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In 2013, the Obama administration included live-in caregivers in U.S. wage and overtime law. Previously, those caregivers – along with salaried workers – had been exempt from overtime provisions.
The administration’s goal at the time was to raise caregiver wages. That has certainly happened, albeit in a small number of cases. Mostly, though, the Obama-era regulation has ended up decreasing the amount of live-in care that home care agencies provide.
“Live-in care used to be a less expensive way of getting 24-hour care,” Georgetown Home Care (GHC) CEO John Bradshaw told Home Health Care News. “Now, it’s a really expensive way of getting a limited number of caregivers. Families need people there around the clock, but don’t want to have six caregivers coming in every week, doing 12-hour shifts. It’s now, really, just for the wealthy.”
Based in Washington, D.C, GHC provides personal care, respite care, senior companionship services and senior transportation services to the D.C. metro area as well as Montgomery County, Prince George’s County and Northern Virginia.
Before the provision that removed caregivers from the overtime exemption list, live-in care was about 25% of GHC’s business. Now, it represents just about 5%. The small number of live-in caregivers that the agency does currently employ generally make more than $100,000 per year.
“And God bless them – they work really, really hard,” Bradshsaw said. “But we’ve always found ourselves in between trying to provide the best possible compensation for our employees at the lowest possible cost to the client. And all of a sudden, those dynamics got really out of whack with live-in.”
The situation has thrown the industry for a loop in general over the past near-decade, as litigation persisted on each side of the argument.
But it has especially come to a head during the COVID-19 pandemic. And if there were ever a perfect time for live-in caregivers, now would be it, industry insiders feel. Suddenly, seniors’ families are very interested in the idea of paying one worker who would be exposed to their loved one, almost exclusively.
“A single caregiver or a primary caregiver, that started to have increased appeal. And obviously increased importance for not just continuity of care, but also reduction in the risk of COVID transmission,” Matt Wolfe, a health care and public policy attorney at Baker Donelson, told HHCN. “But it has really decreased steadily since 2015. But I do think it’s only starting to kind of pick up steam again because of those COVID factors.”
At the same time, many providers are still unable or unwilling to provide that type of care. Although there is a fight for a home care agency exemption from the Fair Labor Standards Act, nothing official has made the industry re-invest in live-in care just yet.
For now, home care providers are stymied by Medicaid wages, which do not match the pay that would be needed for live-in care. Either that, or, they are forced to raise the cost of care for private-pay clients substantially after minimum wage hikes and overtime is considered into the cost of the care plan.
A live-in comeback
While the Obama administration was well intentioned with its move to include live-ins as part of overtime law, the results simply haven’t borne out the strategy.
“The thought from the Department of Labor was that by requiring overtime, it will cause the wages to go up for all these caregivers, and that’s not what happened,” Angelo Spinola, the co-chair of the home health and home care industry group at the law firm Polsinelli, told HHCN. “And there are several reports from the [Government Accountability Office] and [the Health and Human Services Department] that show that caregiver wages have stayed flat.”
Instead, caregivers will now more often work for multiple companies if they want to work more than 40 hours per week.
It’s not to say that the live-in caregiver arrangement didn’t deserve some tweaking. Surely, there were caregivers being underpaid or poorly treated as live-in caregivers, experts recall. But instead of improving the situation, industry regulation has just decreased the amount of paid people in the profession.
“I think that’s one of the more monumental changes that we tried to prevent,” Spinola said. “Before, there was no payment or tracking of overtime. You just basically negotiated with the caregiver on what the service hours would be, and what they’d be paid per hour for the service hours. That was it. And so there was very little litigation in the industry.”
The best way to fix the issue, some industry insiders believe, is to turn live-in caregivers into a salaried position.
But for now, that is also unlikely for providers. Turning a worker into a salaried one could be viewed as a way to get through overtime laws, which is illegal.
“There are some approaches to dealing with the realities of the Fair Labor Standards Act,” Wolfe said. “You can move somebody from being an hourly worker to a salaried worker, but that requires an individualized analysis as to whether that exemption would even apply. There’s also – and I’ll say this nicely – some dubiousness about whether you can change somebody to a salaried employee solely for the purpose of avoiding the minimum-wage overtime requirements.”
That’s not a risk, at this point, that many providers are willing to take – despite demand.
“You’ve got to be really careful not to offer a salary to somebody with the goal of just avoiding overtime,” Bradshaw said. “You could also run into one problem, depending where you are, and that is if you make below a certain level as a salaried employee, you are still due overtime.”
Industry advocates have recognized this is a top issue moving forward, however. Spinola says that there’s a possibility that live-in care could make its way back if a reasonable solution was agreed to in the near-term future – one that’s fair, yet affordable, for all parties involved.
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