By Benjamin Goad - 09/17/13 05:41 PM EDT
The Labor Department moved Tuesday to extend minimum wage and overtime pay rights to nearly 2 million domestic care workers.
The burgeoning in-home health industry has long been exempt from those rights, with aids and assistant nurses traditionally falling under the Fair Labor Standards Act’s “companionship exemption,” under which they are denied the benefits.
"Many American families rely on the vital services provided by direct care workers," said Secretary of Labor Thomas Perez. “Today we are taking an important step toward guaranteeing that these professionals receive the wage protections they deserve while protecting the right of individuals to live at home."
The new regulations are set to take effect in January 2015. Tuesday’s announcement reflects the second major Labor Department action in recent weeks on long-stalled regulations at the agency. Late last month, the department issued a rule designed to limit workers’ exposure to harmful silica dust.
Like the silica rule, the domestic care regulations had been in the works for years, with workers' rights groups and labor unions demanding action.
The proposal dates back to the Clinton administration and was reprised two years ago by Obama, who lamented publicly that domestic workers are “lumped in the same category as teenage babysitters.”
The domestic-worker rule, formally proposed by the Labor Department in 2011, drew some 26,000 public comments. The agency in January submitted the rule to the White House, where it sat under review until Tuesday’s announcement.
AFL-CIO President Richard Trumka said the decision to extend the “most basic labor standards” to home aids was long overdue.
Approximately 90 percent of direct care workers are women, and nearly half are minorities, according to the Labor Department.
“Today’s action will not only benefit the largely female, minority and low-wage workers who provide these essential services, it will help to ensure an adequate supply of homecare workers as demand grows, reduce turnover, and improve quality, permitting more Americans who wish to stay in their own homes as they grow old or experience disability to do so,” Trumka said.
Several worker and activist groups, including the Direct Care Alliance, the Leadership Conference on Civil and Human Rights, the Coalition for Sensible Safeguards and the Paraprofessional Healthcare Institute, heralded the rule’s release.
The action was opposed by business groups, which warned that the rule would cause home care expenses to skyrocket, with the brunt of the costs being passed along to consumers.
Critics noted that Medicaid reimbursement payments to in-home care providers are structured under the current rules, but argued that an increase in the cost of doing business is not likely to be accompanied by Medicaid adjustments.
Ultimately, they contend, the regulations could thrust an otherwise healthy sector of the economy into upheaval.
Those concerns were echoed Tuesday by a pair of Republicans on the House Education and the Workforce Committee, who pointed to estimates indicating the regulation could lead to $2 billion in increased healthcare costs over the next decade.
"Faced with higher costs, some individuals will have no choice but to leave their homes and enter institutional living," Committee Chairman John Kline (R-Minn.) and Rep. Tim Walberg (R-Mich.), who chairs the panel's subcommittee on Workforce Protections, said in a joint statement.
The administration has labeled the regulation as economically significant, meaning it carries an estimated annual price tag of $100 million or more.
— This story was updated at 3:36 and 5:21 p.m.