On August 21, 2015 the Court of Appeals in Washington, D.C. ruled in favor of the Obama administration regulations on the minimum wage rates and overtime pay to home care workers who help the elderly and disabled.
This ruling ends an exemption in federal minimum wage and overtime pay for nearly two million employees. Now for profit home care agencies must pay their employees at least minimum wage as well as minimum overtime wage, i.e. for the time worked in excess of 40 hours workweek at a rate of one and one-half times their hourly rates.
This issue of paying minimum wage to home care workers has a long story. The Department of Labor applying the 1974 federal law defined home care workers as ‘companions’. This definition made them exempt from minimum wage law and allowed employers to pay them whatever they agree to accept.
Since the mid 70-s the situation changed dramatically. The home care industry became one of the fastest growing while paying lowest salaries to their employees, mostly minorities and women. Nowadays the home care services are mostly provided not by home ‘companions’ like babysitters, but by employees of home care agencies.
The situation turned out to be obviously unfair. In 2007 The Supreme Court ruled that the Department of Labor had authority to “resolve the issue.” In 2013 Labor Department issued new rules, which were supposed to go into effect on January 1, 2015.
But the home care industry challenged the new rules in the Federal District Court in Washington, D.C. earlier this year. The court ruled for the home care industry. The Department of Labor appealed and won. It took 40 years to win the campaign against unfair pay in the industry.
Lobbyists for the home care employers argued that the ruling could make it tougher for families to afford home care services for aging and disabled persons. However 15 states including New York have already extended new minimum wage and overtime protections to home care workers. The state of New York was one of the first to support the new rules.