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Current law limiting the amount of time personal attendants spend on tasks other than caregiving may represent liability issues for employers

By Kevin Rehwald
Kevin Rehwald is a named partner in Chaleff Rehwald, an employment law firm in Woodland Hills that places special emphasis on litigating caregiver wage and hour cases.

Many private households employ caregivers to supervise, feed, and care for elderly relatives and disabled family members. The assistive services these caregivers provide allow many incapacitated individuals to remain in their homes and avoid being placed in a facility. Despite the critical value of their services, until very recently, most in-home caregivers were not entitled to overtime compensation. This circumstance changed with the enactment of the Domestic Workers Bill of Rights1 (DWBR), which became law in 2014.

The DWBR substantially limits the overtime exemption for in-home personal attendants, which had prevented many caregivers from receiving overtime wages. Typically, California employees are entitled by statute to receive overtime compensation for all hours worked in excess of eight hours in a day or 40 hours in a week.2 An employer is relieved of its obligation to pay overtime wages if it can affirmatively establish that all of the requirements for an exemption have been met.3 Therefore, the DWBR’s limitations on the personal attendant exemption ex-panded the class of caregivers who are now eligible to receive overtime wages.

Wage Order 15 Considerations

Prior to the enactment of the DWBR, wage order 15, promulgated by the Industrial Welfare Commission (IWC), governed the wages, hours, and working conditions of persons employed in “household occupations.”4 The IWC was defunded in 2004, but its wage orders are still in effect,5 and courts continue to treat wage orders as quasilegislative regulations.6 Under wage order 15, the term “household occupations” means “all services related to the care of persons or maintenance of a private household or its premises by an employee of a private householder.”7 The wage order also contains a nonexclusive list of covered workers, which includes companions, cooks, graduate and practical nurses, house cleaners, housekeepers, and maids.8 Because the primary work of in-home caregivers is to feed, supervise, and care for incapacitated individuals, they fall squarely within the ambit of wage order 15.

The pre-DWBR personal attendant ex-emption for in-home caregivers provides that except for the rules governing minimum wages, the limitations on meal and lodging credits, and the enforcement and remedy provisions, the requirements of the wage order do not apply to personal attendants.9 Notably, personal attendants are exempt from part 3 of wage order 15, which contains the rules mandating payment of overtime and double-time wages, and from parts 11 and 12, which require employers to provide meal and rest periods.

Wage order 15 defines the phrase “personal attendant” such that it “includes baby sitters and means any person employed by a private household, to supervise, feed, or dress a child or person who by reason of advanced age, physical disability, or mental deficiency, needs supervision.”10 The definition also states, “The status of a ‘personal attendant’ shall apply when no significant amount of work other than the foregoing is required.”11 Accordingly, the personal attendant exemption described in wage order 15 has two requirements. First, the employee in question must work in a private household supervising, feeding, and dressing an incapacitated individual. Second, the employee must have no other substantial duties. Wage order 15 does not further define the parameters of the exemption. Therefore, it fell to the courts to clarify these requirements.

Regarding the second element, the pre-DWBR cases held that the phrase “no significant amount of [other] work” limited the total work time that an employee could spend on tasks other than dressing, feeding, and supervising.12 Specifically, a personal attendant would lose the exemption if he or she spent more than 20 percent of the work time performing tasks other than dressing, feeding, and supervising.13 There is no explicit basis for the 20 percent rule in the language of wage order 15. The cases that adopted the rule relied on various external authorities, the most important of which were publications of the Division of Labor Standards Enforcement (DLSE).14 The DLSE is the state agency tasked with enforcing the IWC wage orders.15 While its publications, such as opinion letters, enforcement manuals, and interpretive bulletins, are not binding on courts, they may be considered for their persuasive value.16

The first element of the personal attendant exemption looked at which duties would be counted as exempt versus nonexempt when determining if the 20 percent threshold had been met. Here, the language of the wage order is relatively clear. A personal attendant is one who works in a private home supervising, feeding, and dressing an incapacitated individual.17 As discussed in Cash v. Winn, “[u]nder the plain language of this provision, an employee is a personal attendant if the work is directed primarily at supervising, feeding, or dressing the client.”18 The court there further explained, “the word ‘supervision’ with respect to an elderly client refers to assisting the person with daily tasks to allow the individual to remain living in the home.”19 These tasks include “assistance with bathing, showering, accessing medicines, money management, and housework limited to the direct personal space of the supervised person.”20

While housework related to the direct personal space of the incapacitated individual was exempt, general housekeeping unrelated to caregiving was not.21 Another important distinction was that the provision of medical services, such as taking a temperature or pulse or assisting with an over-the-counter blood sugar test, was counted as nonexempt work.22 However, the vast majority of caregivers, especially those caring for the elderly, will be required to perform some health tasks related to care. Therefore, under wage order 15, a caregiver would not lose the exemption merely because he or she provided some health care aid. Nevertheless, an employee would be considered a nonexempt practical nurse if medical services occupied more than 20 percent of the caregiver’s work time.23

The policy behind wage order 15’s personal attendant exemption was to provide private households with access to affordable assistance with daily living tasks so that incapacitated individuals can remain living in their homes.24 One way that private households typically arrange for affordable care is to hire a single, live-in caregiver who is responsible for 24- hour supervision. Wage order 15 has special provisions protecting live-in workers.25 The short rule is that live-in employees are entitled to premium pay for all hours worked in excess of nine in a day or 45 in a week. They must also be paid overtime and double time on any sixth and seventh day of work if they do not receive one day off each week of 24 consecutive hours.

While these special provisions would seem to have permitted some measure of protection to live-in personal attendants, they did not. The live-in rules are contained in part 3 of wage order 15, and, personal attendants are exempted from the entirety of part 3, including the live-in provisions. This highlights the disparity between personal attendants and all other domestic employees under wage order 15. Before the DWBR, personal attendants were not entitled to any overtime compensation, even if they provided 24-hour, live-in care, seven days a week. Personal attendants did not have to receive any duty-free meal or rest breaks. Furthermore, unlike many other exemptions, such as the executive, administrative, and professional exemptions, personal attendants did not have to be paid a salary equal to two times the applicable minimum wage for full-time work. In other words, an employer could lawfully require a personal attendant to work 24 hours a day, six days a week26 and only pay that employee the minimum wage. Many in-home caregivers have limited education and employment op-portunities. Therefore, wage order 15’s personal attendant exemption created a situation in which some of the most vulnerable employees were also some of the least protected and most exposed to unfair employment arrangements.

The DWBR closes the wage gap between personal attendants and other domestic workers. The DWBR applies to any “domestic work employee.”27 A domestic work em-ployee is defined as “an individual who performs domestic work and includes live-in domestic work employees and personal attendants.”28 The definition of “domestic work” in the DWBR incorporates much of wage order 15’s definition of household occupations. This makes the coverage of the DWBR coextensive with that of wage order 15. Domestic work under the DWBR means “services related to the care of persons in private households or maintenance of private households or their premises.”29 The definition also includes a nonexclusive list of covered employees that focuses on caregivers. It expressly covers childcare providers and caregivers for the disabled, sick, convalescing, and elderly.30 Thus, the DWBR is designed to protect caregivers.

The main feature of the DWBR is that it substantially limits wage order 15’s personal attendant exemption. It states that any domestic work employee who qualifies as a personal attendant must be paid “one and one-half the employee’s regular rate of pay for all hours worked over nine in any workday and for all hours worked more than 45 hours in any workweek.”31 While the DWBR mandates overtime pay for personal attendants, it does not require that they receive meal and rest periods. And, unlike wage order 15’s live- in provisions, the DWBR does not require the payment of double time on the sixth or seventh workdays if the employee does not receive a day off. Otherwise, the DWBR’s overtime rules are very similar to wage order 15’s live-in provisions.

The DWBR expressly excludes certain employees from its reach. These employees include any person providing services through in-home supportive services, close family members, certain babysitters, any person employed by a licensed health facility, and individuals who are compensated through various state programs to care for the developmentally disabled.32 With the exception of employees working in licensed health facilities, who are covered by wage order 5, the excluded employees remain subject to the personal attendant exemption of wage order 15.

The DWBR’s definition of “personal attendant” also tracks the language of wage order 15. Under the DWBR, a personal attendant is any person employed in a private household “to supervise, feed or dress a child, or a person who by reason of advanced age, physical disability, or mental deficiency needs supervision.” Again, the definition applies when “no significant amount of work other than the foregoing is required.”33 Unlike the wage order, the DWBR explicitly defines the phrase “no significant amount of [other] work” to mean that the total time a personal attendant spends on tasks other than feeding, dressing, and supervising cannot exceed 20 percent.34 As such, there is no need to resort to external DLSE materials to support the 20 percent rule.

The DWBR’s definition of a personal attendant also helps clarify who qualifies as an employer. A personal attendant includes “any person employed by a private householder” as well as any person employed by “any third-party employer recognized in the health care industry to work in a private household.”35 This new language dovetails with the DWBR’s definition of a “domestic work employer.” Here, the DWBR takes the wage order’s definition of an employer and builds upon it. Under the wage order, an employer is “any person…who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions.”36 As recently discussed by the California Supreme Court in Martinez v. Combs, this is a far-reaching definition that is broader than the common-law test that distinguishes between employees and independent contractors.37

The DWBR expands this definition even further. First, it expressly includes corporate officers and executives within the definition of a domestic work employer.38 In Reynolds v. Bement, the California Supreme Court held that individual corporate officers and executives are not individually liable for wage and hour violations because they are not employers under the wage orders.39 Under the DWBR, Reynolds v. Bement is inapplicable. Corporate officers and executives are subject to liability.40 And, the failure to properly compensate a caregiver as required by the DWBR can result in substantial liability for unpaid overtime, penalties, and even attorneys’ fees.

The DWBR’s definition of a domestic work employer also includes those who procure caregiving services though any third party, such as a temporary service, staffing agency, or other similar agency.41 This clarifies that private householders cannot evade liability under the DWBR simply by utilizing an employment agency. A private householder is liable to the extent that he or she exercises control over wages, hours, or working conditions. Most employment agencies will also fall under the DWBR’s definition of a “domestic work employer.” This is because the DWBR explicitly labels employment agencies as “third party employers.”42 More importantly, the DWBR exempts some, but not all, employment agencies from its grasp.43 This implies that all nonexcluded employment agencies constitute domestic work employers.

Regarding the exclusion, the DWBR provides that employment agencies that comply with all of the terms of Civil Code Section 1812.5095 do not qualify as domestic work employers.44 The requirements of this section are exacting and only the largest employment agencies are likely to be compliant. Among several other conditions, the employment agency must have a signed contract with the domestic worker that states how the agency referral fee is to be paid and that informs the domestic worker that he or she is free to perform work for persons not referred by the agency.45 The domestic worker must remain free to renegotiate the rate of pay with the private householder. The agency also cannot exercise control over how the worker performs his or her duties nor provide tools, supplies, or equipment. Further, the agency cannot retain power to terminate the relationship between the worker and the person who receives the services.

Accordingly, in most domestic caregiver cases involving an employment agency, both the agency and the private householder will likely qualify as employers. This is in keeping with prior case law, which recognized that employment agencies and private householders might constitute joint-employers, mak-ing both liable for any wage and hour violations. For instance, in Guerrero v. Superior Court, the court considered whether Sonoma County’s In- Home Support Services Public Authority could constitute a joint-employer with the private householder under IWC wage order 15.46 The trial court sustained the public authority’s demurrer on the ground that it was not an employer under wage order 15 as a matter of law. After carefully examining the wage order’s definition of an em-ployer, the control the public authority exercised over the wages, hours, and working conditions of the domestic employee, the court concluded that the trial court erred in finding that the public authority could not be a joint-employer as a matter of law.47 Thus, under Guerrero, placement agencies and private householders can qualify as joint-employers depending on the facts of the particular case.

While the DWBR now exempts those employed through in-home support services from its scope,48 the reasoning of Guerrero is still applicable to private employment agencies. Thus, unless they comply with Section 1812.5095, employment agencies and their individual corporate agents will likely be held responsible for violations of the DWBR as joint- employers. At a minimum, they will almost certainly be named as defendants in any action brought to enforce the DWBR.

Compensation

Another important issue to consider under the DWBR is how to structure a personal at-tendant’s compensation. Many private householders compensate domestic employ-ees according to fixed daily rates, weekly rates, or monthly salaries. Because the DWBR requires that a personal attendant receive one and one-half the employee’s regular rate of pay for all hours worked in excess of nine in a day or 45 in a week, these fixed rates are not permissible. Personal attendants must be paid on an hourly basis. In fact, any form of fixed- rate pay constitutes a salary.49 Pay-ing a personal attendant on a salary basis, even one equivalent to the minimum required under the DWBR, will likely result in substantial liability for unpaid overtime.

Under Labor Code section 515, subdivision (d)(2), “payment of a fixed salary to a nonexempt employee shall be deemed to provide compensation for the employee’s regular, nonovertime hours, notwithstanding any private agreement to the contrary.”50 This means that if an employer and employee agree that a fixed rate will compensate a personal attendant for both regular and overtime hours, the Labor Code will invalidate this agreement and require that the entire fixed rate be applied to the employee’s regular hours only. In this situation, the employer will have paid the employee nothing for any overtime hours worked.

This not only creates overtime liability for the employer, it also gives rise to the related issue of how to calculate the em-ployee’s regular rate for the purposes of determining the overtime rate. An employer and employee who have agreed on a fixed rate of pay will typically have a specified hourly rate in mind on which the fixed salary is based. However, it is not this agreed-upon rate that will be multiplied by one and a half for all hours worked in excess of nine or 45 hours. According to the statute, “[f]or the purpose of computing the overtime rate of compensation required to be paid to a nonexempt full-time salaried employee, the em-ployee’s regular hourly rate shall be 1/40th of the employee’s weekly salary.”51

For example, if the employer and em-ployee agree to a fixed day rate of $240 based on 24 hours of care at $10 per hour for six days, the overtime rate is not $15. Instead, $240 must be multiplied by six, giving that employee a weekly salary of $1,440. Then, $1,440 must be divided by 40, which gives the caregiver a regular rate of $36. It is this figure, not the agreed-upon $10 per hour, that will be multiplied by one and one-half. This makes the employee’s overtime rate $54 an hour instead of the contemplated $15.

Conversely, if an employer pays a 24-hour caregiver on a true hourly basis, the minimum wage of $10 per hour can set the floor for compensation. The DWBR requires payment of nine regular hours, which at $10 per hour equals $90. The DWBR also requires payment of 15 hours at one and one-half times the regular rate of pay, which requires a payment of $225 each day. Thus, provided it is on an hourly basis, the minimum daily amount a caregiver must receive for providing 24-hour care is $315. This rate would only apply to the first five 24-hour days worked by the caregiver each week because after that he or she will have exceeded the weekly maximum of 45 regular hours of work. The minimum day rate for the remaining days in the week is $360. However, nothing in the DWBR prevents a household from hiring multiple caregivers and staggering their shifts such that no one caregiver works more than nine hours in one day or 45 hours in one week. This is a viable cost-saving strategy that reduces the daily cost for 24-hour care to $240 and eliminates the payout of any overtime compensation. In this regard, the DWBR embodies the dual policy behind California’s overtime laws, which encourages the employment of additional workers while adequately compensating employees who are forced to work longer hours.52

Independent Contractor Classification

One unsuccessful cost-saving strategy that some households and agencies employ is to classify caregivers as independent contractors. As discussed above, the test for who constitutes an employee versus an independent contractor is more expansive in the wage and hour context than it is under the common-law control test. Anyone who controls the wages, hours, or working conditions is an employer. Moreover, the DWBR explicitly lists in-home caregivers for the disabled, sick, elderly, and convalescing as workers who perform domestic work, meaning they meet the DWBR’s definition of a domestic work employee and therefore cannot be classified as independent contractors.

This reflects the reality that most incapacitated individuals have a litany of unique needs, like special diets, precise food preparation instructions, and medicine or tests that must be given on a set schedule. Requiring a worker to perform a regimented set of time-sensitive duties is antithetical to a true independent contractor relationship, where the principal relinquishes control over the details of the work. It is also difficult to conceive of any greater degree of control that one could exercise over a servant than to require that individual to provide 24-hour, live-in care.

Instead of saving the private household money, classifying a caregiver as an independent contractor will likely subject that em-ployer to penalties under Labor Code Section 226.8 and tax consequences for failing to pay the employer portion of the employee’s payroll taxes. Because some who classify caregivers as independent contractors do so to pay less than the legally required minimum wage, this tactic might suggest a willful artifice to evade California’s wage and hour laws. This could provide a plaintiff’s lawyer with fodder when arguing in favor of penalties that require a showing of willfulness, such as penalties under Labor Code Section 203 and liquidated damages under Labor Code Section 1194.2, among others.

Some domestic work employers may also wish to exclude eight hours of sleep time from the compensable hours worked of a 24-hour caregiver. The DWBR has no provision governing sleep time. Therefore, caregivers are still covered by wage order 15 on this subject. With the exception of wage order 5, which has a unique definition of hours worked, California cases have consistently held that the time an employee spends sleeping at an employer’s premises must be counted as hours worked.53 Notwithstanding, in 2011, the First District Court of Appeal in Seymore v. Metson Marine held that wage order 9 was modeled after the federal regulations defining hours worked under the Fair Labor Standards Act. It therefore read an implied sleep time exclusion into the wage order that was based on federal regulations,54 which allowed written, verbal, and implied agreements to exclude up to eight hours of sleep time from 24-hour shifts, provided adequate sleeping facilities were made available and the employee had the opportunity to get five hours of uninterrupted sleep. Because wage order 9’s definition of hours worked was identical to that of the other wage orders, the sleep time exclusion in Seymore v. Metson Marine arguably applied to all other industries, including household occupations.

This was in fact the conclusion reached by the court of appeal in Mendiola v. CPS Security.55 However, on review, the California Supreme Court rejected this conclusion and disapproved of the sleep time exclusion in Seymore v. Metson Marine.56 Mendiola was a case involving security guards brought under wage order 4. The court reasoned that there was no indication from the language of the wage order that the IWC intended to incorporate the federal sleep time exclusion. The court, under wage order 4, held that employers cannot exclude sleep time from 24-hour shifts. While the court explicitly limited its holding to wage order 4, the reasoning it employed has broader implications.57 Be-cause courts are not permitted to incorporate federal regulations into the wage orders absent convincing evidence of the IWC’s intent to do so,58 after Mendiola, courts cannot impliedly incorporate the federal sleep time exclusion into wage orders with language identical to wage order 4’s definition of hours worked. Wage order 15 contains the same definition of hours worked as the one under wage order 4. While no court has yet held that the sleep time exclusion is inapplicable to wage order 15, the rationale in Mendiola makes that conclusion virtually inescapable. Therefore, anyone employing an in-home caregiver should not deduct sleep time from the hours worked.

In Labor Code Section 1453, the DWBR contains an express sunset provision that will repeal the law unless the legislature acts to extend it. Currently, SB 1015 is making its way through the California legislature. This bill would repeal Section 1453, making the DWBR a permanent feature of California wage and hour law. Even if SB 1015 fails, and the DWBR is repealed pursuant to Section 1453, it will not eliminate any past liability for unpaid overtime that accrued between January 1, 2014, and December 31, 2016. Because the statute of limitations for overtime actions is effectively four years from the date the unpaid wages were due, tail liability will persist through December 31, 2020. There-fore, there could be many cases in which the DWBR applies to part of a claim and wage order 15 applies to the remainder. In fact, this is already happening with cases in which caregivers worked before January 1, 2014, and continued working thereafter. Because of this, it is important to have a working understanding of both the DWBR and wage order 15’s differing rules.

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1 Lab. Code §§1450 et seq.

2 Lab. Code §§510(a), 515; In re United Parcel Service Wage and Hour Cases, 190 Cal. App. 4th 1081, 1010 (2010).

3 In re United Parcel Service Wage and Hour Cases, 190 Cal. App. 4th at 1010. 4 Wage order 15 has been codified at 8 Cal. Code Regs. §11050.

5 Johnson v. Arvin-Edison Water Storage Dist., 174 Cal. App. 4th 729, 735 (2009) (“Although the IWC was defunded effective July 1, 2004, its wage orders remain in effect.”).

6 Gonzalez v. Downtown LA Motors, LP, 215 Cal. App. 4th 36, 43 (2013). 7 8 Cal. Code Regs. §11150, subdiv. 2(J).
8 Id.
9 Id. §11150, subdiv. 1(B).

10 Id. §11150, subdiv. 2(J). 11 Id.

12 Cardenas v. Mission Indus., 226 Cal. App. 3d 952, 958 (1991) disapproved on other grounds in Smith v. Rae-Venter Law Group, 29 Cal. 4th 345, 370 (2002); Guerrero v. Superior Ct., 213 Cal. App. 4th 912, 956-957 (2013); Cash v. Winn, 205 Cal. App. 4th 1285, 1292 (2012).

13 Cardenas v. Mission Indus., 226 Cal. App. 3d at 958. 14 Id..

15 Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal. 4th 557, 561-62 (1996).

16 Seymore v. Metson Marine, Inc., 194 Cal. App. 4th 361, 369 n.5 (2011), disapproved on other grounds in Mendiola v. CPS Sec. Solutions, Inc. 60 Cal. 4th 833, 846 (2015).

17 8 Cal. Code Regs. §11150, subdiv. 2(J).
18 Cash v. Winn, 205 Cal. App. 4th 1285, 1292, 1298 (2012). 19 Id.
20 Id.
21 Id.
22 Id. at 1294.
23 Id. at 1302-1303.
24 Id. at 1299.
25 8 Cal. Code Regs. §11150, subdiv. 3(A).
26 Lab. Code §§551-52.
27 Id. §1454.
28 Id. §1451(b)(1).
29 Id. §1451(a)(1).
30 Id.
31 Id. §1454.
32 Id. §1451(b)(2).
33 Id. §1451(d).
34 Id.
35 Id.
36 8 Cal. Code Regs. §11150, subdiv. 2(G).
37 Martinez v. Combs, 49 Cal. 4th 35, 64-66 (2010).
38 Lab. Code §1451(c)(1).

39 Reynolds v. Bement, 36 Cal. 4th 1075 (2005), affirmed by Martinez v. Combs, 49 Cal. 4th at 66 (“The opinion in Reynolds [citation omitted] properly holds that the IWC’s definition of ‘employer’ does not impose liability on individual corporate agents acting within the course of their agency.”).

40 Lab. Code §558.1 (As of January 1, 2016, owners, directors, officers, and managing agents of an employer may be liable for violations of the minimum wage and hours and days of work provisions of the wage orders, as well as for violations of Lab. Code §§203, 226, 226.7, 1193.6, 1194, 2802.).

41 Id. §1451(c)(1).

42 Id.

43 Id. §1451(c)(2)(B).

44 Id.

45 Civ. Code §1812.5095(b)(1)-(9).

46 Guerrero v. Superior Court, 213 Cal. App. 4th 912, 954-55 (2013).

47 Id.

48 Lab. Code §1451(b)(2)(A).

49 Negri v. Koning & Associates, 216 Cal. App. 4th 392, 397 (2013).

50 Lab. Code §515(d)(2).

51 Id. §515(d)(1).

52 Huntington Memorial Hosp. v. Superior Ct., 131 Cal. App. 4th 893, 902 (2005).

53 Seymore v. Metson Marine, Inc., 194 Cal. App. 4th 361, 367, disapproved on other grounds by Mendiola v. CPS Sec. Solutions, Inc., 60 Cal. 4th 833, 846 (2015).

54 29 C.F.R. §785.22

55 Mendiola v. CPS Sec. Solutions, Inc., 60 Cal. 4th at 843-44 (the court of appeal concluded “that all industry-specific wage orders implicitly incorporate a federal regulation that permits the exclusion of eight hours of sleep time[.]”) (emphasis in original).

56 Id. at 846, 848-49.
57 Id. at 848-49.
58 Id. at 843, citing Morillion v. Royal Packing Co., 22 Cal. 4th 575, 592 (2000).