California operates programs, funded in part through the federal government, that provide domestic in-home services to the elderly and disabled. These homecare providers help with daily activities including housework, meal preparation, and personal care. Since 1974, these services have been provided under California’s In-Home Supportive Services (IHSS) plan. The program is administered partially by California counties, including the County of Los Angeles (the County).
The State, counties, and IHSS recipients all play roles in implementing the IHSS program. For example, the State sets the rules for the program, creates standardized guidelines, and identifies specific services authorized under the program. The counties process recipient applications, handle day-to-day administration, and “act as or establish an employer” for purposes of collective bargaining. Recipients of the IHSS program “retain the right to hire, fire, and supervise the work of any in-home supportive services personnel providing services for them” and are responsible for setting their provider’s schedule.
The County makes a direct payment to program recipients for the purchase of IHSS services. Any IHSS providers in the County are paid directly by the State. The State is responsible for collecting time cards, maintaining timekeeping records, and issuing paychecks drawn on the State’s treasury. The County also created the Public Assistance Services Counsel (PASC) to act as the employer of record for collective bargaining, to establish a registry of potential providers, and provide access to training for providers and recipients. The PASC bills the County for its services.
On January 1, 2015, the federal regulations changed to provide overtime payments to IHSS providers under the Fair Labor Standards Act (FLSA). To implement this change, the State provided letters and guidance to the counties. The County used the State’s letters and training materials to develop handouts, FAQs, and instructions for IHSS providers. In 2017, two homecare providers filed a lawsuit on behalf of themselves and all other similarly situated homecare providers alleging the County and State failed to pay them overtime compensation in violation of the FLSA. After the homecare providers dismissed the State, the County filed a motion to dispose of the lawsuit arguing that it is not an employer of IHSS providers. The trial court agreed and entered judgment in favor of the County.
Under the FLSA, an “employer” must pay overtime compensation to certain employees. An employer is defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Two or more employers may be “joint employers,” and both are individually responsible for compliance with the FLSA. To determine whether an entity is an employer, courts look to the “economic reality” behind the relationship and whether the alleged employer: 1) had the power to hire and fire the employees; 2) supervised and controlled employee work schedules or conditions of employment; 3) determined the rate and method of payment; and 4) maintained employment records.
The court concluded that under these factors, the County was not an employer of the home health care providers. The court noted that the County plays only an administrative role on behalf of the State and that the County has no power, absent State authority, to hire or fire IHSS providers. For example, the County does not have the ability to deviate from the State’s onboarding tasks or independently determine whether to hire IHSS providers. In addition, the court found that the County did not exercise control over an IHSS provider’s employment because the recipient, not the County, is responsible for setting a provider’s work schedule, deciding when a provider should come and go, and paying the provider should the recipient want more services than the hours they were allotted. Further, the court noted that the State pays providers directly and that the County “does not control the purse strings.” Finally, the court noted that there was no evidence that the County maintained providers’ employment records.
Thus, the providers could not maintain their lawsuit against the County.
Ray v. California Department of Social Services, 2020 WL 6784527 (Oct. 27, 2020).
Note:
Although Los Angeles County was not the employer, in this case, FLSA liability can be tremendous. As always, public agencies should ensure they are properly classifying workers to reduce the risk of FLSA liability.