Public Sector Case Notes

• Publication year: 2023
• Author: J. Scott Tiedemann

PUBLIC SECTOR CASE NOTES

AUTHORS^*

J. Scott Tiedemann

Brian R. Dierzé

COUNTIES MAY BE LIABLE FOR IHSS PROVIDER OVERTIME

Ray v. Los Angeles Cnty. Dep't of Pub. Soc. Servs., 52 F.4th 843 (9th Cir. 2022)

California's In-Home Supportive Services Program (IHSS) offers in-home supportive services to eligible low-income elderly, blind, or disabled individuals (i.e., program recipients). IHSS providers help recipients with their daily activities and chores. More than 500,000 individuals work as IHSS providers throughout California.

Courts have long debated the legal status of the various entities that are involved in the IHSS Program due to the complex relationships between IHSS providers, care recipients, counties and the State of California. For example, IHSS recipients supervise, hire, and fire the day-to-day work of IHSS providers, set provider work schedules, and review and approve provider time sheets. The State of California receives IHSS provider timesheets, approves new pay rates that counties set, and issues paychecks to IHSS providers—sometimes directly, sometimes indirectly. Counties set IHSS provider pay rates, recruit IHSS providers, maintain databases of possible providers for recipients, and generally set IHSS provider work hours. Moreover, California law allows a county to establish a separate public authority to deliver in-home supportive services, and that public authority is the employer of record of IHSS providers for purposes of collective bargaining only—not for other legal liability. Finally, funding for IHSS programs is split between counties and the State, with a portion of the state contribution deriving from the federal government.

In 2013, the U.S. Department of Labor (DOL) issued a new rule entitling IHSS providers (and other homecare workers) to overtime pay under the Fair Labor Standards Act (29 U.S.C. §§ 209-219) (FLSA). After a lengthy delay, the State of California began paying overtime to IHSS providers on February 1, 2016.

In June 2017, IHSS provider Trina Ray filed a suit against the County of Los Angeles for unpaid overtime between January 1, 2015 and February 1, 2016. Ten thousand other IHSS providers working in the County joined Ray's collective action lawsuit.

In 1983, the Ninth Circuit Court of Appeals ruled in Bonnette v. Cal. Health & Welf. Agency, 704 F.2d 1465 (9th Cir. 1983) that states and counties were joint employers of IHSS providers under the FLSA. Under Bonnette, a joint employer relationship may be established by looking at numerous factors to evaluate the "economic reality" of an employer's relationship with a worker. The most important factors are: (1) who has the power to hire and fire the employees; (2) who supervises and controls employee work schedules or conditions of employment; (3) who determines the rate and method of payment; and (4) who maintains employment records.

Notwithstanding the holding in Bonnette, the County contended it was not liable because it did not employ the plaintiff IHSS providers as a joint employer under the FLSA. The County argued that the economic reality of the relationship between the County and IHSS providers had evolved since 1983. Specifically, while the County used to pay providers directly or pay the recipients (who then paid the providers), the State now issues paychecks directly to IHSS providers.

However, the Court was not persuaded, reasoning that the State's issuance of a paycheck does not free the County from a joint employer relationship. Instead, the Court noted the various ways in which the County continues to exert a significant amount of economic control over IHSS workers, including the following: contributing a greater share of funding to the IHSS

[Page 17]

program; setting IHSS provider pay rates through collective bargaining; and sometimes choosing the providers' method of payment. The Court also noted various ways in which the County continues to exercise significant control over...