I remember sitting at my dad's funeral next to my grandmother and realizing I was going to have to take over managing her care. Fortunately, I found an in-home caregiver who was a godsend. She took a huge burden off me because I trusted her to take good care of my granny. In return, my siblings and I paid her well. But now, paying well (or at least fairly) means giving an inhome caregiver overtime pay if he or she works more than 40 hours.
Today, my guest blogger, Mark J. Neubergerr, a labor and employment attorney with Foley & Lardner in Miami, weighs in with a legal update that sheds light on the a new law that gives minimum wage and overtime premium protections to most in-home companionship workers. As baby boomers age, more of us are going to be confronting the reality that we need to know this new law -- a costly one for those hiring the caretaker.
How will this change affect your financial outlook?
Got a Granny? Minimum Wage and Overtime Premium Extended to In-Home Companions
In a long anticipated move, the U.S. Department of Labor (DOL) recently announced that it will will extend the minimum wage and overtime premium protections to most in-home companionship workers.
This is a major policy shift, which not only affects the staffing companies that provide such workers, but also affects individuals who have hired someone on their own. If you currently have, or anticipate having, an elderly or disabled relative or friend who needs “in-home care services,” regardless of who actually “employs” them, the cost of providing such services will likely increase.
The law applies to anyone whose job titles include home health aide, personal care attendant, home maker, companion and others. With an aging population and changes in health care delivery systems, the demand for in-home care for persons of all ages and with all sorts of medical conditions has exploded. The DOL estimates that an additional two million workers will come under the guarantees of the federal minimum wage and time and one-half premium after 40 work hours in a week mandated by the FLSA.
Recognizing that many such workers are employed directly by either the individual receiving the services or a family member, there is a widespread assumption that many such in-home employees are currently underpaid.
The bottom line is that anyone who employs a home care worker will have to pay the minimum wage (currently at $7.25 per hour), pay time and a half the base wage for all hours worked over 40 in any one work week, and keep all of the legally mandated records, including detailed records of all hours worked. Also, be sure to consult the laws in your state, where the state law may provide a higher minimum wage or more restrictive regulations
Clearly, the DOL’s new regulation is not only designed to raise the earnings of these in home workers, but also seeks to kill the “off the books” nature of many of these employment relationships. Even those employees who simply provide non-professional, non-skilled “sitting” services will be covered by the new regulations. Newly covered employees who are engaged through employment agencies or other third party companies will also be covered.
The new rules will become effective January 1, 2015, giving various federal, state and private insurance funding sources sufficient time to come into compliance. These rules are complex and sometimes confusing. If you are using in-home companions or other workers be sure you understand your obligations. The FLSA is one of the few employment laws that carries criminal penalties for offending employers.