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Counties May Be Liable For IHSS Provider Overtime
California’s In-Home Supportive Services Program (IHSS) offers in-home supportive services to eligible low-income elderly, blind, or disabled individuals (i.e., program recipients). IHSS providers help recipients with their daily activities and chores. More than 500,000 individuals work as IHSS providers throughout California.
Courts have long debated the nature of the legal entity that employs IHSS providers because of the complex relationships between IHSS providers, care recipients, counties, and the State of California. For example, IHSS recipients supervise, hire, and fire IHSS providers, set provider work schedules, and review and approve provider time sheets. The State of California receives IHSS provider timesheets, approves new pay rates that counties set, and issues paychecks to IHSS providers – sometimes directly, sometimes indirectly. Counties set IHSS provider pay rates, recruit IHSS providers, maintain databases of possible providers for recipients, and generally set IHSS provider work hours. Moreover, California law allows a county to establish a separate public authority to deliver in-home supportive services, and that public authority is the employer of record of IHSS providers for purposes of collective bargaining only – not for other legal liability. Finally, funding for IHSS programs is split between counties and the State, with a portion of the state contribution deriving from the federal government.
In 2013, the U.S. Department of Labor (DOL) issued a new rule entitling IHSS providers (and other homecare workers) to overtime pay under the FLSA. The rule was intended to go into effect on January 1, 2015. However, the validity of the rule was challenged in federal court. That litigation was resolved in October 2015. The State of California began paying overtime to IHSS providers on February 1, 2016.
In June 2017, IHSS provider Trina Ray filed a suit for unpaid overtime against the County of Los Angeles (County) seeking overtime wages due between January 1, 2015, and February 1, 2016. Ten thousand other IHSS providers working in the County of Los Angeles joined Ray’s collective action lawsuit.
At the outset, the County asked the Court to dismiss the case, arguing it was immune from suit under the Eleventh Amendment of the U.S. Constitution. In 2019, the Court ruled against the County on its immunity argument, and Ray’s case went forward.
The County next argued that Ray could not win her case because the County did not employ IHSS providers under the FLSA definition of joint employment. The County argued this despite a Ninth Circuit ruling from 1983 that held the state and counties were joint employers of IHSS providers under the FLSA. According to the County in the new Ray case, the economic reality of the relationship between the County and IHSS providers had changed since 1983 such that the County was no longer a joint employer under the FLSA.
The 1983 Ninth Circuit case mentioned above that held that the state and counties were joint employers of IHSS workers under the FLSA was Bonnette v. Cal. Health & Welfare Agency. (Note: because the DOL had not construed the FLSA’s overtime rules to apply to IHSS providers until 2013, the issue in Bonnette was whether IHSS workers were owed minimum wage.)
Under Bonnette, a joint employer relationship may be established by looking at numerous factors to evaluate the “economic reality” of an employer’s relationship with a worker, the most important factors are (1) who has the power to hire and fire the employees; (2) who supervises and controls employee work schedules or conditions of employment; (3) who determines the rate and method of payment; and (4) who maintains employment records. The Bonnette court concluded that counties were joint employers of IHSS providers under this standard.
In Ray, the County argued it was no longer a joint employer of IHSS providers due to new ways IHSS providers are paid under the California IHSS program. While the County used to pay providers directly or pay the recipients (who then paid the providers), now the State issues paychecks directly to IHSS providers. The Court rejected the County’s argument, reasoning that the State’s issuance of a paycheck does not free the County from a joint employer relationship. Instead, the Court noted the various ways in which the County continues to exert a significant amount of economic control over IHSS workers, including the following: contributing a greater share of funding to the IHSS program; setting IHSS provider pay rates through collective bargaining, and sometimes choosing the providers’ method of payment. The Court also noted various ways in which the County continues to exercise significant control over the employment relationship, including that the County determines the tasks IHSS workers will perform, as well as their work hours, and that from the IHSS workers’ perspective, the County is the public face of the employer of IHSS providers.
Based on the above factors, the Ninth Circuit concluded that the County maintains both economic and structural control over IHSS providers, rendering it a joint employer under Bonnette. Note that although the Court analyzed facts specific to Los Angeles County, to the extent that facts are similar in other counties, the Court’s reasoning would be applicable to other counties.
An employer that violates the FLSA is subject to liquidated damages in an amount equal to back pay owed unless it can show the violation was not in bad faith. In Ray, the Court found no evidence of bad faith – even though the County failed to pay overtime owed from January 1, 2015, through February 1, 2016. This is because, regardless of the County’s efforts to do otherwise, the County was not able to provide overtime compensation until the State made it available. The State did not start paying overtime until February 1, 2016.
Moreover, despite the State’s delay, the County provided training on implementing the new FLSA overtime requirements. Because the Court found the County’s decisions to have been made “above board and justified in public,” this served as evidence that the County’s actions were more likely to have been made in good faith.
Ray v. Los Angeles Cnty. Dep’t of Pub. Soc. Servs., 52 F.4th 843 (9th Cir. 2022).
Counties should expect an uptick in FLSA claims in the wake of the Ray decision. Although counties may not know the extent to which IHSS providers work hours over forty per week, IHSS program directors should work with legal counsel and other key county personnel to manage the effects of the Ray decision.