The Independent Contractor Rule: What You Need To Know.

Recent changes from the Department of Labor impact your home care registry. We’re here to share what that means for you and how you can maintain compliance with the caregivers that you contract with.

Here’s what you need to know:

What changed?

This legislation, firstly, rescinds the 2021 Independent Contractor (IC) rule. This represents the DOL changing the definition of who is and isn’t a contractor under the Fair Labor Standards Act (FLSA). 

Who does it impact?

The change relies on a variety of factors relating to economic reality. The factors cited below directly impact the independent contractors you match with families, impacting you/your business (directly) and them (indirectly):

• Opportunity for profit or loss depending on skill. In the case of a home care or caregiver registry, independent contractor caregivers would with operate independently of your registry. Their pay varies based on the rate that they negotiate with families, and their working relationships are self-determined. 
• Investments by the worker. In the case of a home care registry, workers are considered independent contractors if they make equal or greater investments (than the company) to suggest they they work independently.
• Degree of permanence of the working relationship. For a caregiver registry, you are responsible for matching families and clients with caregivers, and beyond that, caregivers take care of the rest. The degree of permanence of work for independent contractors is outside of your control, and a factor that is determined mutually by the client/family and the caregiver.
• Nature and degree of control. For an independent contractor, your caregiver registry exercises no degree of control over the nature of their work. Most importantly, this refers to scheduling, worker supervision, and rates. You can avoid misclassification by refraining from doing any of those tasks. 
• The extent of the work being integral to the business’s success. What this refers to, is how your business operates. Caregiver registries are in the business of matchmaking—not providing care or services to clients. This distinction is important, and it can come down to your business name, the way that you describe your business on your website, and how your team members talk about your registry on the phone. The work that caregiver independent contractors must operate independently of your business’ success. 
• Worker skill and initiative. Employees utilize skills, training, and other resources provided by an employer. For a caregiver registry, the contractors must not have any specialized knowledge or training provided by you as this is considered supervision and exercising control. 

These are the six factors explicitly mentioned in the DOL’s final rule, however, they allude to the potential inclusion or consideration of other factors. 

[READ MORE: Your Guide To Caregiver Registry Compliance Part 2: On Caregivers]

What do you need to know?

The DOL has been cracking down on investigations of home-based care businesses, and have found that many are not in compliance. A 2022 press release from the DOL shared that 80% of care industry businesses had violations, impacting 25,000 workers and counting.

One of the most common violations they cited was the misclassification of employees as contractors. The rule itself could lead to more FLSA violations, prompting a higher level of vigilance and effort put toward maintaining compliance with regard to your independent contractors. 

How can you protect your business?

The best way to start is to audit your caregiver registry for indications or hints of employee-employer status. Pay careful attention to website content that talks about care or caregiving, and how you describe the nature of your business. 

It’s also important to take stock of your registry management system. Your operations hub is a mine of data and information, including contractor and client records. If you are looking around for a new registry management system, contact us for a demo today. Ally is the only registry management system purpose-built for your business model with the resources, modules, reports, and functions you need to stay compliant. 

Learn more about how to stay in compliance with contractors by watching some of our webinars with Angelo Spinola from Polsinelli: