In 2015, the Fair Labor Standards Act (FLSA) went into effect removing the overtime exemption for live in employees. This law requires employers to pay live in home health care workers overtime based on an hourly rate of pay, which must be equal to or greater than the prevailing minimum wage. Employers who provide live in health care services are required to maintain compliance with the FLSA Final Rule. A labor department audit would result in expensive fines, penalties for the employer and could also result in the employees being owed back pay. This FLSA Calculator is a great tool which assists employers to become compliant with these laws and mitigate their liability for a future Federal or State Labor Department audit.
The U.S. Department of Labor removed the overtime exemption for live in home healthcare employees in 2015, requiring employers to track and pay live in employees for all hours worked or waiting to work. Up to 8 hours of sleep per night, 3 hours for meals and 3 hours for personal breaks may be exempt for payroll. If the employee does not receive these breaks, it is considered time worked and compensable time. This requirement has caused payroll processing issues and labor audit liabilities for home healthcare agencies who provide live in aides. We have spend many thousands of dollars on legal fees for guidance on how to calculate, track and document live in aide payroll to maintain compliance with the regulations and spirt of the law.
Historically home care agencies had paid live in employees a fixed daily rate. The FLSA rules require that live in employees are paid for their hours worked at a set hourly rate, not a daily rate which does not take into account how many hours are actually worked. There are both Federal and State Minimum wages, the higher rate must be paid. Lawmakers did not fully understand the difficulty this final rule presents to employers. Live In employee's days & hours worked fluctuates based on the changing level of care of the client. In addition, the employee is entitled to personal days and vacation. This requires employers who wished to remain compliant to create a new payroll structure to keep employee compensation fair and equitable, all while managing the rising costs for their clients. Home Health Care is unique as there is typically a 1-to-1 ratio, employee to client. All increase in cost can only be passed along to one client. Employers have tried several different methods: additional pay, multiple regular pay rates, multiple overtime rates, etc. Many employers have chosen the Additional Pay method after consulting with lawyers to understand the risk associated with each method. The calculation consists of a regular hourly rate of pay, an overtime rate of pay, and a lump sum amount to reach the employees expected daily pay rate. When using Additional Pay, the overtime rate used must incorporate the lump sum compensation into the calculation. This becomes a daunting complex mathematical exercise.
This FLSA calculator will enable employers to calculate wages for live in caregivers in compliance with the new FLSA guidelines utilizing the "Additional Pay" methodology. Our algorithm enables payroll departments to quickly and costs effectively calculate the inputs needed for Overtime Pay and Additional Pay. The Additional Pay methodology enables the employer to arrive at the employee's expected daily compensation rate, regardless of how many days are worked in each week. Our FLSA Calculator makes this the least expensive and least time-consuming method for the employer. Our tool allows employers to solve for the two related unknowns: the overtime pay and additional pay, for each employee per pay period. Factors in this calculation may include days worked, hours worked, hourly pay rate, lost sleep time, lost mealtime, lost personal time and holidays. This tool simplifies and streamlines the process and eliminates the guess work. Several years ago, our FLSA Calculator was reviewed by the Federal Labor Department, soon after we launch it for the public. We provided several members of the Federal Labor Department with sign on credentials. They later advised us that they could never formerly indorse our algorithmic solution. But stated that if that if they found any issues or believed it was non-compliant with the FLSA Final Rule, they would immediately tell us to stop using it and offering it for re-sale.