With an increasing aging population that desires care at home, the need for home health workers is increasing, and so too is the need for fair compensation. In New York, the Federal Fair Labor Standards Act (FLSA) various laws including the Home Care Worker Wage Parity Act (WPA) have made strides to provide home care workers with fair and equal pay.

 A Bit of History

Before 2015, home care aides in this country were considered “companions of the elderly” and “domestic workers.” Therefore, their work was not considered real work. This made them exempt from the Federal Fair Labor Standards Act (FLSA) minimum wage and overtime protections.

In real terms, the lack of transparency in regards to hours worked amounted to wage theft. Let’s say, for example, that an aide receives a daily flat rate of $150. But the aide can be at the client’s home well past a usual 8-hour work day, In fact, they can be at the client’s home for a good 17 hours, from sunup to past sundown.

And their real wages would be even less if they receive room and board, as they were basically on duty 24 hours a day without any wage parameters.

But the baby boomer generation is aging. And instead of being shuttled into a group home, many seniors would rather receive care at home, and the care they require is complex. Home care aides must not only clean and feed, but also provide medications, manage medical care, provide mental and behavioral support, and look over the general safety and concerns of the people in their care. With this focus of community-based care, the value of home care aides could no longer be trivialized.

Classification of the Home Health Worker

• According to the U.S. Department of Labor, home health workers provide three categories of care: fellowship and protection (like social activities and keeping company), personal care (like bathing, cooking, and cleaning), and health-related services (like medicine administration and tube feeding).
• They may live outside or in the consumer’s home, but they must provide services at the consumer’s home. (They do not provide care in nursing homes, hospitals, or other facilities).
• Their titles are varied, including personal care attendant, certified nursing assistant, and home health aide.
• They may be paid by private funds, Medicaid, or some combination. They may be employed by an agency, by the consumer directly (“direct hire”), or in a hybrid model that is considered “self-directed” where the consumer finds the home care worker through a Medicaid-funded program run by a state agency but the consumer is responsible for hiring or firing the worker.

Federal Protections: FLSA’s Home Care Final Rule

In 2015 the DOL’s Home Care Final rule took effect, requiring employers to pay the federal minimum wage ($7.25 an hour) and overtime (one and a half times their regular rate of pay for over 40 hours of work in a week) to the home care worker.

Finally, home care aides employed by third parties were offered minimum wage as well as overtime protections—that includes such things as intra-day travel time, on-call time, and training time. So too were home care workers who spent at least 20 percent of their work providing home care and personal assistance, regardless of their employer.

Also, agencies that employed 50 or more full-time employees had to start providing their employees the protections afforded by the Affordable Care Act.

A couple exemptions

1. The “companionship services exemption” allows for the consumer or their families to pay less than the federal minimum wage if the services provided are mostly companionship in nature and they don’t provide medical assistance. However, an agency must always comply with the rule, regardless of the services provided. (Note: The NYS Domestic Workers Bill of Rights prohibits this exemption from any employer of a home health aide in New York City.)
2. Live-in home health care workers are not required to receive overtime pay. Their wages are calculated by deducting sleep time, breaks, meals, and other periods of off-duty time. The live-in worker comes to an agreement with the consumer. Additionally, under certain circumstances, consumers can deduct the cost of housing and food from their wages.

*An employer is broadly defined as the agency or the consumer who hires the home care worker directly. In a hybrid, consumer-directed model, both the agency and the consumer would be considered responsible for complying with the FSLA rule as “joint employers.”

FSLA Falls Short

Despite federal protections, home health workers are still struggling. According to the DOL, home health workers make an average of $11.99 an hour and their mean annual wage is $24,940. An article in the New York Times sums it up well, “Home health care is the fastest growing major job category in the country, one of the most emotionally and personally demanding, and one of the worst paid.”

As such, various states across the country (like Massachusetts, California, and New York)—in part motivated by labor unions and other advocacy groups—have created their own laws for the fair compensation of home health workers. In these cases, the state law must be followed.

Additional New York Legislation

In New York, one of the most expensive places to live in the world, the federal minimum wage and even the average industry wage don’t amount to a living wage for home health workers (referred to as home health aides in New York legislation). So the 1199SEIU (Service Employees International Union) has been a strong advocate. They’ve been able to effectuate minimum wage and overtime laws that require higher payments to health care workers. Here are a few key features of the extended protections in New York, known as the Home Care Worker Wage Parity Act (WPA).

3 Types of Home Care Agency Employer Types

New York buckets certified home health agency employers into three categories. This is important to keep in mind as we consider the parameters of WPA.

LHCSAs

Private agencies that employ home care aides must be licensed as Licensed Home Care Service Agencies. Home care aides, in addition to providing day-to-day care, provide assistance with nursing and health-related tasks.

CHHAs

Certified Home Health Agencies are similar to LHCSAs, but they focus on short-term, post-hospital care.

FIs

In a fiscal intermediary set up, the recipient of care obtains the home care aide from an organization but is responsible for some employer responsibilities, including hiring and dismissal. This is known as “consumer-direction.”

New York’s Home Care Worker Wage Parity Act (WPA)

To help fill the need for fair wage compensation, New York created the Home Care Worker Wage Parity Act, which went into effect in 2012. It requires eligible employers to pay home health workers who perform Medicaid-reimbursed work in New York City and the counties of Nassau, Suffolk, and Westchester, the state’s minimum wage for the applicable region and an additional $3.22 – $4.09 an hour (depending on the area) in additional benefits, whether it’s in wages, benefits, or a combination of the two.

As of December 31, 2020, this is the breakdown of wages and benefits:

• New York City: $15.00/hr + $4.09/hour in wages and/or benefits
• Nassau, Suffolk, and Westchester: $14.00/hr + $3.22/hr in wages and/or benefits

Additionally, home health aides—unless they are directly hired by the consumer—must receive certification training based on their category of care.(Personal care aides receive 40 hours of initial training plus 6 more hours of in-service training annually. Home health aides receive 75 hours of initial training plus 12 hours in-service annually.)

Employer Notice

Effective October 1, 2020, WPA requires employers to provide home care aides a notice at the time of hire which details the supplemental benefit portion of the minimum rate of home care aide total compensation.

The notice must be in English and any other language identified by the employee as their primary language (as long as the DOL makes the template available in that language) and include:

• Hourly pay rate
• The type of supplement or type of home care aide benefits
• The names and addresses of the benefit providers
• The plan or agreement that creates the benefit for each type of benefit

Additionally, the employee must sign and date the pay notice and the employer must keep an original signed copy for at least 6 years.

Additional resources from the NYS DOL

• Guidelines
• Instructions
• Templates for the Notice and Acknowledgement of Pay Rate and Payday

Wage Parity Packages

Employers need creative, efficient, and compliant ways to administer wages and benefits that meet their employees’ needs. That’s where “wage parity packages” come into play.

If you are a broker savvy on the laws, you can help your clients create these packages. Or you can lean on general agents or third-party agencies that specialize in this pocket of the benefits marketplace. Agencies can help employers administer the benefits while maintaining compliance with the law while reducing the burden of payroll administration (should the additional benefit be provided as wages). And they allow for employer benefits to be automatically calculated and distributed via pre-tax consumer benefits (should the additional benefit be provided as a consumer benefit).

Your employer clients have wage parity dollars, so what are they going to do with them?

Employers can choose to pay the additional benefits as wages, as supplemental benefits (like medical, transit, dental, vision, and dependent care reimbursement accounts), or a combination of the two. Whatever choice the employer makes, there are a few considerations they should keep in mind:

• They can use the additional benefit to meet minimum value and minimum essential health plan coverage requirements of the ACA.
• If they provide the additional benefit as a wage, the employee is subject to income and FICA taxes.
• When the additional benefit is provided to the worker as a consumer benefit, it is without cost and is tax-free.
• Also, the employer can take a business tax deduction for the total benefit cost. Funds spent or to be spent on the supplemental benefits may not be returned to the employer.

Regardless of the choice, it must pass the compliance test of multiple acronym-loving laws including WPA, IRS, ACA, wage and hour laws, and the NYS Domestic Workers’ Bill of Rights. For example, here are a few more considerations:

• Employers need to provide 3 days of rest for home health aides. (NYS Domestic Workers’ Bill of Rights)
• On the seventh day worked, employers need to provide one and a half more the normal hourly wage. (NYS Domestic Workers’ Bill of Rights)
• In NYC, qualified workers receive 2 paid days of sick leave. (NYS Domestic Workers’ Bill of Rights)
• Home health workers receive an additional hour for split shifts. (NY Labor Law)
• Employers must discount live-in aides 8 hours of sleep time and 3 hours of meal time. Also, aides must get at least 5 hours of uninterrupted sleep. (NY Labor Law)

Home Care Employment Law has a great page on their site that goes into more detail and outlines supporting case law.

Avoiding Costly Pitfalls

Non-compliance with FSLA can be costly to the employer. Employees have a right to sue and seek compensation for back-pay, liquidated damages (a monetary award equal to the amount of backpay), and attorney’s fees. Additionally, states may have their own laws that allow for additional compensation, including interest.

Just like with the FSLA, non-compliance of the WPA can cost the employer. Employees are able to recover double the damages and their attorney’s fees. Additionally, here are the NYS penalties, straight from Section 3614-C, an amendment which was established in April 2020:

“Any certified home health agency … or other third party that willfully pays less than such stipulated minimums regarding wages and supplements, as established in this section, shall be guilty of a misdemeanor and upon conviction shall be punished, for a first offense by a fine of $500 or by imprisonment for not more than 30 days, or by both fine and imprisonment; for a second offense by a fine of $1,000, and in addition thereto the contract on which the violation has occurred shall be forfeited.”

Some wage parity compliance tips that could save your business:

• Before an employer decides to apply a wage and overtime exemption from any of the various laws, they should seek counsel from an employment lawyer.
• Employers should enter into a written agreement with the worker regarding work expectations.
• Employers should make sure their employees record the hours worked according to the requirements of the FSLA and their state and city laws. Note that there are different record keeping requirements for live-in aides.

Final Thoughts

Wage parity laws are complex. And to be fully compliant, your employer clients need to make sure they are taking all of the relevant laws into consideration. While this summary provides a number of key considerations, it’s not exhaustive. And laws can always change and evolve.

We recommend that you retain the expertise of a benefit administrator that understands the compliance needs of LHCSAs, CHHAs, and FIs who provide care in New York. The total compensation packages of home care agencies require a unique blend of compliance, cost-consciousness, and advocacy for the health and fiscal needs of their workforce.