Health Caregiver Registries: Are They Matching Services, Or Employers?

Generally, there are three ways that clients can obtain such services:

• Independently retain a caregiver;
• Retain a home care agency to provide the needed services; or
• Obtain a referral from a caregiver registry that matches clients with providers.

Under the third option, the question often arises: Is the registry the caregiver’s Fair Labor Standards Act “employer?” That question is important because if the registry is an employer, it must ensure that the caregiver is paid no less than the federal minimum wage, plus time-and-one-half for all time over forty hours that the caregiver works in a workweek.

On July 13, 2018, the U.S. Department of Labor’s Wage & Hour Division, issued a Field Assistance Bulletin to help its field staff answer that question.

The WHD first reaffirms two basic principles:

• A registry that simply serves as a client-caregiver matchmaker is not an FLSA employer, even if the registry also provides payroll and other routine administrative services.

• However, a registry that selects the caregiver or controls his or her employment terms and conditions may be the caregiver’s employer and therefore subject to the FLSA’s requirements.

Next, the WHD applies those principles to 10 common registry activities:

1. Conducting Background and Reference Checks. Conducting background checks, even checks that are specific and tailored to state or local laws, does not necessarily make a registry the caregiver’s employer. The conclusion may change, however, if the registry conducts a more probing subjective assessment, such as by determining whether the caregiver is likeable or would be a good fit with the client. This suggests that the registry, not the client, is selecting the caregiver. 
2. Hiring and Firing. Registries often inform their client that a potential caregiver meets the client’s threshold parameters and preferences, and then introduces the two. And, the client is free to accept or decline services from the referred caregiver. If the client hires the caregiver, the registry usually has no right to alter or terminate the terms and conditions of the caregiver’s employment. As with hiring, the ultimate termination decision is the client’s. A registry’s inability to hire and fire employees indicates that the registry is not an employer of the caregiver.
   • In contrast, a registry that (1) interviews or selects a caregiver at the request of the client; or (2) fires a caregiver whose performance falls short, invites the employer designation. That’s because the registry may control the permanency of the client-caregiver relationship, and the caregiver may economically depend on the registry to obtain and/or keep his or her job, which are indicia of an employment relationship.
3. Scheduling and Assigning Work. Clients usually dictate caregiver schedules and work assignments. If a registry does so, it risks an employer designation. Contrast that to registries that merely notify caregivers of work opportunities, such as by posting jobs to an online message board or sending texts or emails to a caregiver to contact a particular client. Doing so does not make them the caregivers’ employer. 
4. Controlling the Caregiver’s Work. Controlling a caregiver’s work also may signal employer status. That includes: (1) dictating how caregivers provide their services; (2) requiring caregivers to accept jobs with specific clients; (3) monitoring caregiver behavior; (4) conducting performance evaluations; (5) defining when caregivers must work; (6) requiring caregivers to call the registry, not the client, if he or she is tardy or needs to take time off; and (7) disciplining caregivers for his or her performance problems.
5. Setting the Pay Rate. To minimize the risk of an employer designation, registries should allow caregivers and clients to negotiate caregiver compensation. A registry that sets the caregiver’s wage or defines what a caregiver may charge for his or her services, signals that it is the caregiver’s employer.  However, merely relaying proposals and counterproposals between the client and the caregiver, likely will not lead to an employer designation.
6. Receiving Continuous Payments for Caregiver Services. A registry may charge clients a fee for its matchmaking service. That fee alone does not indicate that the registry is the caregiver’s employer.  However, a registry whose fees fluctuate based on the number of hours that the caregiver works for the client, may cross the line.  That’s because the fees are based on the ongoing caregiver-client relationship, not the registry’s initial referral or administrative efforts.
7. Paying Wages. A registry often performs payroll-related functions for its clients. Those functions include calculating the amount of wages owed based on the hours worked and the previously-determined pay rate, making the appropriate tax deductions, administering benefits that the caregiver has requested and for which the caregiver pays, and issuing checks or electronic deposits. If the client provides the funds directly or via an escrow account, performing such payroll services does not indicate that the registry is the caregiver’s employer.
   • In contrast, a registry that pays its own funds to the caregiver risks an employer designation. This is true even if the client typically reimburses the registry. Why? Because, in this situation, the registry may be effectively guaranteeing the payment, which makes the caregiver economically dependent on the registry’s funds.
8. Tracking Caregiver Hours. The WHD views tracking and verifying time worked as a form of supervision on which the caregiver depends for payment. However, merely collecting time sheets or requiring the caregiver to submit timesheets does not mean that the registry will be considered the caregiver’s employer, as long as the client, and not the registry, verifies and adjusts the timekeeping information.
9. Purchasing Equipment and Supplies. Purchasing equipment and supplies for a caregiver and investing in his or her training, licensure, and insurance coverage, according to the WHD, point to employer status. 
10. Receiving EINs or 1099s. That a caregiver obtains an employer identification number or liability insurance is “not relevant” to determining whether the caregiver is an employee of the registry. Neither is the designation “employee” or “independent contractor” that a registry gives to caregivers. How the WHD resolves the employer issue turns on a close, fact-specific examination of each situation’s economic realities, without regard to labels.

This is an area in which registries must tread very carefully. A misstep, under the FLSA, could cost a registry crippling sums in unpaid wages, penalties, and interest. Thus, to minimize the risk of liability, we encourage registries, and other companies hoping to avoid an employer designation, to consult with labor counsel.