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Reflections on the Companionship Exemption

July 11, 2013

— by Rick Surpin, Chairperson, PHI, and ICS President; and Jodi Sturgeon, President, PHI

The U.S. Department of Labor is poised to issue its final rules, narrowing the Fair Labor Standards Act‘s “companionship exemption,” which currently excludes home care workers from federal minimum wage and overtime protection. For us, it has become very uncomfortable, if not painful, to participate in the debate over the proposed changes, because it has at times divided people and organizations who have often been strong allies on other related issues. 

PHI sits in a unique position regarding this issue, since it is the prime sponsor of the consumer-based Independence Care System (ICS), as well as the worker-owned Cooperative Home Care Associates (CHCA). The proposed change in the companionship exemption affects our three organizations in the following ways:

Independence Care System is a nonprofit Medicaid managed long-term care plan in New York City. It was founded in 2000, on the premise that adults with physical disabilities needed a program which responded to their special needs, including a focus on wheeled mobility and Consumer-Directed Personal Assistance Services. ICS has approximately 4,800 members today; 25 percent of them need 12-24 hours of personal assistance a day, and 10 percent use CD-PAS. 

Staff at PHI have colleagues and friends on the senior staff and Board of ICS who have physical disabilities, and need considerable support at home. Staff at ICS with disabilities are worried both for themselves and for others about the impact of the proposed change. They believe it will make it harder for a high-end user of services to find the number of people required to provide the necessary assistance, and that personal assistants who may work 50-60 hours a week today, may have to work less and not make enough in overtime to compensate for the lost hourly income. We believe that they are right on both counts.

Cooperative Home Care Associates is a worker-owned home care agency based in New York City. It was founded in 1985, on the premise that home care aides needed decent wages and fringe benefits, job stability, and opportunity for advancement; and that “good jobs” were a prerequisite for providing “good care.” At its inception, CHCA had to decide how to treat overtime. Every other agency that we knew of paid time and a half, based on the minimum wage.

CHCA chose instead to pay overtime on the aide’s base wage. It was consistent with our understanding of management’s responsibility to be fair, and we treated it as a cost of doing business, no different than other costs like worker compensation or paid time off. We quickly learned though that overtime could be and was a runaway cost, and had to be managed. We figured out how to control it with the least amount of disruption for clients receiving high hours of personal care and the least impact on aides — basically scheduling aides 48 hours per week, one week and 36 hours the next.

PHI is a national nonprofit organization that conducts policy research, analysis, and advocacy. It was founded in 1991 on the premise that the “Good Jobs, Good Care” model should be disseminated, applied in different home care and long-term care settings, and further developed. PHI has taken the position that the companionship exemption never should have happened and that there is no rational basis for excluding home care aides and personal assistants from the Fair Labor Standards Act. We both believe that PHI’s stance is right.

For the last 14 years, Independence Care System has worked very hard to ensure that the State Medicaid program paid appropriately to cover the cost of 12–24 hours of personal care a day in a managed care framework. We did not believe that ICS could be an organization focused on the needs of adults with physical disabilities…and only serve those people with low and moderate needs. For the last 28 years, CHCA and PHI have worked very hard to establish wage and benefit requirements in state law and to ensure that the funding was there to pay for these requirements.

For most of that time, public policymakers essentially would say that they would love to pay workers more, but it would mean having less money to provide care for people with disabilities and elders. Most, if not all, of both the consumer and worker advocates came to reject that argument as a false choice — there had to be money available to meet both critical needs. We believe that this is the case on this issue as well.

The exemption should be ended and the federal government should commit to pay for the additional costs in Medicaid home care services related to overtime. It is a marginal cost, but in the few states wherea substantial number of people are affected, a federal commitment to pay for it is warranted. There should also be federal/state guidance to payors and employers about how to manage overtime, similar to practices at CHCA, that seek to control it with the least impact on both workers and consumers — and not to eliminate it entirely.

This will require a transition to a system that pays for overtime appropriately, but manages its use, like most organizations do. A good transition will involve sufficient notice to consumers and workers, time to adjust, and support for making schedule changes and for finding additional compatible workers, if needed. We both understand that this kind of transition will be difficult for some people, and the challenge is to make it as least disruptive as possible.

It is disturbing, and certainly counterproductive, for consumer and worker advocates to be fighting over another version of a false choice. There is a way to essentially accommodate the primary interests of both parties if we can create the will to do so. President Obama could help lessen the increasing tensions between both sets of actors by coming out strongly for both the change in regulation, as he already has, and coupling it with a commitment to fund the increased Medicaid costs related to it.

Leadership is required on all sides to avoid arguments that appear to pit worker rights and consumer rights against each other. PHI remains committed to that challenge.

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