Overtime and Minimum Wage Proposed for Senior Care Workers

Overtime and Minimum Wage Proposed for Senior Care Workers

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As more baby boomers age, the in-home care field will grow exponentially – yet workers do not qualify for minimum wage and overtime under the current law. President Obama, Department of Labor and Labor Secretary Hilda Solis announced plans to update the laws to provide protection for people working in this sector.

That many of the beneficiaries of President Obama’s “We Can’t Wait” initiatives are also members of his electoral base is not missed among his critics.  Many lobbied criticism that the goodwill gestures are costly attempts to appeal to voters. Similar accusations arose during the most recent pronouncement.  Whether a political move or not, there are 1.8 million people out there welcoming this latest endeavor.

The gender and racial demographics in that field speak to pronounced disparities and a need for change in the pay scale: 92% women, nearly  30% African American and 12% are Hispanics.  Close to 40% rely on public benefits such as Medicaid and food stamps because they not subject to the same standards as other health care workers.

In response to those who claim this may be a political move to take a stance that benefits a key voting bloc, Secretary of Labor said “Not at all.

“This issue has been around for decades and it has been a long time coming and finally this President has said we cannot wait for Congress to come in and fix.” Solis referenced a 2007 case when home care worker Evelyn Coke sued for overtime protection under the existing regulations because she worked 70 hours a week with no benefits. The court ruled against her based on the language of the old rules.

When the Fair Labor Standards Act was created in 1974 bestowing rights to workers including healthcare professionals, homecare workers were considered more like babysitters and  and were exempted from overtime and minimum wage protection.

Since then, the field has evolved to include professionals.

Solis said that though Cook did not live to see the fight she started have its proper outcome, others will benefit and be able to benefit if the rule change is finally in place. “The care provided by in-home workers is crucial to the quality of life for many families,” Solis said.

During a speech announcing the initiative yesterday, the president was joined by home health care worker Pauline Beck, who the president traded places with in a “life in my shoes” type program during the campaign trail in 2007 .   Of his experience, the president said he acknowledged that home healthcare workers are “hardworking  professionals, mostly women who work around the clock so that folks who need help, including many of our family members, can live independently in their own home.”

“That’s right – you can wake up at 5:00 in the morning, care for somebody every minute of the day, take the late bus home at night and still make less than the minimum wage,” President Obama said. “And this means that many homecare workers are forced to rely on things like food stamps just to make ends meet.”

“This proposal will level the playing field,” Secretary Solis said. Currently 29 states do not afford minimum wage and overtime protection and the law, when finalized, would standardize the benefits.  After the proposal is formally published, members of the public will have 60 days to comment after which the Department of Labor will ascertain those comments and issue its final rules which will then go into effect and impact millions of agencies and home health workers.

2 COMMENTS

  1. This is a terrible idea that will further drive underground the home care industry, without any benefit to either the workers or the recipients of care. I fully understand and appreciate that these are a lot of hard working and extraordinarily dedicated caregivers, whose services are vital to those who need them. However, if we price them out of the reach of their employers, those few employers who are now properly reporting the wages and paying taxes will have no choice but to go under the table with payments. In many cases, Granny cannot afford to pay minimum wage plus time and one half above 40 hours per week, and even if she can, it is hard enough now to get Granny to file payroll taxes without having to do overtime calculations. Most don't do it.

    Illinois is a prime example of how this goes wrong. Illinois broadened its laws to cover home care workers at the urging of the service unions, who thought they would be able to add members and bring benefits to these workers. However, they have not been able to sign up members and get union shops in an industry where the workers do not "come to work" at a fixed location. Meanwhile, conscientious agencies who furnish properly screened workers who may legally work in the US, who pay employment and unemployment taxes, and who insure their worker under the Workmens' Compensation laws find it almost impossible to keep in compliance with the overtime laws when work hours vary week to week. If a worker who normally puts in 60 hours per week works only 59, the agency is compelled to reduce the weekly wage by a time and one half hour, not a straight time hour. Try explaining that to your workers, many of whom live on the margins of the economy and for whom that extra one-half hour deduction is vital.

    This is an industry where the agencies have very small margins, because the competition is not another agency. The competition is untaxed, often illegal, and perhaps dangerously under screened individuals. The first time an agency tries to bill more than their standard hourly rate for overtime because a caregiver stayed an extra hour, or deducts a time an one-half hour from a caregiver who left early, the US Treasury loses an employee who goes underground and works directly for the customer, both of whom become tax dodgers.

    The workers understand, without breaking it down on their paycheck, that they are being paid $X for Y hours per week, including compensation for hours that are overtime. What happens if this law is passed is that an artifice is created where everyone works backward from the existing wage and hours being worked to create a non-existent "straight time" wage. In most major metropolitan areas, the weekly amount comes out to be at or higher than the minimum wage, even if overtime is factored in. Where the usual compensation for a home care worker works out to less than minimum wage, I would guess that it is a low income, and possibly a lower cost of living locality where the employer is suffering under the same lack of funds as the worker.

    Who gains here?

    Donald J. Schaffer, CPA
    Northbrook, Illinois

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