[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
ENSURING REGULATIONS PROTECT ACCESS TO AFFORDABLE AND QUALITY COMPANION
CARE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, MARCH 20, 2012
__________
Serial No. 112-54
__________
Printed for the use of the Committee on Education and the Workforce
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Committee address: http://edworkforce.house.gov
----------
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Dale E. Kildee, Michigan
Judy Biggert, Illinois Robert E. Andrews, New Jersey
Todd Russell Platts, Pennsylvania Robert C. ``Bobby'' Scott,
Joe Wilson, South Carolina Virginia
Virginia Foxx, North Carolina Lynn C. Woolsey, California
Bob Goodlatte, Virginia Ruben Hinojosa, Texas
Duncan Hunter, California Carolyn McCarthy, New York
David P. Roe, Tennessee John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania Dennis J. Kucinich, Ohio
Tim Walberg, Michigan Rush D. Holt, New Jersey
Scott DesJarlais, Tennessee Susan A. Davis, California
Richard L. Hanna, New York Raul M. Grijalva, Arizona
Todd Rokita, Indiana Timothy H. Bishop, New York
Larry Bucshon, Indiana David Loebsack, Iowa
Trey Gowdy, South Carolina Mazie K. Hirono, Hawaii
Lou Barletta, Pennsylvania Jason Altmire, Pennsylvania
Kristi L. Noem, South Dakota Marcia L. Fudge, Ohio
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
Barrett Karr, Staff Director
Jody Calemine, Minority Staff Director
------
SUBCOMMITTEE ON WORKFORCE PROTECTIONS
TIM WALBERG, Michigan, Chairman
John Kline, Minnesota Lynn C. Woolsey, California,
Bob Goodlatte, Virginia Ranking Member
Todd Rokita, Indiana Dennis J. Kucinich, Ohio
Larry Bucshon, Indiana Timothy H. Bishop, New York
Trey Gowdy, South Carolina Mazie K. Hirono, Hawaii
Kristi L. Noem, South Dakota George Miller, California
Dennis A. Ross, Florida [Vacant]
Mike Kelly, Pennsylvania
C O N T E N T S
----------
Page
Hearing held on March 20, 2012................................... 1
Statement of Members:
Walberg, Hon. Tim, Chairman, Subcommittee on Workforce
Protections................................................ 1
Prepared statement of.................................... 3
Woolsey, Hon. Lynn, ranking member, Subcommittee on Workforce
Protections................................................ 5
Prepared statement of.................................... 6
Statement of Witnesses:
Dombi, William A., vice president for law, National
Association for Home Care & Hospice........................ 54
Prepared statement of.................................... 56
Esterline, Wynn, franchise owner, Home Instead Senior Care... 30
Prepared statement of.................................... 31
Leppink, Nancy J., Deputy Administrator, Wage and Hour
Division, U.S. Department of Labor......................... 8
Prepared statement of.................................... 11
Ruckelshaus, Cathy, legal co-director, National Employment
Law Project................................................ 39
Prepared statement of.................................... 41
Woodard, Marie, on behalf of her parents, Walter and Margaret
Esselman................................................... 35
Prepared statement of.................................... 37
Additional Submissions:
Mr. Dombi:
Letter with appendices, dated March 21, 2012, from Mr.
Dombi to Mary Ziegler, U.S. Department of Labor........ 88
Chairman Walberg:
Survey, ``Economic Impact of Eliminating the FLSA
Exemption for Companionship Services,'' Internet
address to............................................. 3
The National Federation of Independent Business (NFIB),
prepared statement of.................................. 69
Ms. Woolsey:
Letter, dated March 6, 2012, from supporters of the
Department of Labor's proposed regulation.............. 64
The American Federation of State, County and Municipal
Employees (AFSCME), prepared statement of.............. 66
Letter, dated March 6, 2012, from Caring Across
Generations (CAG)...................................... 72
Letter, dated March 19, 2012, from various communities of
faith.................................................. 73
Letter, dated March 20, 2012, from various home care
employers.............................................. 73
The Paraprofessional Healthcare Institute (PHI), prepared
statement of........................................... 74
Letter, dated March 20, 2012, from various Jewish support
organizations.......................................... 76
Advertisement, www.justice.org........................... 77
``Private-Duty Industry Association Studies of DOL's
Proposal to Revise FLSA's Companionship Exemption: What
Do They Tell Us?'' policy paper, dated March 19, 2012,
Paraprofessional Healthcare Institute (PHI)............ 78
ENSURING REGULATIONS PROTECT
ACCESS TO AFFORDABLE AND
QUALITY COMPANION CARE
----------
Tuesday, March 20, 2012
U.S. House of Representatives
Subcommittee on Workforce Protections
Committee on Education and the Workforce
Washington, DC
----------
The subcommittee met, pursuant to call, at 10:02 a.m., in
Room 2175, Rayburn House Office Building, Hon. Tim Walberg
[chairman of the subcommittee] presiding.
Present: Representatives Walberg, Goodlatte, Woolsey, and
Kucinich.
Staff present: Katherine Bathgate, Press Assistant/New
Media Coordinator; Casey Buboltz, Coalitions and Member
Services Coordinator; Ed Gilroy, Director of Workforce Policy;
Benjamin Hoog, Legislative Assistant; Marvin Kaplan, Workforce
Policy Counsel; Ryan Kearney, Legislative Assistant; Donald
McIntosh, Professional Staff Member; Krisann Pearce, General
Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce
Policy; Linda Stevens, Chief Clerk/Assistant to the General
Counsel; Alissa Strawcutter, Deputy Clerk; Joseph Wheeler,
Professional Staff Member; Kate Ahlgren, Minority Investigative
Counsel; Aaron Albright, Minority Communications Director for
Labor; Tylease Alli, Minority Clerk; John D'Elia, Minority
Staff Assistant; Celine McNicholas, Minority Labor Counsel;
Richard Miller, Minority Senior Labor Policy Advisor; Megan
O'Reilly, Minority General Counsel; Julie Peller, Minority
Deputy Staff Director; Michele Varnhagen, Minority Chief Policy
Advisor/Labor Policy Director; and Michael Zola, Minority
Senior Counsel.
Chairman Walberg. Good morning. It is time to get started
here, and I would like to welcome our guests and thank our
witnesses for being with us today.
It is good to see you again, Deputy Administrator Leppink.
We appreciate your participation in this hearing and the
department's willingness to extend the comment period through
tomorrow to accommodate our desire to submit relevant materials
from this hearing into the rulemaking record.
Before we begin today I would like to take a moment to
express my sadness over the loss of one of our colleagues. For
more than 20 years Congressman Donald Payne was a passionate
and tireless advocate on behalf of the people of New Jersey's
10th congressional district. His presence on this committee,
and in this body, and certainly in this--his district will be
missed in Congress and on this committee, as well.
I extend my heartfelt condolences to his family, his
friends, his staff, as they mourn his passing and reflect on
the achievements of his distinguished public service record. I
would ask that we all honor his memory by observing a moment of
silence at this time.
Now we move to the issue before the subcommittee this
morning. As they say, life goes on and challenges that are
involved still continue, and so does our purpose to continue
today in honor of our colleague, but also in honor of the
service that we are called to perform.
Today we will examine the Department of Labor's effort to
narrow the long-standing companionship services exemption under
the Fair Labor Standards Act. As we all know, the FLSA
continues to serve as the foundation of federal wage and hour
standards.
Today's discussion is not about whether we stand by this
important law more than 70 years after its enactment. The
question before the subcommittee is whether the rules and
regulations intended to enforce the law adequately reflect the
policy decisions made by the people's elected representatives.
Nearly 4 decades ago Congress amended the FLSA to extend
its overtime and minimum wage requirements to domestic workers.
However, policymakers recognized then the importance of
ensuring seniors and individuals with disabilities have access
to affordable in-home care. This support can often help a
senior spend more years in the comfort of their own home or
allow an individual with a disability to enjoy the independence
afforded a life outside institutional care.
Due to the vital role of in-home care in the lives of these
individuals, in 1974 Congress created an exemption under FLSA
for companion care workers. Through public rulemaking the
department has since held the exemption extends to all
companion care workers regardless of how they are employed, and
this reasonable regulatory approach was unanimously upheld by
the U.S. Supreme Court less than 5 years ago.
Unfortunately, access to this critical support is
threatened by a regulatory initiative introduced last December.
Under the Labor Department's proposal only employees who follow
a rigid set of arbitrary standards would qualify for an
exemption. The proposed regulation would also eliminate the
existing exemption for companion care workers employed by a
third party as well as exemption for workers jointly employed
by a third party and the individual receiving the care.
The department's proposed regulation essentially overturns
decades of companionship care policy. These changes run
contrary to what Congress intended when it first established
this important exemption nearly 4 decades ago. While I
recognize the delivery of services has evolved over the years,
the need to maintain access to affordable in-home care has not.
As a result of this dramatic regulatory shift higher costs
would inevitably ensue. In fact, the Labor Department estimates
this proposal would increase the cost of in-home companion care
from anywhere between $420 million to upwards of $2.3 billion
over the first 10 years alone.
And there is a great concern that this estimate is just the
tip of the iceberg. A survey of companion care franchise
businesses determined the department understated the extent of
overtime work performed by employees and based a number of its
underlying assumptions on incomplete data. The report finds,
and I quote--``The Department of Labor has significantly
understated some of the economic impacts that will result from
the proposed changes in regulations.''
Without objection, I would like to insert this survey
conducted on behalf of the International Franchise Association
Educational Foundation into the record. And I hear no
objection.
[The survey, ``Economic Impact of Eliminating the FLSA
Exemption for Companionship Services,'' dated Feb. 21, 2012,
may be accessed at the following Internet address:]
http://franchise.org/uploadedFiles/Franchise_Industry/Resources/
Education_Foundation/IHSGlobalInsightCompanionCareReport.pdf
______
Chairman Walberg. Understanding the true cost of a
regulatory proposal that already carries a price tag of up to
$2.3 billion is startling. Some have said the costs will simply
be transferred from the employer to the worker and have no
impact on the demand for services.
Such a flawed understanding of basic economics ignores the
reality that these costs will ultimately be paid by the
consumer, whether senior citizen, taxpayer, family member, or
individual with a disability. A cost rise, those who receive
in-home care will be forced--excuse me--as costs rise, those
who receive in-home care will be forced to confront difficult
choices, such as accepting a diminished quality of care or
relying upon institutional services outside the home.
I have had an opportunity to hear the concerns of providers
who reside in my congressional district as well as others
located across the country. In fact, Michigan is already
dealing with the consequences of these changes and I look
forward to having one of my constituents give the committee a
firsthand account of how the people of my home state are faring
under this policy.
The act of making responsible public policy often involves
finding a balance between competing interests. Current policies
that govern delivery of in-home companion care have served our
nation well for nearly 40 years. The administration has a
responsibility to provide a clear and compelling reason why
that important balance must now be upset and a greater burden
must be placed on some of our most vulnerable citizens.
With that, I will now recognize the senior Democrat member
of the subcommittee, Ms. Woolsey, from California, for her
opening remarks?
[The statement of Chairman Walberg follows:]
Prepared Statement of Hon. Tim Walberg, Chairman,
Subcommittee on Workforce Protections
Good morning. I would like to welcome our guests and thank our
witnesses for being with us today. It is good to see you again, Deputy
Administrator Leppink. We appreciate your participation in this hearing
and the Department's willingness to extend the comment period through
tomorrow to accommodate our desire to submit relevant materials from
the hearing into the rulemaking record.
Before we begin, I would like to take a moment to express my
sadness over the loss of one of our colleagues. For more than twenty
years, Donald Payne was a passionate and tireless advocate on behalf of
the people of New Jersey's 10th congressional district. His presence
will be missed in Congress and on the committee as well. I extend my
heartfelt condolences to his family, friends, and staff as they mourn
his passing and reflect on the achievements of a distinguished public
servant. I would ask that we all honor his memory by observing a moment
of silence.
[Moment of silence.]
Thank you. Now, we move to the issue before the subcommittee this
morning.
Today, we will examine the Department of Labor's effort to narrow
the long-standing companionship services exemption under the Fair Labor
Standards Act. As we all know, the FLSA continues to serve as the
foundation of federal wage and hour standards. Today's discussion is
not about whether we stand by this important law more than 70 years
after its enactment. The question before the subcommittee is whether
the rules and regulations intended to enforce the law adequately
reflect the policy decisions made by the people's elected
representatives.
Nearly four decades ago, Congress amended the FLSA to extend its
overtime and minimum wage requirements to domestic workers. However,
policymakers recognized then the importance of ensuring seniors and
individuals with disabilities have access to affordable in-home care.
This support can often help a senior spend more years in the comfort of
their own home, or allow an individual with a disability to enjoy the
independence afforded a life outside institutional care.
Due to the vital role of in-home care in the lives of these
individuals, in 1974 Congress created an exemption under FLSA for
companion care workers. Through public rulemaking, the department has
since held the exemption extends to all companion care workers,
regardless of how they are employed, and this reasonable regulatory
approach was unanimously upheld by the U.S. Supreme Court less than
five years ago.
Unfortunately, access to this critical support is threatened by a
regulatory initiative introduced last December. Under the Labor
Department's proposal, only employees who follow a rigid set of
arbitrary standards would qualify for an exemption. The proposed
regulation would also eliminate the existing exemption for companion
care workers employed by a third-party, as well as the exemption for
workers jointly employed by a third-party and the individual receiving
care.
The department's proposed regulation essentially overturns decades
of companionship care policy. These changes run contrary to what
Congress intended when it first established this important exemption
nearly four decades ago. While I recognize the delivery of services has
evolved over the years, the need to maintain access to affordable in-
home care has not.
As a result of this dramatic regulatory shift, higher costs would
inevitably ensue. In fact, the Labor Department estimates this proposal
would increase the cost of in-home companion care from anywhere between
$420 million to upwards of $2.3 billion, over the first 10 years alone.
And there is great concern that this estimate is just the tip of
the iceberg. A survey of companion care franchise businesses determined
the department understated the extent of overtime work performed by
employees and based a number of its underlying assumptions on
incomplete data. The report finds, ``The Department of Labor has
significantly understated some of the economic impacts that will result
from the proposed changes in regulations.''
Without objection, I would like to insert this survey conducted on
behalf of the International Franchise Association Educational
Foundation into the record.
Understating the true cost of a regulatory proposal that already
carries a price tag of up to $2.3 billion is startling. Some have said
the costs will simply be ``transferred'' from the employer to the
worker and have no impact on the demand for services. Such a flawed
understanding of basic economics ignores the reality that these costs
will ultimately be paid by the consumer, whether a senior citizen,
taxpayer, family member, or individual with a disability. As costs
rise, those who receive in-home care will be forced to confront
difficult choices, such as accepting a diminished quality of care or
relying upon institutional services outside the home.
I have had an opportunity to hear the concerns of providers who
reside in my congressional district, as well as others located across
the country. In fact, Michigan is already dealing with the consequences
of these changes, and I look forward to having one of my constituents
give the committee a firsthand account of how the people of my home
state are faring under this policy.
The act of making responsible public policy often involves finding
a balance between competing interests. Current policies that govern the
delivery of in-home companion care have served our nation well for
nearly forty years. The administration has a responsibility to provide
a clear and compelling reason why that important balance must now be
upset and a greater burden must be placed on some of our most
vulnerable citizens.
With that, I will now recognize the senior Democrat member of the
subcommittee, Ms. Woolsey, for her opening remarks.
______
Ms. Woolsey. Well, Mr. Chairman, with the passing of Donald
Payne I have personally lost a man that I loved and respected,
a friend for life and a mentor. When I came to Congress I
couldn't have asked for a better mentor--a public schoolteacher
from New Jersey, someone kind and smart to help me be the best
member of Congress I could be.
I served on Congressman Payne's Africa Subcommittee; he
served on my Workforce Protections Subcommittee. On both panels
I benefitted from his wisdom, his advice, and his expertise and
experience.
This is a man who knew public service and knew what it was
all about. He was, as he described himself, a well--a mild-
mannered man, but he was also tenacious and he was dedicated.
No one has worked harder to bring peace, democracy, and
human rights to Africa. He almost gave his life for the cause a
few years ago when his plane was shot by rebels as he prepared
to come home after a Somalia mission that the State Department
had warned him against--in fact, they told him not to go.
As change continues, Mr. Chairman, in our world and in our
own country I hope we will all remember the role that Donald
Payne played in fearlessly protecting workers' rights and
making education accessible and affordable for all. A true
friend of working families and children, his death leaves an
indescribable void.
Donald Payne had a huge heart and a keen mind. I will miss
both.
And too, Mr. Chairman, will the nation's nearly 2 million
home care workers, the overwhelming majority of whom are women
and minorities who are currently excluded from federal minimum
wage and overtime protections under the Fair Labor Standards
Act. Home care workers help patients live in their homes and
assist them with eating, dressing, bathing, preparing meals,
medication management, light travel, and other services that
are absolutely necessary to live independently. They are a
productive workforce for a booming, profitable industry and
deserve the basic minimum wage and overtime protections of the
FLSA.
The modern home care workforce performs a wide range of
functions far exceeding the fellowship and protection services
that Congress envisioned when this exemption was first created.
The home care industry, on the other hand, makes profits of 30
to 40 percent in a $70 billion-a-year industry. However, the
median annual wage for home care workers is under $20,000 a
year, which has led to high turnover rates and increased
employer costs that also affect the quality of care the client
receives.
To address this issue, the Department of Labor issued a
proposed rule to extend minimum wage and overtime protections
under the FLSA, providing basic wage and hour protections to a
growing sector of the workforce and would put more money in the
pockets of low-wage workers, which would in turn spur economic
growth. This proposal discourages excessive overtime, which
often leads to workplace injuries, illnesses, and fatigue.
It would also likely result in a reduced reliance on public
benefits because 40 percent of the workers affected by the
proposed rule rely on programs like Medicaid and Food Stamps so
that in reality the taxpayers make up the difference so the
business owners can profit. Think about that: pay low,
taxpayers make up the difference, businesses profit.
Let's be clear: Nothing in this proposal requires an
increase in the cost of providing home care services. What this
proposal requires is that the individuals providing care be
compensated fairly.
I know that there are some who say that if we pay home
health care workers a decent wage the elderly and disabled will
not be able to afford in-home care. However, the issue
threatening affordable quality home care is not paying minimum
wage to home health workers providing care; it is promoting a
business model that allows for the generation of $70 billion in
annual profit on the backs of its workers, as many as 50
percent of whom rely on some form of public assistance to make
ends meet.
DOL analyzed the impact of this proposal on Medicare and
Medicaid and found that it would have no direct effect on
federal spending. Twenty-one states already provide some
coverage under state minimum wage and overtime laws. These
states demonstrate that it is possible to extend these critical
protections in an economically responsible manner without
disastrous consequences.
In fact, Mr. Chairman, as you just said, your home state of
Michigan already has minimum wage and overtime coverage for
home care workers and has not--well, you didn't say this. You
said they are not covered; I am saying not--have not seen an
increase in the cost of these services nor any widespread
unwanted institutionalization of elderly or disabled
individuals.
I am certain that by convening this hearing we are not
suggesting that workers in your state be stripped of their
current protection under Michigan law, so I hope that we can
look forward to learning from the positive Michigan experience
and hearing from today's witnesses. Thank you, Mr. Chairman.
[The statement of Ms. Woolsey follows:]
Prepared Statement of Hon. Lynn C. Woolsey, Ranking Member,
Subcommittee on Workforce Protections
Mr. Chairman, the nation's nearly 2 million home care workers, the
overwhelming majority of whom are women and minorities, are currently
excluded from federal minimum wage and overtime protections under the
Fair Labor Standards Act (FLSA).
Home care workers help patients live in their homes and assist them
with eating, dressing, bathing, preparing meals, medication management,
light travel and other services. They are a productive workforce for a
booming, profitable industry and deserve the basic minimum wage and
overtime protections of the FLSA.
The modern home care workforce performs a wide range of functions
far exceeding the fellowship and protection services that Congress
envisioned when this exemption was first created.
The home care industry on the other hand makes profits of 30 to 40
percent in a $70 billion a year industry. However, the median annual
wage for home care workers is under $20,000 a year, which has led to
high turnover rates and increased employers' costs that also affect the
quality of care the client receives.
To address this issue, the Department of Labor issued a proposed
rule to extend minimum wage and overtime protections under the FLSA,
providing basic wage and hour protections to a growing sector of the
workforce and would put more money in the pockets of low-wage workers
which would spur economic growth.
This proposal discourages excessive overtime which often leads to
workplace injuries, illnesses and fatigue. It would also likely result
in a reduced reliance on public benefits---40 percent of the workers
affected by the proposed rule rely on programs like Medicaid and food
stamps so in reality, the taxpayers make up the difference so the
business owners can profit.
Let's be clear, nothing in this proposal requires an increase in
the cost of providing home care services. What this proposal requires
is that the individuals providing care be compensated fairly. I know
that there are some who say that if we pay home health care workers a
decent wage, the elderly and disabled will not be able to afford in-
home care. However, the issue threatening affordable, quality home care
is not paying minimum wage to home health workers providing care, it is
promoting a business model that allows for the generation of billions
of dollars in profit on the backs of its workers, as many as 40 percent
of whom rely on some form of public assistance to make ends meet.
DOL analyzed the impact of this proposal on Medicare and Medicaid
and found that it would not have a direct effect on federal spending.
21 states already provide some coverage under state minimum wage and
overtime laws. These states demonstrate that it is possible to extend
these critical protections in an economically responsible manner
without disastrous consequence.
In fact, Mr. Chairman, your home state of Michigan already has
minimum wage and overtime coverage for home care workers and has not
seen an increase in the cost of these services nor has there been
widespread unwanted institutionalization of elderly or disabled
individuals. I'm certain that by convening this hearing, you are not
suggesting that workers in your state be stripped of their current
protections under Michigan State law, so I look forward to learning
from the positive Michigan experience and hearing from today's
witnesses.
Closing
I regret that the Committee chose to hold a hearing today
questioning whether an industry that generates billions of dollars in
profit each year can afford to provide basic wage and hour protections
to its workforce. These workers enable our loved ones to remain in
their homes and preserve their dignity and quality of life. These
workers deserve basic minimum wage and overtime protections so that
they can provide for their families with the same dignity and self-
sufficiency they provide their clients.
As Senator Kennedy said when discussing FLSA protections, ``no one
who works for a living should have to live in poverty.'' Today we heard
compelling testimony from Ms. Ruckelshaus clearly demonstrating the
need for the Department of Labor's proposed regulation. All workers
deserve a fair day's pay for a fair day's work. The home care workforce
is no different. These workers, primarily women and minorities, do
valuable work and deserve just compensation. It is essential that we
extend FLSA protections to home health care workers.
I would ask unanimous consent to submit for the record, a letter
signed by 86 organizations in support of DOL's proposed rule and I'd
also ask unanimous consent to submit a statement for the record from
the American Federation of State, County and Municipal Employees. Thank
you.
______
Chairman Walberg. I thank the gentlelady for clarifying,
and we will have opportunity to hear who is right. [Laughter.]
Ms. Woolsey. Well, you are right; I am left. [Laughter.]
Chairman Walberg. That is true. That is true. And very
quick for you to remember that.
Well, that is why we have these hearings, and it is a
personal thing to me, as well, having a mother who was able to
stay on our farm for 3 additional years because of
companionship care that was given. And thankfully my wife and I
were--I should say my wife, especially, was capable of
organizing that, but not all are, and so this is a key issue.
My mother is 96 and now in a nursing home, and many more
tax dollars are being used--it could be argued much of which
she and my father put in the system for many systems for
helping to pay for her. But it was our desire, certainly, to
keep her at home as long as possible, and we are appreciative
of companions who assisted in doing that.
Pursuant to committee rule 7(C) all members will be
permitted to submit written statements to be included in the
permanent hearing record. And without objection, the hearing
record will remain open for 14 days to allow questions for the
record, statements, and extraneous material referenced during
the hearing to be submitted for the official hearing record.
We have two distinguished panels of witnesses today, and I
would like to begin by introducing the first solitary panel:
Deputy Administrator of Wage and Hour Division, Nancy Leppink,
who is not unfamiliar to this committee, and we appreciate you
being here again today in front of our committee. You don't
need any instruction on the lighting system, and we certainly
want to hear your testimony and then have opportunity for
myself and Ms. Woolsey to question you, as well as any other
committee members that may show up.
One of your colleagues, Steven Chu, is just down the
hallway here testifying before a committee that a number of us
sit on as well. But we are intensely interested in what you
have to say, so thank you for joining us and you may begin your
testimony.
STATEMENT OF NANCY J. LEPPINK, DEPUTY ADMINISTRATOR, WAGE AND
HOUR DIVISION, U.S. DEPARTMENT OF LABOR
Ms. Leppink. Thank you, Chairman.
Good morning, Chairman Walberg, Ranking Member Woolsey, and
members of the subcommittee. Thank you for the invitation to
testify today about the department's notice of proposed
rulemaking on the application of the Fair Labor Standards Act
to domestic service.
Under the department's current regulation federal minimum
wage and overtime protections are denied to many of the almost
2 million in-home care workers, 92 percent of whom are women,
30 percent of whom are African American, and nearly 12 percent
Hispanic. This fact received significant attention a few years
ago when Evelyn Coke challenged the department's regulation all
the way to the Supreme Court.
Ms. Coke was the sole wage-earner and single mother of
five. She had been an in-home care worker for over 20 years.
She had bathed, fed, and cared for the elderly clients of her
employer, working up to 70 hours per week with no overtime pay.
The Supreme Court ruled against her, concluding that Congress
delegated to the department the authority to define
companionship services and to determine whether the
companionship service exemption could be claimed by her third
party employer.
Given the changes and the growth in the in-home care
service industry over the last 36 years since the department
issued its rules, the persistently low wages of in-home care
workers, and the critical importance of the work that they do,
the department believes it appropriate to consider, under its
current regulations, whether they are out of date and whether
the application of the companionship services exemption is
overly broad.
The importance of this rulemaking is reflected by the
thousands of comments we have received from workers, from
employers, from individuals and families receiving in-home care
services, from members of Congress, and many others.
In 1974 Congress extended the act's minimum wage and
overtime protections to domestic service workers employed by
private households. It was Congress' intent that by extending
the FLSA's economic protections to these workers those
protections would raise not only their wages but would also
raise the status of the work they performed.
These amendments carved out a limited exemption for casual
babysitters and individuals providing companionship. At the
time, providing companionship to the elderly or infirm was
commonly understood to be an avocation engaged in by family,
friends, and neighbors, and the companions were not their
family's breadwinners and, consequently, were not in need of
the FLSA's protections.
Since the department issued its regulations the demand for
in-home care services has grown significantly due to a number
of factors, including the increase in our aging population, the
rising cost of traditional institutional care, the desire of
individuals and their families to receive needed care in their
homes, and the availability of funding under Medicare and
Medicaid. As the industry has grown, and has continued to grow
even in these difficult economic times, the employment of in-
home care workers has also increased.
This growth, however, has not translated into increased
earnings for these workers. The earnings of employees working
as home health and personal care aides remains among the lowest
in the service industry. Further, demanding work coupled with
low wages and irregular hours has resulted in high turnover,
which means fewer experienced workers and a lack of continuity
of care.
In contrast to the companions Congress had in mind in 1974,
workers who now care for our family members are employed in
well recognized occupations and are often the sole wage-earners
supporting their families. In-home care employees engage in
difficult physical and emotionally taxing work, yet nearly 40
percent rely on Food Stamps or other forms of public
assistance.
Included among the ranks of these professionals were the
in-home care workers who, at the announcement of the proposed
rule, expressed their commitment to the work they perform but
also expressed how difficult it is to support their families
and how they would feel more economically secure with minimum
wage and overtime protections--the security of a fair day's pay
for a fair day's work.
We are seeking to accomplish two important objectives by
proposing amendments to our current rules: first, to more
clearly define the services that may be performed by an exempt
companion. The proposed rules would limit an exempt companion's
services to fellowship and protection. It would continue to
allow for certain incidental intimate personal care, such as
occasional dressing and grooming, and activities such as
driving to appointments, provided those services are attendant
to the provision of companionship and do not exceed 20 percent
of the total hours worked in a work week.
The proposal would make clear that companionship services
do not include medically related duties for which training is
typically required. The proposed changes would ensure that
companionship services only applies to those workers who are
truly providing companionship.
The proposed rules would also limit the exemption to
companions employed by individuals or households using the
companionship services--using the companionship services. Third
party employers, such as in-home care service companies or
staffing agencies, would no longer be permitted to claim the
companionship services exemption.
Protecting more in-home care service workers under the
FLSA's minimum wage and overtime provision would align the
companionship services exemption--beg your pardon to finish--
exemption with its original statutory purpose and would be an
important step in ensuring that in-home care service industry
attract and retains qualified workers. Evelyn Coke did not live
to see the publication of this proposed rule, but it is with
her and other hardworking in-home care service workers in mind
the department is proposing these changes to ensure the FLSA is
implemented as intended.
I appreciate the opportunity to appear before this
committee today. I value your input and the input of
thousands--the thousands who have submitted comments, and when
the comment period is closed we will carefully consider the
comments that have been submitted, and I am glad to respond to
any questions that you, Chairman, or the members of the
committee have.
[The statement of Ms. Leppink follows:]
``The Department of Labor's economic impact analysis of
the proposed rule changes substantially understated the extent of
overtime work among companion care workers, at least among those
working for franchise-operated companion care businesses. The average
amount of overtime worked is three times greater than estimated in the
Department of Labor analysis.''
``Other costs of the proposed rule change may also be
understated * * * including management costs of adding staff to avoid
the cost of overtime pay (assumed zero) and the cost of travel time for
employees travel between work sites.''
``We believe the Department of Labor's assumption about
the sensitivity of the demand for companion care services to price
increases (the demand price elasticity) is based on incomplete data on
the source of payment for these services and is, therefore,
significantly understated.''
``As a result of the underestimation of costs and the
price elasticity, the Department of Labor has significantly understated
some of the economic impacts * * * that will result from the proposed
changes in regulations.''
``The impact of the proposed rule changes on employment is
less clear. Businesses that responded to our survey indicate a strong
intention to avoid paying higher overtime costs, which may lead to
sufficient hiring of additional employees to offset job loss due to
reduced demand. To the extent this occurs, the effect of the proposed
Department of Labor regulations may be to create a certain number of
additional (primarily low-wage) jobs, while at the same time reducing
the earnings of a substantial number of workers who are already low-
wage workers.''
The 542 franchise business owners who supplied the survey data
operate 706 locations in 47 states, representing a very broad cross-
section of businesses. In general, these are small businesses--more
than half reported revenue of less than $1 million and only 5 percent
had revenue of more than $4 million. The typical--average--agency
employs 75 to 85 employees. It is also important to note that about 80
percent of the agencies receive more than half of their revenue from
companion care services. In addition, these agencies report that more
than 83% of their employees are engaged in providing companion care
services.
The survey revealed a few other key findings:
These business owners say that higher rates of overtime
pay, increased numbers of workers, and larger administrative costs will
force them to raise client fees by 20 percent or more.
Ninety percent of these business owners say that higher
fees will cause some of their clients--approximately 1 in 5 of their
clients--to seek care from ``underground'' or ``grey market'',
unregulated care givers.
Ninety-five percent of the business owners operating in
states without overtime regulations say they will eliminate all
scheduled overtime--which will result in less income for thousands of
low-wage companion care workers.
Lastly, this survey report represents only those franchise
businesses that are members of the International Franchise Association,
and therefore, it may not be representative of the entire industry. In
the IFA membership, there are 27 franchise companies in this sector,
with an estimated 4,193 franchisees. The greatest impact of the
Department of Labor's proposed rule changes would be on approximately
2,500 of these businesses, which are located in states that currently
do not require overtime pay to companion care workers. These businesses
operate approximately 3,200 establishments (locations), with
approximately 200,000 employees, including 168,000 companion care
workers.
When considering just this one segment of the companion care
industry, the franchising sector, it is very apparent that the
Department of Labor analysis has ``substantially understated'' the
negative impact of the proposed rule changes on our businesses, on our
clients, and on our employees.
Conclusion
I firmly believe that in-home companionship care should not be a
luxury afforded only to those who are willing to violate the law in the
unsafe ``grey market'' or the very wealthy who can afford to pay the
increased cost that will result from these proposed changes.
I hope that you will consider urging the Department of Labor to
withdraw these proposed regulations. Thank you for giving me this
opportunity to present my views. I would be happy to answer any
questions you might have.
______
Chairman Walberg. Thank you, Mr. Esterline.
Ms. Woodard, welcome.
STATEMENT OF MARIE WOODARD
Ms. Woodard. Chairman Walberg, Ranking Member Woolsey,
and--members of the subcommittee, thank you. Thank you for
giving me the opportunity to speak.
My name is Marie Woodard and I am speaking on behalf of my
parents, who received home care from 2004 to 2011 here in
Virginia. We started aides with my father back in 2004 couple
days a week to help him with bathing, showering--gradually
increased to 10 hours a day. My mother had a heart attack in
May of 2005 and we started with 24-hour care because she could
no longer care for Dad. Our two main aides worked 5 to 6 days a
week, 8 a.m. to 8 p.m., 8 p.m. to 8 a.m., so there were two
shift changes a day and then on the weekends we had coverage
aides.
Dad died in March of 2008, and within 24 hours my mother
was in intensive care unit dying so we just sent the aides that
were with Dad the day before, ``Go now to the hospital and sit
with Mom.'' So we had continuous care for all of that time.
My primary concerns with the care of my parents was really
the quality of the care and the consistency of the care. My
father had Parkinson's disease, which caused him difficulty in
swallowing, so the consistency of the aide being there to feed
my father was so important because she was familiar with him,
she knew him, she was not afraid to feed him because he would
choke and cough. So the exact feeding regime had to be
followed, where his liquids had to be thickened, his foods had
to be pureed, he had to eat in a sitting up position. All of
this was very, very important, and my father became very
anxious if he knew another aide was going to feed him because
he was afraid of choking, too.
Another concern with my mother--my mother had heart
failure. Again, we needed someone consistently to watch my
mother for those subtle changes that come with heart failure.
With heart failure you are on a fine line. If you give them
too much fluid it overloads the heart and they go into heart
failure; if you give them too little their blood pressure
drops, they get dehydrated, and they faint and they fall. So we
were on that fine line every day as my mother managed it
herself while she was well, now the aide would remind her,
``Weigh yourself every day; take your blood pressure,'' and I
would call every day and get those results and kind of weigh
what we would do with Mom that day as far as her fluid pills
and whether we needed to call the doctor to keep her out of the
emergency room. With the heart failure there was also very
subtle changes that you needed to watch with my mother, where
if she would cough that wouldn't mean anything, but with my mom
it could mean that fluid was building up in her lungs and we
needed to act on that cough right away and start looking at her
fluid buildup.
So the consistency of the aide really kept both my parents
out of the hospital, kept my father from developing aspiration
pneumonia from choking on his food, and kept my mother from
developing severe heart failure, which would cause her to be
hospitalized.
Another primary concern was the emotional issues. It is
very hard to have someone to come in and care for you in your
home. It is a very personal thing.
My mother and father would become anxious about an hour to
an hour-and-a-half before shift change: Who was coming? Did
they know her? If they didn't know her, did she know what she
was doing? They became afraid to the point where they would
either hang onto me if I was there or to the aide that was
there begging us not to leave, and don't leave us with that
person.
My mother even, at one night, snuck off to the phone at 3
o'clock in the morning and dialed 911 that the aide did not
know about and told the police there was a stranger in her
house and to hurry over and help her quickly. When the police
knocked on the door, of course they found the aide that I had
hired and called me at 3 o'clock in the morning and I said yes,
indeed I did hire her. So the consistencies of the aides really
allowed my parents to be calm and have a trust and a bonding
relationship with these aides.
The financial aspect of it, it was--over the 7 years it
cost my family and my parents over $1 million to provide this
care. None of this care was covered by Medicare, Medicaid, or
long-term care insurance; this was totally out-of-pocket. Of
course, they had Medicare but it couldn't be covered by
Medicare because it is not skilled care, it was custodial care.
Our family was really fortunate to be able to give our
parents exactly what I think everybody in this room would want
for your parents, would want for ourselves when we get sick--
the ability to stay in your own home as long as possible, to
stay with your family, to stay with your spouse, not to be
separated from your spouse, to stay out of the hospital, to be
able to have care in your home, have somebody to assist your
family in your home, to know that the caregiver--you can trust
them, they are familiar with you, they know you, and that they
are there to care for you. And to die in your own bed. Every
one of--you know, wish that they have the opportunity to be in
your own home, to be in your own bed at the time of death. And
also, for this care to be affordable.
If we had had to pay overtime to our aides with the 12
hours a day our family would have had to make hard choices.
Were we willing to pay that additional cost? Could we
financially pay that additional cost? What would the impact be
on my parents having aides come for three shifts a day?
So just the--yes.
Chairman Walberg. Wrap up your comments quickly here.
Ms. Woodard. Okay.
Chairman Walberg. Time is expired.
Ms. Woodard. Okay.
So I just would like you to consider the consumer and the
family member in any decisions that you make. Thank you.
[The statement of Ms. Woodard follows:]
Prepared Statement of Marie Woodard, on Behalf of Her Parents,
Walter and Margaret Esselman
Mr. Chairman and Members of the Subcommittee, thank you for
allowing me to testify today. My name is Marie Woodard and I am
testifying on behalf of my family and my parents who received personal
care from aides in their home from 2004 to 2011.
My parents were both healthy and active until their mid eighties.
My father had Parkinson's disease and Alzheimer's and required home
care starting in 2004. We started with having a privately hired aide
come 3 days a week to his home for bathing and dressing. As the needs
changed, the care progressed to daily aide care 10 hours a day and we
hired aides through a private duty agency. In May 2005 my mother had a
heart attack and was hospitalized and my father could not be left home
alone. We started 24 hour home aide care services in May 2005. My
father required 24 hour care until his death in March 2008. Within 24
hours of my father's death my mother was in ICU with pneumonia and not
expected to live. Our family was in turmoil arranging for my father's
funeral while our mother was dying. We were blessed to have our mother
survive this illness but the recovery was extensive and lengthy. We
continued to have aides provide one on one care to my mother as she
progressed from the hospital to the nursing home then back to her home.
We were so fortunate to have the same aides who had cared for Dad now
caring for Mom. My mother developed dementia during this illness in
addition to her severe heart failure and she required 24 hour care from
March 2008 until her death October 2011. I was one of four children,
but I was the only child living in Virginia and was very involved in
the care of my parents. My parents had consistent aides who worked 12
hours a day for anywhere from 5 to 6 days a week. The aides changed
shifts at 8am and 8pm. The day aide, Memunah, worked 6 days a week 12
hours a day from 8am to 8pm. Night care was provided by Harriet, who
worked 5 days a week from 8pm to 8am. Their days off were on the
weekend and were covered by other aides.
During these seven years I had three major concerns coordinating
and supervising the care of my parents. These concerns were the quality
of the care my parents received, their comfort level with the aides
providing care, and that emotionally my parents could adjust to having
the aides with them 24 hours a day. As we began the care in 2004 on a
part-time basis the cost of the care was a concern but we had no idea
that this care would continue for the next seven years and our out of
pocket expenses for this care would be a million dollars.
Consistency of aides was so important for the quality of care
provided my parents.
A new aide assigned would require a great deal of teaching and
intervention by me to assure that my parent was well cared for. I
needed to instruct each aide with the individualized needs of each
parent. My parents had unique needs due to their diseases, levels of
confusion and anxiety as well as the day to day needs--medication
reminders, fall prevention, choking risks related to the Parkinson's
Disease, emergency actions to take for medical emergencies that
occurred during that 7 years--injuries related to falls, kidney
failure, chest pains, heart attacks, episodes of aspiration pneumonia
and difficulty breathing. The consistent care provided by the aide and
their constant supervision of my parents prevented many
hospitalizations and emergencies room visits. My father had Parkinson's
disease that caused difficulty in swallowing. To prevent my father from
choking, he had to be carefully fed to prevent him from aspirating and
developing pneumonia. His feeding regime was very detailed and needed
to be strictly followed. It was required that all his food and liquids
be thickened, that all food have the right consistency, that he be fed
slowly, be closely observed and that he be sitting up and was to never
feed himself. I spent hours teaching the aides to properly feed my
father. Having the same aide feeding my father most of the time assured
that my father would not choke and develop pneumonia. The weekday aides
were very skilled in feeding my father due to their familiarity with
him and his illness. With my mother's severe heart failure I taught the
aides to observe carefully for signs of impending heart failure
crisis--the aides took my mother's blood pressure and weight every day
and observed her difficulty breathing, shortness of breath, coughing
and swelling of the legs and lower back. This was reported to me daily
and with this information I and her doctor managed her heart failure on
a daily basis to prevent hospitalizations. This required a level of
skill on the aide's part, my trust in the aide, and the aide being with
my mother on a daily basis to note subtle changes. My trust in the
aides and their consistency relieved my anxiety knowing that the aide
caring for my parent was familiar with them and knew how to care for
both of them and to manage their medical needs.
The consistency of the aides allowed my parents to become
comfortable with them.
It was very difficult for my parents to accept care in their home.
My mother wanted to be the sole caregiver of my father and was very
resistant to ``outside'' help. Emotionally for both my parents they saw
the need for an aide as the loss of their vitality, lifestyle and
independence. Both my parents had a great deal of trouble adjusting to
the aides and I would estimate that adjustment period took over 12
months as they progressed from aides short term during the week to 24
hour care. The realization that the 24 hour care was permanent was
devastating to them both as they accepted their frail health. As they
got to know the aides they relaxed a little, but at each shift change
my mother became anxious asking who was coming and begging the current
aide on duty to stay and not leave her or my father. This anxiety was
heightened greatly when an aide was coming that she did not know. If a
new aide was assigned I called to discuss the care plan with them as
well as went over to see my parents--as much to ease my mother's
anxiety and my own anxiety having an unknown aide. We were fortunate
that the shift change was only twice a day so the care was consistent
and my parents developed a level of trust with the aides. I strongly
believe that without the consistency of the aides working 12 hour
shifts and knowing my parents and their illnesses so well that they
would have died years earlier. Both weekday aides worked with my
parents for many years, Harriet the night aide cared for my parents for
over 6 years.
The financial cost of the care provided to my parents was a burden
to my parents and the family.
The average costs for long-term care in the United States (in 2010)
are:
$205 per day or $6,235 per month for a semi-private room
in a nursing home
$229 per day or $6,965 per month for a private room in a
nursing home
$3,293 per month for care in an assisted living facility
(for a one-bedroom unit)
$21 per hour for a home health aide
$19 per hour for homemaker services
$67 per day for services in an adult day health care
center
Source: www.longtermcare.gov/LTC/Main_Site/index.aspx. National
Clearinghouse for Long-Term Care Information website. The U.S.
Department of Health and Human Services. Example: $21.00 per hour for a
home health aide is $504.00 per day for 24 hour care or $183,960 per
year.
Since we started home care in 2004 the cost per hour was less but
still our family paid over $1 million dollars for the care provided to
our parents from 2004 to 2011. This was totally out of pocket expenses
since Medicare does not cover this type of care and my parents did not
have Long Term Care Insurance. The additional cost of overtime pay
would have caused an additional financial burden to my parents and our
family.
The majority of Americans want to age at home and to stay at home
rather than go into a facility. It is important to keep this home care
affordable and to ensure consistency of care. When the cost of overtime
pay is passed onto the consumer it will force the patient and their
family to compromise the quality of care and have multiple aides in
their home as well as multiple shift changes per day. The multiple
shift changes per day would be very disruptive--I can imagine my
parents refusing to go to bed until 11pm to let the night aide into the
house. The increased cost may force families to choose care in a
facility rather than providing the care in the home. My family was
fortunate to be able to abide by my parents wishes to receive excellent
care, stay in their own home, to be cared for by caregivers who cared
for them as if they were their own mother and father, and to be able to
die in their home. It was heart wrenching to watch my parents as they
aged and became ill, I can only imagine how hard our lives would have
been if we were forced to place them in a nursing home. Having the same
aides care for my parents allowed the family the comfort of knowing
that our parents were well cared for and when both my parents died at
home they were treated with dignity and respect by their beloved aides.
The aides were so close to my parents that they also grieved with us as
if they had lost their own mother and father.
______
Chairman Walberg. Thank you, Ms. Woodard.
Ms. Ruckelshaus?
STATEMENT OF CATHY RUCKELSHAUS, LEGAL CO-DIRECTOR,
NATIONAL EMPLOYMENT LAW PROJECT
Ms. Ruckelshaus. Yes. Chairman Walberg, Ranking Member
Woolsey, and members of the committee, thank you for this
opportunity to testify today. My name is Cathy Ruckelshaus and
I am the legal co-director of the National Employment Law
Project, a nonprofit based in New York that seeks to ensure
good jobs and economic security for our nation's workers.
My remarks will highlight two primary areas from my written
testimony but I am, of course, happy to answer any questions
based on what I have submitted. First, I will briefly describe
the working conditions of workers who provide the care and
services to the older adults and persons with disabilities.
Because the jobs are so low-paying turnover is high,
creating dangerous shortages during a time of increasing
demand. These are the workers I have represented or advocated
for and come to know over the years. And I will end by touching
briefly on the experiences we know about in the states where
there is a wage floor for these jobs.
The workers in my practice--I have met many home care
workers who care for elderly and disabled individuals. I have
also had the opportunity to meet some here at the hearing
today.
I am going to just give you two examples. Josefina Montero
is a client of mine who is a home care worker who cares for
adults and people with disabilities in the New York City
region. She was paid the minimum wage, now $7.25 an hour, but
not overtime by her agency. She takes care of all of her
patients needs, including changing their diapers, feeding them,
helping them take their medications, and accompanying them to
appointments.
Another set of former clients include Anna Thomas, Tracey
Dennis, Renee Johnson, and Marilyn Jackson, all from the
Philadelphia area who worked in home care. They bathed, fed,
dressed, and cleaned for their clients. They assisted with
catheter care and transfers and they administered medications.
These workers were paid $5.15 an hour, the then minimum wage,
but were not paid for the time they spent traveling between
their clients by bus or by car. Their pay dropped below the
minimum wage.
Kara Glenn is another worker I have encountered. She makes
$8.45 an hour after 30 years in the industry. She said, ``I
stayed working because of the clients. I liked them and they
liked me. We made our own little family and that meant more to
me than the money. As long as they were getting good care that
was really what mattered to me. When you are taking care of
somebody you want to do your best and you don't want to leave
them but sometimes you have got to because you need money to
survive. You can't escape that.''
None of these workers have jobs that pay enough to support
them. They have had difficulty making ends meet for their
families. They are eligible for Welfare and many have taken
jobs to supplement their earnings.
And they are typical. The average national wage of $9.34 an
hour, which is $18,000 a year, means that one in five lives
below the poverty line. In 29 states the average hourly wages
are low enough to qualify them for Welfare.
These jobs are paid for by Medicaid, Medicare, and other
public sources, which fund approximately 89 percent of the
care. Many of these jobs require the same training as certified
nurse's aides who work in nursing homes. The only difference
between the two sets of workers is that those in nursing homes
do get minimum wage and overtime and those providing care and
services in the homes do not.
What do we know about how this might play out were these
rules to be implemented? It is not a zero sum game where
consumers win or the workers win. The states where there is
coverage have seen that the programs have thrived and the
quality of care has not dropped.
As we have heard this morning, 15 states already extend
minimum wage and overtime protections to some or all home care
workers. This includes Michigan, New Jersey, Minnesota, and
states with some of the nation's largest home care programs,
including New York, Illinois, and Pennsylvania. These states'
experiences illustrate the economic feasibility of providing
basic protections to home care workers.
Some advocates and employers argue that the only way an
individual can get continuity of care is to have only one
worker for all needed hours. Requiring one worker for 24/7 care
is not a good model for anyone. The worker at these low wages
cannot sustain this kind of work, and that has related to--that
has resulted in high turnover, which does not support
continuity of care for anybody.
And I just wanted to mention what Secretary Leppink
mentioned. There are a couple of myths out there that I am
happy to address in questions.
Live-in arrangements will not be drastically altered under
the proposed federal rule. The employers of live-in workers are
still permitted to enter into agreements with their workers to
not pay for sleep time.
And finally, these proposed changes come at a critical
time. Over the next 2 decades the population over 65 will grow
to more than 70 million. An estimated 27 million Americans will
need direct care by 2050. If recruitment and retention problems
grow due to the low wages labor shortages could fail to meet
the growing need.
Thank you for inviting me to testify, and I look forward to
any questions.
[The statement of Ms. Ruckelshaus follows:]
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------
Chairman Walberg. Now we will move to Mr. Dombi?
Is your microphone on?
STATEMENT OF WILLIAM A DOMBI, NATIONAL ASSOCIATION FOR HOME
CARE AND HOSPICE
Mr. Dombi. Good morning, Chairman Walberg, Ranking Member
Woolsey, and members of the Subcommittee on Worker Protection.
Thanks for the opportunity to testify at today's hearing.
The subject of the hearing is of crucial importance to the
provision of home care to our nation's elderly and people with
disabilities. The U.S. Department of Labor has proposed changes
in overtime compensation exemptions that would effectively
eliminate the application of those exemptions for home care
services.
There has been no change in the law mandating these
revisions. In fact, the rules that are subject to change have
been in effect for nearly 40 years.
The proposed rule raises several legal and factual
concerns. First, the proposed redefinition of ``companionship
services'' is in direct conflict with the language of the Fair
Labor Standards Act as well as its legislative history.
Specifically, the FLSA applies the exemption to employees
providing companionship services for individuals who, because
of age or infirmity, are unable to care for themselves. This
exemption relates to care, not fellowship, which is the
proposal from the department, a term which is not referenced
anywhere in the law.
In 1973 Senator Taft noted that the services are directed
to caring for the elderly in their homes to avoid nursing home
placement. Senator Burdick further noted that the exemption
applies for services to the aged and infirm that needs someone
to take care of them. Fellowship is not care and does little or
nothing to keep people out of nursing homes.
Second, excluding employees of third party employers from
the application of the exemption is in direct contradiction to
the language of the FLSA as well as the position advanced by
the Department of Labor at the U.S. Supreme Court. The law
applies the exemption to any employer.
The department relied on this language in defending its
current regulations before the Supreme Court in 2007. The
exemption is not limited to the infirm that have the
wherewithal and financial capabilities to take on the difficult
tasks required of employers.
Third, the proposed rules have existed essentially in this
same form since 1975's original rulemaking. Congress has had
many opportunities to change the law in line with the
defendant's--the department's proposal. Where Congress does not
find sufficient reason to change the law over 36 years, the
legal validity of the current proposal is called into serious
question.
Finally and perhaps most importantly, the analysis by the
Department of Labor regarding the likely impact of the proposed
rules falls far short of the analysis required under the Small
Business Regulatory Flexibility Act and other federal law.
While the department offers a very lengthy impact report it has
several major failings at its core. Given the potential impact
of the proposal, the department should be held to a very high
standard of accuracy and completeness in its impact analysis.
The analysis misses completely one of the most significant
forms of home care--privately purchased personal care.
Estimates fall short of 5 to 7 percent from the department's
analysis, yet our own analysis shows that several million
elderly people with disabilities as well, as well as those non-
elderly with disabilities receive such care through over 20,000
companies across the country with an estimated $30 billion in
annual expenditures.
The impact analysis is also devoid of any evaluation of
live-in services. This unique segment of home care is virtually
all on a private pay basis. The impact on live-in care and
caregivers cannot simply be assumed by using Medicare data or
even the limited but unrelated data from Medicaid home care.
The major weakness in the department's analysis is also its
great reliance on Medicare data, which funds virtually none of
the companion services at issue in this rule. Less than 6
percent of Medicare home health spending applies to home health
aides, most of whom don't even qualify for the companionship
services exemption.
Medicaid, a much larger public purchaser of personal care,
has no uniform data even to conduct the analysis to understand
impact. We have conducted our own study of the impact of the
proposal and we have looked at private pay as well as public
programs, and the conclusions are that there will be moderate
to significant increases in care costs; restrictions in
overtime hours to the detriment of workers' overall
compensation; loss of service quality and continuity; and
increased costs passed on to patients and public programs that
would result in the decreased service utilization, increase use
of unregulated grey market services where quality of care is in
jeopardy, and increased institutional care utilization rather
than absorbing and covering the higher cost of care.
Further, an additional analysis by Navigant Economics
confirms that the department fell far short of the depth and
accuracy needed to produce the mandated impact analysis to
protect the public from harmful policy changes. We are prepared
to share all of that analysis with this committee and we will
be doing so with the Department of Labor, as well.
I would close with one remark: The Department of Labor
essentially qualified the proposed rule as inconsequential
financially, at the same time characterizing the rule as so
important to the workforce and so important to the elderly
consumer of the services that it had to be done now. I think
the department really needs to go back to the drawing board and
examine true impact, and they have that opportunity--a rare
opportunity. Given the 16 states that have overtime
compensation, they can do a thorough review of what the impact
has been in those 16 states as the transition occurred to
determine much better than the assumptions and speculation that
they used to determine the impact of this proposed rule just by
looking at raw data.
Thank you for the opportunity to testify, and I would take
any questions that you might have.
[The statement of Mr. Dombi follows:]
Prepared Statement of William A. Dombi, Vice President for Law,
National Association for Home Care & Hospice
Good morning Chairman Walberg, Ranking Member Woolsey, and members
of the Subcommittee on Worker Protections. I am William A. Dombi, Vice
President for Law at the National Association for Home Care & Hospice.
Thank you for the opportunity to testify at today's hearing.
The subject of today's hearing is of crucial importance to the
provision of home care to our nation's elderly and people with
disabilities. The U.S. Department of Labor has proposed changes in
overtime compensation exemptions that would effectively eliminate the
application of the exemptions for home care services. Specifically, the
proposed rule would redefine ``companionship services'' to limit the
application of the exemption to primarily ``fellowship.'' Also, the
proposed rule would eliminate any application of the companionship
services and live-in exemptions where the worker is employed by a third
party. There has been no change in the law mandating these revisions.
Further, these rules have been in effect for nearly 40 years.
The proposed rule raises several legal and factual concerns.
First, the proposed redefinition of ``companionship services'' is
in direct conflict with the language of the Fair Labor Standards Act as
well as its legislative history. Specifically, the FLSA applies the
exemption to employees providing ``companionship services for
individuals who (because of age or infirmity) are unable to care for
themselves.'' This exemption relates to care, not ``fellowship'' a term
never referenced in the law.
In 1973, Senator Taft noted that the services are directed to
caring for the elderly in their homes to avoid nursing home placement.
Senator Burdick further noted that the exemption applies for services
to the aged and infirm that needs someone to take care of them.
``Fellowship'' is not care and does little or nothing to keep people
out of nursing homes.
Second, excluding employees of third-party employers from the
application of the exemption is in direct contradiction to the language
of the FLSA and the position advanced by the Department of Labor at the
US Supreme Court in Long Island Care at Home v. Coke. The law applies
the exemption to ``any employee.'' The Department relied on this
language in defending its current regulations at the Supreme Court in
2007. The exemption is not limited to the infirm that have the
wherewithal and financial capabilities to take on the difficult tasks
required of employers.
Third, the proposed rules have existed essentially with identical
standards since the original rulemaking proceeding in 1975. Congress
has had many opportunities to change the law in line with the
Department's proposal. Where Congress does not find sufficient reason
to change the law over 36 years, the legal validity of the current
proposal is called into serious question.
Finally, the analysis by the Department of Labor regarding the
likely impact of the proposed rules falls very far short of the
analysis required under the Small Business Regulatory Flexibility Act,
the Paperwork Reduction Act, and Executive Orders 12886 and 13563.
While the Department offers a lengthy impact report, it has several
major failings at its core. Given the potential impact of the proposal,
the Department should be held to a very high standard of accuracy and
completeness in its impact analysis.
The analysis misses completely one of the most significant forms of
home care--privately purchased personal care. It is estimated that
several million elderly and persons with disabilities use such care
through 20,000 companies with an estimated $25-30 billion in annual
expenditures.
The Department's impact analysis is also devoid of any evaluation
of live-in services. This unique segment of home care is virtually all
on a private pay basis. The impact on live-in care and caregivers
cannot be simply assumed by using Medicare data or even the limited,
but unrelated data on Medicaid home care services. It is a service that
is wholly different from any public program home care.
The major weakness in the Department's impact analysis is the great
reliance on Medicare data on home health services and other public
reports on such care. However, only 6% of Medicare home health spending
is on home health aides, the closest service to companionship care.
Medicaid is a much larger public purchaser of personal care
services through a variety of state specific programs. However,
Medicaid data on the actual hours of care provided by personal care
workers is virtually unavailable making an assessment of impact
unreliable when using public data reports.
NAHC has conducted a study of the impact of the proposal. This
nationwide survey, including private pay home care and live-in services
providers, indicates the following adverse impacts:
1. Moderate to significant increases in care costs
2. Restrictions in overtime hours to the detriment of the workers
overall compensation
3. Loss of service quality and continuity
4. Increased costs passed on to the patients and public programs
that would decrease service utilization, increase unregulated ``grey
market'' care purchases, and increase institutional care utilization
rather than absorbing and covering the higher cost of care.
Further, an analysis by Navigant Economics confirms that the
Department fell far short of the depth and accuracy needed to produce
the mandated impact analysis sufficient to protect the public from
harmful policy changes. Navigant Economics uncovered essential flaws
and weakness in the Department's analysis, indicating that it would be
prudent to re-initiate a comprehensive review before proceeding further
with the proposed rule change.
In conclusion, the Department of Labor's proposed rule
significantly changes its longstanding policy. This proposal is in
conflict with the language of the law and its legislative history.
Also, the proposal fails to comply with requirements that the
Department undertake a comprehensive and reliable impact analysis
before issuing the proposal. Consumers, workers, small businesses, and
public health care financing programs such as Medicaid all would be
adversely affected by the proposal.
______
Chairman Walberg. Mr. Dombi, I thank you and each member of
the panel. I appreciate your comments.
I also want to take an opportunity as I see a number of
caregivers in in attendance today, as well as administrators of
caregiving organizations, and I would--having experienced some
of that myself in caring for my mother, I want to say thank
you. You are special people for what you do and the care you
provide. Regardless of our discussions here related to law and
how it goes on, we appreciate your services.
Delighted to have the gentleman from Virginia, Mr.
Goodlatte, here.
I know that it is a scheduling issue and I would like to
extend the opportunity now to recognize you for questioning.
Mr. Goodlatte. Well, Mr. Chairman, thank you very much, and
thank you for holding this hearing. And I also want to join you
in thanking all of the caregivers and individuals who operate
businesses that afford people the opportunity to hire good
workers so they can keep family members at home and live at
home.
I also want to take the opportunity to recognize two of
those folks who are here from my district, one of whom is a
member of the Virginia General Assembly, and that is Delegate
Chris Head and his wife Betsy, who are both here, and I thank
them for the interest they have taken in today's hearing.
I want to first direct my questions to Mr. Dombi and ask
you if you could elaborate on your testimony that the
department's rule directly conflicts with the language in the
Fair Labor Standards Act and its legislative history. Can you
explain your understanding of Congress' intent in enacting the
companionship exemption, and can you please elaborate on how
this rule conflicts with that intent and the language of the
act?
Mr. Dombi. Certainly. Start with the fact that the proposed
rule redefines companionship services in a way that pretty much
limits it to a concept called fellowship, which in this modern
day and age sounds like Facebook, and eliminates, effectively,
the definition as it relates to providing care to the elderly
and infirm; whereas, the language in the law itself refers to
care of the elderly and infirm, not fellowship, a concept which
is not addressed--even referenced--in the legislative history
or the statutory language.
And in terms of any ambiguity regarding that, the
legislative history, as I referenced in my testimony, from two
of the proponents of the companionship services exemption,
Senators Taft and Burdick, focused-in on caring for individuals
to keep them out of the nursing home. So to take the proposed
regulation, which effectively says no more than 20 percent of
the time can be spent providing personal care to an individual,
apply it to the elderly and infirm, who frankly aren't looking
for a friend to watch TV with them, they are looking for
assistance with activities of daily living, looking at the
statutory language which focuses in on care not on fellowship,
and the rule essentially guts the companionship exemption as
intended by Congress back in 1974.
The second part of it is relating to the application of the
rule to third party employers, companies that provide the
services. Most elderly and disabled really aren't going to be
looking on Craigslist for finding caregivers; it is a dangerous
effort in many respects, as well.
Instead, they turn to third party agencies who do
background screening and place people there who can competently
meet needs. The statute itself regarding the exemptions
references very specifically that it applies to any employee
engaged in that type of service. The Department of Labor, at
the Supreme Court in the Long Island Care at Home v. Coke case,
very specifically argued that ``any employee'' means third
party employers as well as people directly engaged in
employment within the household.
Mr. Goodlatte. I want to interrupt you because I want to
direct one of the points you just made over to Mr. Esterline. I
wasn't here for the testimony of the deputy administrator, but
I understand that one of the questions from the gentlewoman
from California related to the fact that the amount that is
billed to someone who hires one of these companies is greater
than the amount paid to the caregiver.
And so, Mr. Esterline, as the operator of one of these
businesses can you describe the costs of operating a business
outside of the payroll--outside the amount of money that you
have to pay in wages to the direct caregivers?
Mr. Esterline. So for clarification, Congressman, you were
wondering what the overall operating expenses, administrative
expenses----
Mr. Goodlatte. Right.
Mr. Esterline [continuing]. Or my business?
Mr. Goodlatte. Exactly.
Mr. Esterline. Certainly. Thank you for the question.
I would like to start by referencing--Congresswoman Woolsey
was referencing the profits of these businesses of 30 to 40
percent. I have been doing this for 11 years and, boy, it would
be nice to have 30 or 40 percent profit but the reality is is
it is not. Not even close.
But to answer your direct question, Congressman, there is
a--for the caregiver expense we have got the gross payroll
dollars; we then have to match all the employer taxes; we also
have to carry workman's comp insurance, putting us well over 50
percent out the door. Then we have got the administrative costs
for the administrative people that are doing the hiring, the
training, the scheduling, the marketing of our services----
Mr. Goodlatte. You also bear the risk, too, don't----
Mr. Esterline. We absolutely bear the risk.
Mr. Goodlatte. If an individual wants to save money and, as
Mr. Dombi suggested, go to Craigslist or call a neighbor or
call a friend, find somebody that way, they certainly can do
that and it might be--may be less expensive for them to do
that. But when they do that they don't--and something goes
wrong and that individual causes some harm that individual is
likely not going to be able to make things right financially,
whereas your company has the insurance, has the wherewithal to
make things right if something does go wrong. Is that not----
Mr. Esterline. That is absolutely correct--general
liability, professional liability to cover all of our
caregivers and to protect our clients.
Mr. Goodlatte. And do you have competitors?
Mr. Esterline. Do I have competitors?
Mr. Goodlatte. Do you have other businesses in your area
that offer similar services?
Mr. Esterline. That are opening every single day,
Congressman.
Mr. Goodlatte. Yes. And so if they are choosing to pay more
to their workers or charge less to the people hiring the
service, you have got to be aware of that, you have got to
compete with that along with competing with people who decide
they are going to simply directly go to the newspaper, or
Craigslist, or a referral from a friend or neighbor.
Mr. Esterline. Yes. And I think that, really the point is,
I am here defending my caregivers. I am really here advocating
for them, and I have lived it every single day----
Mr. Goodlatte. You take the time to screen them, to train
them, to make sure they are going to do a good job so that your
company has a good reputation and people will want to continue
to do business with you.
Mr. Esterline. Absolutely. And----
Chairman Walberg. The gentleman's time is expired.
Mr. Goodlatte. Thank you, Mr. Chairman.
Chairman Walberg. Thank you for your questioning.
I recognize the ranking member, Ms. Woolsey?
Ms. Woolsey. Thank you, Mr. Chairman.
Ms. Ruckelshaus, in Mr. Dombi's testimony he says that the
proposed rule is in direct conflict with the legislative
history of the Fair Labor Standards Act. I would like to give
you some more time to talk about what you--how you believe this
proposed rule and the intent of the framers in this
companionship exemption. And I would like you to expand into--
this is the 21st century. This is no longer 1974.
Ms. Ruckelshaus. Sure. Yes. Thank you for the question. And
Mr. Dombi and I were on opposite sides in the Coke case in the
Supreme Court, so we--we see the case differently.
In 1974, when the Congress decided to extend the Fair Labor
Standards Act to domestic service workers for the first time,
it carved out two narrow exemptions. One was for casual
babysitters and one was for companions.
It did not define what companions--``companionship
services'' meant and it explicitly left it to the Department of
Labor to define what ``companionship services'' meant. The
Department of Labor did that in 1975 and it defined
companionship services in such a way that the modern home care
workforce is now completely swept into what was intended to be
a very narrow exception for casual babysitters and companions.
The legislative history shows that what the Congresspeople
were talking about were elder-sitters--people where were not,
as a vocation, doing the things that these workers here today
are doing--catheter care, caring for patients with Alzheimer's,
with very technical experience. The Congresspeople intended to
exempt the casual babysitters and the companions who were more
like elder-sitters whose vocation was not taking care of--as a
profession.
Ms. Woolsey. Thank you very much. So critics of the rule--I
am staying with you on this--have argued that continuity of
care will be harmed if this rule is in effect. Talk about the
effect of low wages on the current home care industry and the
turnover rates, and how that affects care.
Ms. Ruckelshaus. The problem with the continuity of care
arguments that are sometimes made is first, the opponents are
suggesting that 24/7 care can only be performed by one worker,
and that is just not a workable scenario for anybody. My own
grandmother who had three aides who were taking care of her at
the end in her home and she loved all of them; she knew them;
they were with her for a long time. There was continuity of
care and it was the same three workers for a long time.
The high turnover, which is estimated to be as high as 65
percent per year, does more damage to the continuity of the
workforce than any raise in--from $7 an hour to $9 an hour
could ever do. The high turnover not only costs the agencies
but it means that the workers leave because they have to leave
and there is no continuity of care for the consumers and
recipients of the services.
Ms. Woolsey. Thank you.
Mr. Esterline--yes, thank you--I am so confused about how
$8 an hour for 54 hours a week versus $8 for 29 hours a week,
in your best judgment, ends up in being better for the worker.
How does that work?
Mr. Esterline. It is absolutely not better for the worker.
Ms. Woolsey. Well why would you make that happen?
Mr. Esterline. Well, my----
Ms. Woolsey. What happened to 40 hours a week?
Mr. Esterline. Well, I will tell you exactly,
Congresswoman. We referenced in testimony earlier about our
scheduling software programs and how we can manage and we can
do these things. Absolutely we can.
In the state of Michigan I have been--we have been
successful in doing that. But the issue is is that we are not
being--we are--we are giving our caregivers the hours that they
want because we have to cap them at 40. Because if not I have
got to pass the costs on to my senior clients that are already
struggling to pay for the services themselves.
Ms. Woolsey. So then why did poor Rosie--I think it was
Rosie--only get 29 hours? I mean Doris--Doris. I am sorry.
Mr. Esterline. Doris. Yes, it was Doris.
Ms. Woolsey. Thank you. I mean, what happened to 40?
Mr. Esterline. Well, I would love to give her 40, and
anyone of us--anyone of us in this room would love to have
Doris for 40-plus hours or the 54 she was averaging before, but
it is based on need, and--and as our customers come and go
because of various situations that they may be in I can't
openly just schedule her; I have to analyze that information
daily and weekly in limiting them in their hours, ultimately
decreasing their income. It is unfair to them, and this--and
this is taking--this is taking money out of their pockets and
they have to get a second job. It is not fair.
Ms. Woolsey. Okay.
Thank you, Mr. Chairman.
Chairman Walberg. I recognize myself for my 5 minutes of
questioning.
Ms. Woodard--Woodard, excuse me--Ms. Woodard, your
testimony noted that your father--father's care started with a
privately hired caregiver.
Ms. Woodard. Yes.
Chairman Walberg. However, as your father's--as I remember
it--your father's needs changed you hired a caregiver through
an agency.
Ms. Woodard. Correct.
Chairman Walberg. Can you explain why you made the switch
to a caregiver hired through an agency?
Ms. Woodard. I think that what I did is I made the mistake
that a lot of people do and think, ``I know what I am doing; I
know this person through church, or they worked at somewhere
else and they just retired,'' so I hired somebody to care for
my dad, and I knew her so I didn't have to do a background
check, I didn't have to make sure she had her license, make
sure she, you know, had her papers to work.
But then as you start thinking through her being with your
father, what if my father fell on her? What if she got injured
on the job? Whose responsibility would it be to pay for her
back injury or her workman's compensation because she had no
workman's compensation? She wasn't licensed or bonded. I had no
protection as a consumer.
So what I did was actually I called up her homeowner's
insurance and I asked him was I at risk, and he said yes, you
are at great risk and I would suggest increasing your parents'
policy to $1 million because if she does indeed fall, if
something happens to her while she is in my house, even if it
is involved in being with my father, we were responsible.
Chairman Walberg. Okay. Thank you.
Mr. Esterline, the notice of proposed rulemaking claims
that Medicare and Medicaid figures on home health to support
its conclusion that a great deal of the cost would be picked up
by Medicare and Medicaid. Let me ask you, how is the
companionship industry different from home health?
Mr. Esterline. It is different from home health because my
caregivers are placed in the homes to care for our clients.
They are to be there for them to potentially supervise and make
sure that they are safe in their home environment.
Secondary services are going to be the assistance to the
restroom, or the housekeeping, or the meal preparation, where
your home health is going to be going in and per visit--not for
an hourly length of time--to go in and assist with a bath--a
bath visit, so they are in and out for no length of time, and
it is not even scheduled for the time that the--that the senior
would like. A lot of times it is like calling Sears: ``We will
be there between 1 and 5 for that bath visit.''
So what is different is that we are there to provide the
care much more than just a bath visit.
Chairman Walberg. How has the Department of Labor's notice
of proposed rulemaking altered the services that you are able
to provide?
Mr. Esterline. I am sorry. Can you say that again?
Chairman Walberg. How has the Department of Labor's notice
of proposed rulemaking altered the services you are able to
provide, if they have?
Mr. Esterline. Well, I can tell you exactly. Prior to the
rule--or, excuse me, the law change in Michigan in 2006 my
staff and I focused 100 percent on consistency in scheduling
the caregivers to the hours that they--the designated hours
that they wanted to work and making sure that it matched the
needs of our clients, and it was 100 percent based on the care
being provided.
And since the change in the law the third component now
is--Doris is a perfect caregiver but we can only put her in
there for one night because she has already got so many hours.
So what has happened is that she has--it has disrupted the
continuity and the consistency of care.
Chairman Walberg. Generally speaking, how much does your
business--your industry--rely on Medicare and Medicaid
payments?
Mr. Esterline. As I stated in my written testimony, based
on the numbers from the IFA study, it is 85 percent privately
paid by the senior or the family member and 5 percent by
Medicare and Medicaid. My business is very close to similar to
those numbers.
Chairman Walberg. How much does your business rely on--
typically--on health insurance?
Mr. Esterline. Your traditional health insurance, like
Medicare, your Blue Cross Blue Shield, zero. Not one penny is--
the companionship services----
Chairman Walberg. Zero.
Mr. Esterline. Zero.
Chairman Walberg. So should this rule be enacted, who would
pay for the services your business--your industry provides?
Mr. Esterline. Well, me personally, it doesn't change one
bit for me. I am already living under those--the--those
regulations.
Chairman Walberg. In Michigan.
Mr. Esterline. In Michigan. So I am here to share--and to
explain that don't follow Michigan down this road. It is a bad
deal for the--for our caregivers and a bad deal for our
clients.
Chairman Walberg. Do your employees in Michigan make more
money now, after the change?
Mr. Esterline. No. They are not making more. They are
struggling to make the same. And a lot of times the caregivers
like Doris--she is not an isolated incident or an isolated
situation--we have to cap the caregivers to make it affordable
for our--for our seniors, and so it is limiting the income that
they are actually going to--they are actually making.
I have caregivers that will say to me at any given time,
``Wynn, don't pay me overtime. Let me just care for Mr. and Ms.
So-and-so.''
And I say, ``I am sorry. I have to abide by the law. It is
not worth going to jail over.''
Chairman Walberg. Well, thank you, each of the panel
members. I appreciate your time with us.
At this point in time I would ask the ranking member if she
has any closing remarks to make.
Ms. Woolsey. Thank you, Mr. Chairman. Thank you for this
hearing.
I believe it was Mr. Dombi that asked, why haven't the
rules been changed since 1974, and I think the answer is clear.
It is because we have not had a Department of Labor willing to
step up to this issue and to bring forth rules that bring this
industry into the 21st century, and I thank our current
Department of Labor for being willing to do this.
Today's hearing questions whether an industry that
generated billions of dollars of profit each year can afford to
provide basic wage and hour protections for its workforce.
These workers enable our loved ones to remain in their homes
and preserve their dignity and quality of life. These workers
deserve basic minimum wage and overtime protections so that
they can provide for their families with the same dignity and
self-sufficiency they provide for their clients.
As Senator Kennedy said when discussing Fair Labor
Standards Act protections, and I quote him--``No one who works
for a living should have to live in poverty.''
Today, Mr. Chairman, we heard compelling testimony from Ms.
Ruckelshaus clearly demonstrating the need for the Department
of Labor's proposed regulation. All workers deserve a fair
day's pay for a fair day's work.
The home care workforce is no different. These workers,
primarily women and minorities, do valuable work and they
deserve just as--they deserve just compensation. It is
essential that we extend FLSA protections to home health care
workers.
With that, Mr. Chairman, I would like to ask unanimous
consent to submit for the record a letter signed by 86
organizations in support of the Department of Labor's proposed
rule and I would like to ask unanimous consent to submit a
statement for the record from the American Federation of State,
County, and Municipal Employees. And I thank you.
[The information follows:]
March 6, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, Washington, DC 20515.
Dear Chairman Walberg and Ranking Member Woolsey: The undersigned
organizations support the Department of Labor (DOL) for revising the
rules (RIN 1235-AA05) on the ``companionship exemption'' under the Fair
Labor Standards Act (FLSA), which currently denies the direct care
workforce basic federal wage-and-hour protections.
This workforce provides daily supports and services to older
Americans and individuals with disabilities who need assistance with
personal care and activities of daily living. The work that home care
workers and personal care attendants do is vitally important to the
health, independence, and dignity of consumers who rely on paid
services in their homes. Unfortunately, because of the current DOL
regulations, over 1.7 million home care workers are not ensured minimum
wage or overtime pay. As a result, wages for this workforce are
depressed, earning them low compensation, often for long hours of work.
The current federal minimum wage is $7.25 per hour but one quarter of
personal care aides earn less than $6.59 per hour and one quarter of
home health aides earn less than $7.21 per hour. Nationwide, one out of
every 12 low-wage workers is a direct care worker, and typical of a
low-wage workforce, these home care workers are more likely to be
uninsured, and nearly half receive public benefits such as Medicaid or
food stamps.
During this economic recovery, we need to implement federal
regulatory policies that fight poverty and promote access to quality
care and the growth of quality jobs. The current DOL regulations
broadly exempt this whole workforce. Such a sweeping policy is unsound,
unfair, and undermines the economic recovery and our nation's goals for
quality long-term care. Extending basic minimum wage and overtime
protections to most home care workers will improve the stability of our
home care workforce and encourage growth in jobs that cannot be
outsourced. Reducing turnover in this workforce will improve access to
and quality of these much-needed services.
The work done by these home care workers and personal care
attendants affirms the values of dignity and respect we have for our
aging citizens and individuals with disabilities. It is time that we
value this workforce, too. Now is not the time to delay regulations
that would provide them with a small measure of respect--the protection
of federal wage-and-hour rules.
We oppose efforts to delay issuing the final rule and we support
increasing resources to expand in-home supports and services. Our
nation faces many challenges to allow consumers and home care workers
to live with dignity, respect and independence but the solution to
providing these needed services is not to deny paid caregivers federal
minimum wage and overtime protections.
9to5, National Association of Working Women
Advocacy for Patients with Chronic Illness, Inc.
AFL-CIO
AFSCME
Alliance for a Just Society
Alliance for Retired American
American Association of University Women (AAUW)
American Civil Liberties Union
American Federation of Government Employees (AFGE)
American Federation of Teachers (AFT)
American Rights at Work
American Society on Aging
Asian Law Caucus, Member of Asian American Center for Advancing Justice
Asian Pacific American Legal Center, a member of the Asian American
Center for Advancing Justice
Association of University Centers on Disabilities (AUCD)
Campaign for Community Change
Caring Across Generations
Center for Law and Social Policy (CLASP)
Chicago Jobs Council
Coalition of Labor Union Women
Coalition on Human Needs
Communications Workers of America (CWA)
Community Action Partnership
Cooperative Care
D.C. Employment Justice Center
Demos
Direct Care Alliance
Direct Care Workers of Color, Inc.
Disciples Justice Action Network
Equality State Policy Center
Excluded Workers Congress
Families USA
Food Chain Workers Alliance
Friends Committee on National Legislation
Gray Panthers
Health Care for America Now
Indiana Care Givers Association
Institute for Policy Studies
Interfaith Worker Justice
International Brotherhood of Teamsters
International Union, United Automobile, Aerospace & Agricultural
Implement Workers of America, UAW
Jobs With Justice
Lawyers' Committee for Civil Rights Under Law
League of United Latin American Citizens
Legal Aid of Marin
Legal Momentum
MataHari: Eye of the Day
MomsRising
National Academy of Elder Law Attorneys, Inc. (NAELA)
National Alliance for Direct Support Professionals
National Consumer Voice for Quality Long-Term Care
National Council of Jewish Women
National Council of La Raza (NCLR)
National Council of Negro Women (NCNW)
National Council of Women's Organizations
National Domestic Workers Alliance
National Employment Law Project (NELP)
National Employment Lawyers Association (NELA)
National Gay and Lesbian Task Force Action
National Hispanic Council on Aging
National Partnership for Women & Families
National Women's Law Center
National Women's Health Network
National Workrights Institute
NCB Capital Impact
NETWORK, A National Catholic Social Justice Lobby
OWL-The Voice of Midlife and Older Women
Paraprofessional Healthcare Institute (PHI)
Partnership for Working Families
Provincial Council of the Clerics of St. Viator (Viatorians)
Raising Women's Voices for the Health Care We Need
Sargent Shriver National Center on Poverty Law
Service Employees International Union (SEIU)
Sugar Law Center for Economic and Social Justice
The Brazilian Immigrant Center
The Iowa Statewide Independent Living Council (SILC)
The Leadership Conference on Civil and Human Rights
United Steelworkers (USW)
Universal Health Care Action Network (UHCAN)
USAction
Virginia Poverty Law Center
Voices for America's Children
Voices for Progress
Washington Community Action Network
Wider Opportunities for Women
Women Employed
Working America
______
Prepared Statement of the American Federation of
State, County and Municipal Employees (AFSCME)
Mr. Chairman and members of the Subcommittee, on behalf of the 1.6
million members of the American Federation of State, County and
Municipal Employees (AFSCME), including approximately 125,000 home care
providers, please include the following statement in the hearing record
for ``Ensuring Regulations Protect Access to Affordable and Quality
Companion Care.''
The home care providers represented by AFSCME are a lifeline to
independence and dignity for the consumers to whom they provide support
services. These home care workers assist individuals who have
functional limitations--due to age, chronic condition, illness or
injuries--with mobility, personal hygiene, toileting, dressing, eating,
transportation, cleaning and cooking, and other daily activities of
living which many of us take for granted. The support and services home
care workers provide enable consumers to continue to live in the
comfort of their own homes and remain active and part of their families
and communities. The job home care workers do is demanding and
intensely personal in nature. It requires an exceptional emotional
connection and is frequently draining. Our members find the work
worthwhile because they know they make a difference in someone's
quality of life every hour they work. For some older Americans
receiving home care services, these paid caregivers may be the only
person they see regularly beside their physician.
The work is highly valued by consumers and their families but
compensation has been suppressed due to the overly broad Department of
Labor regulations that exempt the whole home care industry, including
home care agencies, from having to plan for and comply with basic
federal wage and hour protections. The federal minimum wage is $7.25.
One quarter of personal care aides earn less than $6.59 per hour, and
one quarter of home health aides earn less than $7.21 per hour.\i\
Moreover, the real hourly rates are lower because these hourly rates
are usually for direct care hours only, as workers typically are not
paid for travel time between clients or reimbursed for travel costs.
---------------------------------------------------------------------------
\i\ http://www.carseyinstitute.unh.edu/publications/IB-Smith-Home-
Care-Workers.pdf
---------------------------------------------------------------------------
These suppressed wages hurt workers, employers and our economy, and
keep home care workers and their families nearly impoverished. Two out
of five home care workers employed by a home care agency lack health
insurance. Due to high injury rates, home care workers are especially
vulnerable without adequate insurance coverage. Nearly one out of two
home care workers are in households relying on public assistance, such
as Medicaid and food stamps, to meet their basic needs.
For employers it means costly high turnover. The national price tag
for high turnover in this industry is roughly on the order of $4.1
billion.\ii\ Small businesses that want to pay workers better wages are
put at an unfair disadvantage because there is no federal minimum wage
that applies to home care providers to level the competitive playing
field.
---------------------------------------------------------------------------
\ii\ http://www.directcareclearinghouse.org/download/
TOCostReport.pdf
---------------------------------------------------------------------------
The U.S. Department of Labor projects that at least another third
of a million new home health aides will be needed by 2014 to meet the
home health care needs of an aging population that is expected to more
than double, from 13 million in 2000 to 27 million in 2050. Because
this demand for these services will increase as our nation ages, the
low wages of these jobs undermine economic growth and increase worker
shortages.
Our members are committed to those they serve. They are acutely
aware of how the low wages and high industry turnover destabilize the
workforce, reducing access to services and undermining the delivery of
quality services that truly satisfy the needs of elders and persons
with disabilities. The absence of federal wage and hour protections for
home care workers puts the individuals who need their services at risk
since an individual's quality of life and safety may depend on the
reliability and the skill of their home care worker. Low wages will
continue to deprive individuals with functional limitations access to
needed services as low wages drive more workers out of these jobs at a
time when the demand is growing.
The significant disparity between what home care agencies charge
and are paid versus the hourly wages of home care workers suggests that
the industry can afford to comply with basic federal wage and hour
rules. The average rate paid by state Medicaid programs to agencies
providing personal care services was $17.73 per hour in 2010. In
comparison, to the median wage received by home care workers generally
(under both private and public-pay arrangements) who work in the
overall home care industry (both private and public-pay) was
$9.40.\iii\ According to the National Private Duty Association, the
national average charge to families for personal care services is
$19.82 per hour, compared to the $9.69 per hour paid to the worker.
Accordingly, many for-profit agencies charge consumers approximately
twice the hourly rate paid to caregivers. This data suggest the 30% to
40% profit margins that for-profit franchises report receiving for
delivering personal care services are being underwritten by the low
wages paid to caregivers.
---------------------------------------------------------------------------
\iii\ http://www.directcareclearinghouse.org/download/pcs-rates-
and-worker-wages.pdf
---------------------------------------------------------------------------
It is time to be fair to those who care. It is time to end the
broad exemption from federal wage and hour rules for a whole industry.
Those who rely on home care services to remain independent need
increased access to in-home supports and services--and so do their
families. The (mostly) older women whose compassionate hearts and
steady hands provide those services should be valued and respected. We
are long overdue to provide home care workers with basic federal wage
and hour protections.
______
Chairman Walberg. I have no objection.
Ms. Woolsey. With that, I yield.
Chairman Walberg. I was waiting for the last word.
Well again, I thank my ranking member, a good friend from
California, for her statement, for the concern, and we
certainly, in this hearing, want to make sure that issues are
addressed that, number one, meet the needs of the clients, of
the patients, of those that are requiring assistance of
caregivers that I have stated earlier on. I frankly almost see
it as unbelievable the type of work that they are willing to do
and the care and commitment they make to people even like my
mother, that supported my wife and myself in providing an
additional 3 years on top of 10 prior years of making sure she
could stay at--with us. The only reason that that changed was
it became--even with those caregivers supplementing my wife and
myself--it became dangerous for her to live at home, and so now
we are thankful we have nursing care that provides for her.
But that doesn't change the needs of many, many people, and
a growing number of us, as the age increases, that need care,
hopefully in home, in settings that are familiar, that are
loving, that are friendly and caring, and provide opportunities
for them to live with dignity in the remaining years of their
life.
On the other side of the ledger, we want to make sure that
those that provide that care, starting with the caregiver that
comes directly to the home and to the patient--the client--have
incentive to do the job that they are uniquely qualified to do
and have the abilities, the emotions, the sensitivity, and the
desire to provide that care in loving, careful, and consistent
ways. And that in turn, they have the ability to know that they
are appreciated, that they have an income that meets their
needs or approaches very carefully meeting their needs, as
well. In turn, we have a great amount of appreciation for the
caregiving organizations that provide in-home care, supervise,
train, administer, and send out to those settings people who
will--who would care for the clients.
We understand that in order to do that, and having
experience in organizing that for just one person--my mother--
it is a challenge. Then when you add to that the liabilities,
the cost factors, the additional component parts to make sure
that the businesses stays in business and we don't find another
business that goes out and now a loss of caregivers, that their
needs are met, as well.
For those purposes, today we held this hearing. For those
purposes, today we will make sure that the remarks given from
all perspectives are part of the comment for the Department of
Labor that would expand their ability to make the proper
decision in putting forth rules, that they also understand that
this Congress, over the course of years, has decided the best
approaches to take in dealing with that and to author that
without careful and due consideration in time of economic
upheaval, and challenge, and expanding need, and to do that
without caring for the full picture would be an extreme
problem--human problem, not just a political economic problem,
but a human problem, as well.
So I am trusting that this hearing will provide insights in
unique and special ways to allow us to expand the opportunities
to give care, expand the opportunities to be employed in this
most important field, expand the opportunities to know that I
will be cared for at some point in time, if necessary in my
life----
Ms. Woolsey. Me first.
Chairman Walberg. You first? Well, you are tenacious enough
probably to outlive me. But both of us, that we would have that
opportunity, and our constituents, as well, in a--in the
greatest country on the earth, have the greatest care possible,
as well.
So I appreciate the hearing today and look forward to good
things coming from it. And having no other questions or
comments, the committee is adjourned.
[Additional submission of Mr. Walberg follows:]
Prepared Statement of the National Federation of Independent Business
(NFIB)
Thank you Chairman Walberg, Ranking Member Woolsey, and Members of
the Subcommittee for holding this hearing. The National Federation of
Independent Business (NFIB) appreciates the Subcommittee on Workforce
Protections focusing on the effects the U.S. Department of Labor's
proposed changes to the companionship exemption will have on all
stakeholders in the companionship care industry. We are thankful for
the opportunity to offer the following statement on how the proposed
rule will affect small businesses in the industry.
NFIB is the nation's leading small-business advocacy association,
representing members in Washington, D.C., and all 50 state capitals.
Founded in 1943 as a nonprofit, nonpartisan organization, NFIB's
mission is to promote and protect the right of its members to own,
operate, and grow their businesses. NFIB represents about 350,000
independent business owners who are located throughout the United
States, including more than 300 businesses that provide in-home care to
individuals that require it.
The U.S. Department of Labor (DOL) proposes to revise the current
Fair Labor Standards Act (FLSA) regulations pertaining to the exemption
for companionship services and live-in domestic services. Currently,
the FLSA exempts from its minimum wage and overtime provisions domestic
service employees. The most important proposed change eliminates the
use of this exemption by third-party employers of companion care
workers.
NFIB believes that the DOL should keep the companionship exemption
for minimum wage and overtime pay to covered workers. Simply put, this
proposal is a solution in search of a problem. Any change to the
structure of the current exemption will have a profound negative effect
on the small businesses that provide such services, as well as
employees and clients.
NFIB members in this industry have four major concerns with the
proposed rule. First, we believe that the agency has not sufficiently
identified a market failure that warrants the rule being proposed.
Second, the proposed rules will have a substantial negative impact on
the marketplace that will close businesses, have unintended
consequences on employees, and jeopardize the safety and quality of
life of clients. Third, we believe that the DOL is severely
underestimating the number of businesses (and thus employees and
clients) that will be affected by this proposal. Fourth, if finalized,
the proposal would create a significant paperwork and recordkeeping
burden that will disproportionately affect small businesses.
The DOL has not identified a market failure in need of correction
NFIB believes that the DOL has not sufficiently shown that the
market for in-home care fails any of the participants within it. Third-
party employers are able to make modest profits and employ thousands of
workers nationwide. These workers already earn wage rates at or above
the minimum wage, as the preamble to the NPRM indicates. This fact is
also supported by a study completed by IHS Global Insight for the
International Franchise Association Education Foundation (IFA study),
which found the average rate paid to employees of franchised small
businesses was nearly $10 per hour.\i\ The employees also enjoy the
stability of working for one employer at the home of one or two
clients. Many that live in the home where they work also typically
enjoy room and board in addition to their wage. Finally, the clients
enjoy affordable care and the stability of having the same worker in
their home every day--which can be imperative in cases of dementia and
other cognitive diseases.
---------------------------------------------------------------------------
\i\ ``Economic Impact of Eliminating the FLSA Exemption for
Companionship Services,'' HIS Global Insight for the International
Franchise Association Education Foundation,'' February 2012. http://
emarket.franchise.org/CompanionCareReport.pdf
---------------------------------------------------------------------------
The DOL has not justified the need for action in this situation.
The Mercatus Center at George Mason University, a research center that
aims to apply ``sound economics to offer solutions to society's most
pressing problems,'' recently graded this NPRM as part of its
Regulatory Report Card project.\ii\ Mercatus looked at how well the DOL
identified the problem in need of correction, the thoroughness of the
Regulatory Impact Analysis (RIA), and other areas. In total, this NPRM
scored just 24 points out of 60 possible.
---------------------------------------------------------------------------
\ii\ ``Regulatory Report Card: Application of the Fair Labor
Standards Act to Domestic Service,'' Mercatus Center at George Mason
University, February 2012. http://mercatus.org/reportcards/application-
fair-labor-standards-act-domestic-service
---------------------------------------------------------------------------
In the area of ``How well does the analysis identify and
demonstrate the existence of a market failure or other systemic problem
the regulation is supposed to solve?'' the NPRM scored just one out of
a possible five points. The Regulatory Report Card concludes ``the RIA
fails to identify the labor-market failure that necessitates the use of
the minimum wage, overtime, and travel compensation regulations set
forth in the DOL's NPRM.'' We strongly encourage the DOL to review this
document.
NFIB strongly believes that the DOL's inability to demonstrate a
market failure in the in-home care market requires the agency to
withdraw the proposal and maintain the current exemption.
Impact of the proposed rule on the marketplace
Given that there is no market failure in the in-home care industry,
it is important to demonstrate the breadth of impact that the DOL's
interference will have on the marketplace.
Because virtually all employees make at or above minimum wage, it
is safe to assume that negligible costs will be imposed on employers
for this requirement. However, the requirement of overtime pay at time-
and-a-half will have a significant effect on employers. These
businesses have to make every effort to keep costs affordable to their
clients. Adding overtime makes in-home care unaffordable for many
clients. Therefore, third-party employers will alter work schedules to
ensure that each worker's time stays below the overtime threshold.
In order to have the staff available to fill the new shifts that
result, companies will need to hire and train additional workers. The
IFA study found that nearly 80 percent of respondents are at least
somewhat likely to hire more workers. The cost of hiring and training a
new employee for a small business (in this case, a business with 500
employees or fewer) is at least $3,162, based on data from the Society
for Human Resources Management--a figure that does not include the cost
of background checks or other pre-employment screening. If a 100-
employee company has to double its staff, that is an upfront cost of at
least $316,200, assuming the small business can find the employees
needed to service its clients. If businesses are unable to meet the new
costs or find the right amount of labor, many will have to close their
doors hurting everyone in the market.
This potential uptick in hiring new workers, however, should not be
mistaken as a creation of jobs as a result of this proposal. Because
there are those businesses that will scale back their services, the IFA
study found that the total projected number of jobs lost to be 2,630--
and this is just from the 158 respondents, not all companies
nationwide. Expect job losses to be significantly higher.
By-and-large, employees like the present arrangement--and this NPRM
would damage it. Employees enjoy making a decent wage for the hours
they want to work. Workers also enjoy the ability to work in one
location, with one client. They form a personal relationship with that
client that goes beyond that of a simple service provider.
As an example, employees that enjoyed getting paid for working 60-
hour weeks in the same work site will be greatly harmed. Because their
hours will be cut--to say 40 hours--that worker will have to try to
find another 20-hour weekly schedule with another in-home care company
to make up the difference. This new work, if they are able to find it,
will likely be in a different location than their first job, requiring
travel time to get to the additional work site--which means they will
have less time to spend with their families or to use how they would
otherwise like to. Assuming the jobs pay the same wage rate, the worker
is also no better off financially than under the current structure.
The DOL also needs to consider how the agency's interference will
affect clients. Once overtime is introduced into the equation, care
becomes much more difficult to afford. According to figures from
California Association for Health Services at Home (CAHSAH), the annual
cost to a client for live-in care is $70,000-$80,000 depending on the
state. With overtime passed along to the client that cost escalates to
$140,000-$185,000. The result is that many families, who want their
loved one to live out their final years at home, will have to instead
choose institutionalized care like a nursing home. Quality of life, and
in many cases the length of life, is reduced.
Another option includes getting multiple workers to come in to the
home to fill the needed shifts. However, clients prefer having one
steady presence. In cases of dementia or other cognitive diseases it is
not a preference but a necessity. Having multiple providers can have
significant stress or safety concerns on these particular clients.
Furthermore, another safety issue is presented here. Third-party
providers screen workers with background checks to help ensure that no
malicious or devious persons are working in the home of a client. As
costs increase, many in-home care clients may choose to hire a worker
off the ``gray market,'' which is essentially someone off the street
with little or no training or professionalism. These workers can be
paid below minimum wage and under-the-table, which is clearly counter
to the goal DOL wishes to address with this NPRM. These workers also
pose safety and theft risks to clients. Nearly 90 percent of IFA study
respondents believe their clients are very likely to seek other care,
such as underground providers.
The effects of DOL interference in this market will harm all actors
in the market and benefit no one. NFIB believes the agency's lack of
justification for interference requires the agency to abandon this
proposal and maintain the exemption as is.
Underestimation of affected businesses
NFIB believes that the DOL erroneously focused its industry
analysis on ``home health care'' organizations, which are funded in
part by Medicare, and neglected the industry segment known as ``home
care aid'' organizations, which are not paid for with public assistance
in any way. While estimates on the number of firms in this category are
hard to come by, one reliable figured has been furnished by CAHSAH.
This organization published a report in 2009 that estimated there are
1,200 home care aid organizations in the state.\iii\ Since California
has 12 percent of the U.S. population, one can reasonably assume that
there are close to 10,000 home care aid organizations in America--all
of which were left out by the DOL.
---------------------------------------------------------------------------
\iii\ ``How Large is California's Home Care Industry,'' California
Association for Health Services at Home, December 2009.
---------------------------------------------------------------------------
Furthermore, the IFA study found that 85 percent of respondent
companies' revenue comes directly from the customer or client, which
directly contradicts DOL's assertion that 75 percent of total payments
in the affected industry come from Medicare and Medicaid.
Additionally, this misrepresentation of the industry has the
potential to violate the Regulatory Flexibility Act, which requires a
thorough analysis of a proposed rule's impact on the small businesses
in an affected industry.
At a minimum, the study should trigger a complete reexamination of
the affected number of businesses and the DOL should conduct a new
impact analysis.
Disproportionate paperwork and recordkeeping burden on small businesses
The DOL has estimated that paperwork and recordkeeping associated
with this proposed rule will cost in excess of $22.5 million per year.
This is a substantial burden that will disproportionately impact small
businesses. Small businesses face unique difficulties in regulatory
compliance. The SBA Office of Advocacy released a study in 2010 that
showed the smallest businesses--those with fewer than 20 employees--
spend 36 percent more per employee per year complying with federal
regulations.\iv\
---------------------------------------------------------------------------
\iv\ ``The Impact of Regulatory Costs on Small Firms,'' Crain and
Crain for the SBA Office of Advocacy, September 2010. http://
archive.sba.gov/advo/research/rs371tot.pdf
---------------------------------------------------------------------------
The reason regulatory compliance costs are so disproportionate is
because in a small business the task of compliance falls on the small-
business owner, whereas in a larger business the task would fall on a
specialized compliance expert. Not only is a small-business owner's
time more valuable, but the complexity of regulatory compliance does
not make it easy for a layperson to understand. Add in the fact that
compliance must be done in addition to core business tasks like
generating sales, taking inventory, and managing employees and it is
easy to see how quickly the costs escalate for a small business.
This substantial paperwork burden can be avoided by maintaining the
exemption for third-party home care providers.
In conclusion, NFIB believes that the DOL should withdraw this
proposal and maintain the current exemption for in-home providers as
is, including for third parties. The agency has not justified in any
compelling way its need for action. Even worse, agency interference
will significantly harm all actors in the market. Small businesses will
be forced to try to absorb significant personnel and paperwork costs.
Employees will have to work for multiple providers in multiple
locations just to make the same wage they enjoy today. Clients will be
faced with terrible options--either moving to institutionalized care,
multiple providers, or navigating the gray market. In addition, the
agency has not come close to identifying the universe of businesses,
workers, or clients affected by this rulemaking because it has ignored
the private-pay market.
NFIB appreciates the opportunity to submit comments for the hearing
record, and appreciates the Subcommittee's work on this important
issue.
______
[Additional submissions of Ms. Woolsey follow:]
March 6, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, Washington, DC 20515.
Dear Chairman Walberg and Ranking Member Woolsey: Caring Across
Generations (CAG) supports the Department of Labor (DOL)'s rulemaking
(RIN 1235AA05) to revise the ``companionship exemption'' regulations
under the Fair Labor Standards Act (FLSA). The current regulations deny
minimum wage and overtime protection to direct care workers. The
proposed regulations would narrow the companionship exemption and
provide fundamental labor protections to most direct care workers.
CAG is a campaign to transform long term care in the United States
for individuals who rely on long term services and supports, for the
workers who provide home care, and for the individuals and families who
struggle to find and afford these services. Finalizing the proposed
regulation would be an important recognition of the importance of the
work that caregivers perform and would represent an important step
towards ensuring both that these vital workers are treated with dignity
and respect and that seniors and people with disabilities receive the
support that they need to live independently in their homes and
communities.
Direct care workers provide daily supports and services to older
Americans and individuals with disabilities who need assistance with
personal care and activities of daily living.Nearly 70% of people
turning 65 today will need, at some point in their lives, help with
activities of daily living, such as bathing, feeding, and dressing. The
work that home care workers and personal care attendants do is vitally
important to the health, independence, and dignity of consumers who
rely on paid services in their homes. Unfortunately, because of the
current DOL regulations, over 1.7 million home care workers are not
ensured minimum wage or overtime pay. As a result, wages for this
workforce are depressed.
During this economic recovery, we need to implement federal
regulatory policies that fight poverty, create jobs, and promote access
to quality long term care. The current DOL regulations broadly exempt
the direct care workforce from fundamental labor protections. Such a
sweeping policy is unsound, unfair, and undermines our economic
recovery and our nation's goal of promoting quality long-term care.
Extending basic minimum wage and overtime protections to most home care
workers will improve the stability of our home care workforce and
encourage growth in jobs that cannot be outsourced. Reducing turnover
in this workforce will improve access to and quality of these vital
services.
Home care workers and personal care attendants provide critical
support to enable seniors and people with disabilities to live
independently in their homes and remain a vital force in their
communities. It is time that we value the workers and affirm the value
of the support they provide. Now is not the time to delay regulations
that would provide them with a small measure of respect--the protection
of federal wage-and-hour rules.
We oppose efforts to delay issuing the final rule, and we support
increasing resources to expand in-home supports and services. Our
nation faces many challenges to allow consumers and home care workers
to live with dignity, respect and independence, but the solution to
providing these critical services is not to deny paid caregivers
federal minimum wage and overtime protections.
Sincerely,
Ai-jen Poo, Co-Director,
On Behalf of the Caring Across Generations Campaign.
______
March 19, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, Washington, DC 20515.
Dear Chairman Walberg and Ranking Member Woolsey: As communities of
faith united by our common religious traditions and values of justice
and compassion, we urge you to support the Department of Labor's (DOL)
revised rules (RIN 1235-AA05) on the ``companionship exemption'' under
the Fair Labor Standards Act (FLSA), which currently denies the direct
care workforce basic federal wage-and-hour protections. Further, we
urge you to oppose any delay in the implementation of these long-
overdue rules
The work done by our nation's more than 1.7 million direct care
workers is a daily testament to our values as a compassionate society.
Those who provide support and services to individuals who would
otherwise be unable to perform basic activities of daily living
deserve--at a minimum--a just and fair wage.
Direct care workers provide the gentle touch to help lift a frail
person from their bed in the morning. They provide the steady hand to
feed an individual with disabilities. They offer the deep kindness
necessary to bathe a person who can no longer bathe herself, but wants
to remain in the comfort of her own home. Because of the challenging
and intense work done by this workforce, millions of individuals are
able to live at home with dignity and remain active members of their
families and communities.
Though their work is of priceless value to the families they serve,
home care workers and personal care attendants earn low-wages for long
hours. Approximately 45 percent of direct-care workers live in
households below 200 percent of the federal poverty level; nearly half
of all direct-care workers live in households that receive one or more
public benefits such as Medicaid or the Supplemental Nutrition
Assistance Program (SNAP).
It is an injustice that home care workers have thus far been denied
basic protections afforded to all other hourly workers under the FLSA.
We urge you to support the DOL's efforts to address this problem by
backing the revised rules that would provide this growing workforce
with basic wage-and-hour protections and opposing any delays.
Respectfully,
Center of Concern,
Church Women United,
Disciples Justice Action Network,
The Episcopal Church,
Episcopal Women's Caucus,
Faith in Public Life,
Friends Committee on National Legislation,
Interfaith Worker Justice,
Jewish Community Action, St. Paul, MN,
Jewish Women International,
Jews United for Justice,
National Advocacy Center of the Sisters of the Good
Shepherd,
National Council of Catholic Women,
National Council of Jewish Women,
National Council of the Churches of Christ, USA,
NETWORK, A National Catholic Social Justice Lobby,
Presbyterian Church (U.S.A.) Office of Public Witness,
Progressive Jewish Alliance & Jewish Funds for Justice,
Union for Reform Judaism,
Unitarian Universalist Association of Congregations,
United Church of Christ, Justice and Witness Ministries,
The United Methodist Church--General Board of Church and
Society.
______
March 20, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, Washington, DC 20515.
Dear Chairman Walberg and Ranking Member Woolsey: As home care
employers, we are writing in support of the Department of Labor's
proposed rule (RIN) 1235-AA05 that would narrow the current exemption
of home care workers from the minimum wage and overtime protections
under the Fair Labor Standards Act.
We own or run agencies that vary in size from 4 employees to over
200. We operate in states that have minimum wage and overtime
protections and in those that don't. We are employers that receive
public funds from Medicare and Medicaid, those with public and private
revenues, and those who rely on private pay only.
We value the work our employees do and have always treated our
workers with respect--and that includes fair compensation. We believe
strongly that our employees deserve the same federal minimum wage and
overtime protections that are granted to other American workers,
including nursing assistants who do similar work in different settings.
Many of our clients have high-hour needs, and as a business we can
manage those cases without excessive overtime.
Our workers provide a wide range of services, including personal
care, household assistance, medication reminders, meal preparation and
companionship. This work requires skill and compassion. It is by no
means equivalent to Friday-night babysitting. It is a career that
allows our employees to give back to their communities while helping to
provide for their families.
One of the challenges we face as a business is recruiting and
retaining a qualified workforce. We believe that providing a
compensation floor will help to attract more workers to the field and
reduce turnover, which adds unnecessary costs to our business ledger
and undermines continuity of care.
The proposed rule shows that home care is a ``real'' job, deserving
of respect and fair pay. Without this action, we will struggle to
provide quality care to an exploding population of seniors.
Signed,
Bring Care Home,
(Massachusetts--347 employees).
Buffalo River Services,
(Tennessee--180 employees).
Catalina In-Home Services,
(Arizona--85 employees).
Cooperative Home Care,
(Wisconsin--50 employees).
Cooperative Home Care Associates,
(New York--1,800 employees).
From the Heart,
(Pennsylvania--100 employees).
Graham Behavioral Services,
(Maine--111 employees).
Halcyon Home Care,
(Maine--4 employees).
Home Care Associates,
(Pennsylvania--175 employees).
Home Care Partners,
(Washington, DC--210 employees).
In-Home Supportive Services Consortium,
(California--450 employees).
Lutheran Social Services In-Home Care,
(New Hampshire and Connecticut--475 employees).
North Shore Community Action Programs,
(Massachusetts--50 employees).
Paradise Home Care Cooperative,
(Hawaii--25 employees).
______
Prepared Statement of the Paraprofessional Healthcare Institute (PHI)
Chairman Walberg, Ranking Member Woolsey, and members of the
Subcommittee, on behalf of PHI, the nation's leading expert on the
direct-care workforce, please include the following statement in the
hearing record for ``Ensuring Regulations Protect Access to Affordable
and Quality Companion Care.''
PHI strongly supports the Department of Labor's (DOL) proposal to
extend federal minimum wage and overtime protections to nearly 2.5
million home care workers. This extension of basic labor protections to
home care workers will strengthen the infrastructure for home and
community-based services, assuring access to affordable, quality care.
Home care is the nation's fastest-growing occupation, expected to
grow to over 3 million workers by 2020. Yet these workers, who are 90
percent female with a median age of 45, continue to be treated in the
same fashion as teenage babysitters. Home care, however, is a true
vocation, and should be treated as such under the law.
Home care aides are essential to the continued independence of
millions of elders and people with disabilities, assisting them to
remain healthy, at home, and engaged in their communities. They provide
skilled personal care services, ensuring that people with functional
limitations are able to get out of bed, bathe, dress, eat, manage their
medication, and so on.
The work is physically and emotionally demanding; rates of injury
are higher than for the construction trades. Nevertheless, home care
workers earn $9.40 per hour on average, and one in three has no health
insurance coverage. More than half work part-time (often
involuntarily), resulting in average annual earnings of $16,600. As a
result of this poor compensation, about half of home care workers live
in households that rely on public assistance to make ends meet.
The DOL's proposed rule would help to improve the quality of home
care jobs. It brings our nation's treatment of these workers in line
with changes in the provision of home care services over the last four
decades. In particular, it recognizes the formalization of the industry
and the professionalization of the workforce. The millions of women who
provide these services are no different from those who work in similar
jobs in nursing homes and assisted living facilities. There is
absolutely no justification for continuing to treat these workers as
casual companions, exempting them from basic labor protections that
most American workers have enjoyed for over 70 years.
In establishing FLSA in 1938, and in broadening coverage in
subsequent years, the federal government clearly articulated its policy
goals: to provide low-income workers with higher wages, better working
conditions, and more leisure time; to discourage excessive working
hours and promote full employment; and to stabilize our economy by
boosting consumer spending.
These goals are as relevant today for the home care workforce.
FLSA protections will help to improve wages and working
conditions across the industry, affecting as many as 3 million workers
by the end of this decade.
Better wages for millions of home care workers will boost
consumer spending.
Applying overtime rules to home care agencies will
encourage efforts to spread work more evenly, reducing overwork and
providing more hours for workers who desperately need them.
In addition, FLSA protections will help to stabilize and grow the
workforce by making home care jobs more competitive. This regulatory
change will also help to address the industry's high turnover rates--
currently 50 to 60 percent annually--which undermine continuity and
quality of care and cost the system billions in recruitment and
replacement expenses.
We believe that recent industry studies suggesting that the
proposed regulations will have a negative impact on businesses,
consumers, and workers are seriously flawed (see www.phinational.org/
fairpay/ for a full critique). Our analysis of nationally
representative survey data aligns with the conclusions of the DOL--the
economic impact of the proposed changes would be relatively small and
would have little impact on the affordability of services for
consumers.
Despite a deep recession, home care industry revenues have doubled
to $84 billion since 2001 (though workers' wages have remained
stagnant). Our analysis shows that less than 10 percent of the
workforce reports working overtime, making it unlikely that overtime
costs will significantly increase costs for businesses or the clients
they serve. Moreover, we know that in the 15 states that already
require agencies to pay minimum wage and time and a half for overtime,
home care agencies remain successful enterprises.
The companionship exemption was never intended to provide a means
for agency employers to save on labor costs. Today's workers are not
``companions,'' who sit with elders to provide fellowship and
protection. These are skilled caregivers who provide personal care,
medical-related assistance, and social supports to millions of elders
and people with disabilities who want to live independently. As workers
vital to our health and aging services, they deserve better. It is time
to provide them with the most basic wage and hour protections that most
other American workers enjoy.
For more information, contact Carol Regan, PHI Government Affairs
Director, at [email protected] or 202-223-8355. All data cited can
be found at www.PHInational.org/homecarefacts
______
March 20, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, Washington, DC 20515.
Dear Chairman Walberg and Ranking Member Woolsey: Guided by our
Jewish values of justice and compassion, we urge you to support the
Department of Labor's (DOL) revised rules (RIN 1235-AA05) on the
``companionship exemption'' under the Fair Labor Standards Act (FLSA),
which currently denies the direct care workforce basic federal wage-
and-hour protections. Further, we urge you to oppose any delay in the
implementation of these long-overdue rules
While the number of elderly Americans who need home care is
exploding, the number of elderly Jews is proportionally even here--with
at least 19 percent of American Jews now over 65 or older, as compared
with 12% of the general population. Families and individuals struggle
greatly to care for the elderly or disabled loved one at home, and
frequently must hire a home care worker to assist a fragile family
member with their most intimate needs, such as walking, bathing,
eating, dressing, and ensuring that medications are taken properly. As
we visit and care for elderly and home-bound members of our communities
and families, we see the vital role that home care workers play.
The future of home care is a top concern for the Jewish community,
and a critical problem we must address is that half of all home care
workers leave the job each year due to low pay and difficult working
conditions. This extraordinary turnover has obvious implications for
both the quality of care and for whether there will be enough workers
to fill the need in the long run.
The Fair Labor Standards Act (FLSA) was passed by Congress in 1938
with the goals of fighting poverty by raising workers' wages, and
stimulating economic growth--goals as important today as they were back
then--but America's 1.7 million home care workers are excluded from the
FLSA and, in 29 states, have no minimum wage protections. This
exclusion is a vestige of a long history of devaluing the work of women
and African Americans under federal labor laws. In December President
Obama proposed a rule change to include home care workers in FLSA
protections.
Our tradition teaches the importance of caring for our elders and
treating workers fairly. Supporting this rule change is one way we can
bring these values to life, right now. Please join us and our many
partners in showing the Obama Administration that the Jewish community
supports basic rights for the workers who care for the most vulnerable
members of our families.
It is an injustice that home care workers have thus far been denied
basic protections afforded to all other hourly workers under the FLSA.
We urge you to support the DOL's efforts to address this problem by
backing the revised rules that would provide this growing workforce
with basic wage-and-hour protections and opposing any delays.
Respectfully,
Jewish Community Action,
Jewish Council on Urban Affairs,
Jews for Racial and Economic Justice,
Jews United for Justice,
National Council of Jewish Women,
Progressive Jewish Alliance & Jewish Funds for Justice,
Union for Reform Judaism,
Uri L'Tzedek.
______
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Additional submissions of Mr. Dombi follow:]
March 21, 2012.
Mary Ziegler, Director,
Division of Regulations, Legislation and Interpretation, Wage and Hour
Division, U.S. Department of Labor, Room S-3502, 200
Constitution Avenue, NW, Washington, DC 20210.
Re: Application of the Fair Labor Standards Act to Domestic Services;
76 Fed. Reg. 81190 (December 27, 2011)
Dear Ms. Ziegler: Thank you for the opportunity to provide comment
on the proposed rule: Application of the Fair Labor Standards Act to
Domestic Services; 76 Fed. Reg. 81190 (December 27, 2011). This
proposal will have significant impact on access to home care services
for millions of elderly and infirm, the workers who provide home care,
the businesses that deliver such services, and the public programs that
often pay for the care. We urge the Department of Labor to proceed very
cautiously on its proposal. Specifically, we recommend that the
Department withdraw the current proposal, initiate a comprehensive and
focused study of the actual and expected impact of the proposal on all
affected parties, and consider the wide range of alternatives to the
current proposal before moving forward.
There are very strong indications that the Department did not
accurately or sufficiently evaluate the impact of the proposal as it:
(1) relied upon data from programs that do not fund ``companionship
services,'' (2) failed to develop the basic and essential information
necessary to understand the proposal's impact on privately purchased
care, (3) fell far short of a reliable analysis of the proposal's
impact on Medicaid and other public program spending, (4) provided no
analysis of impact on the wholly distinct services of live-in
caregivers, and (5) failed to take advantage of the opportunity to
evaluate actual impact occurring in the states where the
``companionship services'' exemption from overtime compensation has
already been eliminated or modified rather than acting on pure
assumptions. Additionally, the Department's proposal rests on a very
shaky legal foundation of alleged authority to modify the 37 year-old
definition of companionship services and the application of the
exemptions to third-party employed caregivers.
The National Association for Home Care & Hospice (NAHC), along with
its affiliate the Private Duty Home Care Association of America,
represent the interests of the thousands of companies that provide home
care services to nearly 12 million people of all ages annually. These
businesses employ over 2 million dedicated caregivers that support the
millions of spouses, parents, children, relatives, friends and
neighbors that often are the primary caregivers to the home care
patients and clients. It is well recognized that home care provides
significant dynamic value by offering high quality care at
substantially less cost than institutional care while also helping to
prevent costly complications that lead to hospitalizations and other
costly medical services.
NAHC and the caregivers we represent share the Department's goal to
provide fair and reasonable compensation to home care aides and
personal care attendants. The jobs that they take on are essential,
particularly as our society ages with millions of ``baby boomers.''
Also, the work that they do is hard and can only be done by dedicated
individuals who understand its importance and appreciate the privilege
of caring for vulnerable elderly and infirm.
Specifically, NAHC does not oppose overtime compensation. However,
we do not support the Department's proposal that would institute a
national requirement for overtime compensation as an isolated and non-
integrated element in the delivery system of home care, thereby
disregarding the impact on publicly funded services, services purchased
by the elderly who have limited incomes, and the workers who will
experience depressed base wages and restricted working hours because
employers will be unable to cover the cost of overtime with shrinking
Medicaid payment rates and the inability of private purchasers to
afford the care.
The Department must recognize that a strategy directed at overtime
compensation alone will not help home care workers. Any compensation
strategy must consider and incorporate other elements as well including
base wage rates, career growth opportunities, health insurance and
other fringe benefits, increased payment rates from public programs
such as Medicaid, and support for the elderly and infirm who cannot
afford higher care rates. To push overtime compensation alone in the
face of the other forces at play in this marketplace will only lead to
compromised wages and restricted working hours for hardworking
caregivers. This is directly evidenced by existing data, the
Department's own analysis and the comments of those purporting to
represent the interests of the worker.
There is no need to rush the proposal to a final rule. If the
Department's analysis is correct, very few workers would qualify for
overtime and many of those will end up with restricted working hours as
the employers respond to the new requirement by avoiding scheduling
workers for more than 40 hours in a week. In terms of opening up new
job opportunities, there are many current openings for home care
workers and the Bureau of Labor Statistics forecast continued growth in
demand. However, if the Department's view of limited impact is wrong,
home care consumers, workers and public programs are put a great risk
of negative consequences. Accordingly, NAHC strongly recommends that
the Department initiate the necessary comprehensive research and study
to determine the real impact of any changes with far less reliance on
seemingly endless assumptions before proceeding.
Aside from the many assumptions employed by the Department in its
analysis, there are crucial undisputed facts that are relevant and
material to appropriate policy relative to the companionship services
and live-in exemptions:
1. All stakeholders in this matter, along with the Department
itself, agree that the proposal will increase the cost of care for
direct consumers as well as public programs. The disagreement on this
matter is how much cost will increase.
2. All stakeholders also agree that the primary result of the
imposition of an overtime compensation obligation for home care workers
will be an employer's restriction in working hours to eliminate or
limit the risk of an overtime cost.
3. The Department did not evaluate, through use of any specific
data or analysis with targeted information, the impact of the proposals
on access to and cost of live-in services for the elderly and disabled
who need personal care supports for activities of daily living.
Instead, the Department simply applied its analysis of hourly, part-
time personal care services to full time live-in caregivers.
4. The Department focused its attention on certain public programs
such as Medicare and Medicaid to the near exclusion of consideration of
privately purchased home care by assuming that such services were a
mere incidental part of home care.
The undisputed facts and findings are combined with a series of
very important, but unsubstantiated assumptions:
1. Public programs such as Medicaid will modify payment rates to
ensure any increased costs triggered by the overtime compensation
obligation are fully reimbursed on a timely basis.
2. The change in the overtime compensation obligation will reduce
turnover of workers providing home care.
3. There will be no adverse impact on the quality of care.
4. Any restriction on work hours to control overtime costs will
create new job openings that will help the nation's economy.
5. Currently overworked workers will have an improved quality of
life leading to better job performance in service to the elderly and
person's with disabilities.
When the undisputed facts are combined with these assumptions, only
one logical conclusion results: the Department must be very sure about
the bona fides of the underlying rationale for its proposal and be
reasonably certain about the likely impact of the rule change before
proceeding. The facts alone would dictate that the rule be withdrawn or
significantly redrawn. However, if the Department is also wrong in its
assumptions, the consequences to workers, consumers, and public
programs could be disastrous.
In fact, it is the workers that are at greatest risk. NAHC strongly
believes that the Department's assumptions are not well founded. First,
public programs such as Medicaid are already in financial jeopardy
across the country. One prime example is California where the governor
has sought significant reductions in payment rates to providers of home
care, both home care agencies as well as to hundreds of thousands of
individual caregivers. California is far from alone with reductions in
the payment rates and scope of home care benefits occurring in such
other states as North Carolina and New York.
Second, the Department is aware that there is a great risk of
higher worker turnover as an impact of the proposed rule. At a recent
``Roundtable'' held by the Small Business Administration, the
Department learned first hand from a home care agency executive that
the shift to an overtime compensation obligation in Michigan in 2006
significantly increased staff turnover. Such consequence is intuitively
logical when combined with the recognition that employers will restrict
working hours to avoid overtime costs. Workers facing lower overall
compensation will seek other employment. As such, consumers suffer
because of the loss of experienced caregivers, businesses experience
higher staff recruitment and training costs, and workers either lose
income or the opportunity to work in home care.
Third, while there is no study of the impact of an overtime
obligation on quality of care, it is far from safe to assume that it
will improve care. Instead, it is more likely that the increase in
staff turnover will negatively impact care quality as inexperienced
workers take over for departing caregivers and the assignment of
multiple caregivers with restricted work hours naturally leads to
deterioration in care consistency.
Fourth, it is very likely that the assumption that the rule change
would create new job openings is accurate. However, is that really a
good impact? Currently, home care is already struggling with increasing
demand for caregivers, not an oversupply of individuals looking for
such jobs. The Bureau of Labor Statistics also notes that the demand
for such workers will be rising exponentially as the nation ages. The
shortage of workers for these jobs is not a creature of the lack of
overtime compensation, it is because the work is hard and only certain
people fit the demands of caregiving. These jobs pay well in excess of
minimum wage, yet have more openings than jobs that pay at the minimum.
Fifth, there is no data or factual support for the contention that
workers are overworked and that restriction in working hours will
improve quality. Unlike the experiences in hospitals and institutional
care settings where nurses and other workers have been subjected to
``forced overtime'', there is no such activity ongoing in home care. A
large segment of home care workers are employed on a part-time basis
and employers in home care are noted for offering very flexible working
hours. In fact, home care companies routinely report that it is the
workers who seek more hours, not the employers demanding that the
employees work more.
The perfect opportunity exists for the department to test their
assumptions and gain a real understanding of the impact of the proposed
rule to a level of accuracy generally not available. That opportunity
lies in those states that have eliminated the application of the
companionship services exemption already. In fact, two states that
recently did so through legislation or regulatory interpretation,
Michigan and Pennsylvania respectively, would be perfect testing
grounds allowing for a near contemporaneous review of the ``before and
after.'' A thorough review of the consequences of the changes in those
states would better inform the analysis and debate on this matter than
the impact analysis undertaken to date by the department. Accordingly,
NAHC recommends that the Department initiate such an analysis before
proceeding. It is the best way to avoid the potentially dire
consequences to all stakeholders as discussed above.
Concerns on the legal validity of the proposal
The substance of the proposed rule raises several important
concerns about its legal validity. NAHC participated in the case, Long
Island Care at Home v. Coke before the U.S, Supreme Court and the
positions taken by the Department in this proposed rule change are in
direct contradiction to its position advanced to the Court. Further,
the proposed rule is at odds with the unambiguous language of the FLSA.
Finally, the Department's initial impact analysis falls far short of
requirements under the Small Business Regulatory Flexibility Act. These
matters must be addressed by the Department before it can move forward
with any proposal to change these rules in issue.
First, the proposed redefinition of ``companionship services'' is
in direct conflict with the language of the Fair Labor Standards Act as
well as its legislative history. Specifically, the FLSA applies the
exemption to employees providing ``companionship services for
individuals who (because of age or infirmity) are unable to care for
themselves.'' This exemption relates to care, not ``fellowship'' a term
never referenced in the law.
Specifically, 29 U.S.C. 213(a)(15) applies the exemption from
overtime compensation to:
``any employee employed in domestic services employment to
provide companionship services for individuals who(because of
age or infirmity) are unable to care for themselves (as such
terms are defined and delimited by regulations of the
Secretary.''
The operative word defining ``companionship services'' is ``care''
and the focus of the care is the elderly and infirm. However, the
Department proposes to minimize the ``care'' aspect of companionship
services and shift the definition fully towards the concept of
``fellowship.'' In doing so, the proposal directly offends the mandate
in section 213(a)(15) of the FLSA and effectively guts the usefulness
of the exemption for the elderly and infirm. Fellowship is something
that is not generally purchased thereby making concerns about worker
compensation irrelevant. Fellowship comes by way of ones friends,
family, church, clubs, fraternity or sorority, or by using Facebook.
While it may be possible that a person ``buys'' a friend, it is highly
unlikely that there would be an overtime need for one.
More importantly, ``fellowship'' is not what elderly or infirm
persons who cannot care for themselves need, it is actual care. The
current rule recognizes such and has done so effectively since 1975.
The proposal is in direct conflict with the statutory mandate that the
Secretary define and delimit the companionship services exemption
within the parameters of workers providing care to the elderly and
inform, not fellowship.
The legislative history fully supports the companionship services
definition currently in force. By focusing on caring for the infirm and
elderly in enacting the companionship services exemption, Congress
targeted our nation's most vulnerable population. Improving the
opportunities for the elderly and person's with disabilities to remain
in their own homes, with families, avoiding more costly institutional
care is the central purpose behind the exemption. See 118 Cong. Rec.
24715 (July 20, 1972) (statement of Senator Taft noting that certain
domestic services are directed to caring for the elderly in their homes
and preventing nursing home placement): 119 Cong. Rec. 24801 (July 19,
1973) (statement of Senator Burdick indicating the exemption relates to
aged or infirm fathers and mothers who need someone ``to take care of
them).
Fellowship does not include the care needed to keep someone from
being forced to be admitted in a nursing home. One can have 24/7
fellowship and require nursing home placement to receive the care
needed to meet activities of daily living (ADLs) and instrumental;
activities of daily living (IADLs). The type of companionship services
that provide the opportunities to avoid institutional care are the
caregiving services that have been defined as companionship services
since the exemption was enacted in 1974. The passage of time and the
changes in the business of providing such care have not changed those
needs for care.
Second, excluding employees of third-party employers from the
application of the exemption is in direct contradiction to the language
of the FLSA and the position advanced by the Department of Labor at the
US Supreme Court in Long Island Care at Home v. Coke. The law applies
the exemption to ``any employee.'' Specifically, 29 USC 213(a)(15)uses
the phrase ``any employee employed in domestic services'' without any
qualification as to the identity of the employer.
In 1974 when the FLSA companionship services exemption was enacted,
Congress well understood what legislative language was needed to
exclude application of the exemption to third-party employment. In
fact, Congress expressed clear awareness of a recently enacted
provision in the Social Security Act that contained such language when
deliberating the companionship services exemption. S. Rep. No. 93-690,
93rd Congress, 2d Session at 18. (This bill would bring under minimum
wage and overtime provisions of the Act all employees in private
household domestic service earning ``wages'' ($50 per quarter) for
purposes of the Social Security Act, but retains a minimum wage and
overtime exemption for * * * companions * * *'').
Under Public Law 92-5 (March 17, 1971), Congress expanded the
application of the Social Security program to domestic services, but
specifically excluded taxing wages from a certain subclass of domestic
services. Specifically excluded is:
``(6)(A) Remuneration paid in any medium other than cash to
an employee for service not in the course of the employer's
trade or business or for domestic service in a private home of
the employer;
(B) Cash remuneration paid by an employer in any calendar
year to an employee for domestic service in a private home of
the employer (including domestic service on a farm operated for
profit), if the cash remuneration paid in such year by the
employer to the employee for such service is less than the
applicable dollar threshold (as defined in section 3121(x) of
the Internal Revenue Code of 1986) for such year;
(C) Cash remuneration paid by an employer in any calendar
year to an employee for service not in the course of the
employer's trade or business, if the cash remuneration paid in
such year by the employer to the employee for such service is
less than $100. As used in this paragraph, the term ``service
not in the course of the employer's trade or business'' does
not include domestic service in a private home of the employer
and does not include service described in section 210(f)(5); *
* *.'' 42 U.S.C. Sec. 209(a)(6). (Emphasis added.)
Consistent with this statutory language, implementing regulations
distinguish the nature of domestic services from the identity of the
employer. Under 42 C.F.R. Sec. 404.1057(b), domestic services ``is
work of a household nature'' including such services as those performed
by cooks, waiters, butlers, maids, and housekeepers. It does not
include ``services performed as a private secretary, tutor, or
librarian, even though performed in the employer's home.'' 42 C.F.R.
Sec. 404.1057(b).
The Congressional awareness of language necessary to limit
application of provisions of law related to domestic services in the
home of the employer is further found in the Internal Revenue Code. The
tax code is replete with references to ``domestic service in a private
home of the employer'' as distinguished from the more general concept
of ``domestic services.'' See, e.g., 26 U.S.C. Sec. Sec. 3510(c);
3121; 3306; 3401; and 3102. Unlike the tax code, the FLSA contains no
comparable qualification.
It is apparent that Congress understood the concept of ``domestic
services'' to relate solely to the nature of the employee's activities.
Further qualifications such as location (``in a private home'') and the
identity of the employer (``* * * of the employer'') are necessary to
establish intended limitations. The Department's proposal to include
and limit the identity of the employer in the application of the
companionship services exemption overextends the reach of the concept
of ``domestic services'' under 29 U.S.C. Sec. 213(a)(15). It would be
wholly illogical and inconsistent for Congress to intend different
definitions of the same employment category, ``domestic services,''
under the Fair Labor Standards Act, the Social Security Act, and the
Internal Revenue Code. Barnhart v. Walton, 535 US 212, 221 (2002) (The
same statutory words should not be interpreted differently in closely
related contexts); citing, Department of Revenue of Oregon v. ACF
Industries, Inc., 510 US 332 (1994). It is plain that Congress was
aware of the language needed to qualify and limit the category of
employer for the companionship services exemption in 1974. Congress did
not so limit its application to a distinct set of employers under the
FLSA. The Department's proposal to end application of the companionship
exemption to third-party employed workers violates the FLSA unambiguous
mandate.
The Department relied on this language in defending its current
regulations at the Supreme Court in 2007. In its amicus brief in Long
Island Care at Home, Ltd., et al v. Coke, the Department stated that:
``The statutory exemption applies to ``any employee employed in
domestic service employment to provide companionship services.'' 29
U.S.C. 213(a)(15) (emphasis added). Congress's use of the encompassing
term ``any'' is a natural read to include all employees providing such
services, regardless of who employs them * * *
If Congress had wanted to exclude employees of third-party
employers from the exemption, it easily could have done so by expressly
including a limitation based on employer status, as it has done with
other FLSA exemptions * * *
[The third-party employer rule] also is consistent with Congress's
intent in enacting the exemption for companionship services in the
first place, and it avoids the disruption to the provision of
companionship services to aged and disabled individuals that would
result if the regulation were invalidated * * *
Allowing the exemption for all employees providing companionship
services, regardless of the identity of their employer, is consistent
with Congress's intent to keep such services affordable. See 119 Cong.
Rec. 24,797 (1973) (statement of Sen. Dominick); id. at 24,798
(statement of Sen. Johnston); id. At 24,801 (statement of Sen.
Burdick); Welding, 353 F.3d at 1217 (``Congress created the
companionship services exemption to enable guardians of the elderly and
disabled to financially afford to have their wards cared for in their
own private homes as opposed to institutionalizing them.'') (internal
quotation marks and citations omitted). This affordability concern
applies regardless of whether a person needing care employs a companion
directly or uses a third-party agency to obtain such services.''
The Department's only explanation for its change in position is the
allegation that the businesses providing personal care and home care
aide services to the elderly and persons with disabilities have grown
in numbers and size. However, the businesses changes have nothing to do
with the purpose behind the exemption--to keep people out of nursing
homes and make home care an affordable alternative. In fact, with the
growing population of people needing such services, the importance of
the exemption applied as it has since 1975 has grown as well.
There is no indication in 213(a)(15) that Congress intended the
companionship services exemption to apply only to the elderly and
infirm that have the wherewithal and financial capabilities to take on
the difficult tasks required of employers. However, that is the direct
consequence of the Department's proposal. Those using companionship
services who do not want the cost of overtime compensation must take on
the complex role of an employer with all of its administrative
obligations and financial liabilities. In doing so, the person gains
the benefit of the exemption but also loses the benefits of state-
designed consumer protections that address everything from worker
background checks and competencies to professional oversight. The
Department's proposal sacrifices the option of a third-party agency
model of care for consumers to bring the illusion of higher
compensation to workers. Congress stuck a conscious balance between the
consumers and the workers and did not authorize the Department's
proposal to restrict the exemption to direct employees of the consumer.
Third, the proposed rules have existed essentially with identical
standards since the original rulemaking proceeding in 1975. Congress
has had many opportunities to change the law in line with the
Department's proposal. Where Congress does not find sufficient reason
to change the law over 36 years, the legal validity of the current
proposal is called into serious question. Since the ruling of the U.S.
Supreme Court in Coke, Congress has had several opportunities to enact
legislation that would achieve the changes that the Department now
proposes in a regulation. See, Fair Home Health Care Act, H.R.3582;
Fair Home Health Care Act of 2007, S.2061; Direct Care Job Quality
Improvement Act of 2011, S.1273; Direct Care Job Quality Improvement
Act of 2011, H.R.2341; Direct Care Workforce Empowerment Act S.3696;
Direct Care Workforce Empowerment Act, H.R.5902.
Each of these efforts were attempts to modify 213(a)(15) in a
manner virtually identical to the Department's proposed rule change.
Each would have eliminated the longstanding application of the
companionship services exemption to third-party employed workers. Each
would have eliminated the application of the exemption to any worker
who was employed on more than a casual basis. These legislative efforts
never cleared the respective house of Congress let alone the Congress
overall. In fact, each had only a small numbers of cosponsors with S.
2061 getting the high-water mark in the Senate at 11 and HR 2341
garnering 35 in the House.
The Department's complete turnaround in its interpretation of the
law as proposed has doubtful validity. It's very clear previous legal
position on the FLSA companionship services exemption is totally
inconsistent with the present proposal. Also, Congress's clear
unwillingness to change the 37 year-old rule defining and delimiting
the Department's exemption is a strong indicator of the validity of the
existing FLSA interpretation and application. Most importantly, the
fact that the Department's rationale for keeping the rule as is in 2007
still exists today--keeping the elderly and persons with disabilities
out of institutional care and in their own homes.
Finally, the analysis by the Department of Labor regarding the
likely impact of the proposed rules falls very far short of the
analysis required under the Small Business Regulatory Flexibility Act,
the Paperwork Reduction Act, and Executive Orders 12886 and 13563.
While the Department offers a lengthy impact report, it has several
major failings at its core. Given the potential impact of the proposal,
the Department should be held to a very high standard of accuracy and
completeness in its impact analysis.
The analysis misses completely one of the most significant forms of
home care--privately purchased personal care. It is estimated that
several million elderly and persons with disabilities use such care
through 20,000 companies with an estimated $25-30 billion in annual
expenditures.
The Department and others contend that Medicare and Medicaid make
up 89% of total spending on personal care services. However, Medicare
spending on personal care services, as part of a skilled care home
health benefit, is less than $1 billion annually. Medicare requires
that the patient be homebound and in need of intermittent care. 42
U.S.C. 1395f(a)(C). If qualified, the person can receive part-time care
from a home health aide, 42 U.S.C. 1395m. That care can include some
personal care, but also includes assistance with medication, non-
complex wound care, and therapy exercises from a certified home health
aide in contrast to a personal care attendant. Medicare home health
aides are subject to detailed training and competency testing
requirements. 42 CFR 484.32. Personal care is only one part of their
functions. As such, the application of the $19 billion in total
Medicare home health spending to the analysis of the impact of the
Department's proposal is wholly misplaced.
Medicaid spending on personal care and home care aides is
approximately $25 billion. However, it is difficult to determine
exactly how much of such care fits within the current ``companionship
services'' definition. Assuming that all of such Medicaid spending is
on care that could be classified as ``companionship services (an
assumption that is a very generous one in this matter), it becomes
apparent that the Department examined the wrong business in its impact
evaluation. It should have looked mostly at private pay personal care
and Medicaid while ignoring Medicare data.
All told, it is estimated that private pay personal are services
represent nearly half of all spending on care that could be classified
as ``companionship services'' under the current rule. Most of the
remaining comes from public programs such as Medicaid and the Older
American's Act. Only an incidental portion comes by way of Medicare. A
compliant impact review would necessitate a thorough examination of
private pay home care.
The Department's impact analysis is also devoid of any evaluation
of live-in services. This unique segment of home care is virtually all
on a private pay basis. Medicaid is a payer of some live-in care, but
most states do not provide such a level of coverage. The impact on
live-in care and caregivers cannot be simply assumed by using Medicare
data or even the limited, but unrelated data on Medicaid home care
services. It is a service that is wholly different from most public
program home care.
Live-in care has elements that make for obvious distinctions in
terms of its nature and its ``compensation'' to workers. The live-in
worker generally has significant free time and is not actually working
24/7. Also, the live-in has a wide variety of responsibilities, often
including personal care when working as a caregiver rather than a maid
or housekeeper. Another significant factor is that the live-in worker
gets housing and even meals in some instances as part of their
compensation---elements that are not calculated into the determination
of wage levels in the Department's proposal. That means that the wages
and the value of housing and meals combined far exceed minimum wage
levels.
The Medicaid beneficiaries that receive covered live-in services
are quite varied and unique in their needs and circumstances. With the
Department's proposal, these individuals are at serious risk of losing
all care in the community setting. These individuals include college
students with Medicaid paid ``roommates'' who also attend college. They
include individuals who work and take their caregivers to work with
them. They are individuals who can have their needs met during the day,
but need an overnight live-in to address intermittent needs. The
Department's impact analysis indicates clearly that these consumers,
the workers who care for them, and the programs that support them were
not examined or reviewed with any specificity.
The utter absence of sufficient evaluation of the proposal's impact
on live-in services warrants an immediate withdrawal of the proposal.
If the Department wishes to proceed with its live-in rule change, it
should start at ``square one'' and comprehensively analyze the
employment circumstances and the effect that any change will have on
all stakeholders. Simply applying an analysis that is inadequate in
relation to hourly care to the highly distinct live-in care is not
acceptable or compliant with the Department's obligation.
NAHC, along with the National Private Duty Home Care Association,
conducted a study (Appendix 1) of the impact of the Department's
proposal. This nationwide survey, including private pay home care and
live-in services providers, indicates the following adverse impacts:
1. Moderate to significant increases in care costs
2. Restrictions in overtime hours to the detriment of the workers
overall compensation
3. Loss of service quality and continuity
4. Increased costs passed on to the patients and public programs
that would decrease service utilization, increase unregulated ``grey
market'' care purchases, and increase institutional care utilization
rather than absorbing and covering the higher cost of care.
The survey protocols began with the identification of the universe
of survey targets. NAHC and NPDA did not limit the survey universe.
Instead, through various communications from both NAHC and NPDA, as
well as industry publications and state home care associations, the
survey was open to all interested home care companies.
For your reference, the survey questions are in Appendix 2. As you
will note in reviewing the survey questions, the survey was intended to
elicit responses covering the broad range of potential answers as well
as leaving an open input opportunity for the respondents to include
narratives in the event that the respondent had an answer that was not
on the listed options or wished to elaborate on his/her answer. For
example, with respect to the question on the impact of overtime pay on
quality of care, response options included: no impact; minimal
deterioration; moderate deterioration; significant deterioration;
minimal improvement; moderate improvement; significant improvement; and
unsure. This is a very typical survey method wherein respondents have
the full range of response options to avoid any survey bias.
For further reference, the entire survey response results are found
in Appendix 3. These results are unedited and raw, without any analysis
or editorial review. The results raise serious questions about the
Department's impact analysis and findings. In fact, these survey
results depict an entirely different industry that the one displayed in
the NPRM impact analysis. The main reason for the differences is that
the NPRM analysis focused primarily on Medicare, Medicaid and other
public programs to the near exclusion of the private pay side of home
care services--a large and important segment of ``companionship
services'' and live-in care. Another reason for the differences is that
the survey study is real time and not reliant on the vagaries of non-
uniform publicly reported data. Instead, it focused on impact directly,
going to the first-line source of the most pertinent information--the
employers of caregivers. In addition, it provides information about the
actual, rather than forecasted impact from the states where overtime
compensation is already a requirement. This information is
extraordinarily useful in forecasting the impact of the Department's
proposal.
The study demonstrates that the potential adverse impact on
patients, workers, public programs, and the business that employ
caregivers is real and significant. While we do not take the position
that the study is the ``be all'' of impact analyses, the insights
gained from this study demonstrate that the Department's data sources
and analytic methodology fall short of the comprehensive and accurate
review of the potential impact of the proposed rule. Further, those
insights depict consequences that warrant additional review and
evaluation prior to the advancement of any changes in the longstanding
standards under the companionship services exemption. These
consequences are intuitively sound and reasonably foreseeable given the
overall market context of home care. In addition, the proposal would
adversely affect too many stakeholders in home care to ignore and move
on to a final rule at this point. Higher care costs, restricted working
hours for caregivers, reduced quality of care, and increased demands on
financially fragile public programs should not be the intended results
of a rule change.
Further, an analysis by Navigant Economics confirms that the
Department fell far short of the depth and accuracy needed to produce
the mandated impact analysis sufficient to protect the public from
harmful policy changes. Navigant Economics uncovered essential flaws
and weaknesses in the Department's analysis, indicating that it would
be prudent to re-initiate a comprehensive review before proceeding
further with the proposed rule change. The report, ``Estimating the
Economic Impact of Repealing the FLSA Companion Care Exemption,'' by
Jeffrey A. Eisenbach, PhD. And Kevin W. Caves, PhD., (hereinafter
``Navigant Report'') is a significant contribution to the dialogue on
the companionship services and live-in issues. The report can be found
at: PhD., (hereinafter ``Navigant Report'') is a significant
contribution to the dialogue on the companionship services and live-in
issues. The report can be found at: PhD., (hereinafter ``Navigant
Report'') is a significant contribution to the dialogue on the
companionship services and live-in issues. The report can be found at:
While we suggest that the Department carefully review the entire
Navigant Economics report, several highlights are worthy of note.
Navigant concludes that the Department's impact analysis:
1. ``systemically understates the costs of the proposed rules while
overstating potential benefits. Navigant Report at 12.
2. ``assumes away or understates several important types of
compliance costs.'' Navigant Report at 15.
3. ``understates deadweight loss (a) by assuming, explicitly and
incorrectly, that elasticity of demand for companionship labor is
extremely low; and (b) by implicitly and incorrectly assuming that
elasticity of demand for companionship services is zero (perfectly
inelastic). Navigant Report at 15-16.
4. fails ``to distinguish between live-in care and hourly care
[causing] it to under-estimate the overtime cost burden for the live-in
industry by roughly a factor of eighteen.'' (footnote omitted) Navigant
Report at 20.
5. ignores real and significant quasi-fixed costs, regulatory
familiarization and recordkeeping costs, and added travel costs
Navigant Report at 23-28.
6. ``ignores altogether the disproportionate impact of the repeal
on the market for live-in care.'' Navigant Report at 28-31.
7. fails to recognize that the home care industry ``is far more
responsive to changes in Labor costs than the PRIA assumes * * * the
demand for companionship care workers is found to be elastic, implying
that a one percent increase in labor costs causes employment to decline
by more than one percent, causing aggregate worker compensation to
decline.'' Navigant Report at 43.
8. ``dismisses concerns about continuity of care based on little
more than speculation based on studies showing the impact of long hours
on medical error rates.'' Navigant Report at 48-49.
9. fails to recognize that, ``It is certain [with the proposed rule
changes] that the demand for institutional care will increase, perhaps
substantially.'' Navigant Report at 49.
10. fails to consider viable alternatives such as continuing to
allow individual states to regulate minimum wage and overtime
provisions in relation to companionship services and fails to gather
the necessary data to demonstrate the value of the proposed changes as
required under OMB Circular A-4. Navigant Report at 51-53.
The Navigant Report adds to the body of evidence demonstrating that
changes to the longstanding FLSA rules on companionship services and
live-in care are not ripe for action. The layers of assumptions and
impact speculation offered by the Department fall far short of the
reliability level sufficient to justify this significant policy change.
There is too much at risk to act hastily particular when those risks
are shared by workers, consumers, and payers alike. It is even of
greater concern when the consumers are the most vulnerable of our
citizens, the workers already have compensation concerns, and the
public programs financing the care are obviously very fragile.
While the Navigant Report highlights major weaknesses in the PRIA
as it relates to companionship care, the surprising changes regarding
live-in services deserve special notice. Unlike the companionship
services exemption, the separate live-in exemption has not had over a
decade of attention by the Department or the stakeholders. The data on
companionship services is weak at best and it is necessary that there
be original, ground up granular research to determine if changes are
necessary and warranted with its rule. However, the live-in care impact
review falls very far short of the companionship rule analysis. The
reason is obvious: the Department did not look at live-in services
beyond assuming that the impact is negligible. If it had it would
quickly realize that there is no public data to determine impact. The
proposal on the live-in rule should be withdrawn until the Department
has sufficient information to understand that separate industry and the
potential impact on consumers and workers.
Reports of high profit margins are wholly erroneous
At a March 20, 2012 hearing before the House Subcommittee on Worker
Protections, the Department's witness, Nancy C. Leppink, Deputy
Administrator, Wage and Hour Division, and the Ranking Member of the
subcommittee, Hon. Lynn Woolsey, indicated that home care companies can
absorb any costs associated with the proposed rule, including overtime
costs, because the companies have generally high profit margins of 30-
40%. It appears that such figure came from the December 2010 Franchise
Business Review article entitled, ``Senior Care and Home Healthcare
Franchises. However, that article referenced ``gross Profit Margins''
not net profit margins. The concepts are entirely distinct with net
margins being the metric that sets out profit after all costs. Gross
margins look only at direct costs and exclude many of the natural and
necessary costs of running any business. It is clear that the net
profit margins of home care companies are nowhere near the claimed
levels.
There are five public companies providing home care services that
encompass to varying degrees the personal care services that
potentially could be classified as companionship services under the
existing rule. They include Addus, Almost Family, Amedisys, Gentiva,
and LHC Group. Those companies' net margins as of March 19, 2012 range
from 1.02 to 7.11 percent. http://biz.yahoo.com/p/526qpmd.html. In
addition, the company that is presented by some proponents of the
proposed rule change, Addus, reported a December 31, 2011 net profit
margin of 3.64 percent. http://ycharts.com/companies/ADUS/profit--
margin.
It should be noted that these five companies represent just a small
slice of the overall home care providers. However, their financial
performance fits within the range of the rest of the industry. NAHC
maintains a database on cost reports submitted to Medicare annually by
home health agencies across the country. These cost reports include
data on both Medicare and non-Medicare revenues. These cost reports do
not include what is known as hospital-based home health agencies as
their filings do not allow for home care specific analysis on overall
home care margins. With 6604 cost reports encompassing 2010 filings,
the overall profit margin average is 3.15%. This margin represents a
total of $48,644,977,360 in revenues with more than $34 billion of that
from non-Medicare sources.
These data do not evidence a provider group with exorbitant profit
margins sufficient to absorb added costs of providing care. The 30-40%
margin reference expressed by the Department comes from Gross Margins
which have nothing in common with Net Margins.
The Medicaid payment rates for personal care services further tell
the real story on the ability of providers to bear the additional costs
of overtime or alternative costs of hiring and training additional
workers if care hours are restricted to avoid overtime costs. For
example, in Texas, the state pays $10.41-11.56 per hour depending with
providers obligated to pay attendants 90% of the designated labor
portion which ranges from $8.34-9.49 per hour. In Georgia, the personal
care service rate is $9.00 per hour. South Carolina offers $11.40 per
hour with neighboring North Carolina at $13.80. Ohio provides $17.12
per hour, but rates were decreased by 3% in July 2011, an example of a
national trend.
These payment rates are far lower than the Department has
understood and certainly do not support any claim of high profit
margins for the businesses that provide the care to elderly and infirm
citizens. Nor do these rates and the state trends downward on rates
support a contention that additional costs can be absorbed without
adverse consequences to workers and clients alike.
Simply put, the Department's numbers are wrong and actual margins
in home care fall far short of permitting additional costs to be
absorbed without adverse consequences to patients/clients, workers,
public funding programs, and overall business viability.
Recommendations/alternatives
NAHC recommends that the Department of Labor consider the following
alternatives to the proposed rule.
1. Withdraw the NPRM and initiate original and focused research on
the impact of any changes to the companionship services and live-in
exemption rules before proceeding further.
2. Allow individual states to determine what changes fit best for
their individual home care market in order to best fit the employment
marketplace, the state-specific structures regulating the quality of
home care services, and the state's Medicaid program as the primary
public payer of personal care services.
3. Separate the companionship services exemption policy change
proposal from the live-in exemption proposal, withdrawing the live-in
proposal and proceed with separate and comprehensive analysis on live-
in impact.
4. Develop a home care specific minimum wage and overtime
compensation policy that addresses the unique working hour arrangements
such as shift care, hourly service visit-oriented care, intermittent
work days, and ``work weeks'' that are not a standard 7 days. This is
similar to the approach taken in other health care sectors such as
hospitals and nursing homes.
5. Examine state-specific approaches to overtime compensation in
home care that can achieve a reasonable balance between the interests
of consumers and workers. This would include overtime triggered after a
certain point in the day (MN) and overtime connected to minimum wage
levels rather than actual hourly wages (NY).
6. Allow daily compensation arrangements, without hourly time/
function logs as proposed, between live-in workers and their clients to
take into consideration issues of sleep time, breaks, meal time and the
cost of such to the client and value to the worker.
7. Withhold issuance of any final rule that requires overtime
compensation to companions (as currently defined) until states revise
Medicaid payment models to address the increase in costs to assure that
workers are allowed to work into overtime to qualify for the added
compensation.
8. Ensure even application of any changes in the companionship
services and live-in exemption rules to all workers providing personal
care services to the elderly and disabled including agency workers,
individual providers working in consumer directed care programs under
Medicaid where the employer's identity is unclear, and workers directly
employed by consumers and their families. This will prevent a shift to
``grey market'' unregulated providers of care.
9. Provide sufficient lead time to adjust to the new obligations.
Employers of home care aides will require at least one year to address
the myriad of issues presented by the proposed rule if care disruptions
are to be avoided. The companies will need to modify staff scheduling,
hire and train additional staff, and work with Medicaid rate setters to
attempt to secure payment rate adjustments.
10. Maintain an exemption from overtime compensation while
requiring payment of minimum wages.
Conclusion
Thank for the opportunity to submit these comments. NAHC stands
ready to work with the Department and all other stakeholders to devise
a reasonable strategy on worker protections for those that take on the
essential task of caring for our most vulnerable citizens.
Very truly yours,
William A. Dombi,
Vice President for Law.
______
appendix 1
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appendix 2
This is a survey on the impact or potential impact of requiring
payment of overtime compensation to personal care attendants and home
care aides. Under the federal Fair Labor Standards Act, ``companionship
services'' are exempt from minimum wage and overtime pay requirements.
In many circumstances, the work done by personal care attendants and
home care aides is considered ``companionship services'' under this
law. States can drop the exemption and nearly half the states have done
so.
Presently, the US Department of Labor has developed proposed
changes in the existing rule defining companionship services and its
application to companies that employ workers providing home care. It is
expected that the proposal would significantly alter the long-standing
definitions in a manner that would mean that the exemption is no longer
applicable to home care employees.
As used in this survey, ``companionship services'' includes
personal care to the elderly and disabled. Housekeeping and chore
services are included as companionship services provided that those
services are less than 20% of the total time worked by the employee.
``Companionship services'' may be provided by personnel operating under
various labels such as personal care attendant, home care aide, home
health aide and others. For purposes of the overtime exemption, it is
the functions of the worker that matter, not the job label.
1. In which state(s) does your company provide home care? List all
states applicable
2. Please list all the types of services provided by your company
a. Private pay personal care
b. Medicaid personal care services
c. Medicaid home and community-based waiver services
d. Older Americans Act personal care (Area Agencies on Aging
services)
e. Medicare/Medicaid home health services
f. Medicare/Medicaid hospice
g. Commercial insurance paid services
h. Veteran's Administration paid home care
3. What is the annual home care revenue for your company? a. Under
$1M
b. $1-5M
c. $5-10M
d. $10-20M
e. Over $20M
4. What percentage of your revenue comes from personal care
services and home health aide services regardless of payment source?
a. None
b. 0-20
c. 21-40
d. 41-60
e. Above 60
f. Unsure
5. Are companionship services exempt from overtime wages in your
state?
a. Yes
b. No
c. Unsure
6. What percentage of your workforce provides companionship
services?
a. None
b. 0-20
c. 21-40
d. 41-60
e. Above 60
f. Unsure
7. What percentage of your employees that provide companionship
services provide live-in services?
a. None
b. 0-20
c. 21-40
d. 41-60
e. Above 60
f. Unsure
8. What percentage of your companionship services are covered for
payment under a public program, such as Medicare, Medicaid, the
Veteran's Administration, or Older Americans Act? a. None
b. 0-20
c. 21-40
d. 41-60
e. Above 60
f. Unsure
9. What percentage of your companionship services are paid for
privately, by the individual client/patient, family or through a
commercial insurance plan?
a. None
b. 0-20
c. 21-40
d. 41-60
e. Above 60
f. Unsure
10. What percentage of your employees who provide companionship
services work over-time?
a. None
b. 0-20
c. 21-40
d. 41-60
e. Above 60
f. Unsure
11. Do you pay overtime wages to employees that provide
companionship service whether required or voluntary?
a. Yes--required (proceed to 12)
b. Yes---voluntary (proceed to12 )
c. No (proceed to 21 )
d. Unsure (END of SURVEY)
12. Do you pay employees that provide live-in companionship
services wages for sleep hours?
a. Yes
b. No (proceed to 14)
c. Unsure (proceed to 14)
13. Do you factor in sleep time hours for employees that provide
live-in companionship services when determining whether overtime wages
are paid?
a. Yes
b. No
c. c. Unsure
14. Does paying overtime wages impact your business costs?
a. Yes (proceed to 15)
b. No (proceed to 16)
c. Unsure (proceed to 16)
15. How much of an impact does paying overtime for companionship
services have on your agency's business costs?
a. No change in business costs
b. Minimal increase
c. Moderate increase
d. Significant increase
e. Decrease costs
f. Unsure
16. Does paying overtime wages adversely impact the quality of care
your agency provides to the clients/patients you serve?
a. Yes (proceed to 17)
b. No (proceed to 19)
c. Unsure
17. How much of an impact does overtime pay for companionship
services have on the quality of care to the clients/patients you serve?
a. No impact
b. Minimal deterioration
c. Moderate deterioration
d. Significant deterioration
e. Minimal improvement
f. Moderate improvement
g. Significant improvement
h. Unsure
18. What impact does paying overtime wages have on the quality of
your services? (check all that apply)
a. lower staff retention
b. higher staff retention
c. poorer staff competencies
d. better staff competencies
e. lower staff educational levels
f. higher staff educational levels
g. poorer consistency and continuity of care
h. improved consistency and continuity of care
i. Other
19. What business adjustments have you made in response to paying
overtime wages to employees who provide companionship services? (check
all that apply)
a. Increased billing rates to clients/patients
b. Hired additional employees to provide companionship services to
reduce or eliminate need for overtime hours
c. Reduced the number of hours for employees providing
companionship services to avoid the payment of overtime
d. Scale back offering companionship services
e. Assign additional employees to individual clients/patients
receiving companionship services
f. Increased human resources costs due to a greater need for staff
g. Increased staff training costs
h. No adjustments made
i. Other (please explain):
20. What changes have you observed in your market since the payment
of overtime for companionship services was implemented?
a. Fewer clients/patients seek companionship services through an
agency
b. Employees providing companionship services work for more
agencies to obtain their desired number of hours per week
c. Employees providing companionship services report less
satisfaction with their work schedule
d. No change
e. More clients/patients seek companionship services through an
agency
f. Employees providing companionship services work for fewer
agencies to obtain their desired number of hours per week
g. Employees providing companionship services report more
satisfaction with their work schedule
h. I don't remember a time when the payment of overtime for
companionship services wasn't required
If you answered Q 19 and 20 this is the end of the survey.
21. Do you pay employees that provide live-in companionship
services wages for sleep hours?
a. Yes
b. No
c. Unsure
22. Do you expect that paying overtime wages would impact your
business costs?
a. Yes (proceed to 22)
b. No (proceed to 23)
c. Unsure
23. How much of an impact would paying overtime wages for
companionship services have on your agency's business costs?
a. No change in business costs
b. Minimal increase
c. Moderate increase
d. Significant increase
e. Decrease costs
f. Unsure
24. Do you expect that paying overtime wages would impact the
quality of care your agency provides to the clients/patients you serve?
a. Yes (proceed to 25)
b. No (proceed to question 26)
c. Unsure
25. How much of an impact would you expect overtime pay for
companionship services would have on the quality of care to the
clients/patients you serve?
a. No impact
b. Minimal deterioration
c. Moderate deterioration
d. Significant deterioration
e. Minimal improvement
f. Moderate improvement
g. Significant improvement
h. Unsure
26. What impact would you expect paying overtime wages would have
on the quality of your services? (check all that apply)
a. lower staff retention
b. poorer staff competencies
c. lower staff educational levels
d. poorer consistency and continuity of care
e. higher staff retention
b. better staff competencies
c. higher staff educational levels
d. improved consistency and continuity of care
e. Other
27. What business adjustments would you expect to make in response
to paying overtime wages to employees who provide companionship
services? (check all that apply)
a. Increased billing rates to clients/patients
b. Hire additional employees to provide companionship services to
reduce or eliminate need for overtime hours
c. Restrict overtime hours for employees providing companionship
services
d. Scale back offering companionship services
e. Assign additional employees to individual clients/patients
receiving companionship services
f. Increase human resources costs due to due to a need for
additional employees
g.
h. Increase staff training costs due to a need for additional
employees
i. No adjustments made
j. Other (please explain):
28. What impact on the communities you serve would you expect from
paying overtime wages for companionship services?
a. Fewer clients/patients able to afford care
b. Less work available for employees who provide companionship
services
c. No Impact
______
appendix 3
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[Whereupon, at 11:40 a.m., the subcommittee was adjourned.]