The U.S. Supreme Court last week upheld a Labor Department rule that exempts home-care workers from federal minimum-wage and overtime standards. But the Service Employees International Union, which backed the plaintiff in the case, vowed to pursue the issue in state legislatures and Congress, and with the next president.
At issue were guidelines the department generated after Congress amended the Fair Labor Standards Act in 1974 to include more of the U.S. workforce but made an exception for companionship workers. The department interpreted the exemption to include those employed by third parties.
Evelyn Coke, now 73, worked for Long Island (N.Y.) Care at Home for 20 years and in 2002 sued the company seeking unpaid wages she believed she was owed. U.S. District Court in Central Islip, N.Y., dismissed the case, but an appeals court disagreed and the matter made its way to the Supreme Court.
A different outcome could have been devastating to the industry, representatives say. The potential of retroactive liability in these businesses would be in the billions, said William Dombi, vice president of law at the National Association for Home Care & Hospice. In many states, Dombi added, Medicaid programs and departments on aging are the dominant payers, not families, and they set the rates that agencies are paid. Mandated overtime pay would force agencies to cut back on hours and employees, he said. This is management and labor vs. payment source rather than management vs. labor.
Hospital-based services represent a relatively small portion of the businesses that would have been affected, Dombi said.
Joseph Hafkenschiel, president of the California Association for Health Services at Home, said the exemption is essential to keeping services affordable. The 24-hour pay would increase from $180 to $285 if California overtime rules applied.
Seventeen states already have laws in place that extend wage and overtime guarantees to home-care workers in varying ways, and the SEIU is working to persuade more states to provide coverage, said Craig Becker, the unions associate general counsel.
Congress, Becker said, never intended to exempt the workers. This decision simply said, Its not clear what Congress intended so we think courts need to defer to the Department of Labor, he said. A new administration could construe the law differently.
Sens. Edward Kennedy (D-Mass.) and Tom Harkin (D-Iowa), meanwhile, said in separate statements they would pursue a legislative fix to a situation they consider unfair to the affected workers, who fill a growing demand.