home health agencies

INTRODUCTION

The Fair Labor Standards Act, (FLSA), is a federal statute which requires an employer to compensate its non_exempt employees at a stated minimum wage and overtime pay at a rate of not less than one and one half times the regular rate of pay for all hours worked in excess of forty in any one workweek. The FLSA is a remedial statute, which reflects Congressional intent to provide broad federal employment protection to workers. The Office of Inspector General (OIG) and the Department of Labor have both targeted health care employers for enforcement actions. The consequences of non_compliance can be financially devastating.

The FLSA contains many other legally enforceable obligations for employers as well. This is the first in a series of articles about the requirements of the FLSA and will concern the record keeping requirements incumbent upon all employers. Future articles will deal with subjects such as exemptions from overtime requirements, the fee basis of payment, damages for non_compliance, joint employment and the distinctions between an employee and an independent contractor, with particular emphasis on those requirements as they affect health care providers.

RECORD KEEPING REQUIREMENTS

Under the FLSA, all covered employers are required to keep certain records on each non_exempt employee. There is no specified format for this data, but the employer is required to maintain the following information:

1. Employee’s full name and social security number
2. Address
3. Date of birth, if under 19
4. Sex and occupation
5. Time of day and day of week on which the employee’s work week begins
6. Hourly rate of pay
7. Hours worked each work day and total hours worked each work week
8. Total daily or weekly straight time earnings, exclusive of overtime
9. Total premium pay for overtime hours
10. Total additions to or deductions from wages paid each pay period
11. Total wages paid each pay period.
12. Date of payment and the pay period covered by each payment.

For exempt employees, the employer is required to keep all of the above, except for numbers 6_10, in such a manner that the employee’s entire remuneration, including fringe benefits and prerequisites, can be readily calculated. Under these provisions of the FLSA, each employer is required to display an official poster in the workplace which outlines the provisions of the Act. Note that an employer is required to keep a record of all hours worked by an exempt employee compensated by fee (#7).

An employer’s records under the FLSA must be kept in a place where they can be produced within 72 hours of a request by the Secretary of Labor, or the Administrator of the Wage and Hour Division. All of the required records are subject to inspection by the Administrator. If an employer, or group of employers, due to peculiar conditions under which they must operate, wish to modify one or more of these record keeping requirements, the employer(s) may submit a written petition to the Administrator of the Wage and Hour Division, requesting such a waiver.

Payroll records, collective bargaining agreements, plans, trusts, employment contracts and the employer’s sales and purchasing records must be kept for three years. Supplementary records, such as time cards, wage rate tables, orders, shipping and billing records must be preserved two years under the FLSA. An employee does not have the right to sue his or her employer for the employer’s failure to abide by the FLSA’s record keeping requirements. Only the Department of Labor can maintain such an action.

There are several exceptions to the record keeping requirements. Those of particular interest to health care providers include employees of hospitals and residential care facilities. Those institutions can invoke the so_called “8/80 Rule.” It does not apply to home health agencies. It is designed for employees of residential care facilities who are primarily engaged in the care of the sick, the aged, or mentally ill and whose patients reside on the premises. It permits the employer to establish a fourteen day work/reporting period, instead of the usual seven day work period required under the Act.

Consequently, the seven day record keeping requirements listed above are expanded to fourteen days in the case of residential care facilities who use the 8/80 rule. In addition, the FLSA requires that any institution using this exception to the record keeping requirements must have a written agreement which summarizes its terms and indicates how long it remains in effect.

Another exception to the general record keeping requirements is known as a “Belo contract.” A Belo contract, is designed for an employer whose employees work irregular hours and permits the employer to pay a fixed salary for a guaranteed number of hours, up to sixty, based upon an hourly rate. Employees are paid the guaranteed weekly wage regardless of the number of hours they actually work. Overtime would only be calculated during those work weeks when an employee worked in excess of sixty hours in a week. This exception requires that the wage must be set pursuant to a written employment contract.

The most common example would be a collective bargaining agreement between an employer and its unionized employees. Strict requirements that the employer keep accurate records of all hours worked are enforced because the employer must be able to demonstrate to the Department of Labor that there are fluctuations both above and below the guaranteed number of hours. Otherwise, the plan will be invalidated.

Recent case law raise significant concerns about Healthcare Agency’s liability for abandoning patients who are discharged from services or have services reduced. Discharging patients is always an undesirable decision for HHAs, but agencies may discharge and avoid legal liability for abandonment if certain steps are followed.

To understand the legal concept of “patient abandonment” it must be distinguished from discharge. Abandonment, as applied in the health care setting, is a unilateral termination of services when there is a continuing need for health care services and a lack of reasonable notice to the patient. Thus there are three elements to a claim for abandonment.

The termination is not subject to mutual agreement i.e. is a unilateral decision by the health care provider;
The discharge occurs without reasonable notice to the patient- sufficient to allow the patient to obtain another care giver;
The patient must continue to need health care services provided by the health care entity.

In the Home care setting then, the a patient abandonment claim is viable where there is not sufficient notice to the patient. Courts generally use the concept of “reasonable” notice which implies that there has been sufficient time for patient to obtain another health care provider or find alternative means of obtaining the needed care.
To facilitate “reasonable notice,” agencies should follow the following steps:

Determine the patient’s need for services- as to frequency, duration, and availability of alternative care givers. If there exists an ongoing plan of care services likely should not be terminated until a normal endpoint, such as the next decertification date.
Similarly, if the patient is under a plan of care, then the HHA should advise the patient physician of the intent to discharge.
Provide the patient advance written notice of the intent to discharge him or her including the exact date services will end, and explanation of the reasons for the decision to discharge, and suggested alternative care givers. Notice should be sent by certified mail, return receipt requested to properly document the patient’s receipt. A copy of the notice should also be transmitted to the physician.

The procedures for patient discharge, as outline above, should be included in agencies’ clinical policies. The unilateral decision to discharge must be made in accordance with the above procedures and in light of each patients’ ongoing need. Thus the length of the notice to the patient which is “reasonable” likely will depend on the particular situation, i.e. the availability of other providers and the patient’s need for services.

In addition if the decision to discharge is based on financial hardship due to reimbursement limitations, an H.A. must be prepared to show that it can not longer reasonably expect to be able to meet the needs of the patient- i.e. can no longer pay staff to provide the care. Discharge notices should always include information on the 504 Rehabilitation Grievance Policy (See: “504 Rehabilitation Act Grievance Policy.” by Elizabeth Zink-Pearson, on this website). In the end, in these difficult situations, it is advisable to discuss the situation with your health care counsel to obtain advise on the particular issues pertaining to the proposed discharge.

Recordkeeping Requirements Under The Fair Labor Standards Act (29 C.F.R. PART 516)

Avoiding Patient Abandonment Claims