With millions of people relying on home care to help senior loved ones age at home, many families have unwittingly taken on the role of employer by directly hiring a homemaker-companion (or other caregiver), often with the assistance of a home care registry or other referral agency. Although the family might consider the caregiver as just another contractor—like a plumber or electrician—Connecticut and federal laws generally regard the caregiver as the family’s employee. Therefore, the family may be liable for taxes, Social Security, unemployment and workers’ compensation insurance and other financial obligations. Not only are most people not aware of this liability, until Oct. 1, state law did not require registries to inform consumers until four days after placing the caregiver with the consumer.
To protect unsuspecting consumers, Public Act 17-53 changed the law, effective Oct. 1, 2017, to require homemaker-companion registries to give consumers a written notice of legal liability before supplying, referring, or placing an individual homemaker or companion with a consumer. The services cannot commence until the registry receives a signed copy of the notice from the consumer, unless a bona fide emergency exists and the registry details the specific nature of the emergency on a form approved by the Department of Consumer Protection and signed by the consumer or his or her authorized representative. If such an emergency exists, the four-day deadline in current law applies. The act also requires that the notice be featured prominently in boldface type.
The relatively simple amendments to Conn. Gen. Stat. §20-679a could have a profound impact on consumers. In general, consumers have two options for procuring home care: Contract with a home care company, which employs and supervises the caregiver it sends to the consumer’s home; or hire the caregiver directly, either through a registry or some other referral source. Because home care companies employ their caregivers, and are therefore subject to state and federal wage-and-hour rules, workers’ compensation, unemployment and tax withholdings, they generally charge more for their services than registries do. Registries, which neither employ nor supervise caregivers, typically charge less because the consumer is taking on the liabilities and obligations of an employer. See “Not All Home Care Is Created Equal,” Conn. Law Tribune, Vol. 36, No. 3 (Jan. 18, 2010).
While it is not clear how much consumers know about the liability that comes with becoming an employer, anecdotal evidence suggests consumers are much more likely to consider upfront costs than any other factor. Home care companies indicate that one of the first questions asked by prospective clients is about such costs. For people on fixed incomes, including seniors, the cost of home care can be especially important. However, focusing on cost might blind consumers to the potential exposure that comes with becoming an employer, and they may ultimately end up paying a higher price for not being aware of the liability they incur when hiring a caregiver to provide companionship and home care services.
Consider the case of Latimer v. Administrator, Unemployment Compensation Act, 216 Conn. 237 (1990). Walter Latimer was 88 years old when he suffered a stroke, following which he required 24-hour assistance with activities of daily living. With the help of a registry, Latimer hired certified nurse’s aides and certified home health aides, which he believed to be “contractors” for tax and other purposes. Accordingly, he did not pay unemployment contributions for any of the aides. The administrator of the Connecticut Unemployment Compensation Act disagreed with Latimer’s position and made an assessment for unpaid contributions. The case was appealed to the Connecticut Supreme Court, which agreed with the administrator and found that the aides were, indeed, Latimer’s employees.
In recognizing the potential liability, the Legislature enacted Public Act 17-53 to protect unsuspecting consumers by providing advance notice of the potential liability in being recognized as a caregiver’s employer. Legislators did, however, balance these consumer protections against protecting the private marketplace that allows registries and referral agencies to conduct business. Several policy reasons helped Public Act 17-53 become law:
- Assumption of risk should be a choice. While cost is a factor in the buying process, knowing why something is less expensive is critical to making an informed decision. Discovering that you have unwittingly become an employer together with all the risk, responsibilities and liabilities, along with unforeseen costs of taxes and insurance after making a selection of provider is the opposite of “consumer protection.” Notifying the consumer after the commencement of services forces the consumer to choose between taking a chance that none of the possible risks will happen to him or her or starting the whole selection process over again.
- State policy. The new law is consistent with other consumer protection laws that inform the consumer in advance of any potential liability. Very few commercial transactions result in consumers assuming the liabilities of the business with whom they are dealing.
- Precedent and prior practices. In 2015, the Legislature approved and the governor signed into law Public Act 15-230, which reduced the time of notice from seven to four calendar days after a registry supplies, refers or places a caregiver with the consumer. In 2011, a provision substantially similar to what became law in 2017 would have required notice to the consumer before commencement of services; it was approved in committee but later removed by amendment.
Sami Asaad is with McCarter & English, in Hartford, where he represents home care companies and other employers as a member of the firm’s labor and employment group. Matthew Hallisey, also an attorney, is managing principal of Matthew Hallisey Government Affairs, LLC, in Hartford. He represents the Home Care Association of America in legislative lobbying in Connecticut.