Caregivers paid as independent contractors who follow your schedule and wear your badge are employees under federal law. Combined with chronic overtime miscalculation, the average home care agency we review has $74,000–$140,000 in unaddressed payroll exposure.
Paying caregivers as 1099 contractors is the single largest liability in the industry. If you assign their cases, set their hours, and require agency uniforms or training — they're employees. DOL enforcement in home health is aggressive and ongoing.
Night-shift premiums, weekend differentials, and attendance bonuses must be included in the regular rate of pay before overtime is calculated. Most agencies calculate OT on the base rate only — this is wrong and frequently audited.
Live-in caregiver exemptions are narrow and state-specific. 24-hour shift pay — sleep time, meal time, on-call time — follows rules most agencies get partially wrong. The Department of Labor's Home Care Rule (2015) eliminated most exemptions.
No. Worker preference doesn't determine classification under the law. The DOL and IRS apply economic-reality tests: who controls the work, who bears business risk, how integral is the service to your business. Most caregivers who "prefer" 1099 do so because they haven't been shown the full picture — and the liability stays with the agency either way.
Possibly. Paying overtime at 1.5× the base rate is correct — only if the base rate includes all compensation. If you pay shift differentials or bonuses to hourly caregivers who also work overtime, those premiums must be blended into the regular rate before OT is calculated. This is a nearly universal oversight in home care payroll.
Our illustrative sample report (modeled on a 64-employee, 2-location agency) found $118,000–$196,000 in combined exposure across 7 findings. The two largest items were caregiver misclassification ($74k–$120k) and overtime miscalculation ($28k–$52k). See the sample →