We've brought together a team of educators and home care experts to answer the burning questions that you and every home care owner will ask at some point.
Jeff Wiberg President of the Home Care Association of America board and CEO of Family Resource Home Care
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Debbie Miller Former pharma sales rep who built a $10M home care company and founded 52 Weeks Marketing
Debbie Miller Former pharma sales rep who built a $10M home care company and founded 52 Weeks Marketing
Brett Ringold Vice President of A Long-Term Companion
Mark Johnson EA specializing in home care agencies
Jason Chagnon CEO of Home Care Marketing Pros; digital marketing consultant to senior care businesses
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Becki Harrington-Davis Senior Content Marketing Manager at CareAcademy
Sabrina Sattler Account Executive at Careswitch, home care agency advisor specializing in startup success and longevity
Ilya Vakhutinsky Careswitch CEO, home health aide's son, Forbes 30 Under 30, caregiver advocate
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Rachel Gartner Former home care recruiter who was so successful that she founded her own recruitment firm (Carework)
Gregg Mazza Founded a home care agency, almost ran out of capital after two years, figured things out and scaled past $5M
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Jennifer Ramos Managed and sold three different home care agencies; CEO of JR3 Consulting
Jennifer Ramos Managed and sold three different home care agencies; CEO of JR3 Consulting
Brett Ringold Vice President of A Long-Term Companion
Erica Horner Home care sales consultant & project manager at corecubed
Erica Horner Home care sales consultant & project manager at corecubed
Brett Ringold Vice President of A Long-Term Companion
Jennifer Ramos Managed and sold three different home care agencies; CEO of JR3 Consulting
Angelo Spinola Home health, home care and hospice chair at Polsinelli
Jennifer Ramos Managed and sold three different home care agencies; CEO of JR3 Consulting
Adam Corcoran Director of Business Development at Golden Care, owner of Home Care Flyers, helped build a multimillion dollar agency from the ground up
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Greg Coopman President at SeniorCareCX
Miriam Allred Head of Partnerships @Careswitch, former host of Vision: The Home Care Leaders Podcast
Brian Cottone Jr. Benefits expert at VItable Health
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Jeremy Fuller Managing Director of Grow Home Care Marketing; website, SEO, and digital marketing expert
Julio Briones Home care consultant specializing in helping 7-figure home care agencies grow
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
Connor Kunz VP @Careswitch, former head of education @ Home Care Pulse, scaled a service business 7 figures in 3 years
There are several very important, very specific ways. Before we get to that, let’s talk briefly about why it’s important:
The Department of Labor (DOL) has significantly ramped up its audits of home care agencies over the past several years.
Here’s what happened: with several major legislative changes to home care in the 2010s, such as removing companion care overtime exemption and mandating that home care workers be treated as W-2 employees rather than 1099 contractors, home care become a Wild West as agencies tried to adapt to the new landscape.In 2021, the DOL became aware of this and announced a new Home Care Initiative aimed specifically at wage and payroll compliance within our industry.
As of September 2022, 7% of all DOL audits in the last year have been within the home care industry. Many of these resulting in settlements in the hundreds of thousands of dollars or more.
The bottom line is that litigation against home care agencies is ramping up, and it’s more important than ever to run a tight ship.
It’s the right thing to do. While no one is obligated to agree with every point of legislation regarding their business (and let’s face it, does anybody?), these laws are generally enacted to protect caregivers and their livelihoods. Failing to comply with payroll laws typically hurts the caregiver’s paycheck long before it hurts the agency.
So, what are the main areas where agencies often fail to comply with laws and what can you do to make sure you’re operating within the law?
Misclassifying your employees as 1099 contractors.
Your employees need to be classified as W-2 employees, not 1099 independent contractors. Home care registries, as opposed to agencies, are allowed to classify their employees as 1099s. However, registries are a very different business model from agencies, and they involve sacrificing a great deal of the control that agency owners have over their business.
It’s not unusual to hear an agency owner wonder if they’re allowed to classify employees as 1099s based on the fact that their competitor down the street is doing so.If your competitor is classifying their employees as 1099s, there are only two reasons: they’re either a registry, or they’re breaking the law. There are no other alternatives.
Not including all relevant types of pay when you’re calculating their overtime pay.
You’re aware that overtime is 1.5x an employee's effective pay rate—but the effective rate isn’t always the same as their hourly base pay rate.The effective rate is calculated as the total renumeration (legally relevant/includable pay) divided by the hours they worked. As such it can often be a little higher than the employee’s base hourly rate, resulting in a slightly higher overtime rate.The effective rate isn’t only an employee’s normal wage; it should also include various types of other compensation that they may or may not be receiving.
If, for example, you’re paying a caregiver on-call pay, performance bonuses, and shift differentials, those should be added to their pay as the renumeration to determine the overtime rate for the designated time period.For a list of what should and shouldn’t be included in these calculations, go to the DOL website and/or consult your own legal counsel.
Not paying for travel time between shifts.
This one gets DICEY.Travel time between clients during the workday is legally compensable as hours worked. Thus, if you’re requiring caregivers to drive between multiple clients in a day, you’re required to pay them for the travel time—and possibly the break between, if it’s not long enough to pursue personal activities.If there is a long break (typically 30 minutes or more uninterrupted) between two client visits AND the caregiver is completely free to pursue personal activities, you can exclude the break time from hours worked. Otherwise, you’re required to pay for the entire time between shifts.
However, DOL has taken the position that you must still pay for estimated travel time driving between the two clients.Avoid any problems with this by making sure your caregivers know that you want to pay for all time worked. Write the travel time into their contracts – “if at any point the travel time increases, make us aware immediately and we’ll pay you for the additional time.” You need to have a reasonable process in place to ensure that caregivers can get paid for an increase in travel time if it changes.
Engaging in rate manipulation.
Rate manipulation is essentially any changing of rates to evade paying your employees full overtime. This may include reducing hourly rates when they start working overtime, or changing rates on a weekly basis in order to pay a set target amount every week.Rate adjustments are permissible if it’s paying the caregiver for a different type of work (they’re working as a mentor or in the office in addition to caregiver, for example), or premiums for certain types of shifts (24-hr shifts, weekends, holidays, etc.).
If you’re in any doubt as to whether what you’re doing is legal, contact your legal counsel. Don’t take the risk.
Failing to properly pay on-call shifts.
This can include:
This is legal content so we gotta include our legal disclaimer: the above content was adapted in part from a presentation by Josh Vaughn of Littler, a law firm focused on labor law. Josh specializes in defending home care agencies, and Littler is among the leading firms in the space. The above content is educational in nature and in no way replaces the advice of your own legal counsel; likewise, this content doesn’t represent Littler in any way.