Understanding Overtime Laws and How They Impact Your Home Care Agency

May 25, 2017 10:00:00 AM

Employees are the single biggest asset most home care agencies have, and managing those employees is one of the biggest challenges agencies face. This not only means keeping employees happy – but also finding ways to manage labor costs. Given that most home care workers are not salaried employees and not exempt, keeping tabs on overtime laws is critical.

Understanding Overtime Laws and How They Impact Your Home Care AgencyIt’s important to note that overtime laws frequently treat home care workers as a special category, and eligibility requirements for overtime differ compared to most other industries. The changing regulatory landscape doesn’t help, either, making it extremely difficult for agency management to keep up with developments.

Here’s a breakdown of what home care agency leaders need to know about overtime laws, worker rights, and the current regulatory environment.

Overtime Laws for the Home Health Care Industry

In 2013, the Department of Labor extended wage and overtime protections to home care workers, arguing that agencies could no longer claim that employees were exempt from the Fair Labor Standards Act (FLSA). Several provider groups and trade organizations opposed this move, contending that the change could increase health care costs and potentially hurt employees in the long run.

A federal judge initially ruled that the Department of Labor didn’t have the authority to make such changes. But in 2015, the Department of Labor prevailed, and the wage and overtime rules were restored.

Under the FLSA, home care workers must be paid at least the federal minimum wage – which is currently $7.25/hour – and are entitled to overtime (time and a half) pay when working over 40 hours in a seven-day workweek. If a home care agency doesn’t comply with these laws, its workers can sue the agency or file a complaint with the Department of Labor asking for an investigation. Agencies that are not in compliance will have to pay back the missing wages – and possibly even double that amount in penalties – to the employee.

According to the Department of Labor, there are a few exemptions from the minimum wage and overtime rules. For example, in some limited circumstances, clients and their families are not required to pay a home care worker federal minimum wage and overtime pay if the home care worker provides mostly fellowship and protection services (i.e., the home care worker spends most of their time watching over the client and keeping them company rather than providing personal care services).

Additionally, a special FLSA rule applies to home care workers who live in the same house as the clients they work for. While these employees are entitled to receive at least the federal minimum wage for all their hours worked, they are not required to receive overtime pay. This is known as the live-in domestic service employee exemption.

How Overtime Laws Vary by State

Not all states are in favor of the new federal laws. There is concern that overtime laws negatively impact certain groups of people receiving home-based care – such as the elderly or those with disabilities.

One notable example of this is in Illinois, where there has been a long-standing fight over whether home care workers in Illinois should be eligible for overtime pay.

The dispute began in June 2016, when several organizations – including Access Living, the National Employment Law Project (NELP), the Illinois Network of Centers for Independent Living (INCIL), Caring across Generations, and SEIU Healthcare Illinois – jointly released a report outlining the impact of overtime laws on home health care services.

The report concluded that the state shouldn’t be able to restrict the number of hours a home care worker can work in a given week and that restrictions on overtime hours are disrupting the care system and harming workers, clients, and families. It also stated that such restrictions threaten the independence and safety of people with disabilities, since clients with service plans over 35 hours per week will be required to hire an additional caregiver to cover the remaining hours of service.

Subsequently, Senate Bill 261 was introduced in the State Congress, which would prohibit Illinois from limiting the number of weekly hours worked by individual providers. However, in January 2017, Governor Bruce Rauner vetoed the bill, meaning home care workers in the state will no longer be allowed to work overtime or receive overtime pay. Rauner cited that deep budget cuts meant the state could not afford time-and-a-half overtime pay for home care providers.

While Illinois is restricting overtime pay eligibility in an effort to curb state spending, other states are debating new policies that may be beneficial to workers but may also increase costs for agencies. For example, groups in both Maine and California are fighting to increase minimum wage, which will likely benefit home care workers but squeeze profits for agencies.

The Impact of Overtime Laws on Home Care Agencies

While the minimum wage and overtime laws were enacted with the goal of having a positive impact on home health care and agencies as a whole, not all states are experiencing these outcomes. In Minnesota, the effects of the home care wage rule are taking a massive and unwanted toll on caregivers along with their clients.

Specifically, many of the state’s home care agencies are cutting hours and rescheduling workers to avoid paying travel costs and overtime. As a result, care has been disrupted to hundreds of clients who rely on home care services and has led to a severe shortage of caregivers in the state.

Since Minnesota’s state-funded personal care assistant program doesn’t have enough money to compensate caregivers for overtime costs, Minnesota’s governor asked the state legislature for $58 million in new funding to help pay for overtime and travel costs.

If the extra funding is granted, Minnesota would join several other states – including Massachusetts, California, Oregon, and Washington – that have moved to help home care agencies cope with the added costs of the new labor and overtime laws.

Monitor Overtime and Increase Compliance with a Care Delivery Management Solution

Overtime laws for home care agencies are constantly changing, especially at the state level. Monitoring overtime hours and managing how many hours employees are working is critical for agencies.

Implementing a Care Delivery Management solution that includes mobile time sheets can enable agencies to improve compliance with overtime laws as well as with other government mandates, such as Electronic Visit Verification (EVV) and Pre-Claim Review

Home health and community care leaders rely on CellTrak’s Care Delivery Management solution to boost productivity, enhance communication, increase compliance, reduce costs, and improve care. Learn how you can improve care and service delivery by contacting us today.

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Topics: Compliance, Productivity