Premium ContentMouse over Home then click on Premium Content for information.Two big players in the in-home care industry — both based in Omaha — say a plan to provide minimum wage and overtime protections for care workers could lead to higher costs for people who use their services.
Executives at Home Instead Senior Care and Right at Home, both franchise companies with locations around the country, said they're paying close attention to the recently released proposal from the U.S. Department of Labor. The changes would remove an exemption that allows employers of many caregivers to pay less than minimum wage and avoid paying more for workers' overtime hours.
Federal officials and labor groups say the move is necessary to update outdated rules meant for caregivers who provided only companionship services. Today, they said, there are nearly 2 million people who work in a rapidly growing industry that provides more comprehensive and professional services, ranging from physical therapy to housekeeping.
And because of the long hours required for in-home work, supporters of the change say many workers don't receive sufficient compensation. An estimated 40 percent of them receive government assistance, including Medicaid and food stamps.
But opponents, including the two local companies, say the impact of the changes would almost certainly be felt by clients — leading to bigger bills in a time when more people are already finding it hard to afford care services.
"As we look forward, what we know is that people in general are prepared less financially, particularly the (baby) boomers, for old age," said Roger Baumgart, CEO of Home Instead Senior Care. "We're very concerned about the affordability and accessibility that seniors in the future will have to enjoy the benefits of home care."
The plan is one of several in President Obama's "We Can't Wait" initiative: changes that can be made by executive order, rather than by Congress. The actions are aimed at recharging the economy, in this case by boosting care workers' standard of living.
A notice of the proposal was published Dec. 27, and people can submit comments through Feb. 27 at www.regulations.gov.
The White House's announcement of the wage and overtime changes noted that the exemption for home care workers from the Fair Labor Standards Act has been in place since 1974. In 2007, the U.S. Supreme Court took on the topic, ruling that a home care worker who logged more than 70 hours a week was not entitled to overtime pay. Related bills introduced in Congress have failed to gain steam.
Some states' policies do provide different rules for caregivers. Five states, including Nebraska, provide minimum wage protection for the workers, but not overtime. Sixteen states offer both minimum wage and overtime pay, but 29 states, including Iowa, do not require either.
Workers' advocates say the situation adds up to hardship for many employees. A paper issued by the National Employment Law Project on the subject noted that a 40-hour work at the median wage for home-care workers in 2009 — $9.34 per hour — added up to a yearly salary of $20,283.
Home care companies, however, say a sweeping change across the country could have a big impact on franchise companies that operate in a variety of locations.
Right at Home, founded in Omaha in 1995, began opening franchises in 2000. It currently has more than 220 offices in 41 states, and also operates in the United Kingdom, Brazil and China. The company provides care for between 25,000 and 30,000 clients.
Brian Petranick, Right at Home's president and chief operating officer, said the proposed changes would have an impact on 20 percent to 30 percent of its customers and care providers.
He said the current system has worked well to keep costs down for customers. He said the changes would lead to unavoidable cost increases for customers, so the company is pushing back.
"We're working with some national associations on fighting this as best we can," Petranick said.
Baumgart said removing the exemption could have another significant impact: The loss of full-time jobs.
Home Instead, which got its start in 1994 and now has about 1,000 franchises in the U.S. and 15 other countries, employs more than 65,000 care workers. The changes would affect all of those employees who work in the U.S., Baumgart said. Because staffing agencies would have to pay more for those workers' time, he said he expects many might opt to employ more part-time than full-time workers.
And because many families might decide to look for less costly options, he said they might cut hours or try to find cheaper workers who might have less experience and supervision.
"People will not go without care, but they'll cut back the hours and either have to pick up the slack with family members or friends and neighbors," he said.
The issue already had the attention of Rep. Lee Terry, R-Neb., who introduced legislation last fall to block the Department of Labor from removing the care worker exemption. Terry spokesman Charles Isom said the congressman drafted the "Companionship Exemption Protection Act" because he frequently hears from voters about the need for keeping home care services affordable.
In a letter to fellow lawmakers, urging them to support the resolution, Terry said the proposed changes would be a particular hardship to people who require overnight care. For now, overnight stays when the caregiver don't result in any added charges. Overtime protection would add those hours to a worker's total for the week.
Terry's plan is currently awaiting a hearing in the Education and the Work Force committee.
Both Petranick and Baumgart said the industry will continue to grow — even through the recession demand remained high.
"People are more careful with how they're spending their money, but there aren't very many alternatives for what we're doing," Petranick said. "The number of (older) people in the country is growing at such a rate that the assisted-living facilities — they can't build enough of them."
Whether or not the proposal goes through as written, Baumgart said there are big changes coming as more and more people reach retirement age and beyond.
"I think the greatest impact in this particular category is yet to be seen," he said. "We're just barely starting to serve the baby boomers."
Contact the writer:
402-444-1543, erin.golden@owh.com
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