How Will New Federal Labor Rules Impact Cost of Elder Home Care?

Photo by Abbeyfield Kent

The unjust rule that, for nearly 40 years, has created an exemption for home care workers that prevented them from receiving the same minimum wage and overtime benefits that other workers—even those who perform the very same work at nursing homes instead of in the home—will be going away on January 1, 2015. However, the new US Department of Labor changes leave more questions than answers as to how the industry and state Medicaid programs will adjust and what will be the resulting impact on elder care prices.

To be clear, the amendments to the Fair Labor Standards Act will continue to exempt companion and live-in caregivers who are self-employed or hired directly by the family. However, home care agencies and other businesses that employ home care workers will not be allowed to use this exemption. This means that the agencies will be forced to comply with the rules while elders who hire workers directly will not.

The Department of Labor also set a new definition for what constitutes ‘companion care,’ stating that companions will spend no more than 20% of their working time on “care related tasks.” In order to enforce this rather ambiguous definition, the Department is suggesting that families establish written agreements with home care workers and that the workers maintain records of their hours worked.

The new rules will be effective on January 1, 2015, but Thomas Perez, the Secretary of Labor, announced in October that, in consideration of the burden placed on the states and industry, the Department would not enforce the rules for the first six months of the new year. After that period, the Department of Labor may choose to enforce its new rules, but that it would do so at its own discretion. Finally, the rules are set to be both fully implemented and fully enforced on January 1, 2016.

What Really Changes?

In some cases, home care agencies may have to raise the hourly wage of their home care workers to the state minimum wage where they are working. More often, though, it is expected that these agencies will have to schedule more workers to care for the same number of clients, as workers commonly exceed 40 hours per week. The agencies will try to minimize the number of hours that they have to pay over time.

As reported in the Huffington Post, the grassroots advocacy group Adapt has expressed concern about the potential that state agencies on tight budgets will simply cut back the hours of home care workers, limiting the care and mobility of seniors and the disabled.

Matt Salo, Executive Director of the National Association of Medicaid Directors, issued a statement just after the final rule was published that underscored the need for time for the State Medicaid agencies to adjust to the changes. Salo suggested that the rule could precipitate changes to the state Medicaid Home and Community Based Services, otherwise known as the Medicaid Waivers, the popular programs that pay for elders to transition to live outside of nursing homes, among many other things.

While the rule brings equal protection to workers who were excluded from basic labor protections for too long, the changes will also impact the cost of long term care for some of the nation’s poorest and most vulnerable seniors. Unfortunately, Medicaid Waivers are already overburdened and without a new allocation or adjustment in funding, longer wait times and lower service levels might result.