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January 2012 

 Letter to Chairmen

Chairman John Kline

Committee on Education and the Workforce

Chairman Tim Walberg

Subcommittee on Workforce Protections

2181 Rayburn House Office Building

Washington, D.C. 20515

                                    Re:  DOL Proposed Changes to the Companionship Exemption

Dear Chairmen Kline and Walberg:

On behalf of the Private Care Association (the “PCA”), I am writing to express our appreciation for your insightful observations concerning the U.S. Department of Labor’s (“DOL”) proposal to eliminate the companionship exemption under the Fair Labor Standards Act (“FLSA”) for third-party firms, and to significantly narrow the definition of the types of services that constitute companionship.  We believe the “unintended consequences” you reference in a December 15, 2011, joint statement would include a seismic disruption in the lives of caregivers and care recipients.  

PCA is a national association representing caregiver registries. These firms help match freelance caregivers with elderly and disabled consumers seeking a pre-background-screened, pre-credential-verified home-care provider. Caregiver registries earn referral fees from the home-care arrangements they facilitate.

In addition to serving as President of PCA, I also operate a caregiver registry.   I personally deal with caregivers and care recipients on a daily basis.

As a threshold matter, we believe there are two significant points that need to be part of the debate on this important issue.

First, it should be appreciated by all that the only issue under the FLSA for home care is overtime; we are not aware of any caregivers who operate with caregiver registries who receive an hourly rate at or below minimum wage.  In Florida, where my registry operates, caregivers generally earn approximately $10 to 11 per hour.

Second, we believe it critical to acknowledge the dichotomy of choices that this issue presents. The elderly or disabled individuals who need home care to remain independent do not have a choice in the matter. For example, a quadriplegic does not choose whether or not to purchase home care.  Without help, he or she would need to be institutionalized. Caregivers, on the other hand, do have a choice. If they want overtime, they need only work in a facility. The companionship exemption does not apply to companionship services performed in a facility.  In addition to serving as President of PCA and operating my caregiver registry, I also am disabled. I have a deep, personal appreciation for this dichotomy of choices.

With respect to the “unintended consequences” you referenced, my experience and the experience of my colleagues in the industry suggest that a fundamental problem with the DOL’s proposal is one of mathematics. There simply is no money to pay overtime.  Home care is paid for (i) by long-term insurance, which generally pays a “capitated,” fixed amount per day or per week, which is established by contract and will not change, (ii) by private savings, which for most of our clients are diminished due to the bleak economy and very low interest rates, or (iii) by government programs, which also generally pay a “capitated” amount and already appear to be stretched.  In this paradigm, the most likely reaction to a new overtime mandate is that care recipients would restructure their care relationships to avoid overtime liability. This restructuring would have the following consequences: 

• Caregivers would no longer be able to work for only one client during a week, but instead would need to work for multiple clients, to avoid qualifying for overtime with respect to any client;
  • The lives of caregivers would be disrupted,
  • Caregivers would need to pack up, move in and move out, multiple times each week, and travel from client to client, and
  • Caregivers likely would work fewer hours, due to the difficulty of finding multiple clients who need care on synchronized schedules that permit a caregiver to maximize the number of hours worked;
• Elderly and disabled care recipients would need to work with multiple caregivers during a week, to avoid any caregiver qualifying for overtime;
  • Care recipients would lose the continuity of care they cherish,
  • Care recipients and their family members who help them would experience a heavier administrative burden associated with keeping track of multiple caregivers and their respective schedules,
  • Care recipients with dementia, Alzheimer’s disease and similar types of aliments, which causes them to have a difficult time adjusting to new caregivers, would suffer disproportionately,
  • Care recipients who seek to avoid overtime by locating caregivers on their own, without a third-party firm, would no longer enjoy the background-screening and credential-verification protections such firms provide, and would be left vulnerable to unqualified, abusive or predatory caregivers, and
  • In cases where a care recipient needs substantial care and cannot find enough different caregivers to keep all below 40 hours per week, the care recipient would need to go without needed care during certain periods, to pay the overtime, or else move into an institution.

 

For caregiver registries, the DOL’s proposal creates an additional problem.  As noted, registries merely facilitate home-care relationships between care recipients and freelance care providers.  Registries generally do not pay caregivers; rather, the care recipients generally pay their caregivers directly or through an escrow account that a registry maintains. The DOL, nonetheless, has taken the position in audit that a registry is a third-party employer of a caregiver.  Consequently, in a case where a caregiver obtains two clients through a registry and the caregiver performs 30 hours for each client, the caregiver would be eligible for 20 hours of overtime under the DOL’s proposal and its audit position, but neither client would want to pay overtime because neither would have received more than 40 hours of care. The DOL’s proposal offers no solution to this dilemma.

On behalf of PCA, we very much appreciate the leadership and courage you have demonstrated on this issue by acknowledging the problems that the DOL’s proposal would create, notwithstanding its very obvious visceral appeal.

We look forward to working with you and your colleagues on this important issue.

Thank you very much.

            Sincerely,

            Joseph Bensmihen

President

Private Care Association