A recently-released report on the consequences eliminating the federal overtime exemption for home care confirms what most of us suspected: both consumers and home care workers are being hurt. The report was published by Home Care Pulse and based on a survey of members of the Home Care Association of America, an industry trade group.
First some background. From the 1970’s until October, 2015, home care providers were not subject to federal overtime and minimum wage requirements. Although virtually all providers compensated their employees at well above the minimum wage, most did not pay overtime to workers who exceeded forty hours per week. Now they must, and the repercussions have been major.
The survey polled 444 home care companies throughout the country regarding the effect of the new rule on their operations and the actions they plan to take. Nearly two-thirds of respondents reported that the rule was having a negative (32.2%) or highly negative (29.8%) impact. Respondents who reported a more or less neutral impact constituted 19.8%, while the remaining 18.2% reported a positive impact or were unsure.
One factor affecting the foregoing results is whether the survey participants were located in states that already require overtime pay. For example, among home care companies located in the southern region of the U.S. where state overtime laws are less common, a total of 72% reported a negative or highly negative impact. In the Pacific region, where some states like California have existing overtime laws, the figure was closer to 50%.
As to how home care providers are navigating the new wage requirements, a large majority (67.8%) reported cutting their caregivers’ work hours to minimize overtime costs. About half answered that they were increasing their charges to clients by an average of $1.50 per hour, or $55 per day in the case of live-ins.
The live-in model is particularly affected by the new rule because now the work hours of live-in workers must be recorded carefully for purposes of calculating overtime. The DOL also has made it clear that periods during which live-in workers are idle but “engaged to wait” must be treated as compensable time. In the case of live-ins, the strategy of limiting hours to 40 per week would require that as many as three different aides be assigned to a single client over the course of a week. It is therefore not surprising that companies are substantially increasing their live-in charges. The survey also reveals, however, that 37.2% are going further by either reducing live-in services or eliminating them entirely.
In summary, the survey results show that many individuals needing home care assistance are either facing an increase in costs, a loss of caregiver continuity or both. In addition, many who have been dependent on live-in care are finding this service to be less widely available.
As for the home care workers whom the new rule in supposed to benefit, they too are suffering because their employers are no longer allowing them to work the longer hours necessary to support their families. Those who need more weekly income than can be earned in 40 work hours now have to find second jobs.
The new DOL overtime rule, the survey suggests, does nothing but hurt all the major stakeholders in home care: the companies who provide the service, the consumers they serve and the workers they employ. Even for our federal bureaucracy, that’s quite an achievement.