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WEBINAR: Staying Compliant, Managing Risk, & the Home Care Agency Compliance Toolkit

This webinar was recorded on November 22nd, 2017 with Angelo Spinola of Littler Law and Derek Jones of ClearCare Online. Angelo is a Wage & Hour attorney dedicated to the home care space. The webinar was mostly on the topic of the FLSA's Overtime ruling that was set to go into effect Dec 1 (within an hour of the end of the webinar, the ruling was blocked by a Texas court). However, Angelo covers updates in the regulatory space, how to avoid litigation, and covers a Home Care Compliance Toolkit that are great evergreen topics for home care agencies looking to stay compliant. Angelo is available to assist with any questions and can be contacted at aspinola@littler.com or 404-760-3921. Enjoy! 


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Good afternoon, everybody. This is Derek Jones with ClearCare Online. Thank you for joining us for the webinar today. Today’s webinar is titled “The New Overtime Rule and Reclassifying Home Care Providers”. We are really lucky to have Angelo Spinola from Littler who will be our panelist and presenter for today. 



Before we get into introducing Angelo, I want to just give a few housekeeping items. The first is this webinar is being recorded. We will have the recording and a transcript of the webinar available within 24 hours, and we will send that to all the attendees.



Second, all lines are currently on mute. We want to make this very interactive, and Angelo, one of the biggest values that the webinar will give to the owners is answer your questions at the end of the webinar. We have scheduled a webinar to a full 90 minutes if we need it, but please do type in your questions the GoToWebinar panel. You can do that by clicking. There should be a GoToWebinar panel in your upper right hand screen.



If you click the orange or red arrow button, that expands the GoToWebinar panel, and you can type your question in, in that panel. Only Angelo and I will see that question, unless there is an option if you want to communicate with the rest of the attendees. Most of you probably just want to type into the question box.



We will save all that Q&A for the end of the call. We’ll have plenty of time for that Q&A, so please as questions come up, just type those in, and we’ll be sure to address those. With that, let’s click to the next slide. Excellent.



Before we pass off to Angelo, just I’m Derek Jones here on the left. I work for ClearCare Online here in San Francisco. We are a technology software company that serves the home care industry. A lot of you may have telephony systems today, scheduling systems, ClearCare does that, plus a lot more. We’ll talk a little more about that later in the call.



The point of the call today is to introduce you to Angelo Spinola. I first met Angelo, I think, maybe six years ago, six or seven, at a home care conference in Las Vegas. I’ve never seen a presenter in the home care space be the rock star of our space. He literally gets mobbed at the end of these sessions of 15, 20, 30 people wanting to ask additional questions.



Not only is Angelo knowledgeable about wage and hour and employment issues in general, but he also in an expert in home care. He knows our space. His practice, his specialty is in wage and hour, but he knows the home care space. He’s committed. He speaks 20 or 30 times for the home care industry each year, and we’re very lucky to have him on the call. With that, Angelo, I’ll let you do a light intro, and then thank you for hopping on the call and sharing the information on this regulatory update.



Thank you very much, Derek. Thanks for setting this up. I appreciate the partnership with you at ClearCare. I never heard an attorney be analogized to a rock star before, so I’ll take that as a compliment. I don’t know how true it is, but I’ll take it.



Today, as Derek said, I do a lot in the home care space. This is really my bread and butter. I was a caregiver. It helped me get through college. I did not have any problem not receiving overtime in Maryland. It was very happy with the pay that I got, and I everything I can now in my career to help home care companies.



Some of you, I represent. Some of you, I don’t, but what I do is compliance work. Lots of compliance in preparing for litigation and DOL audits, and then I handle the litigations and audits as they come up. Our practice here at Littler Mendelson is national. We have offices in every major city in American and also all over the world. It’s really what we do this labor employment space.



I do a lot with wage hours. Today, we’re really going to talk about wage hour and some upcoming changes that you are all too familiar with, I am sure. Some updates, up-to-the-minute updates on what is going on with those laws. There’s going to be a decision today that’s very significant on the December first deadline.



We’re going to talk about all that, and we’re going to talk about compliance, and how we prepare for the changes, and most importantly, I think that most of you have a plan in place. You know what you’re going to do if and when the time comes to either increase folks’ salaries or change them to non-exempt. What I really want to focus on today is the back half of that. Once you’ve made that decision, now how do we comply going forward, given the rash of litigation that we are seeing in this space?



We’re going to spend a few minutes just reviewing what the federal law is on overtime and what exemptions are applicable to home care. We’re going to talk about the new rule that is going into effect on December first. We’re going to talk about what those changes look like, and then we’re also going to talk about Littler’s compliance toolkit towards the end. We, even with all that, have enough time for your questions. We’re going to move fast today, starting with the quick overview.



As just about everybody knows on the call, under the Fair Labor Standards Act you are required to pay minimum wage and overtime unless there is a specific exemption from minimum wage and overtime. What you might not know is that it’s your burden as the employer to demonstrate that somebody qualifies for one of those exemptions. If you can’t absolutely meet that standard, they are not going to be considered exempt.



The exemptions are the exception to the rule. The rule is that you must pay minimum wage and overtime and understand in most cases, when we’re talking about an exemption, there are two independent tests that you have to meet. There’s a test that relates to how the individual is paid, which is the compensation test, and then there’s a test with respect to what the individual does, which is the duties test.



You have to satisfy the courts or the Department of Labor or whomever it is that’s looking at the exemption that you meet both the compensation element of the test and the duties element of the test. If you meet one and not the other, that individual is going to be non-exempt, and they’re going to be entitled to overtime.



The reason that I stress that is all too often in home care I have heard while we pay a salary and the salary is high enough to meet the salary qualification, that doesn’t make somebody exempt just because you pay them a salary, and the salary meets the threshold. They also have to meet the duties for the exemption. Salary plus duty.



The exemptions that apply most typically in the home care world are the professional exemption. That would be your RNs, under federal law, not in California, but under federal law, an RN in just about every other state other than California, an RN can be professionally exempt. Physical therapist, occupational therapist, medical/social workers, those positions can be exempt from overtime if they are performing the right kind of work and paid the right kind of way.



Contrast that with PTAs, physical therapist assistants. LPNs, CNAs, those positions cannot be exempt, no matter what you pay them. You can pay an LPN $100,000, and the LPN is not going to be professionally exempt. If the LPN is doing true supervision, then maybe the LPN could fall under a different exemption, but in most cases, LPNs are not going to be exempt no matter how much you pay them and what form you pay them in.



The administrative exemption is one that requires decision-making, significant decision-making where the employee is using discretion and independence in that decision-making with respect to decisions of significant. Important decisions. Those individuals could be pay a salary or a fee.



The administrative exemption is the one that’s probably the most overused. To be administratively exempt, you also can’t be involved in the production. Whatever your company is producing, in this case, it would be care. Caregivers and those who are providing care could not be administratively exempt. The administrative exemption is reserved for people who are running the business, the background, the administration of the business.



For example, HR directors can be administratively exempt. The executive exemption, that’s your true manager. The executive exemption would be one where you have a supervisor, who is supervising two or more full-time equivalents, and what a full-time equivalent means is you’re talking about supervision of 80 hours a week. That could be in the form of four part-timers who are working 20 hours a week each or two full-time people who are working 40 hours, but it’s got to equate to 80 hours a week.



By supervision, that doesn’t mean, for example, an RN who’s a case manager and has other caregivers on her team. What we’re talking about is somebody who actually has the ability to hire and fire, to discipline employees. That’s a supervisor. You can’t have two people, two managers supervising the same people and count those hours twice. It’s one or the other.



I was working with a client the other day that had somebody managing office staff, and they wanted to use another personnel who also manages that same staff and treat that as executively exempt. You can’t do that. You can divide up the workforce, so that you’ve got multi managers, but there needs to be a primary manager for each individual.



Let’s also talk briefly about the companionship and live-in exemptions, just so everybody’s on the same page. Those exemptions are not being impacted by the changes that are coming into play on December first. These are not white collar exemptions. Those are independent exemptions that used to apply for third parties, for agencies, such as yourselves, could rely on a companionship and live-in exemptions under federal law to be exempt from overtime.



In the case of the companionship exemption, it was actually a minimum wage and overtime exemption, meaning that those individuals that qualified for the exemption were not entitled to minimum wage or overtime. As you know, and our firm was the firm that brought that litigation against the Department of Labor when those changes were made, or attempted to be made back in January of 2015, and we had success at the district court level preventing those rules from going into play.



Then at the court of appeals, the Department of Labor won, so the rules went into play October of 2015. The belief was that as of October of 2015, the requirement was for all agencies to pay overtime to their non-skilled caregivers. They had to pay overtime to the companions, the CNAs, the home health aides, the personal attendants even if you are in a state that didn’t already require payment of overtime. Under federal law, now there was an overtime obligation.



I do want to point out that there is a growing sentiment that those rules even though the court of appeals didn’t put them into place until October of 2015, and the DOL is not really enforcing the rule until actually November of 2015, is when they’re finding that the companies had to come into compliance. Plaintiff lawyers are arguing, and they’re arguing effectively, there’s a split in cases on this issue, that because the DOL intended the rules to go into effect in January of 2015, and because the court of appeals overturned the district court that the real effective date is January of 2015.



That’s a significant issue if you’re one of those states where that’s been the determination. That’s a significant issue because nobody was paying overtime prior to October of 2015 unless you were already in a state like, say, Michigan that required overtime independently under state law. If you were in a state like Georgia or Florida or Texas, where there was no overtime obligation, nobody was paying overtime until October.



However, if you get sued on that issue, the lawyer is going to argue that the effective date is really January, meaning that there’s going to be even if you did comply as soon as you were supposed to that there is 10 months of potential liability. That’s very important to what I’m going to talk about in a few minutes, when I reference arbitration agreements and the importance of an arbitration agreement with a class action waiver.



If you’ve heard me speak, you’ve heard me talk about this before. I think it’s absolutely essential to have an agreement like that in place in home care. That’s the update on companionship and live-in. You do, as of right now, have to pay overtime. We did appeal our case to the Supreme Court, and after sitting on it and pontificating on it for many months, the Supreme Court eventually did not take the case.



That particular litigation effort is dead. There is legislation that is pending and gaining support in Congress to reinstate these rules and effectively codify the rules that were in the regulations into the statute so that the Department of Labor cannot mess with it anymore.



Trump’s election as president is going to impact that legislation and give that legislation more of a chance of success. It’s still going to take time though. We are working on that. Others are working on the lobbying efforts to get that law passed through both the Senate and the House. That is in the works. It’s going to take time. It may not happen, but we’re bullish about it. We think that it ultimately will, particularly with some of the changes that Trump will make at the Department of Labor and less opposition to the way things work.



In the meantime, you’re paying overtime. You’re monitoring the law very carefully. There’s also a possibility of another litigation in another state that is being discussed by some of the associations. The key and the point here on the companionship and the live-in exemption is you have to stay abreast of what is happening because things are changing at a very rapid pace all the time with respect to home care and some of the rules, regulations, and laws that are impacting home care.



Another trend I want to discuss with you is the scourge of litigations that have hit home care since those rules did change in October of last year. There has been in little over a year a significant number of cases to the point that home care is now the most targeted industry for wage and hour cases, both from a class and collective action standpoint and also with respect to individual actions. You can see the disbursement between the states. We track this all the time.



There was a case just filed today. There’s normally two or three that are filed in a week at least, and that number is continuing to grow as the statute of limitations continues to get larger and larger from the date of the exempt status of caregivers, whether you’re using January or October to today. What that means is with the statute of limitations growing, that means that the damages will continue to accrue and grow.



The trend that I want you to understand, and the reason that I use this slide, is the most common type of wage and hour lawsuit is the one where the exempt employee is moved to non-exempt status, and then after spending some time in non-exempt status, which is exactly what happened with the companionship and live-in exemption, went from exempt to non-exempt, and that’s what the vast majority of these case are about. Then, as a non-exempt employee, you get sued, and the argument is that the non-exempt employee was not paid appropriately even if you are paying overtime.



If you’re paying overtime, the argument is typically it wasn’t enough overtime, that you weren’t tracking time effectively. The reason I want to mention that in the context of this presentation is we’re going to be talking about that same issue with the white collar exemptions. You’ll not be surprised to learn that there are lots of plaintiff lawyers that are waiting for you to reclassify your employees to non-exempt status, and then represent those employees in a lawsuit against you.



They way that you do that and the way that you manage those employees after making the determination to move them to non-exempt status is significant. It’s very important how you do it. These are the cases that come all the time.



The other thing I’ll mention, you notice that California is not on this list. That’s because all we’re tracking is the federal cases, the cases that are filed in federal court. The reason we don’t track in an organized manner the state cases is because they are very hard to see. They don’t come across the docket in every state in the same way that the federal cases do, but there are twice as many state cases as there are federal cases.



What that means is that there’s more than 750 cases, probably more than 800 cases, that have been filed just related to home care, just related to wage hour pay practice type issues. You are easily the most targeted industry, and that’s going to continue for the next several years.



With respect to the white collar exemption changes, it’s not just going to be home care. It will be every industry because all industries are impacted by these changes that are going to be targets of these same kinds of litigation. Today, we’re going to talk about the way to prepare for that.



First, let’s go through as most of you know quickly what is changing as of December first, the salary threshold is what’s increasing. There’s no changes to the duties test, no changes to the salary basis test, but the salary amount that you have to pay to treat somebody as professionally exempt, administratively exempt, or executively exempt has now changed from what was $23,660 annualized to $47,476 annualized, from $455 a week to $913 a week.



It was supposed to actually be even higher than that, but what the DOL ultimately did is they set the threshold at the 40th percentile of all salaries in the Southern region, the Southern census region. The $50,000 that you heard about before was considering all the regions. By limiting it to the South, they decreased the amount a little bit.



You can utilize non-discretionary bonuses, incentive payments, commissions to cut down that salary requirement by 10%, but that’s not a particular effective way to go because if they don’t earn the bonus, to get them up to the $47,476, then you have to pay it anyway. It’s not really much of an incentive if you’ve got to pay it anyway, and when you are paying it, it’s got to be done on a quarterly basis.



You can’t wait until the end of the year, and true somebody up if they haven’t met the bonus requirement to get them to the $47,476. You’ve got to actually do that on a quarterly basis at least. You could do it sooner than that. You can do it on a monthly basis, but at minimum, it’s got to be a quarterly basis.



A couple of other things that are changing that are very significant, and these are being challenged. We’ll talk about this in a second. What the DOL did, what the DOL has to do anytime they want to change the while collar exemptions or any of the regulations, they have to go through a notice of comment period. That means that they have to present the proposed changes, get comments from the public. You’ll respond to those comments, and ultimately make the changes, and give you notice of what changes are going to be made before they go into effect.



That’s a difficult process. The last time it happened with the white collar exemptions was in 2004 when I as a baby lawyer. I remember that. I had just started my career, and I remember the same kind of activity that we have today then. Lots of people making reclassification decisions and analyzing their wage and hour compliance programs. This is a great time to be really focused on this.



They don’t want to have to go through that process every time they make a change, so what they have done as part of these amendments is they have said this is going to happen automatically every three years without us having to go through the notice and comment period. Every three years, we’re going to reset the salaries to the 40th percentile in the South region.



The problem with that is, as most of you are making the decision, if you’ve got somebody between the $23,000 and the $47,000, let’s say they’re paid $32,000 or $35,000, a lot of those people are going to be reclassified. They’re going to be out of the pool.



What constitutes the 40th percentile is going to go up significantly over time, and that’s important when you’re making the determination of do I reclassify or do I up somebody’s salary? It’s not just about what you have to pay this year, which is the $47,476, but what is the 40th percentile going to look like the next time this adjusts in 2020? It’s going to skyrocket up to $55,000. Then in 2023, it’s going to get up to $65,000, based on the current trajectory, which is the thought that everybody between the $23,000 and $47,000, out of every four people, one person will reclassify.



That was the assumption used by our economists here [inaudible 00:25:00] economics when they did this analysis. That’s a really significant problem for home care because there are no administrators and office folks that you’re typically going to be paying $65,000 to.



The effective date for this is coming up real fast, which is why I know that you guys are ready, and you have prepared. There is a challenge here in what you do based on some of the litigation and legislative efforts. We’ll talk about in a second how far do we want to push it. You can’t really wait to December first because that’s a Thursday, and your pay periods are not typically going to be Thursday to Friday. They’re going to be Saturday to Sunday, or Sunday to Saturday.



That’s not going to work to wait, and you also have these requirements to provide advanced notice you’re changing somebody from exempt to non-exempt status, or if you’re altering their pay. Even if you’re altering it up, a lot of states have a requirement to provide notice. Hopefully, that has been done. Some states require that that notice be in writing.



Hopefully, that has been done. On the toolkit that I’ll demo later, we do have an example of what one of those acknowledgements should look like, but let me just give you an idea here. As we’re talking about and thinking into the future of, we know that after whatever decision we make we know there’s going to be a rash of litigation, just like there was with the live-in and companionship exemption, just like that’s going to continue.



We’re also going to have this issue now with our exempt office staff. What kinds of things can we do today to better position ourselves for that litigation of the future? It’s on the doorstep. It is coming, so what can we do today?



One example would be in that acknowledgement to make sure that you’re putting some of the requirements of what a non-exempt person should do. If we’re asking them to sign an acknowledgement that they’re going from exempt to non-exempt, and this will be your hourly pay as a non-exempt employee, pepper that with some self-serving language about, “You’re required to record all your time worked.”



Maybe give them the off-the-clock work policy that you have or your timekeeping policy. You’ve got to record all your time. This is how you do it. We’re going to give you some training around that, and we want you to acknowledge that you’re going to record all your time worked, so that when they sue you and tell you that they didn’t record all the time worked, you can pull back that acknowledgement and wave it in their face. I love that kind of stuff as your lawyer. That’s the stuff that I use to win cases. All too often we don’t have that.



Also remember when you’re consideration what you’re going to do that there are state laws, and sometimes state law has different exemption requirements than the federal law does. The perfect example is the one I have before about RNs. You can be professionally exempt as an RN under federal law, but not in the state of California because the state law is different. You’ve got to know both your federal and state law requirements as far as the duties go.



I suppose the good news is that once the salary changes go into effect on December first, if they do in fact go into effect, the federal requirements will be higher than any state as of right now. The states are entitled to and are all the time changing. You’ve seen changes to minimum wage at the state level. You’ve seen changes to the salary requirements at the state level, but as of right now, the $47,476 will be highest in the land. Even in California and New York, you don’t have to worry about a higher salary requirement if these rules go into effect.



In today’s world, New York, California, Connecticut, and Alaska have a higher salary level than federal law. You’ve got to stay appraise of what’s happening at the state level and the federal level, and make sure you understand if you’re utilizing exemptions to make sure that it meets both the federal tests and the state duties tests to the extent that you’ve got that.



All right. How do you make the decision as to whether to increase salary or reclassify as non-exempt? It’s what you want to pay, and I’m not going to spend a lot of time on this formula because we have a formula. This is on our home care tool kit, which is a paid subscription, but you can also find it on ComplianceHR, which is a partner vendor of ours, where this calculator is actually free. It will help you figure out what the impact of reclassification is.



What you would do is you’d put in what somebody’s currently earning, and exempt employee with their currently salary, how many hours you think that they’re working each week, and it will tell you if they’re getting any kind of bonuses or commissions, and it will tell you what would be the cost to maintain the exemption, and more importantly, for you, what would be the hourly rate. If you were going to treat them exactly the same, cost neutral, based on the hours that we’re expecting them to work, what hourly rate do we need to pay? Once overtime is factored into that hourly rate, they are cost neutral.



In other words, as long as they do the exact performance, if they’re working 50 a week a hours before, they continue to work 50 hours a week, we need to pay them $10.53 to treat them exactly the same as what they were getting on their prior salary. It’s a pretty tool, really easy to use. You plug in your specifics, and it gives you that information.



Let’s talk for a minute about some real time updates on what’s going on. There are four or five different bills that are attempting to either slow this down or eliminate the changes to the white collar exemptions, just as there is the legislation that I talked about earlier with respect to the companionship and live-in exemptions.



As it probably be no surprise, as you’ve seen how our government has operated lately, that any legislative effort takes a lot of time. You’ve got to get bipartisan support. You’ve got to lobby. You’ve got to really work at it. I think that the legislation that has the best chance is one that’s slowly introduces. It’s basically a different timetable to getting to the $47,000. It’s  a much slower rollout process to allow businesses to get up to speed and grow into the salary increases.



All of that said, with the election just occurring, that legislation isn’t going anywhere anytime soon. They’re building support for the legislation. Some efforts have been more successful than others. I think that there’s more of a likelihood that that type of legislation will be effective in light of the election results, but it’s not going to happen before December first, that’s for certain.



The best shot of anything happening before December first is the litigation. To make sure everybody knows about the litigation, there have been two lawsuits filed in the state of the Texas. The reason the cases were filed in the state of Texas is that is where you have many Republican judges, and the best opportunity for that kind of litigation to work.



We actually brought one of those cases on behalf of the Chamber of Commerce, and 50 different business associations, some within Texas, some outside of Texas, a whole coalition of businesses that’s basically representing the private sector. That would be home care and everyone else, challenging the Department of Labor, very similar to the other exemptions for home care saying that the Department of Labor overreached.



Oral argument was heard in that case last week. The oral argument went three-and-a-half hours. It was a long argument, and I wasn’t there. I was actually at Decision Health, the conference that I met Derek at seven, eight years ago, whenever that was, at the same time that the oral argument was going on. It went for quite some time, and my understanding is that the judge was very hard on the government and asked some very hard-hitting questions about the Department of Labor overreaching, which I think is a good sign.



That said, the judge was much more even-handed. They were hard on us as well. The judge really didn’t tip his hand. Judge Leon, from the live-in and companionship exemption case, it was pretty clear what he was going to do. That was a district court judge. It was pretty clear that he was going to invalidate the Department of Labor’s actions and vacate the changes to the exemption at oral argument.



Our people are not saying that about this oral argument. They’re saying it’s very difficult to tell. Listen to this. Some crazy timing, just like Decision Health with starting the oral argument, today will be the day that the judge decides whether or not he’s going to grant a stay for December first. If you haven’t made changes yet, and you’re planning to make the changes, before December first, wait until the last moment to do it because it may be that there’s a stay. That’s something that’s beyond the scope of this presentation, but just be aware that that decision is coming out today.



We have a blog, by the way. It’s free. This is something that we put out lots of. They’re called ASAPs and Insights specific to home care. If you would like to be on that, just email me. My email address was at the front of this presentation. I think it might be on the back. It’s ASpinola at Littler.com, and we will get you added to our home care list.



We will send you updates in as close to real-time as we can, as to what is happening both with respect to the litigations with the legislation as it impacts home care. Our stuff only goes out to the extent that it impacts home care. That’s what’s going on.



Another question that I’m asked a lot that I thought we would cover today is what the Trump administration means to home care. I think politics aside, I don’t care who you voted for. I’m not going to ask you who you voted for. Don’t ask me who I voted for, although if you know me, you probably have an idea. Regardless of what you think about Trump, there are some positives, I think, that his election as president is going to have on home care.



Not the least of which are the changes that are going to be made with respect to the secretary of labor, where Perez is going to be out, and the administrator, Dr. Weil, is going to be out. Dr. Weil has had a real focus on independent contractors and misclassification of independent contractors on home care. The Department of Labor has had a real focus on home care in general.



The number of audits in home care has skyrocketed since last year, since they made these changes. Generally speaking, the Department of Labor wasn’t all that active with respect to home care because of the companionship and live-in exemptions. They would target home care where, which facility work or where more than 20% of the workforce was household work, and those sorts of things where the exemption could not be met.



Generally speaking, you didn’t see a lot of activity. Today, I have so many audits all around the country from the Department of Labor, both with respect to agencies, registries, you name it. They’re really focused. I think that it’s going to take time, but some of the focus is going to change. It’s going to, I believe, be taken off of home care.



We have, again a little bit beyond the scope of what we’re talking about today, but we have two members of our firm on Trump’s transition team, one of which is heavily involved with the Department of Labor and discussion about who the next secretary of labor will be and the next administrator will be. We’re very hopeful that we will be first in line to sit down with the new administrator and talk about some of the difficulties that home care has experienced with the overregulation that we’ve had through the last administration and trying to get some relief in multiple ways.



Stay tuned on those efforts as well. We have a mini coalition set up with respect to home care specifically that I think is going to result in some great strides, including with some of that legislation we talked about earlier.



I think one of the first orders of business for Trump is to make some changes to the Affordable Care Act. That’s no secret. We know that he wants to repeal it. There’s been talk now that about the entire act will not be repealed because it will be 200 million people without insurance, without health benefits. Work is underway now to figure out what to repeal and what to replace. I think that that’s going to take more time than originally suggested as well, but I do think that will be at the top of the agenda.



I think that we will see right away a lot of these executive orders, the ones that didn’t go through the notice of comment discussion that we just talked about, like the white collar exemptions, the ones that were actual executive orders, which in some ways a lot of people see it as an in-run around the gridlock in Congress. I’m just going to create these executive orders to change the things that I can control. Those are going to be repealed.



My understanding is that Trump actually has a letter written to do that in his first day of office. I think you can expect to see a lot of that happen really quickly. Generally speaking, I think you’re going to see a whole lot less regulation. Trump has said that for every new regulation, two will be repealed. The idea is less government oversight. I think we’ll see more state regulation in those more liberal states like, say, California, where you see both a state and even a city level that they’re increasing minimum wage.



I think you’re not going to see that minimum wage increase to $15 an hour that was discussed on the Democratic ticket. I think what you’re going to see is the liberal states will continue to increase minimum wage, and those conservative states are going to leave it alone, or increase at much less of an increment than what we’re seeing in states like New York and California.



As I said, I think that the home care final rule there’s some new life that has been breathed into codifying the old regulations into the statutes. Hopefully that will happen, and hopefully some of the heat will come off of home care over time. Just understand that it’s in its infancy, and this is going to take some time. Those who have an active Department of Labor investigation , for example, it may not get to you in time. The release may not get there in time.



We are working right now with a bunch of investigators, letting them know, and what we’re trying to do is delay determinations, slow things down. Letting them know that as the old Department of Labor secretary said there’s a new sheriff in town, and you shouldn’t make decisions based on the goals of the old regime.



What we’ve seen is a lot of these investigations, there appears to be a bias and an agenda before the investigator has even conducted an investigation. That has certainly happened with at least some of the investigators. Okay. That’s your update portion of the presentation.



Now, let’s talk about how you need to go forward in this environment and what you really need to be focused on. In order to do this, what I want to explain is the balance. Why do we see so many cases here in the wage hour world? I want to emphasize as much as I possibly can without screaming from the rooftops, which I feel like I’ve practically been doing for the last couple of years on this, is to get you to understand the fundamentals of these cases and why they’re so popular, why your employees are suing you all the time.



There is a burden shifting in wage hour that is non-existent with respect to any other kind of labor law. In a Title VII case, which would be discrimination or harassment, if I’m going to allege that you discriminated against me, or you harassed me, I have to come forward with facts that you did so. It’s my burden to demonstrate that you have done something wrong.



If I can prove that, then you have a way of coming up with a legitimate defense and showing that there was a business reason for the actions that you took, and then the burden shifts back to me. There’s a whole burden process that starts with me as the employee.



What that does, two things, it makes it harder for me to prove a case in that world. In any other way, discrimination, harassment, disability, any other kind of labor and employment issue, the burden is on me. It makes it a more difficult standard for me to meet. It also limits the pool of liability to me and maybe a few others like me.



If I’m going to bring a class action, and it’s, say, a harassment class action or a discrimination class action, then I’ve got to prove that there are other people that were discriminated against just like me, which is probably limited to a pool of individuals that reported to one supervisor. It’s going to be a handful of people at most with a more difficult standard.



That’s not how it works in the wage hour world. In the wage hour world, what I need to try to identify is a pay practice or a decision of yours that could mean that I was underpaid or I was misclassified. If I can come up with a hook, whether that’s an automatic meal deduction, whether that’s a rounding, that you round time to the nearest quarter hour, whatever it is, if I can come up with something theory as to why you owe me more money than you’ve paid, instead of the burden being on me to prove that, the burden is actually on you to show that that isn’t true.



That’s why the case is so popular. “Hey, I haven’t been paid correctly. You prove that you’ve paid me correctly.” How do you do that as the employer if it’s my responsibility to tell you how many hours I worked? I’m the one that has to report the time to you, but you’ve got to prove that my time is accurate.



Very challenging for the employer. Very challenging, trust me. I’ve been litigating class action wage hour cases for my whole career, and it is one of the most difficult types of cases to defend. They’re really hard because generally speaking employers don’t always have the cleanest, clearest of records, the best strongest compliance policies and programs, so the employee has a huge leg up.



What has happened over the years is plaintiff lawyers have begun to solicit and target these kinds of cases. They’re actively the reason that home care is now the most targeted isn’t because some home care employees, a bunch of clinicians and caregivers, all the sudden decided that they wanted to sue their employer. No, that’s not how it happened. What happened is the lawyers went out and found the caregivers.



They came up with a theory. They came up with the arguments. They figured out what the loopholes were, and then they went out and solicited your employees. Ten to one that nine out of every 10 folks that are on this call that have gone through a wage hour case, an actual wage hour litigation, it was the lawyer, and they can tell you this, the lawyer that found the caregiver, not vice versa. Or the caregiver went to complain to the lawyer about something totally unrelated, and the lawyer converted that into a wage hour claim.



Why? Because it’s the most profitable case that a lawyer can bring. They get paid a contingency, a percentage of the total take. The bigger the class, the higher the stakes, the more money the attorney gets. They’re looking at the providers with lots of caregivers. They’re looking at big hours, and when they get the caregiver in their hand, often the caregiver is manipulated to say something that isn’t true. It’s, again, your job to prove that they are wrong. Very hard to do.



I’ve come up with all kinds of creative ways of doing it. Use [inaudible 00:47:57], care logs, timesheets, cell phone records, swipes in the garage for times in and times out, all kinds of things. Very expensive to do, and very challenging. There are ways to do it, but you don’t want to be in that position. You do not want to be in a class action lawsuit at all, and you certainly don’t want to be in a class action lawsuit where you don’t have the right tools in place.



Keep that in mind as we go through this compliance program and what you need to do to build a good faith defense. A critical factor is understanding that the burden is on you, and you’ve got to create affirmative evidence to demonstrate that people are paid correctly.



We’re going to talk about those good faith defenses in the context of exemptions and how you establish that somebody’s properly classified exempt and also non-exempt pay practices. Then we’re going to talk about the toolkit, and then take your questions.



First off, think about this. You have a compliance program for the discrimination and harassment claims. You do. You have a compliant procedure. You’ve got a policy. You may not have that corresponding thing for the wage hour issues, even though out of every class action, nine out of every 10 class action is a wage hour class action. Those are much higher stakes. There’s more people involved. They’re worth a lot more than one of these other cases.



The reason for that is, is the civil rights cases, they happened a lot earlier, and then these good faith defenses eventually developed and companies eventually got compliant. Wage hour claims are a newer claim. They’re the most popular, but it’s taking longer for companies to get up to speed and to develop their compliance program as time passes. That will eventually happen, but we are still another five years or so away before being there.



Home care in general is behind the times because we haven’t had to focus as much on wage hours as other types as industries, and it’s more difficult because you have a remote workforce. It’s harder to manage a remote workforce and make sure they’re taking their meals and doing all the things that they’re supposed to do by way of time recording.



That’s the reason that the cases are popular. We will eventually get there, and what I’m trying to do in my practice is speed up the timeclock on that. That is really my goal, to get to you before the plaintiff lawyer does, and get you compliant before you find out that you’re not the hard way. That’s really my objective.



With exemption, the first thing you do in the exemption is you’ve got to identify those positions that are gray areas and figure out what to do with them. There are some positions that are clearly going to be exempt, and we don’t have to worry much about them. We don’t have to worry about job descriptions. Everybody knows they’re exempt. A CEO is exempt. We don’t have to worry about a CEO.



Then there are other positions that are consistently targeted, the assistant manager type positions. Schedulers. Care managers. They’re positions that are targeted as being misclassified. Inside sales is a huge one. There is no such thing as an inside sales position. If you have marketers and people that are doing that, and they’re not out in the field meeting with clients all the time, and they’re not paid based on the sale, then they’re probably not exempt. They’re not outside sales people. They’re inside sales person who are non-exempt. That’s a big one that we see misclassified quite a bit in home care.



You identify those positions that are a problem, and you figure out. If you’re going to maintain the exemption you’ve got to build up that exemption because what happens is that employee leaves you, and once they leave you, if you don’t have evidence that they were truly exempt then what they’re going to say in the lawsuit is that they didn’t do anything. They didn’t exercise discretion and independence. They didn’t make decisions. They weren’t really supervising people. It was really the owner that supervised. They would just be involved in an interview, but they didn’t really have weight in making any decisions on who was hired or fired or who was disciplined.



What you want to do is figure out what are the allegations. The nice thing about this kind of litigation is it is cookie cutter. Once somebody comes up with an idea, all the other lawyers pile on. They bring the same kind of lawsuits, and you have a sense of what it is that they’re doing and how they’re doing it.



Look at it. Look at the allegations are, and figure out how you stack up against those allegations. Do you have holes? Is your job description accurate? What defenses are you going to use to establish that these folks are really exempt? Would it be better maybe to treat them as non-exempt and not have to go through that whole process? You figure out what the gaps are and how to build around those gaps.



Some of that would include making sure your job descriptions are accurate. Your job postings, make sure that those are clearly communicating exempt duties. Keep the employees’ resumes. I’m talking about if they leave you, and on their resume that talked about what they did for you, that’s often a great source of evidence because on their resume, you want to make yourself look good. You’re going to be high in stature as far as what you were doing.



Have the employees while they’re with you provide self-assessments, and you can put in the self-assessment the type of activities. Who did you supervise? Tell me about your management. Where did you exercise some discretion, make some important decisions this year? Put some stuff in there depending on what exemption you’re trying to use to have them testify, so to speak, as to their exempt status down the road.



When they say they’re a drone later, we pull out their self-assessment. Performance reviews. Make sure your managers understand what to put in there to establish exempt status.



With respect to the pay practice claims, now we’re talking about non-exempt claims. How do we build around those claims? If we’re taking people from exempt status to non-exempt, or we have a large group of non-exempt employees, like our companions, how do we make sure that we don’t have holes, we don’t have loop holes, we don’t have the kind of pay practice that’s going to lead to litigation and create some problems?



You want to identify those pay practices now. A lot of stuff I’m talking about is not hard to do. Do we have a regular rate issue? Are we incorporated on-call premiums and bonuses and differentials and extra payments into our regular rate for purposes of overtime? If not, that’s a real easy case that you will lose if you have something that’s not in your regular rate that should be, that’s really easy to figure out, that’s going to affect everybody, that’s going to be a class action. You’re not going to defeat a class action claim like that.



Are we rounding? Can we pay by the minute? Do people enter the same time every day? Are we only paying to the service? Service hours as opposed to actual hours worked? There are lots of things that you can do today to analyze your litigation risk for tomorrow, assuming that you’re going to get sued. That’s the starting presumption. Fix it now. Create evidence now that’s actually going to help you.



What kind of evidence do we want to show that we’re committed to paying timely and accurately? That the employees have been trained, and they have received policies. A complaint procedure as to what to do if they have not had all their time paid for. They haven’t recorded all their time worked, how to fix that.



What working time even is in this context, the charting times. Time at home, time on our iPhone that that’s all working time that must be recorded. The training time is a big issue. Orientation time is a big issue in home care, where that time is sometimes not treated as working time. It’s understanding the rules and making sure that you put it into practice. These are the types of issues that we’re seeing lots and lots of litigation over.



I don’t have time to go through all these today, but where there’s a meal requirement. How are you tracking a meal requirement? How are you tracking sleep time in a live-in situation, that they are getting their sleep time. Too many companies don’t have a reasonable agreement in place. You have to have an agreement in place to exclude sleep time under federal law. If you don’t have a written agreement, you can’t exclude that time.



That just happened with a client of mine in Florida. It went to use the sleep exemption, and the DOL said, “Where’s your agreement?” “We don’t have an agreement, but they were sleeping.” “You don’t have an agreement, then you can’t use it as an exception to working time.”



Are you paying mileage? Are you properly tracking travel time? Sometimes we see folks where they only track travel time if the visits are within a certain amount of time of each other. That’s an issue. That’s not going to work. On-call, and treatment of on-call with the non-exempt workforce is one of the most difficult things for home care to do correctly. We haven’t seen that very much.



On the non-skilled side of things, we see too much payment of only service time, and whatever somebody’s service time is, if they had 20 service hours, they’re getting 20 hours of pay, and that’s probably not right. There’s probably travel time in between there, and some work that was done beyond the service time, whether it’s in the office or at home.



When you see the service time and the paid time track perfectly evenly, that’s a huge red flag. Rounding, we discussed as an issue. These are the types of things where we see problems.



Real quick on the travel because people ask about the travel all the time what should happen with travel is any travel that is between client sites, anything after the first travel of the day and after the last travel of the day, anything in between there is compensable travel time.



Even if it’s a split shift situation and you’ve got four or five hours in between two visits, you’re supposed to estimate what it would have taken the caregiver to go from client A to client B, and pay that travel time. You don’t have to pay for all the downtime in between, but the actual direct travel time, you’re supposed to pay. You need to have a method for recording that travel time. It’s very important that we get this information from the caregiver, and the caregiver is telling us how much time was spent.



Another issue that we’re seeing a lot of is the continuous workday theory, where the caregiver argues that they really started their day in their home, and therefore even that first commute should be compensable. Then they would get home, and then contact their supervisor or submit the work that they did for the day so that last commute should also be compensable.



That issue, which is a hot button issue today in home care and leads to a tremendous amount of potential exposure, as you can imagine, if you’re talking about 20 minutes with the client each way, that’s 40 minutes a day of overtime that may be owed. As you probably know, that’s typically going to be liquidated, meaning it’s doubled damages. It’s not just the back wages, but two times the back wages, plus attorney’s fees on top of that.



That’s a theory and a claim that many are arguing, and it’s really easy to address through a travel time policy. All you need to do is have the right type of policy in place, and you follow that policy, and they can’t make that claim. They could make the claim, but they’re not going to be successful.



Let’s just talk about the building block of what an effective compliance program looks like, and then I’ll show you some examples of some of this stuff. It starts with your policy. Your policies are really the skeleton that holds the whole body together. You’ve got to have the right type of policies specific to home care about sleep time and specific to you state, not just some generic policy that you found in a handbook somewhere online.



You want to have policies that explain what the rules are in home care. What kind of work in home care is compensable time? In your state, what are the state requirements for meals? Is there a state requirement? If there isn’t, then don’t have a meal policy. Don’t require people to have meal periods, and just pay them for all their timed worked. Under federal law, there’s no obligation to provide a meal period.



That’s a state specific issue. You need to understand what these rules are. Look at the law in your state, and build your policies around that law, and around your practices.



A very specific timekeeping policy that explains how you record time and requires them to certify their time. We’ll talk about that in a minute. If you’re utilizing ClearCare, make sure you explain what they need to do and what they need to record and how they need to do it. What they need to do if they didn’t have the opportunity to put all their time through ClearCare. Give them another option.



If for some reason, the telephony wasn’t available, or they did some work that was not captured within telephony, give them another way of recording time. We utilize a non-client or non-visit timesheet, real simple form that they fill out if they need it, and they’re certifying that that time on it is accurate.



Make sure that once you implement your policies that you train your employees, that they understand what they’re supposed to be doing and how to record time. You want to be really transparent. The reason for that, sometimes people say, “I don’t want them to understand that if they’re working from home that I’ve got to pay them for it because then I’ve got to pay them for it, and they’re going to record it.”



Trust me on this. You want your employee to know that they have a voice within your organization, and that you have policies and procedures in place to address any of their wage hour concerns. You want them to call you. You want them to use the internal complaint procedure, and not call the Department of Labor, not call, god forbid, a plaintiff lawyer, and say, “Hey, I don’t think I’ve been paid the right way. I really don’t know what to do about it. I’ve had all these sleep interruptions, but I’ve been told that I don’t get paid for sleep time. What do I do?”



That lawyer is going to have a field day with that. You’ve really got to train them. Make sure they understand, and make sure that they understand that you have an open door. That’s communicated in policies. That’s communicated in training. That’s communicated in your day-to-day work. I know that some of this might be a bit of a sea change, but trust me on this. Trust me. You’ll be glad that you’ve put these things in place now because if you don’t do it, and you get sued, that’s a bet-the-company kind of litigation. That’s a very expensive proposition.



In some of my presentations, I do an exposure analysis and show with just 100 employees, this is what exposure can look like. It quickly gets up to millions of dollars without a lot of on-the-clock work time. I’ve decided to pull that out because people just don’t like me very much. I already have an uphill battle as a lawyer talking to you guys. I know how you feel about us. The last thing I want to do is make it worse.



Implement arbitration. We talked about this before. There’s a specific type of arbitration agreement that you should probably have that has an opt-out. There is a whole lot of stuff going on with arbitration, particularly in the Ninth and Seventh Circuits. This is going to be an issue that goes up to the Supreme Court real soon. Again, an area where the election of Trump is going to be beneficial to those of you, I think, who are utilizing arbitration agreements because he will nominate somebody to go on the Supreme Court in place of Justice Scalia, who was the deciding vote on all these class action waiver issues that will hopefully be a conservative, like-minded, that will also agree that class action waivers are appropriate.



The National Labor Relations Board has really been attacking class action waivers, and there are some vacancies on that board that he’s going to nominate, so we think that things are going to change over time. There’s going to be less scrutiny on these agreements. These agreements, if you have the right one in place, are life savers. They are game changers.



What it means, and this just happened to me last night, one of my clients called and said, it was a franchisor, and he’s got a franchisee that just got a California class action lawsuit. They named the franchisor and the franchisee, and he’s worried about it. All kinds of potential exposure on all sorts of issues. These California claims, they won’t bring once. They bring 13 or 14.



We found out this morning that this is one of our toolkit subscribers that the franchisee has utilized our arbitration agreement with class action waiver. That means that if that same individual who’s trying to bring a class action lawsuit will be compelled [inaudible 01:06:34] and it will be a class of one.



We take something that is a multimillion dollar issues, a hundreds of thousands of dollars issue, depending on the size of the organization, and make it into a [bunch 01:06:51], or at most a single, a few thousand dollar issue. It’s a game changer, and you have the ability, if you have the right kind of agreements, it’s very important that you, if you’re using the right. This is not the type of thing you want to meddle in and dabble in. You want to have the right kind of agreement of using the federal arbitration act. It’s got the right policies.



We’ve had too many times. The reason I’m emphasizing that, where a company thinks they’re in good shape, but they do have an arbitration program, arbitration agreement. They give it the agreement. It turns out it’s not enforceable in their state, or there are terms in it that make in unconscionable, and we can’t get the agreement enforced.



A company thought they were clean, thought that they could avoid a class action, and it turns out that they couldn’t. That’s something, it’s not a difficult agreement to put in place. You just want to make sure you’ve got the right kind.



Then be wary in today’s environment of utilizing independent contractors, particularly when you’re moving employees to independent contractors. One other thing I’ll say to watch out for because I’ve seen a lot lately is employee type share arrangements, where one agency is sharing employees with another agency. Once my guys get to 40 hours and we send them over to work for you, and I’ll take some of your guys to service them to my clients. The DOL is looking at those with great scrutiny.



That doesn’t mean that if there’s somebody that’s completely independently working for somebody else they can’t work for you, as long as you’re not orchestrating share. When you have employees going back and forth across multiple companies, even if those companies are unrelated companies, then there’s a risk that they’re going to be deemed joint employers, and those hours are going to be aggregated.



If I work 40 hours for you and 40 hours for another agency, and we keep going back and forth, that’s 80 hours, 40 hours of overtime, that both companies are mutually responsible for. That can be a real mess.



Time certification is another silver bullet type issue. This is something that you absolutely need your employees to be doing, where the employee is telling you that their time is accurate. You’re not making an assumption. You’re getting the time from the employee, and they are communicating whether that.



With ClearCare, we have done a lot where we have actually built scripts into the ClearCare software, where just like ClearCare, you’re connecting the dots on the plan of care. Did you provide Mrs. Smith with a bath today? Did you feed her three squares today? Have you recorded all your time?



We put scripts into ClearCare that mirror the state requirements in whatever state you’re in. That’s a good thing to have, and I know ClearCare is putting together a very comprehensive compliance program to allow those types of certifications. In my opinion, it’s very advanced stuff. That’s a really essential tool.



If there’s any work that’s being done outside of telephony, like I said, have a mechanism for that to be recorded. If you’re not recording travel time within telephony or within electronic system, then put it on a paper timesheet. Use two forms. I know that’s a little inconvenient, but that’s what we need to do in today’s world.



We want to make sure that that certification language is something that we can utilize and we can point to along with other things like your training and the other things that you’re doing to demonstrate that we are compliant. Now, when the employee says, “I was working off the clock,” we can go back. I can go back at a deposition and say, “You were certifying the accuracy of your time, time and time again, so what’s the deal? Were you lying when you were certifying the time?”



Then they’re going to say, “I only signed that because the supervisor told me to.” Then we’re going to point to your awesome, off-the-clock-work policy, and demonstrate that a supervisor is not authorized to do that. They had an obligation to report to you if anybody did instruct them to work off the clock.



What you’re doing is taking some of that burden that is on the employer’s back and you’re shifting that over to the employee, where the employee, you have the responsibility. This is your time. Here, we’ve given you the tools, the policies, the techniques to understand what you’re supposed to do. Now you need to do it. If you don’t do it, don’t come suing us later because it’s your fault. That’s what I want to be able to argue.



When you’ve got this kind of program, I look like Matlock when I’m doing that. I look so good because I can use all of your stuff and say, “Look, we had this all in place. You didn’t do it.”



Now, since I told you about all these things that you have to do that cost you money, and by the way, compliance is not particularly expensive, particularly the toolkit. We’ve put this toolkit together as a subscription service specifically for those who say, “I can’t afford a big compliance program.” Here are the tools. You do it yourself. I’ll cover that in a minute, but there is a cost obviously associated with compliance.



If you really are compliant, and you’re not today, which chances are you have 90%, 95% of you have some issues that we need to address, so your labor cost is going to go up a little too. As an even-minded guy, I want to give something back to you.



This is something that’s work opportunity tax credit. It’s something that not many home care companies are aware of, and many of the employees that you have will actually qualify for this. This is basically a dollar-for-dollar tax credit. If you have an employee that can qualify for this, these would be people who are veterans, who are on food stamps, who live in certain areas in certain states, who get supplemental Social Security. There’s lots of ways that you can qualify.



It’s a real easy process to figure out if somebody qualifies. You can put it into the application process, and it can really reduce your tax obligation significantly, and there’s a lot of money out there to be had. I know that ClearCare has a process for collecting this credit on your behalf. It’s very efficient. Let me let Derek talk about that for a second, and then we’ll move to the toolkit and questions.



Awesome. Thanks, Angelo. Definitely in response to all of what has seemed to be news that puts pressure on your margins, ClearCare has integrated the work opportunity tax credit. I think when we talk about this integration, there are three things we like to talk about, making it a standard part of your caregiver application process, which we’ve done. When you’re on the ClearCare platform, for those of you who are customers today and aren’t aware of it, you can just contact us, and we can turn it on.



Each agency has their own unique link for caregivers to apply, and that link, you can use on Craigslist, Indeed, et cetera, wherever you’re recruiting for caregivers. When the caregiver applies, and you have the WOTC integrated, the caregivers are asked a few additional questions. That way, their information comes paperlessly into ClearCare.



You then immediately there’s 13 categories of eligibility for the WOTC program. You know instantly nine of those 13 categories, if that caregiver qualifies before you even contact them for potential employment. They give you the ability to prioritize. That’s exactly the intent of the benefit, to try and prioritize recruiting, hiring, and then putting certain caregivers to work.



The second component that we built that’s really nice is it integrates into the payroll system. The tax credit is accrued not only when you hire the person, but you must put them to work approximately 120 and 400 hours, which isn’t a whole lot. That isn’t a whole lot of hours to make that happen, but you need to make sure that you have the visibility on who is tapped out over the 400 hours. Because then you may want to prioritize a caregiver on a new case that has maybe not reached that threshold.



Then the third component is the eligibility check. Not only have we streamlined the application process, but we’ve got a great team through our partners at GIF who are checking to see if the caregivers are eligible. We’re currently running about a 30% eligibility success rate, which means that 30% of your caregiver new hires are eligible for one of the tax credits.



We’ve got a lot of great testimonials coming in. This is a product that we’ve had out for about a year-and-a-half. I will mention this too. Many owners have reduced what is likely your effective business tax rate of 25% down to zero. It is a dollar-for-dollar. This is not a deduction. It is a credit, the best kind. You can drive your tax liability, your business tax liability down to zero with the credit.



We actually haven’t had to deal with this case with a few of our customers where they actually have an access of credits, and those credits do carry over for 20 years. If you do drive your business tax liability to zero, the excess credits can carry over for 20 years, and you can work with your accountant on when to apply those.



Thanks, Angelo, for mentioning it and giving us a chance to speak about it. If you have interest in that, we’ve included a link with a video on our website.



Yeah, I appreciate you talking about it. It’s just so important because you’ve got to find a way, particularly with the way things have gone over the last few years, and hopefully this is a change for you, but what can you actually do to lower your costs? As important as it is, everything that we’re talking about today does increase cost. I’m aware of that, sensitive of that. That’s an opportunity to balance it out.



I’ve had many clients who’ve utilized that credit, and the credit has actually been a net gain when compared to the other things that they put in place, including payment of overtime. With that, this is another method. I’ll just explain what this home care toolkit is to the extent that you’re not familiar.



This is a subscription service that we have put together on behalf of home care companies. It’s used quite a bit by franchisors, franchisees, independents, agencies all across the country, and the idea was to include materials and resources to be a one-stop shop for home care. I’m going to show you what this toolkit looks like here in a second.



We know that there are some companies that don’t have a budget for a lawyer to go through a compliance program. They don’t have a budget to do really spend for every question that they have. What historically happened is they’ll try to Google something, or they’ll try to download something off of some vendor site, or get it from an HR company or something like that that’s selling generic materials that are not state specific or home care specific, and then we end up inheriting those materials when we are handling a litigation or an audit or something like that.



Trust me. In those situations, I do not look like Matlock. What ends up happening … I hope everybody knows who Matlock is. I’m showing my age here, ageing myself a little. What starts to happen is after the litigation and after the expensive audit or whatever it is, when somebody gets dinged, like I was saying about the arbitration agreement, how hard is that? It’s not hard to have the right arbitration agreement, but you’re not lawyers, so you’re not going to know what’s right and what isn’t.



You think that you’re covered, and you think you’re okay, but you haven’t really focused on it that much. Then something comes along that makes you focus on it, ie, litigation, DOL audit, and now it’s like a culture shock. Wow, I had no idea that I was sitting on that kind of liability, and it was so easy to fix.



Through the course of litigation, we fixed it, but it’s a value-add for the future. What it does it cuts off continued exposure in the litigation, but it doesn’t do anything to eliminate past exposure. It’s this rude awakening.



What I’ve really been trying to do, the reason that I’m out speaking 30, 40 times a year is to try to really educate the industry prior to that happening, and help you get your house ready for the storm that is to come before it comes. In some cases, I work directly with the bigger providers that’s got lots of resources and tools in updating the things that they have.



Home care is often a mom-and-pop shop, where we don’t have huge companies with huge budgets, so what we did is we created a toolkit where we’re taking the materials that Fortune 500 companies use , and it’s literally hundreds and hundreds of thousands of dollars of attorney time and content that our firm has developed over the years, and to the extent it’s something that can be used on behalf of many companies, we’ll include it on the toolkit.



It’s something that’s customizable. It’s basically documents, forms, agreements, compensation agreements, arbitration agreements, the type of materials that you can utilize and plug in your name, modify as you need to, the policies, those sorts of things to allow you in a way to do it yourself. Our goal is really to get the tools in the hands of people that will not otherwise have them, or will have the wrong tools, and candidly, hopefully, if you’re using our tools, we don’t make any money on the toolkit really because of the amount of investment we have to put into it.



The idea is that if you run into a problem, you’ll be more likely to call us to help you. We’ll be able to develop a relationship that way with you, but it’s only when we’re needed as opposed to you calling us about something you’d really rather not.



The way it’s organized, and I’m just going to show it to you here, is with respect to on-boarding materials, like your hiring checklists, 50 state compliance application form, fair credit reporting act compliance, offer letters, those sorts of things from when you’re bringing somebody on board. When you’re hiring them.



Continue employment resources and ending employment resources. It’s also set up by state. Before I move away from this slide, if you need my email, if you want to be on that blog and get updates on what’s happening. I still haven’t seen what’s happened with the litigation. That may be because I’m on this call. I would imagine that we have something right now about whether the stay is in place or not. If not, it’s coming tonight. Let me know if you want to be on that blog, and we will get an update out to everyone. That’s my contact information. I’m going to move off this presentation and just give you a quick guide of what the toolkit looks like. This is it.



You’ve got your on-boarding materials. It’s basically a subscription service. You get a secure website, and everything is broken down by stage of employment. You’ve got your pre-hire resources. Most of these materials have notes and comments on them and the application, for example, also comes with a memo that tells you what you can and cannot ask on your application.



Like it’s a big thing right now, as you’ve probably heard, with ban the box. What you can and cannot ask for in ban the box, with respect to convictions. That’s a state specific thing. You’ve got an application memo that will explain what you can and cannot do. That fair credit reporting act, there’s a lot right now on fair credit reporting act and not doing background checks the right way.



There’s a big scourge of lawsuits that are being filed about that because either you are using the right form, or you’re not. If you’re not following the right process, that it is a per se violation. In other words, whether the person actually committed a crime or not is irrelevant. Are you using the right process? That’s been a big class action lately. It helps with that.



Also, all the new hire notices that you’ve got to put up, your posters and new hire forms that you have to give to people. Those are organized by state. These are also state specific forms. You can go and click and get the forms here. Hiring resources. Draft offer letter, I9s, W4s. A guide on that work opportunity tax credit. All the posters. That’s the on-boarding piece of it.



The continuing employment, let’s go to that real quick. [inaudible 01:25:34] Continuing employment materials are the types of resources and guidance you would need for actually managing your workforce. Here’s all your policies that you would need in home care, for individuals working 24-hour shifts, meal and rest, travel policies. That travel policy we were talking about, off-the-clock work policy we were talking about. Training, acknowledgements on call logs. Timesheets with the time certification.



Here’s all the exemption transition documents. The acknowledgement I was talking to you about, what we would give to reclassify the employee. Talking points, what the requirements are. Emails to executives, frequently asked questions. Here’s your timesheets, both for regular caregivers, live-ins.



This is updated all the time, so we’re actually going to add several versions of the timesheet in the next several weeks. We just drafted them. As the law changes, so do the materials. We changed our arbitration agreements as the law changed. Here are the requirements for vacation and leave based on state. Performance evaluations examples and guidance on that.



Then for end of employment, here’s your arbitration materials section. I won’t go through all this, but if your triple A letters, frequently asked questions, how to actually communicate why you’re implementing arbitration, and of course, the agreement itself is there. Then for the end of employment, these are your termination letters, your release agreements, both for you have to have an agreement for somebody that’s over 40 or under 40, guidance on all of that.



Then [inaudible 01:27:30] as the poster requirements. In certain states you have to provide notice to the Department of Labor exit forms. Provides all those materials. Then you’ve got just general guidance to help you. I’ll show you one other thing about the guidance. Help you with resources on specific subject matters.



These is guidance that’s related to home care, what’s happened with the exemptions, best practices for home care. Meal and lodging credits, orientations rules, minimum wage and overtime for home care, and then here are some general issues. Implementing arbitration agreements, restructuring, independent contractors versus employees. I9 compliance. The list goes on.



If you would like a more thorough demo of this, I’m happy to do it. This is one other resource I wanted to show you. It’s really cool. This GPS is a subscription within a subscription. We basically put this in the home care toolkit. I had to get permission to do this from the firm, but it basically tracks all recent legislation by state, pending legislation, and it’s [topical 01:28:52], so you can search and there’s all sorts of ways of setting this up where you can look at whatever you want to.



Here are the types of issues that are covered, just about anything you can think of. These are all 50 state surveys on issues on do I have to payout vacation upon termination. These are state specific issues that you can look at all these surveys and customize your searches without having to go to Google and maybe getting the right answer, maybe not.



This is a topical map, so you can click on your state and get information specific to your state. The federal wage and hour guide is here, and also California specific wage and hour guide that gives you all the information you would need on the wage and hour rules in your state and California. There’s a memo about how you have to pay home care employees in California. You have California paid sick leave, offer letters. You can see there’s a lot of state specific information as well. It’s just another way to getting to the posters and notices that are required in your state.



Up here, these are company specific documents if we’re working with a particular company. We’ve done a training specific for them, or they’ve got their own handbook. That will be there. We keep this up to date in what is happening in the home care world as far as conferences and things that you might need, you might like to attend that are local to you, and then lots of news and updates.



This tells you what to expect in the labor and employment world post-election. Lots of good stuff, and recorded webinars that you can actually use with your employees, podcasts. I know there’s one on here, wage and hour challenges for the home care industry. That’s where I actually did that one and spent about 20 minutes identifying all specific issues, orientation, all the stuff that we touched on today.



Then these are trainings, do-it-yourself type trainings. Wage hour 101 is a really good one to use during the orientation process to help you support your piece and help you demonstrate that you actually are compliant. You take it seriously. When the DOL sees this kind of stuff, this kind of comprehensive program, they go bananas. They know that you’re in good shape, that you are really focused on this.



Compliance is either something you have or you don’t have. You’re either focused on it, or you’re not. To the extent that you have local issue, and you need a local attorney, this is a resource guide of telling you who our home care attorneys are around the country, who also have access to this toolkit and all this information.



That in a nutshell is the toolkit. It’s a subscription service. It’s an annual fee. The fee depends on what state you’re in. Like I said, it’s not particularly significant cost-wise from my perspective, and the whole goal is really to get you in a position of compliance.



I know we are right up at the time, so Derek, I don’t know if we’ve got some questions. If you need to drop off, feel free to drop off now. I can answer questions now, Derek, or if you want to submit them, send them to me. I’m happy to do it by email as well. I’ve probably got another 30 minutes or so, if we want to stay on the line. It’s your call. Sorry, I’m verbose.



Great. Thank you, Angelo. I can wait on for a few minutes, and we’ll address a few of the questions. The ones that we don’t get to, I’ll get back to those individuals.



Thank you. That was a lot of material. Very well needed. I think it’s timely, and also thank you for walking us through the toolkit. I think a lot of owners can benefit from that, and I’m glad you were able to spend some time walking through it.



I’ll pull up a few questions. Some of these questions, you may have ended up answering at different points, but quick responses might help people reconnect those parts of the discussion. Let’s take the first one from, let me sort through here real quick. Howard Schwartz asks, “Are any of the executive orders to be canceled by Trump affect home care?” I guess the question might be are any the executive orders that he might nullify or cancel, will they affect home care in either a positive or negative way.



Mr. Schwartz, good to hear from you, sir. I see you at every conference. I don’t think specifically, no. To be candid, from what I’ve understood, there wasn’t a real focus for Trump on home care. This is something that we’re going to have to do, and the though process is that we hope to get the people in the prominent positions that we need, that will be beneficial to home care, and that would be namely in my world, the administrator of the Department of Labor.



We hope to work on that process, and then work with those individuals on the issues that we have. I don’t think that the repeal of the executive orders, whatever those are going to be, would have a significant impact on home care. I see the changes being those that are going forward with the change in philosophy of overregulation of an industry that really can survive on its own.



Probably the most significant impact will be a lack of a … Again, this is me speculating because we haven’t seen this yet, but a lack of a federal minimum wage. Get going up to $15 an hour.



Excellent. A lot of questions were around that ironically. Maybe not ironically. We had a question from Colleen. Colleen Nimitz. What qualifies a work week? That was at the very beginning of the webinar, maybe 10 minutes in, so I don’t know where that would have been connected, but her question is what qualifies a work week?



You can pretty much define the work week how you want as long as once you’ve done it, you’re consistent. You can even define the work week differently for different types of employees. Sometimes we see that with respect to live-ins, where the work week splits hours 12 on one side, and 12 on the other, where companies have adjusted the work week to account for that.



You can define it how you want, and it’s basically any seven-day period. It would be 12 o’clock to 11:59 from a Sunday to Saturday kind of situation. That’s how you typically see it, but you could do it Thursday to Friday, Friday to Thursday. Any seven-day period is going to define a work week, and you really should, all hours in that work week should be counted towards that work week. If it’s a split shift situation, meaning that a shift is split over two work weeks, then whatever hours go into the second work week should be counted towards that work week.



Excellent. Got a comment from Linda here, who commented, “By the way, when is the work of non-medical home care going to be recognized for its actual value and translate the actual costs to run our business?” I just thought I’d through that out there because I think her question is more of a statement, and I couldn’t agree more there, Linda.



[inaudible 01:37:11] to address that. There’s a lot of exciting changes coming up with CMS. I think home care is only at the beginning of being recognized as part of the healthcare continuum. Every week, we are hearing examples of how home care are starting to join ACOs and value-based payment programs.



I know it’s difficult to absorb that in context of some of the discussion. I think personally from our perspective at ClearCare, it’s never been a better time to be in the home care space.



I’ll take maybe a couple more here. If you have any more questions just please type them in. Howard has maybe one or two more questions. Howard asked, “Explain the rounding issue with timekeeping. What’s the best way to handle that?” Sounds like there are multiple ways, et cetera, best practice.



Yeah, that’s a great question. There’s a misconception about rounding that as long as you’re rounding rule is neutral, you don’t have a rounding problem. Just to explain what I mean by rounding, what we’re talking about is when you have a rule, or you self-inflict it, and you say that a caregiver should round to nearest 15 minutes or the nearest 7.5 minutes or nearest five minutes. For example, if I clock in at 8:55, that time rounds up to 9:00. If I clock in at 9:05, it rounds back to 9:00.



The idea would be that’s a neutral rule, so there really should be no impact. There’s a couple things about rounding. Number one, when you’re determining whether there’s an overtime obligation or there’s an issue with compensation, you don’t look at whether the rounding rule is neutral. You look at whether the rounding impact is neutral. A rounding impact is rarely neutral.



Most of the time it favors the employer, and the reason for that is individuals often clock in early and much less frequently clock in late. Just a typical office environment, I’m going to clock in more likely at 8:55 than at 9:05 because if I’m clocking in at 9:05, I’m going to be in trouble for being late.



I’m not getting the advantage of the rounding, and that is looked at in an individual basis. Most often, I’ve looked at lot of rounding data, most often it’s about two-thirds of the workforce do not get the benefit of rounding rule, and a third get the benefit of the rounding rule. It’s an individual basis, so the one-third that have been overpaid as a result of rounding are taken out of the equation and the two-thirds would have a claim.



If you have a large group of employees, that claim can add up pretty fast, and be some significant amounts of money. The best method is really to pay by the minute, and have people actually record their actual time. That also looks much better than always seeing the same nine to five, nine to five, whatever the exact service hours are, to see the actual start time 8:57 to 4:59, or 5:03. That’s a very positive thing to see the actual time



I understand that that can create incremental of just little bits of overtime or strange pay amounts, but it really is the best practice. That is a claim that is fairly common. There’s a rounding issue. I have a bunch of those cases in the hospital setting in particular.



The other thing I would say about rounding that’s really important to understand is that many companies have a rule that artificially impacts who the rounding benefits. They’ll say, “We want you to round, but you can’t clock in until seven minutes before start of your shift.” You can’t clock in late. If you clock in late, it’s an attendance violation.



You’re influencing the fact that the rounding is going to benefit the employer and not the employee, meaning the employer is going to get the benefit of extra time worked. Very challenging kind of case to defend.



Excellent. Thanks, Angelo. We have a few more, but we are a little bit over, so I want to make sure we give people that. We’ll document those questions and send those over to Angelo to follow-up. Angelo, any departing thoughts for the group?



All I will say is I know lots of folks look at this and say, “Boy, this is a really daunting thing.” It really isn’t that hard. Even if you’re not going to fully create a compliance program, take baby steps. Start getting there, and I think you’ll find it’s easier to implement than you think.



This is the perfect time to do it because there are these changes coming up. Something’s got to be done. We know there’s going to be cases filed. Just do it the right way and start working on it, and at first it is a bit of a cultural shift. I can promise you we have led many companies through the process, and once you have your compliance program in place, and everybody understands what the rules are, it really isn’t very difficult to maintain and to make sure it’s working effectively.



Start the process. Get there. Put yourself ahead of the curve, and do not be the low-hanging fruit for these lawyers to peck on.



Excellent. With that, Angelo, thank you so much for the information, the dedication to the home care industry. I know I hope one thing people take away is how knowledgeable you are that we have an advocate who’s looking out for not only our individual compliance, but you mentioned a lot of things you’re doing to help out the overall industry with some of the regulations, and getting the attention of the incoming administration.



Thank you for all that your firm is doing. Also, I know there are a number of people at your office who are also dedicated. I know Jessie helped a lot with the presentation and slides and preparation and the toolkits, so thank you to your and your team for all that help. We will send out a recast of the webinar here within 24 hours.



With that, thank you, Angelo and team, and we will sign off.



Thank you, Derek.



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Derek Jones

Derek enjoys spending time with family running road races, has completed 6-half marathons, mountain biking, and anything to do with baseball or the outdoors.