The U.S. Department of Labor (DOL) is trying to get back to long-standing definitions of employers and independent contractors after withdrawing from changes made during the Obama administration.
The first attempt is a Field Assistance Bulletin issued in July to provide guidance on misclassification in the healthcare industry, specifically whether or not a registry for caregivers is an employer under federal law.
As Jackson Lewis attorney Patrick O. Peters explains, “The underlying theme of the Bulletin is that registries may avoid being considered an employer by limiting the amount of control they have over the caregiver and by maintaining minimal interference with the caregiver-client relationship.”
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Under the Obama administration, DOL ruled that registries for home caregivers, nurses, and other healthcare professions were actually employers under the Fair Labor Standards Act even though they only matched people who need services with the service providers. DOL reversed itself last year, withdrawing the new standards but not offering anything in its place until now.
There is no single definition for independent contractors and employers in these caregiver registry cases. Among the specific factors to be considered are:
- Does the registry conduct basic background checks or does it screen caregivers using subjective criteria?
- Does the registry exercise control over the caregiver’s work schedules and assignments?
- Does the registry purchase equipment and supplies necessary for caregivers to perform their services?
- Does the registry pay wages directly using its own funds?
- Does the registry charge for things like payroll processing and tax documents based on hours worked by the caregiver?
Note that simply paying caregivers with an IRS Form 1099 is not enough to prove they are independent contractors.