Home Healthcare Agencies Increasingly at Risk for Wage & Hour Claims

Home Healthcare Agencies Increasingly at Risk for Wage & Hour Claims

Wage and hour claims are on the rise, with certain industries, such as home healthcare agencies, becoming more vulnerable than others. Most of these claims involve allegations that an employer failed to pay employees for off-the-clock work, failed to pay employees for overtime worked, misclassified employees as exempt from overtime pay requirements, or made improper deductions from employee pay.

Home healthcare agencies are particularly susceptible to wage and hour violations for a variety of reasons. One reason is that back in October 2015 the U.S. Court of Appeals for the D.C. Circuit reinstated regulations from the U.S. Department of Labor (DOL), which extended federal minimum wage and overtime requirements to home health workers employed by third-party employers. Another reason why this industry is vulnerable to these types of claims is that the typical workforce of home healthcare agencies is comprised of hourly employees who do not work in a traditional office setting.

In order to guard against the potential for wage and hour lawsuits and to put employers in a much better position to defend themselves in the event of a suit, following are several recommendations, courtesy of national law firm, BakerHostetler.

  • Be sure the home healthcare provider is up to date with the law, as both federal and state wage and hour laws are constantly changing. For example, all home healthcare agencies, as with any other employer, must comply with not just the Fair Labor Standards Act (FLSA), but also state wage and hour laws. Some states impose stricter restrictions on employers than the FLSA does.
  • Use of an effective time-keeping system. Employees who bring wage and hour lawsuits typically allege that the hours paid were not accurate and that hours worked by the employees were either not reported or under-reported by their employers. Home healthcare providers should use a standardized system for employees to record all time in and out, either electronically or with a punch-clock. This is critical for home healthcare agencies, as a large percentage of their workforce works outside a traditional office setting. The system should require each nonexempt employee to record, review and sign off on their time for each pay period and provide a signed acknowledgment that the hours reported are accurate and include all time worked for that period. Supervisors should monitor and review time cards of the employees they manage on either a daily or weekly basis.
  • Implementation of comprehensive written policies. These policies at the very least should inform employees: (1) that they will be paid for all time worked, (2) that they must record their hours accurately, (3) that off-the-clock work is prohibited, and (4) of how to report concerns if an improper deduction was made to their pay or they did not receive all pay owed. Make sure to discipline employees and supervisors who violate the timekeeping policies.
  • Use outside counsel to conduct a wage and hour audit. Counsel can help employers identify and address potential wage and hour violations.
  • Perform periodic compliance training for supervisors, managers, nonexempt employees, and HR representatives. These individuals are the first (and primary) line of defense for wage and hour issue, and can help identify and prevent wage and hour issues at their source with proper training.
  • Be aware of the issue of “joint employers”. Unless each home healthcare company is truly distinct (i.e., there is no commingling of finances or resources and no shared management or decision-making), both companies could be deemed by the DOL or a court to be “joint employers” of the shared employees. The same issue arises if the home healthcare agency “leases” workers from staffing companies. Whenever there is a “joint employment” or “co-employment” situation, each employer is responsible for complying with the FLSA.
  • Pay attention to employees working remotely. Although employees usually should not be paid for time spent commuting to and from work, employees typically should be paid for time spent traveling between workplaces or when traveling to and from a client (patient). To further complicate things, technology has blurred the lines of when employees are working and not working. Nonexempt employees should be paid if they make work-related phone calls or if they send or receive work-related emails or text messages while working at home, remotely or otherwise outside normal work hours.
  • Be ready to defend each employee’s exemption. It’s the employer’s responsibility to prove an employee is properly classified as exempt if the exemption is ever challenged. HR and management must be familiar with the criteria for making these determinations. Misclassifying an employee as exempt can have significant financial consequences. When in doubt, treat the employee as non-exempt.

Caitlin Morgan specializes in providing home healthcare providers with insurance products to safeguard against the diverse liability exposures they face. This includes General and Professional Liability coverage. We also offer Directors & Officers (D&O) Liability and Employment Practices Liability (EPLI) insurance. EPLI provides coverage for employers involved in workplace allegations such as claims of discrimination, harassment, and wrongful termination, among others. Some policies may also be tailored to address wage and hour lawsuits, including providing a sub-limit for defense coverage. This has to be looked at very closely. Contact us at 877.226.1027 for more information about our home healthcare insurance program.