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Fiscal Intermediaries Are Employers, Federal Trial Court Rules

The U.S. District Court for the Western District of New York ruled last month that Consumer Directed Personal Assistance Program (CDPAP) fiscal intermediaries (FIs) are employers of personal assistants (PAs) for purposes of compliance with New York Labor Law (NYLL) wage and hour requirements. The decision in Hardgers-Powell v. Angels in Your Home, LLC arose out of a case involving a CDPAP PA who sought to bring a class action lawsuit claiming that the defendants violated the NYLL and the federal Fair Labor Standards Act by failing to pay overtime wages at the correct rate. The lawsuit also included overtime claims brought by a personal care aide and state wage notice claims.

The decision creates a new precedent governing the relationship of FIs with PAs and their legal obligations. Relying on four factors, the Court concluded that the owner of Angels in Your Home, LLC is an employer of CDPAP PAs:

  1. The owner establishes the amount of each CDPAP PA's wages;
  2. He maintains personnel records for CDPAP PAs;
  3. He identifies himself and his D/B/A as the employer of record for CDPAP PAs, including on NYLL wage notices, in payroll and unemployment taxes, and workers compensation and statutory disability coverage; and
  4. Under the statutory and regulatory scheme under which participants and FIs operate, “the responsibilities that would be traditionally associated with one employer are divided between the participant and fiscal intermediary, who work in tandem to control each [CDPAP PA’s] working conditions and to ensure the delivery of home health care services.”

Interestingly, the Court determined that, for purposes of the NYLL, the individual owner, rather than the agency, is the employer of CDPAP aides. Although the decision is not entirely clear on this point, it appears that “Angels in Your Home” is merely a name under which the owner does business and not a legal entity.

Because it was rendered by the federal District Court (a trial-level court), the decision does not bind other courts. It may, however, be viewed as persuasive by other courts and may have implications for the obligations and potential liability of FIs that extend beyond the wage and hour context. For more information about the decision, please see this memorandum by our attorneys at Hinman Straub.

Contact: Karen Lipson, klipson@leadingageny.org, 518-867-8383 ext. 124