Obama Proposes Removing Companionship Services Exemption for Home Care Workers

USA Today | By Richard Wolf

WASHINGTON – Nearly 2 million home care workers could qualify for federal wage and overtime protections under a rule being proposed today by the Obama administration.

The effort — the 18th initiative in Obama’s “We Can’t Wait” campaign against Congress — would overcome legislative inertia and a 2007 Supreme Court ruling that upheld home care workers’ exclusion from wage-and-hour standards.

Once classified as companions for the elderly and people with disabilities, most home care workers today are part of a growing $70 billion industry that has doubled in size during the past decade. The nation’s over-65 population is projected to grow from 40 million to 72 million by 2030; 27 million Americans will need home care by 2050, the government estimates.

At the same time, the duties of home care workers have evolved to include health care services, such as managing medications and monitoring vital signs. Yet they average $17,000 to $20,000 a year — more than the $7.25-per-hour minimum wage, but low enough to put many beneath the poverty line and enable them to qualify for public assistance.

More than 90% of home care workers are women, and nearly 50% are minorities. About four in 10 rely on public benefits such as Medicaid and food stamps.

“The care provided by in-home workers is crucial to the quality of life for many families,” Labor Secretary Hilda Solis says. “The vast majority of these workers are women, many of whom serve as the primary breadwinner for their families.”

About 1.6 million of the 1.8 million workers are employed by agencies that pay more than the minimum wage but not overtime. The National Association for Home Care and Hospice says the change would lead the agencies to hire more workers, rather than pay overtime rates.

“The worker is not getting anything out of it,” says Bill Dombi, the group’s vice president for law. “Instead, the employer ends up with higher costs because they have to hire more people.”

Eventually, he says, an aging society will outpace the industry’s ability to serve it, leading to cost overruns for federal and state government programs serving the elderly and disabled.

Home care costs Medicaid and Medicare about $56 billion annually. The proposed change is projected to cost about $100 million a year, mostly in overtime costs. Twenty-one states already provide minimum-wage protection for more than half the nation’s home care workers, and 15 also provide overtime protection.

The exemption from the Fair Labor Standards Act’s wage and overtime rules dates to 1974. President Clinton sought to change it shortly before leaving office in 2001, but President George W. Bush reversed that effort.

Enter Obama, who co-sponsored Senate legislation in 2007 that would have ended the exemption for most home care workers. As an Illinois state senator in 2003, he voted to raise the pay of home care workers to $9 an hour.

The effort plays into Obama’s “fair share” campaign theme, outlined in Osawatomie, Kan., last week, which echoes Theodore Roosevelt’s century-old crusade against economic inequality. It’s likely to help him with low-income and minority workers, who traditionally favor Democrats.

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