A federal regulation scheduled to go into effect on January 1, 2015, could force employers to pay previously exempt caregivers the federal minimum wage and time-and-a-half for overtime. While this may seem like a good deal for the caregivers, it could result in cutbacks to services for seniors and people with disabilities if states limit caregiver hours in response to the new regulations.
Congress initially passed the Fair Labor Standards Act (FLSA) in 1938 to give most workers a guaranteed minimum wage and overtime protection. The original FLSA did not apply to many domestic workers hired directly by households, so in 1974 Congress amended the FLSA to cover many people who work in private households. However, the 1974 amendment did not apply to “companionship” workers who assist elderly patients or people with disabilities, and it also stated that live-in domestic workers were not entitled to overtime pay.
In 2013, the Department of Labor issued a final regulation altering these rules for the first time since 1974. The new regulation, which goes into effect on January 1st, narrows the definition of “companionship” services and requires third-party employers like home health care agencies to meet all minimum wage and overtime laws for all employees.
Under the new rules, an employee qualifies as a “companionship” worker only if he spends less than 20 percent of his work time assisting a senior or person with disabilities with activities of daily living or instrumental activities of daily living. In addition, if the worker provides any medically necessary services, then he is not engaged in “companionship” work. In all cases, if the employee is not considered a companion, then he must be paid the minimum age and must receive overtime pay. These rules apply only to workers employed by the senior, person with disabilities or her household. If the worker is employed by a third party, or in many cases if the worker is employed by both the person with disabilities and a third party (like a state agency), then he will always be subject to minimum wage and overtime rules, even if he is a live-in employee who would typically not be subject to overtime rules.
Although the new regulations could mean more money for caregivers who may not currently receive minimum wage or overtime protection, there could also be some negative consequences for consumers and caregivers. Since many state agencies are now going to be considered third-party employers, they may implement their own regulations limiting the number of hours that caregivers can work in order to avoid being out of compliance with these new federal rules. This could lead to reduced services for people who need them and fewer hours for caregivers.
According to an advocacy fact sheet from the National Senior Citizens Law Center, only California has addressed these concerns in its 2014-2015 budget, which leaves most seniors and people with disabilities in limbo as the January 1st implementation deadline approaches.
For more on this complicated problem, you can view an assortment of materials on the Department of Labor’s website here and download the National Resource Center for Participant-Directed Services’ toolkit here.
Regards, Brian
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