Caregiver Registries Find Key Information on Employment Relationship Determinations in WHD Field Assistance Bulletin

On July 13, 2018, the acting administrator for the United States Department of Labor’s Wage and Hour Division (WHD) issued Field Assistance Bulletin (FAB) 2018-4 to assist field staff in determining when home care, nurse, or caregiver registries will be considered employers under the Fair Labor Standards Act. The FAB reviews a number of practices and business models utilized by registries to point out which might suggest an employment relationship and which would not. When a caregiver registry acts as a matching service between caregivers and clients, no employment relationship will be found. However, if the registry determines pay, has the power to hire or fire, or controls the schedule of the caregiver, it will likely be found to be an employer. The FAB provides meaningful and helpful clarification regarding specific registry practices that might be of assistance to both the WHD and the regulated community.

Notably, the FAB is limited to a select, narrow group of employers—those that hold themselves out as home care, nurse, or caregiver registries. While employers in other industries may be able to utilize the FAB for guidance, it is limited on its face to the aforementioned registries. Additionally, while some may read this FAB as a change in policy, in reality, it is nothing more than a reiteration of the WHD’s “economic realities” rubric that has been at the center of misclassification issues for many years. The FAB emphasizes that the “totality of the circumstances” will continue to be critical to any analysis of employer status.

The FAB does provide a helpful list of activities that, if performed by a registry, typically do not suggest an employer-employee relationship. These practices include:

1. confirming caregiver credentials;
2. conducting background checks on caregivers;
3. contacting professional references;
4. determining what work caregivers are willing to perform, their target compensation, their availability, and other personal preferences;
5. interviewing the client to determine the needs of the client, the client’s budget, and the client’s personal preferences;
6. charging a fee for administrative services for the client, such as fees for recordkeeping, invoicing, collecting, and administering payroll;
7. posting available positions online for caregivers to screen and consider;
8. providing information to caregivers and clients regarding typical pay rates in the area;
9. acting as a liaison between the caregiver and the client in the process of the caregiver and the client negotiating compensation; and
10. providing caregivers the opportunity to purchase necessary equipment from the registry or a third party.

The FAB also delineates activities that, if carried out by the registry, likely will suggest an employer-employee relationship between the registry and the caregiver. These include:

1. suggesting or determining the rate to be paid to the caregiver;
2. exercising control over the caregiver’s schedule;
3. exercising any level of control over discipline;
4. interviewing candidates to evaluate subjective factors for the client;
5. exercising any control over hiring and firing decisions;
6. offering work assignments to select caregivers based on the registry’s own criteria;
7. assigning specific caregivers to specific clients;
8. directing caregivers on how to provide services;
9. monitoring, supervising, or evaluating caregivers’ performance;
10. charging fees for ongoing services to be provided by the caregiver; and
11. directing payment of its own funds to the caregiver, even if reimbursed by the client.

The FAB gives registries guidance on how to structure their relationships with caregivers and clients to maintain an independent contractor relationship. If a registry stays within a matchmaking or referral service model, the WHD will likely conclude the relationship is not that of employer and employee. However, when the registry goes beyond simply matching caregivers with clients and starts hiring and firing caregivers and/or dealing with their compensation, duties, and schedules, the “economic reality” of the relationship will lead the WHD to conclude that an employer-employee relationship exists.

Maintaining an independent contractor relationship in the home healthcare world can be difficult, and an understanding of this FAB is only one aspect of avoiding a finding of an employer-employee relationship. Equally important is structuring policies and procedures that are consistent with the FAB. Employers may also want to maintain adequate documentation of the independent contractor relationship through, for example, a detailed, written contract outlining the contours of the relationship.