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DOL Issues Guidance on State Joint Employment Obligations Under New FLSA Regulation

June 24, 2014

In anticipation of the January 1, 2015 implementation of new federal minimum wage and overtime protections for home care workers, the U.S. Department of Labor has released guidance, including an “Administrator’s Interpretation” (AI) and an updated fact sheet, to help states determine how to ensure workers are paid fairly.

The guidance is intended to explain the impact of the new regulations on state Medicaid-funded consumer-directed programs. Specifically, it supports states, as well as public and private entities that participate or administer consumer-directed programs on their behalf, in determining their obligations as potential joint employers under the rules. Entities that are deemed to be joint employers would be responsible for ensuring aides are paid minimum wage, overtime, and travel time between clients, as the revised rule requires third-party employers (e.g. home care agencies, states) to comply with these labor protections without exception.

Consumer-directed programs allow consumers to have control over some functions of employment, such as selecting and hiring the worker and terminating employment. However, the design of these programs and the degree to which consumers oversee the employment of their aides vary widely across states and programs. And in many states, consumers share responsibility for some employment functions with an entity that administers the program on behalf of the state.

To help states understand the “economic realities” tests used to determine joint employment under FLSA, the DOL offers several hypothetical examples based on actual home care programs. The AI also provides guidance as to which employment functions — such as the right to hire or fire, wage setting, and scheduling — are “strong,” “moderate,” or “weak” indicators of joint employment by the state or public entity. Six of the nine of the hypothetical examples included in the guidance illustrate scenarios which constitute joint employment.

This guidance should be helpful to states in understanding their possible legal exposure under the revised rule. It should also ensure that states allocate sufficient funds to their Medicaid programs during their budget processes to pay workers fairly and in accordance with the law by the January 1 implementation date.

The June 19 guidance supplements other fact sheets, assessment tools, and webinar recordings for individuals, family members, agencies, and states posted by DOL in September 2013

PHI also offers Fair Pay resources for advocates, workers, and agencies.

— by the PHI PolicyWorks Team

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