Home Care Employment Law

Executive Summary. Today the New York Court of Appeals issued its long-awaited decision on 24-hour shift home health aides who work as “sleep-in” workers. The Court reversed two Appellate Division decisions, Andryeyeva v. New York Health Care, Inc., (“Andryeyveva”) and Moreno et al., v. Future Care Health Services, Inc., (“Moreno”) and ruled that home health aides were not automatically entitled to wages for each hour of the 24-hour shift. The Court deferred to the State Department of Labor’s (“DOL”) interpretation of its own regulation, that non-residential (“sleep-in”) home health aides may be entitled to 13 hours of wages, provided that they receive a sleep break of at least eight hours (receiving five hours uninterrupted sleep) and three hours of meal breaks. At the same time, the Court warned home care agencies that “failure to provide a home health aide with the minimum sleep and meal times required under the DOL’s interpretation of the Wage Order is a ‘hair trigger’ that immediately makes the employer liable for paying every hour of the 24-hour shift, not just the actual hours worked.” For the home care industry in New York State, this decision has enormous ramifications, which we discuss below.

How Did the Court Reach This Decision?

The Court reached its decision by relying on the doctrine of “judicial deference” to “an administrative agency’s rational interpretation of its own regulation in its area of expertise.” The Court said the DOL “interpreted its Wage Order to require payment for at least 13 hours of a 24-hour shift if the employee is allowed a sleep break of at least 8 hours—and actually receives five hours of uninterrupted sleep—and three hours of meal break time.” This, said the Court, “does not conflict with the promulgated language [of the Wage Order], nor has the DOL adopted an irrational or unreasonable construction.”

Rejecting the Appellate Division’s contention in Andryeyeva that “the DOL’s interpretation is neither rational nor reasonable, because it conflicts with the plain language of the Wage Order,” the Court said that being physically present and able to work does not mean the home health aide is “available for work,” and the DOL’s interpretation was not inconsistent with the plain language.

Importantly, with regard to the ultimate merits of the claims alleged in Andrveveya and Moreno, and the class certifications motions in each case, the Court expressed no opinion, referring each case back to its lower court for further proceedings consistent with its opinion.

What Are the Ramifications of This Decision?

1. Dozens of “24-hour” cases pending in federal and state court are affected by this decision and lower courts will decide whether their cases warrant class action treatment or the claims of individual home health aides must be heard one-by-one. Where arbitration demands have been filed under collective bargaining agreements by unions representing home health aides, the arbitrators will have to decide many of the same issues.
2. Other federal and New York wage and hour law issues, such as pay for “spread of hours,” intraday travel time, training time, unauthorized but suffered hours worked, overtime, joint employment, and, most importantly, compliance with the intricacies of New York’s unique wage and hour statutes, such as the Wage Parity Act, Domestic Workers Bill of Rights, Wage Theft Prevention Act, and New York City’s Earned Sick Time Law, are likely to gain prominence. Notably, the First Department in Tokhtaman v. Human Care, LLC, a similar 24-hour case not directly decided by the Court of Appeals, refused to dismiss the home care workers’ breach of contract claims under the Wage Parity Act.
3. Home care agencies and those who broker deals to sell and buy agencies may feel relieved that the threat of six years’ back liability when 24-hour shift workers were paid less than 24 hours for each assigned shift has been lessened, but the due diligence necessary before acquisition remains as important as ever. The Court specifically warns home care agencies that if a home health aide “worked 24-hour shifts without ‘meaningful breaks,’ … [they] would be entitled to compensation for the entire 24-hour period,” and “if an aide receives a modicum of sleep below the five-hour minimum and less than the three hours of meal breaks, the employee must be paid for the full 24 hours.” It can be expected, based on the allegations made in many cases that workers will claim they were not afforded the requisite sleep and meal breaks. Further, plaintiff attorneys may seek to file multiple individual cases making such allegations, in order to force agencies to defend multiple costly lawsuits at the same time, and thereby seek to force settlements.
4. Home care agency policies and procedures for evaluating whether a 24-hour shift home health aide actually receives five hours uninterrupted sleep and three hours for meal periods will come under greater scrutiny, both from the DOL and plaintiffs’ attorneys. If these policies and procedures are not in place, are too loose to be effective, are inconsistent, or are not followed and complied with uniformly, an agency will be exposed to government audits and lawsuits. Home care agencies should immediately review their current policies to ensure they contain protective language.
5. Unclear is the impact of the decision on a fiscal intermediary for a CDPAP and who is responsible to keep records about whether the personal assistant is actually afforded, and receiving, five hours of uninterrupted sleep and three hours of meal breaks.
6. Also unclear is how this decision will affect Wage Parity Act and New York labor law audits being conducted by the State’s Attorney General, OMIG, States’ Departments of Health and Labor, and the federal government’s Internal Revenue Services and Department of Justice. Unless an agency learns what will be asked and how to prove your compliance under these audits, both the agency and its directors and officers, personally, are exposed to substantial liability for non-payment of wages. Proving that you are in compliance requires both preparation and legal guidance.

If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your agency, please contact one of the authors, Stephen Zweig at szweig@fordharrison.com, Philip Davidoff at pdavidoff@fordharrison.com, or Eric Su at esu@fordharrison.com of the firm’s Homecare Industry Law Group in its New York City Office at (212) 453-5906.

Executive Summary. Until last week, no New York court had ruled on the question of whether a fiscal intermediary (FI) participating in New York’s consumer directed personal assistant program (CDPAP) was a joint employer of a consumer’s personal assistants (PAs). New York’s CDPAP regulations made FIs responsible for certain administrative and compliance functions, but it also prohibited FIs from recruiting, hiring, firing, training, supervising and scheduling PAs or managing the consumer’s care. Though the U.S. Department of Labor (USDOL) and states other than New York have recognized that FIs could choose to operate under the “vendor fiscal/employer agent model,” where the consumer is the sole employer of the PAs, New York had left this issue for decision by the courts. The decision in Hardgers-Powell v. Angels In Your Home LLC, 2019 U.S. Dist. LEXIS 16315 (W.D.N.Y. Jan. 30, 2019, No. 16-CV-6612-FPG) is the first to hold that an FI is a joint employer of personal assistants. Its rationale and logic is troubling. If the decision’s holding is adopted by other courts, FIs will face serious exposure on multiple fronts, as we explain below.

What does this Decision Hold?

The federal court in Hardgers-Powell held that David Wegman, the owner of the D/B/A Angels In Your Home LLC was the joint employer with consumers of their PAs for purposes of wage and hour laws. This holding was based in large part on the court’s interpretation of New York’s CDPAP “regulatory regime,” which, said the court, requires that an FI “processes each (PAs) wages and benefits, processes all taxes and wage withholdings, complies with worker’s compensation, disability, and unemployment insurance requirements, and maintains personnel records.” Most importantly, said the court, “the fiscal intermediary is responsible for ‘establishing the amount of each (PA’s) wages.’” (Emphasis in the court’s decision). This was a “substantial factor” in the court’s determination, distinguishing David Wegman from “a mere payroll company.” Also mentioned as important was the fact that David Wegman “in many circumstances identified himself and his D/B/A as the employer of record of (PAs)” and “as the employer on NYLL wage notices” under the State’s Wage Theft Protection Act.

The court acknowledged that “the division of responsibilities under the (CDPAP) program makes the employer determination anything but clearcut,” and quoted from the USDOL’s published guidance, which acknowledges that FIs are not in all instances the PA’s joint employer. For example, the court noted the USDOL’s guidance that where a consumer arranges for an FI to perform tasks similar to payroll agents, but the FI was uninvolved in supervision, scheduling, or direction of the employee, and the consumer, not the FI, had the authority to allocate funds, negotiate wage rates, manage the worker’s assignments, and had power to hire and fire, the fiscal intermediary likely would not be deemed the worker’s employer.

However, “after reviewing the statutory and regulatory underpinnings of the (CDPAP) program and considering the undisputed facts” before it, the court concluded, “David Wegman is the employer of CDPAP workers.”

What is this Decision’s Impact?

Because this decision involved an upstate FI, there was no mention of the Wage Parity Act (WPA) or who determined “Total Compensation,” the consumer or the FI. Moreover, the case concerned a period of time before the WPA applied to downstate CDPAP PAs. Where an FI does not set the Total Compensation package but requires its consumer to negotiate with its own PAs over the wage rates and benefits, would a court reach the same conclusion as in this decision? Or where the FI did not name itself on Wage Theft Protection Act notices or name itself as the “employer of record” on government filings? Or is the Hardgers court’s suggestion that the FI’s compliance obligations imposed by law under the CDPAP program alone are sufficient to render the FI an “employer?” It is only a matter of time before these issues are posed to a court.

What Exposure Does the Decision Create?

Where an FI is the joint employer with a consumer of the consumer’s personal assistants, the FI faces the following legal exposures:

1. The FI may be held liable for wages for hours worked beyond a consumer’s authorized hours, such as “informal support” hours, shopping errands before or after scheduled hours, “on call,” or “engaged to wait” hours, or hours spent driving the consumer to a destination.
2. The FI may be held liable for penalties for not providing compliant health insurance under the Affordable Care Act to personal assistants or for not including the PAs in its 401(k) or other retirement plan.
3. The FI may be held liable if a consumer, a member of the consumer’s family, or a guest is injured or illegally harassed by a personal assistant; if a workplace safety violation occurs; or if the PA and consumer are involved in a car accident, particularly if there is inadequate insurance coverage.
4. The FI may be liable to a union claim that PAs can be added to an existing bargaining unit of other employees or organized anew by a union, and a union’s claim that contributions are due to, and audits can be conducted by, the union’s labor-management trust funds.

Bottom Line: Hardgers-Powell sounds a warning to all FIs that the threat of being considered a joint employer is real. It is up to every FI to do whatever it can to protect itself against such a finding and the legal exposures it will face if this finding is made.

If you have any questions regarding this Legal Alert, please contact one of the authors, Stephen Zweig at szweig@fordharrison.com or Philip Davidoff at pdavidoff@fordharrison.com, in our New York City Office at (212) 453-5900.

Executive Summary. Class action attorneys recently filed a first-of-its-kind class action against Edison Home Health Care (“Edison”) and Preferred Home Care of New York (“Preferred”) alleging that the home care agencies used a “captive” insurance company to cheat their home care workers out of millions of Wage Parity Act (“WPA”) dollars. This is the first lawsuit targeting use of captive insurance companies to provide health benefits and was brought under ERISA, the federal statute governing employee benefit plans, as well as the WPA. The suit claims that the agencies used a captive insurer to avoid paying their Medicaid funded home care workers the full $4.09 WPA package of additional wages and benefits (“WPA Package”) and, instead, returned WPA-credited benefit dollars to the agencies and their owners. No prior lawsuit has targeted use of captive insurance companies in this way, and the progress of this lawsuit will be closely watched. Continue reading “Home Care Agencies Sued for Illegal Use of Captive Insurance Company” →

Authors: Stephen E. Zweig, Phillip Davidoff, Eric Su

Executive Summary. The New York State Fiscal Year 2018-19 State Budget (“Budget”) includes significant changes for Licensed Home Care Services Agencies (“LHCSAs”), limiting the amount of contracts MTLCs can enter into, threatening the continued operation of many LHCSAs, and adding further regulatory requirements for LHCSAs.

Budget Highlights

MLTCs Limited to Certain Number of LHCSAs

• Currently, MLTCs can contract with as many LHCSAs as they choose. Effective October 1, 2018, MLTCs are limited in how many LHCSAs they can contract with. However, the Budget does not restrict how many contracts
  LHCSAs can have or how many cases LHCSAs can service from an MLTC.
• The MLTC contract limit is determined by a formula and will be different for each MLTC. MLTCs will have separate limits for two regions in the state: (1) downstate (NYC, Long Island and Westchester) and (2) upstate (the rest of the state). The formula is based on how many members the MLTC has in each of the regions. Members include all patients of an MLTC and is not limited only to patients receiving LHCSA care.
• Beginning October 1, 2018, the downstate region limit is one LHCSA contract for every 75 MLTC members and the upstate region limit is one LHCSA contract for every 45 members. For example, an MLTC with 4,500 members downstate and 4,500 members upstate would be allowed to have 60 LHCSA contracts downstate and 100 LHCSA contracts upstate.
• The limit decreases the next year, on October 1, 2019, to one LHCSA contract for every 100 MLTC members downstate and one LHCSA for every 60 members upstate. Using the same example as above, an MLTC with 4,500 members downstate and 4,500 members upstate would be allowed to have only 45 LHCSA contracts downstate and 75 LHCSA contracts upstate.
• Exemptions are limited, available only for single case agreements in select circumstances and for other reasons only at the discretion of the DOH.

LHCSAs Required to “Register” Each Year

• Beginning on January 1, 2019, in addition to being licensed, all LHCSAs will have to register with the DOH. The DOH has not yet issued any registration materials or guidelines.
• A $500 fee will be charged for each month a LHCSA has failed to register. If a LHCSA fails to register for two consecutive years or has a pattern of late registration, the DOH can revoke the LHCSA’s license.

LHCSAs Required to Report “Costs” to DOH

• The DOH can require a LHCSA to report on the “costs incurred” by the LHCSA in providing services, including direct care and administrative costs.
• On 90 days’ notice, the DOH can request any “type or amount” of cost information, including supporting documentation.
• The owner or top executive of the LHCSA will be required to certify that all cost information submitted is accurate and correct.

Moratorium on LHCSA Licenses

• There is a moratorium on “the processing and approval of applications seeking licensure” for LHCSAs from April 1, 2018 to March 31, 2020. It is not clear if this includes non-merger transfer of ownership applications.
• The only exemptions are for: (1) transfers of ownership where two or more LHCSAs are merging, (2) applicants filling a demonstrated geographic, cultural, linguistic or other gap in coverage, and (3) applications filed in conjunction with an assisted living program application.

Changes to Standards for Licensing

• The public health and health planning council (“Planning Council”) previously considered only the competence and character of the owners and operators of the applicant as a licensing standard, and was forbidden from considering
  public need or other factors.
• The Planning Council is now required to consider the public need for the LHCSA “at the time and place and under the circumstances proposed,” as well as the finances and financial sources of the applicant. The Planning Council also now has wide latitude to consider other factors it considers “pertinent”.

Conclusion. LHCSAs may be squeezed out as MLTCs have to limit the amount of LHCSAs they can contract with to stay under the legal limits. More regulatory obligations, especially the requirements that owners or top executives certify under penalty of perjury that all cost information submitted is accurate and correct, adds civil and potentially criminal penalties to audits of LHCSAs performed by OMIG and other agencies. LHCSAs need to prepare now to get their houses in order to comply with the new regulations and position themselves to keep their MLTC contracts.

FordHarrison LLP advises and counsels home care agencies on all labor, employment and benefit issues. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your agency, please contact one of the authors, Stephen Zweig at szweig@fordharrison.com, Phillip Davidoff at pdavidoff@fordharrison.com, or Eric Su, esu@fordharrison.com of the firm’s Homecare Industry Law Group in its New York City office at (212) 453-5900.

Authors: Stephen E. Zweig, Phillip Davidoff, Eric Su

Executive Summary. The New York State Fiscal Year 2018-19 State Budget (“Budget”) includes significant changes for fiscal intermediaries (“FIs”) under the Consumer Directed Personal Assistance Program (“CDPAP”). Effective immediately, FIs must receive New York State Department of Health (“DOH”) approval for all advertising material and provide the DOH with cost reports upon request.

Budget Highlights

DOH Must Pre-Approve FI Advertising

• FIs must submit all advertisements to the DOH prior to putting the advertisement into use.
• “Advertisements” is defined broadly to include any material in any medium “that can reasonably be interpreted” as marketing the FI’s services.
• FIs are not allowed to publish any “false or misleading” advertisements.
• FIs must remove or stop using any unapproved or “false or misleading” advertisement within 30 days of receiving notice from the DOH.
• If the DOH determines that an FI used two or more unapproved or “false or misleading” advertisements, the FI will be prohibited from providing services and its FI authorization will be revoked.

Overseeing advertising shows the DOH’s intent to more closely control the way FIs solicit clients. The DOH will have broad discretion in determining what is “false or misleading.” The DOH had already requested all advertising materials be submitted with the FI authorization application. The Budget now gives the DOH clear legal authority to require submission of marketing material prior to use by an FI and to revoke FI authorizations for two violations of its “false or misleading”
standard.

FIs Required to Report “Costs” to DOH

• The DOH may require FIs to report on the “direct care and administrative costs” of providing personal care services, “as accounted for by the [FI].”
• On 90 days’ notice, the DOH can request any “type or amount” of cost information, including supporting documentation.
• The owner or top executive of the FI will be required to certify that all cost information submitted is accurate and correct.

Requiring certification of financial information and supporting documentation by owners or executives of FIs adds further civil and potentially criminal penalties for perjury to investigations and audits of FIs performed by OMIG or other state agencies, including Wage Parity Act audits. Also, as the DOH has recently stated, all fiscal intermediaries must have a Medicaid provider number, separate and apart from any Medicaid provider number they may have for a LHCSA or other line of business. Currently operating fiscal intermediaries should apply for a unique Medicaid provider number immediately.

Conclusion. The Budget continues the state’s efforts, begun with the authorization requirement and the application of the Wage Parity Act to CDPAP, to bring FIs under tighter control. You should work with an attorney versed in CDPAP and the Wage Parity Act to develop compliant marketing materials and structure administrative and benefit costs to comply with the Wage Parity Act and other laws.

FordHarrison LLP advises and counsels home care agencies on all labor, employment and benefit issues. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your agency, please contact one of the authors, Stephen Zweig at szweig@fordharrison.com, Phillip Davidoff at pdavidoff@fordharrison.com, or Eric Su, esu@fordharrison.com of the firm’s Homecare Industry Law Group in its New York City office at (212) 453-5900.

Executive Summary. Yesterday, in two long-awaited decisions, the New York State Appellate Division, Second Department ruled that home care workers who worked 24-hour shifts, commonly referred to as “live-in” shifts, were required to be paid for all 24 hours, regardless of the sleep and meal times they were afforded. The two cases are Andryeyeva v. New York Home Attendant Agency and Moreno v. Future Care Health Services, Inc.

Rationale. Both of yesterday’s decisions followed the reasoning of Tokhtaman v. Human Care, LLC, decided by the Appellate Division, First Department earlier this year, rejecting the New York State Department of Labor’s (“NYSDOL”) longstanding opinion that workers could be paid for 13 hours per shift, provided they were afforded at least eight hours for sleep time and three hours for meals (the “13-Hour Rule”). The Second Department determined that the NYSDOL’s 13-Hour Rule was an interpretation that was “neither rational nor reasonable” under New York’s minimum wage law and regulations.

Appeal. The Andreyeyeva, Moreno, and Tokhtaman decisions were all unanimous, so there is no automatic right to appeal to the New York Court of Appeals, New York State’s highest court. However, these three decisions stand in stark contrast to decisions in federal courts in New York in which those courts have deferred to the NYSDOL’s 13-hour Rule, namely Severin v. Project OHR and Bonn-Wittingham v. Project OHR. Indeed, in Bonn-Wittingham, the Court considered and expressly rejected the First Department’s reasoning in Tokhtaman. This split between the state courts and federal courts could provide an avenue for review of this issue by the New York State Court of Appeals.

In the meantime, these three decisions present significant challenges for agencies. Without a different decision or government action, agencies may face enormous backpay liability for all their 24-hour cases worked over the past six years.

What questions do these decisions raise?

1. Who is directly affected by these decisions? Are fiscal intermediaries for CDPAP as well as LHCSAs affected? Are non-profit agencies as well as for-profit agencies affected?
2. Who has ultimate liability for having to pay 24 hours pay for 24 hour shifts for the past six years? Are owners of corporations and LLCs personally liable for unpaid wages and taxes? How can owners protect their personal assets?
3. What legal options exist? If the Second Department refuses, as the First Department did, to allow an appeal, what alternative way exists to bring this issue before the New York Court of Appeals?
4. What do you do with 24-hour shift cases you are currently servicing?

FordHarrison LLP advises and counsels home care agencies and Fiscal Intermediaries under the New York State CDPAP on all issues relating to labor, employment and benefits. If you have any questions regarding this Legal Alert or would like our advice about particular facts and circumstances at your workplace, please contact the authors, Stephen Zweig at szweig@fordharrison.com, and Philip Davidoff at pdavidoff@fordharrison.com,  or contact any of the firm’s attorneys in its New York City office at (212) 453-5900.