Beginning January 1, 2015, third-party home health care organizations will no longer be entitled to use the Fair Labor Standard Act’s companionship or live-in domestic service worker exemptions. In June, the U.S. Department of Labor (DOL) released an Administrator’s Interpretation relating to situations where the consumer, family, or household receiving home care services and a third-party organization are both employers of the service provider. While the Interpretation focused on public entities that administer Medicaid programs, it also offered insights for private organizations that work with service providers.
The DOL explained that when the new rule goes into effect, it would use an “economic realities” test to determine whether any organization—public or private—is a service provider’s employer. This is important because the rule change requires a public or private organization to pay a provider at least minimum wage and overtime to the provider even though a consumer does not.
The economic realities test looks at:
- who has the authority to hire and/or fire the provider;
- who supervises or controls the provider;
- who determines how much to pay the provider;
- where are the provider’s employment records;
- who determines where the provider works; and
- what kind of work the provider is doing.
The DOL notes in the Interpretation that “no single factor … is determinative” and says other factors, depending on the situation, may also be important.
The DOL will evaluate each employee’s situation to determine whether the consumer, a private agency, or a public agency administering a Medicaid program is the service provider’s employer. Based on this guidance and in anticipation of the rule change, third-party organizations should review their roles with respect to service providers to determine whether they may be joint employers.