The Changing Environment of Labor Standards for Home-Care Workers

Congress passed the Fair Labor Standards Act (FLSA) in 1938 to establish minimum standards of living for the American working class, including the 40 hour work-week, over time regulations, wage protections, and youth employment restrictions. In 1974, Congress amended the law, providing a limited exemption from certain requirements “for workers performing casual babysitting, and companions for the aged or infirmed.” This exemption, referred to as the companionship exemption, excludes domestic care workers from overtime pay requirements. This class of work has grown and evolved immensely over the decades, becoming ever more relevant in the care of the nation’s most vulnerable citizens.

With the 1974 amendment, the Secretary of Labor was left to define what functions an exempt companion could perform, creating regulations which were published in 1975. But today, this exemption is used for nearly all workers performing personal care for individuals living at home. Tasks can range from minor housekeeping such as laundry and sweeping, to direct personal care such as bathing, feeding, dressing, and many hands-on activities requested by the consumer to fulfill his or her desired instrumental activities of daily living (IADLs).  This is much different from Congresses initial intent when the amendment was first passed.

Homecare is one of the largest growing fields of employment in America today, often paying between $8 and $10 an hour, with patient caseloads managed by a Licensed or Certified Home Health Care Agency, referred to as a third-party employer. Most commonly utilized are Personal Care Attendants (referred to as PCAs), approved by Medicaid to be provided to individual who require as much as 24 hour around-the-clock care. An individual requiring home care is first assessed and approved for services by their Local Department of Social Services (LDSS) which then contracts with one or more available Home Health Care Agencies within their jurisdiction to cover the necessary shifts the individual is approved for.

In New York State a PCA certification can be acquired without a high school diploma or GED and appeals to many low income individuals who have limited access to employment opportunities. As such, many individuals who gain successful employment as PCAs may work well over 40 hours in any given week. Often times, employees are asked to cover shifts when another caregiver at a different location (working for another consumer but employed by the same agency) calls out. Nor is it uncommon for workers to be required to stay if the next scheduled caregiver does not arrive. For the consumers dependent on these workers for independence and safety, the risks of abandonment and neglect are ever present due to an overworked and under-compensated workforce.

Currently within the United States, there are several societal trends straining the nationwide healthcare system including a generation of Baby Boomer retirees becoming eligible for Medicare combined with an ever increasing aging population already enrolled in Medicare and receiving long-term care. In addition there is an increasing emphasis on providing less restrictive healthcare settings to accomplish both cost savings and to divert or prevent unnecessary and costly institutionalizations. All of these factors have begun increasing the demand for Home and Community-Based Services such as home healthcare.

The growing dissatisfaction of caregivers and the clients they serve in regards to their inadequate compensation led activists to petition the federal government. Labor and disability rights advocates stressed the need for a review of existing Department of Labor regulations in order to prevent such widespread use of the companionship exemption and the subsequent deprivation of overtime pay to nearly 2 million direct care workers across the country.

The solution came in the form of newly revised regulations developed by the Department of Labor’s Wage and Hour Division in conjunction with the Department of Health and Human Services. After the release of an initial proposal and stakeholder comment period, the new rules were published in October of 2013. The revised regulations clarified the definitions of “companionship services”, as well as valid employee reimbursement and the distinction between third-party versus joint employers. The newly published regulations were given an extended effective date of January 1, 2015 to give governments and agencies time to comply.

Unfortunately, the Department of Labor’s clarification and limitation on what qualified as companionship care was not linked to any alteration in the Medicaid reimbursement rate that would be necessary for the influx of non-exempt workers now eligible for proper overtime. This meant that hundreds of thousands if not millions of healthcare workers would soon become eligible for greater pay for hours worked over 40, but the primary insurance responsible for their employer’s reimbursement (Medicaid & Medicare) were not changing their formulas to align themselves with the Labor Department’s new definition and its applicability.

In response, Home Health Care Agencies across the United States began instituting policies in anticipation. Many began limiting their employees to working no more than 40 hours, while offering those that still would “full-time employment packages” that included a cut in their hourly pay in exchange for promises of vacation days or discounts on health insurance.

For the consumers and individuals with disabilities relying on homecare to remain independent and safe in their homes, many were forced to accept additional aides in situations where an employee working over 40 hours was reduced, requiring an additional person to be trained to cover the hours that one caregiver once worked. Such a situation can be difficult for some. For example, a consumer with a Traumatic Brain Injury receiving split-shift 24-hour care and help from family to train new caregivers, is forced to introduce a greater number of workers into the mix, which is not only difficult and burdensome, but creates uncertainty and increases the likelihood of caregiver turnover, threats to one’s security, and chances for infections that come with increased traffic of individuals going in and out of one’s living space.

Advocates were floored. A policy that so many had been pushing for decades was so poorly considered by government officials that advocates now found themselves having to backpedal, now pushing for the withdrawal or postponement of the Department of Labor’s regulation. Supporters of proper compensation and the initial changes to policy were now realizing that the proposed solution was putting employees at greater risk of losing hours and receiving pay cuts.

It did not take long for opposition to the new rule to form. On June 6, 2014 the Homecare Association of America, along with several other national organizations, filed a lawsuit with the Department of Labor over its changes to the Fair Labor Standards Acts companionship exemption rule, asserting:

“the new rule will have a deeply destabilizing impact on the entire home care industry, which the Department has grossly understated in its regulatory analysis, and will adversely affect access to home care services for millions of the elderly and infirm.  The new Rule will lead to increased institutionalization of those needing home care, as many will no longer be able to obtain the currently available levels of access to affordable, quality care in their homes. Others will be forced to accept care from multiple caregivers instead of one trusted individual, as employers will be forced to reduce work hours to avoid overtime costs. For similar reasons, the new Rule will also adversely impact many home care workers and will increase staff turnover to the detriment of consumers.”

On December 22, 2014 the District of Columbia federal district court granted the plaintiff’s motion and vacated (suspended) the Department of Labor’s regulation barring third-party employers (homecare agencies) from claiming exemptions for overtime and minimum wage requirements for employees providing “companionship” services. With respect to the Department of Labor’s singling out of all third-party employers, Judge Richard J Leon stated in his opinion for the court, “Here, Congress has directed the Department of Labor to define statutory terms, and then include “any employee” who provides services according to those definitions within the scope of the exemptions. The focus is on the type of services provided, not who pays the check. As such, Congress has clearly spoken on this issue, and the department’s new, conflicting rule therefore cannot survive.”

Currently, the district court’s decision has been appealed by the Department of Labor and is currently undergoing review in the Court of Appeals for the DC circuit. Analysts following the suit (Homecare Association of America v. Weil) have stated that the court is likely to decide the case in June of this year. Meanwhile, for guidance to consumers and agencies, author and attorney Brian Steinbeck, one of many following the regulatory landscape had this to say;

“Notwithstanding these proceedings, home care agencies must continue to comply with state labor laws in effect. In New York, for example, notwithstanding the temporary stay of the “companionship services” definition, the home care industry must continue to pay minimum wage (now $8.75 per hour) and overtime (at a rate of one and a half times the minimum wage). Should the DOL prevail, the home care industry will be required to increase overtime pay from one and a half times the minimum wage to one and a half times the employee’s regular rate of pay.”(wagehourblog.com January 6 2015)

As literally millions of Americans wait to see what happens one thing is for certain, regardless of what the courts decide, it is up to Congress and the American people to actively push for equal pay for direct care workers.. It is starkly evident to those individuals who receive it, that the homecare system in its current form is not only unsustainable but tragically unsafe and uncertain. If we are to expect the best possible system for the care of individuals with disabilities and those that require personal attendants, nurses, or other supports, those in the community responsible for providing that care must be equally considered.

For more information on the Department of Labor’s final rule and the status of the companionship exemption you may call the agencies Wage and Hour Division helpline: 1-866-4US-WAGE (1-866-487-9243) or go to http://www.dol.gov/whd/homecare

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2 responses to “The Changing Environment of Labor Standards for Home-Care Workers

  1. Cynthia Badendyck

    Whew! Enormously informative summary of a situation whose very complexity and instability (and the fact that nobody you talk to is fully informed) constitute a serious problem for those needing care and for their families. Very valuable. Is there a call for consumers to weigh in at this point?

    • Thank you. Unfortunately I am unaware of any way of commenting or providing input on this specific issue that would affect the outcome of the lawsuit. Of course that does not preclude anyone from writing a letter detailing the issues they are facing to the relevant parties including the Department of Labor and their state legislators who are particularly overwhelmed with issues that they likely are unaware of this specific one. The New York State 2015/16 budget did include $20 million to cover the potential over time for caregivers but only for those working within a consumer directed personal assistance program (CDPAP).

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