The Home Care  Rule, scheduled to go into effect January 2015, makes three main  changes to the existing regulations:  it updates terminology and narrows the definition of companionship  services;  it limits who may claim the companionship services and live-in  domestic services exemptions by stipulating that third party  employers, such as private home care agencies, will no longer be  able to claim these exemptions; and  it changes the record-keeping requirements for employers of live-in  domestic services workers. 2). In Developing the Home Care Rule, DOL Considered Changes to the Home Care Industry and Time Needed for Implementation

When DOL was developing the Home Care Rule, it considered the growth  in the home care industry and the resulting changes in the home care  workforce. Figure 3 highlights  some of the outreach that DOL conducted during the rulemaking process. In general, limited data  are available on the number of home care workers or the amount of  services provided. Stakeholders Provided Numerous and Sometimes Differing Perspectives on the Potential Effects of the Home Care Rule on Employers, Workers, Consumers, and State Medicaid Programs

		Potential Effects on Employers and the Cost of Implementation

The Home Care Rule is expected to extend FLSA overtime requirements  to more home care workers and, as a result of this change,  representatives of almost all of the 14 national organizations we  interviewed agreed that employers will likely manage workers’ hours more  closely. Extending minimum wage and overtime protections to home care workers  may help expand the workforce and reduce turnover at a time when the  demand for home care services is expected to increase, according to  representatives in 8 of the 14 national organizations we interviewed,  including worker and consumer advocacy organizations. Potential Effects on State Medicaid Programs

Effects on Medicaid-funded home care services will likely vary by state  since states have some flexibility in designing their Medicaid Programs  and could choose to make adjustments in response to the rule. Officials in two of the  states we visited told us they were concerned about how FLSA  requirements may affect live-in care arrangements for those  consumers who require substantial care and how it could be costly to  comply with the FLSA in certain live-in situations. CMS also recently issued regulations on home and  community-based services and some state officials said that they  have been focusing their attention on complying with these  regulations. DOL Worked with Federal Agencies and Stakeholders to Develop Guidance on Implementing the Home Care Rule

		DOL Developed Implementation Guidance

After the Home Care Rule was published, DOL developed guidance,  conducted outreach, and provided technical assistance to help state  Medicaid programs and other stakeholders plan for implementation. She does  not work for any one consumer for more than 40 hours per week. DOL Plans a Phased-In Enforcement Strategy but Does Not Have Plans to Evaluate the Effects of the Rule

While DOL has several enforcement mechanisms in place to oversee the  Home Care Rule’s implementation once it goes into effect, DOL officials  said they are currently focusing their efforts on technical assistance to  help employers and states with implementing the rule. Conclusions

Home care agencies and state Medicaid programs are responding to the  Home Care Rule through programmatic and policy changes, and while  more home care workers will be entitled to receive federal minimum wage  and overtime pay protections as a result of the Home Care Rule, the  effects of the rule will remain unclear until after it is implemented. Recommendation for Executive Action

Depending on the outcome of the litigation, the Secretary of Labor should  take steps to ensure the agency will be positioned to conduct a  meaningful retrospective review consistent with the Executive Order at an  appropriate time.
Why GAO Did This Study

Older adults and people with disabilities are increasingly receiving care at home, and home care workers are performing increasingly skilled duties. DOL recently revised its FLSA regulations to extend minimum wage and overtime protections to more of those home care workers. The Home Care Rule, scheduled to go into effect January 2015, may affect a diverse set of stakeholders, including home care workers, consumers receiving home care services, private home care agencies, and state Medicaid programs. GAO was asked to assess the potential effects of this rule.
GAO examined (1) changes DOL made in the Home Care Rule and factors it considered during the rulemaking process, (2) the potential effects of the rule identified by key stakeholders, and (3) steps DOL has taken to help state Medicaid agencies and other stakeholders understand and comply with the Home Care Rule. GAO visited six state Medicaid programs selected in part for variation in state Medicaid program design; reviewed relevant federal regulations; and interviewed government officials and representatives from 14 national organizations representing the spectrum of home care stakeholders, including workers and consumers.

What GAO Found

The Department of Labor's (DOL) Home Care Rule is expected to increase the number of home care workers who qualify for minimum wage and overtime protections under the Fair Labor Standards Act of 1938, as amended (FLSA). The Home Care Rule narrows the definition of companionship services and limits who may claim the companionship services exemption, among other changes. It is scheduled to go into effect in January 2015, although a challenge to the rule is currently pending in federal court. When developing the rule, DOL considered several factors, including the growth and specialization of the home care workforce, as well as the amount of time needed to make adjustments.
Representatives from national organizations GAO interviewed identified potential effects of the Home Care Rule on jobs and earnings, employer costs, and care, but did not always agree. Some representatives said extending FLSA protections to home care workers will create more full-time employment opportunities for part-time workers, while others said those who work more than 40 hours in a workweek may see reduced hours and earnings. Some representatives said employers may face increased business costs to pay overtime and some said that certain consumers could be placed in institutions because of possible service cost increases. Effects on Medicaid home care services will vary by state. Officials in five of six states GAO visited explained that they were still assessing possible changes to their programs, while one state had determined what changes it would make to comply with the new rule.
After the Home Care Rule was published, DOL collaborated with other federal agencies and stakeholders to develop guidance, conduct outreach, and provide technical assistance to help stakeholders plan for implementation. For example, DOL worked with the Centers for Medicare & Medicaid Services to develop guidance on applying FLSA principles to different home care living arrangements commonly funded by Medicaid. DOL officials said they are focusing on technical assistance to help employers and states with implementation and have developed a phased-in enforcement strategy. The effects of the Home Care Rule, such as whether the workforce will grow or the use of institutional care will increase, remain uncertain, and DOL officials said they do not currently have any plans to evaluate the rule.

What GAO Recommends

Depending on the outcome of the litigation, GAO recommends that the Secretary of Labor take steps to ensure the agency will be positioned to conduct a meaningful retrospective review of the rule at an appropriate time. DOL agreed with this recommendation and is working on developing data collection plans.