NY Court of Appeals Upholds 13 Hours Pay for 24-Hour Shift Home Health Aides

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.

Upstate Federal Court Holds Fiscal Intermediary a Joint Employer of Personal Assistants

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.

Home Care Agencies Sued for Illegal Use of Captive Insurance Company

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

What are WPA Creditable Benefits?

Executive Summary. Home care agencies in New York are still experimenting with different ways to meet the State’s Wage Parity Act (“Act” or “WPA”) requirements. The Act requires a minimum basic wage (cash) of the applicable New York State minimum wage plus additional wages or supplemental wages (i.e., benefits) equal to another $4.09 per hour in NYC or $3.22 per hour in Nassau, Suffolk and Westchester counties (the “WPA Package”).

Options for WPA Packages. Some agencies prefer to provide the entire required amount as cash wages; that, however, causes the entire amount to be subject to employment taxes, which are an additional cost to the agency but are not creditable against the WPA Package. Other agencies provide some additional cash wages plus some non-taxable benefits, such as minimum value health plan coverage in order to avoid penalties under the Affordable Care Act. Still others provide additional benefits, creating a WPA Package that provides everything from transportation benefits to cell phone plan reimbursements.

Advantages of Benefits vs. Cash. The goal for agencies is to deliver the WPA package in a way that is tax advantaged. When this is done properly, it can be a “win-win” for the agency and the worker. The agency takes an income tax deduction for the actual cost of providing benefits and avoids employment tax costs, plus the entire amount is creditable against the agency’s WPA obligation. The worker receives the benefits at no cost and, in most cases, without tax, making the benefits more valuable to the worker than additional cash wages.

Pitfalls with Tax-free Benefits. But this win-win situation for the agency and worker is not always easy to achieve. Not everything qualifies for tax-advantaged treatment – it requires complying not only with the WPA, but also with many other federal and state laws, including the Internal Revenue Code, ERISA, the Affordable Care Act, and wage and hour laws, including the NYS Domestic Workers’ Bill of Rights. Each of these laws has specific rules about how benefits must be set-up and operated. Just because a benefit meets the standards of one law doesn’t mean it meets the standards of the other—for example, if a cell phone plan reimbursement program meets all the standards to be tax qualified under the Internal Revenue Code, it is not a creditable cost towards the WPA Package. When the requirements of all of these laws are ignored, agencies expose themselves to government audits, penalties and employee lawsuits. Agencies must consider all these laws and how they interact when choosing WPA benefits.

What to Consider When Choosing WPA Benefits to Offer. In order to take credit for a benefit, agencies may generally consider any non-wage payment that primarily benefits the employee rather than the agency. This, however, is not a very clear standard, and a number of factors must be taken into account in choosing benefit offerings. For example, some benefits provide tax benefits both to the agency and the worker; others do not. Some benefits require that a formal “plan” be established, while others can simply be set up as payroll practices without a formal plan. Some benefits will provide full dollar-for-dollar credit against the agency’s WPA obligation; others will not. Each benefit has its own characteristics, advantages and disadvantages, and tax consequences, both to the agency and the worker.

Conclusion. Choosing, setting up, and administering benefits under the WPA is not straightforward. You should carefully consider each benefit and consult with an experienced attorney representing your interests to make sure your benefit will be creditable under the WPA, tax advantaged, and not leave you exposed to audits and lawsuits under various state and federal 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, Jeffrey Ashendorf at jashendorf@fordharrison.com and Stephen Zweig at szweig@fordharrison.com, of the firm’s Homecare Industry Law Group in its New York City office at (212) 453-5900. Also, please visit our blog at http://www.homecareemploymentlaw.com for additional developments and information.

The State Budget: What LHCSAs Need to Know

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.

The State Budget: What CDPAP Fiscal Intermediaries Need to Know

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”

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.

DOH Extends Deadline for Fiscal Intermediary Authorization Application to Dec. 15

Notice of Extension.  The New York State Department of Health (DOH) has extended the deadline from November 30 to close of business on December 15, 2017 for currently operating Fiscal Intermediaries under the Consumer Directed Personal Assistance Program (CDPAP) to submit their Applications for Fiscal Intermediary Authorization.

Currently operating Fiscal Intermediaries must now submit the Authorization Application by December 15 or cease operations immediately. Those who are not yet a Fiscal Intermediary but wish to become one should also submit their Authorization Application by December 15 in order to be among those first to be reviewed.

FAQs Issued. Also today, the DOH issued FAQs addressing the Authorization Application. These FAQs can be found at:


The FAQs answer questions raised after the Authorization Application was issued, as follows:

  1. You must obtain your FI Authorization from DOH before you request a Medicaid Provider Identification number, and the Medicaid number for your FI must be separate from any LHCSA Medicaid number.
  2. You can submit an Authorization Application that is not totally complete to comply with the December 15 deadline, as long as you exercised due diligence to submit an application that was as complete as possible. This implies that you will be able to supplement your application. However, the thoroughness of your application will set the timeline for its review.
  3. As requested in the October 2017 Medicaid Update, (although not specifically requested in the Authorization Application), you are required to submit your marketing and outreach materials in pdf format, and any videos and audio segments in their original format, if they cannot be altered to pdf.
  4. DOH will use the CDPAP statute’s and regulations’ parameters in reviewing your marketing and outreach materials to determine whether they comply with the roles and responsibilities assigned to FIs and consumers.
  5. If you fail to submit your Authorization Application by December 15, your FI is deemed out of compliance with the CDPAP statute, is not authorized to operate as an FI, and is subject to contract termination protocols of your MCOs. However, the additional sentence, “Until the Department receives the Authorization application, the FI will remain out of compliance,” raises the question of whether a late filing can be cured and what the ramifications of a late filing will be to an FI.
  6. All Board members must sign the written resolution authorizing the application’s submission.
  7. Submit the Survey or other mechanism you intend to use to obtain input from consumers and other interested parties; if not available, indicate what you intend to develop to meet this requirement.

FordHarrison LLP advises and counsels Fiscal Intermediaries under CDPAP and 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 the author, Stephen Zweig, szweig@fordharrison.com or (212) 453-5900, or contact any of the other attorneys of the firm’s Homecare Industry Law Group in its New York City office. Also, please visit our blog at homecareemploymentlaw.com for additional developments and information.

Appellate Court Nixes Employee Arbitration Agreements – What Does This Mean for Home Care Employers?

Notice: By decision dated July 19, 2017 (the “Decision”), the Appellate Division, First Department (the “First Department”) (which has jurisdiction over Manhattan and Bronx) held that arbitration agreements obligating employees to waive their rights to bring collective disputes, such as class actions regarding wage disputes, were unlawful and unenforceable because they “run afoul of the National Labor Relations Act” (the “NLRA”). Though freely acknowledging that the United States Supreme Court will resolve a similar issue in its October 2017 Term, the Decision currently binds the trial courts in Manhattan and the Bronx and has precedential effect for other trial courts throughout New York. The Decision can be appealed to New York’s highest court, the New York Court of Appeals.

How Did this Issue Come Up?

In Gold v. New York Life Insurance, former insurance agents engaged as independent contractors by New York Life Insurance Company (“NY Life”) asserted violation of New York Labor Law and sought recovery of underpayment of wages. Each agent’s contract contained a provision requiring arbitration of claims or disputes with NY Life. By these agreements, the insurance agents also waived any right to bring their claims on a class, collective or representative basis. On appeal from summary judgment in favor of NY Life, the First Department interjected itself into the national debate concerning enforceability of class and collective action waivers in the context of wage and hour litigation by refusing to enforce NY Life’s arbitration agreements.  The court held that these agreements were unenforceable because their class and collective action waivers violate the NLRA. The Decision is significant in that the First Department rejected the current and longstanding position held by the Second Circuit of the U.S. Court of Appeals (the “Second Circuit”) (which court’s jurisdiction includes Manhattan and Bronx) that upholds class and collective action waivers, and sided with the United States Court of Appeals for the Seventh Circuit in deeming such agreements to have an effect of unlawfully abrogating employees’ right under Section 7 of the NLRA.

What Does the Decision Mean for Home Care Employers?

Until the United States Supreme Court rules otherwise in its upcoming term, the Decision is troubling for New York employers who have relied on the United States Supreme Court’s and Second Circuit’s decisions upholding employee waivers to commence and/or participate in collective, class or representative actions. Following so soon after the First Department’s decision in Tokhtaman v. Human Care LLC, ruling that 24- hour workers are entitled to 24 hours of pay, the risk of class action 24-hour cases has increased as has the risk that Wage Parity Act claims will be added.

Plaintiffs’ attorneys seeking to assert wage claims that arose in Manhattan and Bronx will likely elect to avoid the U.S. District Court for the Southern District of New York and not pursue claims under the Fair Labor Standards Act, and assert only wage claims under New York Labor Law in state court.

Since arbitration agreements with class action waivers may no longer offer employers protection from class actions in state trial courts, we encourage home care agencies to review and evaluate their current wage and hour practices, implement regular self-audits, especially of their 24-hour cases, and undertake immediate corrective action in the event non-compliance is identified.

 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.

Compensating Aides for 24-Hour Cases: The Latest

On August 15, 2017, the Appellate Division, First Department, which had earlier held that 24-hour “sleep-in” aides must be paid for all 24 hours, denied a motion to reargue or further appeal its decision to the New York Court of Appeals, New York’s highest court. Though significant, it is unlikely that this will be the last word on this issue.

Recent History. For several years, federal and state courts in New York have grappled with the issue of compensating home health aides for 24-hour “live-in” or “sleep-in” shifts under New York Labor Law.

Beginning in 2012 with Severin v. Project OHR, and continuing as recently as May 2017 with the Bonn-Wittingham v. Project OHR case, United States District Courts in New York have said that 24-hour shift workers who are afforded eight hours of sleep time (at least five hours of which are uninterrupted) and three hours for meals may be paid for 13 work hours. The New York Department of Labor has long maintained that this approach is consistent with the New York Labor Law.

In contrast, beginning in 2014 with Andryeyeva v. New York Health Care, Inc., and as recently as 2017 with Tokhtaman v. Human Care, LLC, state courts have rejected the NYDOL’s opinion and the deference provided to that opinion by the federal courts, holding that aides working 24-hour shifts must be paid for 24 hours. One notable exception in New York State courts is Moreno v. Future Care Health Servs., Inc., in which the Kings County Supreme Court found similarly to the federal courts.

As these cases have made their way through the courts, the split between the federal and state courts has deepened. So where do the cases presently stand?

NYS Courts. In April 2017, in the first appellate-level decision to address the issue, the Appellate Division, First Department, covering Manhattan and the Bronx, upheld a lower court’s decision in Tokhtaman v. Human Care, LLC, requiring aides to be paid for 24 hours. On August 15, 2017, the Appellate Division, First Department denied the agency’s motion to reargue and also refused to permit it to appeal to the New York Court of Appeals.

Tokhtaman was decided was decided by the Appellate Division, First Department less than one year after its initial filing in the lower court. Contrast this with the Andryeyeva case. The complaint in Andryeyeva was filed nearly seven years ago. The supreme court’s decision concluding that sleep-in aides were entitled to 24 hours’ pay for 24-hour shifts was issued in September 2014 and was promptly appealed. The appeal has since then been pending before the Appellate Division, Second Department, covering Kings, Queens, Richmond, Westchester, Nassau and Suffolk counties. Oral argument in the Andryeyeva appeal and the Moreno appeal was held in tandem in January 2017. To date, no decisions have been reached.

Federal Courts. While the Andryeveva appeal has been pending in state court, another federal court has waded into the controversy. In December 2016, the United States District Court for the Eastern District of New York in Bonn-Wittingham v. Project OHR agreed with the analysis of the Severin court and deferred to the NYDOL’s opinion regarding payment of 13 hours to 24-hour shift aides. In May 2017, Plaintiffs brought to the Court’s attention the Appellate Division, First Department’s decision in Tokhtaman, arguing that it represented a change in the controlling law on the issue and that the Court’s earlier decision applying the NYDOL’s 13–hour Rule should be revisited.

The Court promptly, and quite pointedly, rejected Plaintiffs’ position. The Court noted that the Appellate Division, First Department is a “state intermediate court” whose decisions are not “controlling.” Furthermore, the Court said that the New York Court of Appeals “is not likely to follow Tokhtaman” because the NYDOL’s interpretation of NYLL is “entitled to deference” by the Courts, particularly where, as here, the NYDOL’s interpretation does not conflict with the law and is otherwise reasonable. Notably, the Court cited the Moreno decision in support of its rejection of Tokhtaman.

Conclusion. The Appellate Division. First Department’s Tokhtaman decisions have decided for now the issue of pay for 24-hour shift home care workers who work within its jurisdiction (i.e., Manhattan and the Bronx). By refusing to allow an appeal of its decision to the New York Court of Appeals, the Appellate Division, First Department has heightened concern and interest in the pending Andryeyeva appeal in the Appellate Division, Second Department. If the Appellate Division, Second Department holds differently in Andryeyeva, aligning with the federal courts, it would have a significant impact and almost certainly set the stage for the issue to be decided by the New York State Court of Appeals.

Participating in New York’s CDPAP Is Necessary to Maintain Your Caseload

Why Has CDPAP Become So Popular? 

Publicity. Radio, newspaper, and subway ads are driving Medicaid home care clients and home care workers to abandon traditional home care agency programs for the greater flexibility and freedom of choice of New York’s Consumer Directed Personal Assistance Program (“CDPAP”). Managed care companies are also on board, offering this as an alternative to traditional home care. The benefits to all are many and the restrictions are few, unlike traditional home care.

Contracts. Managed care companies contract with a “Fiscal Intermediary,” a business entity created solely to provide payroll and benefit administration services under the CDPAP. The Fiscal Intermediary, in turn, contracts with Medicaid recipients, known as “Consumers,” referred by the managed care company. Continue reading