Proposed Labor Regulations Will Raise Health Care Costs on Seniors, Hinder Job Creation by Fast-Growing Sector of Franchising

December 16, 2011 // // WASHINGTON - The International Franchise Association today opposed new regulations proposed by the Obama Administration to eliminate an exemption to overtime requirements for workers in the home care industry. The new proposed rule could potentially triple the cost of in home healthcare for seniors, and would negatively impact franchise small business owners, one of the largest and fastest growing segments in the $2.1 trillion franchise industry.

"These proposals, while seemingly well-intended, will likely cause seniors and their family members to pay more for care, possibly making these services economically unviable, given this type of care is paid for not by insurance, but by families themselves. This will result in driving seniors away from home care and into facility care which requires more government resources through Medicare and Medicaid expenditures," said IFA President & CEO Steve Caldeira. "Further, these proposed rules may have the unintended consequence of increasing costs and compliance for small business franchise owners who operate home health care and senior care franchises."

The companionship exemption is the provision within the federal Fair Labor Standards Act (FLSA) which exempts caregivers from the requirement of being paid overtime. The companionship exemption is a significant factor in helping to keep paid, senior home care affordable. The proposed rulemaking by the U.S. Department of Labor will narrow the scope of those caregivers covered by the companionship exemption, to include employees of many IFA member companies.

IFA supports legislation, The Companionship Exemption Protection Act (H.R. 3066) sponsored by Rep. Lee Terry (R-Neb.), that would supersede this proposed regulation by the Department of Labor. This bill would define third party non-medical in-home care to include, but not be limited to the following services: companionship, light housekeeping, meal preparation, errands, assistance to appointments, laundry, medication reminders, bathing and assistance with incontinence and grooming. This bill importantly would ensure that third party providers are included in the companionship exemption in federal law. Furthermore, for the first time, this legislation would include a definition of companionship services in federal law.

"The companionship exemption also helps protect the continuity of care many franchise businesses provide to seniors who typically like to have the same caregiver," said Caldeira. "If overtime payment is mandated, some home care companies will be required to restrict the hours that their caregivers can work, thereby requiring multiple caregivers to care for the same senior, creating confusion for the seniors which adversely affects the quality of care in addition to the cost of care."

Government research also shows the companionship exemption helps preserve and create jobs. According to the U.S. Bureau of Labor Statistics/Office of Occupational Statistics and Employment Projections to 2018, published in the November 2009 Monthly Labor Review, home health aid is the second fastest growing job category in the country. Changes to the companionship exemption would disrupt this employment growth.

About the International Franchise Association

The International Franchise Association is the world's oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.


Alisa Harrison, 202-628-8000
Matthew Haller, 202-662-0770


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