Labor Department announces new overtime rule for home-health workers

The Wall Street Journal reports this morning that, as of Jan. 1, 2015, home-health workers (sometimes called personal care aides or certified nursing assistants) will no longer be exempt from the minimum-wage and overtime provisions of the Fair Labor Standards Act of 1938.  Labor Department Adds Protections for Home-Health-Care Workers – WSJ.com

In 1974, Congress extended FLSA protections to many domestic workers; however, aides providing “companionship services” for the elderly, sick, or disabled were, like teenage babysitters, specifically exempted from the protections provided by the law until now.  Even though such workers help to feed, dress, bathe, and provide essential care and services for their clients, often enabling those receiving such care to remain in their own homes rather than move into an institutional setting, because the workers provide those services in private homes and not, for example, in a hospital or nursing home, regulations before the current did change did not allow these workers to qualify for overtime pay.  In fact, in 2002, When Evelyn Coke sued her employer for overtime wages after working long hours, round the clock, and argued that the law was not intended to discriminate against her profession in this manner, the United States Supreme Court, on June 11, 2007, disagreed and said that, in fact, this was exactly what the law provided… although adding that the Department of Labor (DOL) could revisit the matter to bring home-care workers under the protections of the FLSA if it wished to do so. (Read the Court’s full opinion at Long Island Home Care v. Evelyn Coke.)

At last, this is what the DOL has done.

While the new ruling means that the two million or so home-health workers, a large number of whom are women and minorities, will now be paid time-and-a-half for time worked over 40 hours per week, the effect of the nominal pay raise will almost certainly have a broader impact on the home-care industry, projected to rise to 3.2 million workers by 2020: home-care companies, many of which run on slender profit margins, may cut hours and hire more aides to avoid paying overtime (and perhaps benefits) to remain competitive; base pay in the industry may fall to minimum wage in order to cut costs so that employees’ net wages do not increase when overtime is factored in; more and more workers may choose to become independent (and therefore unsupervised and difficult to regulate) agents so that they can work longer for less money; or the cost to the elderly, sick, and disabled may simply rise.

In light of the foregoing, there is a real question as to whether this fundamentally fair policy change will end up helping or hurting those it is intended to assist.  The Wall Street Journal quotes both Sen. Tom Harkin (D., Iowa), Chair of the Senate Health, Education, Labor and Pensions Committee and Rep. John Kline (R., Minn.), Chair of the House Education and the Workforce Committee to sum up the divide in Congress over the rule.  It may be, however, that both are right, and the policy shift is at the same time “a long overdue step to provide basic fairness for those who support and care for some of our most vulnerable citizens,” while at the same time it “will raise costs and limit access to in-home care for vulnerable Americans.”

It is a truism that the only constant in business is change itself.  If you are facing regulatory changes and need advice, the employment lawyers at Briskin, Cross & Sanford advise privately held companies, including home healthcare companies, on all aspects of their business.  Whether you are an established company dealing with the impact of new regulations or an entrepreneur starting out on your own, we will be happy to discuss solutions to the legal challenges your business faces.

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