The Developmental Disabilities (“DD”) waiver program in New Mexico provides services to assist children and adults with intellectual and developmental disabilities. The Developmental Disabilities Supports Division of the New Mexico Health Care Authority sets standards for delivery of DD waiver services and offers training for providers, including Direct Support Professionals (“DSPs”), who provide services directly to disabled individuals, often in their homes.
Many DD waiver providers across New Mexico engage with DSPs as independent contractors rather than employees. If you are a DD waiver provider, it is critical that you understand the difference between independent contractors and employees. Failure to properly classify DSPs could result in significant financial penalties. The Fair Labor Standards Act, administered by the U.S. Department of Labor, Wage and Hour Division, and the New Mexico Minimum Wage Act, administered by the New Mexico Department of Workforce Solutions, Labor Relations Division, place various requirements on employers, including payment of compensation for overtime. If an independent contractor is misclassified, and that independent contractor works more than 40 hours in a work week, the employer could be liable for unpaid overtime compensation looking back over a two-year period, and a potential doubling of that amount for “liquidated damages.” The U.S. Department of Labor has recently taken an aggressive stance on levying liquidated damages against employers in misclassification situations, and multiple private lawsuits specifically targeting DD waiver providers in New Mexico have been filed seeking such damages as well as attorneys’ fees.
Proper classification depends on an analysis of several factors, and the way the U.S. Department of Labor analyzes those factors changed in January 2024 with the release of an updated federal regulation, Employee or Independent Contractor Classification Under the Fair Labor Standards Act, Fed. Reg. Vol. 89, No. 7. The analysis is complex, with multiple factors interpreted in various ways, making it critical for DD waiver providers to consult with legal counsel. And if a DD waiver provider’s classification is challenged by an administrative agency or a lawsuit, prior consultation with an attorney will be helpful to the provider’s defense.
DD waiver providers in New Mexico are often small businesses and may be unable to withstand the financial penalties associated with misclassification. It’s critical for providers to get this right, and to seek legal help if challenged. We stand ready to assist DD waiver providers continue their mission of helping vulnerable individuals engage actively in their communities.
Call Business Law Southwest today to consult with an attorney.
