When the Obama administration moved to extend overtime pay coverage and the minimum wage to home health-care workers two years ago, states were among the most vocal opponents. But now that a federal judge has overturned that order -- just as budget talks were about to get under way in state capitols -- lawmakers can breathe easier. Bigger paychecks for those workers could be be off the table for the foreseeable future.
Obama’s order, first announced by the Department of Labor and set for a mid-2015 rollout, aimed to end longstanding exemptions from federal overtime and wage requirements for the estimated 2 million home health workers across the country. A federal District Court judge in Washington, D.C., however, decided that the Obama administration had overstepped Congress in moving to end exemptions from the Fair Labor Standards Act.
Various trade groups and labor unions argue that the administration’s move was a long overdue effort to correct an injustice that lumped home health aides with babysitters in the eyes of federal law. More than a million new home care workers will be needed in the next decade, according to the Labor Department. And these workers, supporters say, do everything from assisting with basic tasks, such as bathing, to measuring blood pressure, so they deserve the same wage protections other workers have.
But states, which provide many of the nation’s long-term care services through programs like Medicaid, argue that budgetary reality makes the change unworkable. Worst is the impact to patients themselves, the states argue, because they would have to take on added costs or lose the level of care they’ve grown to depend on.
Under the Labor Department rules, 29 states would have had to extend both wage and overtime protections to home health workers. Another six states that already have wage protections, including California and Ohio, would have had to start paying overtime. According to the Labor Department, the nationwide cost of the increased compensation would be about $300 million a year.
But many states say that figure is a gross underestimate. California, one of the few states to immediately declare that it wouldn’t comply with the new rules, says they would cost its taxpayers $314 million in the next fiscal year alone. Texas had no fiscal impact estimates, but a health department spokeswoman says the state nevertheless would not be going ahead with the mandate.
Illinois, which didn’t immediately weigh in on whether it would comply, has said the new rules would cost the state more than $32 million a year. Ohio and other states say they’re still grappling with the issue.
Not every state is resistant to the idea of raising home health workers’ compensation. New York, for one, announced just after the federal judge’s initial December ruling that it would spend $5 million on overtime pay and travel costs for home health-care workers. But New York is expected to be in the minority. “There just isn’t the money to do that,” says Matt Salo, who heads the National Association of Medicaid Directors. “As long as the constitutionality looks somewhat unclear, I think people are going to hold off.”
Salo is among those who argue that the rules would harm patients because increased pay for health aides inevitably would lead to belt-tightening in other areas of health care. Nevertheless, advocates for ending the pay exemptions plan to continue pushing states like New York and Oregon to follow through on promises to increase compensation.
Meanwhile, the larger issue is far from settled. With an expected appeal from the Labor Department that could be fast-tracked, states should be ready for the possibility that the rules ultimately may be upheld. Legal experts point to past court decisions granting the agency wide discretion in such matters.
Beyond the legal and fiscal questions, though, proponents argue that increasing compensation for home health workers is simply the right thing to do. “As a matter of basic justice and civil rights,” says Sarah Leberstein of the National Employment Law Project, “it’s really shameful that this huge portion of the workforce that’s overwhelmingly female and people of color should not be covered by the most basic workplace law.”