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Interesting Article Regarding New Regulations Regarding Homecare

The New York Times ran a blog article regarding an interview with Select Home Care regarding ways some employers are considering to survive recently enacted and currently pending changes regarding in-home care.  The implementation of AB241 requiring overtime for caregivers in California and soon-to-be-imposed federal regulations requiring overtime for caregivers throughout the nation has employers scrambling to consider how they can keep in-home care affordable and profitable.

The article suggests three alternatives employers are considering:

  1. Raise rates to cover the increased costs, which will mean fewer people will be able to afford in-home care.  Raising the costs will not increase the profit margins, but will result in fewer clients which means companies will have to do more with less.  Companies could hire more workers so the employees each work fewer hours, but that will reduce the employee’s income and require more managers to oversee the work.  This doesn’t result in more money for the workers but could help keep the cost to the client down.
  2. Switch employees to independent contractors.  The article makes it seem like this is a viable option, but I have serious doubts this will be an effective solution.  Particularly in California where there are hefty fines for willfully misclassifying an employee as an independent contractor, and given the broad definition of “employer,” under AB241, I don’t recommend this course of action in most cases.
  3. Change the business model to a referral agency.  Referral agencies do not employ the workers, but can still help families locate and hire quality workers.  This could lower the costs for the families because they are not having to pay the profit margins for the caregivers, but it comes with its own sets of risks.  Most likely, the family will become the employer, which means the family needs to understand and comply with the myriad of laws impacting employers and employees.  This can be a daunting concern.

The article quotes a few other industry professionals, and most seem to agree that the first option (raising prices to cover the costs) is the safest route.  I agree.  Hiring more caregivers, each working fewer hours, will help keep the costs down, but can impact the continuity of care.  This is particularly important for clients with Alzheimer’s or dementia.  Instead of having one worker working a 24-hour shift, you’ll end up with two to four workers working shorter shifts.  Financially this is the best option.  I don’t know if this will be the best option for providing quality care to the elderly and disabled.

Governor Brown (CA-D) has taken the position that the best way to deal with the increasing costs is to limit the number of hours the employees work.  That is why his budget proposal does not allow caregivers under the state’s In-Home Support Services program to work more than 40 hours per week.  Of course, Governor Brown hasn’t indicated how the clients will care for themselves during the remaining 128 hours of the week.

There is one last assumption in the article that bears addressing.  All of the sources seem to imply that they can deduct up to 8 hours of sleep time for 24-hour shifts.  Because the California Supreme Court granted review of Mendiola v. CPS Security Solutions, Inc. in the fall of 2013, we cannot guarantee that an employer can deduct for sleep time.  While the federal regulations allow employers to deduct for sleep time, the issue has not been decided in California.  Employers in California that deduct for sleep time may run the risk of having to go back several years to pay for the uncompensated hours of work.

The New York Times blog promises to do a follow-up with Select Home Care to check on their progress.  If you, or someone you know, uses or provides in-home care, you should speak with a knowledgeable employment attorney to understand the rights and obligations imposed by the law.

The Law Office of Phillip J. Griego
95 South Market Street, Suite 520
San Jose, CA 95113
Tel. 408-293-6341
Original article by Robert E. Nuddleman, former associate of The Law Office of Phillip J. Griego.
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