In a unanimous decision, a three-judge panel strongly disagreed with a lower court's January decision that the Department of Labor had improperly re-defined in-home senior care late last year. The decision, available in its entirety here, cited a "dramatic transformation" of the home care industry over the past four decades as a valid reason for the change. He also noted a massive shift to providing care for the elderly in their own homes rather than in nursing homes, which requires workers to offer more advanced medical care and assistance to clients than the mere "companionship" services envisioned in 1974.
The original suit was brought by The Home Care Association of America, The National Association for Home Care & Hospice, and the International Franchise Association. The appeals court ruling means that home care agencies that provide live-in and other non-medical care services will have to begin paying minimum wage and overtime to their caregivers. The court was not specific about when such payment must begin nor whether they should be paid retroactively, either to the date of the filing of the suit or the date of Judge Leon's January decision.
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According to the judge's ruling, "The overtime exemption prevents employers from being required to pay minimum and overtime wages to 'any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).'" On December 22, he said third-party employers could not be excluded from this exemption, which sent DoL rule writers into action.
To get around the letter of the judge's law, the DoL redefined companionship services to say that the care provided had to be attendant to, and in conjunction with, the provision of fellowship and protection and could not exceed 20% of the total hours worked per person per workweek. The lawsuit plaintiffs responded that this new definition would have the very same impact on the industry as the third-party employment regulation the judge had just vacated.
To get an understanding of how this decision might impact providers, we turned to Barry Berger, the founder and CEO of one of the most successful and fastest-growing healthcare at home agencies in Los Angeles County. Accredited Nursing & Home Health provides more private duty and insurance-paid care than Medicare but is well-established among all payers, including MediCal, California's Medicaid program. Last year, Accredited became a preferred partner of Cedars-Sinai hospital in Los Angeles.
"We have assumed for a long time that this day was coming," Berger told us. "California has had a bill progressing through the state legislature for several years, though it has been stalled to see what the federal courts and the Department of Labor would do. So we decided to put our own policy in place regardless of what DC and Sacramento do."
That policy, he explained, is to pay overtime for shifts longer than 8 hours but not to pass the added cost to the patient. He also stopped offering live-in care. "There is almost no upside to live-in," he continued. "Almost every agency in our area has stopped the practice. But we do offer round-the-clock care with successive 12-hour shifts, and we pay overtime for the last four hours."
Two things have happened by not charging the client a higher rate to cover Accredited's overtime costs. One is that the agency makes a profit on the first eight hours and breaks even on the last four. "And I decided that's OK with me," Berger added, "because I just couldn't justify asking people for more when they are already paying a lot for a 12-hour shift." The other result is a rapid increase in patient census.
"I guess the word is getting around that we are the only ones not charging the patient for overtime," he laughed, "and people choose us once they have compared costs, especially those who are paying out of their own pocket."
"Avid" is too mild a word to describe Berger's relationship with sports of all types, but especially baseball. He compares his pricing decision to what happens when one of his favorite teams -- the Dodgers, where he lives now, and the Cubs, where he used to live ("One can never stop being a Cubs fan," he laments) -- raises ticket prices to the point where a typical family cannot afford to come to the ballpark. Ticket revenue does not always cover the attendance drop off. "Some on my team were a little concerned about barely breaking even on two-thirds of the hours of a 12-hour shift," he admitted. "I was ready to do it even if we did lose a little, but we are actually coming out ahead."
Accredited's overtime decision also protected the agency from a consequence Berger believes is far worse than getting into trouble with state or federal labor department regulators. "Class action lawsuits," he told us, "can be filed by anyone. It only takes a single individual with an attorney to get one started. But the damage can be far-reaching."
Berger speaks from experience, as the owner of an agency that has been through the ordeal and as a former CAHSAH board member who has helped colleagues through the process. By instituting an overtime policy, Accredited Nursing & Home Health may have to absorb an incremental cost increase but it has essentially built a defense against a far greater loss.
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©2015 by Rowan Consulting Associates, Inc., Colorado Springs, CO. All rights reserved. This article originally appeared in Tim Rowan's Home Care Technology Report. homecaretechreport.com One copy may be printed for personal use; further reproduction by permission only. firstname.lastname@example.org