'It's long overdue'

Now that the Obama administration has delivered its long-awaited rule making home-care aides eligible for overtime pay and the federal minimum wage, employers who send out the aides must weigh the impact of a more even playing field.

The home-care trade associations have battled the change for years. But some firms in the industry support paying workers more. They tend to work primarily in states that already pay overtime and higher wages.

Roxanne Ando, deputy director of Home Care Partners, a Washington-based agency with 200 home-care aides, backs the rule. She said it will lend consistency to the profession and raise standards. Her agency pays workers an average of $12.50 an hour and overtime benefits.

“It's just out of a general sense of fairness, particularly for the type of work being done,” she said. “It's long overdue.”

Worker advocacy groups celebrated issuance of the final rule, which won't take effect until Jan. 1, 2015. Unions such as Service Employees Union International and the American Federation of State, County and Municipal Employees had fought hard for the change. The home-care companionship exemption dates from 1938 and had not been altered since 1974.

Home-care trade associations in what has grown to a $54 billion-a-year industry warn that aides and patients will bear the brunt of the increased costs. Their major concern isn't with the $7.25 hourly minimum wage, but with overtime pay for the estimated 2 million home-care workers in America who bathe, drive and prepare meals for their elderly and disabled patients.

“In states that have already eliminated the companionship exemption, the evidence shows that workers earn less, staff turnover has increased, service cost has also increased because of the turnover requiring more hiring and training, and customer satisfaction has decreased,” said Andrea Devoti, chairwoman of the National Association for Homecare & Hospice and the Home Care Association of America, which represents about 33,000 home-care and hospice organizations across the country. She warned that agencies will be forced to reduce worker hours to avoid paying overtime and that would cost employees.

Devoti's association has a membership that includes large home healthcare companies such as the Visiting Nurse Service of New York, which had a surplus of $1.4 billion in fiscal 2011; and Apria Healthcare Group, which posted $2.4 billion in revenue for 2012. Those groups declined to respond to inquires.

Fifteen states already offer minimum wage and overtime guarantees. Advocacy groups say the fact home-care agencies successfully operate in those states is proof that the agencies could weather the financial burden brought by the new rule.

Under the new rule, agencies will no longer be able to claim the exemption, and that's a win for worker groups that believed these bigger chains were exploiting workers in a sector that has grown far beyond cottage-industry status. Federal projections show the industry will continue to experience explosive growth as the population continues to age and becomes increasingly dependent on home-care workers as an alternative to nursing homes.

The estimated financial impact of the rule, including the transfer of income from agencies to workers, costs and net benefits, is estimated at $210 million in the first year, according to the Labor Department. That could swell to $468 million because of increasing demand.

The profile of a home-care worker differs. Some have formal training as certified nurse assistants. Some work independently, while some work for large agencies.

Ando said she can't speak for other agencies, but Home Care Partners in the nation's capital is able to cover these costs. They have already seen the benefits. Ando points to the agency's minimal 15% turnover rate in an industry where half of all workers quit their jobs each year. Two-thirds of Home Care Partners' aides have been with the company for at least five years.

The final rule will be a boon to agencies such as Home Care Partners, she said, because it will allow them to compete with agencies that haven't previously offered benefits. Now those agencies will have to raise prices to cover overtime pay, Ando said.

Agencies will also have to keep better logs of how much employees are working and keep mileage records. Currently, workers aren't compensated for driving between jobs. The revised policy requires it.

The Paraprofessional Healthcare Institute, one of the advocacy groups that supported the rule change, welcomes further regulation of the industry. Workers, who are often poor and in need of public assistance, deserve the benefits, said PHI's National Policy Director Steve Edelstein. Edelstein mentioned high profit margins of some of the bigger chains, and said this will help bring competitive balance to the industry.

“They have to support the workforce and help build stability, which is a big problem,” he said. “We have such a high rate of turnover because the quality of these jobs is generally so poor.”

Agencies now have 15 months to study how the rule will affect them, said Andrea Maresca, director of federal policy for the National Association of Medicaid Directors. Ensuring programs and agencies are compliant with the rule will prove a challenge since penalties for violations remain unclear.

Meanwhile, many workers in the low-paying field are applauding the new rule. The relationship between client and worker is like family, said Carolyn Gay, a certified nurse assistant who is a home-care worker in Mulberry, Fla.

The industry exploits a worker's kindness, she charged. “I've seen people taken advantage of; I know I have been taken advantage of,” Gay said. “There have been times when I have stayed a whole day or half a day or something. Maybe for some reason the client was short of money. I didn't press it.”

Gay, 72, works as an independent contractor, dependent on word-of-mouth references from church members and the community. Florida is a state that requires minimum wage pay, but not overtime benefits. Gay, who charges $10 an hour, serves clients who are blind, have heart problems and suffer from dementia.

Workers will also receive pay while on vacation with clients because of the rule. Gay recalled various trips with her clients where she would spend a week or two away from home caring for a patient who normally requires 24-hour supervision. The patient and her family would pay Gay for only an eight-hour day.

Gay suggested agencies' threats to roll back hours in response to the rule will ultimately benefit the industry by ensuring workers are fresher and offering better care. “We don't need burnout by working 16, 20 hours a day,” she said.

Follow Ashok Selvam on Twitter: @MH_aselvam