Earlier this week, the Obama Administration issued a new regulation to extend Minimum Wage and Overtime Protections to Home Aides who care for disabled persons and older adults. Starting on January 1, 2015, all Home Aides will be covered under the Fair Labor Standards Act (FLSA) which requires employers to pay at least the Federal minimum wage and time-and-a-half overtime premium when Home Aides work more than 40 hours in a week. Traditionally, the FLSA excluded Home Aides and babysitters from these protections. However, in New York, Home Aides were already required to be a paid minimum wage under the New York State Labor Law. The new overtime pay requirement under FLSA will be the added benefit to Home Aides in New York.
The U.S. Labor Department reports Home Aides as one of the fastest growing occupations and expects the number of Home Aides to increase by sixty-eight percent, from 1.9 million in 2010 to about 3.2 million, by 2020. By including Home Aides under the FLSA, the Labor Department seeks to provide stability in an industry where the turnover rate is particularly high. As Baby Boomers continue to move into retirement the demand for Home Aides will increase and the need for stability in the industry will follow.
The Home Aide industry includes Personal-Care Aides, Home Health Aides, and Certified Nursing Assistants. Home Aides are typically hired by families of persons needing care, or by those persons themselves. The Administration revealed that almost 40 percent of Home Aides receive government benefits themselves including Medicaid. The industry is predominately female, with a combined 42 percent representing minority groups. The ruling was received with anxiety from the business sector where many organizations suggest that increased costs will lead to more part-time positions, limit access to home care for individuals needing services, and will cost the Home Aides more in the long run. Advocates of the new ruling expressed how beneficial it would be for those who care for the most vulnerable in our communities to have these added protections.
There are important implications of this new ruling. First, any Home Aide hired through for-profit home care agencies or third-party agencies cannot be exempt from minimum wage and overtime premiums. There is also no exemption for Aides who provide companionship activities which includes care services exceeding 20 percent of the total work hours. The ruling defines care to include activities of daily living and instrumental activities of daily living. Thus, a companion whose duties includes activities such as dressing, grooming, feeding, bathing, preparing meals, assisting with light house work, and managing finances is not exempt from the regulation. Live-in Home Aides are exempt from overtime pay but not the minimum wage requirement.
While the Administration provided time for agencies and families to adjust to the new ruling, it is important to use this time wisely and begin to plan for the changes now. Lamson and Cutner encourages you to subscribe to the Elder Law Exchange Newsletter where we recently covered a related topic:Why Paying a Home Aide Off the Books is Not a Good Idea