Governor Jerry Brown’s Administration has announced that, due to recent court action and following consultation with stakeholders and consumer advocates, payment of overtime wages to In-Home Supportive Services employees in biweekly payrolls will commence February 1, 2016.

Background
Counties will recall that in October 2013, the federal Department of Labor (DOL) issued regulations under the Fair Labor Standards Act (FLSA), that essentially extended payment of overtime and minimum wage protections to home care workers paid by third-party providers. The regulations also narrowed the definition of “companionship care” to only apply to those who spend less than 20 percent of their time aiding clients in bathing, cooking their meals, managing their medications or performing other personal care services.This essentially broadened the number of home care workers eligible for overtime pay and minimum wage protections even further.

Accordingly, the 2014-15 state Budget Act included a negotiated deal between the Brown Administration, Legislature and labor representatives to implement the federal overtime rules to apply to California’s IHSS workers as of January 1, 2015. The Administration had estimated the personnel and administrative cost for complying with the regulations to be $403.5 million in 2014-15 and $707.6 million annually thereafter.

Almost immediately following the issuance of the DOL regulations, the agency was challenged in a lawsuit by the Home Care Association of America (Association) in an effort to block their implementation. In December 2014, the federal court ruled that the portion of the regulation that made home care workers paid by third-party providers eligible for overtime pay and minimum wage protections exceeded DOL’s authority and subsequently delayed implementation of the regulations. Under state law, California’s implementation of overtime was also delayed pending further action by the federal court. Last month, however, the Washington, D.C. Court of Appeals ruled in favor of DOL, entitling home health workers to overtime pay and minimum wage; the subsequent denial of a stay means that those rules went into effect on October 13, 2015, even as the plaintiffs appeal the case to the United States Supreme Court. It should be noted that DOL will continue its time-limited, non-enforcement phase and will exercise prosecutorial discretion in determining whether to bring any enforcement actions, with particular consideration given to the extent to which states have made good faith efforts to bring their home care programs into compliance with FLSA.

What’s Next

To that extent, the Administration will move forward with the following activities to ensure the payment of overtime wages occurs on February 1:

• Updating timesheets used in these programs to enable the capture of hours worked in excess of 40 hours per workweek;
• Training service providers and home services recipients on filling out and approving new timesheets.
• Implementing workweek agreements for providers serving multiple consumers;
• Finalizing changes to the automated case management and payroll system to enable overtime payments; and,
• Adding a new IHSS service category for accompaniment to medical appointments, and enabling payment for travel incurred while serving multiple recipients on the same day.

Counties should recall that as part of the 2014-15 Budget Act, the state put forward policy changes in an effort to curb the use of overtime by IHSS employees:

• 66-Hour Weekly Limit. The number of hours a recipient receives and a provider works is now broken down into one-week increments, and a strict 66-hour per week limit has been adopted, with sanctions for workers who exceed that limit even if the worker incurs the hours for providing services to more than one recipient.
• If a provider exceeds 66 hours of care, they may be sanctioned or, if it occurs on multiple occasions, they could be terminated.

How Will This Affect Counties?

Counties, county public authorities, as well as the Statewide Public Authority, are now charged with oversight of the implementation of the new FLSA overtime rules. Associated implementation activities include:

• Notifying both recipients and providers of the new law and regulations;
• Training, assisting, receiving, and compiling new timesheets that include overtime;
• Tracking recipient overtime; and,
• Communicating with the state regarding providers that exceed the 66-hour per week limit.

More Questions?

DOL has created a new web portal with interactive web tools, fact sheets and other materials to aid families, other employers and workers in understanding these new requirements. Click here to access that information, as well as upcoming webinars on the new rules.

The California Department of Social Services has also released guidance on the state implementation of the regulations, including information related to the state’s February 1 start date.