“For too long this vital occupation, upon which the health and independence of millions depend has been treated as marginal and casual work to be performed under poverty conditions,” SEIU President Mary Kay Henry said in a prepared statement. “This has been so, even as the occupation has become among the fastest growing and most vitally important within the American healthcare system.”
Advocates of the change overcame intense opposition from the home-care industry.
“It will mean that people will receive less care,” said Andrea Devoti, chairwoman of the National Association for Home Care & Hospice, in a prepared statement. “Home-care companies will have little choice but to employ workers part time rather than full time as Medicaid payment rates and consumers with limited incomes cannot afford higher costs. Caregivers will in the end receive less pay.”
The new rule clarifies a policy for companion services that dates back to 1938. Under that policy, workers who care for the elderly at home are exempt from overtime pay and the minimum wage, currently $7.25 per hour. It was the government's way of protecting the elderly and disabled from being on the hook for hourly wages a worker, often a family member, would rack up while living under the same roof.
But advocates argued that the home-care industry has transformed into a $50 billion a year business, and that those paying the bills could afford paying workers more.
In response, the Obama administration has redefined the companionship exemption to exclude services typically performed by a nurse or medically trained worker, “regardless of the actual training or occupational title of the individual providing the services.”
Other updates jettisoned anachronistic language. Terms like “governesses,” “footmen” and “grooms” were replaced by more modern titles such as “nannies,” “home health aides” and “personal-care aides.”
The rule drew more than 26,000 public comments. The government included a variety of scenarios and projections as to the cost of implementing the policy for home-care agencies. The Labor Department estimates that the overall impact on the industry will be $210 million in the first year, increasing to $468 million in 2024 as the demand for home care workers grows.
“Direct-care workers play a critical role in ensuring access to high-quality home care that many people need in order to remain healthy and independent in their communities, and they should be compensated fairly for this important work,” HHS Secretary Kathleen Sebelius said in a news release. “We will continue to engage with consumers, states, advocates and home-care providers in the implementation of this rule to help people with disabilities, older adults and their families receive quality, person-centered services.”
Home-care workers offer an alternative to a nursing home for the elderly and disabled, allowing clients to remain living in their own homes. Organizations representing the home-care workforce said the companionship exemption allowed employers to exploit the workforce.
“There's a lot we need to do as a nation to improve the quality of these jobs,” said Steve Edelstein, national policy director for the Paraprofessional Healthcare Institute, a New York-based advocacy group. “It's not too far down the line that we're seeing that as the baby boomers age, that we're going to need more than 1 million additional workers just to keep up the demand over the next decade.”
Fifteen states already offer minimum wage and overtime protections to home-care workers. Edelstein said many home-care agencies already operate in those states and would be able to weather the financial impact.
(Story updated at 10:20 a.m. Central time to include Labor Department estimate of the rule's impact on the industry.)
Follow Ashok Selvam on Twitter: @MH_aselvam