Home Care Providers Rethink Caregiver Pay Models Ahead Of Dol Overtime Rule

Home care providers are plotting new retention strategies in anticipation of the U.S. Department of Labor’s (DOL) reinstatement of the companionship exemption.

The DOL  proposed to reinstate the companionship exemption in July, which would effectively do away with overtime and minimum wage requirements for certain home care workers. While the industry awaits a final rule, the exemption will likely go through, Angelo Spinola, home health, home care and hospice chair of Polsinelli law firm, said in a recent webinar. 

The DOL stated that the exemption would reduce labor costs for newly-exempt home care workers – but Spinola said that claim is “highly questionable.” Without an overtime requirement, providers will not be able to pay their caregivers less, he said.

“You cannot afford to pay your caregivers less than you pay them now; you will pay them differently than you pay them now,” he said. “Providers are getting very, very creative in their planning … ‘how can we really incentivize our best caregivers to give their hours to us instead of a competitor? What can we do via bonuses, via productivity, via percentages of total comp in a way that we did not have the capacity or ability to do in the past, because they were non-exempt.”’

Previously, creative benefits would have affected their overtime and caused administrative burden for providers to determine what their overtime obligation would be. Caregivers would also, at times, end up with “two jobs for the price of one” because one agency would limit a caregiver’s number of hours, leading them to work for an additional agency.

With the pervasive shortage of caregivers, providers should see the change as an opportunity to consolidate hours with their best caregivers, Spinola said.

State-by-state minimum wage and overtime requirements could now impact home care M&A strategies. Some states, like California, will be relatively unaffected by the DOL’s caregiver exemption. Others, like Florida, have a minimum wage requirement for certain Medicaid waiver programs, but not private duty.

While some labor regulations may be softening, home care providers should not underestimate the value of their caregivers, according to Spinola.

“Your biggest value is your caregiver more even so than your client,” Spinola said. “The idea that the customer is always right isn’t the case anymore in home care, because you don’t have a shortage of opportunities to service clients. You have a shortage of caregivers to service clients.”

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