Home Health & Hospice Week

Watch out for related lawsuits, attorney warns.

Get ready to shoulder a whole new administrative burden of tracking and limiting aides' hours, if a new proposal from the Department of Labor is finalized as is.

On Dec. 15, the DOL released a proposed rule that will eliminate the companionship exemption for any home care workers employed by a third party -- i.e., any staff of home health agencies and private duty agencies. Observers had expected a change to the companionship exemption, since the Obama administration has been signaling that intention for years (see Eli's HCW, Vol. XVIII, No. 22, p. 170).

Background: The companionship exemption exempts "companion" workers from Wage and Hour rules mandated by the Fair Labor Standards Act, which require overtime payment and minimum wage. "Over time, home health aides have been absorbed into the FLSA's exemption for companionship and live-in domestic services," explains attorney Emily Miller with Cozen O'Connor in Philadelphia.

President Obama heralded the change in a press conference. Under current Wage and Hour rules mandated by the Fair Labor Standards Act, "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," the president commented. "And this means that many home care workers are forced to rely on things like food stamps just to make ends meet. That's just wrong."

That may indeed be wrong, but this administrative change is unlikely to do much to help it (see related story, p. 3). Workers won't receive much in overtime payment because HHAs will begin limiting hours to avoid OT pay, notes attorney Elizabeth Zink-Pearson with Pearson & Bernard in Covington, Ky. And the vast majority of HHAs already pay their aides more than minimum wage, so that portion of the rule is largely moot.

Even the DOL acknowledges in the proposed rule that it expects agencies to limit workers' hours to less than 40 per week. "Employees who used to exceed 40 hours of work per week will work fewer hours, transferring income to fellow workers who will absorb the extra hours," the rule notes.

The HHA could pay the worker overtime if a private pay client agrees to the extra costs, notes attorney John Gilliland II with The Gilliland Law Firm in Indianapolis. But that will be rare. "Very few patients/families can afford the overtime pay," Gilliland points out.

The cost: The DOL estimates that this rule will cost HHAs about $29 million and payors, including patients and families, about $27 million.

Just What HHAs Need -- More Paperwork

The main burden on agencies from this rule won't be OT pay itself, expects attorney Stephen Zweig with Ford & Harrison in New York City. It will be accurately tracking aides' hours in the home and managing scheduling to avoid triggering OT with work weeks exceeding 40 hours. "This will change operations dramatically" for agencies that currently use the companionship exemption, Zweig says.

"If finalized, this rule would mean that HHAs must track aides' hours worked and ensure that they receive overtime payment for hours in excess of 40," Miller says.

Watch out: If you fail to track hours accurately, you will be courting a major risk, Zweig warns: a FLSA lawsuit from employees. HHAs may be especially vulnerable to such lawsuits because the work hours take place not in a centralized location with supervision on site, but rather behind closed doors in a client's private home with no supervision, he says.

Under federal law, FLSA lawsuits can go back three years, Zweig notes. But state laws may permit lawsuits to reach back even further. For example, in New York State they can go back six years. "That's how you get enormous numbers being sued for," he says. Class action lawsuits can result in losses totaling hundreds of thousands of dollars.

Tracking aide hours closely is rife with potential problems, Zweig predicts. For example, agencies may require employees to sign in and out on a payroll sheet and notify a supervisor or scheduler of additional hours that would cause them to exceed the OT limit. But getting employees to comply with those rules may prove difficult.

In some cases, aides may have a hard time avoiding OT hours for unexpected reasons. For example, a doctor visit they are attending with their client may run long, or the client may need them during their scheduled lunch period, Zweig offers. Then the payor will be on the hook for the OT.

Private payors won't be the only ones who feel pain from this change. "HHAs who use this exemption primarily do so to provide Medicaid waiver services where the margins are so slim that the OT will take them out," Zink-Pearson notes. "To continue those services, especially in a climate where states are slashing reimbursement, the only answer will be to assure that workers do not exceed 40 hours of work."

Impact: "State Medicaid budgets will be hard hit due to the large increase in the cost of personal care/companion type services when overtime pay is involved," Gilliland predicts.

Home care providers in some states won't feel much effect from this new proposal. That's be-cause about 20 states already don't have this exemption under state law, notes the National Association for Home Care & Hospice.

Note: The proposed rule is online at www.dol.gov/whd/flsa/CompanionshipNPRM.pdf.