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"The Fair Labor Standards Act [FLSA] is a nondenominational-type law, but there are a couple of issues that affect home care specifically," says Lucian Bernard, a partner with Covington, KY-based law firm Pearson & Bernard.
"One of the main reasons is that a lot of agencies are paying nurses on a per-visit basis. For years, the Department of Labor [DOL] has maintained that paying nurses per visit was not appropriate, and where that has gone to court, in very few instances, the courts have disagreed. It’s a very rocky road to try and travel and has to be trodden correctly," he explains.
When it comes to who qualifies for overtime, the laws are complicated, he says. Typically, employees whose work is considered to fall under the categories of executive, administrative, or professional are exempt from overtime regulations. Their pay stays the same regardless of whether it takes them 40 hours or 50 hours a week to complete their jobs. To give it a real-life spin, he uses the example of a painter who gets paid $15,000 to complete a portrait no matter how long it takes to finish.
Even with seemingly clear-cut rules, the lines can get a bit fuzzy, Bernard notes.
"If, for example, you take an RN whom by education would be exempt because of her training, it doesn’t end the inquiry as to her exemption. The FLSA regulation requires that the exempt person is paid a salary or on a fee-basis of payment. In other words, if you pay them hourly, they are hourly employees and get overtime no matter what their responsibilities.
"A lot of home care nurses are paid on a per-visit basis, but the actual requirement describes Schedule C payments as unique and cannot be tied to length of time or amount of work. . . . The DOL has long maintained that nurses doing visits don’t perform a unique function each time, rather they’re doing the same thing, just done over and over again."
Based on the few court cases that have arisen from this issue, to stay on the good side of the FLSA, Bernard says, "It’s almost mandatory that there be a written agreement between the nurse and agency that states they will be compensated on a per-visit basis. Within that agreement, there are many different activities involved with the visit including paperwork and case management, and those should be clearly listed.
"It’s my opinion that it’s the most complicated piece of legislation Congress has passed," Bernard continues. "The FLSA worked real well for what it was designed for: people working on an assembly line. But as our economy has evolved into a service economy, it’s like putting a square peg in a round hole. It’s long overdue for an overhaul."
Until that overhaul comes, if in fact it ever does, here are some facts to keep in mind regarding the overtime requirements of the FLSA:
A nonexempt employee, such as an aide, is entitled to 1½ times the regular rate for all hours worked in excess of 40 in any regular work week.
The regular rate is calculated by dividing total remuneration by total hours worked in any regular work week.
Overtime is calculated by multiplying the regular rate by 1.5.
An employee may not waive his or her rights under the FLSA. You can’t give employees bonuses in lieu of overtime.
"The employee can take it and even sign a contract, but then they can turn around and sue you anyway because they cannot waive their rights," Bernard says.
The employer is responsible for maintaining time records for all hours worked by employees. "In home care, it’s common practice for nurses to do documentation at home at night, but the FLSA says the agency must pay the employee for all hours worked, suffered, or permitted’ so the agency has to track the employee’s hours spent tracking her hours and pay her for it," he notes. To avoid trouble on this issue, Bernard advises agencies to have written policies and an agreement whereby the employee must complete any paperwork in the agency and not at home.
The FLSA mandates that the employer always has the burden of showing that an employee is exempt.
The Companionship Services Exemption may be on its way out, but in the meantime, each employee working under this exemption should be required to maintain a daily log of his or her activities, since there are strict limits as to the amount of time spent doing nonpatient related activities.
Any employee claimed to be exempt must meet two requirements:
80% of the employee’s job responsibilities must satisfy the exemption.
The employee must be paid under the salary basis of payment or the fee basis of payment.
Compliance does not stop with the FLSA, he explains. "The burden of proving an employee is exempt is always on the employer. It’s assumed that everyone is nonexempt and the employer must prove otherwise with convincing evidence that the employee is in fact exempt. But when you’re dealing with FLSA, you cannot stop there," Bernard says.
"Each state has a law usually referred to as Wage Payment Statute that requires additional requirements over the FLSA," he continues.
"For example, under the FLSA, all nonexempt employees get time and a half for all hours worked in excess of 40 in a regular workweek. California, though, requires that all nonexempt employees are paid time and a half for each hour worked over eight in a given workday," Bernard adds.
You could have employees who only work 30 hours in a given week, but their schedules are such that they work three 10-hour days and would be eligible for overtime under California law. "Whenever you look at pay practices, you also must look to state laws as well as federal laws," he notes.
Red flags for the DOL include the use of "independent contractors" and potentially "joint employers," such as an organization that maintains both certified and private duty agencies. "The area of independent contractors is a big trap that employers fall into from time to time with financially disastrous results," notes Bernard.
"Courts and the IRS use tests that look at range of factors including who controls the employee’s schedule, whether they use their own equipment, can they participate in the process, and so on," he adds. "There’s no single factor they look at and the potential penalties are devastating.
"Normally when there’s a violation, the courts can relate back two years from date of filing to determine damages, but if there is an intentional violation or a repeat offender, they go back three years for damages. In addition to unpaid overtime damages, there are also liquidated damages, which double the penalty, and then you have to add in attorney fees and civil penalties as well. You can get wiped out. All you need sometimes is one disgruntled employee."
Bernard cites the example of a "staffing company that contracted with independent contractors but didn’t really control their schedule. One employee complained and went to court, and the courts went back two years to look through their wage records. In the end, the agency had to pay all these people $700,000 in overtime pay all because the court ruled that the nurses were employees."
To protect themselves, Bernard says, agencies must document everything and review pay practices at least annually, "especially over past years when so many agencies have revamped themselves."
Another tricky area lies with volunteers. Even though seemingly straightforward, the definition of volunteer can take on new meaning — and a new status under the FLSA — given certain factors. "If these people are truly volunteering and donating their services for activities of a humanitarian or public service nature, then generally they are not considered to be employees. But if their actions benefits the agency economically, then you have a problem. Then, you must pay them like employees or get rid of them," he says.
Do not contact an investigator for the DOL to assist you in compliance. "It’s the kiss of death," says Bernard. "Their job is to find and sanction violators, not help employers. Some know what they’re doing and are reasonable, and others are only looking for notches on their belt. Call your attorney first, not the agency."
[For more information, contact:
Lucian Bernard, Partner, Pearson & Bernard PSC, 1224 Highway Ave., Covington, KY 41012. Telephone: (859) 655-3700.]