The impact on overtime pay in home care
The final ruling on the Federal Companionship Exemption took place recently as a result of a new proposal by the Obama administration. On the surface, the issue appears to be the eligibility of in-home caregivers to receive fair wages and overtime pay. Up until now, daily live-in senior care has been exempt from overtime pay under the companionship exemption within the federal Fair Labor Standards Act (FLSA). A new proposal to repeal this exemption was passed in September, making live-in caregivers eligible for overtime pay, effective January 1, 2015.
However, the impact of this repeal on the in-home caregiving industry runs much deeper than what is on the surface. In fact, this repeal will impact the entire long-term care industry and change the face of elderly care as we know it. At Senior Helpers, we have always paid our caregivers minimum wage or more. The same is true with many of our competitors. And in terms of overtime pay, 16 states currently have rules in place that trump this ruling and require caregivers to receive overtime pay. Therefore, this won't affect many organizations and has little impact on their businesses.
The real issue with this repeal is the impact that it will have on those who need 24-hour attention and the continuity of their care, something that is extremely important particularly for those dealing with Alzheimer's and dementia. Many families will now need to pay more for their caregivers, a cost that's not feasible for many, driving them to explore other options– some of which are risky. Families may seek to save money by finding caregivers on their own, as opposed to using a third-party agency like Senior Helpers.
With costs rising, many families will turn to the black market of caregiving — online ads on sites like Craigslist —putting the security of the senior and the family at risk. Ads such as these do not mandate the basic requirements that companies like ours do — background checks, certifications, professional training and access to resources. Not to mention the fact that these caregivers may not be employed by anyone and therefore may not be paying taxes on their wages. The last thing that we, as an industry, want is for seniors and their families to shop the underground caregiving market because they can't afford the attention that they need.
Live-in 24-hour care will no longer be affordable for many families, forcing seniors to move to institutional living rather than staying in their own homes. This ruling contributes nothing to the larger picture—finding a solution to efficiently and affordably provide care to our aging population. The effective date of this ruling is January 1, 2015, which gives businesses in the home care sector time to fully consider all public policy options and determine how to most successfully navigate the new requirements.
For more information about the final rules, please visit http://www.dol.gov/whd/homecare/.
Peter Ross is the CEO and co-founder of Senior Helpers, a national chain of in-home senior caregiver services. He serves as president of the Home Care Association of America.