A federal appeals court Friday upheld a new Department of Labor rule aimed at boosting wages for many home healthcare workers.
Labor groups cheered the decision, which reversed a lower court's ruling. Home healthcare industry groups, however, have warned that the Department of Labor rule, if enforced, will destabilize the industry, leading to less in-home care and more institutionalization for the elderly and disabled.
For years, home healthcare agencies haven't had to pay minimum wage or overtime to so-called companionship workers who provide “fellowship, care and protection.” The rule in question, however, would significantly narrow the definition of companionship workers to those who spend no more than 20% of their time providing actual care, such as feeding and bathing. It would also no longer exempt companionship workers employed by third parties, such as home healthcare providers, from wage protections.
The rule would likely lead to changes in pay for a majority of home healthcare workers.
In the opinion for the District of Columbia Circuit Court of Appeals, U.S. Circuit Judge Sri Srinivasan wrote that it was within the Department of Labor's power to change the exemption for third-party employers, and that the department's actions were neither arbitrary nor capricious.
Times have changed since the 1970s, when home healthcare providers were first exempt from wage protections, the judge noted. Exemptions were put in place at a time when most care took place outside the home in hospitals and nursing homes.
“Since the time the Department initially adopted that approach, the provision of residential care has undergone a marked transformation,” Srinivasan wrote. “Individuals with significant care needs increasingly receive services in their homes rather than in institutional settings. And correspondingly, residential care increasingly is provided by professionals employed by third-party agencies rather than by workers hired directly by care recipients and their families.”
Jodi Sturgeon, president of the Paraprofessional Healthcare Institute, said in a statement that the decision is an important one, especially given the booming home healthcare sector.
“Despite the growth of the industry, the wages of home care aides have declined over the last decade to an average of $9.78 per hour,” Sturgeon said. “Federal wage and hour protections will help to provide a more solid wage floor upon which to improve the quality of jobs for home care aides and quality of care for older people and people living with disabilities.”
But Phil Bongiorno, executive director of the Home Care Association of America, called the decision disappointing. His association brought forth the challenge along with the National Association for Home Care and Hospice and the International Franchise Association.
“We're considering what our legal options are based on the decision at this point,” Bongiorno said. “We're just trying to keep care costs effective and affordable for our clients.”
William Dombi, co-counsel for the industry in the case and a vice president at the National Association for Home Care and Hospice, said his group is reviewing the decision. “All options are under consideration, including a request for review by the U.S. Supreme Court,” he said.
In its opinion, the court declined to address the industry groups' challenge to the new definition of companionship services within the rule. The court said that the groups have admitted they don't have standing to challenge that part of the rule if they're not allowed to be exempt from wage protections as third-party employers.