Recently a California care manager posed this question to her colleagues in an online chat forum: Can I continue to work with an elderly client who is paying her caregivers under the table for less than minimum wage? She added that the client’s daughter, who is the power of attorney, is also a CPA. The resounding answer from every respondent was no. The reason is simple. A care manager pledges to be honest and ethical, to uphold the law and work in the best interest of her client. She can’t do those things if the client breaks wage and hour laws, committing what’s known as “wage theft” in California.
In addition, with “joint employer” liability expanding in California, the care manager may risk being held jointly liable along with the client, and potentially the daughter, if the caregivers sue for unlawful wages. Pretending to see or hear no evil will not protect the care manager’s practice or the client’s estate.
“I’ve let the daughter know that I’m terminating our client relationship due to illegal pay,” the care manager followed up a few days later. She added that the daughter, a CPA, responded that she too must change the situation after researching her own potential liability as the person who pays the bills.
California is the toughest state for employers, and households are employers if they bring in even one caregiver or nanny. The law does not allow for caregivers or nannies to be considered “independent contractors”.
Even when seniors or their families hire caregivers, ignorance of the multitude of wage and hour laws is no excuse or defense. In a recent appellate court case, Associate Justice Anne H. Egerton wrote, “We liberally construe state wage and hour laws in favor of the legislative policy to protect workers.”
The case, Liday vs. Sim, was filed in Los Angeles County. Liday was a live-in personal care attendant. Over four years, she worked roughly 18 hours a day during the week and 24 hours a day on weekends caring for the family’s two autistic sons. She sued her former employers, a mother and father who were both doctors in LA, for failure to pay overtime, failure to pay for all hours worked in violation of minimum wage laws, waiting time penalties, etc.
The couple had paid Liday a flat monthly rate, basically $3000. The superior court judge initially awarded Liday $265,000 in back pay, which was reduced to $74,000 in this 2nd District Court of Appeal decision filed on 9/25/2019. (The reduction was based on the fact that much of the work occurred before 2014 when caregivers were not entitled to overtime pay, which they are now.) However, on top of the $74,000 owed in back wages, the couple most certainly had to pay the cost of their own counsel, plus the attorney’s fees for Liday, meaning the real economic penalty was probably double to triple that amount.
In 2014, the Domestic Worker Bill of Rights was enacted in CA, calling for overtime to be paid to caregivers after 9 hours in a day and 45 hours in a week. Based on federal law, the weekly overtime rate actually accrues at 40 hours per week in California. But the rules do not stop there. First, under the Wage Theft law of 2011, caregivers must have their rate of pay written out explicitly. Caregivers must be paid hourly for each hour worked and have their rates defined on each pay check, including which hours are paid at overtime. That means blending the overtime rate with a regular rate to come up with a basic rate of pay is not advised, as it could be misinterpreted. The hours must be recorded and accurate, not rounded, with set pay dates covering set payroll start and end periods.
In California, workers must get mandatory sick pay, an amount which may vary from one city to the next. In San Diego County, the amount may be 24 hours or 40 hours depending on the location of the work. In Los Angeles County, it’s either 24 hours or 48 hours depending on where the caregiver works.
The minimum wage also varies throughout California. In Los Angeles, the minimum wage is $15 an hour. In San Diego, the minimum wage is $14 per hour.
On top of all of that, it’s a misdemeanor for any employer to not have worker’s compensation insurance in place to protect an employee who may become injured at work
AB 5, which passed in 2020, think of Uber and the gig workers, made it even harder for caregivers to be classified as independent contractors, a risky arrangement even before AB 5.
In conclusion, wage and hour laws are extremely strict in California and violations come with a steep price tag. Joint employment liability may apply to anyone involved in hiring, paying or supervising the caregivers. Working with a full-service home care agency helps to reduce that liability, but a best practice is to make sure that the agency pays for each hour worked (including sleep time) pays at least minimum wage, has the proper worker’s compensation insurance (code 8827 in most cases), and assures the client, care manager, CPA or fiduciary that the agency is the employer of record.
About the Author: Lauren Reynolds is the Founder/Administrator of At Home Nursing Care, Inc. licensed and accredited to provide personal care attendant services up to skilled nursing in the home. The agency serves San Diego County and the West Side/South Bay areas of Los Angeles.