On September 16, 2013, the U.S. Department of Labor issued the Final Rule that significantly modified the longstanding companionship services and live-in domestic services exemptions from minimum wage and overtime compensation. The rule changes take effect on January 1, 2015.
NAHC has developed a series of strategies to address the impact of the rule in home care. These strategies include a series of defensive measures through Congress, litigation to invalidate the changes, and a strategy to make the rule change livable for home care providers.
The defensive legislative strategies include the introduction of legislation to reverse the rule change. However, this strategy has a very limited chance of success given the veto power of a President who fully supports this rule. Similar measures such as an attempt to defund the rule implementation are likely to face comparable results.
NAHC continues to evaluate and assess a litigation strategy. NAHC has successfully defended the current rule before the U.S. Supreme Court twice, most recently in 2007. However, litigation this time around would aim to invalidate the rule, which is a much more difficult effort. Also, if litigation is pursued, it would require success on both the revised definition of Companionship Services as well as the change that excluded third-party employers from the exemption. All these elements are undergoing a careful review at NAHC.
The latest NAHC strategy is being termed the lemonade approach. The rule-- a lemon-- would be turned into lemonade by securing federal support for the new costs that the overtime rule would create. With the new funding, home care companies can continue to meet consumers needs without resorting to part-time workers, reducing base wages, or other similar measures to control cost growth. Consumers would win by getting experienced staff with reduced staff turnover. Workers would benefit by getting improved wages. Companies would remain stable as the new costs are funded.
The lemonade strategy would begin with the concept that the President must find a way to fund the new mandate if he wishes to achieve his intended goals for workers without harming consumers and home care businesses. Funding the new mandate may entail two separate actions. For federal health care and personal care programs, regulatory changes in the benefit programs could include a requirement to adjust payment rates to cover any new costs incurred complying with the overtime rule.
Private pay home care can be addressed in a different way. Since rates are set by the private businesses in contrast to government funding programs, consumers can be protected from the higher care costs triggered by the new rule through a tax credit program. Current tax law includes several tax credit programs under which individuals receive a tax payment credit when expenses are incurred for a particular good or service. With this approach, the elderly and disabled can qualify for a credit if they purchase home care services. The credit would be payable even where the consumer has no income tax liability.
The lemonade strategy would not be an easy or success-guaranteed advocacy effort. It will take hard work and luck to succeed. However, it is the one strategy that will bring the most stakeholders together as consumers, workers, and employers should all be able to support it.
NAHC Report will continue to keep the home care community updated as this advocacy effort unfolds.
NAHC also urges its members to attend this years Annual Meeting, October 31 November 3, to continue its grassroots advocacy on this and many other topics that have a direct consequence on the home care & hospice community.
To register to attend the Annual Meeting, please click here.