Upcoming Department of Labor Changes Affecting Personal Care Services: What CILs Need to Know

Presented by Mollie Murphy on November 19, 2014

PAULA MCELWEE: Hello, everyone. Welcome to our upcoming Department of Labor changes affecting personal care services, what CILs need to know. This Webinar is being presented by Mollie Murphy. I'm Paula McElwee, and I'm your host and the TA coordinator for ILRU and the IL-NET and New Community Opportunities Center's projects.
Today's Webinar is being offered by the New Community Opportunities Center at ILRU, that's the national technical assistance project at ILRU, that's the Independent Living Research Utilization in Houston, Texas.
This presentation was developed in collaboration with the National Resource Center for participant-directed services at Boston college and the administration for community living and is funded by the U.S. Department of Education's Rehabilitation Services Administration and no official endorsement by the department should be inferred by this presentation.
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Without further delay, let me welcome and introduce to you our -- I will tell you a little bit about our presenter and that's Mollie Murphy. She is the co-founder and chief executive officer of ANCAM a company providing customer some software and technology and operations consulting for mission-driven organizations. In addition to her role as C.E.O., she serves as the financial management services direction at the National Resource Center for Participant-Directed Services at Boston College. Ms. Murphy has a nationally recognized expertise in financial management services for participant-directed programs. And prior to co-founding her company she served as the lead participant direction tax policy expert for the largest national financial management services provider. She has supported financial management service providers to develop robust policies and procedures manuals, to reengineer processes to improve tax compliance while enhancing participant satisfaction, to implement software to manage FMS and also to improve data management and operations.
She's worked with states to develop their financial management services program from their inception and through the improvement of services and processes for existing financial management services programs. She serves on an interagency work group with the Internal Revenue Service to support tax policy development for United States financial management services providers.
In addition to Mollie, we have a couple of other people on our call today who may have something to say. Richard Petty, formerly with ILRU, is now the executive director for NRCPDS and he's also on the call with us in case he can answer some questions.
And before Mollie begins, we have the opportunity to hear from James Taze, he is the senior advisor at the administration for community living, ACL, and he has been ACL's point person on the new companion and live-in worker rules working closely with the Department of Labor. Welcome and good afternoon, James and Mollie.
> James: Thank you very much. I will be very brief and then turn it over to Mollie. So for the last year, we've been working here at the Department of Health and Human Services, closely with the Department of Labor, on this Home Care Rule which will make some major changes in the way that the Fair Labor Standards Act applies to home care. And Mollie will be going through the details of that. This is a very important issue for us. As many of you know, personal attendant or home care or however these types of programs are named in your particular state is one of the fastest growing and most popular parts of home and community-based services for seniors and people with disabilities. And I think nearly 25% now of all recipients of Medicaid paid home and community-based services are actually in consumer-directed personal attendant or home care programs. And that's been a growth that I think almost everybody has applauded as giving consumers much more control over their own lives and being able to shape their own services and fire and hire their own staff and things of that sort. So this is a very important area.
The Department of Labor rule makes some significant changes that Mollie will go through. It also will present some real challenges in some of your states and we're hoping that this rule can be implemented in a way that does not harm consumers. But we know there will be some significant challenges in some states. So we will go through that today and we know many of your centers out there actually provide attendant care or personal care services and even if they don't, you are probably involved with consumers that will be touched by this rule. So we think this is a very important Webinar, and we're real pleased to be working with the National Resource Center for Participant-Directed Services. They have been leaders for many years in this whole area. Mollie and her team are exceptionally good in both the big picture and getting down to the details of this program and the changes that are coming.
So without further ado, I will just turn it over to Mollie.
> MOLLIE MURPHY: Thank you so much, James. I really appreciate that introduction. Thank you for having me today. As everyone said, my name is Mollie Murphy, and I'm going to talk today about the new Department of Labor Home Care Rule which I expect many of you have heard something about already and hopefully we don't cover too much old ground today. But I do want to start with the basics of this rule.
The rule has actually been -- the original proposed rule came out in late 2011 and had a comment period in early 2012 and the Department of Labor received such significant comments that it wasn't until September 2013 when the final rule was promulgated and that final rule came out with an unprecedented 15 months before it would be implemented. Usually the Department of Labor rules or rule changes go into effect 30, 60, 90 and in some rare cases 120 days after they are released. But in this case, there was a solid 15 months between the release and when it would take effect.
And one of the reasons for that is that this rule stood to impact a number of publicly funded programs that would need to make significant changes in order to come into effect and those programs would need time to be able to do that.
So the primary goal of the rule is to pretty significantly narrow exemptions for companions and live-in workers under the Fair Labor Standards Act. Right now and until January 1st, there exists companionship and live-in exemptions from the Fair Labor Standards Act that are much broader than this new rule. And those exemptions mean that if a worker qualifies as a companion or a live-in worker that they generally don't need to be paid minimum wage and they don't need to be paid overtime for hours over 40 in a week. And currently and until January 1st, the current live-in exemption and companionship exemption is pretty baud. So a lot of personal care workers can actually qualify for that.
So the primary result of this new Home Care Rule is to significantly narrow the companionship and live-in exemption. Those exemptions don't go away. There are still some workers in some rare cases that will qualify for the companionship and live-in exemptions and, therefore, not need to be paid minimum wage and overtime. For companions and minimum and just overtime for live-ins. But because the rule has so narrowed those exemptions when someone actually qualifies for them is going to be much, much, much less often.
The rule also shone the light on when a worker might be jointly employed by multiple employers. And that became really important because the new Home Care Rule makes clear that if an individual worker is employed by a third party, that is, someone who is not receiving the care, if they're employed by someone who is not receiving the care, then in no circumstances can the -- even narrowed companion or live-in exemptions be used. So because there was so much confusion about what would make someone a third-party employer or a third-party joint employer, the Department of Labor released an Administrator's Interpretation No. 2014-2 last June.
Prior to releasing Administrator's Interpretation No. 2014-2 they released an Administrator's Interpretation 2014-1 on shared living programs. When this rule came out, some of the feedback that they got from the Medicaid and state associations was that this would pretty significantly impact shared living programs and there was a lot of confusion about how shared living programs would fit into this rule. So the purpose of Administrator's Interpretation No. 2014-1 was to clear that up.
Just recently the DOL released a time-limited non-enforcement policy of the Home Care Rule. And I will talk about that at the end of the presentation today.
Please go forward to the next slide. We are on slide 4. So today I'm going to cover a lot of ground. I will try not to talk too fast. I have a tendency to talk pretty fast. We're going to talk about what the companionship exemption is under the new Home Care Rule, what the live-in exemption is under the new Home Care Rule. We'll talk about that shared living guidance and when a shared living provider could be an independent contractor and when they couldn't and why that's important.
Joint employment is one of the biggest topics related to this Home Care Rule and what makes an employer a joint employer. So we'll spend a fair amount of time talking about the joint employment rules and implications. And, finally, we'll finish today by touching on the recently announced time-limited non-enforcement policy of this rule and what that means practically.
All right. Next slide, please.
So going to slide 5, we'll start by talking about the new companionship exemption rule. Throughout the slides, you'll see that we have reference to a NRCPDS FLSA Home Care Rule tool kit. We released the first iteration of a Home Care Rule tool kit in September, and we're adding to that tool kit as we develop more materials and get more information about this Home Care Rule.
Throughout this presentation where there is something in the Home Care Rule tool kit that may be helpful to you, we've tried to reference it. So you can find the NRCPDS FLSA Home Care Rule tool kit at And within that tool kit, we have a number of helpful materials. One set of materials that proves to be practically quite useful is a set of decision trees. As you'll hear as I talk through this rule today, you may find your head spinning a little bit: When a minute? When does that apply? When doesn't that apply? When does given part of the rule apply to any part of my situation? I found myself in the same boat. There's so many different arms and legs of this rule that it can be tricky to keep track of how different parts of the rule apply to different scenarios.
So we developed these decision trees with the idea that each decision tree asks -- seeks to answer how a part of the rule would apply to an individual situation. And each -- and the decision tree has yes or no questions that you would ask yourself the question as it applies to your situation or the question at hand. And then depending on whether or not your answer to the question is yes or no, you would follow that arrow down to another yes or no question until you have answered all the yes or no questions and found yourself with an answer at the end of how the rule applies to your situation.
And so we've done that for a bunch of the different arms and legs of the rule and we'll reference throughout the presentation where you can find in our tool kit those particular decision trees. So the new Companionship Exemption Rule you can find on page 9 of the tool kit.
So what is the companionship exemption? The Fair Labor Standards Act is a part of federal law that has requirements for when workers must be paid minimum wage, must be paid overtime. It also has some recordkeeping requirements.
Certain types of workers can have exemptions from the requirements of the Fair Labor Standards Act. The companionship exemption is one of those types of exemptions. And when a worker qualifies for the companionship exemption, it means that the worker is exempt from the requirements to be paid at least minimum wage and to be paid overtime for hours worked in a workweek over 40.
Under the new Home Care Rule, the companionship exemption could be used if a worker's primary duty is providing fellowship and protection to the person to whom they are providing fellowship and protection. The rule says to an elderly person or it a person with an illness, injury or disability.
Fellowship they define as social, physical and mental activities such as conversation, reading, games, crafts or accompanying the person on walks, on errands, to appointments or to social events. Protection they define as accompanying the person to monitor their safety and well-being.
In the rule, there's a lot more information on this. There's other parts of this that we are going to talk about in a moment for what can qualify as a companion. A simple way to think about it is: Is the person who is being paid to provide this service essentially doing the same kind of duties that a friend would do? If they are not doing the same kind of duties that a friend might do, they're probably not going to qualify for the companionship exemption, meaning they probably would need to be paid at least minimum wage and overtime.
A really critical piece of the companionship exemption is that the companionship exemption cannot be used if the worker is employed or jointly employed, which we'll talk a lot more about, by a third party where a third party means the person employing them -- or the person or entity employing them or jointly employing them is not the person also receiving the care.
Now, the good news is the rule does allow that there may be an employer of the worker who is not receiving the care but is in the person who's receiving the care's household or family or very close to them. That kind of employer would not be considered a third-party employer. They could use the exemption, but the message is still very strong and very clear, that if there is an employer who is not the person receiving the care or in their household or family, then the exemption cannot be used regardless of the duties that the worker provides.
So when you're asking yourself whether or not the companionship exemption can be used, the very first question is: Is this worker employed by a third party, either solely or jointly? If so, there is no point in even reviewing the other questions. The other duties that go along with the companionship exemption, because you cannot use the companionship exemption if a third party is an employer or a joint employer.
So let's assume that a third party is not an employer or joint employer. As we saw on slide six, the worker's primary duties must be providing fellowship and protection. The worker could be a companion. I'm on slide 7. I have gone to the next slide.
The worker could be a companion if they are providing some care services but they could not provide more than 20% of the worker's hours per workweek providing care services. So care services are essentially ADLs and IADLs. So you could be a companion and qualify for the companionship exemption because you're primarily providing fellowship and protection and you could provide some care services, but you couldn't provide care services that exceed 20% of your work time in a given workweek and still qualify for the companionship exemption.