5 Rules to Follow to Help You Survive a Worker Classification Audit

Do you sometimes feel overwhelmed by the compliance standards dictated by operating a homecare registry? You're not alone. After all, there are so many regulations to follow to ensure the caregivers you are working with are never perceived as your employees. There's also another aspect registry owners have to worry about: the potential for an audit that comes with referring independently contracted caregivers.

Referring 1099-contracted caregivers by nature opens your registry to a potential DOL worker classification audit, which can be tricky to navigate. So how can you survive and pass a homecare registry worker classification audit? Luckily, we've got some tips that can help you.

Here are five actionable steps you can take to ensure you'll pass your registry worker classification audit.

1. Use the Correct Terminology

Being labeled correctly as a homecare referral business instead of a homecare agency that employes caregivers starts with the consistent use of the correct vocabulary.

Update your internal documents from items like "registration form" to "caregiver profile." You should also omit terms like "shift" to describe the caregiver-client activity. In this way, you create a linguistic barrier that keeps you from looking like the caregiver’s employer.

You should also review major registry items to update wording, such as your:

• Website
• Business cards
• Collateral
• Staff job descriptions
• "Job" postings for caregivers  
• Other internal documents and operational forms

2. Train Your Office Staff

Investigators will interview both you and your office staff in case of an audit. So hold internal training sessions to role-play common mistakes made when talking about your business.

For example, train your staff to say that your office is a referral business, not a homecare business. You should also teach them to avoid language that implies the employment of referred caregivers, like "our caregivers,” saying instead “the caregivers we refer.”

3. Let Caregivers Take the Lead

The core of any registry is ensuring you operate solely as a referral service. That means reinforcing that referred caregivers lead interactions with clients like:

• Pay rates
• Scheduling
• Accepting which clients they'll work with

Caregivers should always be the ones to handle their own pay rates and schedules. As a registry, you cannot bar or encourage specific caregivers to work with certain clients, but you can let your caregiver network know when open shifts are available and unfilled.

4. Find a Legal Counselor That Specializes in Registries

Federal Department of Labor and state-specific guidelines are ever-changing.

Keeping up with these guidelines may seem daunting, but there are legal organizations that specialize in building a compliance program and assisting with an audit. You may benefit from their assistance.

For example, law firms such as Hollrah, LLC, or Polsinelli keep up-to-date on legislation that specifically impacts homecare registries.

5. Use Third-Party Payment Methods

One of the first things an auditor looks at during a homecare registry audit is the flow of funds. In many cases, the audit is concluded if the homecare registry is not collecting and dispersing client payments and caregiver billings separately from their office's operational funds.

As a referral business, a registry's profits are the finder's fee of connecting a client needing care with available caregivers. However, the payment of caregiver's services should be handled by a third party, whether that is an escrow account, a billing service, or registry software that handles caregiver payments and client billings on your behalf. Any of these options provide an extra layer of separation from being labeled "the employer" in a worker classification audit.

You Can Pass Your Audit With Confidence

Ensuring your homecare registry is compliant with legal guidelines can be a formidable task. Thankfully, there are simple ways to increase your chances of passing a possible worker classification audit.

If you make sure you use the correct terminology, train your office staff, let caregivers take the lead in client interactions, find specialized legal counsel, and use third-party payment methods, you can pass your audit with confidence.

Use these tips to refresh your practice frequently, and your registry will remain compliant and thrive for years to come.

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