In April of last year we posted an article to this blog entitled New Federal Regulations Likely to Hit Live-in Care Recipients Hard in 2015. Although it later turned out that the January 1 effective date was delayed due to legal wrangling, the regulations are indeed now in effect as of October 13, 2015. And yes, they will certainly hurt clients who would benefit from live-in care.
What the Regulations State
The regulations, promulgated by the U.S. Department of Labor (DOL), end the “Companionship Exemption” which for over 40 years has exempted home care employers from paying overtime. With narrow exception, they apply not just to third party employers but to individuals who hire privately as well. In consequence, live-in workers (who have in the past been paid on a per-diem basis) must now be paid by the hour, with all hours in excess of 40 per week paid at least at one and a half times the basic hourly wage. Employers must implement procedures to maintain accurate daily records of all hours worked.
The DOL regulations also provide explicit guidance as to what constitutes work. According to the department’s exact wording, “The key issue in determining when workers are performing compensable work is whether they are working or engaged to wait for work or whether they have been completely relieved from duty and are able to use the time for their own purposes….An employee who reads a book, knits or works a puzzle while awaiting assignments is working during the period of inactivity. In such cases the employee is ‘engaged to wait’ and must be paid for such time.”
In determining what can legally be considered off duty time, the key criterion is whether the employee is 100% free to constructively use the time for his or her own personal purposes. In practice, off duty time can be considered to be those periods during which the employee could, if desired, leave the home for some meaningful use of the time. The DOL rule does allow for the exclusion from pay of bona fide sleep and meal times, as long as not interrupted by a call to duty. However, for most live-in clients, that still leaves about 14 hours of compensable work each day.
The Consequences to Clients and Employees
For live-in clients, the regulations mean that they will be paying much higher rates, because no home care employer can afford to assume the dramatic increased payroll costs without passing most of them on to the consumer. An employer’s only other option would be to limit each employee’s work hours to 40 or less per week. But given that a typical live-in day entails at least 14 hours of compensable time, the employer would have to staff a live-in case using at least three different home care aides every single week. That is an administrative nightmare and a huge disadvantage for the typical frail elderly client, for whom continuity is essential.
Ready Hands’ new increased live-in charge is $270 per day–a significant increase, but still lower than most competitors. Other Northern Virginia agencies are now charging $300 or more per day. But that’s not the only impact on clients, because in fact many (perhaps most) home care agencies are simply discontinuing live-in care altogether. The increased cost and complexity of managing these cases is just not worth it for many companies.
Which brings us to employees—ostensibly the one group which the regulations are intended to benefit. On an hourly basis, live-in workers will indeed earn more per day than with the previous per diem pay arrangements. However, live-in work opportunities will decline dramatically as clients choose less expensive alternatives like assisted living, and as employers simply stop offering live-in care altogether. Home care workers who choose live-in assignments often do so because they don’t own a car, so finding alternative live-out employment is hard for many. Moreover, in live-out situations home care employers can more successfully limit work hours to avoid overtime costs, forcing employees to seek a second job to make ends meet.
The new DOL regulations hurt virtually all parties in the home care equation, especially clients and employees involved in live-in arrangements. Our industry fought their implementation, succeeded in delaying them temporarily, but eventually lost the battle. Now we are stuck with them, to the benefit of no one.