The New York Times ran an blog article regarding an interview with Select Home Care regarding ways some employers are considering to survive recently enacted and currently pending changes regarding in-home care. The implementation of AB241 requiring overtime for caregivers in California and soon-to-be-imposed federal regulations requiring overtime for caregivers throughout the nation have employers scrambling to consider how they can keep in-home care affordable and profitable.
The article suggests three alternatives employers are considering:
- Raise rates to cover the increased costs, which will mean fewer people will be able to afford in-home care. Raising the costs will not increase the profit margins, but will result in fewer clients which means companies will have to do more with less. Companies could hire more workers so the employees each work less hours, but that will reduce the employee’s income and require more managers to oversee the work. This doesn’t result in more money for the workers, but could help keep the cost to the client down.
- Switch employees to independent contractors. The article makes it seem like this is a viable option, but I have serious doubts this will be an effective solution. Particularly in California where there are hefty fines for willfully misclassifying an employee as an independent contractor, and given the broad definition of “employer,” under AB241, I don’t recommend this course of action in most cases.
- Change the business model to a referral agency. Referral agencies do not employ the workers, but can still help families locate and hire quality workers. This could lower the costs for the families because they are not having to pay the profit margins for the caregivers, but it comes with its own sets of risks. Most likely, the family will become the employer, which means the family needs to understand and comply with the myriad of laws impacting employers and employees. This can be a daunting concern.
The article quotes a few other industry professionals, and most seem to agree that the first option (raising prices to cover the costs) is the safest route. I agree. Hiring more caregivers, each working fewer hours, will help keep the costs down, but can impact the continuity of care. This is particularly important for clients with Alzheimer’s or dementia. Instead of having one worker working a 24-hour shift, you’ll end up with two to four workers working shorter shifts. Financially this is the best option. I don’t know if this will be the best option for providing quality care to the elderly and disabled.
Governor Brown (CA-D) has taken the position that the best way to deal with the increasing costs is to limit the number of hours the employees work. That is why his budget proposal does not allow caregivers under the state’s In-Home Support Services program to work more than 40 hours per week. Of course, Governor Brown hasn’t indicated how the clients will care for themselves during the remaining 128 hours of the week.
There is one last assumption in the article that bears addressing. All of the sources seem to imply that they can deduct up to 8 hours of sleep time for 24-hour shifts. Because the California Supreme Court granted review of Mendiola v. CPS Security Solutions, Inc. in the fall of 2013, we cannot guarantee that an employer can deduct for sleep time. While the federal regulations allow employers to deduct for sleep time, the issue has not been decided in California. Employers in California that deduct for sleep time may run the risk of having to go back several years to pay for the uncompensated hours of work.
The New York Times blog promises to do a follow-up with Select Home Care to check on their progress. If you, or someone you know, uses or provides in-home care, you should speak with a knowledgeable employment attorney to understand the rights and obligations imposed by the law.The Law Office of Phillip J. Griego 95 South Market Street, Suite 520 San Jose, CA 95113 Tel. 408-293-6341 Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego. Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney. Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.
Is an Employer Responsible for Paying Overtime When It Does Not Know the Employee is Working Off The Clock?
Possibly not. An employer is obligated to pay an employee for all hours worked. Most Wage Orders in California define “hours worked” as “the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so.”
Several federal court cases have held that “suffered or permitted to work” means only work that is performed “with the knowledge of the employer.” For example, in Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, the court held that “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of §207” Id. at 414. “An employer must have an opportunity to comply with the provisions of the FLSA.”
The courts point out that an employer cannot escape responsibility by negligently maintaining required records or by turning its back on a situation, but if the employee “prevents the employer” from acquiring knowledge of the uncompensated overtime, the employer has not “suffered or permitted” the employee to work in violation of the FLSA.
In May 2014, a California Court of Appeal applied this rule to claims under the California Labor Code. See, Jong v. Kaiser Foundation Health Plan, Inc. (2014) 171874. California courts often look to federal law in interpreting state wage and hour claims. Although the California Supreme Court implicitly endorsed the federal interpretation of hours worked in Morillion v. Royal Packing Co. (200) 22 Cal.4th 575, 585, the specific question presented in Jong was not addressed. At least one federal court decision (White v. Starbucks Corp (N.D.Cal. 2007) 497 1080, 1083) applied the “no knowledge” rule to a California wage claim, but California courts are not required to follow federal interpretation of state laws. To my knowledge, Jong represents the first instance in which a California court specifically held that if an employer does not know an employee worked overtime, the employer is not liable for the unpaid overtime compensation.
There are a number of key facts that allowed the court to conclude the employer had no knowledge of the off-the-clock hours. The plaintiff testified that he was aware that it was Kaiser’s policy to pay for all hours worked and to pay for all overtime hours employees recorded, even if an employee should or could have obtained pre-approval before working the overtime but failed to do so. The plaintiff also testified that he was familiar with the applicable time keeping rules and that he knew how to use the timekeeping system. The plaintiff also signed a document confirming he knew employees were not supposed to work off-the-clock. The nail in the coffin was the fact that the plaintiff testified he did not know whether anyone in Kaiser management was aware he was performing off-the-clock work. The two other named plaintiffs in the case had discussions with supervisors about working off the clock, and the court allowed those cases to proceed to trial.
Jong emphasizes the importance of having policies that prohibit off-the-clock work and require employees to record all hours worked. The case also confirms the importance of ensuring the employer knows about all hours worked. If an employee is going to bring a claim for unpaid wages, the employee needs to ensure that a management employee knows the employee is working off-the-clock.The Law Office of Phillip J. Griego 95 South Market Street, Suite 520 San Jose, CA 95113 Tel. 408-293-6341 Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego. Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney. Your use of this blog does not create an attorney-client relationship between you and the Law Office of Phillip J. Griego. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and the Law Office of Phillip J. Griego cannot guarantee the confidentiality of anything posted to this blog.Phillip J. Griego represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.
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