Consumer
and Worker Risks from the Use of Nurse Registries and Independent
Contractor Companies
National
Private Duty Association Position Paper
September 15, 2003
Background
The
National Private Duty Association (NPDA) is a national voice
for organizations that provide private duty home care services,
and an advocate for services which benefit the consumers
for whom they care: seniors, children, persons with disabilities,
those with chronic health conditions and anyone whose quality
of life can be improved by having a care worker help in
their home.
Companies
represented by the NPDA vary in the level of services they
provide. Some help with every day chores like housekeeping
and errands. Others provide needed supervision or friendly
companionship to those who are lonely or afraid. Some NPDA
member agencies provide personal care (bathing, dressing
and help with mobility) or skilled medical or nursing services.
All of the companies in the National Private Duty Association
share a guiding philosophy and values. These values encompass
the following: integrity in providing safe, qualified and
affordable care; excellence in services; and effectively
communicating these values to consumers.
Over
the past several years, the provision of in-home care has
increasingly been provided by nurse registries and employment
agencies that act as “matchmaker” services,
assigning independent contractors to clients and patients
in need of services. Many consumers who use services offered
by these companies never realize that there are potential
legal and tax consequences that go along with the use of
an independent contractor. These consequences can be significant,
and could have a serious impact on the consumer. This paper
outlines the dimensions of the problem, and the National
Private Duty Association’s position.
The
Problem
The
number of consumers purchasing private duty home care services
continues to grow in the United States. Greater numbers
of consumers who are dealing with chronic or debilitating
health conditions are turning to home care, rather than
institutional care, for their long-term care needs. Many
cite the desire for a higher quality of life and independence
as the reasons for the choice of care at home.
Most
of these consumers pay for this care out-of-pocket, using
available disposable income to hire the care they need in
their home. Faced with a growing and sometimes bewildering
number of choices, consumers more and more are turning to
companies that offer them the cheapest price for care without
understanding the implications of their choice. Similar
to the day labor companies that place temporary, low skilled
workers with manufacturers, many consumers are hiring workers
from registries and companies that do not employ or supervise
their workers, but merely “place” them in home
care settings. This has resulted in unfortunate situations
for seniors, families and home care. Below is an examination
of the risks to which seniors, families and home care workers
could be exposed.
Risks
Associated with Use of Registries and Independent Contractor
Companies
There
are many unexpected or hidden issues that consumers and
workers face when dealing with companies that place workers
who they (the company) do not employ. One major issue is
that there IS an employer-employee relationship that is
created in most of the care situations—it is between
the worker and the consumer. Unfortunately consumers in
most cases are not aware of this. Referring registries and
independent contractor agencies often don’t communicate
to the worker and consumer that this arrangement could result
in the creation of an employee-employer relationship. Because
of this, both the worker and consumer can suffer significant
financial liabilities.
Liabilities
and Abuses
Payroll
Taxes
Consumers
and the families of those receiving care are confronted
by a confusing array of federal and state laws. The simplest
and most direct requirement is that anyone who gets a paycheck
must pay the government any taxes due. This includes social
security, Medicare, federal and state
unemployment, and state and federal payroll taxes.
When
the consumer is the employer and responsible for compliance,
and none of these taxes are being paid, the government may
sue the consumer or their estate for back taxes, interest
and penalties. In a situation where many days of care or
many hours each week of care over a long period of time
have been delivered, this tax responsibility can be a substantial
amount. Other remedies that authorities may seek can include
civil fines and criminal penalties.
There
are also many problems for workers. No payment into social
security leaves them vulnerable in their old age, and no
protection is afforded for their periods of unemployment.
Also, workers may not be receiving the minimum wage and
overtime protection to which they may be entitled.
Worker
Related Injuries
This
is the most potentially financially devastating result for
consumers and workers who are unaware of the employer-employee
relationship. If no workers’ compensation protection
is provided (as mandated by law for employees for nearly
every state), and the worker sustains an
on-the-job accident, the liabilities can be substantial.
Medical costs, and disability payments for workers could
cause financial hardship for even a very wealthy client.
For clients who could not afford to pay, the worker could
be left with no help for a devastating injury. Many consumers
incorrectly assume that homeowner’s insurance will
cover this type of loss, when, in fact, homeowner’s
insurance usually specifically excludes employees in the
home.
Abuse
and Exploitation
Most
workers who enter the home care industry are caring, giving
people. Unfortunately, there are also those who know that
it is very easy to take advantage of frail, functionally
limited, often cognitively impaired clients. Registries
or independent contractor agencies, because they have little
ongoing liability and want to avoid being considered as
the employer of the worker, may provide inadequate or no
background investigations on their caregivers. This could
subject clients to physical, psychological or financial
abuse. Families of the consumer can help, but time constraints
and geographical distances often don’t allow for this.
Supervision
of the Worker
Because
of Internal Revenue Service regulations, registries and
independent contractor agencies cannot provide any substantive
work supervision, scheduling, or training to workers in
home care without becoming employers. If they do, the company,
by law, becomes the employer of the worker. Supervision,
scheduling and worker training are important benefits to
consumers and workers and are provided only by agencies
that hire their workers.
For
consumers and their families, hiring a NPDA member home
care agency provides assurance that someone with experience
and responsibility is reviewing the changing care needs
of the client. The NPDA member home care agency provides
ongoing assessments of the limits of care that individual
workers are allowed to provide. Member agencies also provide
appropriate supervision that can potentially head off, or
at least deal with, the sometimes difficult relationship
issues that can occur between clients and their care workers.
Conclusions
-
Consumers who receive home care, and caregivers who
work in the industry, face increasing risk because of
the growing use of companies who refer, but do not hire,
workers.
-
There
is inadequate information about this issue for consumers
and for the professionals in the industry who refer
clients for care. They need to be aware of the risks
and liabilities faced when families become employers.
-
Consumer
choice is important and should be preserved. Clients
and their families should be able to hire the workers
or companies that best meet their care needs, with full
disclosure from companies that are providing care workers
for the home.
-
Action
needs to be taken now to protect consumers and workers.
-
The
Association is developing and promoting the following
actions:
- Education
programs for home care consumers;
-
Education programs for home care professionals;
-
Introduction of home care consumer protection legislation;
and
-
Local “grass roots” level support kits
for NPDA members.
For
more information contact:
National Private Duty Association
8604 Allisonville Road
Suite 260
Indianapolis, IN 46250
Phone: (317) 844-7105
Fax: (317) 575-8751
www.privatedutyhomecare.org
