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Most common problems healthcare providers have around employment law with Zach Rothenberg from the Law Firm of Nelson Hardiman

• Hatch Compliance • Season 1 • Episode 15

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One of the most common areas businesses have legal trouble with is, employment law. It differs from state to state, and there's a lot to know. In this episode, I sit down with Zach Rothenberg from the Law Firm of Nelson Hardiman to discuss the most common legal pitfalls companies deal with, and how to avoid them. 

Speaker 1:

Welcome to Hatching Creativity. This isn't just another behavioral health podcast. This is the place where thought leaders converge to talk about real life challenges, breakthroughs and pivotal aha moments. Thanks for tuning in to Hatching Creativity. Today I speak with Zach Rothenberg from Nelson Hardiman Law Firm. Zach is a behavioral health care attorney who focuses on billing and employment law, and in today's episode, we speak about common pitfalls treatment providers fall into as it relates to employment law and different ways to avoid having problems. If you like what you hear, please like, share, subscribe and tell all your friends about Hatching Creativity Working in the HR and employment law field. What are some of the biggest things that you're seeing right now in terms of pitfalls that organizations are dealing with relating to HR and employment law?

Speaker 2:

Yeah. So let me say two things for a sort of big picture. The first is that one of the things about employment law is it's very state specific. So I kind of want to say that right up front. I'm a lawyer in California. I know California law. My general understanding is that California law is much, I would say, stricter and employee friendly than pretty much any other state in the country by a long shot.

Speaker 2:

But what I say may not necessarily apply to folks in other states. That's number one. And then second big picture point is this that what I find and when we talk about these pitfalls you'll see what I mean is that by and large, folks who get into the treatment industry are doing this from a place of kind of passion, getting back, and typically maybe don't have all the business experience in the world that people in other industries have, and they're making decisions frequently based on a slightly different calculation. They're hiring friends. A lot of times I'm finding folks hiring maybe people who treated them when they were in treatment themselves and making particularly HR and employment related decisions that are not purely left brain, let's say. So I think that's what drives a lot of this and I appreciate all of that and why they're making the decisions they're making, and I wouldn't ask them to do it any other way. But it does raise a lot of these issues and sort of extra pitfalls to look out for. Those are my two big picture points.

Speaker 1:

You know it's funny I see this all the time in compliance where you may have a BHT who has been there for a couple years and then you show up in a meeting and they're now the director of human resources. Or you take a case manager or a therapist and all of a sudden they're in compliance Right, and you go. There is such risk and liability associated with this and there's also so much knowledge that needs to be had. I promise not to get on my soapbox, but I will repeat this again Seren, hire the right people for these positions. The risk is not worth it and you could end up in a lot of trouble, either financially or legally or legally criminally, if you do things wrong just because you're trying to either do things a less expensive way or you don't have that knowledge. Not knowing is not an excuse when it comes to when, when an auditor or surveyor, an insurance company, comes knocking on your door. Agree.

Speaker 2:

Completely agree. Okay, so the first big issue that we see and it raises a lot of different issues that all stems from the same thing is what we call misclassification issues, and so that means two different things. First, that is whether the people who work for you are employees or independent contractors, and that is, I think, a particularly hot issue in California. There's been some legislation on it recently, and there's these Uber and Lyft lawsuits, the gig economy related lawsuits, but the way that the test for whether somebody is an employee or independent contractor has changed markedly in the past couple of years. For many years that was based on what we call the control test, which was, as you could guess, it's sort of based on the degree of control the employer has over the employee in things like setting hours, maybe wearing a uniform, providing supplies and materials exactly how there's, just to carry out their duties. The more control the person has over the worker, the more likely it's an employee and not an independent contractor. Well, that all changed with a case called Dynamics a few years ago, followed by AB5 legislation in California and, by the way, if this isn't the case in other states, it will be eventually. I really think California is just sort of on the front of the wave, but it's coming to what's called now the Dynamics ABC test. The A is the A in the test is essentially what I just described the control part. It's the B part of the test.

Speaker 2:

That's the big thing, the big change, which is that to be an independent contractor, you have to be performing work that is outside the scope of what the company as a whole generally does. It has to be different from the overall service of the business. So if you are working at McDonald's and your job includes making hamburgers, no matter what all the other stuff, you're an employee because McDonald's is in the business of making hamburgers. If you have a, you know you spend time working at McDonald's and you're maybe cleaning toilets, then there's a potential. You are an independent contractor because McDonald's is not in the business of cleaning toilets. This is a silly, pithy example. So that's part one, and the reason that's significant is because, as most people know, employees sort of get a lot of additional protections and safeguards that are ultimately expensive to an employer. So typically employers would prefer having independent contractors where they can.

Speaker 2:

The second part of this, what I call a misclassification issue, is okay, let's look just at the employees? Are they exempt or non exempt from wage and hour laws? So there are exempt employees, who are usually supervisors, managers, executives, people like that, who you could have on a salary. You don't have to worry about overtime, you don't have to worry about meal periods and rest breaks, you may not have to reimburse for business related expenses. And then there's what we would generally think of as sort of the lower level jobs, who are non-exempt, meaning you do have to follow the wage and hour laws, you have to pay them by the hour or have to pay, even if they're paid on salary. If they go beyond eight hours in a day or 40 hours in a week, you have to pay them overtime. You have to worry about minimum wage, you have to ensure that they get their meal periods and their rest breaks and all these other important safeguards.

Speaker 2:

And so there's a test on whether you are exempt or not, and that can get quite complicated as well. It relates to the substance of the work that's being done whether it's sort of high level or low level, in really general terms and also the amount that you're paying them. They have to make at least twice the minimum wage to be exempt. So that's a big one, because what happens is you'll have folks that you've hired, maybe as an independent contractor, or even you think they're an employee, but they are exempt, so that you treat them like an exempt employee. You don't worry about overtime or whatever. Then they don't forget. If you like, what you hear.

Speaker 1:

Maybe they just leave and they come back and they can see you and say hey, I shouldn't have been treated as exempt.

Speaker 2:

I was required to have gotten meal periods and rest breaks and overtime and you owe me now a ton of money or worse. It could become sort of a class action. In California it's called a Paga case, the private attorney general act case where it's like a class action and they sue on behalf of all of the lower level workers at the company for these meal periods and rest breaks and those numbers add up.

Speaker 1:

So you know how much time, what kind of statute of limitations is on something like that?

Speaker 2:

That's a good question. It sort of depends on exactly which statute and which kinds of claims you're looking under, but it can be it can go back several years or sometimes seven years, depending on the kind of case that you're bringing. But yeah, if you're a larger company that has a lot of lower level worker employees and you've been around for a while, I mean, these cases go into the millions and millions of dollars very quickly. And so the important thing is to really give this a cold hard, look right up front and make sure that you are classifying people the right way. And so, if you're an employee versus an independent contractor, exam versus non-exempt, and go through what their work is, what you're expecting of them, make sure you're conducting a really careful analysis and not just landing on the one that seems like it has short term benefits for you, because it's going to come back to you.

Speaker 1:

You know it's important to mention too, and just to reiterate what you said about every state being different. You know this is not a hard fast rule for everybody, but I think that my next question, which is going to be around you know, how do you protect yourself from running into issues? This is something that, no matter where you're located, a lot of these things are going to apply to you. So I would say, of course, just like when we talked about insurance payers, you know, really understanding those regulations is going to be really important, but how can an organization protect themselves from running into these kinds of issues? The best they can.

Speaker 2:

Yep. So again, you need to make a really careful analysis upfront, and it can be painful, it can feel unnecessary. I think is sort of the sense I get from clients when I'm trying to convince them to spend a fair amount of time and money with me on the phone or with kind of interviews with their employees to making sure that we get it right up front, because that's really when you're best protected and, by the way, you do have an opportunity to call whether it's the Department of Labor or whatever the relevant state agency might be for you and ask them these questions. You describe, you know what you do, you describe what these individuals are going to be doing and you can get some really good guidance. It's not a cure all right, it's still on you but you can get a lot of great information from these experts who are looking at this stuff day in and day out.

Speaker 2:

So I would I would encourage people to call the state. Don't be shy and by you can do it anonymously. They expect you to be anonymous and asking these questions. They know that you're calling. Because you're calling anonymously, because you want to have kind of the freedom to be forthcoming in a way that you wouldn't if they asked who you were. So please avail yourself of that opportunity. It's really, really valuable.

Speaker 1:

You know that makes sense and I don't know if you knew, but I'm a cyclist and I get. I did not know that we got tons more to talk about there you go, I'm gonna hold set for five guests.

Speaker 1:

So I get, I get and I definitely will because I because I think that makes a lot of sense to have a conversation about that I get tested by usada, us anti doping. They want to make sure that there are no banned substances in our systems and I've heard stories about people calling up you saw it up for information and they then you get put on this tracking list, yeah, and and they start making paying a little bit more attention to you when you make those calls. But, with that said, anytime I've had to call you saw it. You want to call it an anonymous fashion, the best you can, and if you feel more comfortable calling it anonymously to one of these state agencies or regulatory bodies, then that's fine too. Thanks, you're saying they expect that you're going to be to be calling that way. Yeah, Yep.

Speaker 2:

The key takeaway for me is just that there is, for whatever reason, this pervasive psychology of if nobody tells me I can't do it, then it's okay. If I do it, yeah, and it's to me. That's really putting your, your head in the sand. You need it is on you, as as the operator, as the business owner, to get things right. Pleading ignorance doesn't apply to you anymore. You have to go out of your way to find out the right answers and do things right. Ask the hard questions, even when you may not like the answer. That's why people don't ask them. So they don't want to know. They don't want to get the hard answer that says no. You got to treat them like an employee and give them middle periods because that's expensive, right? So you got to ask the questions, you got to find out the answers. Ignorance is, is not, an excuse.

Speaker 1:

It's true. We again in compliance. I hear this all the time. People just don't want to know because they think that that's going to protect them, but it's actually the opposite. You know, I heard something recently and this was a situation that we had come across, and I'm curious, from somebody with your experience and being in California, your thoughts on this. And this was a software company that has employees all over the country. They were talking about hiring somebody in California, but don't want to hire somebody in California because of all of the issues and the employment issues and everything else that comes with California employees. And I know that they had spoken about possibly even hiring them as a contractor, thinking that that was going to resolve it, but based on what you said and our research that that doesn't, that's not necessarily the case, that you can't protect yourself by hiring as a 1099. Is it discriminatory to not hire somebody based on their state's human resources policies?

Speaker 2:

That is a good question. I think the answer is no, I know national origin. So so there are statutes that identify, federal statutes and state statutes that identify who are, in quote unquote, protected classes. Right, and those are the ones you could imagine. Right, you can't discriminate based on you know race or gender or ethnicity or age or disability, and I know national origin is one of those. I don't think state residency is, but I would need to double check.

Speaker 1:

And all those other categories are things that people have no control over, and that's one of the good points right, but I was just curious. Or, if there was a company that was in the situation that I just explained, do they have any options? Or does California do anything for the for those employees to be able to help them? Because I mean, it seems like living in California could be a big hindrance to somebody being able to have an opportunity.

Speaker 2:

Yeah, not that I'm aware of. I think if you're in California, you have to play by California's laws and if you don't like it, that's how it works.

Speaker 1:

Thanks again, zach. I appreciate you joining us and we'll see you guys next time. Thanks, mike, I had a great time.

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