Alexander, Burr, Johanns, Coburn, Cornyn Call on Obama Administration to Reexamine Plan to “Undermine Care” by Raising the Cost of In-home Companion Care

Washington, D.C., April 8 – U.S. Senators Lamar Alexander (R-Tenn.), Richard Burr (R-N.C.), Mike Johanns (R-Neb.), Tom Coburn (R-Okla.), and John Cornyn (R-Texas) today urged the administration to reexamine its plan to raise the cost of in-home companion care and perform “a more accurate analysis” to determine the “the actual cost that the proposed rule would have on recipients and caregivers.”

In a letter to Boris Bershteyn, the acting administrator for the Office of Information and Regulatory Affairs at the Office of Management and Budget, the senators ask that the agency return to the Department of Labor for further review and analysis a proposed rule to essentially eliminate a current regulation, known as the “companionship exemption,” which has exempted companionship services and live-in domestic services from overtime requirements under the Fair Labor Standards Act since 1975.

The senators write: “Current law is a reflection of the will of Congress to protect both the interests of elderly and disabled care recipients who need affordable care along with those of caregivers who want predictable employment arrangements. …The imposition of an FLSA regulatory regime will not only undermine care but it will result in employment instability for caregivers who have long been able to take advantage of the mutually beneficial arrangements that the companionship exemption allows.”

In requesting a more accurate economic analysis of the rule, the senators write: “DOL’s economic analysis relied on inadequate data to evaluate the impact of its proposal, and its economic assumptions understate the proposal’s costs while exaggerating the proposal’s benefits.” 

They add: “In reality, this proposal will lead to fewer care options for seniors and the disabled or require those who need these services to rotate caregivers, which will disrupt their continuity of care.”

In May of last year, Senators Johanns and Alexander introduced with 11 other senators the Companionship Exemption Protection Act, a bill to preserve the law now exempting those who provide in-home companion services from certain labor requirements, as threatened by the rule proposed by the Department of Labor.

The full text of the letter is below:

April 8, 2013

Mr. Boris Bershteyn

Acting Administrator

Office of Information and Regulatory Affairs

Office of Management and Budget

725 17th Street, NW
Washington, DC 20503

Dear Acting Administrator Bershteyn:

We are writing to express our concern with the U.S. Department of Labor (DOL) Wage and Hour Division’s rulemaking entitled “Application of the Fair Labor Standards Act to Domestic Service,” which would affect the companionship exemption to the Fair Labor Standards Act (FLSA).  We ask that the Office of Management and Budget (OMB) return the draft Final Rule to DOL for further review and analysis. 

The current companionship exemption permits elderly and disabled individuals to obtain the home care they need to remain independent without having to comply with the recordkeeping requirements that the FLSA imposes.  Current law is a reflection of the will of Congress to protect both the interests of elderly and disabled care recipients who need affordable care along with those of caregivers who want predictable employment arrangements.  Setting aside DOL’s flawed economic analysis; any changes to this carefully crafted balance should be made by Congress.  The imposition of an FLSA regulatory regime will not only undermine care but it will result in employment instability for caregivers who have long been able to take advantage of the mutually beneficial arrangements that the companionship exemption allows.

DOL’s economic analysis relied on inadequate data to evaluate the impact of its proposal, and its economic assumptions understate the proposal’s costs while exaggerating the proposal’s benefits.  One of our chief concerns with this rulemaking is that the DOL’s analysis relied on Medicare data to evaluate the impact of its proposal when Medicare does not cover the companionship services that the proposal would affect.  Additionally, the primary funding sources for companionship services – private pay, long-term care insurance, Medicaid and other state programs – lack the funding to pay overtime.  DOL’s analysis demonstrates a lack of understanding regarding these payment structures and, therefore, does not accurately evaluate the far-reaching effects of this proposed rule.  Failing to recognize and analyze these effects is unacceptable. 

A more accurate analysis of these payment sources suggests that this proposal will have a significant and negative impact on individuals seeking companionship services to remain independent.  Many elderly and disabled individuals receive these services through funding from Medicaid and other state programs, and the current budget constraints on federal and state departments are not likely to accommodate additional funding to pay overtime rates for these services.  Other individuals receiving these services may be restricted by a long-term care insurance policy, because benefits are most often defined as a fixed amount per day or week, and these benefits will not adapt to include the increased cost of overtime payments.  In other cases, families may pay for these services with private funds, and their assets and income are not likely to artificially increase to cover the new overtime rate.  In reality, this proposal will lead to fewer care options for seniors and the disabled or require those who need these services to rotate caregivers, which will disrupt their continuity of care.

It is critical to underscore that the statutory exemption protects both the interests of caregivers who provide these services, and the elderly and disabled individuals who need this care to remain independent.  Therefore, regulations interpreting the provision should respect this important balance, and substantive changes to the provision should be reserved to Congress.

We urge you to return to DOL its draft final regulations to provide an opportunity for DOL to complete an economic analysis that actually considers the specific qualities of the home care services market.  Additional analysis will allow DOL to adequately consider the interests of those entities actually paying for the home-care services to which the FLSA’s companionship exemption applies.  We believe that a more accurate analysis will show the actual cost that the proposed rule would have on recipients and caregivers.

Sincerely,

Lamar Alexander                               

United States Senator                     

Richard Burr           

United States Senator         

Mike Johanns

United States Senator

Tom Coburn

United States Senator

John Cornyn

United States Senator

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