Administration revives wage and overtime fight for home-care workers

The Obama administration is moving forward with a contentious and long-dormant proposal to institute minimum wage and overtime standards for the in-home healthcare industry.

Enactment of the regulations, which are under final review at the White House, would represent a major victory for unions that have fought for decades to win higher pay for direct-care aides.

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But industry groups warn that the rule would cause home-care expenses to skyrocket, hurling an otherwise healthy sector of the economy into upheaval.

“You can only do business if the consumer can afford the service you’re giving,” said Gale Bohling, legislative director for the Home Care Association of America.

In recent days, the White House has held multiple meetings with groups that have a stake in the proposal, according to participants and logs maintained by the Office of Management and Budget.

Involved parties on both sides said they expect the White House to issue the rule soon. Bohling, who attended one of the meetings, said the message from industry representatives was clear.

“Before you make this change, you really need to look at what the impact is,” he said. “Let’s make some adjustments so it won’t hurt people.”

Just how much the rule would cost to the more than $50 billion in-home care industry is unclear. The administration has labeled it economically significant, meaning it carries an estimated price tag of $100 million or more.

The proposal dates back to the Clinton administration, when the home-healthcare workforce began pushing for changes to the Fair Labor Standards Act. That law exempts domestic service workers from federal minimum wage and overtime requirements. 

The so-called “companionship exemption” in the 1974 law did not envision the rise of the in-home care industry, according to proponents of the rule.

“They’re still lumped in the same category as teenage babysitters when it comes to how much they make,” President Obama said in 2011. “That’s just wrong. In this country, it’s inexcusable.”

After stalling in the 1990s, the effort to revise the law was a nonstarter during the George W. Bush administration. Obama reprised it as part of his “We Can’t Wait” campaign, a series of initiatives he is tackling via regulation or executive order because they are unlikely to pass Congress.

The domestic-worker rule, formally proposed by the Labor Department in 2011, drew some 26,000 public comments.

Roughly three-quarters of the comments were in favor the rule, according to David Ward, executive director of the Direct Care Alliance, an advocacy group representing in-home health workers and other supporters.

For workers, the issue goes beyond money, he said.

“It’s fundamentally an issue of respect,” Ward said, arguing that direct care aides reflect a vital part of the healthcare industry. “It’s being treated as something less than real work.”

The Labor Department says there are roughly 1.8 million direct-care workers in the United States, though Ward said the Alliance’s estimates place that figure at around 2.5 million.

While industry groups are generally supportive of the minimum wage component of the rule, they say paying all those workers overtime would have a huge impact on companies that provide in-home care services.

“Their rates will have to go up dramatically,” said Marc Freedman, executive director of labor law policy for the U.S. Chamber of Commerce.

Ward countered that at least 15 states had already passed similar requirements without significant disruption. He said companies could keep overtime expenses to a minimum by rotating multiple direct-care aides in and out of homes instead of employing a single, live-in worker.

Ward said that would add stability, because workers sometimes become ill or have personal issues that take them away from the home.

But Bohling countered that in-home care can be “more personal than a marriage,” noting that workers often bathe and clothe the people they work for. New faces can be scary and confusing, he said.

Opponents of the rule note that Medicaid reimbursement payments to in-home care providers are structured under the current rules. But an increase in the cost of doing business is not likely to be accompanied with Medicaid adjustments.

In addition to burdens on the government program and people who rely on in-home care, the workers themselves could be hurt by the rule, said Bill Dombi of the National Association for Home Care and Hospice.

The rule would provide incentive for companies to cap worker hours at 40 hours or less to avoid paying overtime. Many workers would actually wind up seeing their wages reduced, he said.

“This ends up with multiple victims,” he said.

With the White House’s Office of Information and Regulatory Affairs expected to issue the rule in the next few months, industry groups are holding out hope that the final language will contain modifications to address the concerns.

If it does not, their only recourse would be litigation.