Why Grandma's aide earns so little

March 12, 2013: 5:58 AM ET
NEW YORK (CNNMoney)

Home health aides are the fastest growing job in America, yet many are not protected by federal minimum wage and overtime laws.

That's right, people can get away with paying grandma's aide less than $7.25 an hour.

Why? Congress decided in 1974 to lump home health aides in with casual babysitters under labor laws.

President Obama has been trying to change this recently, but the industry is fighting back. The debate all comes down to the meaning of "companionship."

"What they do is static, there's not a lot of effort," said Val Halamandaris, president of the National Association for Home Care & Hospice, referring specifically to companion workers.

"It's in the same category as babysitters. We don't think they should be subject to overtime," he said.

According to the law, minimum wage and overtime are not required for companionship workers, who by definition, spend at least 80% of their workweek merely keeping a patient company. Playing chess or cards would classify as a companionship activity, for example.

Halamandaris said very few home health aide workers actually fit this mold. But a study released by the National Domestic Workers Alliance shows nearly a quarter of home health aides earn below minimum wage.

Worker advocates say employers are exploiting the companionship law and getting away with it.

"It's primarily an outdated, stereotypical idea of what a worker does. This is not the typical way they spend their time," said Heidi Hartmann, president of the Institute for Women's Policy Research.

Related: America's fastest growing job pays poorly

Once aides spend more than 20% of their work week doing general household work, like cleaning or making a tuna sandwich, they are supposed to qualify for both minimum wage and overtime.

But are employers truly tracking their aides' duties so accurately that they can make that distinction?

The large agencies say yes, and argue that they should not pay time-and-a-half to workers who often stay overnight with their patients. During that time, an aide may do little other than help a patient walk to the bathroom once or twice.

"There are many seniors that use our services throughout the night in sleepover situations," said Paul Hogan, chairman of Home Instead Senior Care, which plans to hire 45,000 caregivers in North America this year. "This exemption allows us -- to the benefit of seniors -- to discount for those hours."

As Hogan mentions, costs are a big part of the problem. The industry is pressured to keep prices down to accommodate elderly clients, many of whom are living on fixed incomes. Health care reform could also hurt the industry, as $39.5 billion in Medicare funding cuts through 2019 loom.

Home care providers argue that if they're forced to raise wages and pay overtime, they'll have to restrict workers to 40 hours a week to keep costs down. They also warn that if costs rise, seniors might turn to undocumented, unqualified workers instead.

But home care workers are already entitled to state minimum wages in 21 states, and businesses there are still growing. At least 15 of those states also require overtime pay for those who work more than 40 hours a week.

Meanwhile, recent case studies by the Paraprofessional Healthcare Institute show some companies have developed business models that allow for higher wages and overtime.

In New York, a group called the Cooperative Home Care Associates keeps overtime costs low by often splitting patients who need 24-7 care among four workers. The group is a worker-owned cooperative employing more than 2,000 people.

Addus Homecare (ADUS), a large Illinois-based company, doesn't consider any of its aides as companion workers. So paying minimum wage and overtime are a requirement, not an option. The company uses scheduling software to distribute hours more efficiently and keep overtime costs low.

Darby Anderson, vice president of home and community services for Addus, said he thinks that as more older consumers demand health care at home, competitors will eventually need to rethink their stance on wages and overtime as well.

Related: Men in female-dominated jobs

Vilma Rozen, an aide working in Staten Island, gets paid more than the minimum wage. She said she realizes why it's important to keep costs down. But she and her colleagues need to make a living.

"People don't understand and they always have a complaint about how much they pay for us," she said. "We need to do the best for the elderly, but we need the job too."

She says many don't recognize being a home health care aide as a legitimate career and wants to band together with other domestic workers to get the job the respect it deserves.

Grassroots movements have already taken off in some states, but with limited success. New York passed a domestic workers bill of rights in 2010, but when workers in California tried to do the same, Gov. Jerry Brown vetoed the legislation.

Six years ago, health care aide Evelyn Coke, a single mother of five and immigrant from Jamaica who was not paid minimum wage or overtime, took her case all the way to the U.S. Supreme Court.

Coke lost, with the court unanimously ruling that it was up to Congress or the Department of Labor to change the law. Coke died in 2009.

Now, the Labor Department is reviewing 26,000 public comments on the federal proposal. But it's unclear when, if ever, a final rule will be released.

- CNNMoney video producer Jordan Malter and CNN correspondent Zain Asher contributed to this report.

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