Here is a case that shows the complexities of California wage and hour law. (Guerrero v. Superior Court, 2013 WL 493303 (Cal. Ct. of Appeal).) Whether or not you employ personal attendants or domestic service workers, the analysis the court makes is exactly what California employers must make when considering how to pay employees.
Adelina Guerrero worked as an in-home support services (IHSS) worker providing assistance to low income persons in Sonoma County. She claimed that during a three month period she worked 501 regular hours and 87 overtime hours. Ms. Guerrero sued the County, IHSS, the patient and the patient's family member all as joint employers. The County and IHSS moved to dismiss the complaint on these grounds: (1) They were not Ms. Guerrero's employer under the Fair Labor Standards Act (FLSA); (2) even if they were employers under the FLSA, Ms. Guerrero was exempt as a domestic service worker; (3) they were not Ms. Guerrero's employer under California law; and (4) even if they were employers under California law, Ms. Guerrero was exempt as a personal assistant. The trial court agreed with all four of the defendants' arguments.
However, the Court of Appeal reversed the trial court decision on every point. It held that the County and IHSS were employers under the FLSA and under California law. It also held that the exemptions for domestic service workers or personal attendants could not be established without substantial factual analysis. Finally, California's Wage Order #15 did not provided an exemption to public entities from paying overtime.
Under the FLSA an employer is any person acting in the interest of an employer. As this is not really a helpful definition, courts look at four factors to determine the economic reality of the work relationship. Does the principal (employer): (1) Have the power to hire and fire; (2) supervise the work schedule or condition of employment; (3) determine the rate and method of payment; and (4) maintain employment records. In this case, the court determined that IHSS and the County both had sufficient authority in these four areas to be deemed joint employers under the FLSA.
As an employee, Ms. Guerrero was entitled to overtime compensation unless otherwise exempt. Defendants claimed that Ms. Guerrero was employed in domestic service employment to provide companionship services for individuals who (due to age or infirmity) are unable to care for themselves." However, this exemption does not apply if the employee spends more than 20 percent of his/her time performing general household work. Of course, true to form, the Department of Labor has enacted several regulations interpreting what is household work. Thus, determining the viability of an exemption is not an simple task. The court could not resolve the issue, and thus permitted Ms. Guerrero to proceed on the theory this theory.
Under California law, a person is an employer if it exercises control over the wages, hours or working conditions of another. This is not a difficult allegation to make. Thus, IHSS and the County could both be employers even though each entity assumed certain obligations with respect to Ms. Guerrero.
The personal attendant exemption applies if "no significant amount of work" other than supervising, feeding or dressing the person is performed. Like the domestic services worker exemption, this cannot be determined without substantial factual inquiry.
The court also examined defendants' argument that as public entities the obligations to pay overtime found in the wage order do not apply to them. The court looked at Wage Order #15 which applies to persons employed in household occupations. Unlike 14 of the 17 wage orders, Wage Order #15 does not include an exemption for public entities. This, the court determined, was evidence of the regulators' intent to include public entities within the coverage of wage order #15. (I once had a deputy labor commissioner tell me this was evidence of an oversight, not intent to include public entities.) Thus, Ms. Guerrero was permitted to move forward on the theory that defendants violated California law by not paying overtime as well.
Now that you have read this blog, you might be asking how this could apply to you. This is how: When you engage the services of another, you must ask whether you are the employer. You must also determine whether the worker is eligible for overtime compensation or whether the worker is exempt from overtime or any other provision under the wage order. You must know which wage order applies to your business or to your workers. That is not necessarily an easy determination. It is conceivable that two or three wage orders apply to workers employed in your enterprise. (Perhaps that is the subject of another blog.)
In this case Ms. Guerrero was probably paid $8 per hour. Thus, overtime liability was limited to $696.00. However, if her employment with IHSS and the County terminated, she could be entitled to waiting period penalties not to exceed 30 days of wages (approximately $1,600). Big deal right?
Well, don't forget about attorneys' fees. How much do you think Ms. Guerrero's attorney spent defending the lawsuit, including the appeal? Now we are talking thousands. In fact, it is not unusual for a plaintiffs' lawyer to easily spend $200,000 pursuing a case.
It is much more cost-effective to get it right in the first place, avoid the claim, the headache and the attorneys' fees!