Exemption to Overtime Regulations of Caregivers Proposed

Molly Schlanker, 11/7/2012

Senior caregivers provide hourly and daily care for seniors in their homes and in senior living communities.  The daily "live-in" senior care has been exempt from over-time pay under the companionship exemption within the federal Fair Labor Standards Act (FLSA).  A new proposal by the Obama administration would change this.  The live-in caregivers who care for the senior during the day and sleep at night would qualify for over-time pay.  These caregivers have been classified as companion caregivers for the elderly, but the 18th initiative in Obama's "We Can't Wait" campaign would over-ride a 2007 Supreme Court ruling that upheld home care workers' exclusion from wage-and-hour standards.

The senior home care industry has doubled in size in the past decade.  The baby boomer generation just began turning 65 and it is projected that 27 million Americans will need home care by year 2050.  

The International Franchise Association issued a news release opposing the new regulations to eliminate the over-time exemption, saying the new rule could potentially triple the cost of senior home care.

"These proposals, while seemingly well-intended, will likely cause seniors and their family members to pay more for care, possibly making these services economically unviable, given this type of care is paid for not by insurance, but by families themselves. This will result in driving seniors away from home care and into facility care which requires more government resources through Medicare and Medicaid expenditures," said IFA President and CEO Steve Caldeira.

Medicare only pays for up to 100 days in a nursing home and for seniors who are very low-income (usually must have less than $2,000 in assets), will qualify for Medicaid which does pay for a nursing home ongoing.  The higher cost of senior care with the overtime fees added would cause more seniors to spend down their assets and qualify for the low-income Medicaid care in a nursing home.  Medicaid is a joint program with the federal government and each state and the income requirements and services vary slightly in each state because of this.  Caregiverlist provides the Medicaid qualifications in each state (these qualifications do change as states seek to keep up with an increase in costs and the decrease in tax revenue, with this causing Illinois to recently change Medicaid financial qualifications).

Senior caregivers assist seniors with activities of daily living (called ADL's) and work as hourly and daily "live-in" caregivers for professional senior care companies.  In order to meet federal labor laws, the senior home care agencies and home health agencies employing senior caregivers must provide for all payroll taxes, worker's compensation insurance and professional liability insurance.  Caregivers also receive professional care plans with daily duties and tracking and have a management team to report changes in the senior's condition and behaviors.

Hourly senior caregiving jobs mean the caregiver is working on hourly shifts, following the labor laws of a 40-hour work week and overtime is paid when 40-hours are exceeded.   Live-in caregivers do not actually "live with" the senior.  The term is used for caregivers who go to the seniors house and spend the night, while being able to sleep at least 8 hours each night and able to have a couple hours of down-time to themselvs in the evening. These seniors need someone to be with them at night, just in case they might need extra assistance on occasion. Seniors with memory loss, for instance, often will have a live-in caregiver to be there at night just for security so that they do not wake up and become confused.  Other seniors may need someone to assist them in the night in case they need to get up for a bathroom visit.  Or they may be prone to falling and want a caregiver with them at night because of this.

Right now these live-in caregivers are paid a daily stipend and usually receive food and a few other benefits along with the stipend.  They do not receive over-time pay.  This means that if they stay with the senior for 2 days and are on the job for 48 hours, they are still not paid overtime pay.  But keep in mind this is because they are a le to sleep at night and have time to themselves in the evenings.  These caregivers must be able to obtain a good night's sleep.  If a senior is up often during the night and the caregiver cannot sleep, then the senior's caregivers must move to hourly care.  Usually multiple caregivers are rotated to maintain the 40-hour work week without overtime pay.

This is because overtime pay becomes expensive as it is time-and-a-half.  A senior who is paying $18 per hour for care would need to pay $27 per hour.  This adds up quickly and unless someone is very well off financially, it would be tough to afford more than $100,000 a year for a senior caregiver, in addition to paying for living expenses.

There are thousands of senior home care agencies providing professional senior care and many of these agencies are franchises.  The International Franchise Association has issued a statement about the negative impact of this proposed legislation for ovetime for companion caregivers.

From the International Franchise Association (IFA) news release:

The companionship exemption is the provision within the federal Fair Labor Standards Act (FLSA) which exempts caregivers from the requirement of being paid overtime. The companionship exemption is a significant factor in helping to keep paid, senior home care affordable. The proposed rulemaking by the U.S. Department of Labor will narrow the scope of those caregivers covered by the companionship exemption, to include employees of many IFA member companies.

IFA supports legislation, The Companionship Exemption Protection Act (H.R. 3066) sponsored by Rep. Lee Terry (R-Neb.), that would supersede this proposed regulation by the Department of Labor. This bill would define third party non-medical in-home care to include, but not be limited to the following services: companionship, light housekeeping, meal preparation, errands, assistance to appointments, laundry, medication reminders, bathing and assistance with incontinence and grooming. This bill importantly would ensure that third party providers are included in the companionship exemption in federal law. Furthermore, for the first time, this legislation would include a definition of companionship services in federal law.

"The companionship exemption also helps protect the continuity of care many franchise businesses provide to seniors who typically like to have the same caregiver," said Caldeira. "If overtime payment is mandated, some home care companies will be required to restrict the hours that their caregivers can work, thereby requiring multiple caregivers to care for the same senior, creating confusion for the seniors which adversely affects the quality of care in addition to the cost of care."

Government research also shows the companionship exemption helps preserve and create jobs. According to the U.S. Bureau of Labor Statistics/Office of Occupational Statistics and Employment Projections to 2018, published in the November 2009 Monthly Labor Review, home health aid is the second fastest growing job category in the country. Changes to the companionship exemption would disrupt this employment growth.




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