DOL Asked to Halt Obama-Era Worker Classification Investigations

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By Ben Penn

The Trump Labor Department is considering the home-care registry industry’s request to ease ongoing worker classification investigations that stem from an Obama administration initiative, according to a letter obtained by Bloomberg BNA.

A coalition of home-care registries asked the DOL’s Wage and Hour Division June 30 to suspend the open cases and issue a new policy statement that clarifies how the industry can continue to classify workers as independent contractors, rather than employees, and remain exempt from minimum wage and overtime laws. The registries say they are structured as intermediaries that refer the elderly and disabled populations to available in-home caregivers, allowing workers the flexibility to set employment conditions with their clients.

The document, which was acquired through a Freedom of Information Act request, followed up on a May 1 meeting between industry representatives and DOL officials in Washington. Angelo Spinola, a Littler Mendelson attorney who wrote the letter to the WHD for his home-care clients, told Bloomberg BNA that there are an estimated 15 open investigations, primarily in Florida. Littler Mendelson’s attempts to meet with the department in 2016 were unsuccessful, he said, but the agency’s willingness to hear the concerns this year gives him optimism.

“We weren’t able for many months, until recently, to sit down with the Department of Labor and get any guidance as to what constituted a valid registry,” Spinola said in a Sept. 12 interview. “There may have been an agenda to treat the registry model as the employer of caregivers generally. So I don’t believe that the industry really was getting a fair shake and we’re hoping that will change and that there will be a consistent standard.”

The May 1 meeting was attended by career officials from the WHD and solicitor’s office along with one Labor Department political staffer, Spinola said. The WHD has yet to respond to Bloomberg BNA’s request for comment.

At that sit-down, the “Department of Labor did acknowledge that a valid 1099 registry model could be compliant with the FLSA and there was some recognition that more guidance was necessary,” Spinola said.

Changes in New Administration

Under President Barack Obama, the WHD targeted employers across multiple industries that the agency’s then-director, David Weil, argued were skirting responsibility to employees lower down the chain by unlawfully forcing them into contractor status. Further, the division began enforcing a rule in late 2015 that extended time-and-a-half overtime pay and minimum wage requirements to home-health providers.

But a preamble to this regulation, as written in 2013, includes an example of an arrangement that the DOL states would likely allow registries to maintain caregivers’ exemption status. In the example, the company wouldn’t be allowed to supervise the independent caregiver’s work or to terminate the contract with the consumer.

However, Littler Mendelson alleges some investigators are ignoring this guidance and automatically interpreting registries as the employer.

The firm is asking the WHD to issue an opinion letter, a process reinstated by Labor Secretary Alexander Acosta June 27 with the intention of providing more fact-specific legal clarity. Acosta has yet to lay out his views on worker classification, and the WHD awaits political leadership, as the White House only recently announced a nominee for division administrator—Cheryl Stanton.

The department did signal a softer approach to misclassification enforcement when Acosta ordered the withdrawal of a 2015 guidance memo that explained most workers should be classified as employees rather than independent contractors.

Worker Independence Questioned

Weil wasn’t immediately available for an interview, but an advocate at the National Employment Law Project, which supported his strategies at the WHD, said she hopes the agency continues to pursue misclassification cases in the home health industry.

“Every case requires an investigation,” Caitlin Connolly, who coordinates NELP’s “Home Care Fair Pay” campaign, told Bloomberg BNA. “Rarely is a home care worker truly running an independent business; that’s what it means to be an independent contractor.”

Meanwhile, the registries may have a tougher time proving they aren’t dictating employment terms than the industry and its attorneys state.

“Even with the registries, can they negotiate an hourly rate on their own? If there’s a cost increase in gas or in uniform or in a specific licensure that they have to get, can they pass those costs onto the consumer? If they’re sick or they’re unable to go to work, can they hire someone else to substitute for them?” Connolly said, listing factors that she thinks should be considered in defining the worker’s classification.

Further, the registries don’t reflect the stance of home-care providers who are structured to directly employ their caregivers. These companies compete with the registries for business, especially in the state of Florida.

“The Home Care Association of America supports the idea of enforcing worker misclassification,” Phil Bongiorno, executive director of the HCAOA, told Bloomberg BNA. “We’re on record as supporting the W2 model and would really encourage the Department of Labor to enforce worker classification.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Chris Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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