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.