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Wage and Hour Division (WHD)

U.S. Department of Labor

Wage & Hour Division
Washington D.C. 20210

July 13, 2018 (PDF)

FIELD ASSISTANCE BULLETIN NO. 2018-4
 

MEMORANDUM FOR:

Regional Administrators
Deputy Regional Administrators
Directors of Enforcement
District Directors

FROM:

Bryan Jarrett
Acting Administrator

SUBJECT:

Determining Whether Nurse or Caregiver Registries are Employers of the caregiver

This Field Assistance Bulletin (FAB) provides guidance to Wage and Hour Division (WHD) field staff to help them determine whether home care, nurse, or caregiver registries (registries) are employers under the Fair Labor Standards Act (FLSA). A registry is an entity that typically matches people who need caregiving services with caregivers who provide the services, usually nurses, home health aides, personal care attendants, or home care workers with other titles (collectively, caregivers).

Consistent with WHD’s longstanding position, a registry that simply facilitates matches between clients and caregivers—even if the registry also provides certain other services, such as payroll services—is not an employer under the FLSA. A registry that controls the terms and conditions of the caregiver’s employment activities may be an employer of the caregiver and therefore subject to the requirements of the FLSA. To ensure consistent enforcement, this FAB provides specific examples of common registry business practices, which may, when the totality of factors is analyzed, establish the existence of an employment relationship under the FLSA.

  1. Background
    1. Typical Home Care Registry Business Model

      WHD recognizes that the home care industry serves the important purpose of ensuring that seniors and individuals with disabilities have the support they need to live and remain in their homes and communities. Generally, clients have three options for in-home care: directly and independently hiring a caregiver, hiring a home care agency to provide the services, or obtaining a referral through caregiver registries.1

      WHD has previously issued guidance concerning the FLSA’s applicability to people who hire caregivers directly or employ caregivers through a home care agency. Unlike caregivers and certain home care agencies, a registry may not provide the actual home care services. Instead, a registry typically provides matchmaking and referral services to the client by providing access to its database of qualified, pre-screened, and vetted caregivers. A registry may confirm caregiver credentials, conduct background checks, contact professional references, and engage in other quality-control measures. A registry also typically obtains information from the caregivers about the type of work they are willing to perform, their target compensation, their availability, and other personal preferences when working with clients.

      A registry may also interview the client to learn, for instance, the amount and type of services the client needs, the client’s budget, and the client’s personal preferences. After a client provides such information, the registry usually identifies previously screened caregivers who meet the requirements for the job and facilitates an introduction. After the introduction, the caregiver and/or the client have no obligation to accept the referral. The registry may refer numerous potential caregivers to a client.

      A registry may act as the liaison between the caregiver and the client but does not typically negotiate the terms or conditions of the job on either party’s behalf. For some registries, when a client accepts one of the registry’s referrals, the registry does not usually thereafter control the financial terms or conditions of the home care relationship. Nor does the registry typically control, supervise, or provide training or equipment to the caregiver. Rather, after the match occurs, it may be the client’s responsibility to manage the care. The client may determine, among other things, the type of care provided, the caregiver’s rate of pay, and the caregiver’s hours. The client and the caregiver are free to change the terms and conditions of their relationship at any time.

      In addition to providing matchmaking services, a registry may provide administrative services to the caregivers and clients. These services include recordkeeping, invoicing, collecting and disbursing payments, and other administrative services that are ministerial in nature. Most registries charge an administrative fee for the referral services and the ongoing administrative services. Some registries require a lump-sum payment from the client for the referral.

    2. General Test for Employment Relationship Under the FLSA

      Whether an employment relationship exists under the FLSA depends on the “economic reality” of the circumstances. No single fact about the relationship may conclusively determine whether an employment relationship exists between a registry and a caregiver. Courts have provided several relevant considerations, including whether the potential employer determines the rate and method of payment, whether the potential employer has the power to hire and fire the worker, and whether the potential employer controls the worker’s schedule or conditions of employment. 5

    3. Existing Guidance on Home Care Registries

      For more than 40 years, WHD has maintained that a registry that performs only referral and payroll services is not an employer of the caregivers whom it refers. On the other hand, a registry that directs and controls the caregiver’s work and sets the caregiver’s rate of pay may be an employer of the caregiver. WHD first provided such registry-specific guidance in a 1975 Opinion Letter. The letter confirmed that:

      [T]he ordinary employment agency that refers a nurse to a potential employer is not an employer of the nurse. In such a case, the usual procedure is for the individual referred to contact the potential employer and contract directly with the potential employer as to compensation, hours, and other terms of work.

      WHD Opinion Letter WH-350, 1975 WL 40973, at 1 (July 31, 1975) (“1975 Opinion Letter”).

      In that case, however, the entity did not follow this business model. Rather, the entity “maintain[ed] a log of assignments showing the shifts worked,” “establishe[d] the rate which will be charged,” “exercise[d] control over the nurse’s behavior and the work schedule,” and “exercise[d] a form of discipline.” Id. WHD therefore concluded that the caregiver was the entity’s employee. Id.,

      In 2013, WHD provided additional guidance for registries in the preamble to its regulations concerning domestic service employment. Consistent with the 1975 Opinion Letter, the preamble provided analysis for the following hypothetical scenario:

      ABC Company advertises as a “registry” that provides potential direct care workers. The registry conducts a background screening and verifies credentials of potential workers and assists clients by locating direct care workers who may be able to meet a client’s needs. ABC Company informs Ann, a direct care worker, of the opportunity to work for a potential client. If Ann is interested in the opportunity, she is responsible for contacting the client for more information. Ann is not obligated to pursue this or any other opportunity presented, and she is not prohibited from registering with other referral services or from working directly with clients independent of ABC Company. The registry does not provide any equipment to Ann, and does not supervise or monitor any work Ann performs. ABC Company has no power to terminate Ann’s employment with a client. ABC Company processes Ann’s payroll checks according to information provided by clients, but does not set the pay rate.

      In this scenario, Ann is likely not an employee of ABC Company. There is no permanency in the relationship between the registry and Ann. The registry does not provide any equipment or facilities, exercises no control over daily activities, and has no power to hire or fire. Ann is able to accept as many or as few clients as she wishes. The client sets the rate of pay and negotiates directly with Ann about which services will be provided. However, this does not mean that every “registry” will not be an employer. Rather, a fact-specific assessment must be conducted.

      Id. Final Rule, Application of the Fair Labor Standards Act to Domestic Service, 78 FR 60,454, 60,484 (Oct. 1, 2013).

      Although both the 1975 Opinion Letter and the 2013 preamble provide relevant guidance, additional clarification concerning specific business practices of registries will further assist both WHD and the regulated community.



  2. Determining Whether Caregiver Registries Are Employers Under the FLSA
  3. Determining whether a registry is an employer of the caregiver under the FLSA requires a thorough analysis of the registry’s business model and operations. It is a case-by-case analysis, and no one factor is dispositive. The discussion below addresses some common registry business practices that WHD analyzes during investigations to determine whether an employment relationship exists. It is not an exhaustive list; additional facts relating to the caregiver’s relationship with the registry may be relevant to the analysis.

    1. Conducting Background and Reference Checks

      A registry often performs basic background checks of caregivers. These background checks typically include the collection of objective information concerning the caregiver, such as the caregiver’s criminal history, credit report, licensing, and other credentials. A registry may also perform additional tailored background checks pursuant to either state or local laws. A registry’s performance of such basic or legally required background checks by itself does not indicate that the registry is an employer of the caregiver.6

      If a registry’s background screening evaluates additional subjective criteria, however, it may indicate that the registry (instead of the client) is selecting the caregiver. This may occur, for example, if a registry interviews a prospective caregiver to evaluate subjective factors that the registry values (such as whether the registry finds the caregiver likeable). The registry may also interview the caregiver’s references to assess whether he or she would work well with a particular client. Such actions imply that a registry is pre-selecting caregivers for the client, rather than performing basic quality control and verification checks. In the typical registry business model, it is up to the client to perform such additional, subjective screening after receiving a referral from the registry. Such actions may indicate that the registry is the caregiver’s employer.

    2. Hiring and Firing

      A registry often informs its client that a potential caregiver meets the client’s threshold parameters and preferences, and then introduces the two. The registry does not further participate in the hiring process. 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.

      A registry could, however, play a more active role in hiring or firing caregivers. A registry might, for example, interview or select a caregiver at the request of the client. A registry might also fire a caregiver for failing to comply with requirements and standards established by the industry, the client, or the law. In such circumstances, the registry may control the permanency of the relationship, and the caregiver may economically depend on the registry to obtain and/or keep his or her job. A registry’s exercise of control over hiring or firing decisions indicates that the registry is an employer of the caregiver.

    3. Scheduling and Assigning Work
    4. A registry commonly facilitates initial communication between the caregiver and the client. The caregiver and the client thereafter may independently determine the work schedules and assignments. A registry’s lack of control over work schedules and assignments may indicate that a registry is not the caregiver’s employer. Conversely, a registry’s exercise of control over the caregiver’s work schedules and assignments may indicate that the registry is an employer of the caregiver.

      At times a registry may post to an online message board or send a text or email to all qualified caregivers asking them to contact a particular client if they are interested in working for the client. The registry may also narrow the offer to a subset of caregivers screened by objective criteria, such as those whose availability matches the needs of the client or who can work in a home with a smoker or pets. As yet another alternative, a registry may simply provide a client with access to its entire list of vetted caregivers or a list of caregivers who satisfy the client’s criteria. In any of these scenarios, the registry is providing, not assigning, the work opportunities because it is matching the client with caregivers who meet the requisite qualifications. It is the caregiver’s and client’s burden to pursue the opportunity and structure the terms of their working relationship going forward. Such communications from the registry, therefore, do not alone indicate the existence of an employment relationship.

      A registry might, however, offer work assignments to a subset of caregivers based on the registry’s own discretion and judgment. This may occur, for example, if a registry offers the assignment to a subset of caregivers whom the registry believes would do a better job or are more likeable. Some registries might even directly assign specific caregivers to individual clients. In either scenario, the registry may be exercising control over the caregiver, and the caregiver may economically depend on the registry’s preferences and decisions. These factors may indicate the existence of an employment relationship.

    5. Controlling the Caregiver’s Work
    6. A registry does not plan and provide care for the client, but might seek information concerning the type of care the client needs for matching purposes. The caregiver may not receive any instruction from the registry about how to care for clients. After the referral, a registry may choose to not monitor or manage the caregiver’s methods or work habits. The registry may not, for example, instruct caregivers how to provide caregiving services, monitor or supervise caregivers in clients’ homes, or evaluate caregivers’ performance. The absence of such control indicates that a registry is not an employer of the caregiver.

      On the other hand, a registry may provide training and control the caregiver’s services after making the referral. Control over the caregiver services indicates that the registry is an employer of the caregiver. Examples of such control include setting policies that require a caregiver to provide services in a particular manner; requiring a caregiver to accept jobs with specific clients; visiting the client’s home to monitor a caregiver’s behavior; conducting performance evaluations of the caregiver; setting policies for a caregiver’s time off from work; requiring a caregiver to call only the registry, instead of the client, if the caregiver will be late or miss a shift; and disciplining a caregiver for his or her performance.

      To be sure, there are other ways in which a registry may control a caregiver’s behavior and additionally restrict the caregiver’s ability to independently generate profit and loss—such as limiting the number of clients to whom a caregiver may provide services, limiting the caregiver’s hours, prohibiting a caregiver from registering with other referral services, or prohibiting a caregiver from working directly with clients outside of the registry. The exercise of control over caregivers indicates the existence of an employment relationship.

    7. Setting the Pay Rate
    8. A registry typically does not determine a caregiver’s rate of pay. The client instead negotiates the rate of pay directly with the caregiver. In the alternative, Medicaid or another government program may determine the actual hourly wage rate if they are funding the services. Either scenario indicates that the registry is not determining the caregiver’s rate of pay and, therefore, may indicate that the registry is not the caregiver’s employer.

      Oftentimes both the caregiver and the client will seek the registry’s advice concerning appropriate pay rates. If the registry informs either the client or the caregiver about typical pay rates in the area to serve as a benchmark for negotiations, that does not indicate that the registry is the caregiver’s employer. The registry is simply conveying market information that the parties may ultimately use, or ignore, as they deem fit. Similarly, a registry’s action as a liaison that merely relays communications, offers, or counteroffers between the client and caregiver does not indicate that the registry is controlling the caregiver or acting as the caregiver’s employer.

      Of course, a registry’s decision to effectively set a caregiver’s rate of pay without the caregiver making the ultimate determination indicates that the registry is acting as the caregiver’s employer. This may occur, for example, when a registry designates a set wage range, or when a registry offers tailored direction concerning what a caregiver should charge for specific services that a client needs (as opposed to merely informing him or her of the general market rates in the geographic vicinity). Such behavior indicates the existence of an employment relationship between the registry and caregiver.

    9. Receiving Continuous Payments for Caregiver Services
    10. A registry may charge clients a one-time, upfront fee for the service of matching a caregiver and client. It may likewise perform and charge fees for administrative or ministerial functions (like processing payroll or producing tax documents). Such charges do not indicate that the registry is the caregiver’s employer.

      A registry may instead choose to charge fees that fluctuate based on the number of hours that a caregiver works for the client. Such a registry may have an ongoing interest in the employment relationship, including in the number of hours the caregiver works and whether those hours are tracked accurately. The registry’s fees are based on the ongoing caregiver relationship, not the registry’s initial referral or administrative efforts. The caregiver’s pay then depends, in part, on the amount the registry charges. Such charges, therefore, may indicate that the registry is the caregiver’s employer.

    11. Paying Wages
    12. A registry often performs payroll-related functions for its clients. These functions include, for example, calculating the amount of wages owed based on the hours worked and the previously determined rate of pay, making the appropriate tax deductions, administering benefits that the caregiver has requested and for which the caregiver pays, and issuing a check or electronic deposit. If the client provides the funds directly or via an escrow account, the registry’s performance of such payroll services does not indicate that the registry is the caregiver’s employer.

      A registry’s direct payment of its own funds to the caregiver, however, may indicate that the registry is the caregiver’s employer. This is true regardless of whether the registry typically receives reimbursement from the client because, in this situation, the registry may be effectively guaranteeing the payment even if the client does not ultimately pay. In such circumstances, the caregiver may be economically dependent on the registry, which indicates that the registry is the caregiver’s employer.

    13. Tracking Caregiver Hours
    14. A registry does not typically create and confirm records of a caregiver’s hours worked. It may perform payroll services after the client or caregiver submits time records, as discussed above, but that does not indicate that the registry is the caregiver’s employer. On the other hand, a registry’s active creation and verification of time records may indicate that the registry may be, in fact, an employer of the caregiver. Tracking and independently verifying time worked is generally a form of supervision on which the caregiver depends to ensure proper payment. It therefore may indicate the existence of an employment relationship.

      A registry might collect time sheets from caregivers or offer an electronic time verification system. A registry may also require the correct completion and submission of certain time sheets for purposes of payroll processing. These activities do not indicate that the registry is the caregiver’s employer—as long as the client (not the registry) is the one actually verifying and adjusting the timekeeping information for accuracy.

    15. Purchasing Equipment and Supplies
    16. A registry typically invests in office space, payroll software, timekeeping systems, and other products to operate its businesses. A registry may also provide caregivers with an option to purchase discounted equipment or supplies from either the registry or a third party. These actions, alone, do not indicate that a registry is a caregiver’s employer. But in some cases a registry may purchase equipment and supplies directly for a caregiver, or direct the caregiver to purchase specified equipment and supplies. The registry may also invest in a caregiver’s training or pay for his or her licenses, insurance, or medical supplies. Unlike investments in office space or payroll systems, investments in the tools necessary for the caregiver to perform his or her services may indicate that the registry is acting as the caregiver’s employer, instead of simply a referral service.

    17. Receiving EINs or 1099s
    18. Some caregivers may acquire an Employer Identification Number (EIN) issued by the Internal Revenue Service (IRS). State law requires most caregivers to obtain some type of liability insurance and may also impose bonding requirements. A registry may similarly require an EIN, insurance, or a bond in accordance with the law. These requirements are not relevant to determining whether a caregiver is an employee for FLSA purposes. Calling a caregiver an “independent contractor” or issuing him or her an IRS 1099 form does not preclude the caregiver from being an employee for FLSA purposes.

  4. Conclusion

    WHD will consider the totality of the circumstances to evaluate whether an employment relationship exists between a registry and a caregiver. Because the analysis does not depend on any single factor, and because caregiver registries operate in a variety of ways, WHD will evaluate all factors (including the practices discussed above) to reach appropriate conclusions in each case.

    Please contact the FLSA/Child Labor Branch at (202) 693-0067 with any questions.


Footnotes

1 This FAB refers to “registries” for simplicity and to reflect common terms used in the industry. The FLSA does not define the term “registry.” The title an entity uses does not determine whether it is obligated to comply with the FLSA; instead, the particular facts and circumstance outlined herein control. Additionally, WHD does not recommend or prefer any business model of providing home care services, nor does it offer advice concerning how entities should choose to conduct business. Rather, WHD is issuing this FAB to explain how it determines whether a registry is an employer of caregivers under the FLSA.

2 Additional information is available at https://www.dol.gov/whd/homecare/.

3See, e.g., Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 33 (1961) (citing United States v. Silk, 331 U.S. 704, 713 (1947)); Rutherford Food Corp. v. McComb, 331 U.S. 722, 729 (1947); ); Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir. 2006) (citing Henderson v. Inter-Chem Coal Co., 41 F.3d 567, 570 (10th Cir. 1994)).

4 See, e.g., Haybarger v. Lawrence Cty. Adult Prob. & Parole, 667 F.3d 408, 418 (3d Cir. 2012) (citing Herman v. RSR Sec. Servs., 172 F.3d 132, 139 (2d Cir. 1999)).

5See, e.g., Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1312 (11th Cir. 2013) (citing Usery v. Pilgrim Equipment Co., 527 F.2d 1308, 1311 (5th Cir. 1976)); Haybarger, 667 F.3d at 418 (citing Herman, 172 F.3d at 139); Baystate Alternative Staffing, Inc. v. Herman, 163 F.3d 668, 675 (1st Cir. 1998) (citing Bonnette v. Cal. Health & Welfare Agency, 704 F.2d 1465, 1469-70 (9th Cir. 1983)); Brock v. Mr. W Fireworks, Inc., 814 F.2d 1042, 1043 (5th Cir. 1987) (citing Pilgrim Equipment Co., 527 F.2d at 1311).

6Similarly, in Administrator’s Interpretation 2014-2, WHD previously noted that compliance with mandatory requirements set by the Centers for Medicare and Medicaid Services is not an indicator of employer status.