Home Care Workers Gain Rights to Minimum Wage, Overtime Pay

As of Oct. 13, 2015, almost 2 million home care workers gained protection under the Fair Labor Standards Act (FLSA) minimum wage and overtime provisions. For the first time, direct care workers employed by agencies or other third-party employers will enjoy protections of the FLSA, including the federal minimum wage for all hours worked, including travel time where applicable and time-and-a-half their regular rate for overtime hours—those hours worked over 40 in the workweek.

The Department of Labor (DOL) defines home care workers, or direct care workers, as those “who provide home care services, such as certified nursing assistants, home health aides, personal care aides, caregivers, and companions.”

On Oct. 6, 2015, Chief Justice of the United States John Roberts denied an application to stay a decision by the U.S. Court of Appeals for the District of Columbia Circuit upholding the DOL’s Home Care Final Rule. Three for-profit home care trade associations had sued the DOL, arguing that Congress had not granted it authority to redefine a longstanding exemption in the labor law denying labor protections for home care workers. As a result of Justice Roberts’ action, the DOL’s final rule requires all covered third-party home-care employees to be eligible for federal minimum wage and overtime protections.

The DOL announced it would not begin enforcing the final rule before Nov. 12, 2015. The agency is also expected to exercise prosecutorial discretion when deciding whether to bring enforcement actions through December 2015.

What Workers Are Affected?

The ruling benefits most, but not all workers who provide in-home assistance. Direct-care workers employed by a home care agency or an employer other than the individuals they assist, or the individuals’ families or households, are entitled to receive at least the federal minimum wage and applicable overtime pay. Workers who act as independent contractors, employed only by those they assist or the individuals’ families or households, may or may not be entitled to minimum wage and overtime pay, depending on the workers’ duties.

The DOL provides answers to frequently asked questions regarding home care and attendant federal benefits.

Home Care is a Growing Field

As the U.S. population ages, the need for home care services grows. The federal Administration on Aging points out that by 2060, the nation will have about 98 million older persons, more than twice the number in 2013. People 65+ will compose 21.7 percent of the population in 2040, compared with 14.1 percent in 2013. Many of these individuals will require help with health care, housekeeping, activities of daily living and social contact.

The Paraprofessional Healthcare Institute (PHI) notes that direct care workers form one of the largest and fastest-growing occupational groups in the United States, providing roughly 70 percent to 80 percent of the paid, hands-on services needed by the elderly and disabled. Most direct-care workers are female, poorly paid, and without employment benefits. According to PHI, “As many as 50 percent rely on public assistance and nearly a third do not have health coverage.”

PHI predicts that by 2020, the direct-care workforce will swell to more than 5 million, forming the nation’s largest occupational group.

Implications for Employers

The new rule will likely have a large impact on home health care agencies that employ certified nursing assistants, home health aides, personal care aides, caregivers and companions, including higher payroll expenses and the potential for liability for violations concerning wage and hour laws.

To comply with the new rule, home healthcare employers might want to consider the following precautions:

• Ensure workers receive at least the applicable federal/state/local minimum wage and overtime at time-and-a-half the regular rate of pay for all hours exceeding 40 in a workweek (state laws may be more stringent).
• Track and compensate employees for travel time between home visits. 
• Ensure that overtime calculations include nondiscretionary forms of payment, such as bonuses.
• Revise company policies, procedures, and the employee handbook to cover overtime, time-keeping, safe harbors, unpaid time, and other wage and hour issues.
• Audit the company’s time-keeping practices to ensure accuracy.
• Review pay practices regarding travel time, training, and overnight shifts.
• Ensure compliance with applicable state law.

Good employers want what’s best for their employees. In response to the ruling, U.S. Secretary of Labor Thomas E. Perez said, “The final rule is not only legally sound; it was the right thing to do. It will ensure fair wages for the nearly 2 million home care workers who provide critical services, and it will help ensure a stable and professional workforce for people who need those services.”