President Obama proposes to eliminate the Companion Exemtion from overtime and minimum wage.

Stephen Tweed | December 15, 2011 | Newsroom
President Obama today, (12-15-11) put forth a new regulation designed to eliminate the Companionship Exemption from minimum wage and overtime in the Fair Labor Standards Act. This is another initiative in the President's "we can't wait" campaign against Congress. It is also in opposition to the 2007 U.S. Supreme Court ruling that upheld home care…

President Obama today, (12-15-11) put forth a new regulation designed to eliminate the Companionship Exemption from minimum wage and overtime in the Fair Labor Standards Act. This is another initiative in the President’s “we can’t wait” campaign against Congress. It is also in opposition to the 2007 U.S. Supreme Court ruling that upheld home care workers’ exemption from wage and hour standards.

An article in USA Today on 12-15-11 provided some interesting facts about this issue:

  • home care workers today are part of a growing $70 billion industry that has doubled in size during the past decade
  • The nation’s over-65 population is projected to grow from 40 million to 72 million by 2030
  • 27 million Americans will need home care by 2050, the government estimates.
  • More than 90% of home care workers are women, and nearly 50% are minorities.
  • they average $17,000 to $20,000 a year — more than the $7.25-per-hour minimum wage,
  • About 1.6 million of the 1.8 million workers are employed by agencies that pay more than the minimum wage but not overtime.
  • Home care costs Medicaid and Medicare about $56 billion annually.
  • The proposed change is projected to cost about $100 million a year, mostly in overtime costs
  • The exemption from the Fair Labor Standards Act‘s wage and overtime rules dates to 1974.
  • President Clinton sought to change it shortly before leaving office in 2001, but President George W. Bush reversed that effort
  • Obama co-sponsored Senate legislation in 2007 that would have ended the exemption for most home care workers.
  • As an Illinois state senator in 2003, he voted to raise the pay of home care workers to $9 an hour.

The National Association for Home Care and Hospice says the change would lead the agencies to hire more workers, rather than pay overtime rates.

“The worker is not getting anything out of it,” says Bill Dombi, the group’s vice president for law. “Instead, the employer ends up with higher costs because they have to hire more people.”

Eventually, he says, an aging society will outpace the industry’s ability to serve it, leading to cost overruns for federal and state government programs serving the elderly and disabled.

The Home Care Association of Florida opposes the plan to eliminate the companionship services exemption at the state and federal level until a comprehensive plan can be implemented that addresses service funding, worker health insurance and career development for home health aides.

HCAF urges owners, adminstrators, and CEOs of home health agencies and private duty home care companits to send an urgent message to your Senators and Members of Congress to oppose President Obama’s call to tend the companionship exemption.

What do you think about this issue? Give us your comments.

Stephen Tweed
Stephen Tweed, CSP, began his journey as a business strategist in home health care in 1982. Today, Stephen is among the top thought leaders in Home Care strategy and management. He has worked with top 5% companies from across the US. He is a sought after speaker at from national and state association events.

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