OSHA’s maximum penalties for “serious and other-than-serious violations” will increase from $15,625 per violation to $16,131 per violation. The maximum penalty for “willful or repeated violations” will increase from $156,259 per violation to $161,323 per violation.

States that operate their own Occupational Safety and Health Plans are required to adopt maximum penalty levels that are at least as effective as federal OSHA penalties. Currently, 22 state plans cover both private-sector and state and local government workers, and seven state plans cover only state and local government workers. Civil penalties might differ in those states with their own plans.

“In North Carolina, for example, employers may be surprised to learn that the maximum penalties more than doubled in 2022 — and these penalties will now increase every January to match the maximum penalties available to federal OSHA,” wrote Fisher Phillips attorneys Travis Vance and Curtis Moore.

Under the Federal Civil Penalties Inflation Adjustment Act Improvements Act passed by Congress in 2015, agencies are required to publish “catch-up” rules that adjust the level of civil monetary penalties and make subsequent annual adjustments for inflation no later than Jan. 15 of each year. Because Jan. 15 fell on a federal holiday this year, however, the new OSHA penalty amounts became effective Jan. 16.

“Congress believed that increasing the penalty amounts each year was necessary to maintain a ‘deterrent effect.’ The practical effect, however, is that if an employee incurs an amputation or an injury serious enough to require admission to a hospital, a citation alleging a serious violation with the maximum penalty amount for that alleged violation is often issued, regardless of employee fault,” according to attorneys at Constangy, Brooks, Smith and Prophete, LLP.

“As penalty amounts increase, it is even more important for employers to design and implement an effective safety program that includes significant monitoring of employees’ compliance with safety rules and consistent enforcement of those rules through discipline,” they said.

Tuesday’s release of a final rule on worker classification standards surely will trigger many a call to HR for a policy rewrite. And perhaps to legal counsel for advice on how to react.

According to federal regulators, the updated standards promise to bring clarity to the often murky distinction between independent contractors and employees.

Clearly, regulators feel that too many senior living operators — and employers in general, for that matter — are using the “independent” label to identify workers who should rightfully be considered employees.

Specifically, the new rule adjusts the method of analysis and adds criteria for determining which bucket a worker should be placed into.

The Labor Department asserts that the new rule will take a more “holistic” approach that encompasses additional factors and weighs them more evenly in the decision-making process.

But as so often is the case, operators are pushing back against an official narrative that seems to promise help while ignoring burdens.

“We are concerned that the rule, coupled with other proposed federal regulations, will only serve to exacerbate the workforce shortage and wipe out some of the recent modest gains communities have made in recruiting individuals to help care for our seniors,” Argentum Senior Vice President of Public Policy Maggie Elehwany told McKnight’s Senior Living.

Additionally, the changes may place greater legal and financial burdens on senior living operators, suggested Gerald Maatman Jr., partner and chair of the class action practice group at legal firm Duane Morris.

Maatman suggests that implementation of the rule may well prompt more wage and hour misclassification class action litigation in the sector.

Remember that famous line: “I’m from the government and I’m here to help you”?

I guess you could say it took on a whole new meaning this week. Or that at the very least, the old meaning was freshened up.

John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.

The requirements went into effect with the new year for employers of certain sizes and in certain industries. Among the affected employers are assisted living and other residential care facilities, continuing care retirement communities and skilled nursing facilities (NAICS 6231 and 6233, for example).

Under a rule finalized in July, OSHA amended its regulation to require companies with 100 or more employees in certain industries to electronically submit information from their Forms 300 and 301 to the agency once a year.

The new requirement “is a huge expansion of what employers must send to OSHA and will allow OSHA to obtain — and then publish to third parties — the specific injury and illness records that each senior living and skilled nursing operator keeps at their worksites,” Micah Dickie, an Atlanta-based attorney with Fisher & Phillips’ Workplace Safety and Catastrophe Management Practice Group, previously told McKnight’s Senior Living when the rule was proposed.

Among other requirements, records must be maintained at the worksite for at least five years. Each February through April, employers must post a summary of the injuries and illnesses recorded the previous year. Also, if requested, copies of the records must be provided to current and former employees, or their representatives.

OSHA says that the new reporting requirement will allow the agency to keep closer tabs on illness and injuries in workplaces as well as make the information publicly available. The agency will publish some of the data collected on its website to allow employers, employees, potential employees, employee representatives, current and potential customers, researchers and the general public to use information about a company’s workplace safety and health record to make informed decisions.

Read the final rule here.

A large national trade group advocating for senior living and other long-term care providers is urging its members to “carefully evaluate their existing classifications” of workers following the Tuesday announcement of a new federal rule pertaining to independent contractors.

“The Department of Labor has put a strong emphasis on ensuring proper classification, and we can expect those efforts to continue,” LeadingAge Vice President of Legal Affairs Jonathan Lips told McKnight’s Senior Living on Tuesday. “Now that the final rule is released, we are carefully reviewing the content and its implications for providers and urge our members to carefully evaluate their existing classifications based on the new regulations.”

The rule comes as senior living providers continue to face workforce shortages and sometimes turn to staffing agencies for help.

Another association, Argentum, said that the rule “unfortunately” will result in many workers being unfairly classified as employees and “depriving them of their choice of the manner in which they wish to work.”

“The senior living industry lost hundreds of thousands of jobs during the pandemic, and while the situation is gradually improving, many communities are still struggling to recruit, hire and retain employees,” Argentum Senior Vice President of Public Policy Maggie Elehwany told McKnight’s Senior Living. “We are concerned that the rule, coupled with other proposed federal regulations, will only serve to exacerbate the workforce shortage and wipe out some of the recent modest gains communities have made in recruiting individuals to help care for our seniors.”

Additional experts are concerned that providers will face greater legal and financial burdens under the rule.

The US Department of Labor announced the final rule Tuesday morning, clarifying its interpretation of the Fair Labor Standards Act’s classification of workers as independent contractors. The final rule largely mirror’s the rule it proposed in October 2022, retaining the framework it laid out for determining independent contractor status versus employee status. 

The new rule restores the multifactor analysis to determine independent contractor status, including any opportunity for profit or loss a worker might have; the financial nature of any resources a worker invested in the work; the degree of permanence of the work relationship; the degree of control and employer has over someone’s work; whether the work done is essential to the employer’s business; and a worker’s skill and initiative.

That “control” piece is something senior living and care providers will be reviewing carefully. 

The DOL said that the new rule will provide “a consistent approach for businesses that engage with individuals who are in business for themselves” and ensure that “employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees.”

The US Chamber of Commerce, a national business advocacy organization, called the new regulation “harmful” and “clearly biased” toward labeling most independent contractors as employees, a move it said will “decrease flexibility and opportunity and result in lost earning opportunities for millions of Americans.”

“It threatens the flexibility of individuals to work when and how they want and could have significant negative impacts on our economy,” Chamber Vice President of Workplace Policy Marc Freedman said in a statement. “Making matters worse, the rule is completely unnecessary, as the department continues to report success in cracking down on bad actors that are misclassifying workers.”

Indeed, the Department of Labor frequently reports on employers who pay the price for misclassifying workers as independent contractors rather than employees. In September, for instance, the department reported that a Pittsburgh-based healthcare services provider for people living with dementia or disabilities misclassified two workers as independent contractors, resulting in a recovery of $98,620 in back wages by the federal government. And in 2022, an investigation into a Lansing, MI, adult foster care company’s practice of treating its residential healthcare workers as independent contractors cost it $94,000 in back wages.

In a blog post, law firm Fisher Phillips noted that the DOL’s test applies only to the FLSA and that many states apply their own tests to state-level wage and hour claims. Although some state laws protect the independent contractor relationships if certain criteria are met, other state laws make it more difficult to establish such relationships, the firm said.

Fisher Phillips added that under the new rule, “the risk of misclassification will skyrocket,” with more employers facing potential liability for not paying minimum wage and overtime premiums to their workers.

“The ramifications can be staggering — class-action lawsuits, large settlement demands, backpay, liquidated damages, interst, penalties and attorneys’ fees can all quickly add up,” the authors wrote.

Fisher Phillips suggested that businesses using independent contractors conduct internal audits to assess their risk level for misclassification, update policies and procedures, train managers and work with counsel to evaluate programs and minimize risks.

The new rule rescinds one issued during the final days of the Trump administration in January 2021. The Labor Department under the Biden administration had sought to delay the rule, and then withdrew it in May 2021, believing that it was inconsistent with the FLSA’s text and purpose. A district court, however, in March 2022 determined that the rule had taken effect on its original effective date and remained in effect.

In June 2022, the DOL announced plans to hold public forums to gather feedback on writing a new rule. A proposed rule was issued in October of that year, and the department said it received more than 55,000 comments on the proposal during the comment period and listening sessions. 

The final rule will be published today in the Federal Register (see a PDF here) and will take effect March 11. 

The Labor Department has published answers to frequently asked questions on its website.

For more coverage of the rule, see McKnight’s Long-Term Care News and McKnight’s Home Care.

The Department of Labor this morning issued a final rule that will change how senior living companies and other employers determine who is an employee and who is an independent contractor.

The rule is effective March 11.

“The misclassification of employees as independent contractors may deny workers minimum wage, overtime pay and other protections,” the Labor Department said in an online post. “This final rule will reduce the risk that employees are misclassified as independent contractors while providing a consistent approach for businesses that engage with individuals who are in business for themselves.”

The rule also ensures that “employers that comply with the law are not placed at a competitive disadvantage when competing against employers that misclassify employees,” the department said in an email. 

According to the DOL, the final rule:

• Restores the multifactor, totality-of-the-circumstances analysis to assess whether a worker is an employee or an independent contractor under the Fair Labor Standards Act. 
• Ensures that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors. 
• Uses the longstanding interpretation of the economic reality factors. Those factors include opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer, the degree of permanence of the work relationship, the nature and degree of control, the extent to which the work performed is an integral part of the potential employer’s business, and the worker’s skill and initiative.

The new rule also rescinds one issued during the final days of the Trump administration in January 2021. The Labor Department under the Biden administration had sought to delay the rule, and then withdrew it in May 2021, believing that it was inconsistent with the FLSA’s text and purpose. A district court, however, in March 2022 determined that the rule had taken effect on its original effective date and remained in effect.

That rule, Solicitor of Labor Seema Nanda said at the time, “legally risked increasing instead of reducing misclassifications because it narrowed the facts and basis for determining whether a worker is an employee under the FLSA” and was ”out of sync” with what the courts had been saying for decades.

In June 2022, the DOL announced plans to hold public forums to gather feedback on writing a new rule. A proposed rule was issued in October of that year.

Tuesday, the Labor Department said it had received “thousands of comments from a diverse array of stakeholders that helped inform the regulatory updates” during a comment period that was open through November 2022.

The rule issued Tuesday has not been published in the Federal Register yet but is available as a PDF. Read it here.

Editor’s note, Jan. 10: Read the follow-up story with industry reaction here.