Several business owners have expressed concern to PHI as to how the newly proposed U.S. Department of Labor (DOL) regulations on the home care aide “companionship exemption” will impact them. In the following message, PHI President Steven Dawson describes in greater detail why PHI strongly supports the DOL’s recommendation to narrow the exemption.
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Let me begin by saying that PHI is the prime sponsor of two home care agencies, one in New York and one in Pennsylvania, in total employing more than 2,000 aides. I serve on the board of each. In both cases, our agencies pay our aides more than minimum wage, as well as overtime pay.
That is to say, PHI’s support for the DOL’s new regulations does not stem from abstract political theory, but rather it is grounded in the day-to-day realities of just how difficult and challenging is the business of providing home care services in today’s marketplace.
We at PHI acknowledge that in many states, no fair labor standards for home care aides exist beyond the federal exemption. Therefore, should the DOL’s proposed language go into force next year, adjustments will be required for some employers, workers and clients — and in the immediate term, some of those adjustments may be painful. Good employers like those who have written us will be impacted, along with the rest of the industry.
However, the adjustments that these business owners will be making are not the fault of the new regulations. The fault lies with those in the home care industry who for 30 years have argued that home care aides should be allowed to work without minimum wage and overtime protection — a protection to which nearly every other worker in America is entitled.
Therefore over the past 30 years a large and complex industry has emerged, built around the exception to these basic labor protections — and therefore business models, labor markets, and consumer expectations over time have evolved accordingly, relying on the financial assumption of no minimum wage and overtime costs. Those were the “rules of the road” established over time, and to compete successfully, most all businesses had to follow those rules.
Now, those rules are likely to change. And when an economic system that has been distorted over a long period of time is suddenly corrected — to conform to nearly every other industry in the country — the adjustments can indeed be painful. To take an historical parallel: before racial integration, communities like Harlem here in New York enjoyed relatively strong African American-owned enterprises, confined within but also reinforced by the rigors of segregation. When integration became the law of the land, neighborhoods like Harlem ironically experienced wrenching economic changes. Many small business owners were hurt — including some of the very people integration was intended to benefit. Yet no one today would argue that integration was therefore the wrong historic choice for our country.
And it is true that some workers, when given a choice, would prefer more hours rather than being cut back due to an employer’s higher overtime costs. Yet it is also true that some workers, if given the choice, would also take a higher wage in lieu of paying social security taxes — precisely because their base wages are so low — but that doesn’t mean we should allow employers to avoid their responsibility to cover social security, by paying their workers under the table. Certainly some workers would be happy in the short term, but all workers over time would suffer.
It is also possible that higher wages due to overtime may force some consumers to either pay more, or receive fewer hours of service. Unfortunately, that same argument can be made of any social service: Why, then, don’t we refuse to pay firefighters and policeman overtime — for surely that would mean we would have more money to pay for more officers out there on our streets to protect us. Rather, we pay them overtime wages because their jobs are difficult and essential, and they deserve to have their labor rights protected, even if it means fewer hours of service to us all. The same is true for home care workers: The needs of any one of us as business owners, or even homebound consumers, can never morally justify abridging the rights of another.
Finally, I find it particularly difficult to hear arguments from other business owners about continuity of care for their customers, when the turnover rate for home care workers in our industry averages around 50 percent per year. If the industry were truly concerned about continuity of care, they would be doing everything they could to stabilize the front-line workforce by helping to professionalize it. If the industry were truly concerned about quality of care, they would support requiring minimum training standards for personal care workers. Instead, so long as the industry continues to treat home care workers as if they were, as President Obama said last Thursday, “teenage babysitters,” the home care workforce will continue to churn, consumers will continue to face a constantly revolving door of poorly supported workers into their homes — and the home care industry will continue to be isolated from the rest of the health care system.
In the immediate term, some profit margins may indeed become narrower for a while; some workers will have fewer hours; some consumers will be forced to pay more to keep their aide working more than 40 hours a week. However, we firmly believe that, over time, market expectations will re-align to the new rules, and businesses, workers, and clients will acclimate. We know this is likely, because in states like Pennsylvania — which have state-level regulations that do require home care agencies to extend overtime and minimum wage protection — there are hundreds of proprietary home care businesses that seem to be doing quite well.
We realize this is cold comfort for many employers facing the immediacy of these changes. Yet we at PHI believe the costs across society are relatively modest in exchange for correcting an industry-wide injustice. As Martin Luther King wrote, “The arc of history is long, but bends toward justice.” He never promised, however, that the bending of that arc would come without cost.
