Is It Doing More Harm Than Good?

January 11, 2017

Federal Fair Labor Standards Act: Is It Doing More Harm Than Good?

The new Connecticut overtime mandate may hurt caregivers and seniors.

The Obama administration has been pushing for a change in labor regulations- the Federal Fair Labor Standards Act would make home care workers eligible for overtime pay. The motive behind the proposed change is noble, however the unintended consequences are important to consider.

We can all agree that providing higher wages to home care workers would be beneficial. An increase in pay would attract qualified people to the booming health care industry and improve care for the elderly and disabled. However, mandatingthat home care workers be eligible for overtime pay will not produce the desired outcome.

As the managing partner of Compassionate Care at Home, a home care agency in North Haven, CT, I am now required by state law to pay overtime to eligible caregivers. Like many, I hoped the labor law would result in caregivers earning more money, unfortunately this is not the case.

Well, why?

The answer is simple: The law does not — and cannot — require families or home care agencies to employ the same caregiver once that worker reaches the overtime threshold. When a caregiver reaches their 40 hours, home care agencies can switch to other workers who have not yet reached that limit (even if the first worker is available and wants to earn more money).

What happens if the hourly rate for the caregiver goes up by 50%? Well, if you were paying $22/hr through a home care agency, the cost would now come to about $33/hour — a huge increase. Do you keep the same caregiver coming and pay $33/hour, or do you hire another one to finish out the week at $22/hour?

Families on a tight budget would typically tell the first caregiver to stop work (and therefore stop earning money) at 40 hours of service. You would then request from the agency to send a second caregiver to finish the week.

Many seniors in our country are living on limited budgets. Any increase in home care wage for caregivers means more money flowing out of the Social Security check or retirement savings of seniors. Most families have little incentive to pay the higher rates associated with overtime work.

For a professional caregiver who wants to work more than 40 hours a week at the regular rate (and many do), that option evaporates when overtime pay is required. Someone who used to work 50 hours now can only work up to 40 hours.

Example: In Connecticut, families can choose to not assign overtime hours to their preferred caregiver. Home care workers do not wind up with overtime assignments and higher earnings; instead, they receive less work and make less money. Seniors who receive care have less access to the caregiver of their choice due to budgetary concerns.

Paying home care workers more money should have clear social benefits- but we need to rethink this law if it comes at the cost of pricing vulnerable seniors out of the home care market or reducing the earning potential of caregivers.

Unlike most home care agencies, Compassionate Care at Home has decided to evaluate each case separately rather than impose an automatic price increase for all live-in clients. Once it is determined how many hours the preferred caregiver works on a daily basis, CCAH will discuss with the family the proposed price adjustment (if applicable). The goal is to determine the work requirements for each case. Each and every case is unique and should be dealt with separately, especially if a price increase is required to address overtime pay.

For more information on the overtime changes, please give Compassionate Care at Home a call at 203-433-4325. We would be more than happy to answer any of your questions or concerns regarding the Federal Fair Labor Standards Act.

Joe Campano
Managing Partner