Caregiver Suing for Back Wages: The Dangers of Paying Caregivers in Cash

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Attorney

I was recently presented with this fact pattern to address. A client’s mother’s caregiver was a wonderful person to her and became like family during the six years she worked for the family. By mutual consent, the family paid her cash and didn’t report it. Now, six months after the mom’s death, the caregiver’s lawyer has been in contact and says she is entitled to more than was paid, and she’s demanding back wages. What should be done?

Last year the U.S. Department of Labor established new rules requiring certain types of caregivers to be paid minimum wages, plus time and half for hours worked over 40 hours a week. Application of the law depends in part on how much of the caregiver’s time is “fellowship” or actual health care. Some families weren’t aware of the new rule. Others, already struggling with the expense of paying a caregiver, have chosen to ignore it. It’s a real dilemma.

At this point they need an elder law attorney or labor lawyer to analyze the facts and where they stand, so they can make an intelligent decision. Keep in mind that even if the client chooses to fight and does prevail, the legal fees could potentially exceed what they would have paid in back wages, taxes and penalties.  So a cost benefit analysis is in order.

Situations such as this are a reminder of the value of using a home healthcare agency when seeking help for a loved one. The agency is the employer and responsible for paying the caregiver.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.