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Live-in Health Aides to Earn More -- Will Providers Pass Along Costs?

Some businesses bemoan change in federal rule that will guarantee minimum wage and overtime for homecare workers

milly silva
Milly Silva, executive vice president of the Service Employees International Union Local 1199.

Live-in health aides are a relatively popular option for residents who want to remain at home rather than move to a nursing home but need help with bandages, medications, and daily tasks.

But a federal rule that goes into effect January 1 will guarantee that these workers earn minimum wage and are paid for overtime. And some New Jersey companies that pair home aides with clients say they have no choice but to pass along these higher costs.

“I’d love to pay my caregivers more money, and I’d love to retain them, but there’s a breaking point as to how much consumers can afford,” according to Lenny Verkhoglaz, founder and CEO of Hackensack-based Executive Care.

He predicts that families will essentially go to the black market and instead hire unregulated live-in aides off the books.

According to experts, the economic realities of New Jersey have helped foster the private home healthcare business: There are a large number of higher-income households and a large immigrant workforce (which often will take jobs for low wages). Medicaid generally doesn’t pay for the service in the state.

While these workers generally aren’t unionized, labor unions are applauding the change, saying that it will protect the aides and advance the discussion of paying a livable wage to all workers.

Until the rule change, live-in workers were exempt from the Fair Labor Standards Act. While the U.S. Department of Labor has delayed enforcement of the new rules until July, businesses will still be responsible for implementing them at the start of the year and could face lawsuits if they don’t.

In New Jersey, employers can calculate the pay for these based on an eight-hour day. When the new rule goes into effect, however, they will have to carefully document the hours that workers spend directly providing care, subtracting the breaks they take to eat, sleep or engage in other activities.

“We think it’s 40 years overdue,” said Milly Silva, executive vice president of the Service Employees International Union Local 1199. She was the Democratic candidate for lieutenant governor in 2013.

“Now more than ever, there’s a conversation not only around earning the minimum wage, but what it means for someone to be earning a livable wage,” Silva said, While the state has reoriented its Medicaid long-term care to emphasize providing services to residents in their homes and communities instead of nursing homes, the policy hasn’t focused on live-in home health workers.

Silva added that strengthening pay regulations will contribute toward attracting well-trained workers. She noted that the job hasn’t historically been well-paying, with work concentrated among immigrant women. Nationally, the median pay for home health aides is $20,820 a year. The service is expected to be one of the fastest-growing nationally, helped along in part by the graying of the baby boomers.

“We’re not going to provide top-quality care if we do not have the workforce to provide that care,” said Silva

Verkhoglaz indicated that he is planning to raise daily rates from roughly $185 to $215 to cover additional costs. He’s begun to discuss the price change with clients and their families, and believes he could lose as much as a third of his customers.

“The government really wants us to pay for almost every hour that they spend in a client’s home, even when they sleep sometimes,” said Verkhoglaz. “It will cause us to pass the costs to the consumer.”

The rule change is the subject of a lawsuit by the National Association for Home Care & Hospice and other groups, which contend that the way the federal government has enforced wage laws from 1975 until the recent change is correct.

“What our gripe is, the U.S. Department of Labor just doesn’t understand home care and specifically live-in home care,” said Verkhoglaz, who has 300 aides serving Bergen, Essex, Hudson, and Passaic counties. Franchisees have 50 to 60 workers serving Monmouth, Morris, and -- soon -- Camden counties.

“The government will lose out in the end, because the tax base will erode,” Verkhoglaz said. He added that he hopes that federal officials will “step back and understand what live-in caregivers are all -- we’re not a factory; we’re not an office; we’re not a warehouse.”

He said the jobs, which include room and board and have periods of watching TV or reading, aren’t “analogous to any traditional workplace.”

Chrissy Buteas, president and CEO of the Home Care Association of New Jersey, said her group has been working to teach homecare providers about the effects of the rule change. “We’re working to comply,” she said of the industry.

Christopher Mayer, a law partner with McCarter & English in Newark, said client home-care companies feel that the rule change is a threat to their business.

He has been advising them on ways to document workers’ hours without increasing their pay. Ultimately, the primary costs from complying with the rule-change may be indirect rather than from paying workers more. Some businesses may choose to lower workers’ wages to the minimum if they have to pay for more hours, he added. It remains unclear whether the costs will be passed on to customers or absorbed by the employers.

Silva questioned the forecast that there would be negative economic effects from the rule change. She compared it with the forecasts that the state’s economy would be harmed by raising the minimum wage, which she said hasn’t occurred.

“The sky didn’t fall,” said Silva, who contends that the rule change would lead to “more workers who have more disposable income to invest in the economy.”

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