[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
ENSURING REGULATIONS PROTECT ACCESS TO AFFORDABLE AND QUALITY COMPANION 
                                  CARE 

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, MARCH 20, 2012

                               __________

                           Serial No. 112-54

                               __________

  Printed for the use of the Committee on Education and the Workforce


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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Robert E. Andrews, New Jersey
Todd Russell Platts, Pennsylvania    Robert C. ``Bobby'' Scott, 
Joe Wilson, South Carolina               Virginia
Virginia Foxx, North Carolina        Lynn C. Woolsey, California
Bob Goodlatte, Virginia              Ruben Hinojosa, Texas
Duncan Hunter, California            Carolyn McCarthy, New York
David P. Roe, Tennessee              John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania         Dennis J. Kucinich, Ohio
Tim Walberg, Michigan                Rush D. Holt, New Jersey
Scott DesJarlais, Tennessee          Susan A. Davis, California
Richard L. Hanna, New York           Raul M. Grijalva, Arizona
Todd Rokita, Indiana                 Timothy H. Bishop, New York
Larry Bucshon, Indiana               David Loebsack, Iowa
Trey Gowdy, South Carolina           Mazie K. Hirono, Hawaii
Lou Barletta, Pennsylvania           Jason Altmire, Pennsylvania
Kristi L. Noem, South Dakota         Marcia L. Fudge, Ohio
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director
                                 ------                                

                 SUBCOMMITTEE ON WORKFORCE PROTECTIONS

                    TIM WALBERG, Michigan, Chairman

John Kline, Minnesota                Lynn C. Woolsey, California,
Bob Goodlatte, Virginia                Ranking Member
Todd Rokita, Indiana                 Dennis J. Kucinich, Ohio
Larry Bucshon, Indiana               Timothy H. Bishop, New York
Trey Gowdy, South Carolina           Mazie K. Hirono, Hawaii
Kristi L. Noem, South Dakota         George Miller, California
Dennis A. Ross, Florida              [Vacant]
Mike Kelly, Pennsylvania


































                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 20, 2012...................................     1

Statement of Members:
    Walberg, Hon. Tim, Chairman, Subcommittee on Workforce 
      Protections................................................     1
        Prepared statement of....................................     3
    Woolsey, Hon. Lynn, ranking member, Subcommittee on Workforce 
      Protections................................................     5
        Prepared statement of....................................     6

Statement of Witnesses:
    Dombi, William A., vice president for law, National 
      Association for Home Care & Hospice........................    54
        Prepared statement of....................................    56
    Esterline, Wynn, franchise owner, Home Instead Senior Care...    30
        Prepared statement of....................................    31
    Leppink, Nancy J., Deputy Administrator, Wage and Hour 
      Division, U.S. Department of Labor.........................     8
        Prepared statement of....................................    11
    Ruckelshaus, Cathy, legal co-director, National Employment 
      Law Project................................................    39
        Prepared statement of....................................    41
    Woodard, Marie, on behalf of her parents, Walter and Margaret 
      Esselman...................................................    35
        Prepared statement of....................................    37

Additional Submissions:
    Mr. Dombi:
        Letter with appendices, dated March 21, 2012, from Mr. 
          Dombi to Mary Ziegler, U.S. Department of Labor........    88
    Chairman Walberg:
        Survey, ``Economic Impact of Eliminating the FLSA 
          Exemption for Companionship Services,'' Internet 
          address to.............................................     3
        The National Federation of Independent Business (NFIB), 
          prepared statement of..................................    69
    Ms. Woolsey:
        Letter, dated March 6, 2012, from supporters of the 
          Department of Labor's proposed regulation..............    64
        The American Federation of State, County and Municipal 
          Employees (AFSCME), prepared statement of..............    66
        Letter, dated March 6, 2012, from Caring Across 
          Generations (CAG)......................................    72
        Letter, dated March 19, 2012, from various communities of 
          faith..................................................    73
        Letter, dated March 20, 2012, from various home care 
          employers..............................................    73
        The Paraprofessional Healthcare Institute (PHI), prepared 
          statement of...........................................    74
        Letter, dated March 20, 2012, from various Jewish support 
          organizations..........................................    76
        Advertisement, www.justice.org...........................    77
        ``Private-Duty Industry Association Studies of DOL's 
          Proposal to Revise FLSA's Companionship Exemption: What 
          Do They Tell Us?'' policy paper, dated March 19, 2012, 
          Paraprofessional Healthcare Institute (PHI)............    78


                      ENSURING REGULATIONS PROTECT
                        ACCESS TO AFFORDABLE AND
                         QUALITY COMPANION CARE

                              ----------                              


                        Tuesday, March 20, 2012

                     U.S. House of Representatives

                 Subcommittee on Workforce Protections

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10:02 a.m., in 
Room 2175, Rayburn House Office Building, Hon. Tim Walberg 
[chairman of the subcommittee] presiding.
    Present: Representatives Walberg, Goodlatte, Woolsey, and 
Kucinich.
    Staff present: Katherine Bathgate, Press Assistant/New 
Media Coordinator; Casey Buboltz, Coalitions and Member 
Services Coordinator; Ed Gilroy, Director of Workforce Policy; 
Benjamin Hoog, Legislative Assistant; Marvin Kaplan, Workforce 
Policy Counsel; Ryan Kearney, Legislative Assistant; Donald 
McIntosh, Professional Staff Member; Krisann Pearce, General 
Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce 
Policy; Linda Stevens, Chief Clerk/Assistant to the General 
Counsel; Alissa Strawcutter, Deputy Clerk; Joseph Wheeler, 
Professional Staff Member; Kate Ahlgren, Minority Investigative 
Counsel; Aaron Albright, Minority Communications Director for 
Labor; Tylease Alli, Minority Clerk; John D'Elia, Minority 
Staff Assistant; Celine McNicholas, Minority Labor Counsel; 
Richard Miller, Minority Senior Labor Policy Advisor; Megan 
O'Reilly, Minority General Counsel; Julie Peller, Minority 
Deputy Staff Director; Michele Varnhagen, Minority Chief Policy 
Advisor/Labor Policy Director; and Michael Zola, Minority 
Senior Counsel.
    Chairman Walberg. Good morning. It is time to get started 
here, and I would like to welcome our guests and thank our 
witnesses for being with us today.
    It is good to see you again, Deputy Administrator Leppink. 
We appreciate your participation in this hearing and the 
department's willingness to extend the comment period through 
tomorrow to accommodate our desire to submit relevant materials 
from this hearing into the rulemaking record.
    Before we begin today I would like to take a moment to 
express my sadness over the loss of one of our colleagues. For 
more than 20 years Congressman Donald Payne was a passionate 
and tireless advocate on behalf of the people of New Jersey's 
10th congressional district. His presence on this committee, 
and in this body, and certainly in this--his district will be 
missed in Congress and on this committee, as well.
    I extend my heartfelt condolences to his family, his 
friends, his staff, as they mourn his passing and reflect on 
the achievements of his distinguished public service record. I 
would ask that we all honor his memory by observing a moment of 
silence at this time.
    Now we move to the issue before the subcommittee this 
morning. As they say, life goes on and challenges that are 
involved still continue, and so does our purpose to continue 
today in honor of our colleague, but also in honor of the 
service that we are called to perform.
    Today we will examine the Department of Labor's effort to 
narrow the long-standing companionship services exemption under 
the Fair Labor Standards Act. As we all know, the FLSA 
continues to serve as the foundation of federal wage and hour 
standards.
    Today's discussion is not about whether we stand by this 
important law more than 70 years after its enactment. The 
question before the subcommittee is whether the rules and 
regulations intended to enforce the law adequately reflect the 
policy decisions made by the people's elected representatives.
    Nearly 4 decades ago Congress amended the FLSA to extend 
its overtime and minimum wage requirements to domestic workers. 
However, policymakers recognized then the importance of 
ensuring seniors and individuals with disabilities have access 
to affordable in-home care. This support can often help a 
senior spend more years in the comfort of their own home or 
allow an individual with a disability to enjoy the independence 
afforded a life outside institutional care.
    Due to the vital role of in-home care in the lives of these 
individuals, in 1974 Congress created an exemption under FLSA 
for companion care workers. Through public rulemaking the 
department has since held the exemption extends to all 
companion care workers regardless of how they are employed, and 
this reasonable regulatory approach was unanimously upheld by 
the U.S. Supreme Court less than 5 years ago.
    Unfortunately, access to this critical support is 
threatened by a regulatory initiative introduced last December. 
Under the Labor Department's proposal only employees who follow 
a rigid set of arbitrary standards would qualify for an 
exemption. The proposed regulation would also eliminate the 
existing exemption for companion care workers employed by a 
third party as well as exemption for workers jointly employed 
by a third party and the individual receiving the care.
    The department's proposed regulation essentially overturns 
decades of companionship care policy. These changes run 
contrary to what Congress intended when it first established 
this important exemption nearly 4 decades ago. While I 
recognize the delivery of services has evolved over the years, 
the need to maintain access to affordable in-home care has not.
    As a result of this dramatic regulatory shift higher costs 
would inevitably ensue. In fact, the Labor Department estimates 
this proposal would increase the cost of in-home companion care 
from anywhere between $420 million to upwards of $2.3 billion 
over the first 10 years alone.
    And there is a great concern that this estimate is just the 
tip of the iceberg. A survey of companion care franchise 
businesses determined the department understated the extent of 
overtime work performed by employees and based a number of its 
underlying assumptions on incomplete data. The report finds, 
and I quote--``The Department of Labor has significantly 
understated some of the economic impacts that will result from 
the proposed changes in regulations.''
    Without objection, I would like to insert this survey 
conducted on behalf of the International Franchise Association 
Educational Foundation into the record. And I hear no 
objection.
    [The survey, ``Economic Impact of Eliminating the FLSA 
Exemption for Companionship Services,'' dated Feb. 21, 2012, 
may be accessed at the following Internet address:]

    http://franchise.org/uploadedFiles/Franchise_Industry/Resources/
      Education_Foundation/IHSGlobalInsightCompanionCareReport.pdf

                                 ______
                                 
    Chairman Walberg. Understanding the true cost of a 
regulatory proposal that already carries a price tag of up to 
$2.3 billion is startling. Some have said the costs will simply 
be transferred from the employer to the worker and have no 
impact on the demand for services.
    Such a flawed understanding of basic economics ignores the 
reality that these costs will ultimately be paid by the 
consumer, whether senior citizen, taxpayer, family member, or 
individual with a disability. A cost rise, those who receive 
in-home care will be forced--excuse me--as costs rise, those 
who receive in-home care will be forced to confront difficult 
choices, such as accepting a diminished quality of care or 
relying upon institutional services outside the home.
    I have had an opportunity to hear the concerns of providers 
who reside in my congressional district as well as others 
located across the country. In fact, Michigan is already 
dealing with the consequences of these changes and I look 
forward to having one of my constituents give the committee a 
firsthand account of how the people of my home state are faring 
under this policy.
    The act of making responsible public policy often involves 
finding a balance between competing interests. Current policies 
that govern delivery of in-home companion care have served our 
nation well for nearly 40 years. The administration has a 
responsibility to provide a clear and compelling reason why 
that important balance must now be upset and a greater burden 
must be placed on some of our most vulnerable citizens.
    With that, I will now recognize the senior Democrat member 
of the subcommittee, Ms. Woolsey, from California, for her 
opening remarks?
    [The statement of Chairman Walberg follows:]

           Prepared Statement of Hon. Tim Walberg, Chairman,
                 Subcommittee on Workforce Protections

    Good morning. I would like to welcome our guests and thank our 
witnesses for being with us today. It is good to see you again, Deputy 
Administrator Leppink. We appreciate your participation in this hearing 
and the Department's willingness to extend the comment period through 
tomorrow to accommodate our desire to submit relevant materials from 
the hearing into the rulemaking record.
    Before we begin, I would like to take a moment to express my 
sadness over the loss of one of our colleagues. For more than twenty 
years, Donald Payne was a passionate and tireless advocate on behalf of 
the people of New Jersey's 10th congressional district. His presence 
will be missed in Congress and on the committee as well. I extend my 
heartfelt condolences to his family, friends, and staff as they mourn 
his passing and reflect on the achievements of a distinguished public 
servant. I would ask that we all honor his memory by observing a moment 
of silence.
    [Moment of silence.]
    Thank you. Now, we move to the issue before the subcommittee this 
morning.
    Today, we will examine the Department of Labor's effort to narrow 
the long-standing companionship services exemption under the Fair Labor 
Standards Act. As we all know, the FLSA continues to serve as the 
foundation of federal wage and hour standards. Today's discussion is 
not about whether we stand by this important law more than 70 years 
after its enactment. The question before the subcommittee is whether 
the rules and regulations intended to enforce the law adequately 
reflect the policy decisions made by the people's elected 
representatives.
    Nearly four decades ago, Congress amended the FLSA to extend its 
overtime and minimum wage requirements to domestic workers. However, 
policymakers recognized then the importance of ensuring seniors and 
individuals with disabilities have access to affordable in-home care. 
This support can often help a senior spend more years in the comfort of 
their own home, or allow an individual with a disability to enjoy the 
independence afforded a life outside institutional care.
    Due to the vital role of in-home care in the lives of these 
individuals, in 1974 Congress created an exemption under FLSA for 
companion care workers. Through public rulemaking, the department has 
since held the exemption extends to all companion care workers, 
regardless of how they are employed, and this reasonable regulatory 
approach was unanimously upheld by the U.S. Supreme Court less than 
five years ago.
    Unfortunately, access to this critical support is threatened by a 
regulatory initiative introduced last December. Under the Labor 
Department's proposal, only employees who follow a rigid set of 
arbitrary standards would qualify for an exemption. The proposed 
regulation would also eliminate the existing exemption for companion 
care workers employed by a third-party, as well as the exemption for 
workers jointly employed by a third-party and the individual receiving 
care.
    The department's proposed regulation essentially overturns decades 
of companionship care policy. These changes run contrary to what 
Congress intended when it first established this important exemption 
nearly four decades ago. While I recognize the delivery of services has 
evolved over the years, the need to maintain access to affordable in-
home care has not.
    As a result of this dramatic regulatory shift, higher costs would 
inevitably ensue. In fact, the Labor Department estimates this proposal 
would increase the cost of in-home companion care from anywhere between 
$420 million to upwards of $2.3 billion, over the first 10 years alone.
    And there is great concern that this estimate is just the tip of 
the iceberg. A survey of companion care franchise businesses determined 
the department understated the extent of overtime work performed by 
employees and based a number of its underlying assumptions on 
incomplete data. The report finds, ``The Department of Labor has 
significantly understated some of the economic impacts that will result 
from the proposed changes in regulations.''
    Without objection, I would like to insert this survey conducted on 
behalf of the International Franchise Association Educational 
Foundation into the record.
    Understating the true cost of a regulatory proposal that already 
carries a price tag of up to $2.3 billion is startling. Some have said 
the costs will simply be ``transferred'' from the employer to the 
worker and have no impact on the demand for services. Such a flawed 
understanding of basic economics ignores the reality that these costs 
will ultimately be paid by the consumer, whether a senior citizen, 
taxpayer, family member, or individual with a disability. As costs 
rise, those who receive in-home care will be forced to confront 
difficult choices, such as accepting a diminished quality of care or 
relying upon institutional services outside the home.
    I have had an opportunity to hear the concerns of providers who 
reside in my congressional district, as well as others located across 
the country. In fact, Michigan is already dealing with the consequences 
of these changes, and I look forward to having one of my constituents 
give the committee a firsthand account of how the people of my home 
state are faring under this policy.
    The act of making responsible public policy often involves finding 
a balance between competing interests. Current policies that govern the 
delivery of in-home companion care have served our nation well for 
nearly forty years. The administration has a responsibility to provide 
a clear and compelling reason why that important balance must now be 
upset and a greater burden must be placed on some of our most 
vulnerable citizens.
    With that, I will now recognize the senior Democrat member of the 
subcommittee, Ms. Woolsey, for her opening remarks.
                                 ______
                                 
    Ms. Woolsey. Well, Mr. Chairman, with the passing of Donald 
Payne I have personally lost a man that I loved and respected, 
a friend for life and a mentor. When I came to Congress I 
couldn't have asked for a better mentor--a public schoolteacher 
from New Jersey, someone kind and smart to help me be the best 
member of Congress I could be.
    I served on Congressman Payne's Africa Subcommittee; he 
served on my Workforce Protections Subcommittee. On both panels 
I benefitted from his wisdom, his advice, and his expertise and 
experience.
    This is a man who knew public service and knew what it was 
all about. He was, as he described himself, a well--a mild-
mannered man, but he was also tenacious and he was dedicated.
    No one has worked harder to bring peace, democracy, and 
human rights to Africa. He almost gave his life for the cause a 
few years ago when his plane was shot by rebels as he prepared 
to come home after a Somalia mission that the State Department 
had warned him against--in fact, they told him not to go.
    As change continues, Mr. Chairman, in our world and in our 
own country I hope we will all remember the role that Donald 
Payne played in fearlessly protecting workers' rights and 
making education accessible and affordable for all. A true 
friend of working families and children, his death leaves an 
indescribable void.
    Donald Payne had a huge heart and a keen mind. I will miss 
both.
    And too, Mr. Chairman, will the nation's nearly 2 million 
home care workers, the overwhelming majority of whom are women 
and minorities who are currently excluded from federal minimum 
wage and overtime protections under the Fair Labor Standards 
Act. Home care workers help patients live in their homes and 
assist them with eating, dressing, bathing, preparing meals, 
medication management, light travel, and other services that 
are absolutely necessary to live independently. They are a 
productive workforce for a booming, profitable industry and 
deserve the basic minimum wage and overtime protections of the 
FLSA.
    The modern home care workforce performs a wide range of 
functions far exceeding the fellowship and protection services 
that Congress envisioned when this exemption was first created. 
The home care industry, on the other hand, makes profits of 30 
to 40 percent in a $70 billion-a-year industry. However, the 
median annual wage for home care workers is under $20,000 a 
year, which has led to high turnover rates and increased 
employer costs that also affect the quality of care the client 
receives.
    To address this issue, the Department of Labor issued a 
proposed rule to extend minimum wage and overtime protections 
under the FLSA, providing basic wage and hour protections to a 
growing sector of the workforce and would put more money in the 
pockets of low-wage workers, which would in turn spur economic 
growth. This proposal discourages excessive overtime, which 
often leads to workplace injuries, illnesses, and fatigue.
    It would also likely result in a reduced reliance on public 
benefits because 40 percent of the workers affected by the 
proposed rule rely on programs like Medicaid and Food Stamps so 
that in reality the taxpayers make up the difference so the 
business owners can profit. Think about that: pay low, 
taxpayers make up the difference, businesses profit.
    Let's be clear: Nothing in this proposal requires an 
increase in the cost of providing home care services. What this 
proposal requires is that the individuals providing care be 
compensated fairly.
    I know that there are some who say that if we pay home 
health care workers a decent wage the elderly and disabled will 
not be able to afford in-home care. However, the issue 
threatening affordable quality home care is not paying minimum 
wage to home health workers providing care; it is promoting a 
business model that allows for the generation of $70 billion in 
annual profit on the backs of its workers, as many as 50 
percent of whom rely on some form of public assistance to make 
ends meet.
    DOL analyzed the impact of this proposal on Medicare and 
Medicaid and found that it would have no direct effect on 
federal spending. Twenty-one states already provide some 
coverage under state minimum wage and overtime laws. These 
states demonstrate that it is possible to extend these critical 
protections in an economically responsible manner without 
disastrous consequences.
    In fact, Mr. Chairman, as you just said, your home state of 
Michigan already has minimum wage and overtime coverage for 
home care workers and has not--well, you didn't say this. You 
said they are not covered; I am saying not--have not seen an 
increase in the cost of these services nor any widespread 
unwanted institutionalization of elderly or disabled 
individuals.
    I am certain that by convening this hearing we are not 
suggesting that workers in your state be stripped of their 
current protection under Michigan law, so I hope that we can 
look forward to learning from the positive Michigan experience 
and hearing from today's witnesses. Thank you, Mr. Chairman.
    [The statement of Ms. Woolsey follows:]

      Prepared Statement of Hon. Lynn C. Woolsey, Ranking Member, 
                 Subcommittee on Workforce Protections

    Mr. Chairman, the nation's nearly 2 million home care workers, the 
overwhelming majority of whom are women and minorities, are currently 
excluded from federal minimum wage and overtime protections under the 
Fair Labor Standards Act (FLSA).
    Home care workers help patients live in their homes and assist them 
with eating, dressing, bathing, preparing meals, medication management, 
light travel and other services. They are a productive workforce for a 
booming, profitable industry and deserve the basic minimum wage and 
overtime protections of the FLSA.
    The modern home care workforce performs a wide range of functions 
far exceeding the fellowship and protection services that Congress 
envisioned when this exemption was first created.
    The home care industry on the other hand makes profits of 30 to 40 
percent in a $70 billion a year industry. However, the median annual 
wage for home care workers is under $20,000 a year, which has led to 
high turnover rates and increased employers' costs that also affect the 
quality of care the client receives.
    To address this issue, the Department of Labor issued a proposed 
rule to extend minimum wage and overtime protections under the FLSA, 
providing basic wage and hour protections to a growing sector of the 
workforce and would put more money in the pockets of low-wage workers 
which would spur economic growth.
    This proposal discourages excessive overtime which often leads to 
workplace injuries, illnesses and fatigue. It would also likely result 
in a reduced reliance on public benefits---40 percent of the workers 
affected by the proposed rule rely on programs like Medicaid and food 
stamps so in reality, the taxpayers make up the difference so the 
business owners can profit.
    Let's be clear, nothing in this proposal requires an increase in 
the cost of providing home care services. What this proposal requires 
is that the individuals providing care be compensated fairly. I know 
that there are some who say that if we pay home health care workers a 
decent wage, the elderly and disabled will not be able to afford in-
home care. However, the issue threatening affordable, quality home care 
is not paying minimum wage to home health workers providing care, it is 
promoting a business model that allows for the generation of billions 
of dollars in profit on the backs of its workers, as many as 40 percent 
of whom rely on some form of public assistance to make ends meet.
    DOL analyzed the impact of this proposal on Medicare and Medicaid 
and found that it would not have a direct effect on federal spending. 
21 states already provide some coverage under state minimum wage and 
overtime laws. These states demonstrate that it is possible to extend 
these critical protections in an economically responsible manner 
without disastrous consequence.
    In fact, Mr. Chairman, your home state of Michigan already has 
minimum wage and overtime coverage for home care workers and has not 
seen an increase in the cost of these services nor has there been 
widespread unwanted institutionalization of elderly or disabled 
individuals. I'm certain that by convening this hearing, you are not 
suggesting that workers in your state be stripped of their current 
protections under Michigan State law, so I look forward to learning 
from the positive Michigan experience and hearing from today's 
witnesses.
Closing
    I regret that the Committee chose to hold a hearing today 
questioning whether an industry that generates billions of dollars in 
profit each year can afford to provide basic wage and hour protections 
to its workforce. These workers enable our loved ones to remain in 
their homes and preserve their dignity and quality of life. These 
workers deserve basic minimum wage and overtime protections so that 
they can provide for their families with the same dignity and self-
sufficiency they provide their clients.
    As Senator Kennedy said when discussing FLSA protections, ``no one 
who works for a living should have to live in poverty.'' Today we heard 
compelling testimony from Ms. Ruckelshaus clearly demonstrating the 
need for the Department of Labor's proposed regulation. All workers 
deserve a fair day's pay for a fair day's work. The home care workforce 
is no different. These workers, primarily women and minorities, do 
valuable work and deserve just compensation. It is essential that we 
extend FLSA protections to home health care workers.
    I would ask unanimous consent to submit for the record, a letter 
signed by 86 organizations in support of DOL's proposed rule and I'd 
also ask unanimous consent to submit a statement for the record from 
the American Federation of State, County and Municipal Employees. Thank 
you.
                                 ______
                                 
    Chairman Walberg. I thank the gentlelady for clarifying, 
and we will have opportunity to hear who is right. [Laughter.]
    Ms. Woolsey. Well, you are right; I am left. [Laughter.]
    Chairman Walberg. That is true. That is true. And very 
quick for you to remember that.
    Well, that is why we have these hearings, and it is a 
personal thing to me, as well, having a mother who was able to 
stay on our farm for 3 additional years because of 
companionship care that was given. And thankfully my wife and I 
were--I should say my wife, especially, was capable of 
organizing that, but not all are, and so this is a key issue.
    My mother is 96 and now in a nursing home, and many more 
tax dollars are being used--it could be argued much of which 
she and my father put in the system for many systems for 
helping to pay for her. But it was our desire, certainly, to 
keep her at home as long as possible, and we are appreciative 
of companions who assisted in doing that.
    Pursuant to committee rule 7(C) all members will be 
permitted to submit written statements to be included in the 
permanent hearing record. And without objection, the hearing 
record will remain open for 14 days to allow questions for the 
record, statements, and extraneous material referenced during 
the hearing to be submitted for the official hearing record.
    We have two distinguished panels of witnesses today, and I 
would like to begin by introducing the first solitary panel: 
Deputy Administrator of Wage and Hour Division, Nancy Leppink, 
who is not unfamiliar to this committee, and we appreciate you 
being here again today in front of our committee. You don't 
need any instruction on the lighting system, and we certainly 
want to hear your testimony and then have opportunity for 
myself and Ms. Woolsey to question you, as well as any other 
committee members that may show up.
    One of your colleagues, Steven Chu, is just down the 
hallway here testifying before a committee that a number of us 
sit on as well. But we are intensely interested in what you 
have to say, so thank you for joining us and you may begin your 
testimony.

 STATEMENT OF NANCY J. LEPPINK, DEPUTY ADMINISTRATOR, WAGE AND 
            HOUR DIVISION, U.S. DEPARTMENT OF LABOR

    Ms. Leppink. Thank you, Chairman.
    Good morning, Chairman Walberg, Ranking Member Woolsey, and 
members of the subcommittee. Thank you for the invitation to 
testify today about the department's notice of proposed 
rulemaking on the application of the Fair Labor Standards Act 
to domestic service.
    Under the department's current regulation federal minimum 
wage and overtime protections are denied to many of the almost 
2 million in-home care workers, 92 percent of whom are women, 
30 percent of whom are African American, and nearly 12 percent 
Hispanic. This fact received significant attention a few years 
ago when Evelyn Coke challenged the department's regulation all 
the way to the Supreme Court.
    Ms. Coke was the sole wage-earner and single mother of 
five. She had been an in-home care worker for over 20 years. 
She had bathed, fed, and cared for the elderly clients of her 
employer, working up to 70 hours per week with no overtime pay. 
The Supreme Court ruled against her, concluding that Congress 
delegated to the department the authority to define 
companionship services and to determine whether the 
companionship service exemption could be claimed by her third 
party employer.
    Given the changes and the growth in the in-home care 
service industry over the last 36 years since the department 
issued its rules, the persistently low wages of in-home care 
workers, and the critical importance of the work that they do, 
the department believes it appropriate to consider, under its 
current regulations, whether they are out of date and whether 
the application of the companionship services exemption is 
overly broad.
    The importance of this rulemaking is reflected by the 
thousands of comments we have received from workers, from 
employers, from individuals and families receiving in-home care 
services, from members of Congress, and many others.
    In 1974 Congress extended the act's minimum wage and 
overtime protections to domestic service workers employed by 
private households. It was Congress' intent that by extending 
the FLSA's economic protections to these workers those 
protections would raise not only their wages but would also 
raise the status of the work they performed.
    These amendments carved out a limited exemption for casual 
babysitters and individuals providing companionship. At the 
time, providing companionship to the elderly or infirm was 
commonly understood to be an avocation engaged in by family, 
friends, and neighbors, and the companions were not their 
family's breadwinners and, consequently, were not in need of 
the FLSA's protections.
    Since the department issued its regulations the demand for 
in-home care services has grown significantly due to a number 
of factors, including the increase in our aging population, the 
rising cost of traditional institutional care, the desire of 
individuals and their families to receive needed care in their 
homes, and the availability of funding under Medicare and 
Medicaid. As the industry has grown, and has continued to grow 
even in these difficult economic times, the employment of in-
home care workers has also increased.
    This growth, however, has not translated into increased 
earnings for these workers. The earnings of employees working 
as home health and personal care aides remains among the lowest 
in the service industry. Further, demanding work coupled with 
low wages and irregular hours has resulted in high turnover, 
which means fewer experienced workers and a lack of continuity 
of care.
    In contrast to the companions Congress had in mind in 1974, 
workers who now care for our family members are employed in 
well recognized occupations and are often the sole wage-earners 
supporting their families. In-home care employees engage in 
difficult physical and emotionally taxing work, yet nearly 40 
percent rely on Food Stamps or other forms of public 
assistance.
    Included among the ranks of these professionals were the 
in-home care workers who, at the announcement of the proposed 
rule, expressed their commitment to the work they perform but 
also expressed how difficult it is to support their families 
and how they would feel more economically secure with minimum 
wage and overtime protections--the security of a fair day's pay 
for a fair day's work.
    We are seeking to accomplish two important objectives by 
proposing amendments to our current rules: first, to more 
clearly define the services that may be performed by an exempt 
companion. The proposed rules would limit an exempt companion's 
services to fellowship and protection. It would continue to 
allow for certain incidental intimate personal care, such as 
occasional dressing and grooming, and activities such as 
driving to appointments, provided those services are attendant 
to the provision of companionship and do not exceed 20 percent 
of the total hours worked in a work week.
    The proposal would make clear that companionship services 
do not include medically related duties for which training is 
typically required. The proposed changes would ensure that 
companionship services only applies to those workers who are 
truly providing companionship.
    The proposed rules would also limit the exemption to 
companions employed by individuals or households using the 
companionship services--using the companionship services. Third 
party employers, such as in-home care service companies or 
staffing agencies, would no longer be permitted to claim the 
companionship services exemption.
    Protecting more in-home care service workers under the 
FLSA's minimum wage and overtime provision would align the 
companionship services exemption--beg your pardon to finish--
exemption with its original statutory purpose and would be an 
important step in ensuring that in-home care service industry 
attract and retains qualified workers. Evelyn Coke did not live 
to see the publication of this proposed rule, but it is with 
her and other hardworking in-home care service workers in mind 
the department is proposing these changes to ensure the FLSA is 
implemented as intended.
    I appreciate the opportunity to appear before this 
committee today. I value your input and the input of 
thousands--the thousands who have submitted comments, and when 
the comment period is closed we will carefully consider the 
comments that have been submitted, and I am glad to respond to 
any questions that you, Chairman, or the members of the 
committee have.
    [The statement of Ms. Leppink follows:]

     ``The Department of Labor's economic impact analysis of 
the proposed rule changes substantially understated the extent of 
overtime work among companion care workers, at least among those 
working for franchise-operated companion care businesses. The average 
amount of overtime worked is three times greater than estimated in the 
Department of Labor analysis.''
     ``Other costs of the proposed rule change may also be 
understated * * * including management costs of adding staff to avoid 
the cost of overtime pay (assumed zero) and the cost of travel time for 
employees travel between work sites.''
     ``We believe the Department of Labor's assumption about 
the sensitivity of the demand for companion care services to price 
increases (the demand price elasticity) is based on incomplete data on 
the source of payment for these services and is, therefore, 
significantly understated.''
     ``As a result of the underestimation of costs and the 
price elasticity, the Department of Labor has significantly understated 
some of the economic impacts * * * that will result from the proposed 
changes in regulations.''
     ``The impact of the proposed rule changes on employment is 
less clear. Businesses that responded to our survey indicate a strong 
intention to avoid paying higher overtime costs, which may lead to 
sufficient hiring of additional employees to offset job loss due to 
reduced demand. To the extent this occurs, the effect of the proposed 
Department of Labor regulations may be to create a certain number of 
additional (primarily low-wage) jobs, while at the same time reducing 
the earnings of a substantial number of workers who are already low-
wage workers.''
    The 542 franchise business owners who supplied the survey data 
operate 706 locations in 47 states, representing a very broad cross-
section of businesses. In general, these are small businesses--more 
than half reported revenue of less than $1 million and only 5 percent 
had revenue of more than $4 million. The typical--average--agency 
employs 75 to 85 employees. It is also important to note that about 80 
percent of the agencies receive more than half of their revenue from 
companion care services. In addition, these agencies report that more 
than 83% of their employees are engaged in providing companion care 
services.
    The survey revealed a few other key findings:
     These business owners say that higher rates of overtime 
pay, increased numbers of workers, and larger administrative costs will 
force them to raise client fees by 20 percent or more.
     Ninety percent of these business owners say that higher 
fees will cause some of their clients--approximately 1 in 5 of their 
clients--to seek care from ``underground'' or ``grey market'', 
unregulated care givers.
     Ninety-five percent of the business owners operating in 
states without overtime regulations say they will eliminate all 
scheduled overtime--which will result in less income for thousands of 
low-wage companion care workers.
    Lastly, this survey report represents only those franchise 
businesses that are members of the International Franchise Association, 
and therefore, it may not be representative of the entire industry. In 
the IFA membership, there are 27 franchise companies in this sector, 
with an estimated 4,193 franchisees. The greatest impact of the 
Department of Labor's proposed rule changes would be on approximately 
2,500 of these businesses, which are located in states that currently 
do not require overtime pay to companion care workers. These businesses 
operate approximately 3,200 establishments (locations), with 
approximately 200,000 employees, including 168,000 companion care 
workers.
    When considering just this one segment of the companion care 
industry, the franchising sector, it is very apparent that the 
Department of Labor analysis has ``substantially understated'' the 
negative impact of the proposed rule changes on our businesses, on our 
clients, and on our employees.
Conclusion
    I firmly believe that in-home companionship care should not be a 
luxury afforded only to those who are willing to violate the law in the 
unsafe ``grey market'' or the very wealthy who can afford to pay the 
increased cost that will result from these proposed changes.
    I hope that you will consider urging the Department of Labor to 
withdraw these proposed regulations. Thank you for giving me this 
opportunity to present my views. I would be happy to answer any 
questions you might have.
                                 ______
                                 
    Chairman Walberg. Thank you, Mr. Esterline.
    Ms. Woodard, welcome.

                   STATEMENT OF MARIE WOODARD

    Ms. Woodard. Chairman Walberg, Ranking Member Woolsey, 
and--members of the subcommittee, thank you. Thank you for 
giving me the opportunity to speak.
    My name is Marie Woodard and I am speaking on behalf of my 
parents, who received home care from 2004 to 2011 here in 
Virginia. We started aides with my father back in 2004 couple 
days a week to help him with bathing, showering--gradually 
increased to 10 hours a day. My mother had a heart attack in 
May of 2005 and we started with 24-hour care because she could 
no longer care for Dad. Our two main aides worked 5 to 6 days a 
week, 8 a.m. to 8 p.m., 8 p.m. to 8 a.m., so there were two 
shift changes a day and then on the weekends we had coverage 
aides.
    Dad died in March of 2008, and within 24 hours my mother 
was in intensive care unit dying so we just sent the aides that 
were with Dad the day before, ``Go now to the hospital and sit 
with Mom.'' So we had continuous care for all of that time.
    My primary concerns with the care of my parents was really 
the quality of the care and the consistency of the care. My 
father had Parkinson's disease, which caused him difficulty in 
swallowing, so the consistency of the aide being there to feed 
my father was so important because she was familiar with him, 
she knew him, she was not afraid to feed him because he would 
choke and cough. So the exact feeding regime had to be 
followed, where his liquids had to be thickened, his foods had 
to be pureed, he had to eat in a sitting up position. All of 
this was very, very important, and my father became very 
anxious if he knew another aide was going to feed him because 
he was afraid of choking, too.
    Another concern with my mother--my mother had heart 
failure. Again, we needed someone consistently to watch my 
mother for those subtle changes that come with heart failure.
    With heart failure you are on a fine line. If you give them 
too much fluid it overloads the heart and they go into heart 
failure; if you give them too little their blood pressure 
drops, they get dehydrated, and they faint and they fall. So we 
were on that fine line every day as my mother managed it 
herself while she was well, now the aide would remind her, 
``Weigh yourself every day; take your blood pressure,'' and I 
would call every day and get those results and kind of weigh 
what we would do with Mom that day as far as her fluid pills 
and whether we needed to call the doctor to keep her out of the 
emergency room. With the heart failure there was also very 
subtle changes that you needed to watch with my mother, where 
if she would cough that wouldn't mean anything, but with my mom 
it could mean that fluid was building up in her lungs and we 
needed to act on that cough right away and start looking at her 
fluid buildup.
    So the consistency of the aide really kept both my parents 
out of the hospital, kept my father from developing aspiration 
pneumonia from choking on his food, and kept my mother from 
developing severe heart failure, which would cause her to be 
hospitalized.
    Another primary concern was the emotional issues. It is 
very hard to have someone to come in and care for you in your 
home. It is a very personal thing.
    My mother and father would become anxious about an hour to 
an hour-and-a-half before shift change: Who was coming? Did 
they know her? If they didn't know her, did she know what she 
was doing? They became afraid to the point where they would 
either hang onto me if I was there or to the aide that was 
there begging us not to leave, and don't leave us with that 
person.
    My mother even, at one night, snuck off to the phone at 3 
o'clock in the morning and dialed 911 that the aide did not 
know about and told the police there was a stranger in her 
house and to hurry over and help her quickly. When the police 
knocked on the door, of course they found the aide that I had 
hired and called me at 3 o'clock in the morning and I said yes, 
indeed I did hire her. So the consistencies of the aides really 
allowed my parents to be calm and have a trust and a bonding 
relationship with these aides.
    The financial aspect of it, it was--over the 7 years it 
cost my family and my parents over $1 million to provide this 
care. None of this care was covered by Medicare, Medicaid, or 
long-term care insurance; this was totally out-of-pocket. Of 
course, they had Medicare but it couldn't be covered by 
Medicare because it is not skilled care, it was custodial care.
    Our family was really fortunate to be able to give our 
parents exactly what I think everybody in this room would want 
for your parents, would want for ourselves when we get sick--
the ability to stay in your own home as long as possible, to 
stay with your family, to stay with your spouse, not to be 
separated from your spouse, to stay out of the hospital, to be 
able to have care in your home, have somebody to assist your 
family in your home, to know that the caregiver--you can trust 
them, they are familiar with you, they know you, and that they 
are there to care for you. And to die in your own bed. Every 
one of--you know, wish that they have the opportunity to be in 
your own home, to be in your own bed at the time of death. And 
also, for this care to be affordable.
    If we had had to pay overtime to our aides with the 12 
hours a day our family would have had to make hard choices. 
Were we willing to pay that additional cost? Could we 
financially pay that additional cost? What would the impact be 
on my parents having aides come for three shifts a day?
    So just the--yes.
    Chairman Walberg. Wrap up your comments quickly here.
    Ms. Woodard. Okay.
    Chairman Walberg. Time is expired.
    Ms. Woodard. Okay.
    So I just would like you to consider the consumer and the 
family member in any decisions that you make. Thank you.
    [The statement of Ms. Woodard follows:]

     Prepared Statement of Marie Woodard, on Behalf of Her Parents,
                      Walter and Margaret Esselman

    Mr. Chairman and Members of the Subcommittee, thank you for 
allowing me to testify today. My name is Marie Woodard and I am 
testifying on behalf of my family and my parents who received personal 
care from aides in their home from 2004 to 2011.
    My parents were both healthy and active until their mid eighties. 
My father had Parkinson's disease and Alzheimer's and required home 
care starting in 2004. We started with having a privately hired aide 
come 3 days a week to his home for bathing and dressing. As the needs 
changed, the care progressed to daily aide care 10 hours a day and we 
hired aides through a private duty agency. In May 2005 my mother had a 
heart attack and was hospitalized and my father could not be left home 
alone. We started 24 hour home aide care services in May 2005. My 
father required 24 hour care until his death in March 2008. Within 24 
hours of my father's death my mother was in ICU with pneumonia and not 
expected to live. Our family was in turmoil arranging for my father's 
funeral while our mother was dying. We were blessed to have our mother 
survive this illness but the recovery was extensive and lengthy. We 
continued to have aides provide one on one care to my mother as she 
progressed from the hospital to the nursing home then back to her home. 
We were so fortunate to have the same aides who had cared for Dad now 
caring for Mom. My mother developed dementia during this illness in 
addition to her severe heart failure and she required 24 hour care from 
March 2008 until her death October 2011. I was one of four children, 
but I was the only child living in Virginia and was very involved in 
the care of my parents. My parents had consistent aides who worked 12 
hours a day for anywhere from 5 to 6 days a week. The aides changed 
shifts at 8am and 8pm. The day aide, Memunah, worked 6 days a week 12 
hours a day from 8am to 8pm. Night care was provided by Harriet, who 
worked 5 days a week from 8pm to 8am. Their days off were on the 
weekend and were covered by other aides.
    During these seven years I had three major concerns coordinating 
and supervising the care of my parents. These concerns were the quality 
of the care my parents received, their comfort level with the aides 
providing care, and that emotionally my parents could adjust to having 
the aides with them 24 hours a day. As we began the care in 2004 on a 
part-time basis the cost of the care was a concern but we had no idea 
that this care would continue for the next seven years and our out of 
pocket expenses for this care would be a million dollars.
    Consistency of aides was so important for the quality of care 
provided my parents.
    A new aide assigned would require a great deal of teaching and 
intervention by me to assure that my parent was well cared for. I 
needed to instruct each aide with the individualized needs of each 
parent. My parents had unique needs due to their diseases, levels of 
confusion and anxiety as well as the day to day needs--medication 
reminders, fall prevention, choking risks related to the Parkinson's 
Disease, emergency actions to take for medical emergencies that 
occurred during that 7 years--injuries related to falls, kidney 
failure, chest pains, heart attacks, episodes of aspiration pneumonia 
and difficulty breathing. The consistent care provided by the aide and 
their constant supervision of my parents prevented many 
hospitalizations and emergencies room visits. My father had Parkinson's 
disease that caused difficulty in swallowing. To prevent my father from 
choking, he had to be carefully fed to prevent him from aspirating and 
developing pneumonia. His feeding regime was very detailed and needed 
to be strictly followed. It was required that all his food and liquids 
be thickened, that all food have the right consistency, that he be fed 
slowly, be closely observed and that he be sitting up and was to never 
feed himself. I spent hours teaching the aides to properly feed my 
father. Having the same aide feeding my father most of the time assured 
that my father would not choke and develop pneumonia. The weekday aides 
were very skilled in feeding my father due to their familiarity with 
him and his illness. With my mother's severe heart failure I taught the 
aides to observe carefully for signs of impending heart failure 
crisis--the aides took my mother's blood pressure and weight every day 
and observed her difficulty breathing, shortness of breath, coughing 
and swelling of the legs and lower back. This was reported to me daily 
and with this information I and her doctor managed her heart failure on 
a daily basis to prevent hospitalizations. This required a level of 
skill on the aide's part, my trust in the aide, and the aide being with 
my mother on a daily basis to note subtle changes. My trust in the 
aides and their consistency relieved my anxiety knowing that the aide 
caring for my parent was familiar with them and knew how to care for 
both of them and to manage their medical needs.
    The consistency of the aides allowed my parents to become 
comfortable with them.
    It was very difficult for my parents to accept care in their home. 
My mother wanted to be the sole caregiver of my father and was very 
resistant to ``outside'' help. Emotionally for both my parents they saw 
the need for an aide as the loss of their vitality, lifestyle and 
independence. Both my parents had a great deal of trouble adjusting to 
the aides and I would estimate that adjustment period took over 12 
months as they progressed from aides short term during the week to 24 
hour care. The realization that the 24 hour care was permanent was 
devastating to them both as they accepted their frail health. As they 
got to know the aides they relaxed a little, but at each shift change 
my mother became anxious asking who was coming and begging the current 
aide on duty to stay and not leave her or my father. This anxiety was 
heightened greatly when an aide was coming that she did not know. If a 
new aide was assigned I called to discuss the care plan with them as 
well as went over to see my parents--as much to ease my mother's 
anxiety and my own anxiety having an unknown aide. We were fortunate 
that the shift change was only twice a day so the care was consistent 
and my parents developed a level of trust with the aides. I strongly 
believe that without the consistency of the aides working 12 hour 
shifts and knowing my parents and their illnesses so well that they 
would have died years earlier. Both weekday aides worked with my 
parents for many years, Harriet the night aide cared for my parents for 
over 6 years.
    The financial cost of the care provided to my parents was a burden 
to my parents and the family.
    The average costs for long-term care in the United States (in 2010) 
are:
     $205 per day or $6,235 per month for a semi-private room 
in a nursing home
     $229 per day or $6,965 per month for a private room in a 
nursing home
     $3,293 per month for care in an assisted living facility 
(for a one-bedroom unit)
     $21 per hour for a home health aide
     $19 per hour for homemaker services
     $67 per day for services in an adult day health care 
center

    Source: www.longtermcare.gov/LTC/Main_Site/index.aspx. National 
Clearinghouse for Long-Term Care Information website. The U.S. 
Department of Health and Human Services. Example: $21.00 per hour for a 
home health aide is $504.00 per day for 24 hour care or $183,960 per 
year.

    Since we started home care in 2004 the cost per hour was less but 
still our family paid over $1 million dollars for the care provided to 
our parents from 2004 to 2011. This was totally out of pocket expenses 
since Medicare does not cover this type of care and my parents did not 
have Long Term Care Insurance. The additional cost of overtime pay 
would have caused an additional financial burden to my parents and our 
family.
    The majority of Americans want to age at home and to stay at home 
rather than go into a facility. It is important to keep this home care 
affordable and to ensure consistency of care. When the cost of overtime 
pay is passed onto the consumer it will force the patient and their 
family to compromise the quality of care and have multiple aides in 
their home as well as multiple shift changes per day. The multiple 
shift changes per day would be very disruptive--I can imagine my 
parents refusing to go to bed until 11pm to let the night aide into the 
house. The increased cost may force families to choose care in a 
facility rather than providing the care in the home. My family was 
fortunate to be able to abide by my parents wishes to receive excellent 
care, stay in their own home, to be cared for by caregivers who cared 
for them as if they were their own mother and father, and to be able to 
die in their home. It was heart wrenching to watch my parents as they 
aged and became ill, I can only imagine how hard our lives would have 
been if we were forced to place them in a nursing home. Having the same 
aides care for my parents allowed the family the comfort of knowing 
that our parents were well cared for and when both my parents died at 
home they were treated with dignity and respect by their beloved aides. 
The aides were so close to my parents that they also grieved with us as 
if they had lost their own mother and father.
                                 ______
                                 
    Chairman Walberg. Thank you, Ms. Woodard.
    Ms. Ruckelshaus?

       STATEMENT OF CATHY RUCKELSHAUS, LEGAL CO-DIRECTOR,
                NATIONAL EMPLOYMENT LAW PROJECT

    Ms. Ruckelshaus. Yes. Chairman Walberg, Ranking Member 
Woolsey, and members of the committee, thank you for this 
opportunity to testify today. My name is Cathy Ruckelshaus and 
I am the legal co-director of the National Employment Law 
Project, a nonprofit based in New York that seeks to ensure 
good jobs and economic security for our nation's workers.
    My remarks will highlight two primary areas from my written 
testimony but I am, of course, happy to answer any questions 
based on what I have submitted. First, I will briefly describe 
the working conditions of workers who provide the care and 
services to the older adults and persons with disabilities.
    Because the jobs are so low-paying turnover is high, 
creating dangerous shortages during a time of increasing 
demand. These are the workers I have represented or advocated 
for and come to know over the years. And I will end by touching 
briefly on the experiences we know about in the states where 
there is a wage floor for these jobs.
    The workers in my practice--I have met many home care 
workers who care for elderly and disabled individuals. I have 
also had the opportunity to meet some here at the hearing 
today.
    I am going to just give you two examples. Josefina Montero 
is a client of mine who is a home care worker who cares for 
adults and people with disabilities in the New York City 
region. She was paid the minimum wage, now $7.25 an hour, but 
not overtime by her agency. She takes care of all of her 
patients needs, including changing their diapers, feeding them, 
helping them take their medications, and accompanying them to 
appointments.
    Another set of former clients include Anna Thomas, Tracey 
Dennis, Renee Johnson, and Marilyn Jackson, all from the 
Philadelphia area who worked in home care. They bathed, fed, 
dressed, and cleaned for their clients. They assisted with 
catheter care and transfers and they administered medications. 
These workers were paid $5.15 an hour, the then minimum wage, 
but were not paid for the time they spent traveling between 
their clients by bus or by car. Their pay dropped below the 
minimum wage.
    Kara Glenn is another worker I have encountered. She makes 
$8.45 an hour after 30 years in the industry. She said, ``I 
stayed working because of the clients. I liked them and they 
liked me. We made our own little family and that meant more to 
me than the money. As long as they were getting good care that 
was really what mattered to me. When you are taking care of 
somebody you want to do your best and you don't want to leave 
them but sometimes you have got to because you need money to 
survive. You can't escape that.''
    None of these workers have jobs that pay enough to support 
them. They have had difficulty making ends meet for their 
families. They are eligible for Welfare and many have taken 
jobs to supplement their earnings.
    And they are typical. The average national wage of $9.34 an 
hour, which is $18,000 a year, means that one in five lives 
below the poverty line. In 29 states the average hourly wages 
are low enough to qualify them for Welfare.
    These jobs are paid for by Medicaid, Medicare, and other 
public sources, which fund approximately 89 percent of the 
care. Many of these jobs require the same training as certified 
nurse's aides who work in nursing homes. The only difference 
between the two sets of workers is that those in nursing homes 
do get minimum wage and overtime and those providing care and 
services in the homes do not.
    What do we know about how this might play out were these 
rules to be implemented? It is not a zero sum game where 
consumers win or the workers win. The states where there is 
coverage have seen that the programs have thrived and the 
quality of care has not dropped.
    As we have heard this morning, 15 states already extend 
minimum wage and overtime protections to some or all home care 
workers. This includes Michigan, New Jersey, Minnesota, and 
states with some of the nation's largest home care programs, 
including New York, Illinois, and Pennsylvania. These states' 
experiences illustrate the economic feasibility of providing 
basic protections to home care workers.
    Some advocates and employers argue that the only way an 
individual can get continuity of care is to have only one 
worker for all needed hours. Requiring one worker for 24/7 care 
is not a good model for anyone. The worker at these low wages 
cannot sustain this kind of work, and that has related to--that 
has resulted in high turnover, which does not support 
continuity of care for anybody.
    And I just wanted to mention what Secretary Leppink 
mentioned. There are a couple of myths out there that I am 
happy to address in questions.
    Live-in arrangements will not be drastically altered under 
the proposed federal rule. The employers of live-in workers are 
still permitted to enter into agreements with their workers to 
not pay for sleep time.
    And finally, these proposed changes come at a critical 
time. Over the next 2 decades the population over 65 will grow 
to more than 70 million. An estimated 27 million Americans will 
need direct care by 2050. If recruitment and retention problems 
grow due to the low wages labor shortages could fail to meet 
the growing need.
    Thank you for inviting me to testify, and I look forward to 
any questions.
    [The statement of Ms. Ruckelshaus follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
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    Chairman Walberg. Now we will move to Mr. Dombi?
    Is your microphone on?

  STATEMENT OF WILLIAM A DOMBI, NATIONAL ASSOCIATION FOR HOME 
                        CARE AND HOSPICE

    Mr. Dombi. Good morning, Chairman Walberg, Ranking Member 
Woolsey, and members of the Subcommittee on Worker Protection. 
Thanks for the opportunity to testify at today's hearing.
    The subject of the hearing is of crucial importance to the 
provision of home care to our nation's elderly and people with 
disabilities. The U.S. Department of Labor has proposed changes 
in overtime compensation exemptions that would effectively 
eliminate the application of those exemptions for home care 
services.
    There has been no change in the law mandating these 
revisions. In fact, the rules that are subject to change have 
been in effect for nearly 40 years.
    The proposed rule raises several legal and factual 
concerns. First, the proposed redefinition of ``companionship 
services'' is in direct conflict with the language of the Fair 
Labor Standards Act as well as its legislative history. 
Specifically, the FLSA applies the exemption to employees 
providing companionship services for individuals who, because 
of age or infirmity, are unable to care for themselves. This 
exemption relates to care, not fellowship, which is the 
proposal from the department, a term which is not referenced 
anywhere in the law.
    In 1973 Senator Taft noted that the services are directed 
to caring for the elderly in their homes to avoid nursing home 
placement. Senator Burdick further noted that the exemption 
applies for services to the aged and infirm that needs someone 
to take care of them. Fellowship is not care and does little or 
nothing to keep people out of nursing homes.
    Second, excluding employees of third party employers from 
the application of the exemption is in direct contradiction to 
the language of the FLSA as well as the position advanced by 
the Department of Labor at the U.S. Supreme Court. The law 
applies the exemption to any employer.
    The department relied on this language in defending its 
current regulations before the Supreme Court in 2007. The 
exemption is not limited to the infirm that have the 
wherewithal and financial capabilities to take on the difficult 
tasks required of employers.
    Third, the proposed rules have existed essentially in this 
same form since 1975's original rulemaking. Congress has had 
many opportunities to change the law in line with the 
defendant's--the department's proposal. Where Congress does not 
find sufficient reason to change the law over 36 years, the 
legal validity of the current proposal is called into serious 
question.
    Finally and perhaps most importantly, the analysis by the 
Department of Labor regarding the likely impact of the proposed 
rules falls far short of the analysis required under the Small 
Business Regulatory Flexibility Act and other federal law. 
While the department offers a very lengthy impact report it has 
several major failings at its core. Given the potential impact 
of the proposal, the department should be held to a very high 
standard of accuracy and completeness in its impact analysis.
    The analysis misses completely one of the most significant 
forms of home care--privately purchased personal care. 
Estimates fall short of 5 to 7 percent from the department's 
analysis, yet our own analysis shows that several million 
elderly people with disabilities as well, as well as those non-
elderly with disabilities receive such care through over 20,000 
companies across the country with an estimated $30 billion in 
annual expenditures.
    The impact analysis is also devoid of any evaluation of 
live-in services. This unique segment of home care is virtually 
all on a private pay basis. The impact on live-in care and 
caregivers cannot simply be assumed by using Medicare data or 
even the limited but unrelated data from Medicaid home care.
    The major weakness in the department's analysis is also its 
great reliance on Medicare data, which funds virtually none of 
the companion services at issue in this rule. Less than 6 
percent of Medicare home health spending applies to home health 
aides, most of whom don't even qualify for the companionship 
services exemption.
    Medicaid, a much larger public purchaser of personal care, 
has no uniform data even to conduct the analysis to understand 
impact. We have conducted our own study of the impact of the 
proposal and we have looked at private pay as well as public 
programs, and the conclusions are that there will be moderate 
to significant increases in care costs; restrictions in 
overtime hours to the detriment of workers' overall 
compensation; loss of service quality and continuity; and 
increased costs passed on to patients and public programs that 
would result in the decreased service utilization, increase use 
of unregulated grey market services where quality of care is in 
jeopardy, and increased institutional care utilization rather 
than absorbing and covering the higher cost of care.
    Further, an additional analysis by Navigant Economics 
confirms that the department fell far short of the depth and 
accuracy needed to produce the mandated impact analysis to 
protect the public from harmful policy changes. We are prepared 
to share all of that analysis with this committee and we will 
be doing so with the Department of Labor, as well.
    I would close with one remark: The Department of Labor 
essentially qualified the proposed rule as inconsequential 
financially, at the same time characterizing the rule as so 
important to the workforce and so important to the elderly 
consumer of the services that it had to be done now. I think 
the department really needs to go back to the drawing board and 
examine true impact, and they have that opportunity--a rare 
opportunity. Given the 16 states that have overtime 
compensation, they can do a thorough review of what the impact 
has been in those 16 states as the transition occurred to 
determine much better than the assumptions and speculation that 
they used to determine the impact of this proposed rule just by 
looking at raw data.
    Thank you for the opportunity to testify, and I would take 
any questions that you might have.
    [The statement of Mr. Dombi follows:]

    Prepared Statement of William A. Dombi, Vice President for Law,
              National Association for Home Care & Hospice

    Good morning Chairman Walberg, Ranking Member Woolsey, and members 
of the Subcommittee on Worker Protections. I am William A. Dombi, Vice 
President for Law at the National Association for Home Care & Hospice. 
Thank you for the opportunity to testify at today's hearing.
    The subject of today's hearing is of crucial importance to the 
provision of home care to our nation's elderly and people with 
disabilities. The U.S. Department of Labor has proposed changes in 
overtime compensation exemptions that would effectively eliminate the 
application of the exemptions for home care services. Specifically, the 
proposed rule would redefine ``companionship services'' to limit the 
application of the exemption to primarily ``fellowship.'' Also, the 
proposed rule would eliminate any application of the companionship 
services and live-in exemptions where the worker is employed by a third 
party. There has been no change in the law mandating these revisions. 
Further, these rules have been in effect for nearly 40 years.
    The proposed rule raises several legal and factual concerns.
    First, the proposed redefinition of ``companionship services'' is 
in direct conflict with the language of the Fair Labor Standards Act as 
well as its legislative history. Specifically, the FLSA applies the 
exemption to employees providing ``companionship services for 
individuals who (because of age or infirmity) are unable to care for 
themselves.'' This exemption relates to care, not ``fellowship'' a term 
never referenced in the law.
    In 1973, Senator Taft noted that the services are directed to 
caring for the elderly in their homes to avoid nursing home placement. 
Senator Burdick further noted that the exemption applies for services 
to the aged and infirm that needs someone to take care of them. 
``Fellowship'' is not care and does little or nothing to keep people 
out of nursing homes.
    Second, excluding employees of third-party employers from the 
application of the exemption is in direct contradiction to the language 
of the FLSA and the position advanced by the Department of Labor at the 
US Supreme Court in Long Island Care at Home v. Coke. The law applies 
the exemption to ``any employee.'' The Department relied on this 
language in defending its current regulations at the Supreme Court in 
2007. The exemption is not limited to the infirm that have the 
wherewithal and financial capabilities to take on the difficult tasks 
required of employers.
    Third, the proposed rules have existed essentially with identical 
standards since the original rulemaking proceeding in 1975. Congress 
has had many opportunities to change the law in line with the 
Department's proposal. Where Congress does not find sufficient reason 
to change the law over 36 years, the legal validity of the current 
proposal is called into serious question.
    Finally, the analysis by the Department of Labor regarding the 
likely impact of the proposed rules falls very far short of the 
analysis required under the Small Business Regulatory Flexibility Act, 
the Paperwork Reduction Act, and Executive Orders 12886 and 13563. 
While the Department offers a lengthy impact report, it has several 
major failings at its core. Given the potential impact of the proposal, 
the Department should be held to a very high standard of accuracy and 
completeness in its impact analysis.
    The analysis misses completely one of the most significant forms of 
home care--privately purchased personal care. It is estimated that 
several million elderly and persons with disabilities use such care 
through 20,000 companies with an estimated $25-30 billion in annual 
expenditures.
    The Department's impact analysis is also devoid of any evaluation 
of live-in services. This unique segment of home care is virtually all 
on a private pay basis. The impact on live-in care and caregivers 
cannot be simply assumed by using Medicare data or even the limited, 
but unrelated data on Medicaid home care services. It is a service that 
is wholly different from any public program home care.
    The major weakness in the Department's impact analysis is the great 
reliance on Medicare data on home health services and other public 
reports on such care. However, only 6% of Medicare home health spending 
is on home health aides, the closest service to companionship care.
    Medicaid is a much larger public purchaser of personal care 
services through a variety of state specific programs. However, 
Medicaid data on the actual hours of care provided by personal care 
workers is virtually unavailable making an assessment of impact 
unreliable when using public data reports.
    NAHC has conducted a study of the impact of the proposal. This 
nationwide survey, including private pay home care and live-in services 
providers, indicates the following adverse impacts:
    1. Moderate to significant increases in care costs
    2. Restrictions in overtime hours to the detriment of the workers 
overall compensation
    3. Loss of service quality and continuity
    4. Increased costs passed on to the patients and public programs 
that would decrease service utilization, increase unregulated ``grey 
market'' care purchases, and increase institutional care utilization 
rather than absorbing and covering the higher cost of care.
    Further, an analysis by Navigant Economics confirms that the 
Department fell far short of the depth and accuracy needed to produce 
the mandated impact analysis sufficient to protect the public from 
harmful policy changes. Navigant Economics uncovered essential flaws 
and weakness in the Department's analysis, indicating that it would be 
prudent to re-initiate a comprehensive review before proceeding further 
with the proposed rule change.
    In conclusion, the Department of Labor's proposed rule 
significantly changes its longstanding policy. This proposal is in 
conflict with the language of the law and its legislative history. 
Also, the proposal fails to comply with requirements that the 
Department undertake a comprehensive and reliable impact analysis 
before issuing the proposal. Consumers, workers, small businesses, and 
public health care financing programs such as Medicaid all would be 
adversely affected by the proposal.
                                 ______
                                 
    Chairman Walberg. Mr. Dombi, I thank you and each member of 
the panel. I appreciate your comments.
    I also want to take an opportunity as I see a number of 
caregivers in in attendance today, as well as administrators of 
caregiving organizations, and I would--having experienced some 
of that myself in caring for my mother, I want to say thank 
you. You are special people for what you do and the care you 
provide. Regardless of our discussions here related to law and 
how it goes on, we appreciate your services.
    Delighted to have the gentleman from Virginia, Mr. 
Goodlatte, here.
    I know that it is a scheduling issue and I would like to 
extend the opportunity now to recognize you for questioning.
    Mr. Goodlatte. Well, Mr. Chairman, thank you very much, and 
thank you for holding this hearing. And I also want to join you 
in thanking all of the caregivers and individuals who operate 
businesses that afford people the opportunity to hire good 
workers so they can keep family members at home and live at 
home.
    I also want to take the opportunity to recognize two of 
those folks who are here from my district, one of whom is a 
member of the Virginia General Assembly, and that is Delegate 
Chris Head and his wife Betsy, who are both here, and I thank 
them for the interest they have taken in today's hearing.
    I want to first direct my questions to Mr. Dombi and ask 
you if you could elaborate on your testimony that the 
department's rule directly conflicts with the language in the 
Fair Labor Standards Act and its legislative history. Can you 
explain your understanding of Congress' intent in enacting the 
companionship exemption, and can you please elaborate on how 
this rule conflicts with that intent and the language of the 
act?
    Mr. Dombi. Certainly. Start with the fact that the proposed 
rule redefines companionship services in a way that pretty much 
limits it to a concept called fellowship, which in this modern 
day and age sounds like Facebook, and eliminates, effectively, 
the definition as it relates to providing care to the elderly 
and infirm; whereas, the language in the law itself refers to 
care of the elderly and infirm, not fellowship, a concept which 
is not addressed--even referenced--in the legislative history 
or the statutory language.
    And in terms of any ambiguity regarding that, the 
legislative history, as I referenced in my testimony, from two 
of the proponents of the companionship services exemption, 
Senators Taft and Burdick, focused-in on caring for individuals 
to keep them out of the nursing home. So to take the proposed 
regulation, which effectively says no more than 20 percent of 
the time can be spent providing personal care to an individual, 
apply it to the elderly and infirm, who frankly aren't looking 
for a friend to watch TV with them, they are looking for 
assistance with activities of daily living, looking at the 
statutory language which focuses in on care not on fellowship, 
and the rule essentially guts the companionship exemption as 
intended by Congress back in 1974.
    The second part of it is relating to the application of the 
rule to third party employers, companies that provide the 
services. Most elderly and disabled really aren't going to be 
looking on Craigslist for finding caregivers; it is a dangerous 
effort in many respects, as well.
    Instead, they turn to third party agencies who do 
background screening and place people there who can competently 
meet needs. The statute itself regarding the exemptions 
references very specifically that it applies to any employee 
engaged in that type of service. The Department of Labor, at 
the Supreme Court in the Long Island Care at Home v. Coke case, 
very specifically argued that ``any employee'' means third 
party employers as well as people directly engaged in 
employment within the household.
    Mr. Goodlatte. I want to interrupt you because I want to 
direct one of the points you just made over to Mr. Esterline. I 
wasn't here for the testimony of the deputy administrator, but 
I understand that one of the questions from the gentlewoman 
from California related to the fact that the amount that is 
billed to someone who hires one of these companies is greater 
than the amount paid to the caregiver.
    And so, Mr. Esterline, as the operator of one of these 
businesses can you describe the costs of operating a business 
outside of the payroll--outside the amount of money that you 
have to pay in wages to the direct caregivers?
    Mr. Esterline. So for clarification, Congressman, you were 
wondering what the overall operating expenses, administrative 
expenses----
    Mr. Goodlatte. Right.
    Mr. Esterline [continuing]. Or my business?
    Mr. Goodlatte. Exactly.
    Mr. Esterline. Certainly. Thank you for the question.
    I would like to start by referencing--Congresswoman Woolsey 
was referencing the profits of these businesses of 30 to 40 
percent. I have been doing this for 11 years and, boy, it would 
be nice to have 30 or 40 percent profit but the reality is is 
it is not. Not even close.
    But to answer your direct question, Congressman, there is 
a--for the caregiver expense we have got the gross payroll 
dollars; we then have to match all the employer taxes; we also 
have to carry workman's comp insurance, putting us well over 50 
percent out the door. Then we have got the administrative costs 
for the administrative people that are doing the hiring, the 
training, the scheduling, the marketing of our services----
    Mr. Goodlatte. You also bear the risk, too, don't----
    Mr. Esterline. We absolutely bear the risk.
    Mr. Goodlatte. If an individual wants to save money and, as 
Mr. Dombi suggested, go to Craigslist or call a neighbor or 
call a friend, find somebody that way, they certainly can do 
that and it might be--may be less expensive for them to do 
that. But when they do that they don't--and something goes 
wrong and that individual causes some harm that individual is 
likely not going to be able to make things right financially, 
whereas your company has the insurance, has the wherewithal to 
make things right if something does go wrong. Is that not----
    Mr. Esterline. That is absolutely correct--general 
liability, professional liability to cover all of our 
caregivers and to protect our clients.
    Mr. Goodlatte. And do you have competitors?
    Mr. Esterline. Do I have competitors?
    Mr. Goodlatte. Do you have other businesses in your area 
that offer similar services?
    Mr. Esterline. That are opening every single day, 
Congressman.
    Mr. Goodlatte. Yes. And so if they are choosing to pay more 
to their workers or charge less to the people hiring the 
service, you have got to be aware of that, you have got to 
compete with that along with competing with people who decide 
they are going to simply directly go to the newspaper, or 
Craigslist, or a referral from a friend or neighbor.
    Mr. Esterline. Yes. And I think that, really the point is, 
I am here defending my caregivers. I am really here advocating 
for them, and I have lived it every single day----
    Mr. Goodlatte. You take the time to screen them, to train 
them, to make sure they are going to do a good job so that your 
company has a good reputation and people will want to continue 
to do business with you.
    Mr. Esterline. Absolutely. And----
    Chairman Walberg. The gentleman's time is expired.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Chairman Walberg. Thank you for your questioning.
    I recognize the ranking member, Ms. Woolsey?
    Ms. Woolsey. Thank you, Mr. Chairman.
    Ms. Ruckelshaus, in Mr. Dombi's testimony he says that the 
proposed rule is in direct conflict with the legislative 
history of the Fair Labor Standards Act. I would like to give 
you some more time to talk about what you--how you believe this 
proposed rule and the intent of the framers in this 
companionship exemption. And I would like you to expand into--
this is the 21st century. This is no longer 1974.
    Ms. Ruckelshaus. Sure. Yes. Thank you for the question. And 
Mr. Dombi and I were on opposite sides in the Coke case in the 
Supreme Court, so we--we see the case differently.
    In 1974, when the Congress decided to extend the Fair Labor 
Standards Act to domestic service workers for the first time, 
it carved out two narrow exemptions. One was for casual 
babysitters and one was for companions.
    It did not define what companions--``companionship 
services'' meant and it explicitly left it to the Department of 
Labor to define what ``companionship services'' meant. The 
Department of Labor did that in 1975 and it defined 
companionship services in such a way that the modern home care 
workforce is now completely swept into what was intended to be 
a very narrow exception for casual babysitters and companions.
    The legislative history shows that what the Congresspeople 
were talking about were elder-sitters--people where were not, 
as a vocation, doing the things that these workers here today 
are doing--catheter care, caring for patients with Alzheimer's, 
with very technical experience. The Congresspeople intended to 
exempt the casual babysitters and the companions who were more 
like elder-sitters whose vocation was not taking care of--as a 
profession.
    Ms. Woolsey. Thank you very much. So critics of the rule--I 
am staying with you on this--have argued that continuity of 
care will be harmed if this rule is in effect. Talk about the 
effect of low wages on the current home care industry and the 
turnover rates, and how that affects care.
    Ms. Ruckelshaus. The problem with the continuity of care 
arguments that are sometimes made is first, the opponents are 
suggesting that 24/7 care can only be performed by one worker, 
and that is just not a workable scenario for anybody. My own 
grandmother who had three aides who were taking care of her at 
the end in her home and she loved all of them; she knew them; 
they were with her for a long time. There was continuity of 
care and it was the same three workers for a long time.
    The high turnover, which is estimated to be as high as 65 
percent per year, does more damage to the continuity of the 
workforce than any raise in--from $7 an hour to $9 an hour 
could ever do. The high turnover not only costs the agencies 
but it means that the workers leave because they have to leave 
and there is no continuity of care for the consumers and 
recipients of the services.
    Ms. Woolsey. Thank you.
    Mr. Esterline--yes, thank you--I am so confused about how 
$8 an hour for 54 hours a week versus $8 for 29 hours a week, 
in your best judgment, ends up in being better for the worker. 
How does that work?
    Mr. Esterline. It is absolutely not better for the worker.
    Ms. Woolsey. Well why would you make that happen?
    Mr. Esterline. Well, my----
    Ms. Woolsey. What happened to 40 hours a week?
    Mr. Esterline. Well, I will tell you exactly, 
Congresswoman. We referenced in testimony earlier about our 
scheduling software programs and how we can manage and we can 
do these things. Absolutely we can.
    In the state of Michigan I have been--we have been 
successful in doing that. But the issue is is that we are not 
being--we are--we are giving our caregivers the hours that they 
want because we have to cap them at 40. Because if not I have 
got to pass the costs on to my senior clients that are already 
struggling to pay for the services themselves.
    Ms. Woolsey. So then why did poor Rosie--I think it was 
Rosie--only get 29 hours? I mean Doris--Doris. I am sorry.
    Mr. Esterline. Doris. Yes, it was Doris.
    Ms. Woolsey. Thank you. I mean, what happened to 40?
    Mr. Esterline. Well, I would love to give her 40, and 
anyone of us--anyone of us in this room would love to have 
Doris for 40-plus hours or the 54 she was averaging before, but 
it is based on need, and--and as our customers come and go 
because of various situations that they may be in I can't 
openly just schedule her; I have to analyze that information 
daily and weekly in limiting them in their hours, ultimately 
decreasing their income. It is unfair to them, and this--and 
this is taking--this is taking money out of their pockets and 
they have to get a second job. It is not fair.
    Ms. Woolsey. Okay.
    Thank you, Mr. Chairman.
    Chairman Walberg. I recognize myself for my 5 minutes of 
questioning.
    Ms. Woodard--Woodard, excuse me--Ms. Woodard, your 
testimony noted that your father--father's care started with a 
privately hired caregiver.
    Ms. Woodard. Yes.
    Chairman Walberg. However, as your father's--as I remember 
it--your father's needs changed you hired a caregiver through 
an agency.
    Ms. Woodard. Correct.
    Chairman Walberg. Can you explain why you made the switch 
to a caregiver hired through an agency?
    Ms. Woodard. I think that what I did is I made the mistake 
that a lot of people do and think, ``I know what I am doing; I 
know this person through church, or they worked at somewhere 
else and they just retired,'' so I hired somebody to care for 
my dad, and I knew her so I didn't have to do a background 
check, I didn't have to make sure she had her license, make 
sure she, you know, had her papers to work.
    But then as you start thinking through her being with your 
father, what if my father fell on her? What if she got injured 
on the job? Whose responsibility would it be to pay for her 
back injury or her workman's compensation because she had no 
workman's compensation? She wasn't licensed or bonded. I had no 
protection as a consumer.
    So what I did was actually I called up her homeowner's 
insurance and I asked him was I at risk, and he said yes, you 
are at great risk and I would suggest increasing your parents' 
policy to $1 million because if she does indeed fall, if 
something happens to her while she is in my house, even if it 
is involved in being with my father, we were responsible.
    Chairman Walberg. Okay. Thank you.
    Mr. Esterline, the notice of proposed rulemaking claims 
that Medicare and Medicaid figures on home health to support 
its conclusion that a great deal of the cost would be picked up 
by Medicare and Medicaid. Let me ask you, how is the 
companionship industry different from home health?
    Mr. Esterline. It is different from home health because my 
caregivers are placed in the homes to care for our clients. 
They are to be there for them to potentially supervise and make 
sure that they are safe in their home environment.
    Secondary services are going to be the assistance to the 
restroom, or the housekeeping, or the meal preparation, where 
your home health is going to be going in and per visit--not for 
an hourly length of time--to go in and assist with a bath--a 
bath visit, so they are in and out for no length of time, and 
it is not even scheduled for the time that the--that the senior 
would like. A lot of times it is like calling Sears: ``We will 
be there between 1 and 5 for that bath visit.''
    So what is different is that we are there to provide the 
care much more than just a bath visit.
    Chairman Walberg. How has the Department of Labor's notice 
of proposed rulemaking altered the services that you are able 
to provide?
    Mr. Esterline. I am sorry. Can you say that again?
    Chairman Walberg. How has the Department of Labor's notice 
of proposed rulemaking altered the services you are able to 
provide, if they have?
    Mr. Esterline. Well, I can tell you exactly. Prior to the 
rule--or, excuse me, the law change in Michigan in 2006 my 
staff and I focused 100 percent on consistency in scheduling 
the caregivers to the hours that they--the designated hours 
that they wanted to work and making sure that it matched the 
needs of our clients, and it was 100 percent based on the care 
being provided.
    And since the change in the law the third component now 
is--Doris is a perfect caregiver but we can only put her in 
there for one night because she has already got so many hours. 
So what has happened is that she has--it has disrupted the 
continuity and the consistency of care.
    Chairman Walberg. Generally speaking, how much does your 
business--your industry--rely on Medicare and Medicaid 
payments?
    Mr. Esterline. As I stated in my written testimony, based 
on the numbers from the IFA study, it is 85 percent privately 
paid by the senior or the family member and 5 percent by 
Medicare and Medicaid. My business is very close to similar to 
those numbers.
    Chairman Walberg. How much does your business rely on--
typically--on health insurance?
    Mr. Esterline. Your traditional health insurance, like 
Medicare, your Blue Cross Blue Shield, zero. Not one penny is--
the companionship services----
    Chairman Walberg. Zero.
    Mr. Esterline. Zero.
    Chairman Walberg. So should this rule be enacted, who would 
pay for the services your business--your industry provides?
    Mr. Esterline. Well, me personally, it doesn't change one 
bit for me. I am already living under those--the--those 
regulations.
    Chairman Walberg. In Michigan.
    Mr. Esterline. In Michigan. So I am here to share--and to 
explain that don't follow Michigan down this road. It is a bad 
deal for the--for our caregivers and a bad deal for our 
clients.
    Chairman Walberg. Do your employees in Michigan make more 
money now, after the change?
    Mr. Esterline. No. They are not making more. They are 
struggling to make the same. And a lot of times the caregivers 
like Doris--she is not an isolated incident or an isolated 
situation--we have to cap the caregivers to make it affordable 
for our--for our seniors, and so it is limiting the income that 
they are actually going to--they are actually making.
    I have caregivers that will say to me at any given time, 
``Wynn, don't pay me overtime. Let me just care for Mr. and Ms. 
So-and-so.''
    And I say, ``I am sorry. I have to abide by the law. It is 
not worth going to jail over.''
    Chairman Walberg. Well, thank you, each of the panel 
members. I appreciate your time with us.
    At this point in time I would ask the ranking member if she 
has any closing remarks to make.
    Ms. Woolsey. Thank you, Mr. Chairman. Thank you for this 
hearing.
    I believe it was Mr. Dombi that asked, why haven't the 
rules been changed since 1974, and I think the answer is clear. 
It is because we have not had a Department of Labor willing to 
step up to this issue and to bring forth rules that bring this 
industry into the 21st century, and I thank our current 
Department of Labor for being willing to do this.
    Today's hearing questions whether an industry that 
generated billions of dollars of profit each year can afford to 
provide basic wage and hour protections for its workforce. 
These workers enable our loved ones to remain in their homes 
and preserve their dignity and quality of life. These workers 
deserve basic minimum wage and overtime protections so that 
they can provide for their families with the same dignity and 
self-sufficiency they provide for their clients.
    As Senator Kennedy said when discussing Fair Labor 
Standards Act protections, and I quote him--``No one who works 
for a living should have to live in poverty.''
    Today, Mr. Chairman, we heard compelling testimony from Ms. 
Ruckelshaus clearly demonstrating the need for the Department 
of Labor's proposed regulation. All workers deserve a fair 
day's pay for a fair day's work.
    The home care workforce is no different. These workers, 
primarily women and minorities, do valuable work and they 
deserve just as--they deserve just compensation. It is 
essential that we extend FLSA protections to home health care 
workers.
    With that, Mr. Chairman, I would like to ask unanimous 
consent to submit for the record a letter signed by 86 
organizations in support of the Department of Labor's proposed 
rule and I would like to ask unanimous consent to submit a 
statement for the record from the American Federation of State, 
County, and Municipal Employees. And I thank you.
    [The information follows:]

                                                     March 6, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the 
        Workforce, Washington, DC 20515.
    Dear Chairman Walberg and Ranking Member Woolsey: The undersigned 
organizations support the Department of Labor (DOL) for revising the 
rules (RIN 1235-AA05) on the ``companionship exemption'' under the Fair 
Labor Standards Act (FLSA), which currently denies the direct care 
workforce basic federal wage-and-hour protections.
    This workforce provides daily supports and services to older 
Americans and individuals with disabilities who need assistance with 
personal care and activities of daily living. The work that home care 
workers and personal care attendants do is vitally important to the 
health, independence, and dignity of consumers who rely on paid 
services in their homes. Unfortunately, because of the current DOL 
regulations, over 1.7 million home care workers are not ensured minimum 
wage or overtime pay. As a result, wages for this workforce are 
depressed, earning them low compensation, often for long hours of work. 
The current federal minimum wage is $7.25 per hour but one quarter of 
personal care aides earn less than $6.59 per hour and one quarter of 
home health aides earn less than $7.21 per hour. Nationwide, one out of 
every 12 low-wage workers is a direct care worker, and typical of a 
low-wage workforce, these home care workers are more likely to be 
uninsured, and nearly half receive public benefits such as Medicaid or 
food stamps.
    During this economic recovery, we need to implement federal 
regulatory policies that fight poverty and promote access to quality 
care and the growth of quality jobs. The current DOL regulations 
broadly exempt this whole workforce. Such a sweeping policy is unsound, 
unfair, and undermines the economic recovery and our nation's goals for 
quality long-term care. Extending basic minimum wage and overtime 
protections to most home care workers will improve the stability of our 
home care workforce and encourage growth in jobs that cannot be 
outsourced. Reducing turnover in this workforce will improve access to 
and quality of these much-needed services.
    The work done by these home care workers and personal care 
attendants affirms the values of dignity and respect we have for our 
aging citizens and individuals with disabilities. It is time that we 
value this workforce, too. Now is not the time to delay regulations 
that would provide them with a small measure of respect--the protection 
of federal wage-and-hour rules.
    We oppose efforts to delay issuing the final rule and we support 
increasing resources to expand in-home supports and services. Our 
nation faces many challenges to allow consumers and home care workers 
to live with dignity, respect and independence but the solution to 
providing these needed services is not to deny paid caregivers federal 
minimum wage and overtime protections.

9to5, National Association of Working Women
Advocacy for Patients with Chronic Illness, Inc.
AFL-CIO
AFSCME
Alliance for a Just Society
Alliance for Retired American
American Association of University Women (AAUW)
American Civil Liberties Union
American Federation of Government Employees (AFGE)
American Federation of Teachers (AFT)
American Rights at Work
American Society on Aging
Asian Law Caucus, Member of Asian American Center for Advancing Justice
Asian Pacific American Legal Center, a member of the Asian American 
        Center for Advancing Justice
Association of University Centers on Disabilities (AUCD)
Campaign for Community Change
Caring Across Generations
Center for Law and Social Policy (CLASP)
Chicago Jobs Council
Coalition of Labor Union Women
Coalition on Human Needs
Communications Workers of America (CWA)
Community Action Partnership
Cooperative Care
D.C. Employment Justice Center
Demos
Direct Care Alliance
Direct Care Workers of Color, Inc.
Disciples Justice Action Network
Equality State Policy Center
Excluded Workers Congress
Families USA
Food Chain Workers Alliance
Friends Committee on National Legislation
Gray Panthers
Health Care for America Now
Indiana Care Givers Association
Institute for Policy Studies
Interfaith Worker Justice
International Brotherhood of Teamsters
International Union, United Automobile, Aerospace & Agricultural 
        Implement Workers of America, UAW
Jobs With Justice
Lawyers' Committee for Civil Rights Under Law
League of United Latin American Citizens
Legal Aid of Marin
Legal Momentum
MataHari: Eye of the Day
MomsRising
National Academy of Elder Law Attorneys, Inc. (NAELA)
National Alliance for Direct Support Professionals
National Consumer Voice for Quality Long-Term Care
National Council of Jewish Women
National Council of La Raza (NCLR)
National Council of Negro Women (NCNW)
National Council of Women's Organizations
National Domestic Workers Alliance
National Employment Law Project (NELP)
National Employment Lawyers Association (NELA)
National Gay and Lesbian Task Force Action
National Hispanic Council on Aging
National Partnership for Women & Families
National Women's Law Center
National Women's Health Network
National Workrights Institute
NCB Capital Impact
NETWORK, A National Catholic Social Justice Lobby
OWL-The Voice of Midlife and Older Women
Paraprofessional Healthcare Institute (PHI)
Partnership for Working Families
Provincial Council of the Clerics of St. Viator (Viatorians)
Raising Women's Voices for the Health Care We Need
Sargent Shriver National Center on Poverty Law
Service Employees International Union (SEIU)
Sugar Law Center for Economic and Social Justice
The Brazilian Immigrant Center
The Iowa Statewide Independent Living Council (SILC)
The Leadership Conference on Civil and Human Rights
United Steelworkers (USW)
Universal Health Care Action Network (UHCAN)
USAction
Virginia Poverty Law Center
Voices for America's Children
Voices for Progress
Washington Community Action Network
Wider Opportunities for Women
Women Employed
Working America
                                 ______
                                 

            Prepared Statement of the American Federation of
             State, County and Municipal Employees (AFSCME)

    Mr. Chairman and members of the Subcommittee, on behalf of the 1.6 
million members of the American Federation of State, County and 
Municipal Employees (AFSCME), including approximately 125,000 home care 
providers, please include the following statement in the hearing record 
for ``Ensuring Regulations Protect Access to Affordable and Quality 
Companion Care.''
    The home care providers represented by AFSCME are a lifeline to 
independence and dignity for the consumers to whom they provide support 
services. These home care workers assist individuals who have 
functional limitations--due to age, chronic condition, illness or 
injuries--with mobility, personal hygiene, toileting, dressing, eating, 
transportation, cleaning and cooking, and other daily activities of 
living which many of us take for granted. The support and services home 
care workers provide enable consumers to continue to live in the 
comfort of their own homes and remain active and part of their families 
and communities. The job home care workers do is demanding and 
intensely personal in nature. It requires an exceptional emotional 
connection and is frequently draining. Our members find the work 
worthwhile because they know they make a difference in someone's 
quality of life every hour they work. For some older Americans 
receiving home care services, these paid caregivers may be the only 
person they see regularly beside their physician.
    The work is highly valued by consumers and their families but 
compensation has been suppressed due to the overly broad Department of 
Labor regulations that exempt the whole home care industry, including 
home care agencies, from having to plan for and comply with basic 
federal wage and hour protections. The federal minimum wage is $7.25. 
One quarter of personal care aides earn less than $6.59 per hour, and 
one quarter of home health aides earn less than $7.21 per hour.\i\ 
Moreover, the real hourly rates are lower because these hourly rates 
are usually for direct care hours only, as workers typically are not 
paid for travel time between clients or reimbursed for travel costs.
---------------------------------------------------------------------------
    \i\ http://www.carseyinstitute.unh.edu/publications/IB-Smith-Home-
Care-Workers.pdf
---------------------------------------------------------------------------
    These suppressed wages hurt workers, employers and our economy, and 
keep home care workers and their families nearly impoverished. Two out 
of five home care workers employed by a home care agency lack health 
insurance. Due to high injury rates, home care workers are especially 
vulnerable without adequate insurance coverage. Nearly one out of two 
home care workers are in households relying on public assistance, such 
as Medicaid and food stamps, to meet their basic needs.
    For employers it means costly high turnover. The national price tag 
for high turnover in this industry is roughly on the order of $4.1 
billion.\ii\ Small businesses that want to pay workers better wages are 
put at an unfair disadvantage because there is no federal minimum wage 
that applies to home care providers to level the competitive playing 
field.
---------------------------------------------------------------------------
    \ii\ http://www.directcareclearinghouse.org/download/
TOCostReport.pdf
---------------------------------------------------------------------------
    The U.S. Department of Labor projects that at least another third 
of a million new home health aides will be needed by 2014 to meet the 
home health care needs of an aging population that is expected to more 
than double, from 13 million in 2000 to 27 million in 2050. Because 
this demand for these services will increase as our nation ages, the 
low wages of these jobs undermine economic growth and increase worker 
shortages.
    Our members are committed to those they serve. They are acutely 
aware of how the low wages and high industry turnover destabilize the 
workforce, reducing access to services and undermining the delivery of 
quality services that truly satisfy the needs of elders and persons 
with disabilities. The absence of federal wage and hour protections for 
home care workers puts the individuals who need their services at risk 
since an individual's quality of life and safety may depend on the 
reliability and the skill of their home care worker. Low wages will 
continue to deprive individuals with functional limitations access to 
needed services as low wages drive more workers out of these jobs at a 
time when the demand is growing.
    The significant disparity between what home care agencies charge 
and are paid versus the hourly wages of home care workers suggests that 
the industry can afford to comply with basic federal wage and hour 
rules. The average rate paid by state Medicaid programs to agencies 
providing personal care services was $17.73 per hour in 2010. In 
comparison, to the median wage received by home care workers generally 
(under both private and public-pay arrangements) who work in the 
overall home care industry (both private and public-pay) was 
$9.40.\iii\ According to the National Private Duty Association, the 
national average charge to families for personal care services is 
$19.82 per hour, compared to the $9.69 per hour paid to the worker. 
Accordingly, many for-profit agencies charge consumers approximately 
twice the hourly rate paid to caregivers. This data suggest the 30% to 
40% profit margins that for-profit franchises report receiving for 
delivering personal care services are being underwritten by the low 
wages paid to caregivers.
---------------------------------------------------------------------------
    \iii\ http://www.directcareclearinghouse.org/download/pcs-rates-
and-worker-wages.pdf
---------------------------------------------------------------------------
    It is time to be fair to those who care. It is time to end the 
broad exemption from federal wage and hour rules for a whole industry. 
Those who rely on home care services to remain independent need 
increased access to in-home supports and services--and so do their 
families. The (mostly) older women whose compassionate hearts and 
steady hands provide those services should be valued and respected. We 
are long overdue to provide home care workers with basic federal wage 
and hour protections.
                                 ______
                                 
    Chairman Walberg. I have no objection.
    Ms. Woolsey. With that, I yield.
    Chairman Walberg. I was waiting for the last word.
    Well again, I thank my ranking member, a good friend from 
California, for her statement, for the concern, and we 
certainly, in this hearing, want to make sure that issues are 
addressed that, number one, meet the needs of the clients, of 
the patients, of those that are requiring assistance of 
caregivers that I have stated earlier on. I frankly almost see 
it as unbelievable the type of work that they are willing to do 
and the care and commitment they make to people even like my 
mother, that supported my wife and myself in providing an 
additional 3 years on top of 10 prior years of making sure she 
could stay at--with us. The only reason that that changed was 
it became--even with those caregivers supplementing my wife and 
myself--it became dangerous for her to live at home, and so now 
we are thankful we have nursing care that provides for her.
    But that doesn't change the needs of many, many people, and 
a growing number of us, as the age increases, that need care, 
hopefully in home, in settings that are familiar, that are 
loving, that are friendly and caring, and provide opportunities 
for them to live with dignity in the remaining years of their 
life.
    On the other side of the ledger, we want to make sure that 
those that provide that care, starting with the caregiver that 
comes directly to the home and to the patient--the client--have 
incentive to do the job that they are uniquely qualified to do 
and have the abilities, the emotions, the sensitivity, and the 
desire to provide that care in loving, careful, and consistent 
ways. And that in turn, they have the ability to know that they 
are appreciated, that they have an income that meets their 
needs or approaches very carefully meeting their needs, as 
well. In turn, we have a great amount of appreciation for the 
caregiving organizations that provide in-home care, supervise, 
train, administer, and send out to those settings people who 
will--who would care for the clients.
    We understand that in order to do that, and having 
experience in organizing that for just one person--my mother--
it is a challenge. Then when you add to that the liabilities, 
the cost factors, the additional component parts to make sure 
that the businesses stays in business and we don't find another 
business that goes out and now a loss of caregivers, that their 
needs are met, as well.
    For those purposes, today we held this hearing. For those 
purposes, today we will make sure that the remarks given from 
all perspectives are part of the comment for the Department of 
Labor that would expand their ability to make the proper 
decision in putting forth rules, that they also understand that 
this Congress, over the course of years, has decided the best 
approaches to take in dealing with that and to author that 
without careful and due consideration in time of economic 
upheaval, and challenge, and expanding need, and to do that 
without caring for the full picture would be an extreme 
problem--human problem, not just a political economic problem, 
but a human problem, as well.
    So I am trusting that this hearing will provide insights in 
unique and special ways to allow us to expand the opportunities 
to give care, expand the opportunities to be employed in this 
most important field, expand the opportunities to know that I 
will be cared for at some point in time, if necessary in my 
life----
    Ms. Woolsey. Me first.
    Chairman Walberg. You first? Well, you are tenacious enough 
probably to outlive me. But both of us, that we would have that 
opportunity, and our constituents, as well, in a--in the 
greatest country on the earth, have the greatest care possible, 
as well.
    So I appreciate the hearing today and look forward to good 
things coming from it. And having no other questions or 
comments, the committee is adjourned.
    [Additional submission of Mr. Walberg follows:]

 Prepared Statement of the National Federation of Independent Business 
                                 (NFIB)

    Thank you Chairman Walberg, Ranking Member Woolsey, and Members of 
the Subcommittee for holding this hearing. The National Federation of 
Independent Business (NFIB) appreciates the Subcommittee on Workforce 
Protections focusing on the effects the U.S. Department of Labor's 
proposed changes to the companionship exemption will have on all 
stakeholders in the companionship care industry. We are thankful for 
the opportunity to offer the following statement on how the proposed 
rule will affect small businesses in the industry.
    NFIB is the nation's leading small-business advocacy association, 
representing members in Washington, D.C., and all 50 state capitals. 
Founded in 1943 as a nonprofit, nonpartisan organization, NFIB's 
mission is to promote and protect the right of its members to own, 
operate, and grow their businesses. NFIB represents about 350,000 
independent business owners who are located throughout the United 
States, including more than 300 businesses that provide in-home care to 
individuals that require it.
    The U.S. Department of Labor (DOL) proposes to revise the current 
Fair Labor Standards Act (FLSA) regulations pertaining to the exemption 
for companionship services and live-in domestic services. Currently, 
the FLSA exempts from its minimum wage and overtime provisions domestic 
service employees. The most important proposed change eliminates the 
use of this exemption by third-party employers of companion care 
workers.
    NFIB believes that the DOL should keep the companionship exemption 
for minimum wage and overtime pay to covered workers. Simply put, this 
proposal is a solution in search of a problem. Any change to the 
structure of the current exemption will have a profound negative effect 
on the small businesses that provide such services, as well as 
employees and clients.
    NFIB members in this industry have four major concerns with the 
proposed rule. First, we believe that the agency has not sufficiently 
identified a market failure that warrants the rule being proposed. 
Second, the proposed rules will have a substantial negative impact on 
the marketplace that will close businesses, have unintended 
consequences on employees, and jeopardize the safety and quality of 
life of clients. Third, we believe that the DOL is severely 
underestimating the number of businesses (and thus employees and 
clients) that will be affected by this proposal. Fourth, if finalized, 
the proposal would create a significant paperwork and recordkeeping 
burden that will disproportionately affect small businesses.
The DOL has not identified a market failure in need of correction
    NFIB believes that the DOL has not sufficiently shown that the 
market for in-home care fails any of the participants within it. Third-
party employers are able to make modest profits and employ thousands of 
workers nationwide. These workers already earn wage rates at or above 
the minimum wage, as the preamble to the NPRM indicates. This fact is 
also supported by a study completed by IHS Global Insight for the 
International Franchise Association Education Foundation (IFA study), 
which found the average rate paid to employees of franchised small 
businesses was nearly $10 per hour.\i\ The employees also enjoy the 
stability of working for one employer at the home of one or two 
clients. Many that live in the home where they work also typically 
enjoy room and board in addition to their wage. Finally, the clients 
enjoy affordable care and the stability of having the same worker in 
their home every day--which can be imperative in cases of dementia and 
other cognitive diseases.
---------------------------------------------------------------------------
    \i\ ``Economic Impact of Eliminating the FLSA Exemption for 
Companionship Services,'' HIS Global Insight for the International 
Franchise Association Education Foundation,'' February 2012. http://
emarket.franchise.org/CompanionCareReport.pdf
---------------------------------------------------------------------------
    The DOL has not justified the need for action in this situation. 
The Mercatus Center at George Mason University, a research center that 
aims to apply ``sound economics to offer solutions to society's most 
pressing problems,'' recently graded this NPRM as part of its 
Regulatory Report Card project.\ii\ Mercatus looked at how well the DOL 
identified the problem in need of correction, the thoroughness of the 
Regulatory Impact Analysis (RIA), and other areas. In total, this NPRM 
scored just 24 points out of 60 possible.
---------------------------------------------------------------------------
    \ii\ ``Regulatory Report Card: Application of the Fair Labor 
Standards Act to Domestic Service,'' Mercatus Center at George Mason 
University, February 2012. http://mercatus.org/reportcards/application-
fair-labor-standards-act-domestic-service
---------------------------------------------------------------------------
    In the area of ``How well does the analysis identify and 
demonstrate the existence of a market failure or other systemic problem 
the regulation is supposed to solve?'' the NPRM scored just one out of 
a possible five points. The Regulatory Report Card concludes ``the RIA 
fails to identify the labor-market failure that necessitates the use of 
the minimum wage, overtime, and travel compensation regulations set 
forth in the DOL's NPRM.'' We strongly encourage the DOL to review this 
document.
    NFIB strongly believes that the DOL's inability to demonstrate a 
market failure in the in-home care market requires the agency to 
withdraw the proposal and maintain the current exemption.
Impact of the proposed rule on the marketplace
    Given that there is no market failure in the in-home care industry, 
it is important to demonstrate the breadth of impact that the DOL's 
interference will have on the marketplace.
    Because virtually all employees make at or above minimum wage, it 
is safe to assume that negligible costs will be imposed on employers 
for this requirement. However, the requirement of overtime pay at time-
and-a-half will have a significant effect on employers. These 
businesses have to make every effort to keep costs affordable to their 
clients. Adding overtime makes in-home care unaffordable for many 
clients. Therefore, third-party employers will alter work schedules to 
ensure that each worker's time stays below the overtime threshold.
    In order to have the staff available to fill the new shifts that 
result, companies will need to hire and train additional workers. The 
IFA study found that nearly 80 percent of respondents are at least 
somewhat likely to hire more workers. The cost of hiring and training a 
new employee for a small business (in this case, a business with 500 
employees or fewer) is at least $3,162, based on data from the Society 
for Human Resources Management--a figure that does not include the cost 
of background checks or other pre-employment screening. If a 100-
employee company has to double its staff, that is an upfront cost of at 
least $316,200, assuming the small business can find the employees 
needed to service its clients. If businesses are unable to meet the new 
costs or find the right amount of labor, many will have to close their 
doors hurting everyone in the market.
    This potential uptick in hiring new workers, however, should not be 
mistaken as a creation of jobs as a result of this proposal. Because 
there are those businesses that will scale back their services, the IFA 
study found that the total projected number of jobs lost to be 2,630--
and this is just from the 158 respondents, not all companies 
nationwide. Expect job losses to be significantly higher.
    By-and-large, employees like the present arrangement--and this NPRM 
would damage it. Employees enjoy making a decent wage for the hours 
they want to work. Workers also enjoy the ability to work in one 
location, with one client. They form a personal relationship with that 
client that goes beyond that of a simple service provider.
    As an example, employees that enjoyed getting paid for working 60-
hour weeks in the same work site will be greatly harmed. Because their 
hours will be cut--to say 40 hours--that worker will have to try to 
find another 20-hour weekly schedule with another in-home care company 
to make up the difference. This new work, if they are able to find it, 
will likely be in a different location than their first job, requiring 
travel time to get to the additional work site--which means they will 
have less time to spend with their families or to use how they would 
otherwise like to. Assuming the jobs pay the same wage rate, the worker 
is also no better off financially than under the current structure.
    The DOL also needs to consider how the agency's interference will 
affect clients. Once overtime is introduced into the equation, care 
becomes much more difficult to afford. According to figures from 
California Association for Health Services at Home (CAHSAH), the annual 
cost to a client for live-in care is $70,000-$80,000 depending on the 
state. With overtime passed along to the client that cost escalates to 
$140,000-$185,000. The result is that many families, who want their 
loved one to live out their final years at home, will have to instead 
choose institutionalized care like a nursing home. Quality of life, and 
in many cases the length of life, is reduced.
    Another option includes getting multiple workers to come in to the 
home to fill the needed shifts. However, clients prefer having one 
steady presence. In cases of dementia or other cognitive diseases it is 
not a preference but a necessity. Having multiple providers can have 
significant stress or safety concerns on these particular clients.
    Furthermore, another safety issue is presented here. Third-party 
providers screen workers with background checks to help ensure that no 
malicious or devious persons are working in the home of a client. As 
costs increase, many in-home care clients may choose to hire a worker 
off the ``gray market,'' which is essentially someone off the street 
with little or no training or professionalism. These workers can be 
paid below minimum wage and under-the-table, which is clearly counter 
to the goal DOL wishes to address with this NPRM. These workers also 
pose safety and theft risks to clients. Nearly 90 percent of IFA study 
respondents believe their clients are very likely to seek other care, 
such as underground providers.
    The effects of DOL interference in this market will harm all actors 
in the market and benefit no one. NFIB believes the agency's lack of 
justification for interference requires the agency to abandon this 
proposal and maintain the exemption as is.
Underestimation of affected businesses
    NFIB believes that the DOL erroneously focused its industry 
analysis on ``home health care'' organizations, which are funded in 
part by Medicare, and neglected the industry segment known as ``home 
care aid'' organizations, which are not paid for with public assistance 
in any way. While estimates on the number of firms in this category are 
hard to come by, one reliable figured has been furnished by CAHSAH. 
This organization published a report in 2009 that estimated there are 
1,200 home care aid organizations in the state.\iii\ Since California 
has 12 percent of the U.S. population, one can reasonably assume that 
there are close to 10,000 home care aid organizations in America--all 
of which were left out by the DOL.
---------------------------------------------------------------------------
    \iii\ ``How Large is California's Home Care Industry,'' California 
Association for Health Services at Home, December 2009.
---------------------------------------------------------------------------
    Furthermore, the IFA study found that 85 percent of respondent 
companies' revenue comes directly from the customer or client, which 
directly contradicts DOL's assertion that 75 percent of total payments 
in the affected industry come from Medicare and Medicaid.
    Additionally, this misrepresentation of the industry has the 
potential to violate the Regulatory Flexibility Act, which requires a 
thorough analysis of a proposed rule's impact on the small businesses 
in an affected industry.
    At a minimum, the study should trigger a complete reexamination of 
the affected number of businesses and the DOL should conduct a new 
impact analysis.
Disproportionate paperwork and recordkeeping burden on small businesses
    The DOL has estimated that paperwork and recordkeeping associated 
with this proposed rule will cost in excess of $22.5 million per year. 
This is a substantial burden that will disproportionately impact small 
businesses. Small businesses face unique difficulties in regulatory 
compliance. The SBA Office of Advocacy released a study in 2010 that 
showed the smallest businesses--those with fewer than 20 employees--
spend 36 percent more per employee per year complying with federal 
regulations.\iv\
---------------------------------------------------------------------------
    \iv\ ``The Impact of Regulatory Costs on Small Firms,'' Crain and 
Crain for the SBA Office of Advocacy, September 2010. http://
archive.sba.gov/advo/research/rs371tot.pdf
---------------------------------------------------------------------------
    The reason regulatory compliance costs are so disproportionate is 
because in a small business the task of compliance falls on the small-
business owner, whereas in a larger business the task would fall on a 
specialized compliance expert. Not only is a small-business owner's 
time more valuable, but the complexity of regulatory compliance does 
not make it easy for a layperson to understand. Add in the fact that 
compliance must be done in addition to core business tasks like 
generating sales, taking inventory, and managing employees and it is 
easy to see how quickly the costs escalate for a small business.
    This substantial paperwork burden can be avoided by maintaining the 
exemption for third-party home care providers.
    In conclusion, NFIB believes that the DOL should withdraw this 
proposal and maintain the current exemption for in-home providers as 
is, including for third parties. The agency has not justified in any 
compelling way its need for action. Even worse, agency interference 
will significantly harm all actors in the market. Small businesses will 
be forced to try to absorb significant personnel and paperwork costs. 
Employees will have to work for multiple providers in multiple 
locations just to make the same wage they enjoy today. Clients will be 
faced with terrible options--either moving to institutionalized care, 
multiple providers, or navigating the gray market. In addition, the 
agency has not come close to identifying the universe of businesses, 
workers, or clients affected by this rulemaking because it has ignored 
the private-pay market.
    NFIB appreciates the opportunity to submit comments for the hearing 
record, and appreciates the Subcommittee's work on this important 
issue.
                                 ______
                                 
    [Additional submissions of Ms. Woolsey follow:]

                                                     March 6, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the 
        Workforce, Washington, DC 20515.
    Dear Chairman Walberg and Ranking Member Woolsey: Caring Across 
Generations (CAG) supports the Department of Labor (DOL)'s rulemaking 
(RIN 1235AA05) to revise the ``companionship exemption'' regulations 
under the Fair Labor Standards Act (FLSA). The current regulations deny 
minimum wage and overtime protection to direct care workers. The 
proposed regulations would narrow the companionship exemption and 
provide fundamental labor protections to most direct care workers.
    CAG is a campaign to transform long term care in the United States 
for individuals who rely on long term services and supports, for the 
workers who provide home care, and for the individuals and families who 
struggle to find and afford these services. Finalizing the proposed 
regulation would be an important recognition of the importance of the 
work that caregivers perform and would represent an important step 
towards ensuring both that these vital workers are treated with dignity 
and respect and that seniors and people with disabilities receive the 
support that they need to live independently in their homes and 
communities.
    Direct care workers provide daily supports and services to older 
Americans and individuals with disabilities who need assistance with 
personal care and activities of daily living.Nearly 70% of people 
turning 65 today will need, at some point in their lives, help with 
activities of daily living, such as bathing, feeding, and dressing. The 
work that home care workers and personal care attendants do is vitally 
important to the health, independence, and dignity of consumers who 
rely on paid services in their homes. Unfortunately, because of the 
current DOL regulations, over 1.7 million home care workers are not 
ensured minimum wage or overtime pay. As a result, wages for this 
workforce are depressed.
    During this economic recovery, we need to implement federal 
regulatory policies that fight poverty, create jobs, and promote access 
to quality long term care. The current DOL regulations broadly exempt 
the direct care workforce from fundamental labor protections. Such a 
sweeping policy is unsound, unfair, and undermines our economic 
recovery and our nation's goal of promoting quality long-term care. 
Extending basic minimum wage and overtime protections to most home care 
workers will improve the stability of our home care workforce and 
encourage growth in jobs that cannot be outsourced. Reducing turnover 
in this workforce will improve access to and quality of these vital 
services.
    Home care workers and personal care attendants provide critical 
support to enable seniors and people with disabilities to live 
independently in their homes and remain a vital force in their 
communities. It is time that we value the workers and affirm the value 
of the support they provide. Now is not the time to delay regulations 
that would provide them with a small measure of respect--the protection 
of federal wage-and-hour rules.
    We oppose efforts to delay issuing the final rule, and we support 
increasing resources to expand in-home supports and services. Our 
nation faces many challenges to allow consumers and home care workers 
to live with dignity, respect and independence, but the solution to 
providing these critical services is not to deny paid caregivers 
federal minimum wage and overtime protections.
            Sincerely,
                                   Ai-jen Poo, Co-Director,
               On Behalf of the Caring Across Generations Campaign.
                                 ______
                                 
                                                    March 19, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the 
        Workforce, Washington, DC 20515.
    Dear Chairman Walberg and Ranking Member Woolsey: As communities of 
faith united by our common religious traditions and values of justice 
and compassion, we urge you to support the Department of Labor's (DOL) 
revised rules (RIN 1235-AA05) on the ``companionship exemption'' under 
the Fair Labor Standards Act (FLSA), which currently denies the direct 
care workforce basic federal wage-and-hour protections. Further, we 
urge you to oppose any delay in the implementation of these long-
overdue rules
    The work done by our nation's more than 1.7 million direct care 
workers is a daily testament to our values as a compassionate society. 
Those who provide support and services to individuals who would 
otherwise be unable to perform basic activities of daily living 
deserve--at a minimum--a just and fair wage.
    Direct care workers provide the gentle touch to help lift a frail 
person from their bed in the morning. They provide the steady hand to 
feed an individual with disabilities. They offer the deep kindness 
necessary to bathe a person who can no longer bathe herself, but wants 
to remain in the comfort of her own home. Because of the challenging 
and intense work done by this workforce, millions of individuals are 
able to live at home with dignity and remain active members of their 
families and communities.
    Though their work is of priceless value to the families they serve, 
home care workers and personal care attendants earn low-wages for long 
hours. Approximately 45 percent of direct-care workers live in 
households below 200 percent of the federal poverty level; nearly half 
of all direct-care workers live in households that receive one or more 
public benefits such as Medicaid or the Supplemental Nutrition 
Assistance Program (SNAP).
    It is an injustice that home care workers have thus far been denied 
basic protections afforded to all other hourly workers under the FLSA. 
We urge you to support the DOL's efforts to address this problem by 
backing the revised rules that would provide this growing workforce 
with basic wage-and-hour protections and opposing any delays.
            Respectfully,
                                         Center of Concern,
                                       Church Women United,
                          Disciples Justice Action Network,
                                      The Episcopal Church,
                                  Episcopal Women's Caucus,
                                      Faith in Public Life,
                 Friends Committee on National Legislation,
                                 Interfaith Worker Justice,
                     Jewish Community Action, St. Paul, MN,
                                Jewish Women International,
                                   Jews United for Justice,
       National Advocacy Center of the Sisters of the Good 
                                                  Shepherd,
                        National Council of Catholic Women,
                          National Council of Jewish Women,
           National Council of the Churches of Christ, USA,
         NETWORK, A National Catholic Social Justice Lobby,
     Presbyterian Church (U.S.A.) Office of Public Witness,
    Progressive Jewish Alliance & Jewish Funds for Justice,
                                  Union for Reform Judaism,
       Unitarian Universalist Association of Congregations,
   United Church of Christ, Justice and Witness Ministries,
  The United Methodist Church--General Board of Church and 
                                                   Society.
                                 ______
                                 
                                                    March 20, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the 
        Workforce, Washington, DC 20515.
    Dear Chairman Walberg and Ranking Member Woolsey: As home care 
employers, we are writing in support of the Department of Labor's 
proposed rule (RIN) 1235-AA05 that would narrow the current exemption 
of home care workers from the minimum wage and overtime protections 
under the Fair Labor Standards Act.
    We own or run agencies that vary in size from 4 employees to over 
200. We operate in states that have minimum wage and overtime 
protections and in those that don't. We are employers that receive 
public funds from Medicare and Medicaid, those with public and private 
revenues, and those who rely on private pay only.
    We value the work our employees do and have always treated our 
workers with respect--and that includes fair compensation. We believe 
strongly that our employees deserve the same federal minimum wage and 
overtime protections that are granted to other American workers, 
including nursing assistants who do similar work in different settings. 
Many of our clients have high-hour needs, and as a business we can 
manage those cases without excessive overtime.
    Our workers provide a wide range of services, including personal 
care, household assistance, medication reminders, meal preparation and 
companionship. This work requires skill and compassion. It is by no 
means equivalent to Friday-night babysitting. It is a career that 
allows our employees to give back to their communities while helping to 
provide for their families.
    One of the challenges we face as a business is recruiting and 
retaining a qualified workforce. We believe that providing a 
compensation floor will help to attract more workers to the field and 
reduce turnover, which adds unnecessary costs to our business ledger 
and undermines continuity of care.
    The proposed rule shows that home care is a ``real'' job, deserving 
of respect and fair pay. Without this action, we will struggle to 
provide quality care to an exploding population of seniors.
            Signed,
                                           Bring Care Home,
                                    (Massachusetts--347 employees).
                                    Buffalo River Services,
                                        (Tennessee--180 employees).
                                 Catalina In-Home Services,
                                           (Arizona--85 employees).
                                     Cooperative Home Care,
                                         (Wisconsin--50 employees).
                          Cooperative Home Care Associates,
                                       (New York--1,800 employees).
                                            From the Heart,
                                     (Pennsylvania--100 employees).
                                Graham Behavioral Services,
                                            (Maine--111 employees).
                                         Halcyon Home Care,
                                              (Maine--4 employees).
                                      Home Care Associates,
                                     (Pennsylvania--175 employees).
                                        Home Care Partners,
                                   (Washington, DC--210 employees).
                    In-Home Supportive Services Consortium,
                                       (California--450 employees).
                     Lutheran Social Services In-Home Care,
                    (New Hampshire and Connecticut--475 employees).
                     North Shore Community Action Programs,
                                     (Massachusetts--50 employees).
                            Paradise Home Care Cooperative,
                                            (Hawaii--25 employees).
                                 ______
                                 

 Prepared Statement of the Paraprofessional Healthcare Institute (PHI)

    Chairman Walberg, Ranking Member Woolsey, and members of the 
Subcommittee, on behalf of PHI, the nation's leading expert on the 
direct-care workforce, please include the following statement in the 
hearing record for ``Ensuring Regulations Protect Access to Affordable 
and Quality Companion Care.''
    PHI strongly supports the Department of Labor's (DOL) proposal to 
extend federal minimum wage and overtime protections to nearly 2.5 
million home care workers. This extension of basic labor protections to 
home care workers will strengthen the infrastructure for home and 
community-based services, assuring access to affordable, quality care.
    Home care is the nation's fastest-growing occupation, expected to 
grow to over 3 million workers by 2020. Yet these workers, who are 90 
percent female with a median age of 45, continue to be treated in the 
same fashion as teenage babysitters. Home care, however, is a true 
vocation, and should be treated as such under the law.
    Home care aides are essential to the continued independence of 
millions of elders and people with disabilities, assisting them to 
remain healthy, at home, and engaged in their communities. They provide 
skilled personal care services, ensuring that people with functional 
limitations are able to get out of bed, bathe, dress, eat, manage their 
medication, and so on.
    The work is physically and emotionally demanding; rates of injury 
are higher than for the construction trades. Nevertheless, home care 
workers earn $9.40 per hour on average, and one in three has no health 
insurance coverage. More than half work part-time (often 
involuntarily), resulting in average annual earnings of $16,600. As a 
result of this poor compensation, about half of home care workers live 
in households that rely on public assistance to make ends meet.
    The DOL's proposed rule would help to improve the quality of home 
care jobs. It brings our nation's treatment of these workers in line 
with changes in the provision of home care services over the last four 
decades. In particular, it recognizes the formalization of the industry 
and the professionalization of the workforce. The millions of women who 
provide these services are no different from those who work in similar 
jobs in nursing homes and assisted living facilities. There is 
absolutely no justification for continuing to treat these workers as 
casual companions, exempting them from basic labor protections that 
most American workers have enjoyed for over 70 years.
    In establishing FLSA in 1938, and in broadening coverage in 
subsequent years, the federal government clearly articulated its policy 
goals: to provide low-income workers with higher wages, better working 
conditions, and more leisure time; to discourage excessive working 
hours and promote full employment; and to stabilize our economy by 
boosting consumer spending.
    These goals are as relevant today for the home care workforce.
     FLSA protections will help to improve wages and working 
conditions across the industry, affecting as many as 3 million workers 
by the end of this decade.
     Better wages for millions of home care workers will boost 
consumer spending.
     Applying overtime rules to home care agencies will 
encourage efforts to spread work more evenly, reducing overwork and 
providing more hours for workers who desperately need them.
    In addition, FLSA protections will help to stabilize and grow the 
workforce by making home care jobs more competitive. This regulatory 
change will also help to address the industry's high turnover rates--
currently 50 to 60 percent annually--which undermine continuity and 
quality of care and cost the system billions in recruitment and 
replacement expenses.
    We believe that recent industry studies suggesting that the 
proposed regulations will have a negative impact on businesses, 
consumers, and workers are seriously flawed (see www.phinational.org/
fairpay/ for a full critique). Our analysis of nationally 
representative survey data aligns with the conclusions of the DOL--the 
economic impact of the proposed changes would be relatively small and 
would have little impact on the affordability of services for 
consumers.
    Despite a deep recession, home care industry revenues have doubled 
to $84 billion since 2001 (though workers' wages have remained 
stagnant). Our analysis shows that less than 10 percent of the 
workforce reports working overtime, making it unlikely that overtime 
costs will significantly increase costs for businesses or the clients 
they serve. Moreover, we know that in the 15 states that already 
require agencies to pay minimum wage and time and a half for overtime, 
home care agencies remain successful enterprises.
    The companionship exemption was never intended to provide a means 
for agency employers to save on labor costs. Today's workers are not 
``companions,'' who sit with elders to provide fellowship and 
protection. These are skilled caregivers who provide personal care, 
medical-related assistance, and social supports to millions of elders 
and people with disabilities who want to live independently. As workers 
vital to our health and aging services, they deserve better. It is time 
to provide them with the most basic wage and hour protections that most 
other American workers enjoy.
    For more information, contact Carol Regan, PHI Government Affairs 
Director, at [email protected] or 202-223-8355. All data cited can 
be found at www.PHInational.org/homecarefacts
                                 ______
                                 
                                                    March 20, 2012.
Hon. Tim Walberg, Chairman; Hon. Lynn Woolsey, Ranking Member,
Subcommittee on Workforce Protections, Committee on Education and the 
        Workforce, Washington, DC 20515.
    Dear Chairman Walberg and Ranking Member Woolsey: Guided by our 
Jewish values of justice and compassion, we urge you to support the 
Department of Labor's (DOL) revised rules (RIN 1235-AA05) on the 
``companionship exemption'' under the Fair Labor Standards Act (FLSA), 
which currently denies the direct care workforce basic federal wage-
and-hour protections. Further, we urge you to oppose any delay in the 
implementation of these long-overdue rules
    While the number of elderly Americans who need home care is 
exploding, the number of elderly Jews is proportionally even here--with 
at least 19 percent of American Jews now over 65 or older, as compared 
with 12% of the general population. Families and individuals struggle 
greatly to care for the elderly or disabled loved one at home, and 
frequently must hire a home care worker to assist a fragile family 
member with their most intimate needs, such as walking, bathing, 
eating, dressing, and ensuring that medications are taken properly. As 
we visit and care for elderly and home-bound members of our communities 
and families, we see the vital role that home care workers play.
    The future of home care is a top concern for the Jewish community, 
and a critical problem we must address is that half of all home care 
workers leave the job each year due to low pay and difficult working 
conditions. This extraordinary turnover has obvious implications for 
both the quality of care and for whether there will be enough workers 
to fill the need in the long run.
    The Fair Labor Standards Act (FLSA) was passed by Congress in 1938 
with the goals of fighting poverty by raising workers' wages, and 
stimulating economic growth--goals as important today as they were back 
then--but America's 1.7 million home care workers are excluded from the 
FLSA and, in 29 states, have no minimum wage protections. This 
exclusion is a vestige of a long history of devaluing the work of women 
and African Americans under federal labor laws. In December President 
Obama proposed a rule change to include home care workers in FLSA 
protections.
    Our tradition teaches the importance of caring for our elders and 
treating workers fairly. Supporting this rule change is one way we can 
bring these values to life, right now. Please join us and our many 
partners in showing the Obama Administration that the Jewish community 
supports basic rights for the workers who care for the most vulnerable 
members of our families.
    It is an injustice that home care workers have thus far been denied 
basic protections afforded to all other hourly workers under the FLSA. 
We urge you to support the DOL's efforts to address this problem by 
backing the revised rules that would provide this growing workforce 
with basic wage-and-hour protections and opposing any delays.
            Respectfully,
                                   Jewish Community Action,
                           Jewish Council on Urban Affairs,
                      Jews for Racial and Economic Justice,
                                   Jews United for Justice,
                          National Council of Jewish Women,
    Progressive Jewish Alliance & Jewish Funds for Justice,
                                  Union for Reform Judaism,
                                              Uri L'Tzedek.
                                 ______
                                 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 
    [Additional submissions of Mr. Dombi follow:]

                                                    March 21, 2012.
Mary Ziegler, Director,
Division of Regulations, Legislation and Interpretation, Wage and Hour 
        Division, U.S. Department of Labor, Room S-3502, 200 
        Constitution Avenue, NW, Washington, DC 20210.
Re: Application of the Fair Labor Standards Act to Domestic Services; 
    76 Fed. Reg. 81190 (December 27, 2011)

    Dear Ms. Ziegler: Thank you for the opportunity to provide comment 
on the proposed rule: Application of the Fair Labor Standards Act to 
Domestic Services; 76 Fed. Reg. 81190 (December 27, 2011). This 
proposal will have significant impact on access to home care services 
for millions of elderly and infirm, the workers who provide home care, 
the businesses that deliver such services, and the public programs that 
often pay for the care. We urge the Department of Labor to proceed very 
cautiously on its proposal. Specifically, we recommend that the 
Department withdraw the current proposal, initiate a comprehensive and 
focused study of the actual and expected impact of the proposal on all 
affected parties, and consider the wide range of alternatives to the 
current proposal before moving forward.
    There are very strong indications that the Department did not 
accurately or sufficiently evaluate the impact of the proposal as it: 
(1) relied upon data from programs that do not fund ``companionship 
services,'' (2) failed to develop the basic and essential information 
necessary to understand the proposal's impact on privately purchased 
care, (3) fell far short of a reliable analysis of the proposal's 
impact on Medicaid and other public program spending, (4) provided no 
analysis of impact on the wholly distinct services of live-in 
caregivers, and (5) failed to take advantage of the opportunity to 
evaluate actual impact occurring in the states where the 
``companionship services'' exemption from overtime compensation has 
already been eliminated or modified rather than acting on pure 
assumptions. Additionally, the Department's proposal rests on a very 
shaky legal foundation of alleged authority to modify the 37 year-old 
definition of companionship services and the application of the 
exemptions to third-party employed caregivers.
    The National Association for Home Care & Hospice (NAHC), along with 
its affiliate the Private Duty Home Care Association of America, 
represent the interests of the thousands of companies that provide home 
care services to nearly 12 million people of all ages annually. These 
businesses employ over 2 million dedicated caregivers that support the 
millions of spouses, parents, children, relatives, friends and 
neighbors that often are the primary caregivers to the home care 
patients and clients. It is well recognized that home care provides 
significant dynamic value by offering high quality care at 
substantially less cost than institutional care while also helping to 
prevent costly complications that lead to hospitalizations and other 
costly medical services.
    NAHC and the caregivers we represent share the Department's goal to 
provide fair and reasonable compensation to home care aides and 
personal care attendants. The jobs that they take on are essential, 
particularly as our society ages with millions of ``baby boomers.'' 
Also, the work that they do is hard and can only be done by dedicated 
individuals who understand its importance and appreciate the privilege 
of caring for vulnerable elderly and infirm.
    Specifically, NAHC does not oppose overtime compensation. However, 
we do not support the Department's proposal that would institute a 
national requirement for overtime compensation as an isolated and non-
integrated element in the delivery system of home care, thereby 
disregarding the impact on publicly funded services, services purchased 
by the elderly who have limited incomes, and the workers who will 
experience depressed base wages and restricted working hours because 
employers will be unable to cover the cost of overtime with shrinking 
Medicaid payment rates and the inability of private purchasers to 
afford the care.
    The Department must recognize that a strategy directed at overtime 
compensation alone will not help home care workers. Any compensation 
strategy must consider and incorporate other elements as well including 
base wage rates, career growth opportunities, health insurance and 
other fringe benefits, increased payment rates from public programs 
such as Medicaid, and support for the elderly and infirm who cannot 
afford higher care rates. To push overtime compensation alone in the 
face of the other forces at play in this marketplace will only lead to 
compromised wages and restricted working hours for hardworking 
caregivers. This is directly evidenced by existing data, the 
Department's own analysis and the comments of those purporting to 
represent the interests of the worker.
    There is no need to rush the proposal to a final rule. If the 
Department's analysis is correct, very few workers would qualify for 
overtime and many of those will end up with restricted working hours as 
the employers respond to the new requirement by avoiding scheduling 
workers for more than 40 hours in a week. In terms of opening up new 
job opportunities, there are many current openings for home care 
workers and the Bureau of Labor Statistics forecast continued growth in 
demand. However, if the Department's view of limited impact is wrong, 
home care consumers, workers and public programs are put a great risk 
of negative consequences. Accordingly, NAHC strongly recommends that 
the Department initiate the necessary comprehensive research and study 
to determine the real impact of any changes with far less reliance on 
seemingly endless assumptions before proceeding.
    Aside from the many assumptions employed by the Department in its 
analysis, there are crucial undisputed facts that are relevant and 
material to appropriate policy relative to the companionship services 
and live-in exemptions:
    1. All stakeholders in this matter, along with the Department 
itself, agree that the proposal will increase the cost of care for 
direct consumers as well as public programs. The disagreement on this 
matter is how much cost will increase.
    2. All stakeholders also agree that the primary result of the 
imposition of an overtime compensation obligation for home care workers 
will be an employer's restriction in working hours to eliminate or 
limit the risk of an overtime cost.
    3. The Department did not evaluate, through use of any specific 
data or analysis with targeted information, the impact of the proposals 
on access to and cost of live-in services for the elderly and disabled 
who need personal care supports for activities of daily living. 
Instead, the Department simply applied its analysis of hourly, part-
time personal care services to full time live-in caregivers.
    4. The Department focused its attention on certain public programs 
such as Medicare and Medicaid to the near exclusion of consideration of 
privately purchased home care by assuming that such services were a 
mere incidental part of home care.
    The undisputed facts and findings are combined with a series of 
very important, but unsubstantiated assumptions:
    1. Public programs such as Medicaid will modify payment rates to 
ensure any increased costs triggered by the overtime compensation 
obligation are fully reimbursed on a timely basis.
    2. The change in the overtime compensation obligation will reduce 
turnover of workers providing home care.
    3. There will be no adverse impact on the quality of care.
    4. Any restriction on work hours to control overtime costs will 
create new job openings that will help the nation's economy.
    5. Currently overworked workers will have an improved quality of 
life leading to better job performance in service to the elderly and 
person's with disabilities.
    When the undisputed facts are combined with these assumptions, only 
one logical conclusion results: the Department must be very sure about 
the bona fides of the underlying rationale for its proposal and be 
reasonably certain about the likely impact of the rule change before 
proceeding. The facts alone would dictate that the rule be withdrawn or 
significantly redrawn. However, if the Department is also wrong in its 
assumptions, the consequences to workers, consumers, and public 
programs could be disastrous.
    In fact, it is the workers that are at greatest risk. NAHC strongly 
believes that the Department's assumptions are not well founded. First, 
public programs such as Medicaid are already in financial jeopardy 
across the country. One prime example is California where the governor 
has sought significant reductions in payment rates to providers of home 
care, both home care agencies as well as to hundreds of thousands of 
individual caregivers. California is far from alone with reductions in 
the payment rates and scope of home care benefits occurring in such 
other states as North Carolina and New York.
    Second, the Department is aware that there is a great risk of 
higher worker turnover as an impact of the proposed rule. At a recent 
``Roundtable'' held by the Small Business Administration, the 
Department learned first hand from a home care agency executive that 
the shift to an overtime compensation obligation in Michigan in 2006 
significantly increased staff turnover. Such consequence is intuitively 
logical when combined with the recognition that employers will restrict 
working hours to avoid overtime costs. Workers facing lower overall 
compensation will seek other employment. As such, consumers suffer 
because of the loss of experienced caregivers, businesses experience 
higher staff recruitment and training costs, and workers either lose 
income or the opportunity to work in home care.
    Third, while there is no study of the impact of an overtime 
obligation on quality of care, it is far from safe to assume that it 
will improve care. Instead, it is more likely that the increase in 
staff turnover will negatively impact care quality as inexperienced 
workers take over for departing caregivers and the assignment of 
multiple caregivers with restricted work hours naturally leads to 
deterioration in care consistency.
    Fourth, it is very likely that the assumption that the rule change 
would create new job openings is accurate. However, is that really a 
good impact? Currently, home care is already struggling with increasing 
demand for caregivers, not an oversupply of individuals looking for 
such jobs. The Bureau of Labor Statistics also notes that the demand 
for such workers will be rising exponentially as the nation ages. The 
shortage of workers for these jobs is not a creature of the lack of 
overtime compensation, it is because the work is hard and only certain 
people fit the demands of caregiving. These jobs pay well in excess of 
minimum wage, yet have more openings than jobs that pay at the minimum.
    Fifth, there is no data or factual support for the contention that 
workers are overworked and that restriction in working hours will 
improve quality. Unlike the experiences in hospitals and institutional 
care settings where nurses and other workers have been subjected to 
``forced overtime'', there is no such activity ongoing in home care. A 
large segment of home care workers are employed on a part-time basis 
and employers in home care are noted for offering very flexible working 
hours. In fact, home care companies routinely report that it is the 
workers who seek more hours, not the employers demanding that the 
employees work more.
    The perfect opportunity exists for the department to test their 
assumptions and gain a real understanding of the impact of the proposed 
rule to a level of accuracy generally not available. That opportunity 
lies in those states that have eliminated the application of the 
companionship services exemption already. In fact, two states that 
recently did so through legislation or regulatory interpretation, 
Michigan and Pennsylvania respectively, would be perfect testing 
grounds allowing for a near contemporaneous review of the ``before and 
after.'' A thorough review of the consequences of the changes in those 
states would better inform the analysis and debate on this matter than 
the impact analysis undertaken to date by the department. Accordingly, 
NAHC recommends that the Department initiate such an analysis before 
proceeding. It is the best way to avoid the potentially dire 
consequences to all stakeholders as discussed above.
Concerns on the legal validity of the proposal
    The substance of the proposed rule raises several important 
concerns about its legal validity. NAHC participated in the case, Long 
Island Care at Home v. Coke before the U.S, Supreme Court and the 
positions taken by the Department in this proposed rule change are in 
direct contradiction to its position advanced to the Court. Further, 
the proposed rule is at odds with the unambiguous language of the FLSA. 
Finally, the Department's initial impact analysis falls far short of 
requirements under the Small Business Regulatory Flexibility Act. These 
matters must be addressed by the Department before it can move forward 
with any proposal to change these rules in issue.
    First, the proposed redefinition of ``companionship services'' is 
in direct conflict with the language of the Fair Labor Standards Act as 
well as its legislative history. Specifically, the FLSA applies the 
exemption to employees providing ``companionship services for 
individuals who (because of age or infirmity) are unable to care for 
themselves.'' This exemption relates to care, not ``fellowship'' a term 
never referenced in the law.
    Specifically, 29 U.S.C. 213(a)(15) applies the exemption from 
overtime compensation to:

        ``any employee employed in domestic services employment to 
        provide companionship services for individuals who(because of 
        age or infirmity) are unable to care for themselves (as such 
        terms are defined and delimited by regulations of the 
        Secretary.''

    The operative word defining ``companionship services'' is ``care'' 
and the focus of the care is the elderly and infirm. However, the 
Department proposes to minimize the ``care'' aspect of companionship 
services and shift the definition fully towards the concept of 
``fellowship.'' In doing so, the proposal directly offends the mandate 
in section 213(a)(15) of the FLSA and effectively guts the usefulness 
of the exemption for the elderly and infirm. Fellowship is something 
that is not generally purchased thereby making concerns about worker 
compensation irrelevant. Fellowship comes by way of ones friends, 
family, church, clubs, fraternity or sorority, or by using Facebook. 
While it may be possible that a person ``buys'' a friend, it is highly 
unlikely that there would be an overtime need for one.
    More importantly, ``fellowship'' is not what elderly or infirm 
persons who cannot care for themselves need, it is actual care. The 
current rule recognizes such and has done so effectively since 1975. 
The proposal is in direct conflict with the statutory mandate that the 
Secretary define and delimit the companionship services exemption 
within the parameters of workers providing care to the elderly and 
inform, not fellowship.
    The legislative history fully supports the companionship services 
definition currently in force. By focusing on caring for the infirm and 
elderly in enacting the companionship services exemption, Congress 
targeted our nation's most vulnerable population. Improving the 
opportunities for the elderly and person's with disabilities to remain 
in their own homes, with families, avoiding more costly institutional 
care is the central purpose behind the exemption. See 118 Cong. Rec. 
24715 (July 20, 1972) (statement of Senator Taft noting that certain 
domestic services are directed to caring for the elderly in their homes 
and preventing nursing home placement): 119 Cong. Rec. 24801 (July 19, 
1973) (statement of Senator Burdick indicating the exemption relates to 
aged or infirm fathers and mothers who need someone ``to take care of 
them).
    Fellowship does not include the care needed to keep someone from 
being forced to be admitted in a nursing home. One can have 24/7 
fellowship and require nursing home placement to receive the care 
needed to meet activities of daily living (ADLs) and instrumental; 
activities of daily living (IADLs). The type of companionship services 
that provide the opportunities to avoid institutional care are the 
caregiving services that have been defined as companionship services 
since the exemption was enacted in 1974. The passage of time and the 
changes in the business of providing such care have not changed those 
needs for care.
    Second, excluding employees of third-party employers from the 
application of the exemption is in direct contradiction to the language 
of the FLSA and the position advanced by the Department of Labor at the 
US Supreme Court in Long Island Care at Home v. Coke. The law applies 
the exemption to ``any employee.'' Specifically, 29 USC 213(a)(15)uses 
the phrase ``any employee employed in domestic services'' without any 
qualification as to the identity of the employer.
    In 1974 when the FLSA companionship services exemption was enacted, 
Congress well understood what legislative language was needed to 
exclude application of the exemption to third-party employment. In 
fact, Congress expressed clear awareness of a recently enacted 
provision in the Social Security Act that contained such language when 
deliberating the companionship services exemption. S. Rep. No. 93-690, 
93rd Congress, 2d Session at 18. (This bill would bring under minimum 
wage and overtime provisions of the Act all employees in private 
household domestic service earning ``wages'' ($50 per quarter) for 
purposes of the Social Security Act, but retains a minimum wage and 
overtime exemption for * * * companions * * *'').
    Under Public Law 92-5 (March 17, 1971), Congress expanded the 
application of the Social Security program to domestic services, but 
specifically excluded taxing wages from a certain subclass of domestic 
services. Specifically excluded is:

          ``(6)(A) Remuneration paid in any medium other than cash to 
        an employee for service not in the course of the employer's 
        trade or business or for domestic service in a private home of 
        the employer;
          (B) Cash remuneration paid by an employer in any calendar 
        year to an employee for domestic service in a private home of 
        the employer (including domestic service on a farm operated for 
        profit), if the cash remuneration paid in such year by the 
        employer to the employee for such service is less than the 
        applicable dollar threshold (as defined in section 3121(x) of 
        the Internal Revenue Code of 1986) for such year;
          (C) Cash remuneration paid by an employer in any calendar 
        year to an employee for service not in the course of the 
        employer's trade or business, if the cash remuneration paid in 
        such year by the employer to the employee for such service is 
        less than $100. As used in this paragraph, the term ``service 
        not in the course of the employer's trade or business'' does 
        not include domestic service in a private home of the employer 
        and does not include service described in section 210(f)(5); * 
        * *.'' 42 U.S.C. Sec.  209(a)(6). (Emphasis added.)

    Consistent with this statutory language, implementing regulations 
distinguish the nature of domestic services from the identity of the 
employer. Under 42 C.F.R. Sec.  404.1057(b), domestic services ``is 
work of a household nature'' including such services as those performed 
by cooks, waiters, butlers, maids, and housekeepers. It does not 
include ``services performed as a private secretary, tutor, or 
librarian, even though performed in the employer's home.'' 42 C.F.R. 
Sec.  404.1057(b).
    The Congressional awareness of language necessary to limit 
application of provisions of law related to domestic services in the 
home of the employer is further found in the Internal Revenue Code. The 
tax code is replete with references to ``domestic service in a private 
home of the employer'' as distinguished from the more general concept 
of ``domestic services.'' See, e.g., 26 U.S.C. Sec. Sec.  3510(c); 
3121; 3306; 3401; and 3102. Unlike the tax code, the FLSA contains no 
comparable qualification.
    It is apparent that Congress understood the concept of ``domestic 
services'' to relate solely to the nature of the employee's activities. 
Further qualifications such as location (``in a private home'') and the 
identity of the employer (``* * * of the employer'') are necessary to 
establish intended limitations. The Department's proposal to include 
and limit the identity of the employer in the application of the 
companionship services exemption overextends the reach of the concept 
of ``domestic services'' under 29 U.S.C. Sec.  213(a)(15). It would be 
wholly illogical and inconsistent for Congress to intend different 
definitions of the same employment category, ``domestic services,'' 
under the Fair Labor Standards Act, the Social Security Act, and the 
Internal Revenue Code. Barnhart v. Walton, 535 US 212, 221 (2002) (The 
same statutory words should not be interpreted differently in closely 
related contexts); citing, Department of Revenue of Oregon v. ACF 
Industries, Inc., 510 US 332 (1994). It is plain that Congress was 
aware of the language needed to qualify and limit the category of 
employer for the companionship services exemption in 1974. Congress did 
not so limit its application to a distinct set of employers under the 
FLSA. The Department's proposal to end application of the companionship 
exemption to third-party employed workers violates the FLSA unambiguous 
mandate.
    The Department relied on this language in defending its current 
regulations at the Supreme Court in 2007. In its amicus brief in Long 
Island Care at Home, Ltd., et al v. Coke, the Department stated that:
    ``The statutory exemption applies to ``any employee employed in 
domestic service employment to provide companionship services.'' 29 
U.S.C. 213(a)(15) (emphasis added). Congress's use of the encompassing 
term ``any'' is a natural read to include all employees providing such 
services, regardless of who employs them * * *
    If Congress had wanted to exclude employees of third-party 
employers from the exemption, it easily could have done so by expressly 
including a limitation based on employer status, as it has done with 
other FLSA exemptions * * *
    [The third-party employer rule] also is consistent with Congress's 
intent in enacting the exemption for companionship services in the 
first place, and it avoids the disruption to the provision of 
companionship services to aged and disabled individuals that would 
result if the regulation were invalidated * * *
    Allowing the exemption for all employees providing companionship 
services, regardless of the identity of their employer, is consistent 
with Congress's intent to keep such services affordable. See 119 Cong. 
Rec. 24,797 (1973) (statement of Sen. Dominick); id. at 24,798 
(statement of Sen. Johnston); id. At 24,801 (statement of Sen. 
Burdick); Welding, 353 F.3d at 1217 (``Congress created the 
companionship services exemption to enable guardians of the elderly and 
disabled to financially afford to have their wards cared for in their 
own private homes as opposed to institutionalizing them.'') (internal 
quotation marks and citations omitted). This affordability concern 
applies regardless of whether a person needing care employs a companion 
directly or uses a third-party agency to obtain such services.''
    The Department's only explanation for its change in position is the 
allegation that the businesses providing personal care and home care 
aide services to the elderly and persons with disabilities have grown 
in numbers and size. However, the businesses changes have nothing to do 
with the purpose behind the exemption--to keep people out of nursing 
homes and make home care an affordable alternative. In fact, with the 
growing population of people needing such services, the importance of 
the exemption applied as it has since 1975 has grown as well.
    There is no indication in 213(a)(15) that Congress intended the 
companionship services exemption to apply only to the elderly and 
infirm that have the wherewithal and financial capabilities to take on 
the difficult tasks required of employers. However, that is the direct 
consequence of the Department's proposal. Those using companionship 
services who do not want the cost of overtime compensation must take on 
the complex role of an employer with all of its administrative 
obligations and financial liabilities. In doing so, the person gains 
the benefit of the exemption but also loses the benefits of state-
designed consumer protections that address everything from worker 
background checks and competencies to professional oversight. The 
Department's proposal sacrifices the option of a third-party agency 
model of care for consumers to bring the illusion of higher 
compensation to workers. Congress stuck a conscious balance between the 
consumers and the workers and did not authorize the Department's 
proposal to restrict the exemption to direct employees of the consumer.
    Third, the proposed rules have existed essentially with identical 
standards since the original rulemaking proceeding in 1975. Congress 
has had many opportunities to change the law in line with the 
Department's proposal. Where Congress does not find sufficient reason 
to change the law over 36 years, the legal validity of the current 
proposal is called into serious question. Since the ruling of the U.S. 
Supreme Court in Coke, Congress has had several opportunities to enact 
legislation that would achieve the changes that the Department now 
proposes in a regulation. See, Fair Home Health Care Act, H.R.3582; 
Fair Home Health Care Act of 2007, S.2061; Direct Care Job Quality 
Improvement Act of 2011, S.1273; Direct Care Job Quality Improvement 
Act of 2011, H.R.2341; Direct Care Workforce Empowerment Act S.3696; 
Direct Care Workforce Empowerment Act, H.R.5902.
    Each of these efforts were attempts to modify 213(a)(15) in a 
manner virtually identical to the Department's proposed rule change. 
Each would have eliminated the longstanding application of the 
companionship services exemption to third-party employed workers. Each 
would have eliminated the application of the exemption to any worker 
who was employed on more than a casual basis. These legislative efforts 
never cleared the respective house of Congress let alone the Congress 
overall. In fact, each had only a small numbers of cosponsors with S. 
2061 getting the high-water mark in the Senate at 11 and HR 2341 
garnering 35 in the House.
    The Department's complete turnaround in its interpretation of the 
law as proposed has doubtful validity. It's very clear previous legal 
position on the FLSA companionship services exemption is totally 
inconsistent with the present proposal. Also, Congress's clear 
unwillingness to change the 37 year-old rule defining and delimiting 
the Department's exemption is a strong indicator of the validity of the 
existing FLSA interpretation and application. Most importantly, the 
fact that the Department's rationale for keeping the rule as is in 2007 
still exists today--keeping the elderly and persons with disabilities 
out of institutional care and in their own homes.
    Finally, the analysis by the Department of Labor regarding the 
likely impact of the proposed rules falls very far short of the 
analysis required under the Small Business Regulatory Flexibility Act, 
the Paperwork Reduction Act, and Executive Orders 12886 and 13563. 
While the Department offers a lengthy impact report, it has several 
major failings at its core. Given the potential impact of the proposal, 
the Department should be held to a very high standard of accuracy and 
completeness in its impact analysis.
    The analysis misses completely one of the most significant forms of 
home care--privately purchased personal care. It is estimated that 
several million elderly and persons with disabilities use such care 
through 20,000 companies with an estimated $25-30 billion in annual 
expenditures.
    The Department and others contend that Medicare and Medicaid make 
up 89% of total spending on personal care services. However, Medicare 
spending on personal care services, as part of a skilled care home 
health benefit, is less than $1 billion annually. Medicare requires 
that the patient be homebound and in need of intermittent care. 42 
U.S.C. 1395f(a)(C). If qualified, the person can receive part-time care 
from a home health aide, 42 U.S.C. 1395m. That care can include some 
personal care, but also includes assistance with medication, non-
complex wound care, and therapy exercises from a certified home health 
aide in contrast to a personal care attendant. Medicare home health 
aides are subject to detailed training and competency testing 
requirements. 42 CFR 484.32. Personal care is only one part of their 
functions. As such, the application of the $19 billion in total 
Medicare home health spending to the analysis of the impact of the 
Department's proposal is wholly misplaced.
    Medicaid spending on personal care and home care aides is 
approximately $25 billion. However, it is difficult to determine 
exactly how much of such care fits within the current ``companionship 
services'' definition. Assuming that all of such Medicaid spending is 
on care that could be classified as ``companionship services (an 
assumption that is a very generous one in this matter), it becomes 
apparent that the Department examined the wrong business in its impact 
evaluation. It should have looked mostly at private pay personal care 
and Medicaid while ignoring Medicare data.
    All told, it is estimated that private pay personal are services 
represent nearly half of all spending on care that could be classified 
as ``companionship services'' under the current rule. Most of the 
remaining comes from public programs such as Medicaid and the Older 
American's Act. Only an incidental portion comes by way of Medicare. A 
compliant impact review would necessitate a thorough examination of 
private pay home care.
    The Department's impact analysis is also devoid of any evaluation 
of live-in services. This unique segment of home care is virtually all 
on a private pay basis. Medicaid is a payer of some live-in care, but 
most states do not provide such a level of coverage. The impact on 
live-in care and caregivers cannot be simply assumed by using Medicare 
data or even the limited, but unrelated data on Medicaid home care 
services. It is a service that is wholly different from most public 
program home care.
    Live-in care has elements that make for obvious distinctions in 
terms of its nature and its ``compensation'' to workers. The live-in 
worker generally has significant free time and is not actually working 
24/7. Also, the live-in has a wide variety of responsibilities, often 
including personal care when working as a caregiver rather than a maid 
or housekeeper. Another significant factor is that the live-in worker 
gets housing and even meals in some instances as part of their 
compensation---elements that are not calculated into the determination 
of wage levels in the Department's proposal. That means that the wages 
and the value of housing and meals combined far exceed minimum wage 
levels.
    The Medicaid beneficiaries that receive covered live-in services 
are quite varied and unique in their needs and circumstances. With the 
Department's proposal, these individuals are at serious risk of losing 
all care in the community setting. These individuals include college 
students with Medicaid paid ``roommates'' who also attend college. They 
include individuals who work and take their caregivers to work with 
them. They are individuals who can have their needs met during the day, 
but need an overnight live-in to address intermittent needs. The 
Department's impact analysis indicates clearly that these consumers, 
the workers who care for them, and the programs that support them were 
not examined or reviewed with any specificity.
    The utter absence of sufficient evaluation of the proposal's impact 
on live-in services warrants an immediate withdrawal of the proposal. 
If the Department wishes to proceed with its live-in rule change, it 
should start at ``square one'' and comprehensively analyze the 
employment circumstances and the effect that any change will have on 
all stakeholders. Simply applying an analysis that is inadequate in 
relation to hourly care to the highly distinct live-in care is not 
acceptable or compliant with the Department's obligation.
    NAHC, along with the National Private Duty Home Care Association, 
conducted a study (Appendix 1) of the impact of the Department's 
proposal. This nationwide survey, including private pay home care and 
live-in services providers, indicates the following adverse impacts:
    1. Moderate to significant increases in care costs
    2. Restrictions in overtime hours to the detriment of the workers 
overall compensation
    3. Loss of service quality and continuity
    4. Increased costs passed on to the patients and public programs 
that would decrease service utilization, increase unregulated ``grey 
market'' care purchases, and increase institutional care utilization 
rather than absorbing and covering the higher cost of care.
    The survey protocols began with the identification of the universe 
of survey targets. NAHC and NPDA did not limit the survey universe. 
Instead, through various communications from both NAHC and NPDA, as 
well as industry publications and state home care associations, the 
survey was open to all interested home care companies.
    For your reference, the survey questions are in Appendix 2. As you 
will note in reviewing the survey questions, the survey was intended to 
elicit responses covering the broad range of potential answers as well 
as leaving an open input opportunity for the respondents to include 
narratives in the event that the respondent had an answer that was not 
on the listed options or wished to elaborate on his/her answer. For 
example, with respect to the question on the impact of overtime pay on 
quality of care, response options included: no impact; minimal 
deterioration; moderate deterioration; significant deterioration; 
minimal improvement; moderate improvement; significant improvement; and 
unsure. This is a very typical survey method wherein respondents have 
the full range of response options to avoid any survey bias.
    For further reference, the entire survey response results are found 
in Appendix 3. These results are unedited and raw, without any analysis 
or editorial review. The results raise serious questions about the 
Department's impact analysis and findings. In fact, these survey 
results depict an entirely different industry that the one displayed in 
the NPRM impact analysis. The main reason for the differences is that 
the NPRM analysis focused primarily on Medicare, Medicaid and other 
public programs to the near exclusion of the private pay side of home 
care services--a large and important segment of ``companionship 
services'' and live-in care. Another reason for the differences is that 
the survey study is real time and not reliant on the vagaries of non-
uniform publicly reported data. Instead, it focused on impact directly, 
going to the first-line source of the most pertinent information--the 
employers of caregivers. In addition, it provides information about the 
actual, rather than forecasted impact from the states where overtime 
compensation is already a requirement. This information is 
extraordinarily useful in forecasting the impact of the Department's 
proposal.
    The study demonstrates that the potential adverse impact on 
patients, workers, public programs, and the business that employ 
caregivers is real and significant. While we do not take the position 
that the study is the ``be all'' of impact analyses, the insights 
gained from this study demonstrate that the Department's data sources 
and analytic methodology fall short of the comprehensive and accurate 
review of the potential impact of the proposed rule. Further, those 
insights depict consequences that warrant additional review and 
evaluation prior to the advancement of any changes in the longstanding 
standards under the companionship services exemption. These 
consequences are intuitively sound and reasonably foreseeable given the 
overall market context of home care. In addition, the proposal would 
adversely affect too many stakeholders in home care to ignore and move 
on to a final rule at this point. Higher care costs, restricted working 
hours for caregivers, reduced quality of care, and increased demands on 
financially fragile public programs should not be the intended results 
of a rule change.
    Further, an analysis by Navigant Economics confirms that the 
Department fell far short of the depth and accuracy needed to produce 
the mandated impact analysis sufficient to protect the public from 
harmful policy changes. Navigant Economics uncovered essential flaws 
and weaknesses in the Department's analysis, indicating that it would 
be prudent to re-initiate a comprehensive review before proceeding 
further with the proposed rule change. The report, ``Estimating the 
Economic Impact of Repealing the FLSA Companion Care Exemption,'' by 
Jeffrey A. Eisenbach, PhD. And Kevin W. Caves, PhD., (hereinafter 
``Navigant Report'') is a significant contribution to the dialogue on 
the companionship services and live-in issues. The report can be found 
at: PhD., (hereinafter ``Navigant Report'') is a significant 
contribution to the dialogue on the companionship services and live-in 
issues. The report can be found at: PhD., (hereinafter ``Navigant 
Report'') is a significant contribution to the dialogue on the 
companionship services and live-in issues. The report can be found at:
    While we suggest that the Department carefully review the entire 
Navigant Economics report, several highlights are worthy of note. 
Navigant concludes that the Department's impact analysis:
    1. ``systemically understates the costs of the proposed rules while 
overstating potential benefits. Navigant Report at 12.
    2. ``assumes away or understates several important types of 
compliance costs.'' Navigant Report at 15.
    3. ``understates deadweight loss (a) by assuming, explicitly and 
incorrectly, that elasticity of demand for companionship labor is 
extremely low; and (b) by implicitly and incorrectly assuming that 
elasticity of demand for companionship services is zero (perfectly 
inelastic). Navigant Report at 15-16.
    4. fails ``to distinguish between live-in care and hourly care 
[causing] it to under-estimate the overtime cost burden for the live-in 
industry by roughly a factor of eighteen.'' (footnote omitted) Navigant 
Report at 20.
    5. ignores real and significant quasi-fixed costs, regulatory 
familiarization and recordkeeping costs, and added travel costs 
Navigant Report at 23-28.
    6. ``ignores altogether the disproportionate impact of the repeal 
on the market for live-in care.'' Navigant Report at 28-31.
    7. fails to recognize that the home care industry ``is far more 
responsive to changes in Labor costs than the PRIA assumes * * * the 
demand for companionship care workers is found to be elastic, implying 
that a one percent increase in labor costs causes employment to decline 
by more than one percent, causing aggregate worker compensation to 
decline.'' Navigant Report at 43.
    8. ``dismisses concerns about continuity of care based on little 
more than speculation based on studies showing the impact of long hours 
on medical error rates.'' Navigant Report at 48-49.
    9. fails to recognize that, ``It is certain [with the proposed rule 
changes] that the demand for institutional care will increase, perhaps 
substantially.'' Navigant Report at 49.
    10. fails to consider viable alternatives such as continuing to 
allow individual states to regulate minimum wage and overtime 
provisions in relation to companionship services and fails to gather 
the necessary data to demonstrate the value of the proposed changes as 
required under OMB Circular A-4. Navigant Report at 51-53.
    The Navigant Report adds to the body of evidence demonstrating that 
changes to the longstanding FLSA rules on companionship services and 
live-in care are not ripe for action. The layers of assumptions and 
impact speculation offered by the Department fall far short of the 
reliability level sufficient to justify this significant policy change. 
There is too much at risk to act hastily particular when those risks 
are shared by workers, consumers, and payers alike. It is even of 
greater concern when the consumers are the most vulnerable of our 
citizens, the workers already have compensation concerns, and the 
public programs financing the care are obviously very fragile.
    While the Navigant Report highlights major weaknesses in the PRIA 
as it relates to companionship care, the surprising changes regarding 
live-in services deserve special notice. Unlike the companionship 
services exemption, the separate live-in exemption has not had over a 
decade of attention by the Department or the stakeholders. The data on 
companionship services is weak at best and it is necessary that there 
be original, ground up granular research to determine if changes are 
necessary and warranted with its rule. However, the live-in care impact 
review falls very far short of the companionship rule analysis. The 
reason is obvious: the Department did not look at live-in services 
beyond assuming that the impact is negligible. If it had it would 
quickly realize that there is no public data to determine impact. The 
proposal on the live-in rule should be withdrawn until the Department 
has sufficient information to understand that separate industry and the 
potential impact on consumers and workers.
Reports of high profit margins are wholly erroneous
    At a March 20, 2012 hearing before the House Subcommittee on Worker 
Protections, the Department's witness, Nancy C. Leppink, Deputy 
Administrator, Wage and Hour Division, and the Ranking Member of the 
subcommittee, Hon. Lynn Woolsey, indicated that home care companies can 
absorb any costs associated with the proposed rule, including overtime 
costs, because the companies have generally high profit margins of 30-
40%. It appears that such figure came from the December 2010 Franchise 
Business Review article entitled, ``Senior Care and Home Healthcare 
Franchises. However, that article referenced ``gross Profit Margins'' 
not net profit margins. The concepts are entirely distinct with net 
margins being the metric that sets out profit after all costs. Gross 
margins look only at direct costs and exclude many of the natural and 
necessary costs of running any business. It is clear that the net 
profit margins of home care companies are nowhere near the claimed 
levels.
    There are five public companies providing home care services that 
encompass to varying degrees the personal care services that 
potentially could be classified as companionship services under the 
existing rule. They include Addus, Almost Family, Amedisys, Gentiva, 
and LHC Group. Those companies' net margins as of March 19, 2012 range 
from 1.02 to 7.11 percent. http://biz.yahoo.com/p/526qpmd.html. In 
addition, the company that is presented by some proponents of the 
proposed rule change, Addus, reported a December 31, 2011 net profit 
margin of 3.64 percent. http://ycharts.com/companies/ADUS/profit--
margin.
    It should be noted that these five companies represent just a small 
slice of the overall home care providers. However, their financial 
performance fits within the range of the rest of the industry. NAHC 
maintains a database on cost reports submitted to Medicare annually by 
home health agencies across the country. These cost reports include 
data on both Medicare and non-Medicare revenues. These cost reports do 
not include what is known as hospital-based home health agencies as 
their filings do not allow for home care specific analysis on overall 
home care margins. With 6604 cost reports encompassing 2010 filings, 
the overall profit margin average is 3.15%. This margin represents a 
total of $48,644,977,360 in revenues with more than $34 billion of that 
from non-Medicare sources.
    These data do not evidence a provider group with exorbitant profit 
margins sufficient to absorb added costs of providing care. The 30-40% 
margin reference expressed by the Department comes from Gross Margins 
which have nothing in common with Net Margins.
    The Medicaid payment rates for personal care services further tell 
the real story on the ability of providers to bear the additional costs 
of overtime or alternative costs of hiring and training additional 
workers if care hours are restricted to avoid overtime costs. For 
example, in Texas, the state pays $10.41-11.56 per hour depending with 
providers obligated to pay attendants 90% of the designated labor 
portion which ranges from $8.34-9.49 per hour. In Georgia, the personal 
care service rate is $9.00 per hour. South Carolina offers $11.40 per 
hour with neighboring North Carolina at $13.80. Ohio provides $17.12 
per hour, but rates were decreased by 3% in July 2011, an example of a 
national trend.
    These payment rates are far lower than the Department has 
understood and certainly do not support any claim of high profit 
margins for the businesses that provide the care to elderly and infirm 
citizens. Nor do these rates and the state trends downward on rates 
support a contention that additional costs can be absorbed without 
adverse consequences to workers and clients alike.
    Simply put, the Department's numbers are wrong and actual margins 
in home care fall far short of permitting additional costs to be 
absorbed without adverse consequences to patients/clients, workers, 
public funding programs, and overall business viability.
Recommendations/alternatives
    NAHC recommends that the Department of Labor consider the following 
alternatives to the proposed rule.
    1. Withdraw the NPRM and initiate original and focused research on 
the impact of any changes to the companionship services and live-in 
exemption rules before proceeding further.
    2. Allow individual states to determine what changes fit best for 
their individual home care market in order to best fit the employment 
marketplace, the state-specific structures regulating the quality of 
home care services, and the state's Medicaid program as the primary 
public payer of personal care services.
    3. Separate the companionship services exemption policy change 
proposal from the live-in exemption proposal, withdrawing the live-in 
proposal and proceed with separate and comprehensive analysis on live-
in impact.
    4. Develop a home care specific minimum wage and overtime 
compensation policy that addresses the unique working hour arrangements 
such as shift care, hourly service visit-oriented care, intermittent 
work days, and ``work weeks'' that are not a standard 7 days. This is 
similar to the approach taken in other health care sectors such as 
hospitals and nursing homes.
    5. Examine state-specific approaches to overtime compensation in 
home care that can achieve a reasonable balance between the interests 
of consumers and workers. This would include overtime triggered after a 
certain point in the day (MN) and overtime connected to minimum wage 
levels rather than actual hourly wages (NY).
    6. Allow daily compensation arrangements, without hourly time/
function logs as proposed, between live-in workers and their clients to 
take into consideration issues of sleep time, breaks, meal time and the 
cost of such to the client and value to the worker.
    7. Withhold issuance of any final rule that requires overtime 
compensation to companions (as currently defined) until states revise 
Medicaid payment models to address the increase in costs to assure that 
workers are allowed to work into overtime to qualify for the added 
compensation.
    8. Ensure even application of any changes in the companionship 
services and live-in exemption rules to all workers providing personal 
care services to the elderly and disabled including agency workers, 
individual providers working in consumer directed care programs under 
Medicaid where the employer's identity is unclear, and workers directly 
employed by consumers and their families. This will prevent a shift to 
``grey market'' unregulated providers of care.
    9. Provide sufficient lead time to adjust to the new obligations. 
Employers of home care aides will require at least one year to address 
the myriad of issues presented by the proposed rule if care disruptions 
are to be avoided. The companies will need to modify staff scheduling, 
hire and train additional staff, and work with Medicaid rate setters to 
attempt to secure payment rate adjustments.
    10. Maintain an exemption from overtime compensation while 
requiring payment of minimum wages.
Conclusion
    Thank for the opportunity to submit these comments. NAHC stands 
ready to work with the Department and all other stakeholders to devise 
a reasonable strategy on worker protections for those that take on the 
essential task of caring for our most vulnerable citizens.
            Very truly yours,
                                          William A. Dombi,
                                            Vice President for Law.
                                 ______
                                 
                               appendix 1

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 
                               appendix 2
    This is a survey on the impact or potential impact of requiring 
payment of overtime compensation to personal care attendants and home 
care aides. Under the federal Fair Labor Standards Act, ``companionship 
services'' are exempt from minimum wage and overtime pay requirements. 
In many circumstances, the work done by personal care attendants and 
home care aides is considered ``companionship services'' under this 
law. States can drop the exemption and nearly half the states have done 
so.
    Presently, the US Department of Labor has developed proposed 
changes in the existing rule defining companionship services and its 
application to companies that employ workers providing home care. It is 
expected that the proposal would significantly alter the long-standing 
definitions in a manner that would mean that the exemption is no longer 
applicable to home care employees.
    As used in this survey, ``companionship services'' includes 
personal care to the elderly and disabled. Housekeeping and chore 
services are included as companionship services provided that those 
services are less than 20% of the total time worked by the employee. 
``Companionship services'' may be provided by personnel operating under 
various labels such as personal care attendant, home care aide, home 
health aide and others. For purposes of the overtime exemption, it is 
the functions of the worker that matter, not the job label.
    1. In which state(s) does your company provide home care? List all 
states applicable
    2. Please list all the types of services provided by your company 
a. Private pay personal care
    b. Medicaid personal care services
    c. Medicaid home and community-based waiver services
    d. Older Americans Act personal care (Area Agencies on Aging 
services)
    e. Medicare/Medicaid home health services
    f. Medicare/Medicaid hospice
    g. Commercial insurance paid services
    h. Veteran's Administration paid home care
    3. What is the annual home care revenue for your company? a. Under 
$1M
    b. $1-5M
    c. $5-10M
    d. $10-20M
    e. Over $20M
    4. What percentage of your revenue comes from personal care 
services and home health aide services regardless of payment source?
    a. None
    b. 0-20
    c. 21-40
    d. 41-60
    e. Above 60
    f. Unsure
    5. Are companionship services exempt from overtime wages in your 
state?
    a. Yes
    b. No
    c. Unsure
    6. What percentage of your workforce provides companionship 
services?
    a. None
    b. 0-20
    c. 21-40
    d. 41-60
    e. Above 60
    f. Unsure
    7. What percentage of your employees that provide companionship 
services provide live-in services?
    a. None
    b. 0-20
    c. 21-40
    d. 41-60
    e. Above 60
    f. Unsure
    8. What percentage of your companionship services are covered for 
payment under a public program, such as Medicare, Medicaid, the 
Veteran's Administration, or Older Americans Act? a. None
    b. 0-20
    c. 21-40
    d. 41-60
    e. Above 60
    f. Unsure
    9. What percentage of your companionship services are paid for 
privately, by the individual client/patient, family or through a 
commercial insurance plan?
    a. None
    b. 0-20
    c. 21-40
    d. 41-60
    e. Above 60
    f. Unsure
    10. What percentage of your employees who provide companionship 
services work over-time?
    a. None
    b. 0-20
    c. 21-40
    d. 41-60
    e. Above 60
    f. Unsure
    11. Do you pay overtime wages to employees that provide 
companionship service whether required or voluntary?
    a. Yes--required (proceed to 12)
    b. Yes---voluntary (proceed to12 )
    c. No (proceed to 21 )
    d. Unsure (END of SURVEY)
    12. Do you pay employees that provide live-in companionship 
services wages for sleep hours?
    a. Yes
    b. No (proceed to 14)
    c. Unsure (proceed to 14)
    13. Do you factor in sleep time hours for employees that provide 
live-in companionship services when determining whether overtime wages 
are paid?
    a. Yes
    b. No
    c. c. Unsure
    14. Does paying overtime wages impact your business costs?
    a. Yes (proceed to 15)
    b. No (proceed to 16)
    c. Unsure (proceed to 16)
    15. How much of an impact does paying overtime for companionship 
services have on your agency's business costs?
    a. No change in business costs
    b. Minimal increase
    c. Moderate increase
    d. Significant increase
    e. Decrease costs
    f. Unsure
    16. Does paying overtime wages adversely impact the quality of care 
your agency provides to the clients/patients you serve?
    a. Yes (proceed to 17)
    b. No (proceed to 19)
    c. Unsure
    17. How much of an impact does overtime pay for companionship 
services have on the quality of care to the clients/patients you serve?
    a. No impact
    b. Minimal deterioration
    c. Moderate deterioration
    d. Significant deterioration
    e. Minimal improvement
    f. Moderate improvement
    g. Significant improvement
    h. Unsure
    18. What impact does paying overtime wages have on the quality of 
your services? (check all that apply)
    a. lower staff retention
    b. higher staff retention
    c. poorer staff competencies
    d. better staff competencies
    e. lower staff educational levels
    f. higher staff educational levels
    g. poorer consistency and continuity of care
    h. improved consistency and continuity of care
    i. Other
    19. What business adjustments have you made in response to paying 
overtime wages to employees who provide companionship services? (check 
all that apply)
    a. Increased billing rates to clients/patients
    b. Hired additional employees to provide companionship services to 
reduce or eliminate need for overtime hours
    c. Reduced the number of hours for employees providing 
companionship services to avoid the payment of overtime
    d. Scale back offering companionship services
    e. Assign additional employees to individual clients/patients 
receiving companionship services
    f. Increased human resources costs due to a greater need for staff
    g. Increased staff training costs
    h. No adjustments made
    i. Other (please explain):
    20. What changes have you observed in your market since the payment 
of overtime for companionship services was implemented?
    a. Fewer clients/patients seek companionship services through an 
agency
    b. Employees providing companionship services work for more 
agencies to obtain their desired number of hours per week
    c. Employees providing companionship services report less 
satisfaction with their work schedule
    d. No change
    e. More clients/patients seek companionship services through an 
agency
    f. Employees providing companionship services work for fewer 
agencies to obtain their desired number of hours per week
    g. Employees providing companionship services report more 
satisfaction with their work schedule
    h. I don't remember a time when the payment of overtime for 
companionship services wasn't required
    If you answered Q 19 and 20 this is the end of the survey.
    21. Do you pay employees that provide live-in companionship 
services wages for sleep hours?
    a. Yes
    b. No
    c. Unsure
    22. Do you expect that paying overtime wages would impact your 
business costs?
    a. Yes (proceed to 22)
    b. No (proceed to 23)
    c. Unsure
    23. How much of an impact would paying overtime wages for 
companionship services have on your agency's business costs?
    a. No change in business costs
    b. Minimal increase
    c. Moderate increase
    d. Significant increase
    e. Decrease costs
    f. Unsure
    24. Do you expect that paying overtime wages would impact the 
quality of care your agency provides to the clients/patients you serve?
    a. Yes (proceed to 25)
    b. No (proceed to question 26)
    c. Unsure
    25. How much of an impact would you expect overtime pay for 
companionship services would have on the quality of care to the 
clients/patients you serve?
    a. No impact
    b. Minimal deterioration
    c. Moderate deterioration
    d. Significant deterioration
    e. Minimal improvement
    f. Moderate improvement
    g. Significant improvement
    h. Unsure
    26. What impact would you expect paying overtime wages would have 
on the quality of your services? (check all that apply)
    a. lower staff retention
    b. poorer staff competencies
    c. lower staff educational levels
    d. poorer consistency and continuity of care
    e. higher staff retention
    b. better staff competencies
    c. higher staff educational levels
    d. improved consistency and continuity of care
    e. Other
    27. What business adjustments would you expect to make in response 
to paying overtime wages to employees who provide companionship 
services? (check all that apply)
    a. Increased billing rates to clients/patients
    b. Hire additional employees to provide companionship services to 
reduce or eliminate need for overtime hours
    c. Restrict overtime hours for employees providing companionship 
services
    d. Scale back offering companionship services
    e. Assign additional employees to individual clients/patients 
receiving companionship services
    f. Increase human resources costs due to due to a need for 
additional employees
    g.
    h. Increase staff training costs due to a need for additional 
employees
    i. No adjustments made
    j. Other (please explain):
    28. What impact on the communities you serve would you expect from 
paying overtime wages for companionship services?
    a. Fewer clients/patients able to afford care
    b. Less work available for employees who provide companionship 
services
    c. No Impact
                                 ______
                                 
                               appendix 3

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    [Whereupon, at 11:40 a.m., the subcommittee was adjourned.]

                                 
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