior to providing referrals.
- The agency must orally and in writing provide the following notice to the person hiring the worker:
“[Name of the agency] is not the employer of the domestic worker it referred to you. The domestic worker may be your employee or an independent contractor depending on the relationship you have with him or her. If you direct and control the manner and means by which the domestic workers performs his or her work you may have employer responsibilities, including employment taxes and workers’ compensation, under sate and federal law. For additional information contact your local Employment Development Department and the Internal Revenue Service.”
- The agency cannot specify in any notice, advertisement or brochure that the referred workers are independent contractors.
- The agency must insert the following statement in any paid advertisement or promotional material:
“[Name of the agency] is a referral agency”
- The agency’s advertisements and solicitations cannot refer to any required bond or to any licensure acquired by the agency.
Failure to comply with all of the above requirements may create an employer-employee relationship subjecting the agency to liability for unpaid overtime.
If you are an employment agency, receive referrals from employment agencies, or work for an employment agency and have questions about how the Domestic Workers Bill of Rights applies to you, contact an attorney familiar with employment agencies and in-home care.
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