For the first time, the U.S. Department of Labor is offering a program to allow home care agencies and other companies to self-disclose Fair Labor Standards Act (FLSA) violations in exchange for Labor waiving civil monetary penalties and liquidated damages.
The Payroll Audit Independent Disclosure (PAID) program, which began April 1, could be significant for private duty and Medicare-certified agencies whose payroll mistakes lead to underpayments that violate the FLSA, industry experts say.
Employers in the top 10 wage-and-hour lawsuits of 2017 paid out more than $574 million in back wages, penalties and damages.
In February, a Florida district judge ordered a home health agency to pay nearly $2 million in sanctions for wage-and-hour violations.
According to law firm Seyfarth Shaw’s 2018 Workplace Class Action Litigation Report, 73% of collective actions alleging wage-and-hour violations were certified by courts, and at least 12 collective action lawsuits alleging FLSA violations by home health or private duty employees were certified in in 2017.
In the past, employers who discovered they had violated the FLSA were “left in no-man’s land” because if they fixed the problem, they could potentially have alerted employees to the error. This could have resulted in Labor department penalties and lawsuits, says attorney Robert Markette of Indianapolis-based Hall, Render, Killian, Heath & Lyman.
Employers that are aware of a violation and fail to fix it can be assessed up to $1,100 by the DOL for each repeated or willful violation of the FLSA. Employers who are taken to court for violations are likely to pay back wages, liquidated damages — which double the back wages amount — and attorney’s fees.
But Markette believes PAID may prove to be similar to the self-disclosure protocols available through the HHS Office of Inspector General (OIG) and CMS for Stark Law violations, which provide a means for providers to proactively address noncompliance they identify.
PAID is available for companies with $500,000 per year in sales that have not previously been sanctioned by the Labor department and that don’t have pending FLSA litigation.
PAID is in the pilot phase. It will run for six months and then be evaluated before Labor determines whether to make it permanent.
Don’t fret about staff filing lawsuits
Employees technically can choose to opt-out of potential settlements via PAID and file their own lawsuit.
Another potential consideration is whether a company that goes through the PAID program could still be on the hook for state wage-and-hour penalties, says William Pokorny, a partner at Chicago law firm Franczek Radelet, P.C.
Despite these possibilities, Markette is optimistic about the program’s potential for providing agencies a remedy for a violation that doesn’t penalize them unnecessarily.
Markette believes most employees who are told their employer intends to pay them unpaid — and likely unexpected — back wages will take the money rather than risk a drawn-out legal battle in the hopes of someday collecting double through liquidated damages.
He’s also hopeful that if an employee files a lawsuit after the agency has voluntarily complied with PAID, a court would toss it out.
PAID may be most useful for an employer with a fairly self-contained issue, such as failing to include bonuses in overtime calculations, Pokorny says.
“Usually there is not much money at stake in those kinds of claims,” he says. “It’s usually a matter of math, and there’s not much risk of the DOL coming up with a different result.”
Here’s how to sign up for PAID
Labor has launched webpages to help businesses better understand the program and participate.
Before signing up, read up and conduct a cost-benefit analysis, Markette advises.
“If you identify a small problem before it becomes big, this protocol can be beneficial, and you have the certainty of resolution,” Markette says.
Contact an attorney before making a final decision, Pokorny adds.
Sometimes an employee may flag something as a compliance issue that actually isn’t and can be resolved on the phone, Pokorny says. If there is a problem, it’s a good idea to have the attorney supervise the audit or investigation to create attorney-client privilege.
“The last thing you want to do is create a record that may turn up as evidence if you do end up being sued,” he says.
Comply with wage-and-hour rules
Regardless of whether a problem has been identified or if an agency is considering PAID, it would be wise to:
Perform audits regularly.
- Consider common FLSA errors, such as whether your agency is accurately capturing travel time and including that in employee wages, Markette says.
- Under the FLSA, traveling for work purposes during the workday qualifies as compensable time worked and must be paid at minimum wage or higher. Simply reimbursing employees for mileage won’t cover the travel time requirement.
- Agencies can take one of several approaches to handle travel time correctly. Markette prefers an option where agencies treat all employees as nonexempt and have them come to the office to clock in, pick up files and go out for visits. After all visits are completed, the employee would return to the office to clock out and drop off files.
Verify that your agency is properly calculating the rate of pay for overtime.
- Factor in all wages including bonuses.
- Ensure pay-per-visit employees’ regular rate is more than minimum wage and that working time in excess of 40 hours in a work week is compensated at 1.5 times the regular rate, Markette says.
- For employees who are paid per visit, the regular rate may vary from week to week, depending upon the number of visits, length of visits and travel time.
Monitor whether employees have worked more than 40 hours in a week at different locations.
- This aggregation includes working at related but different legal entities, such as a certified nursing aide who splits time between a home health agency and its separate private duty business. — Angela Childers (firstname.lastname@example.org)
Related link: : Visit https://www.dol.gov/whd/paid/ to identify whether your agency is eligible for PAID and review compliance assistance materials about the FLSA.