Labor & Employment Law Daily Wrap Up, WAGE-HOUR—OVERTIME—3d Cir.: Pennsylvania Medicaid waiver program vendor was not joint employer of care workers, (May 20, 2026)

By Nicholas Kaster, J.D.

The company was involved in the care workers’ employment but did not exercise “significant control” over their work and its surrounding circumstances.

The U.S. Court of Appeals for the Third Circuit has ruled that a company was not a joint employer of care workers and therefore not liable for unpaid overtime, affirming the holding a federal district court. According to the appellate court, the company was merely a vendor and financial services provider, not a joint employer (Talarico v. Public Partnerships LLC, No. 25-1369 (3d Cir. May 19, 2026, nonprecedential)).

Care worker. An individual worked as a care worker from 2013 to 2018. This care was provided pursuant to a Medicaid waiver program called the Self-Directed Services model. Pennsylvania’s Office of Long Term Living (OLTL) administered the program and empowered qualifying disabled individuals to exercise decision making authority in identifying, accessing, managing and purchasing their personal assistance services.

PPL. In 2012, OLTL entered into a Grant Agreement with Public Partnerships LLC (PPL) to provide financial management services in implementing the Program. The agreement directed PPL to make payments to care workers after processing their timesheets, and to ensure that background checks and work authorization forms were completed. In addition, PPL provided some orientation and training for care workers. Upon enrolling in the Program, participants received a common law employer informational packet. In fulfilling their duties under the Program, participants worked with Service Coordinators, contracted by OLTL, to create an Individualized Service Plan. The Individualized Service Plan determined the participant’s medical needs and the total hours of care a participant required each week, the care worker’s responsibilities, and what care they would provide for the participant. PPL was not involved in finalizing or approving Individualized Service Plans. The employer packet stated that participants served as the employers of care workers, and that they were responsible for recruiting, hiring, training, and, where necessary, firing care workers. From May to August 2017, and starting again December 1, 2018, newly hired care workers were required to attend a paid orientation program conducted by PPL.

Administrative role. Once a participant decided to hire a given care worker, PPL provided the participant with the paperwork needed to execute the hiring decision, namely, a care worker application. PPL then calculated the range of compensation a care worker could receive from the Program in accordance with OLTL and state and federal minimum wage law. This involved identifying and applying tax deductions and applying costs such as workers’ compensation insurance. PPL selected the care workers’ compensation carrier and broker. Participants then determined the care workers’ hourly wage, and had the option to exceed program maximums by paying the difference out-of-pocket. Participants sent care workers’ timesheets to PPL for payment.

Enrollment packet, background check. PPL sent the care worker an enrollment packet. Upon completion, the care worker could begin receiving payment for their services. PPL reviewed the qualification form to ensure that the care worker meets OLTL’s program requirements. PPL also conducted a background check required by Pennsylvania of the prospective care worker and provided the results to the participant.

Participants’ discretion. Participants could hire a care worker with a criminal history, however, and PPL had no authority to override this decision if made. Once a care worker’s employment commenced, PPL was not involved in their day-to day work. PPL neither observed nor provided feedback to care workers. PPL maintained care workers’ employee records such as payroll and tax forms, employment enrollment packets, and submitted timesheets. Participants set the care workers’ schedules.

Overtime claims. Despite working overtime from the beginning of their employment, the care workers only began receiving overtime pay after January 1, 2016. The care worker here brought various state and federal claims against PPL for unpaid overtime wages on behalf of himself and others similarly situated. A federal district court in Pennsylvania held that PPL was not the care workers’ joint employer. The current appeal ensued.

Authority to hire and fire. The care workers argued that the district court erred because it disregarded PPL’s role in reviewing the care workers’ qualifications and PPL’s maintenance of a recruitment database. The Third Circuit disagreed. The district court did not ignore PPL’s role in assessing qualifications, said the appellate court, it merely weighed this evidence differently than the care workers after observing that PPL’s role was confined to reviewing qualification forms to confirm that care workers met program requirements.

Concerning recruiting, the care workers argued that the district court failed to consider that PPL created and maintained an online forum where participants and care workers could voluntarily post their information to find each other. While PPL established the forum, said the appellate court, the record did not reflect that PPL had control over the participants’ use of that forum to recruit a care worker.

Authority to set work rules and conditions of employment. The district court made a number of factual findings upon which it based its conclusion that PPL had minor authority over care workers’ work rules and their conditions of employment, including that PPL had a limited role in care workers’ orientation and offered discrete training; that the rate of pay selected by a participant for their care worker was exclusively within the control of the participant; and that PPL had no input as to the specific rate a participant opted to pay their care worker.

The care workers did not challenge most of these findings but did argue that the district court clearly erred in finding that participants determined care workers’ compensation. They argued that PPL controlled care workers’ pay by defining the Program’s range of allowable rates.

Pay rates. The Third Circuit noted that PPL calculated care workers’ compensation rate, taking the wage schedule determined by OLTL, and subtracting costs such as worker’s compensation insurance or applying tax deductions. The care workers argued that “PPL helped determine the size of the deductions by, for instance, managing workers’ compensation and determining participants’ tax deductions.” They further contended that because participants often paid care workers the OLTL maximum wage, PPL functionally set care workers’ wages.

There was evidence in the record that PPL had some impact on the maximum OLTL wage. For instance, PPL would identify the applicable tax exemptions, and PPL paperwork detailed that tax exemptions had to be taken when applicable. There was also evidence that PPL selected the worker’s compensation carrier and broker. In the end, though, participants were free to choose any wage and could exceed the OLTL maximum wage and pay the difference if they desired. While under these facts PPL had some impact on the ultimate maximum wage available under the OLTL schedule, the Third Circuit determined that the district court did not clearly err in finding that participants determined care workers’ pay.

The care workers also argued that PPL nonetheless exercised control over compensation and, thus, their conditions of employment, because: (1) PPL set care workers’ pay rate for their time spent in orientation; (2) PPL worked with OLTL to determine hazard pay and when care workers would receive such pay; and (3) if a participant failed to specify a wage when onboarding a care worker, PPL had authority to decide a care worker’s hourly rate. However, the Third Circuit was not convinced that such influence amounted to authority over the care workers’ conditions of employment.

PPL set orientation pay rates at the minimum wage, remitted orientation payments, and calculated the hazard pay amounts in conjunction with OLTL, but did not control whether care workers would receive orientation pay, nor if they would be eligible to receive hazard pay. And when participants failed to specify a rate on hiring forms, a care worker would only be paid PPL’s default rate of minimum wage as an interim measure until the participant told PPL the actual wage to be paid. Given that the participant had final say over care worker wages, the Third Circuit did not agree that such dynamics amounted to substantial control over compensation, and found that the district court did not err in concluding that PPL had only minor authority over care workers’ compensation, “slightly” favoring employer status.

Not joint employer. Based on a consideration of the total employment situation and the economic realities of the work relationship, the Third Circuit determined that PPL was not a joint employer. The total employment situation and the economic realities of the relationship between PPL and the care workers indicated that PPL was involved in care workers’ employment but did not exercise “significant control” over their work and its surrounding circumstances. PPL did not control day-to-day functions, care worker compensation, nor whether a given care worker would be hired or fired. At most, the record pointed to PPL implementing requirements set by the program and OLTL, and facilitating the inception and maintenance of program participation by care workers and participants. Because the record merely reflected PPL’s role as the SDS vendor and Financial Management Services provider, the Third Circuit affirmed the district court’s holding that PPL was not a joint employer of the care workers.

The case is No. 25-1369.

Judge: Chung, C.

Attorneys: Dana Busgang (Cohen Milstein Sellers & Toll) for Ralph Talarico. Jason A. Cabrera (Cozen O'Connor) for Public Partnerships LLC d/b/a PCG Public Partnerships.

Companies: Public Partnerships LLC; PCG Public Partnerships

Cases: WageHour EmployeeStatus CoverageLiability Overtime AgencyNews DelawareNews NewJerseyNews PennsylvaniaNews