By: Joseph “J.B.” Bensmihen, Guest columnist of the Orlando Sentinel
President-elect Trump pledged to unravel much of what President Obama created through executive orders and the reinterpretation of laws by federal regulators. Trump and the new Congress have also promised an aggressively pro-business agenda. Both now have an opportunity to undo an action of the Obama administration in a way that will appear solidly pro-business, but actually support the disabled and the elderly.
This change involves the Companionship Exemption to the 1938 Fair Labor Standards Act. The FLSA requires people who work more than 40 hours per week to be paid time-and-a-half for overtime. It’s a good law that makes sense for assembly-line workers, nurses in doctors’ offices, orderlies in hospitals, etc.
But there are some jobs and situations where this overtime rule doesn’t make sense. Consider workers who provide home care and companionship for the disabled and the elderly. These caregivers often work overnight, typically in 12-hour shifts. Many work 40 to 60 hours per week. In St. Petersburg, where I live, home-care workers are typically paid $11 to $12 an hour, and home-care companies bill their clients about $18 an hour. This means that a year of 50-hour-per-week care costs almost $47,000 — with no overtime pay.
In recognition of such costs, in 1974 Congress passed the Companionship Exemption, which exempts home-care companies from paying home-care workers time-and-a-half after 40 hours per week. In practice, it also means that home-care companies bill consumers the same hourly rate, whether a caregiver works 10 hours a week, 40, 50 or 60.
The people who wrote the Companionship Exemption thought it through very carefully, based on the realities of providing and receiving home care. As a result, five presidents (two Democrats and three Republicans), Congress (six times), and the Supreme Court (in a 9-0 decision) all came to the same conclusion: Don’t mess with the Companionship Exemption.
But President Obama messed with it. He had Department of Labor regulators reinterpret a rule in a way that allowed the department to circumvent the will of Congress and the Supreme Court. The Labor Department killed the Companionship Exemption for home health-care workers who are employed or referred by home-health care registries or agencies. (Strangely, the exemption was maintained for home health-care workers who are directly employed by families.)
Obama and the Labor Department had good intentions: They hoped to increase the incomes for home health-care workers. But here is what happened instead:
- Many disabled and elderly people, especially those living on fixed incomes, can’t afford as many hours of care, and are buying less of it. Some shifted from hiring one worker for 40-plus hours per week to hiring two for 20-plus hours a week each, in order to avoid the overtime expense.
- Medicaid, which pays for home care for hundreds of thousands of Americans, has to spend (and find in its fixed budget) many millions of extra dollars each year.
- Many disabled and elderly people have their home care paid for by long-term care insurance. Since this insurance typically pays a daily maximum, many of these Americans suddenly have new (and often significant) out-of-pocket costs.
If Trump and our 115th Congress reinstate the Companionship Exemption, they will assist millions of people with disabilities, and even more millions of seniors, particularly those living on fixed incomes. They will also save the federal government tens of millions of dollars annually.
There are three ways this could happen:
- The Labor Department, under new management (and with President Trump’s encouragement), can reinterpret the relevant department regulation to mean what it meant for 41 of the past 42 years.
- Congress can pass legislation reinstating the former provisions of the Companionship Exemption.
- Congress can create and pass the Companionship Protection Act of 2017, making the provisions of the Companionship Exemption a separate law that would not be subject to the machinations of any president or federal bureaucrat.
If they do any one of these, our new president and Congress can claim a victory for American businesses. In fact, the positive effect on home-care companies will likely be marginal. But the change will deliver big benefits to the disabled and the elderly.
We can then allow our new president and Congress to crow about one accomplishment while we enjoy the benefits of another.
Joseph “J.B” Bensmihen is vice president of Evergreen Private Care in Houston. He is the former president of the National Private Care Association, and is an advocate for people with disabilities.