Court reinstates wage rules for home care workers

Last Updated Aug 21, 2015 12:01 PM EDT

WASHINGTON -- A federal appeals court on Friday reinstated Obama administration regulations that guarantee overtime and minimum wage protection to roughly 2 million home health care workers.

The occupation is the fastest growing in the United States, with the aging of the nation's baby boomers leading to a surge in demand for home care workers, who in addition to the elderly, also care for the disabled and chronically ill.

Home care is also among the lowest paid occupations. In 2012 (the latest year for which data is available,) the median annual wage for the country's nearly 2 million so-called direct care workers was about $10 an hour, or less than $21,000 per year, according to the U.S. Department of Labor.

The ruling is a victory for worker advocacy groups and labor unions that have long sought higher wages for domestic workers who help the elderly and disabled with everyday tasks such as bathing or taking medicine.

The court's decision "corrects a decades-old injustice that has fueled poverty wages and destabilized an increasingly vital industry, the National Employment Law Project, among the groups that advocated for home care workers, said in a statement.

"We will be moving full steam ahead to ensure that states and employers implement the new regulations in a way that supports workers and consumers," Catherine Ruckelshaus, NELP's general counsel and program director, stated.

It's also a win for the White House, which announced the rules four years ago as part of an effort to go around an unwilling Congress in a bid to help low-wage workers through executive action.

A federal judge had scrapped the Labor Department rules earlier this year after finding that the agency had overstepped its authority. Since 1974, federal law has exempted home care workers hired through third-party staffing agencies from wage and overtime requirements.

But the U.S. Court of Appeals for the District of Columbia Circuit said the Labor Department has the power to interpret the law to change that exemption.

Writing for a three-judge panel, Judge Sri Srinivasan cited a "dramatic transformation" of the home care industry over the past four decades as a valid reason for the change. While most caregivers used to be directly employed by individual households, the vast majority of workers now work for staffing companies that service hundreds or thousands of customers, Srinivasan said.

He also noted a massive shift to providing care for the elderly in their own homes rather than in nursing homes, which requires workers to offer more advanced medical care and assistance to clients than the mere "companionship" services envisioned in 1974.

Home health care companies employing many of the workers have said overtime requirements would make it tougher for families to afford home care for aging parents.

Lobbyists for the $84 billion industry argued that the new rules could even reduce the take-home pay of caregivers if companies decide not to send workers out for shifts longer than eight hours to avoid overtime pay.

In June, President Barack Obama announced another set of rules that would make another 5 million workers eligible for overtime pay if they work more than 40 hours per week. Under the latest rules, salaried employees earning less than $50,440 a year would be assured overtime, up from the previous threshold of $23,660 a year.