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LeadingAge New York

Cheryl Udell, policy analyst

Hinman Straub P.C.:

Leanne R. Kontogiannis, principal

December 2, 2014

Speakers

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• Background

• Definitions of Terms

• Who is Impacted?

• Who is Exempt?

• What Services Are Impacted?

• Third Party Liability Rule

• Economic Realities Test

• Wage Parity

• Travel Requirements

• Live-In/Sleep-In Changes

• What Does the Time Enforcement Delay Mean?

• Survey Findings

• Advocacy

• Resources

• Questions

Agenda

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Who is Impacted? Direct Care Workers • Six million of the 40 million individuals over the age of 65 need some form of

daily assistance to remain in the community

• The number is expected to double with the aging baby boomers

• Presently, nearly 2 million direct care workers provide essential home care assistance to seniors or individuals with a disability

• The majority are employed by home care agencies, nearly 90% are women and nearly 50% are minorities. They are in roles of:

Home health aides

Personal care aides

Certified nursing assistants

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Background and Overview of States Impact • 15 states already extend state Minimum Wage (MW) and Overtime (OT)

protections to direct care workers (NY)

• In 20+ states and Puerto Rico, for the first time, workers will have MW and

OT rights

• 13 states and D.C. workers will be covered by a higher state minimum wage

rate vs. federal minimum wage

• 5 states and D.C. workers, for the first time, will have OT rights

• In 2013, the Nation’s home care workers usually earned $8.50 to $12 hour

• Estimated 40% of aides receive government benefits (i.e. SNAP/Medicaid)

• Employment projections (US DOL Occupational Outlook)

• Home Health Aides expected to grow by 69% from 2010-2020

• Personal Care Aides expected to grow by 70% for the same time period

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Direct Care Workers – Con’t.

• Impact – Shrinking Pool of Caregivers

• Direct care workers have been exempt from federal wage laws since 1974, ends the 40 year old exemption

• Classified into the same “companionship services” category as baby sitters, a group that is exempt from minimum wage and overtime coverage

• U.S. Dept. of Labor – “We’ve seen a lot of turnover in this industry, and we believe that this new rule will stabilize the work force.”

• Others – concerned with cost, less care, more P/T aides, more on caregivers

• So what are the key components of this new rule?

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FAIR LABOR STANDARDS ACT (FLSA) BACKGROUND

• Requires employers to pay minimum wage and overtime to employees.

• Overtime compensation must be paid at a rate not less than 1 ½ times the “regular rate” at which the employee is employed.

• Exemption from minimum wage and overtime requirements for domestic service workers.

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FAIR LABOR STANDARDS ACT (FLSA) BACKGROUND

• In order for FLSA’s minimum wage and overtime provisions to apply, must be an employment relationship

• Workers who are economically dependent on the business of the employer, regardless of skill level, are considered to be employees

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FAIR LABOR STANDARDS ACT (FLSA) BACKGROUND

• Economic Realities Factors used to determine whether an employment relationship exists under the FLSA

– Extent to which the work performed is an integral part of the employers’ business

– Whether the worker’s managerial skills affect his or her opportunity for profit and loss

– Relative investment in facilities and equipment by the worker and the employer

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FAIR LABOR STANDARDS ACT (FLSA) BACKGROUND

– Worker’s skill and initiative

– Permanency of the worker’s relationship with the employer

– Nature and degree of control by the employer

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FAIR LABOR STANDARDS ACT (FLSA) COMPANIONSHIP EXEMPTION

APPLIES TO:

– Domestic service workers employed to provide companionship services for an elderly person or a person with an illness, injury or disability

DOES NOT APPLY TO:

– Trained personnel such as registered or practical nurses

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CHANGES TO FLSA EFFECTIVE JANUARY 1, 2015

Minimum wage and overtime protections extended to all direct care workers employed by home care agencies and third parties

Overtime wages must be paid at time and a half of the regular wage rather than time and a half of the minimum wage

Additional record keeping requirements for live-in domestic service employees

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CHANGES TO FLSA EFFECTIVE JANUARY 1, 2015

COMPANIONSHIP EXEMPTION

• No longer available to third party employers such as home health agencies – Third party employers must pay their workers the

federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a work week

• Only available to individual, family or household solely or jointly employing the worker – Must meet companionship services test

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COMPANIONSHIP SERVICES

• Under the companionship services test, “companionship services” are defined as “fellowship” and “protection” and also include the provision of “care” activities as long as the care activities do not exceed 20% of the worker’s time.

• If a worker providing services in a private home spends more than 20% of the work week providing assistance with activities of daily living, the worker is not providing companionship services and must be paid at least the minimum wage and overtime at time-and-a-half the regular pay rate.

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COMPANIONSHIP SERVICES

• “Companionship services” are defined as “the provision of fellowship and protection for an elderly person or a person with an illness, injury or disability who requires assistance in caring for himself or herself.” – may include household work related to the care of

an aged or infirm person, such as meal preparation, bed making, washing of clothes and other similar services

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COMPANIONSHIP SERVICES

• “Fellowship” means to engage the person in social, physical and mental activities, such as conversation, reading, games, crafts, accompanying the person on walks, on errands, to appointments or to social events.

• “Protection” means to be present with the person in their home, or to accompany the person when outside of the home, and to monitor the person’s safety and well-being.

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COMPANIONSHIP SERVICES

• Companionship services also includes the provision of care – attendant to and in conjunction with the provision of

fellowship and protection

– does not exceed 20% of the total hours worked per consumer and per workweek

• The provision of “care” means assisting the person with: – Activities of Daily Living (ADLs); and

– Instrumental Activities of Daily Living (IADLs)

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COMPANIONSHIP SERVICES

• Tasks Not Considered Companionship Services – Household work

• If primarily benefits other members of the household, such as making dinner for the entire family or doing laundry for another member of the household, companionship exemption not applicable

– Medically related services • Services that typically require training by medical

personnel include invasive or sterile procedures or procedures that require the exercise of medical judgment

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LIVE-IN DOMESTIC SERVICE EMPLOYEES

• Reside in the employer’s home permanently or for an extended period of time

– If employed by an individual, family or household, exempt from overtime pay, must receive federal minimum wage.

– If solely or jointly employed by a third party must be paid at least the federal minimum wage and overtime pay for all hours worked.

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LIVE-IN DOMESTIC SERVICE EMPLOYEES

• Agreements between employer and employee to exclude certain time from compensable hours worked – sleep time (not more than 8 hours)

– meal time

– other periods of complete freedom from work duties

• If the sleeping period is interrupted by a call to duty, the interruption must be counted as hours worked. If the worker is not able to sleep for at least five hours, the entire period must be counted as work time.

• Employer must maintain a copy of the agreement

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LIVE-IN DOMESTIC SERVICE EMPLOYEES

• Mandated recordkeeping documenting exact number of hours worked

• Employer may require the live-in domestic service employee to record his or her hours worked and to submit the record to the employer

• Failure to maintain accurate records may result in back wage liability

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Impact with NYS DOL and Wage Parity • NYS Dept. of Labor regulations require agencies to pay minimum wage and pay overtime at time-and-a-half of minimum wage.

• “Elimination of the companionship exemption” means home care and hospice

providers must meet federal rules and pay overtime to their aides at time-and-a-half of the aide’s regular wage rate, not time-and-a-half of minimum wage, effective January 1, 2015.

• “Regular wage rate,” is impacted by local living wage laws, the state Home Care Worker Wage Parity Law, and recent increases in the State’s minimum wage amount.

• In NYS, the minimum wage will increase to $8.75 by the end of 2014.

• The wage parity rates are determined by county designation.

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NYS Dept. Of Health

• Official Notice of Home Care Worker Wage Parity Minimum Rate of Total Compensation – Update as of Nov. 24, 2014.

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Travel

• Travel time between multiple clients during a workday is considered “hours worked” under the FLSA, and the provider would be responsible for the payment of both MW and OT.

• Time spent by an employee in travel as part of their principal activity, such as travel from job site to job site during the workday, is work time and must be counted as hours worked. See regulations, 29 CFR 785.38.

• When an employee travels from home before the regular workday and returns to his/her home at the end of the workday, it is not work time.

• See regulations 29 CFR 785.35 about time spent commuting.

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Dates

• January 1, 2015

• Time-Limited Non-Enforcement Policy (10/9/2014, Federal Register)

– Jan.1, 2015 through June 30, 2015 U.S. DOL will not bring enforcement actions

– After July 1, 2015 US DOL will begin enforcement actions

– July 1, 2015 through Dec. 31, 2015 U.S. DOL will exercise its prosecutorial discretion on a case-by-case basis

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DELAYED ENFORCEMENT

• Third party employers (employers of domestic service employees other than individuals receiving services or the individuals’ families or households) will be prohibited from claiming the companionship services exemption from the FLSA’s minimum wage and overtime compensation requirements or the live-in domestic service employee exemption from the FLSA’s overtime compensation requirement.

• Agencies that do not comply with the changes as of January 1, 2015 may nevertheless face private lawsuits.

• Although DOL’s enforcement of rule change is restricted for first six months, private enforcement stemming from litigation is not restricted.

• Plan for compliance by January 1, 2015.

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Survey Findings

• Other State Projections

– Illinois for the 10,000 home care workers added, OT costs would exceed $32M

– California project - OT requirement would cost $600M

New York State

Survey – Eight Questions

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Survey Questions

• For CY 2013, how many hours in excess of 40 hrs. per week, proportion of

Medicaid

• Reducing OT hours from 2013 to 2014

• How do you pay OT?

• Projection of additional annual costs to comply with the new rule

• How many additional aides will you be hiring?

• How many “live-in”/”sleep-in” cases

• How will the new rule impact the way you do business in the future

• https://www.surveymonkey.com/s/FVG89PH

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Survey Findings

• The estimated additional overtime costs to serve Medicaid patients that will be incurred by providers who responded with complete data to the survey is: $15 million

• In addition to OT costs, the providers that responded estimate that they will face another $10.8 million in costs to comply with the rule

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Resources: US Dept. of Labor, Wage and Hour Division • Final Rule Fact Sheet Application of the Fair Labor Standards Act to Domestic Service, Final Rule [PDF] • Fact Sheet 79 Private Home and Domestic Service Employment Under the Fair Labor Standards Act [PDF] • Fact Sheet 79A Companionship Services Under the Fair Labor Standards Act (FLSA) [PDF] • Fact Sheet 79B Live-in Domestic Service Workers Under the Fair Labor Standards Act (FLSA) [PDF] • Fact Sheet 79C Recordkeeping Requirements for Individuals, Families, or Households Who Employ Domestic Service Workers Under the Fair Labor Standards Act (FLSA) [PDF] • Fact Sheet 79D Hours Worked Applicable to Domestic Service Employment Under the Fair Labor Standards Act (FLSA) [PDF] • Fact Sheet 79E Joint Employment in Domestic Service Employment Under the Fair Labor Standards Act (FLSA) [PDF] • Fact Sheet 79F Paid Family or Household Members in Certain Medicaid-Funded and Certain Other Publicly Funded Programs Offering Home Care Services Under the Fair Labor Standards Act (FLSA) [PDF] • Fact Sheet 79G Application of the FLSA to Shared Living Programs, including Adult Foster Care and Paid Roommate Situations [PDF] Home Care Webinar recordings – including audio and a transcript – that you can watch and download.

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Questions?

A &

Q

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Contact

• Cheryl Udell, policy analyst, LeadingAge NY – cudell@leadingageny.org

– 518-867-8383

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