Should home-care workers be entitled to overtime pay and minimum-wage protections?

 

Caring for the elderly and disabled in their own homes is one of the fastest-growing occupations in the U.S., with at least a million workers and 30,000 home-care agencies.

 

The industry has ballooned as more seniors have tried to avoid nursing homes. Medicare and Medicaid, eager to reduce the steep bill from nursing-home care, have supported the growth of home care, with government money covering 80% of the tab.

 

Now, a new push to extend federal overtime and minimum-wage requirements to home-care workers is dividing the $70 billion industry between workers demanding better pay and employers who insist that new mandates would drive up health-care costs and lead to reduced services. Both sides claim they are looking out for the best interests of some 12 million Americans who receive care at home.

 

The pay debate goes back to 1938, when the Fair Labor Standards Act introduced a federal minimum wage and capped the weekly number of hours worked before employees must receive overtime pay. In 1974, Congress extended the protections to some categories of domestic workers but exempted from coverage those who work on a casual basis, which the Labor Department interpreted to include home-care workers. In 2007, the Supreme Court turned aside a challenge to the exemption for home-care workers. The ruling didn't affect laws in some 20 states that provide some overtime and minimum-wage protection to home-care workers.

 

Now, a group of Democratic lawmakers are pushing to re-open the debate, hoping to persuade an administration that is viewed as friendlier to labor concerns than its predecessor. Earlier this month, 15 senators, including Tom Harkin of Iowa and Edward Kennedy of Massachusetts, wrote to Hilda Solis, President Barack Obama's labor secretary, urging her to extend overtime and minimum-wage coverage to home-care workers.

 

Ms. Solis promised to examine the issue, saying she is concerned about home aides "who work demanding schedules and receive low wages." The Labor Department declined further comment.

 

Home-care aides help clients with cleaning, cooking and other personal matters. Nurses and other medical professionals aren't governed by the 1974 exemption.

 

Ms. Solis's response was welcomed by the Service Employees International Union, which represents 420,000 home-care attendants and has long campaigned for better pay.

 

But some home-care agencies say they are worried about the effect on the already high costs of care if the law were changed.

 

"The biggest concern is you could bankrupt the system," says Joseph Campanella, executive director of the Home Care Council of New York City.

 

In 1974, when the exemption was established, home care was seen as an ad-hoc pursuit, filled mostly by part-timers caring for family or friends, much like baby-sitting. Since then, the industry has grown -- and not just because of nursing-home aversion. The U.S. population has aged, and medical advances have allowed many people to live longer with debilitating conditions. In the past six years, total spending on home health care has nearly doubled from $38 billion. That includes spending both on medical and nonmedical care.

 

In 2002, home-health aide Evelyn Coke sued her employer, Long Island Care at Home Ltd., for overtime pay and unpaid minimum wages. The home-health agency argued Ms. Coke wasn't entitled to these benefits because of the 1974 exemption. A New York district judge agreed with the employer, but an appeals court later sided with Ms. Coke.

 

That set the stage for the Supreme Court, which in 2007 handed a de facto victory to home-care firms. In a unanimous decision, the justices said the exemption stood unless the Labor Department chooses to revise it.

 

The litigation produced a trove of documents detailing broader issues at stake. New York City, for instance, runs a Medicaid-funded home-care service which at the time of the litigation covered some 50,000 low-income elderly and disabled adults at an annual cost of $1.6 billion. In a court brief, the city argued the removal of the exemption would increase the cost by about $250 million a year and might result in service cuts for vulnerable people.

 

In a competing brief, AARP argued that "better pay for home-care workers equates with better care for home-care clients." The group, which lobbies for older Americans, said low pay and poor benefits lead to a high turnover rate among caregivers and compromise the quality of care.

 

Other advocates say that poor care in their own homes might push some seniors into nursing homes, which are more expensive to Medicare and Medicaid, the government insurance programs for the elderly and the poor and disabled that already are under strain.

For home-care firms, preserving the 1974 exemption is seen as crucial. "It's built into their business model, and they fear they will have to close their doors" if the exemption is lifted, says Sheila McMackin, founder of Chicago-based Wellspring Personal Care and president of an industry group that represents some 1,200 home-care firms.

 

Write to Philip Shishkin at philip.shishkin@wsj.com