New rules require home healthcare agencies to pay minimum wage, overtime

The U. S. Department of Labor issued new rules Tuesday that mandate home health care agencies pay their workers the minimum wage and receive overtime pay starting in 2015.
“Almost 2 million home care workers are doing critical work, providing services…

The U. S. Department of Labor issued new rules Tuesday that mandate home health care agencies pay their workers the minimum wage and receive overtime pay starting in 2015.

“Almost 2 million home care workers are doing critical work, providing services to people with disabilities and senior citizens who want to live in community settings and age in place in their familiar surroundings,” said Secretary of Labor Thomas Perez. 

But when it comes to getting paid, they are “lumped into the same category as teenage babysitters,” he said. “This is wrong and this is unfair.” 

For nearly 40 years, home care workers had been exempted from the pay rules because their services were considered “companionship.” But advocates, including organized labor organizations, had argued that these workers were often doing much more, providing assistance with dressing, eating and other daily activities. The decision extends the Fair Labor Standards Act’s minimum wage requirements, currently at least $7.25 an hour, to direct care workers, including home health aides, personal care aides and certified nursing assistants, according a Labor Department statement

“This is a tremendous victory for home care aides, a workforce earning near-poverty wages while providing vital personal care and health-related services to America’s elders and people living with disabilities, “said Jodi M. Sturgeon, president of Paraprofessional Healthcare Institute (PHI National), an advocacy group for home health workers.

The rule, proposed by President Barack Obama two years ago,  had been strongly opposed by industry and disability groups. 

Reps. John Kline, R-Minn., and Tim Walberg, R-Mich., criticized the rule, saying it will cost $2 billion over the next decade. “Today’s regulatory action by the Department of Labor will raise costs and limit access to in-home care for vulnerable Americans,” they said in a statement. “Congress enacted a specific exemption in the law to help ensure seniors and individuals with disabilities can receive the support they need from the comfort of their own homes.”

Although the new rules apply primarily to home health care agencies and other third party employers, individuals or families are subject to the requirements if they hire their own home health care aides to perform medically-related tasks for which training is necessary or for domestic work that benefits other members of the household, said Laura Fortman, deputy administrator of the Labor Department’s wage and hour division.

An Unusually Long Wait For Implementation

Currently, 15 states provide minimum wage and overtime protections to home care workers, and six more require minimum-wage pay. Perez said Tuesday’s decision “levels the playing fields by ensuring they receive the same minimum wage and overtime protection as other workers.” 

Medicaid pays for a large share of these services and Labor Dept. officials estimated that the new rule could increase costs for that federal-state health program for low-income people by roughly .03 percent annually. 

Generally, such rules go into effect in just 60 days, but the Labor Department delayed the effective date so that states and families could plan for the additional costs.

Industry representatives also predicted the change will hurt seniors and people with disabilities. 

“Like many things that emanate from Washington, the repeal of the companionship exemption is not what it seems,” said Andrea L. Devoti, chairman of the National Association for Home Care & Hospice, which represents 33,000 U. S. home care and hospice organizations. “It will mean that people will receive less care. Home care companies will have little choice but to employ workers part-time rather than full-time as Medicaid payment rates and consumers with limited incomes cannot afford higher costs.” 

Marcia Tetterton, executive director of the Virginia Association for Home Care and Hospice, said most home health agencies in Virginia already pay workers the minimum wage. But she predicted that requiring overtime pay will mean agencies won’t employ workers for more than 40 hours and that will cause problems for consumers.

“They will end up having multiple aides instead of two or three,” she said.  “They won’t have the continuity of care and particularly for people with cognitive deficits, change doesn’t come easy.” 

Contact Susan Jaffe at [email protected].

This article was produced by Kaiser Health News with support from The SCAN Foundation.