Seyfarth Synopsis: When we think of California employers encountering complex issues during the COVID-19 pandemic, images of retail, service, and other types of businesses come to mind. But one special type of employer needs to be mindful of California law: the family who employs workers to support the household as nannies, chefs, security personnel, personal assistants, and personal caregivers. We highlight below some of the key issues for California families to consider as they cross the threshold from family to employer.
It is critical that families who employ workers of any kind (beyond a casual babysitter) carefully structure the relationship. We see many claims made by domestic workers against the families and individuals who have retained them as employees or contractors. These claims are stressful, time consuming, and often very expensive for the family to resolve, particularly where the employment relationship did not end on good terms.
Can We Classify Family Workers as Independent Contractors?
Traditionally, many families employed domestic workers as independent contractors. Other than some very limited cases, such as an occasional babysitter, this approach is now fraught with huge legal risk in California (and was risky even in the past).
Last year, Governor Newsom signed Assembly Bill 5 (AB5), which codified a three-part test to determine whether a worker providing services in California is an employee for purposes of the California Labor Code, the state’s Wage Orders, and the Unemployment Insurance Code. With some very limited ad hoc statutory exceptions, this law was very expressly designed to eliminate independent contractors in California. We discuss AB5 here and here in prior posts.
AB5 establishes significant potential penalties for employers, including families, who misclassify employees as contractors. These penalties are in addition to the very substantial meal and rest period penalties, paystub penalties, unpaid wages, overtime, waiting time penalties, interest and attorneys’ fees that a disaffected domestic worker can seek if misclassified as an independent contractor.
Without delving into great detail, California domestic workers and attendants of every kind often will not qualify as contractors under the new AB5 test. The fact that an individual may want to be an independent contractor is also almost entirely irrelevant under California law.
This means that families who have erroneously classified their nannies, au pairs, frequent gardeners, housekeepers, cooks, personal attendants, and other staff as independent contractors face the risk of enormous potential liability, not including the costs of defense. The law also gives domestic workers huge leverage over the family, if for some reason the relationship does not work out. When hiring any of these types of domestic employees, therefore, families should seek legal help to structure an employment relationship to avoid these risks.
What are California’s Current Overtime Rules?
Assuming that a domestic worker is properly classified as an employee, one primary area of risk will involve whether, when, and how to pay overtime. When it comes to overtime requirements, California provides extraordinarily generous legal protections for hourly, non-exempt employees. While federal law only requires overtime for hours worked in excess of 40 in a workweek, California employers generally must pay hourly non-exempt employees daily overtime at time and a half, and possibly double time, depending on how many hours they work in a day or week. These overtime obligations also apply to employers of domestic workers—with some limited exceptions and variations.
Specifically, when determining what overtime rules may apply to a particular domestic employee, there are generally two questions to consider. First does the worker qualify as a “personal attendant” as opposed to other types of domestic workers? Second, does the employee live in the home? The answer to these two questions will determine when overtime is owed, if at all.
What are the Overtime Rules for Domestic Workers and Personal Attendants?
As noted above, California law has different overtimes rules for personal attendants, as compared to other types of domestic workers.
- Personal attendants usually are employed by a private household or any third-party employer recognized in the health care industry to work in a private household. Duties of a personal attendant include supervising, feeding, and dressing a child or person who needs assistance because of advanced age, physical disability, or mental deficiency. Typically they are nannies, nurses, and caretakers.
- Other domestic workers provide services related to the care of people in the home, or maintain private households or their premises. Typically they are butlers, chauffeurs, cooks, gardeners, tutors, housekeepers, guards, and assistants to healthy adults.
It is critical to note that if the employee spends more than 20 percent of the time performing work other than supervising, feeding, and dressing a child or person who needs supervision (such as making beds, housecleaning, cooking, laundry, or other duties related to the maintenance of a private household or the premises), then the employee cannot be considered a personal attendant and, thus, is an “other domestic worker” subject to the overtime requirements applicable to such workers.
Employees who qualify as personal attendants who work in the home are entitled to overtime pay (1.5 times the regular rate of pay) for any hours worked over nine hours per day or over 45 hours per week. (The federal Fair Labor Standards Act might mandate overtime pay after 40 hous in a workweek for a live-in personal attendant, but this depends on whether the employee is employed directly by the family or a professional employer organization.) Personal attendants who work in the home are not entitled to double time. But keep in mind the 20%-duties rule (described above), which, if triggered, will make the employee an “other domestic worker.”
If the employee does not qualify as a personal attendant and, thus, is an “other domestic worker,” the overtime rule that applies comes from IWC Wage Order 15. A domestic worker’s entitlement to overtime will depend on whether the domestic worker lives with the family or in the home.
- Domestic workers who do not live with the family or in the home are entitled to:
- overtime (1.5 times the regular rate of pay) for hours worked over eight in a day or 40 regular hours in a workweek;
- overtime for the first eight hours worked on the seventh consecutive day of the workweek (depending on the hours spread over the workweek);
- double time (2 times the regular rate of pay) for hours worked over 12 in a day; and
- double time for hours worked over eight on the seventh consecutive day of the workweek.
- Live-in domestic workers are entitled to:
- overtime for hours worked over nine in a day;
- overtime for the first nine hours worked on the sixth and seventh consecutive day of the workweek; and
- double time for hours worked over nine hours on the sixth and seventh consecutive day of workweek.
Are Domestic Workers and Personal Attendants Entitled to Meal Periods and Rest Breaks?
Resolution of the “personal attendant” question will also dictate whether the employee is entitled to meal and rest periods.
If the worker qualifies as a personal attendant, the family does not have to provide meal periods and rest breaks, although it certainly can do so. However, all other domestic workers, regardless of where they live, are entitled to the same meal periods and rest breaks as any other California employee.
Generally, this means an unpaid 30-minute off-duty meal period if the employee works five or more hours and a paid 10-minute rest break for every four hours worked or major fraction thereof. The meal period must begin before the employee has worked more than five hours, and the employee must be relieved of all duties (including not being on call and being free to leave). The law provides for extremely onerous penalties for failure to provide these breaks (and it is very easy for employees to simply claim they did not get them). It is critical, therefore, that even family employers have clear rules, policies and practices to ensure these breaks are being made available, in full, at the required times, and that the meal periods are being fully documented.
Can a Family Apply Meal and Lodging Credits Against the Employee’s Minimum Wage?
Yes, to a small extent. But there are strict limits specified in the law and this arrangement must be documented in a voluntary written agreement between the family and the employee before the work is performed. Families that would like to take a meal and lodging credit should work with experienced counsel before doing so.
Are Family Employees Entitled to Paid Sick Leave?
Yes. California’s Paid Sick Leave law applies to all employers regardless of size. In addition, depending on the city in which the family lives or where the work is performed, some California cities have paid sick leave ordinances that require employers to provide more paid sick time than state law requires. Those cities currently include Berkeley, Emeryville, City of Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica.
How Do Families Protect Their Property, Privacy and Other Interests?
Families that employ domestic workers and personal attendants open their doors to people with whom they might not have any history. These families have a strong desire to protect their property, their children and their privacy. As a result, we recommend employers consider conducting post-offer criminal history background checks on applicants before allowing them access to the family home. Of course, families that conduct such checks must comply with federal and state background check laws.
Moreover, families should consider a very strong confidentiality agreement that is carefully tailored to the privacy interests they seek to protect, and an enforceable arbitration agreement, mandating private arbitration. Both of these need to be tailored specifically for domestic workers to be enforceable and to avoid running afoul of numerous legal limitations on, and impediments to, such agreements.
Families also will need to secure worker’s compensation insurance and set up an account with the state’s Employment Development Department, the agency responsible for overseeing and administering unemployment benefits for California workers. Moreover, if the domestic worker or personal attendant will drive the family’s car or use other equipment, the family should secure appropriate automobile insurance coverage and work with their insurance broker to obtain any other general liability insurance policies to protect their property and interests.
Next Steps for Families that are Employers
While we’ve highlighted some key issues to consider when a family dives into employer status, there are a number of other laws and best practices to consider before families employ domestic workers and personal attendants, such as:
- implementing proper time keeping and final pay practices;
- ensuring legally compliant wage statements (an employer must specifically set up the wage statements to be compliant; the payroll services do not do that for the employer typically as a matter of course);
- managing issues as to the homeowner’s general liability policy and coverage for use of vehicles by domestic staff;
- ensuring the security of video, network and financial systems and records (and potential bonding of the worker);
- maintaining control over family photographs, videos, images, and information;
- managing issues related to health screening and drug testing of caregivers;
- overseeing the lease or rental of space for live in workers, and ensuring that they do not become subject to the protection of state and local tenant protection laws;
- managing issues as to immigration compliance;
- determining whether any county or city laws require more than state law (e.g., local minimum wage requirements, posting requirements, etc.);
- ensuring proper workers compensation coverage;
- handling travel by caregivers, and paying properly for it (and avoiding liability issues), and
- implementing of other key policies including, anti-discrimination and harassment policies.
Families should work with counsel experienced with these unique issues before allowing workers access to their family homes, their children, and their private lives.