Los Angeles County May Be On the Hook for Missed Overtime for In-Home Health Providers, Federal Appeals Court Rules

Los Angeles County May Be On the Hook for Missed Overtime for In-Home Health Providers, Federal Appeals Court Rules

More than 10,000 in-home care providers won a major victory against Los Angeles County earlier this month when the Ninth Circuit Court of Appeals held that Los Angeles County was an employer of the in-home care providers. Accordingly, the County was required to compensate in-health home care providers with overtime in accordance with the Fair Labor Standards Act (FLSA).

The in-home health care providers in Ray v. Los Angeles County of Department of Social Services filed suit to recover overtime wages they earned for over a year between January 1, 2015, and February 1, 2016, while the state of the law was up in the air. The District Court determined that: (1) the County did not employ the plaintiffs under the FLSA, and (2) the County therefore did not violate the FLSA willfully or make itself subject to liquidated damages. On appeal, the plaintiffs won on the first issue but lost on the second, despite a persuasive dissent written by well-respected jurist Marsha Berzon.

An employee can have more than one employer under the FLSA, known as “joint employers.” Each employer must comply with the FLSA’s requirements. To determine whether the County employed the plaintiffs, the Ninth Circuit examined the following factors set forth in Bonnette v. California Health & Welfare Agency (9th Cir. 1983) 704 F.2d 1465: whether the employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or employment conditions, (3) determined the rate and method of payment, and (4) maintained employment records.

The Ninth Circuit primarily looked at the economic and structural control the County and the State of California exercised over in-home health providers in determining that both were joint employers under the meaning of the FLSA, even though California issued paychecks and handled payroll. The County currently provides 35% of the County’s non-federal funds for in-home health provider wages, plus additional funding during the period at issue in Ray. Practitioners considering a possible joint employer case involving government entities might consider using Public Records Act requests to investigate the extent of the entities’ economic control. The Ninth Circuit also found significant that the County chose the method of payment (paying providers directly).

The Ninth Circuit further held that the County controlled the structure of employment, such as the tasks in-home health providers were to perform. Trainings were conducted at County facilities by County employees, and the County maintained some employment records. When providers were required to obtain approval of overtime, approval would come from the County, not the State. The County’s economic and structural control of the in-home health providers demonstrated a joint-employer relationship, so the Ninth Circuit reversed the lower court decision on this issue.

Ray was not a total victory. Over Judge Berzon’s dissent, the Ninth Circuit held that the FLSA violations was not willful (shortening the statute of limitations from three years to two) and that the plaintiffs were not entitled to liquidated damages. In an unfortunate framing, the Court pronounced that “a determination of willfulness and the assessment of liquidated damages are reserved for the most recalcitrant violators,” a premise that exaggerates previous Ninth Circuit rulings and which Judge Berzon described as “just wrong.” By the majority’s reasoning, California controlled the payroll system, so the County had no discretion with regards to FLSA compliance; therefore, violations could not have been willful. This holding produces a strange result when taken with the joint-employer holding: the County can be held liable for FLSA violations it had no choice but to commit. To avoid this outcome in other FLSA cases, practitioners should be prepared to demonstrate the ways in which the employer exercised discretion in its employment decisions.

If you believe you have been denied overtime wages earned, contact Bryan Schwartz Law, P.C..