Employers of in-home caregivers beware. A recent California court of appeal ruled that an in-home caregiver was entitled to overtime pay under the Domestic Worker Bill of Rights after finding she was an employee rather than an independent contractor.
In Duffey v. Tender Heart Home Care Agency, LLC, the court rejected the employer’s attempt to rely on the standards set forth in the California Supreme Court’s recent Dynamex decision, which resulted in what is now known as the “ABC Test” for determining whether a worker is an employee or an independent contractor.
Prior to 2014, workers hired to provide in-home care and supervision for those unable to care for themselves were not entitled to overtime pay. But when the Domestic Worker Bill of Rights went into effect that year, it essentially eliminated the “personal attendant” exemption from the California Industrial Welfare Commission’s regulations on wages, hours, and working conditions for household occupations.
Since January 2014, domestic work employees must receive overtime wages for all hours worked more than 9 hours per day or 45 hours per week. In response to the overtime payment requirement for employees, some employers in the industry began classifying their in-home caregivers as independent contractors. The Duffy decision upends that approach.
Independent Contractor or Employee – Not as Simple as ABC
Last year’s Dynamex decision changed California’s notions of who was an independent contractor and who was not. Since then, employers in many industries who relied on independent contractors have restructured their business and others have crafted unique ways to describe their relationship with their workers. Those in the home care industry are no exception.
Using the ABC Test analysis, Tender Heart argued that the plaintiff was an independent contractor not subject to overtime. Tender Heart further argued that the plaintiff had signed its Caregiver Contract, which specifies that the signer was an independent contractor and independent domestic worker, in the business of providing care giving services in dwellings.
The Court struck down both arguments:
- The ABC Test. In rejecting application of the Dynamax ABC Test, the court noted that “Dynamex recognized that different standards could apply to different statutory claims.” The Court found that Tender Heart’s power and authority to negotiate and set the plaintiff’s rate of pay (the plaintiff did not negotiate directly with the client) meant that it exercised control over her wages. The Court further found that the plaintiff did not have the opportunity to profit or loss, did not possess skills that go well beyond those possessed by the average person, and that Tender Heart had the ability to terminate at will, all key factors to consider under the old independent contractor analysis.
- The Employment Agency Exception. The Court further considered whether Tenderheart was eligible for the employment agency exemption under the the Domestic Worker Bill of Rights since the Caregiver Contract states it is “engaged in the business of qualifying, screening and referring caregivers,” and “is dedicated to matching the right caregivers to each client’s needs.” But the contract with the caregiver failed to specify how the employment agency’s “referral fee” is paid, essentially precluding use of this exception under Civil Code § 1812.5095.
Keep the Workplace Working: Takeaways
The court in Tender Heart made clear that California courts will look at the independent contractor versus employee inquiry differently depending on the statutory scheme at issue. This only causes more unrest in this area of the law.
It appears California is trending away from unifying its independent contractor law and, therefore, leaving employers with even more questions than they had before. Now more than ever employers need to be cautious in how they classify their workers as different standards may apply to different industries, different statutory schemes, and beyond.