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Minnesota can enact a proposed 20 percent cut on the wages of paid family caregivers, according to a March 23 ruling by a district judge.

The cuts would lower caregivers’ hourly wages to $9, from approximately $11, and could affect as many as 7,000 family caregivers who serve as personal care assistants (PCAs) to low-income relatives and receive payment through Medicaid.

Originally enacted by the state legislature last year to help close a $5 billion budget gap, the cuts are expected to save the state just $17 million if they take effect.

Last fall, after eight home care agencies filed suit against the state, Ramsey County District Judge Dale Lindman ruled to temporarily block the cuts from taking effect. In his March 23 decision, however, Lindman reversed his own decision, giving the cuts his stamp of approval.

Hope for Delayed Enforcement

Minnesota Governor Mark Dayton (D) has voiced opposition to the wage cuts, and advocates — including many home care agencies — hope he will delay their enforcement until the end of the current legislative session.

Tim Plant, the executive director of Healthstar Home Health in North St. Paul, told the Minnesota Star Tribune, “We disagree with the judge. The law requires unequal pay for equal work, and some of these PCAs are very low-income. They can’t afford the pay cut.”

Lindman, however, said that he agreed with the legislature’s assessment that the PCAs have “moral obligations” to care for their relatives, and would continue to do so despite being paid a lower wage.

The eight home care agencies say they plan to appeal Lindman’s decision.

– by Matthew Ozga

As the clock struck midnight on March 21, the public comment period on the proposed rule to revise the “companionship exemption” under the Fair Labor Standards Act (FLSA) drew to a close.

Nearly 10,000 comments on whether home care workers should be extended basic federal minimum wage and overtime protections, including comments submitted by PHI (pdf), have been registered on the official government website.

The next step is for DOL to review all of the submitted information before it issues a final rule on the companionship exemption, which is anticipated to be sometime this summer.

Kudos to the Workers

The day before the comment period closed, the Workforce Protections Subcommittee of the U.S. House of Representatives Education and the Workforce Committee held a hearing entitled, “Ensuring Regulations Protect Access to Affordable, Quality Companion Care.”

While there was much disagreement between Committee Chair Tim Walberg (R-MI), Ranking Member Lynn Woolsey (D-CA), and the hearing witnesses about whether revising the regulation to include home care workers was affordable for business and how it would impact consumers and workers, everyone agreed that home care workers are invaluable: they make it possible for elders and people with disabilities to live independently in their homes instead of in more costly nursing homes.

Walberg sang the praise of the home care workers who assisted his own parents in their later years. However, despite giving kudos to the home care workforce for the important work that they do — including the many workers in attendance at the hearing — Walberg claimed that extending home care workers a fair wage would raise costs and have unfavorable consequences for consumers and workers.

Woolsey countered by saying that today home care is a “booming industry” and the services and supports that the “modern” home care workforce provides “far exceeds [the] fellowship and companionship” services that FLSA originally intended to exempt.

Woolsey said that the “bottom line” of the home care business is to “bill twice what the worker receives,” but the worker then “ends up on public assistance” with the taxpayers paying the cost.

Impact Has Been Manageable

Catherine Ruckelshaus, legal co-director of the National Employment Law Project, was among the witnesses who testified (pdf) in favor of extending home care workers basic labor protections. She explained that Congress never intended to carve out home care workers from FLSA when it revised the law in 1974 to include other domestic workers.

Fifteen states already provide overtime and protections and another five provide minimum wage protections, and the “impacts have been manageable,” Ruckelshaus said.

She added that there is no data that shows that states that have more labor protections “have higher rates of institutionalization,” which suggests that “the remaining states are capable of making this shift without major disruptions to their long-term care systems.”

In a statement (pdf) submitted for the record, PHI reiterated its position that home care aides cannot continue to be treated as if they are casual companions:

Home care is the nation’s fastest-growing occupation (pdf), expected to grow to over 3 million workers by 2020. Yet these workers, who are 90 percent female with a median age of 45, continue to be treated in the same fashion as teenage babysitters. Home care, however, is a true vocation, and should be treated as such under the law.

Industry Studies Are Seriously Flawed

Opponents of extending home care workers basic labor protections have been trying to support their claims with recent industry-funded studies, but PHI has conducted its own analyses, finding that these studies — which suggest that the proposed regulations will have a negative impact on businesses, consumers, and workers — are seriously flawed.

All of the witnesses’ testimony, an archived webcast, and other information from the hearing are available on the DOL website.

– by Deane Beebe

– by Dorie Seavey, Ph.D., PHI Policy Research Director

During the past two months, private-duty trade associations have produced three different studies designed to bolster their position that narrowing the overtime exemption would have serious negative consequences for home care companies, clients, and workers. Yet each of these studies presents serious flaws.

In two surveys of their membership, these associations had the opportunity to acquire solid industry data on the employment patterns of home care workers: how many work overtime, and how often; how many work part-time and would like to work more; and how much they are paid. This kind of information could have usefully complemented the U.S. Department of Labor‘s (DOL) analysis, which relied on all the nationally representative, statistically valid data available on these questions. So, what do the new studies tell us?

SURVEYS

The Companionship Services Exemption Survey, funded by the National Association for Home Care and Hospice–affiliated Private Duty Homecare Association (PDHA) and the National Private Duty Association (NPDA), includes a question about the percent of employees who work overtime. Yet regrettably the study fails to report respondents’ answers to this question. Rather, the survey emphasizes opinion questions that are phrased to lead respondents to answers that align with the associations’ opposition to the proposed regulations.

Not Nationally Representative or Statistically Valid

The second study, Economic Impact of Eliminating the FLSA Exemption for Companionship Services — prepared by IHS Global Insight and paid for by the International Franchise Association (IFA) — like the PDHA/NPDA survey, relies on what is known as a “convenience sample”: a sample confined to those members that returned a completed survey. This type of sample is not considered nationally representative or statistically valid and, at best, merely reflects the positions and experiences of the companies that actually completed the survey, leading to a strong likelihood of bias.

Dorie Seavey

Low Response Rates

IFA, an association dedicated to preserving and enhancing the regulatory climate for the growth of franchising, sampled nine of its 27 franchise home care companies to participate in the survey. These nine companies in turn represent 3,259 franchisees, of which only 17 percent actually participated in the survey, for a total of 554 franchisees. This is considered a very poor response rate, affecting the validity of the findings. The PDHA and NPDA survey received roughly twice as many responses (1,458 “home care companies” responded) but the report doesn’t provide a response rate, thereby leaving its validity in question.

To put these survey response numbers in perspective: according to the U.S. Bureau of Labor Statistics, in 2010 there were 55,929 establishments in “Services for the Elderly and Persons with Disabilities,” the industry that encompasses the vast majority of home care companies specializing in the provision of non-medical home care services. Furthermore, approximately 70 percent of these companies were non-profit organizations (see Chapter 3 of PHI’s Caring in America report). This means that the for-profit segment of the industry represented by the three trade associations sponsoring the surveys constitutes just a segment, and certainly not the majority, of the entire home care industry.

Unintentional Support for DOL’s Conclusion of Small Adjustment Costs

The most remarkable empirical finding of these two survey-based studies is inadvertent: fully 40 percent of respondent companies report that they already extend minimum wage and overtime to home care workers! Why? Because the companies are located in states that require them to do so or because they voluntarily elect to meet these basic standards. It’s hard to imagine stronger evidence in support of the DOL’s conclusion that the economic impact on the home care industry of the proposed revisions to the companionship services exemption is likely to be small. If providing these labor protections is so cost-prohibitive to the industry, how do these businesses continue to operate and even thrive?

ECONOMIC STUDY

The third industry-sponsored study, Estimating the Economic Impact of Repealing the FLSA Companion Care Exemption, paid for by the same private-duty associations that financed the first survey, was conducted by two economists at Navigant Economics who are complete newcomers to the field of home care labor market analysis. The study does little more than reiterate limitations in the available data used by DOL to assess the costs of narrowing the companionship exemption. The analysis asserts that the costs would be “substantial” but it does not provide an estimate of the costs.

The study’s most self-promoted achievement is an estimation — which they claim to be superior to that of DOL’s — of the decrease in demand for “companion care labor” caused by an increase in wages, known in economic theory as the “elasticity of demand.” The Navigant report overemphasizes the role of this elasticity in assessing the impact of proposed regulations and fails to acknowledge that the costs of the regulatory change will be driven more by how those agencies not already extending overtime protections to their aides respond to new payment requirements. As DOL notes, “those employers who adjust schedules and redistribute hours can be expected to decrease overtime costs significantly” (NPRM, p. 100).

Probably the most disturbing inference made in the Navigant study is that, since millions of employees, such as fisherman, movie theatre employees, and criminal investigators, are also exempt from minimum wage and overtime protection, continuing to exempt home care workers should not be such a big deal. This conclusion is clearly out of touch with the reality that home care occupations top the list of the country’s fastest-growing jobs and constitute one of the largest workforces ever produced by our economy.

Companionship Exemption Comment Period Extended through March 21

The U.S. Department of Labor (DOL) has extended the public comment period through March 21 on its proposed revisions to the companionship exemption. The revised rule would extend home care workers federal minimum wage and overtime protections under the Fair Labor Standards Act, if it becomes law.

To learn more about the companionship exemption, see sample comments, and make a comment on the official public comment website, visit the PHI Campaign for Fair Pay.

Hearing

The Subcommittee on Workforce Protections of the U.S. House of Representatives’ Committee on Education and the Work Force is holding a hearing on the companionship exemption proposal on March 20 at 10:00 at the Rayburn House Office Building in Room 2175. There will be a live webcast of the hearing.

Steven Edelstein

SUMMARY: Steve Edelstein, PHI national policy director, discusses efforts to extend minimum wage and overtime protections to home care workers and the expected benefits to continuity and quality of care.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

download podcast (mp3)
Recorded: March 7, 2012
Duration: 06:25
File Size: 5.88 MB

America’s undervalued home care workforce deserves to be paid a fair wage, according to an op-ed published in Newsday on March 6.

In the op-ed, S.E. Watts, who lives with physical limitations, writes that she depends on her home care workers to help her perform basic tasks, including bathing, preparing meals, and housekeeping.

However, under the Fair Labor Standards Act‘s “companionship exemption,” home care workers are excluded from the basic federal wage protections of minimum wage and time-and-a-half pay for overtime.

“These workers…are considered [by federal law] to be mere ‘companions’ to the ‘elderly and infirm,’ the equivalent of a teenage baby-sitter,” Watts writes.

In December 2011, President Obama announced a proposed rule change that would finally extend minimum-wage and overtime protections to home care workers. The public has until March 21 to submit a comment on the proposal.

Home care workers are the “backbone of the home care system, yet they are undervalued and do not get the respect that they deserve. Updating the companionship exemption would be a very good start,” Watts writes.

For more information on the companionship exemption, including sample comments, visit the PHI Campaign for Fair Pay home page.

– by Matthew Ozga

UPDATE: On March 9, the DOL extended the public comment period to March 21. This post has been updated to reflect that change.

The U.S., which will need 1.3 million more home care workers by 2020, will not be able to meet this ever-increasing demand unless home care jobs improve.

A Department of Labor (DOL) proposal to amend the “companionship exemption” to the federal Fair Labor Standards Act (FLSA) would go a long way toward valuing home care workers and the important jobs they do.

The “companionship exemption” currently excludes home care workers from a guaranteed minimum wage and time-and-a-half pay for overtime. The DOL proposal would fix that, finally giving home care workers the same basic labor protections nearly every other U.S. worker enjoys.

The public has until March 21 to submit a comment on the proposal.

Thousands of Comments Already Submitted

People on all sides of the issue — consumers, employers, workers, academics, and advocates — have already weighed in on the DOL’s proposed change by submitting their own comments.

PHI thinks that valuing the worker is the right thing to do. “This country is facing a tremendous demand for long-term services and supports,” said PHI National Policy Director Steve Edelstein in a March 7 podcast for the Fairness Initiative on Low-Wage Work.

The latest DOL employment projections, released last week, show that an additional 1.3 million home care workers will be needed to meet rising demand by 2020.

“The only way we’re going to possibly be able to keep up with that demand is to improve the quality of jobs for the home health aides and personal care aides who provide these essential services,” Edelstein said, explaining PHI’s support for limiting the companionship exemption.

Many others think so too. Some of the comments include:

• “I am a labor economist whose research has focused on women workers, especially those with low wages. Unfortunately, home care aides are the quintessential low-wage worker… The proposed regulations would do a great deal to make this work and these workers more visible as well as more highly valued.”
• “I am 75 years old and will be facing the probability of needing in-home care for myself and my husband in the not too distant future. I want to know that the people providing that care are being paid fairly and are well qualified to do that job. We can’t get well qualified people if they aren’t compensated fairly.”
• “I support applying the FLSA rules to domestic service. I employ caregivers through an agency to help with my 94-year-old blind and cognitively impaired mother… Better wages and working conditions will attract the best people to do these difficult but very important jobs.”
• “I am fortunate enough to receive home care from two wonderful and caring people. Please help ensure that these women, who are literally my lifesavers, can earn a wage more in line with the tremendous value of the services they provide for individuals, families and communities.”

To learn more about the companionship exemption — and find out how to express your opinion by leaving a comment before the March 21 deadline — visit the PHI Fair Pay for Home Care Workers site.

– by Matthew Ozga