June 08, 2015
June 08, 2015
New federal rules will provide wage and hour protections and help stabilize home-care workforce.
Contact: Wendy Patton, 614.221.4505
Home-care aides, who provide care for people with disabilities, advanced age or illness, work in one of Ohio’s fastest-growing occupations. However, the home-care industry is riddled with high turnover rates, workforce vacancies and related quality-of-care issues, largely because of low wages, part-time and unpredictable hours, and a lack of benefits. In an earlier report, Low Wages, High Turnover in Ohio’s Home-Care Industry, we recommended the state take steps to improve wages of the publicly funded home-care workforce, including promoting the right of home-care workers to bargain collectively.
New rules proposed by the United States Department of Labor (DOL) under the Fair Labor Standards Act (FLSA) will help stabilize the home-care industry by extending wage and hour protections to the home-care workforce. The FLSA, often known as the “wage and hour” law requires employers to pay at least the federal minimum wage and to pay an overtime premium after 40 hours of work in a week. These new rules, described in this brief, were designed to extend these basic protections to home-care workers, long excluded under a 40-year old “companionship” exemption. Significant parts of the new rules have been struck down by a court decision, but the Department of Labor has appealed that decision to a federal appeals court. A decision is anticipated within a few months. In Ohio, the major impact of the new rules will be on overtime pay, providing (1) payment for all hours worked, including travel time and work performed before or after the official shift and on overnight shifts; and (2) overtime pay. According to Ohio Labor Market Information’s Occupational Employment Statistics (OES), entry-level wages for both home-health aides and personal-care attendants are higher than minimum wage. Workers may actually receive this wage only for their scheduled direct-care hours. The primary benefit of the new rules in Ohio, then, will be application of federal standards for hours worked and overtime pay. There is currently no assurance that home-care workers in Ohio get paid for all hours actually worked or are eligible for overtime pay. The new federal rules would require that home health-care workers are paid for all hours worked and are paid at an overtime rate of one-and-a-half times their regular hourly wage for hours worked above 40 per week. The home-care industry in Ohio More than 86,000 people work as home health-care aides or personal-care attendants in Ohio. A recent series in the Columbus Dispatch found many home health-care workers are not paid for the time they drive from the home of one client to the next. Nationally, it is estimated 9 to 12 percent of workers like this work more than 40 hours per week. Studies find turnover in this sector is high because wages are so low. Public programs — Medicaid and Medicare — finance 80 percent of the work in this industry, which primarily serves older adults and people with physical or developmental disabilities. These public dollars flow either through non-profit and for-profit entities that employ home-care aides, or to independent home-care providers employed directly by the consumers receiving services. There are about 13,000 “independent providers” in Ohio. These workers can earn higher hourly rates than is typical for their counterparts employed by an agency. According to the Columbus Dispatch, home-health aides, often employed by an agency, earned a median $9.60 per hour in 2013 but independent providers, who work directly for a consumer, can bill Medicaid about $18 for the first hour of care, and about $13 for subsequent hours. The “independent provider” bears costs of independent employment. Ohio’s outlook for better pay and working conditions in the home-care sector is mixed. On one hand, House Bill 64, the budget bill for fiscal years (FY) 2016-17, contains proposals for some increase in state Medicaid funding for some home health care. At the same time, the Kasich administration proposes to eliminate “independent providers,” in part because of the new federal rules that would ensure minimum wage and overtime protection. Outside of the budget process, Ohio’s Medicaid-funded rates for independent providers is being reduced.”. In addition, the administration recently ended the right of independent provider home-health workers to bargain collectively. The need for wage and hour protection for home care workers is heightened with loss of the critical right to bargain for better wages and working conditions. The Fair Labor Standards Act (FLSA) and new rules to protect home-care workers The FLSA was passed in 1938 to eliminate child labor, set a minimum hourly wage and establish the maximum hours in the workweek. It did not initially protect domestic workers like cooks, gardeners or servants employed by private households. Congress extended FLSA coverage to domestic workers in 1974, but exempted casual babysitters as well as companions for the aged and infirm, the latter under a provision that came to be known as the “companionship exclusion.” Over time, the exemption was used widely to exclude virtually all workers in the growing home-care industry from wage-and-hour protections. In 2013, the U.S. Department of Labor announced that rules governing the companionship services exemption would be clarified and wage and hour protection extended to home-care workers. Under the new rules, previously exempt workers are protected if any of the following apply:
Only workers employed solely by an individual or household and who spend more than 80 percent of their weekly work hours providing fellowship and protection will be exempt. A federal district court vacated the provisions of the new rules outlined above in two decisions, one in December 2014 and another in January 2015. The judge said that the Department of Labor could not bar third-party employers like home-care agencies from qualifying for the companionship exemption. He also threw out parts of the rule that narrowed the definition of exempt companionship services for home-care workers (items 2, 3 and 4, above). The Department of Labor has appealed the decisions. It is important to note that the new rules had other provisions that were not struck down, including new record-keeping and time-keeping provisions. It also clarifies, without changing the law, information regarding third-party and joint employment relationships, independent contractors, and other areas such as sleep time. These clarifications and provisions will benefit all home-care workers, including those exempted from FLSA coverage at present, when the new rules take effect. Record keeping: Prior to the new rule, employers were not required to keep records of the actual hours home-care employees worked, but could instead maintain a copy of an employment agreement that set forth agreed-upon hours. Any variance from the agreement had to be recorded, reflecting the actual hours worked. The new rule permits employers to record hours or to delegate the recording of hours to the employee, who must then submit an accurate record of actual hours worked. The employer is responsible for maintaining records. Advocates consider the revision an improvement because it establishes a process for recording hours worked each week, whereas the previous approach might have meant that employers frequently overlooked extra work that home-care providers did. (See Appendix for the Department of Labor’s detailed definitions of what is work, what must be counted as “on the clock”, what is off the clock, what records must be kept and how.) Employment relationships: Who is the employer? : If time sheets are to be kept for home-care workers, who keeps the time and pays overtime for independent providers who serve several clients? The new rules do not change the definition of employer, but clarify that the standard for determining an employment relationship under the FLSA is the “economic realities test,” a different standard than in other statutes, including the Internal Revenue Code and many state laws. While we sometimes assume the employer is the tax withholder, in the “economic realities test,” the factors to consider include (but are not limited to):
State Medicaid agencies may be considered an employer or a joint employer under this test. For example, if a home-care worker works for Consumer A for 25 hours a week, Consumer B for 20 hours a week, and Consumer C for 20 hours a week, the state as joint employer may be responsible for paying the worker overtime for the 25 hours in excess of the 40-hour threshold. Ohio -- like other states -- is re-evaluating the nature of its relationship with independent home-care providers in light of the fact that under the economic realities test, the state could be the employer, or a joint employer, and liable for pay under federal guidelines for work. Rules on sleep time, shared living: The new rules were designed to update and clarify the companionship exemption for domestic workers. In some cases, an employee sleeps over at a client’s house. The rule does not change existing sleep time rules. However, because the DOL received many comments and questions about sleep time for domestic service workers, including several that conflated live-in employees with employees working one or more 24-hour shifts, it set forth clarifications in the rule on existing law. Many service delivery models fall under the broad definition of “shared living." This can include adult foster care, host homes, and paid roommates. To help providers and patients better understand when these arrangements are considered “employment” under the FLSA, the DOL issued guidance, which breaks down models into three basic types of shared living:
The Department of Labor’s fact sheet on shared living (http://www.dol.gov/whd/regs/compliance/whdfs79g.htm) provides methodologies to understand how the employment relationship is determined under each one of these three scenarios. Conclusion New FLSA rules would extend all wage and hour protections enjoyed by most American workers to the growing ranks of home-care workers. Employer groups challenged the rules and a federal district court has struck down significant sections of the rules, but the Department of Labor has appealed. If the DOL wins its appeal, Ohio’s home-care workers will be eligible for the protection of federal minimum wage and overtime pay rules. More than 86,000 work in the home-care industry in Ohio. Many are not paid for hours they are on the job, like hours spent traveling between the homes of consumers they serve. Up to 12 percent of home-care workers are on the job more than 40 hours per week, but they are not paid overtime. Wage and hour protections for home-care workers are badly needed. With fair timekeeping, pay for hours worked and overtime pay when applicable, home-care workers will be able to make ends meet. The result will be a more stable home-care sector, a more skilled workforce and better care for vulnerable Ohioans. APPENDIX: Time keeping and record keeping as defined by the United States Department of Labor What is overtime?The Fair Labor Standards Act (FLSA) provides a definition of overtime. Employees covered by the FLSA must receive overtime pay when they work more than 40 hours in a work week. Overtime pay must be at least 1.5 times the regular rate of pay. The act does not limit hours for workers over 16, nor does it specify overtime pay for weekend or holiday work if the work week is still less than 40 hours. Overtime protection applies by the week. An employee's work week is a fixed and regularly recurring period of 168 hours — seven consecutive, 24-hour periods. It need not coincide with the calendar week, but may begin on any day, at any hour. Different work weeks may be established for different employees or groups of employees. An employer cannot average hours over two or more weeks. Normally, overtime pay earned in a particular work week must be paid on the regular payday for the pay period in which the wages were earned. Work includes a category of paid time that is considered “suffered or permitted.” Work not requested but suffered or permitted is work time that must be paid for by the employer. For example, an employee may voluntarily continue to work at the end of the shift to finish an assigned task or to correct errors. The reason is immaterial. The hours are work time and must be paid. Fact sheets from the Department of Labor give examples of “Suffered or permitted” work:
Problems arise when employers fail to recognize and count certain hours worked as compensable hours. For example, an employee who remains at her desk while eating lunch and regularly answers the telephone and refers callers is working. This time must be counted and paid as compensable hours worked because the employee has not been completely relieved from duty.  Record-keeping requirements Record-keeping requirements are listed under the FLSA's recordkeeping regulations, 29 CFR Part 516. Employers are required to display an official poster outlining the provisions of the Act (available electronically for downloading and printing at http://www.dol.gov/osbp/sbrefa/poster/main.htm.) Every covered employer must keep certain records for each worker covered under the FLSA. The Act requires no particular form for the records, but does require that the records include certain identifying information about the employee and data about the hours worked and the wages earned. The law requires this information to be accurate. The basic records an employer must maintain include:
Each employer must preserve payroll records and collective bargaining agreements for at least three years. Records on which wage computations are based such as time cards, piecework tickets, wage rate tables, work time schedules, and records of additions to or deductions from wages should be retained for two years. These records must be open for inspection by the division's representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.   Amanda Woodrum, “Low wages, high turnover in Ohio’s home-care industry,” Policy Matters Ohio, April 2015 at http://bit.ly/1AAu76s  Since the 2006 passage of the Fair Minimum Wage Amendment (FMWA) to the Ohio Constitution, home health care workers are covered by the minimum wage. The language of the Constitutional amendment (now Article 2, Section 34a of the Ohio Constitution) is broad and, as held by the Ohio Court of Appeals for the Second District, in Haight v. Cheap Escape Co., 2014-Ohio-2447, does not incorporate most FLSA exemptions, such as the one for home health care workers. Workers who are not exempt are covered. However, because of a discrepancy between the FMWA and the enabling legislation passed by the Ohio legislature, some employers have asked whether the exemptions for certain workers under the current FLSA regulation apply in Ohio. An appeal of the appellate decision in the Haight case, which involved outside salespeople, has been accepted by the Ohio Supreme Court. Nevertheless, because most home health care workers in Ohio are paid at or above the minimum wage for direct-care hours, the real effect of the new DOL regulations involves pay for travel time and overnight hours and overtime pay.  Woodrum, Op.Cit.  “Aides generally use their own vehicles, buy their own gas and, in some cases, don’t get to stay on the clock between clients.” Rita Price and Ben Southerly, “Home health care for vulnerable Ohioans leans hard on poorly paid workers,” The Columbus Dispatch, December 15, 2014 at http://bit.ly/1d1ZZpU.  Home Care Jobs: The Straight Facts on Hours Worked, Value the Care #6, February 2012, at: http://www.PHInational.org/fairpay. Also see in-depth information presented in D. Seavey and A. Marquand (December 2011) Caring in America, Bronx, NY: Paraprofessional Healthcare Institute, available at: http://www.phinational.org/homecarefacts. Cited in Dorie Seavy and Alexandra Olins, Can Home Care Companies Manage Overtime Hours? Three Successful Models, Paraprofessional Helathcare Institute (2012) at http://bit.ly/1FQiQ2z. Department of Labor estimates 12 percent of home care workers work unpaid overtime. See General Accountability Office, Fair Labor Standards Act: Extending Protections to Home Care Workers, (GAO-15-12), p.18, December 2014 at http://www.gao.gov/assets/670/667601.pdf  Paying the Price: How poverty wages undermine home care in America, Paraprofessional Health Institute at http://bit.ly/17mF1ip.  Centers for Medicaid and Medicare Services, National Expenditure Report for 2013, at http://go.cms.gov/1qiUAfG; see also Seavey & Marquand, PHI, Caring in America, cited in Woodrum, Op. Cit.  Ben Southerly and Rita Price, State Liability Drives Plan to Phase Out Independent Providers, The Columbus Dispatch, March 15, 2015 at http://bit.ly/1EoW6BJ.  Ben Southerly and Rita Price, Kasich’s Budget Plan Aims at Medicaid Fraud,” The Columbus Dispatch, February 3, 2015 at http://bit.ly/1zaHV4P.  Initially, the state pointed to fraud as the reason for eliminating this class of workers, but Office of Health Transformation director Greg Moody subsequently told the Columbus Dispatch that the reason for the proposed elimination of independent providers was the new federal labor rule that says home-care workers are entitled to minimum wage, overtime and travel reimbursement.. See Southerly and Price, “State liability drives plan to phase out independent contractors, The Columbus Dispatch, March 15 2015 at http://bit.ly/1EoW6BJ  Gongwer Ohio, “Amid Opposition, JCARR Lets Controversial Rule On Home Health Care Rates Stand, June 1,2015 at http://www.gongwer-oh.com/programming/news.cfm#sthash.Y9OTzt44.dpuf  Jeremy Peltzer, John Kasich halts union rights for home health care, child care workers,” Northeast Ohio Media Group, May 22 2015 at http://bit.ly/1F1D1FT.  By Paul K. Sonn, Catherine K. Ruckelshaus and Sarah Leberstein, Fair Pay for Home Care Workers: Reforming the U.S. Department of Labor’s Companionship Regulations Under the Fair Labor Standards Act, National Employment Law Project< August 2011 at http://bit.ly/1FjgLbw  Analysis provided in a memo from Christina Williams, a student of the Cleveland-Marshall College of Law, to Wendy Patton, dated April 24, 2015.  Frank Hupfl, The Companionship Exemption Remains: DC District Court’s Most Recent Decision in Home Care Association of America v. Weil Marks Second Victory for Home Care Employers; DOL Appeals, Mintz Levin Employment Matters blog, January 23, 2015 at http://bit.ly/1LLRETk  Katherine Berland, Esq., Director of Public Policy, “The Impact for Providers of the Court Rulings in Home Care Association of America v. Weil (Case No. 14-cv-967) Regarding the Department of Labor Final Rule RIN 1235-AA05, Application of the Fair Labor Standards Act to Domestic Service (Home Care Rule)”, Memo to members of ANCOR (American Network of Community Options and Resources), February 5, 2015  Id.  DOL, Administrator’s Interpretation No. 2014-2, p. 3 (June 19, 2014) available at http://www.dol.gov/whd/opinion/adminIntrprtn/FLSA/2014/FLSAAI2014_2.htm (citing 29 C.F.R. Part 791; 29 C.F.R. 500.20(h); Charles v. Burton, 169 F.3d 1322 (11th Cir.), cert. denied, 528 U.S. 879 (1999); Lopez v. Silverman, 14 F.Supp.2d 405 (S.D.N.Y. 1998)).  United States Government Accountability Office, “Fair Labor Standards Act: Extending Protections to Home Care Workers (GAO-15-12), p.29, December 2014 at http://www.gao.gov/assets/670/667601.pdf  Katherine Berland, Op.Cit.  This was not part of the new FLSA rules, but the questions were raised and so guidance was offered by the DOL as part of clarifying the new rules. See United States Department of Labor, Wage and Hour Division, “Fact Sheet #79G: Application of the Fair Labor Standards Act to Shared Living Programs, including Adult Foster Care and Paid Roommate Situations,” March 2014 at http://www.dol.gov/whd/regs/compliance/whdfs79g.htm  This section taken from the United States Department of Labor factsheets at http://www.dol.gov/whd/homecare/finalrule.htm  United States Department of Labor, “Fact Sheet #22: Hours Worked Under the Fair Labor Standards Act (FLSA) at http://www.dol.gov/whd/regs/compliance/whdfs22.htm  United States Department of Labor, “Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA)” at http://www.dol.gov/whd/regs/compliance/whdfs21.pdf
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