Obama Extends Minimum Wage to 2 Million Home Health Aides

Overturning a decades-old exemption, the U.S. Department of Labor has extended minimum wage and overtime benefits to the mostly female and minority workforce of nearly 2 million home health-care workers.

The Fair Labor Standards Act will be extended to direct care workers, U.S. Secretary of Labor Thomas Perez said Tuesday on a conference call with reporters. Those affected by the rule will receive the same protections as people providing similar services in hospitals and nursing homes, effective Jan. 1, 2015.

“Home-care workers are no longer treated like teenage babysitters providing casual services under this rule,” Perez said. “A fair wage will further stabilize and professionalize this critical line of work.”

The move was opposed by the Washington-based U.S. Chamber of Commerce, which said it would make home-health care too expensive for some. The cost of the rule will average $6.8 million a year over a 10-year period, the department said. It was backed by a broad coalition of groups that advocate for low-wage workers, according to Sarah Leberstein, a staff attorney with National Employment Law Project in New York.

Congress extended benefits to domestic workers when it amended the Fair Labor Standards Act in 1974. The measure included a narrow exemption for babysitters and workers who provide “companionship” services that the Labor Department later interpreted to include direct-care workers, Leberstein said.

State Protections

“Part of the problem was this just wasn’t a huge workforce at that time,” Leberstein said in an interview. “People really hadn’t conceived this exemption as covering people who do this as their profession.”

Fifteen states already provide wage and hour protections under state law. Workers covered by the rule are predominantly women in their mid-forties or older or minorities, the Labor Department said.

Republican representatives John Kline of Minnesota and Tim Walberg of Michigan said the decision circumvents an exemption enacted by Congress to help seniors and people with disabilities get the care they need at home.

The “regulatory action by the Department of Labor will raise costs and limit access to in-home care for vulnerable Americans,” they said in a joint statement. “Faced with higher costs, some individuals will have no choice but to leave their homes and enter institutional living.”

Marc Freedman, executive director of labor policy for the U.S. Chamber of Commerce, expressed disappointment with the department's move, which he said “contradicts the will of Congress.”

Dire Predictions

“The result will be that these services, that are being relied upon by more and more of our older and disabled parents, relatives, and friends, will be too expensive and beyond their reach,” Freedman said in an e-mailed statement.

Such dire predictions were not borne out in meetings the department held with business owners, according to Laura Fortman, principal deputy administrator for the department’s wage and hour division. The effective date of the rule was pushed back to give families that use home-care workers and state Medicaid programs time to prepare, she said.

Regulations often take effect 60 days after being issued.

“Companionship was originally described as similar to babysitting,’ Fortman said on the conference call. “This occupation has grown dramatically and changed. These are professional workers who are providing critical services.”

The National Association for Home Care & Hospice said the ruling will lead to a reduced level of care.

Union Backing

“Home care companies will have little choice but to employ workers part time rather than full time as Medicaid payment rates and consumers with limited incomes cannot afford higher costs,” Andrea Devoti, chairman of the Washington-based trade association, said in a statement. “It will trigger great harm to many of this nation’s most vulnerable citizens.”

The rule “finally recognizes the value of the work done by millions of people who take care of our aging parents as well as our sisters, brothers and children with disabilities,” Richard Trumka, president of the AFL-CIO, the largest U.S. labor federation, said in a statement.

The decision grants overtime and minimum wage rights to a broad swath of home-care workers, including home health aides, personal care aides, personal assistants, home attendants, companions, personal care staff, resident care aides, and direct-support professionals.

“It’s been a long time coming, we think it’s very significant and an important step in the right direction,” said Elise Nakhnikian, a spokeswoman for the Direct Care Alliance, Inc., a New York-based advocacy group for direct-care workers. “It’s one of the fastest growing industries in the country. The average wage they make is less than $10 an hour. That’s not much.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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