Merrily Orsini's Thought Leadership

HCAOA Takes Legal Action to Prevent Collapse of Home Care Industry

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FSLA exemption rule could prevent millions from receiving the home care services they desperately need.

This month the Home Care of Association of America (HCAOA), the National Association for Home Care and Hospice (NAHCH), and the International Franchise Association (IFA), joined forces to file a lawsuit contesting a Fair Labor Standards Act (FLSA) exemption rule by the Department of Labor that could restrict access to crucial services for millions of older adults in need of care and assistance in their homes.

The new rule, set to go into effect in January 2015, will reverse a long-standing FLSA rule that allows home care agencies to be exempt from paying overtime and minimum wage to employees providing “companionship services” to the elderly and disabled.

While on the surface the new rule might seem to make things better for home care workers, it could be a health care disaster for the millions of America’s elderly citizens who rely on in-home care services, and it could create instability in this vital and rapidly growing industry. Simply put, when you raise wages and overtime, you raise the cost of doing business, which ultimately gets passed onto the consumer. In the case of home care, the cost of doing business is already high and the consumers who use home care services are already financially strapped. Another cost increase could push many of them over the edge.

According to the Centers for Disease Control and Prevention (CDC), the number of people 65+ has been forecast to increase 101 percent from the years 2000 to 2030, when there will be an estimated 71 million people between the ages of 65 and 83 years old. In stark comparison, the number of family caregivers is only expected to increase 25 percent over the same period. The higher percentage increase in the number of older adults over the number of family caregivers will lead to an intensified demand for home care workers in the United States.

HCAOA President Peter Ross has urged U.S. Secretary of Labor Thomas E. Perez to take action on requests from the National Association of Medicaid Directors and the National Council on Disability to extend the deadline for compliance with the FLSA rule for 18 months beyond the current deadline of January 1, 2015. Ross warns that many home care agencies will not be able to afford overtime pay and will need to augment their workforce to accommodate providing care to clients when caregivers have exceeded 40 hours of service in a week. The overtime provision of the new rule will further add to the increased demand for home care workers.

“These new regulations will drastically change the home care industry to the detriment of small businesses, patient comfort and worker wages,” cautions Susan Eckerly, Senior Vice President of the National Federation of Independent Business. The cost of doing business will surge so high that many home care agencies will simply go out of business. Those agencies who are able to remain open will have no choice but to pass the cost of overtime and inflated wages onto elderly clients whose income is already restricted.

The home care industry has grown exponentially in the last ten years as the population lives longer and more consumers demand the ability to age in their own homes versus opting for facility-based care. Reports estimate that there are around 2.5 million home care workers in the United States. The new rule stands to make home care unaffordable for those who most need in-home care and who do not have family members to provide caregiving assistance, as well as make the cost of doing business far too high for many home care providers.

To read the full copy of the lawsuit filed by the HCAOA, click here. The HCAOA is asking home care agencies to join together in support of the suit and write their members of Congress using this link.