Funding change for in-home care: Interpreting the Fair Labor Standards Act

Posted 8/21/12

ALBANY, NY — Michael Mulhern, a blind veteran with other disabilities who lives in Glen Spey, has around-the-clock companionship through what is called Consumer Directed Personal Assistance (CDPA), …

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Funding change for in-home care: Interpreting the Fair Labor Standards Act

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ALBANY, NY — Michael Mulhern, a blind veteran with other disabilities who lives in Glen Spey, has around-the-clock companionship through what is called Consumer Directed Personal Assistance (CDPA), and this assistance allows him to stay in his home rather than in a facility such as a nursing home. For decades, the U.S. Department of Labor (DOL) had interpreted the Fair Labor Standards Act (FLSA) to say that people providing this sort of assistance or companionship are exempt from the FLSA. But beginning on January 1, 2015, DOL is going to change its interpretation of FLSA in a way that means many personal assistants who provide home care will not be exempt from the FLSA, and that they therefore must be paid time-and-a-half for any hours worked beyond 40 a week. People like Mulhern are concerned that will lead to a “crisis in the continuity of care,” and may lead to reduced amounts of care or increased numbers of people being forced out of their homes and into nursing homes.

An organization called the Consumer Directed Personal Assistance Association of New York State (CDPAANYS) says, “Because consumers using CDPA recruit, hire, train, supervise and terminate their own workers, called personal assistants (PAs), the consumer has historically been viewed as the employer in this program.” Beginning January 1, 2015, however, DOL will consider these personal assistants to be employees of both the consumer and an organization called a fiscal intermediary (FI), which essentially is an organization that handles paperwork like paying taxes, unemployment insurance and other costs associated with the employment of personal assistants.

Because of this change, the cost of care is going to increase. Under the current interpretation in New York State, if a personal assistant is paid $11 an hour, overtime for that employee is paid at $12 per hour because that overtime is based on time-and-a-half of the minimum wage, which is $8 per hour. Under the new interpretation of the law, overtime for that individual will jump to $16.50 per hour, because it will be based on time-and-a-half of the actual base pay.

In New York State, the cost of employing personal assistants is covered by Medicaid funding, and Bryan O’Mally, the executive director of CDPAANYS, said there is no increase in the funding stream to pay for the increased costs. The fear is that the new interpretation is going to mean less care for some disabled or elderly people.

O’Malley said he conducted a survey of the fiscal intermediaries—or providers—that are members of his organization, and the one that is in the best position to handle this change “will wind up with $.86 to pay for workers compensation, unemployment, taxes and every other expense that they have, after they pay salary.”

A statement about the matter from O’Malley’s organization said, “Without changes to the funding stream and Medicaid program, these alterations to the FLSA are likely to cause serious harm to the system, dramatically impacting continuity of care for consumers, as well as their ability to obtain new personal assistants.”

O’Malley said his organization has been lobbying the state and federal government to create a solution to this situation, which he expects will cost $20 million to correct. Half that amount could come from a new state Vital Access Provider Program, which the state legislature included in the 2014/15 budget to specifically address a shortfall caused by DOL’s reinterpretation of the FLSA. Other funds he says should come from Medicaid to pick up some overtime and travel costs. He also advocates some other changes in the state CDPA program.

The DOL has said it will not enforce the new interpretation of the rule until July 1, 2015, but providers and consumers have been advised to comply with it by January 1, 2015 to avoid possible legal action.

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