Affidavit: Healthcare and the Law - As Home- and Community-Based Care Expands, Agencies Focused on M&A and Staffing Challenges Also Face Heightened Labor & Employment Enforcement Environment

Contributors: Zev L. Grumet-Morris and Christopher D. Durham
To learn more about Zev and Christopher, click here.


As the U.S. population ages, the demand for home-based care continues to surge. At a macro level, this has resulted in significant merger and acquisition (M&A) activity, including insurance companies1 and pharmacies2 entering the home-based care space as well as continued deals, many involving private equity, among established players in home-based care (notwithstanding a recent slowdown from the red-hot M&A market during the COVID-19 pandemic).3 Increasing demand also has exacerbated staffing issues in home-based care. The staffing shortage in home-based care is so acute that two leading industry associations recently issued a rare joint report calling for action to address the staffing crisis.4 The growing importance of home-based care as a key component of the healthcare industry shows no signs of abating5 – and with it comes legal scrutiny. 

Growth, consolidation, and crisis can have the unintended effect of obscuring a changing legal enforcement environment – one that providers ignore at their peril. One area that dovetails with both M&A activity and the staffing crisis in home-based care is compliance with labor and employment laws. Enforcement agencies from the U.S. Department of Labor (DOL) to the U.S. Equal Employment Opportunity Commission (EEOC), as well as state legislatures and agencies and the plaintiff’s bar, are not relenting and, if anything, have increased their efforts to target home-based care providers as those providers grow. 

We highlight three key areas of risk and exposure under labor and employment laws here.

Wage & Hour Non-Compliance

In 2021, the DOL launched an initiative to improve, through enforcement, wage and hour compliance of residential care and home health service providers. Since the initiative was launched, the DOL has opened more than 1,600 investigations of providers, uncovering violations in roughly 80% of cases, and racking up over $1.3 million in civil penalties and $28.6 million in back wages for nearly 25,000 workers.6 The most common violations uncovered were failure to pay overtime and minimum wage, with women and women of color especially impacted.

In addition to unpaid overtime, wage, and hour pitfalls for home-based care, employers under federal and state law include: meal and rest break pay; pay for travel at the beginning and end of the workday, and between clients/patients; pay for non-patient care activities that can occur outside of normal working hours (e.g., chart completion); and minimum wage violations (27 states increased their minimum wage in 2023).

The financial consequences of wage and hour violations are steep and increasing in frequency, to say nothing of the financial impact and business disruption of litigation.7 In addition, amidst an unprecedented staffing crisis, the reputational harm accompanying publicized wage and hour violations could prove costly to recruiting and retention efforts. Finally, for businesses positioning themselves for a potential sale, wage, and hour non-compliance likely will be unearthed in the due diligence process and can significantly impact the transaction where there is exposure.

To minimize risk of wage and hour non-compliance, businesses should strongly consider conducting a wage and hour audit to identify and remedy areas of non-compliance.

Independent Contractor Misclassification

Among the most prevalent employment law issues facing home-based care businesses is the threshold question of whether care workers should be classified as employees or independent contractors. While there are enticing business benefits to independent contractor status (e.g., contractors generally are not entitled to benefits or subject to protections under employment laws), the consequences of misclassifying care workers as independent contractors can be substantial, including: liability for unpaid federal and state taxes and withholdings (e.g., Social Security/Medicare tax, income tax withholding, unemployment insurance contributions), benefit self-insurance exposure, and liability for non-compliance with employment laws (including wage and hour) believed to be inapplicable to the misclassified worker. As with wage and hour non-compliance, independent contractor misclassification can be a barrier in the M&A context.

At the federal level, employers have experienced whiplash as the DOL has established a new standard for independent contractor status during the last three administrations. Most recently, in October 2022, the DOL rolled out a proposed new test – expected to be finalized in 2023 – that would make it more difficult to lawfully classify caregivers as independent contractors.8

A patchwork of state laws and court rulings make compliance in this area even more difficult. In fact, the standards in some states – such as those employing the so-called “ABC test” (e.g., California, New Jersey, Massachusetts) – are so stringent that lawful independent contractor status under the state’s laws is exceedingly difficult to establish.

Home-based care businesses should promptly take steps to assess and reduce misclassification risk, including auditing their classification practices and, where necessary, taking remedial steps that may include transition to employee status, restructuring of the contractor relationship, or better documentation of the basis for independent contractor classification.

Pay Equity and Disclosure Requirements

Providers can easily run afoul of pay equity and pay disclosure requirements while trying to strike the balance between attracting talent and maintaining flexibility to manage labor costs – and face significant exposure as a result. This is especially true as the legal and regulatory environment surrounding pay equity becomes increasingly more complex.

For instance, several states have introduced pay transparency laws requiring businesses to disclose wage ranges for open positions.9 Illinois and California also have instituted pay reporting obligations that require employers to submit pay, demographic, and other workforce data to regulators,10 an approach likely to be adopted in other states in the coming years.

Federally, the NLRA and Executive Order 11246 (applicable to federal government contractors and subcontractors) preclude covered employers and federal contractors from forbidding or discriminating against their employees for discussing compensation.11 Meanwhile, the EEOC seems certain to reinstitute a pay data reporting requirement for employers who are required to annually file EEO-1 reports.12  And, pay data reporting aside, the EEOC has demonstrated through litigation that it has its eye on pay equity in home based-care industries.13

Home-based care providers should remain alert to these evolving pay equity laws (particularly those expanding businesses whose growing workforce population and business footprint may trigger additional obligations under federal and applicable state laws) and should strongly consider proactively analyzing employee compensation to determine whether there are pay disparities that may need to be addressed.

Contact Zev at: [email protected]
Contact Christopher at: [email protected]

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.



  1. For example, in 2021 Humana acquired Kindred at Home, then the largest home healthcare provider in the U.S., for around $5.7 billion.  See Tim Mullaney, Humana to Fully Acquire Kindred at Home for $5.7B, Extend Its Senior Care Impact, Senior Housing News (Apr. 27, 2021), available at  More recently, in February 2023, UnitedHealth Group closed its $5.4 billion acquisition of LHC Group, one of the nation’s largest home healthcare companies.  See Amy Baxter, UnitedHealth Group Closes $5.4B Acquisition of LHC Group, Innovative Healthcare: Health Exec (Feb. 22, 2023), available at
  2. At the end of March 2023, CVS completed its $8 billion acquisition of Signify Home Health.  See Bruce Japsen, CVS To Close Signify Health Deal, Launching A National In-Home Care Business, Forbes (Mar. 27, 2023), available at
  3. See, e.g., Matt Caine, A Look at Current Home Health M&A Trends: Despite Strong Headwinds, the Future Looks Bright, HomeCare Magazine (Sept. 17, 2022), available at
  4. The Homecare Workforce Crisis: An Industry Report and Call to Action.  Available at
  5. Just in April, President Biden announced that he would sign an Executive Order that includes numerous directives intended to support home- and community-based care, on the heels of the Biden administration's proposed 2024 budget that would allocate $150 billion for home- and community-based services over the next 10 years.  See FACT SHEET: Biden-Harris Administration Announces Most Sweeping Set of Executive Actions to Improve Care in History, available at Among the directives the announcement previews are directives improving access to home-based care for veterans and leveraging Medicaid funding to ensure that there are enough home care workers as the country’s aging population continues to grow.
  6. See Department of Labor Initiative Finds Violations in 80% of Care Industry Investigations; Recovers $28.6M for Nearly 25K Workers, Mostly Women (Nov. 16, 2022), available at
  7. For example, a 2022 consent decree between a Philadelphia, PA-based healthcare staffing company and the DOL resulted in over $9 million in combined back wages and liquidated damages for nearly 2,000 employees, and a $700,000 civil fine, for denying the affected employees earned overtime.  See US Department of Labor Obtains Judgment to Recover $9.3M in Back Wages, Damages for 1,756 Workers Misclassified by Philadelphia Staffing Company (Sept. 27, 2022), available at
  8. See 87 FR 62218. Among other things, the proposed rule would “revert to the longstanding interpretation of the economic reality factors,” including heightened attention afforded to an employer’s control over its workforce. See US Department of Labor Announces Proposed Rule on Classifying Employees, Independent Contractors; Seeks to Return to Longstanding Interpretation (Oct. 11, 2022), available at  Further complicating matters, the DOL’s test only would apply to those laws its enforces (e.g., the Fair Labor Standards Act), and not necessarily other federal laws (e.g., anti-discrimination statutes or the National Labor Relations Act (NLRA)).
  9. These state laws – which differ in numerous respects including the substance of the disclosure and the triggering events for disclosure – include California (Lab. Code § 432.3(c)(3)), Colorado (Colo. Rev. Stat. § 8-5-201(2)), Connecticut (Conn. Gen. Stat. § 31-40z(8)), Maryland (Md. Code, Lab. & Empl. § 3-304.2(A)), Nevada (Nev. Rev. Stat. § 613.133(2)(a)(b)), New York (N.Y. Lab. Law § 194-B), Rhode Island (R.I. Gen. Laws § 28-6-22(c)), and Washington (Wash. Rev. Code § 49.58.110).
  10. See 820 ILCS 112 et seq. (Illinois); Cal. Lab. Code § 432.3 (California).
  11. 29 U.S.C. §§ 151-169; Executive Order 11246, § 202; 41 C.F.R. § 60-1.4(a)-(b).
  12. With respect to pay data reporting, EEOC Commissioner Keith Sondering stated in August 2022: “Watch out, it’s coming.” See  Commissioner Sonderling’s statement came on the heels of the EEOC’s announcement of a study by the National Academies of Sciences, Engineering, and Medicine, which found that pay data collection could be used by the agency to combat pay discrimination. See EEOC Announces Independent Study Confirming Pay Data Collection is a Key Tool to Fight Discrimination (July 28, 2022), available at
  13. See EEOC Sues Alternate Solutions Health Network and Inova Home Health for Pay Discrimination (Feb. 27, 2023), available at