VOL. 17 ISSUE NO. 36   |  SEPTEMBER 7 – 13, 2011


California on track to price babysitting, domestic work out of market

Will new law force more employers “underground” or increase compliance and reduce violations?

SACRAMENTO, Calif. – California Assembly Bill 889, the Domestic Work Employee Equality, Fairness and Dignity Act, could soon be on its way to the governor’s desk for a signature, as it moves through the Senate with universal support from Democrats, who hold control over both houses of the legislature, and no Republican support.

AB 889 will amend various sections of the Labor Code as it relates to domestic employees.
Existing law regulates wages, hours and working conditions of any man, woman and minor employed in any occupation, trade or industry, whether compensation is measured by time, piece or otherwise, with a few exceptions.

This bill creates new regulations as they pertain to the wages, hours and working conditions of domestic work employees, while removing exclusions.

AB 889 removes exclusions previously allowed for some domestic employees and will now require household employers to not only pay minimum wages to domestic workers over the age of 18, with the exception of family members, but provide a substitute worker every two hours to cover rest and meal breaks, overtime pay, obtain workers compensation insurance, calculate paychecks based on accurately recorded timecards and provide employees information regarding their wages either semi-monthly or at the time of each wage payment.

The bill would require live-in employees to be provided with eight hours of sleep time every 24 hours or without such an arrangement, would necessitate the hiring of a second employee.

Child caregivers, otherwise known as babysitters, fall under the category of personal attendants, which are currently regulated by Wage Order 15.

While personal attendants must be paid minimum wage, they are completely exempt from general overtime requirements, meal and rest break requirements and other provisions of Wage Order 15. Therefore, personal attendants are only required to be paid straight-time for all hours worked, regardless of whether they work more than eight hours in a day or 40 hours in a week.

Assuming one Deputy Labor Commissioner 1 can handle 200 claims annually, just 1,000 claims would require five new positions at a cost of $76,966 each ($384,830).

If only 1 percent of domestic workers filed claims, that number would double.

Unless vetoed by Governor Jerry Brown, AB 889 will also provide unprecedented rights to employees against employers who fail to abide by these provisions, including cumulative penalties, attorneys’ fees, legal costs and expenses associated with hiring expert witnesses.

An employer will be required to pay the employee $50 per day for each day the employer violates any provisions of the law. However, the employee would also have the option of bringing a civil action up to three years from the date of the violation.

Additionally, a domestic work employee who prevails in a civil action shall be entitled to legal or equitable relief, including liquidated (punitive) damages.

While AB 889 was winding its way through the Senate a provision requiring an hour of paid vacation time for every 30 hours worked was amended out of the bill.

The legislative analysis stated there are approximately 200,000 domestic work employees in California, although the number of employees employed by home care agencies was unknown.

The staff report stated, “Given the number of domestic work employees whose wages, hours and benefits would be governed by the provisions of this bill And the possible violations, this analysis estimates there will be a major increase in claims to the Division of Labor Standards Enforcement (DLSE) in the Department of Industrial Relations.”

In determining the potential impact of the law on employers and employees, legislative staff reported, “By one estimate, half of all domestic employees are on duty for 24 hours. While it is difficult to estimate how employers may respond to provisions of this bill, it would appear every such arrangement, where there is no sleep agreement, will necessitate the hiring of a second employee.”

Employers may determine that three eight hour employees is a more cost-effective option, which may decrease wage compensation for some employees.

However, the employer would have to weigh the costs of paying overtime versus workers compensation insurance for three employees.

It may increase compensation for some employees, on the other hand.

For example, one employee, providing 24-hour care without a sleep agreement, receiving minimum compensation of $8 per hour for eight hours, $12 per hour for four hours and $16 per hour for 12 hours, would earn $304 per day, or $112 per day more than straight time at minimum wage.

The report also noted, “If a homecare agency can hire sufficient employees, the agency will have to balance potentially lower employee compensation costs against significant higher workers’ compensation and unemployment insurance costs and possible litigation costs.”

At the time of the legislative analysis, staff indicated proposed amendments would:
• Exempt child care providers (babysitters) from the bill.
• Make a non-substantive change to Labor Code 1454. This amendment would clarify the intent of the bill that Labor Code 510 governs overtime, rather than Wage Order provisions that exempt personal attendants and live-in workers from the usual overtime rules.

The most important question raised in the staff report was whether the provisions of new law would force more employers “underground” or if the penalties and potential civil actions would increase compliance and reduce violations.