The Department of Labor’s Wage and Hour Division just released aggregate data concerning its enforcement of federal wage-and-hour laws for 2009 — 2013. Among the most interesting tidbits is the WHD’s continuing focus on the healthcare industry. The number of cases brought by the WHD against health care companies to recover back-wages for employees have steadily risen, from 1,194 in 2010, to 1,502 in 2011, to basically holding steady at 1,463 in 2012, to 1,622 in 2013. And the amounts recovered by the WHD have been eye-opening, topping 10 million in each of FY2010 to FY2013.
Why the focus on healthcare companies? It’s largely based on the DOL’s focus on “fissure industries,” which are, according to the WHD, “those sectors that increasingly rely on a wide variety of organizational methods that have redefined employment relationships.” These new organizational methods include subcontracting, third-party management, franchising, independent contracting, as well as “other contractual forms that alter who is the employer of record or make the worker-employer relationship tenuous and less transparent.” Healthcare companies, like home health agencies, have liberally used these methods — especially independent contracting relationships with their nurses and therapists — for years, and the DOL has taken notice.
The federal government wants to put an end to misclassification of workers as independent contractors and has the health care industry in its sights. Earlier this year, the United States Department of Labor (DOL) and the Treasury Department announced an interagency “Mislcassification Initiative.” The Initiative involves millions of dollars, new personnel, targeted audits, and even training of OSHA investigators to spot misclassification problems and “rewards” for states that are the most successful in finding and correcting misclassification. The DOL is planning on an additional 4,700 investigations targeting problem industries. Home health care is specifically listed as one of those “problem industries.” All employers in the health care industry should be on guard.
There is little reason to believe the WHD will stop focusing on healthcare companies any time soon, especially now that David Weil is the WHD’s new Administrator. Dr. Weil has written extensively about the impact of fissured workplaces on the US’s regulatory systems. For instance, he’s argued that “[t]he direct, two-party relationship assumed in federal and state legislation and embodied in traditional approaches to enforcement no longer describes the employment situation on the ground [for low-wage workers].” In key business sectors — like healthcare — Dr. Weil sees the employment relationship becoming “fissured,” i.e., the businesses that really occupy the market “have become separated from the actual employment of the workers who provide goods or services.”
Dr. Weil argues that this fissuring has major implications for the enforcement of US employment laws.
The fundamental changes in employment relationships require a revised approach to enforcement, one that is built on an understanding of how major sectors of the economy employing large numbers of vulnerable workers operate and then using those insights to guide enforcement strategy. Just as the forces driving compliance with labour standards have changed, so must the strategies that agencies employ to improve conditions.
Put differently, if you operate a home health agency and your nurses or therapists are technically independent contractors, but they walk-and-talk like your employees, you are not beyond the reach of Dr. Weil’s WHD. Indeed, you may be in the agency’s cross-hairs. Now is the time to carefully examine your practices, to better prepare you in the event of an agency audit or other enforcement action. What Benjamin Franklin said long ago is still true today: “An ounce of prevention is worth a pound of cure.”