November 28, 2020

Volume X, Number 333

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On the Heels of Gains for Other Workers, Home Health-Care Workers Ramp Up Pressure on Minimum Wage

Higher pay is now front and center for the two million home health-care workers in the United States. National home health-care worker groups had long supported the ongoing fast food worker protests we have been reporting for the past months. Now, in nationwide demonstrations last week, home health-care workers themselves are also asking for a $15 minimum wage and the right to unionize. Demonstrations are planned for over 20 cities across the United States in the next weeks, including Atlanta, Chicago, Los Angeles, Cleveland and Washington, D.C.

These demonstrations come on the heels of Wal-Mart’s decision to raise wages of its lowest paid workers to well above the minimum ratewhich followed the lead of several States, municipalitiesand private employers. In fact, some business experts believe that Wal-Mart’s decision might have convinced home health-care workers that they now have the wind at their backs in the push for minimum wage. “We’ve been talking about this for years, and smart money is on a wage increase picking up steam. We have gotten to that critical mass. Maybe Wal-Mart raising their minimum wage last week helped nudge some things loose,” said Yahoo Finance’s Jeff Macke.

These home health-care workers, who are mostly female, help seniors and the disabled with everyday tasks like eating, dressing and bathing. They typically work for private agencies or are independent providers paid by Medicaid. Their median hourly wage is about $9.60, and their average annual pay is an average of $18,600, which puts the industry among the lowest-paying, in spite of the growing demand for home-based caregivers to serve aging Baby Boomers.

None of these workers is guaranteed minimum wage or overtime pay under federal law, because the 1974 amendments to the Fair Labor Standards Act (“FLSA”) exempted all domestic workers who provide “companionship services.” Under the Obama administration, the Department of Labor (DOL) has made it its stated policy to change this. In September 2013, the DOL announced a new rule that would 1) narrow the definition of “companionship services” to people providing "fellowship," "protection" and less than 20 percent of "care" services out of the total hours in a work week; and 2) eliminate the minimum wage and overtime exemptions for workers employed by a third party employer. This would have all but guaranteed that home care workers providing more substantive care, and those employed by third-party agencies, would be entitled to minimum wage and overtime beginning January 1, 2015.

However, last year, three home care industry groups filed suit against the DOL in the U.S. District Court for the District of Columbia. On December 22, 2014, the District Court struck down the rule, insofar as it would require third-party employers to provide minimum wage and overtime protection to home care workers, calling the rule “an arbitrary and capricious exercise of authority inconsistent with Congress’s language and intent.”

The DOL appealed, arguing that a 2007 U.S. Supreme Court decision effectively endorsed the DOL's authority to change the FLSA regulations, that the homecare industry lacked standing to challenge the new "companionship" regulations, and that the new companionship regulations are a reasonable exercise of its "broad general authority" to issue regulations. The D.C. Circuit Court of Appeals has not issued its ruling yet. 

This past Monday, March 9, the United States Supreme Court unanimously ruled, in the cases of Perez et al. v. Mortgage Bankers Association, and Nickols et al. v. Mortgage Bankers Association, that Federal agencies do not have to go through formal rule-making to make significant changes to rules interpreting regulations.

These decisions would seem to support the DOL’s argument in the home health care case and will likely have an impact on how the D.C. Court of Appeals resolves it. While the appeals process runs its course, however, the DOL’s rule will probably not be enforced, and the minimum wage and overtime companionship services exemption definitions will likely remain in effect, although other Federal Courts may, in theory, rule otherwise.

We will keep you updated on developments in the ongoing minimum wage campaign and the ultimate fate of the DOL’s rule as it pertains to home care workers.

©2020 MICHAEL BEST & FRIEDRICH LLPNational Law Review, Volume V, Number 76
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About this Author

Robert Mulcahy, Michael Best Law Firm, Private and Public Sector Labor and Employment Attorney
Partner

Rob is a skilled negotiator whose practice includes both public and private sector management labor and employment law. His work includes National Labor Relations Board (NLRB) proceedings, collective bargaining, contract administration and arbitration proceedings.

Rob also has extensive experience working on employment discrimination matters and wage and hour claims. He helps clients tackle tough issues, including:

  • Union elections and right to work

  • Severance agreements...

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Mitchell Quick, Michael Best Law Firm, Labor and Employment Attorney
Partner

Mitch serves as a trusted advisor to businesses on all aspects of management labor and employment law. Clients value his deep knowledge of employment and labor laws, with an emphasis on wage and hour law. Clients regularly seek his counsel regarding compliance with the many and continually changing labor and employment laws, as well as to address challenging or risky personnel situations.

Mitch has represented businesses across a range of industries, including: 

  • Large and small manufacturers

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