During a House Subcommittee on Workforce Protections hearing – Redefining Companion Care: Jeopardizing Access to Affordable Care for Seniors and Individuals with Disabilities – panelists and lawmakers highlighted problems that await home care providers, workers, and care recipients when the Department of Labor’s new home care rule takes effect in January 2015.  Issued in September, the final rule eliminates the Fair Labor Standard Act’s (FLSA) minimum wage and overtime exemption for home care workers employed by home care agencies and other companies.  This rule also significantly narrows the exemption for home care workers employed directly by the individuals or families receiving home care services. 

Subcommittee Chair Tim Walberg (R-MI) said that he has asked the DOL for a justification for this rule, but has yet to receive any.  He claimed the rule imposes “rigid and arbitrary” requirements on home care providers, and creates more hardship than benefits. 

According to witness Lucy Andrews, Vice Chair of the National Association for Home Care & Hospice, most home care agencies already pay their employees a rate exceeding the minimum wage, and the rule’s overtime requirement will result in these employees being paid less than before.  Andrews explained that home care agencies will need to restrict working hours or charge their care recipients more.  Coupled with the Affordable Care Act’s employer mandate – the implementation of which will coincide with the home care rule’s effective date – the new rule’s requirements will create “a perfect storm” for home care agencies.

Ms. Andrews challenged the change to national standards that have been in place for nearly 40 years. She testified that, based on experience in states that previously have required overtime compensation to personal care workers, she believes that the rule will trigger the following:

1. Moderate to significant increases in care costs
2. Restrictions in overtime hours to the detriment of the workers’ overall compensation
3. Loss of service quality and continuity
4. Increased costs passed on to the patients and public programs such as Medicaid that would decrease service utilization, increase unregulated “grey market” care purchases, and increase institutional care utilization rather than absorbing and covering the higher cost of care.

In response to questioning, Ms. Andrews disagreed with the contention that the new rule would reduce turnover of home care workers. Instead, she opined that the rule change would have the opposite effect.

Joseph Bensmihen, President and CEO of United Elder Care Services, Inc., echoed this sentiment, stating that the rule will have “far reaching and adverse consequences,” particularly for individuals who choose home-based over institutional care.  He said individuals will need to pay “substantially more” for the care they need, or be subject to multiple caregivers. Bensmihen testified that to avoid paying overtime, home care agencies will rotate caregivers, which will result in a loss of continuity of care.  According to Bensmihen, many home care workers prefer to stay with one client per week as well. 

Another witness testified that the rule will result in various compliance difficulties.  According to his testimony, the rule will require individuals to keep track of the activities any caregivers perform to ensure such activities do not “effectively convert friendship into employment.”  He called for more comprehensive guidance to address when a casual caregiver becomes an employee under this rule.  The witness noted in recent years the DOL has diminished a for-profit employer’s ability to use unpaid volunteers or interns, and that it would not be out of the question for the DOL to extend its definition of “employee” to friends or neighbors who provide occasional home care assistance. 

Ranking subcommittee member Joe Courtney (D-CT) also spoke in support of the rule, stating that its purpose is to “ensure nearly two million home care workers get paid the minimum wage.”  Similarly, witness Karen Kulp, President of Home Care Associates, said the rule “recognizes the professionalization of this industry.”

Despite the concerns raised by the other witnesses, Rep. Courtney dismissed the prospects for repealing the rule, confirming that the Department of Labor would not rescind the new regulation.  

For more information on the companionship exemption rule and its implications, see the Littler Report, Challenges and Best Practices for Home Care Employers Following the Elimination of the Companionship Exemption, which was submitted for the record on today’s hearing.