Caring for Caregivers

Should Pros Be Paid Overtime? Will Insurance Cover a Relative’s Services?

Marcy Maler | Credit: Paul Wellman

In the United States, 10,000 people turn 65 daily, and due to the rising costs of residential care, the demand for family caregivers is growing. But nothing about the caregiver world is simple, from whether relatives providing help qualify for reimbursement from insurance to how professional assistants should be paid.

The latter issue made headlines three years ago, when actress Betty White was sued by her former live-in employee for not being paid overtime. We asked attorney Ryan Zick of Price, Postel, and Parma to educate us about how professional caregivers should be handled to ensure everyone remains happy.

Why is caring for caregivers so complicated?  Families that employ in-home caretakers for loved ones are generally unfamiliar with the complex labyrinth of California wage and labor laws. Even seasoned employment attorneys can get lost navigating through these intricate rules. In-home caregivers are subject to a special and unique set of wage and labor laws. There are three main issues any family employing an in-house caregiver should be aware of: classification of the caregiver, overtime, and break/meal periods.

So how should you handle them?  First, an in-home caregiver must be treated as an employee, not an independent contractor; that’s how the IRS treats domestic service workers, i.e., nannies, housekeepers, and caregivers. Licensed caregiver agencies will take care of payroll deductions, workers compensation, and the like. Avoid the pitfall of paying an in-home caregiver a flat daily or weekly rate (like an independent contractor), even if the caregiver suggests doing so.

The next step is determining whether your caregiver is classified as a “personal attendant” or other domestic worker. This determination must be made in order to apply the proper meal/break and overtime rules.

Lastly, you must pay your caregiver the proper overtime rate and provide appropriate meal and rest breaks. This issue constitutes the overwhelming majority of disputes between caregivers and their employers.

When do problems typically start and why?  Bad situations come to light when the employment relationship terminates, often following the death of a loved one. The rifts between the family and the caretaker following the termination of the employment relationship often ends up in a wage or overtime dispute. These disputes can be costly for the families, and oftentimes results in some amount of money being owed to the caretaker, largely due to the failure to adhere to the above-mentioned overtime rules.

Reimbursing Informal Caregivers  

An informal caregiver is an unpaid family caregiver that helps with activities of daily living activities, such as cooking, meal prep, light housekeeping, transportation, and personal care. Can these caregivers convert their hard work into paid hours? That’s what we asked Brad Tisdale of Tisdale Insurance (tisdaleins.com). He’s a long-term care specialist with more than 20 years of experience.

Can informal caregivers be reimbursed?  Most of the long-term care policies are reimbursement policies, i.e., the policy reimburses the insured for the expenses incurred, or the policy pays benefits directly to the home care agency or facility. Reimbursement policies do not pay for services rendered by a family member, unless family member is a certified caregiver employed by an agency.

Are there exceptions?  Yes. A policy that pays benefits on an indemnity basis or a cash basis can pay for services provided by a family member. There are only a couple stand-alone or hybrid long-term care policies that pay a cash benefit; most policies pay on a reimbursement basis. There are also one or two carriers that include a cash alternative option in their policy to pay for home care.

IHSS: A Third Option  

More than 16 million Americans provide unpaid care for people with Alzheimer’s or other dementias, according to Marcy Maler of the Central Coast Alzheimer’s Association. She recommends that relatives seeking an alternative to hiring a caregiver check out In-Home Supportive Services (IHSS), which is part of the Medi-Cal program and provides home care to individuals that cannot accomplish some daily activities on their own. “Once eligibility is established,” explained Maler, “an individual can hire a friend or relative who has completed all necessary enrollment steps prior to starting work.”


For more info on those requirements, contact 681-4550 or visit cosb.countyofsb.org/social_services/.

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