This article is a part of your HHCN+ Membership
On Thursday, lawmakers introduced a bill that, if passed, would guarantee federal minimum wage and overtime protections for home care workers.
This would effectively kill the U.S. Department of Labor’s (DOL) proposal to reinstate the companionship exemption – which the lawmakers who introduced the bill called an “injustice.”
The exemption has caused some division within the industry. Most of the providers I’ve talked to support the exemption, saying it protects continuity of care and increases flexibility for providers – but there has been some nuance. Some providers I’ve chatted with seem less ready to support the exemption outright, and LeadingAge, the association of nonprofit providers of aging services, including home health, has come out against it.
Additionally, a slew of comments submitted during the public comment period vehemently oppose the exemption. I did see the occasional voice of support when reading comments, but most of what I saw highlighted that rolling back overtime protections makes it harder to retain quality caregivers, leads to greater burnout, and will actually undermine continuity of care.
“This rollback would have devastating consequences, not just for workers like me, but for the people we support every day,” one comment read. “We often work long hours, weekends, and holidays – not because we have to, but because our work matters, and our absence puts someone’s health and safety at risk. … I urge you to withdraw this proposal and keep the 2013 rule in place. DSPs deserve fair pay for the hours we work. Our work is vital. Our time matters.”
In this members-only, exclusive HHCN+ Update, I’ll unpack the caregiver exemption and the new bill, sharing analysis and key takeaways, including:
– The benefits and downsides of the caregiver exemption
– Why the industry is divided
– What I see as a key challenge for providers: communications with team members
Actual overtime impacts
One note I’ve heard from providers supporting the exemption is that removing overtime protection will not affect whether home care workers actually receive overtime hours.
Kunu Kaushal, the CEO of Senior Solutions and a supporter of the exemption, previously said at HHCN’s FUTURE conference that his company would likely not stop paying for overtime services. Overtime hours have been a differentiator for Senior Solutions since it was founded in 2010, he said.
“Now, many years later, having that exemption is critical, because the reimbursers themselves are saying, ‘Hey, our budgets are strapped,’” Kaushal said. “We fight for reimbursement every day. Caregiver wage is being talked about, and yet the state doesn’t compensate for overtime. They tell us it’s a ‘you’ problem for agencies to go figure out. I think having options for the exemption is really positive. I think organizations will make a decision based on their payer mix and how they want to identify that. I think it’s become complicated once you now layer on the no tax on tips and overtime.”
Essentially, what Kaushal is saying is that home care agencies are often required to pay overtime, but the government programs and insurers that fund most of that care typically don’t increase reimbursement rates to cover those added costs. As a result, agencies must absorb the expense themselves. Maintaining the overtime exemption, therefore, gives organizations flexibility to manage their finances based on their payer mix and funding structure.
One of the points Kaushal brought up – state-by-state differences in overtime protections – is what I see as the key benefit to providers if the exemption were to be reinstated. Providers operating in certain states could have more flexibility with how they schedule caregivers, and that could allow clients to stay with their preferred caregiver instead of working with multiple caregivers. This could also potentially help caregivers avoid working for multiple agencies if they’re able to work more hours with a single provider.
Fewer caregiver handoffs sounds great – but I’m also aware of the risks highlighted by LeadingAge.
“There is significant risk in the loss of overtime protections,” LeadingAge said in a statement. “Working longer work hours, and/or receiving lower pay for those hours, could negatively impact the retention of home care workers and lead to increased employee turnover and difficulty attracting skilled workers to the sector. Particularly at a time when the home care sector and its workers and consumers are facing serious threats from Medicaid cuts, changing immigration policies and lack of realistic long-term services and support (LTSS) options, removing basic labor protections from home care workers will only exacerbate the crisis.”
While I’ve heard increasing reports that the home care staffing situation has stabilized or improved, the home care workforce shortage has persisted, and providers are facing competition from other industries in addition to other home care companies. To deal with that competition, many providers are likely to provide benefits well above federal minimums.
In my view, it’s situation-dependent if caregivers will benefit from the protections of the Fair Labor Standards Act – in many circumstances, I’m sure providers are offering pay above the minimum wage as well as overtime pay to attract and retain workers in a difficult staffing environment.
But if providers are already offering those benefits, I’m unsure what benefits the caregiver exemption offers. More flexibility makes sense – but could also create a scenario where a caregiver works too many hours to be safe for themselves or their clients. I’m doubtful that increased flexibility is a strong enough argument to eliminate the exemption, if it could harm the clients who need care and the much-needed workers who provide it.
The key challenge
The most interesting challenge with the caregiver exemption to me is the communication challenge. I would hazard a guess that conversations with employees about not being protected under the Fair Labor Standards Act are, at best, uncomfortable.
Industry executives have acknowledged this problem. Kaushal said that human resources teams will have to “figure out” the narrative for communicating changes related to overtime.
I hear time and time again that a positive culture is essential for retaining caregivers. Even if pay is not the highest in a market, having a positive culture can improve retention and increase “boomerang” employees – workers who leave for another career only to return to the original agency.
I think providers will have to be very careful about celebrating the exemption if this bill fails and the exemption is reinstated. If these providers advocate against this bill, I similarly think that they will have to be very careful with how they do so. Caregivers may not be ready to hear that their loss of federal protections positively benefits the company and their clients, if it does not clearly have a positive benefit for them.
The problem here is really about Medicaid reimbursement structures. Medicaid does not always account for overtime costs. I think it would be more reasonable for providers to say, if these structures are not changed, we advocate for the companionship exemption. Without that nuance, I think the human resource risk runs high.
Ultimately, the debate over the companionship exemption reflects a broader tension in the home care industry: balancing workforce protections with the operational realities of delivering care in people’s homes. Providers want the flexibility to meet client needs and manage tight reimbursement structures. Workers and advocates want assurances that the essential labor of caregiving is compensated and protected. As policymakers consider the future of the exemption, providers need to prioritize their messaging, as well as their approach to Medicaid advocacy.