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U.S. Department of Labor Issues Field Assistance Bulletin on Employee/Independent Contractor Classification for Home Care Workers

By: Lilian Davis

On July 13, 2018, the U.S. Department of Labor (“DOL”) issued a Field Assistance Bulletin (“FAB”) to provide guidance to field-office staff regarding whether caregivers, such as nurses and health aides, qualify under the Fair Labor Standards Act (“FLSA”) as employees of registries that connect caregivers with people who need their services, such as senior citizens or individuals with disabilities and/or certain medical conditions, or are independent contractors. 

The majority of the FAB summarizes previous guidelines issued by the DOL, such as

  • Conducting a background check and/or verifying references and credentials, does not make a caregiver an employee of the registry.  Note, however, that screening for subjective characteristics, such as likeability, would indicate an employment relationship.
  • Facilitating matches between clients and caregivers based on their parameters and preferences does not establish an employment relationship, so long as the registry does not maintain control over hiring and firing of the caregiver.
  • Facilitating communication between clients and caregivers is acceptable and does not create an employment relationship, so long as the registry does not directly assign specific caregivers based on subjective factors (i.e., likeability).
  • Allowing the caregiver unrestrained profit/loss opportunities (e.g., no maximum number of hours, no limitations on the engagement in other ventures, etc.) tends to show that there is not an employment relationship.
  • Informing the client or caregiver about normal pay rates in the area is not sufficient to create an employment relationship, nor is relaying communications on preferred rates of pay.

However, the below factors are indicative of an employment relationship between a registry and a caregiver: 

  • The registry maintains the ability to hire or fire a caregiver.
  • Taking extra steps to evaluate “subjective factors that the registry values” rather than “performing basic quality control and verification checks” such as consideration as to whether a prospective caregiver is a likeable person or interviewing the caregiver’s references.
  • Charging “fees that fluctuate based on the number of hours that a caregiver works” for the client indicates an “ongoing interest in the employment relationship, including in the number of hours the caregiver works and whether those hours are tracked accurately.” This type of fee arrangement “may indicate that the registry is the caregiver’s employer.” Conversely, if the fees are issued on an initial basis, as well as “per service” fees for administrative activities, rather than on an hourly basis, it is more likely the parties have entered into an independent contractor relationship.
  • Requiring the creation and confirmation of a caregiver’s hours worked may indicate the existence of an employment relationship.
  • Mandating how services must be provided.

Critically, “the analysis does not depend on any single factor” and the Wage and Hour Division of the DOL “will consider the totality of the circumstances to evaluate whether an employment relationship exists between a registry and a caregiver.” 

As we have previously reported, the standards governing employment and independent contractor classification are constantly changing.  Businesses, especially in labor intensive industries and the sharing economy, should closely track these standards and consult competent counsel with any questions.  We will track how the FAB affects future DOL Wage & Hour investigations and whether it is cited persuasively by courts interpreting the FLSA.