Workers' Compensation: Medicaid Care Workers: Not Jointly Employed

In a significant ruling for the home care and Medicaid services industry, the United States Court of Appeals for the Third Circuit affirmed that a financial management services vendor does not qualify as a joint employer of home care workers under the Fair Labor Standards Act (FLSA). The decision in Talarico v. Public Partnerships LLC, decided May 19, 2026, carries important implications for workers' compensation coverage, overtime liability, and the rights of workers who are exposed to occupational hazards, including asbestos, in home health settings.

The case arose from a long-running class action filed by Ralph Talarico and other personal care workers (Care Workers) who claimed that Public Partnerships LLC (PPL), a financial management services company contracted by Pennsylvania's Medicaid program, was their joint employer and therefore liable for unpaid overtime wages.

Background: Pennsylvania's Self-Directed Services Program

Pennsylvania's Self-Directed Services (SDS) Program, administered by the Office of Long-Term Living (OLTL), empowers disabled individuals, called Participants, to hire and manage their own personal care workers using Medicaid waiver funds. PPL was engaged by the Commonwealth under a Grant Agreement to provide financial management services: processing payroll, conducting background checks, and ensuring compliance with OLTL program requirements.

Crucially, however, the Participants themselves retain the role of Common Law Employers, responsible for recruiting, hiring, training, scheduling, and, when necessary, firing Care Workers. PPL's role was largely ministerial: it processed paperwork, disbursed payments, and maintained payroll records.

After working overtime without additional compensation from the inception of their employment, Care Workers only began receiving overtime pay after January 1, 2016. Talarico and similarly situated workers filed suit in 2017, asserting claims under the FLSA, the Pennsylvania Minimum Wage Act, and the Pennsylvania Wage Payment and Collection Law.

The Court's Rationale: Applying the Enterprise Four-Factor Test

The Third Circuit analyzed joint employer status under the four-factor test established in

In re Enterprise Rent-A-Car Wage & Hour Employment Practices Litigation, 683 F.3d 462 (3d Cir. 2012). The court examined:

• Authority to hire and fire

• Authority to set work rules and conditions of employment (including compensation, benefits, and schedules)

• Involvement in day-to-day employee supervision

• Control over employee records (payroll, insurance, taxes)

The ultimate inquiry, the court emphasized, is whether the alleged employer exercises 'significant control' over the employees.

Factor 1: Hiring and Firing Authority

The Third Circuit upheld the District Court's finding that PPL had no meaningful role in recruiting or hiring Care Workers. While PPL reviewed qualification forms to ensure minimum program requirements were met and conducted required background checks, the Participants retained the ultimate authority to hire, even workers with a positive criminal history. The court concluded that PPL's narrow administrative role did not constitute hiring authority.

Factor 2: Work Rules and Conditions of Employment

On the question of compensation, the court acknowledged that PPL calculated a wage range by applying OLTL's rate schedule, deducting workers' compensation insurance costs and applicable tax obligations. PPL also selected the workers' compensation carrier and broker. Nonetheless, the court found that Participants retained the final authority to set, and even exceed, the maximum wage. PPL's influence was deemed 'minor' and only 'slightly' favored employer status.

The court further found that PPL's role in setting orientation pay at minimum wage, administering hazard pay calculations in conjunction with OLTL, and setting interim default wages when Participants failed to specify a rate was insufficient to constitute substantial control over the conditions of employment.

Factors 3 and 4: Supervision and Record-Keeping

Neither party challenged the District Court's findings on supervision or recordkeeping. PPL neither observed nor provided feedback on Care Workers' day-to-day performance; that responsibility rested exclusively with Participants. PPL maintained employment records (payroll, timesheets, tax forms), but this administrative function alone was insufficient to establish joint-employer status.

Overall: No Significant Control

Surveying the totality of the employment relationship, the court found that PPL functioned as a financial management vendor, implementing program requirements set by OLTL and facilitating program participation, rather than as an employer exercising significant control. Even where the Enterprise factors were evenly split, the court emphasized that the analysis is not a simple counting exercise: context and economic reality matter.

Workers' Compensation as Part of the Analysis

A particularly noteworthy dimension of the Talarico decision is the role workers' compensation insurance played in the joint employer analysis. The Third Circuit specifically noted that PPL selected the workers' compensation carrier and broker for Care Workers, an administrative function that plaintiffs argued constituted evidence of employer control over a key condition of employment.

Under the Enterprise test, control over insurance and related employee benefits can be a relevant indicia of joint employer status. The court, however, found that PPL's role in selecting the carrier did not rise to the level of significant control, partly because it was unclear from the record whether PPL actually named itself as the policyholder, a distinction the court considered material, citing Antenor v. D & S Farms, 88 F.3d 925 (11th Cir. 1996), where the defendant's status as policyholder weighed in favor of joint employment.

This analysis carries substantial practical significance. Under both New Jersey and Pennsylvania workers' compensation law, the obligation to provide workers' compensation coverage rests with the employer. Where a financial management vendor selects the insurance carrier but does not name itself as the policyholder, and where program participants serve as the common law employers, the coverage obligations, and any claims arising from workplace injury or occupational disease, will attach to the Participant-employer rather than to the vendor.

For workers in home care settings, this means that disputes over workers' compensation benefits, including those arising from occupational disease exposures, will be resolved based on who the legal employer is, not who administers the payroll.

Impact on Workers Exposed to Asbestos

The Talarico decision has meaningful implications for home care workers who may be exposed to asbestos, a well-documented hazard in older residential buildings where personal care services are frequently provided.

Asbestos-containing materials (ACMs) were widely used in home construction prior to the 1980s. Insulation around pipes and boilers, floor tiles, textured ceilings, and exterior siding in pre-1980 homes may contain asbestos. Home care workers, who regularly enter older residences to assist elderly or disabled Participants, face potential exposure when these materials are disturbed during routine activities or maintenance.

Why Joint Employer Status Matters for Asbestos Claims

When a home care worker develops mesothelioma, asbestosis, or another asbestos-related disease, the threshold question is: who bears the workers' compensation obligation? Under the SDS model, after Talarico, the answer is the Participant-employer, not PPL or the Commonwealth's program administrator. This creates a practical problem: individual Participants are typically elderly or disabled individuals of limited means, and may not have sufficient workers' compensation insurance limits to cover the catastrophic medical costs and long-term disability associated with asbestos-related disease.

The financial management vendor's selection of the workers' compensation carrier, as noted in Talarico, means that the adequacy of that coverage becomes critical. If PPL chose a carrier that provides only minimum statutory benefits, workers with asbestos-related disease may find that their compensation is capped at levels far below their actual losses.

Third-Party Liability Claims

Because the workers' compensation remedy against a Participant-employer may be limited, asbestos-exposed home care workers may look to third-party tort claims against asbestos product manufacturers, building owners, or premises controllers. However, the exclusive remedy doctrine of workers' compensation bars tort suits against the employer, making the identification of the proper employer all the more consequential.

If PPL is not a joint employer, home care workers cannot assert a tort claim against PPL under a co-employee or employer theory. The path to additional recovery would be through third-party asbestos litigation against manufacturers and suppliers, a route that requires proving product-specific exposure and causation.

Broader Systemic Concerns

The Talarico ruling highlights a structural gap in the Medicaid-funded home care model: the entities with financial resources and administrative capacity (program vendors like PPL) bear no workers' compensation or FLSA obligations, while the de jure employers (individual Participants) may lack the means to satisfy catastrophic occupational disease claims. Legislators and advocates should consider whether the current model adequately protects home care workers from the long-latency occupational diseases, including asbestos-related conditions, that may not manifest until decades after exposure.

Conclusion

Talarico v. Public Partnerships LLC is a significant decision for employers, insurance carriers, Medicaid program administrators, and workers' compensation practitioners alike. It confirms that financial management service vendors in self-directed Medicaid programs are not joint employers under the FLSA when their role is primarily administrative and ultimate employment decisions rest with the Participant-employers.

For workers exposed to asbestos and other occupational hazards in home care settings, the decision underscores the importance of identifying the correct legal employer, ensuring adequate workers' compensation coverage, and understanding the limits of the exclusive remedy doctrine when pursuing compensation for occupational disease. Practitioners advising home care workers, Medicaid program administrators, and financial management vendors should carefully evaluate their obligations in light of this ruling.