Philly-area home-care workers often get cheated on overtime. Pa.’s Medicaid rules don’t help.

Inspectors for the U.S. Department of Labor in Philadelphia don’t have to look very hard for overtime violations in the home health care industry.

From the start of 2021 through March 21, the Philadelphia office concluded 38 investigations of home health care firms in Southeastern Pennsylvania, and found that 35 had violated federal labor laws, mostly by not paying minimum wage or overtime, officials said.

Sounds like a simple matter of companies exploiting low-wage caregivers, right? Not so fast, say a range of experts and advocates.

The home-care industry in Pennsylvania and New Jersey is hobbled by outmoded Medicaid rules that come with a glaring omission: They don’t pay agencies extra for overtime — which is virtually impossible to avoid because of the shortage of workers and the surging demand for their services.

“That’s one huge piece of it,” said Seth Lyons, a staff attorney in Community Legal Services of Philadelphia’s employment unit, citing Medicaid’s lack of an overtime rate, while noting that many agencies find ways to pay proper overtime.

This conflict between wage laws and state Medicaid rates is happening while demand for home care is rising every year thanks to an aging population and rising cases of dementia and other ailments. Elderly patients desperately want to live their final years at home. At the same time, Harrisburg is trying to cut back on the use of nursing homes and other institutions and allow more frail seniors who need help with bathing, dressing, and cooking to stay where they want to be.

But the regulations, set by state government, haven’t caught up with the times.

For workers who are helping the elderly stay at home, the loss of overtime pay is disheartening, said Falisa Hill, 31, of Philly’s East Mount Airy section, who has twice worked for agencies that were forced by the government to give her back pay and damages.

“You want to trust wherever you are, you want to trust that they are going to be honest with you,” said Hill, who has worked in home care since 2014. “You want to trust that you’re going to get what’s due to you.”

The most recent firm to deprive Hill of overtime was Ardmore-based Red Lion Home Care Inc., which in January was ordered to pay $2.9 million in back wages and damages to 491 workers.

That was a big chunk of the nearly $9 million in back wages and damages federal officials have announced so far this year for more than 1,200 low-wage home-care workers.

Red Lion and other companies with large settlements this year did not respond to requests for comment.

Medicaid is a major funder of home care, and that means state officials set the hourly rates paid to the agencies. That money flows through companies the state has hired to manage Medicaid benefits, and those companies determine how many hours of home care an individual needs.

The rate paid to an agency for an hour of home care, now $21.52 in Southeastern Pennsylvania, does not change when the worker logs overtime. If a caregiver gets $13.50 an hour like Hill, the overtime rate would be $20.25 an hour, leaving very little for agencies that are already stretched financially to cover their costs, which include background checks, training, and health screenings for caregivers, plus insurance, and other overhead.

Some nearby states pay more per hour, including New Jersey ($23), Delaware ($26.70), Ohio ($23.88), and West Virginia ($27), according to the Pennsylvania Homecare Association, a Harrisburg trade group.

Liberty Resources Inc., a Philadelphia nonprofit that operates a home-care provider with about 700 caregivers, regularly pays overtime, but it means “we have a margin that’s thinner than the skin on my teeth,” said chief executive Thomas Earle.

Earle said the sector has long been underfunded. “Health care benefits, overtime, paid time off, all the things that are typical benefits of employment, have been largely absent from the home-care industry,” he said, “because the reimbursement rate that funds it doesn’t sustain it.”

A new effort to boost funding for home care came recently from State Rep. Jim Struzzi (R., Indiana). On May 2, he introduced a bill that would not just increase the state’s budget for home care starting July 1 by 8%, but also require the Human Services Department to reimburse agencies for overtime expenses.

Struzzi’s bill would fix a discrepancy in Pennsylvania’s home-care regulations that allows some individuals to directly hire a caregiver who is still paid through Medicaid. That model, known as consumer-directed services for the elderly and disabled, has a built-in overtime rate. Struzzi did not respond to a request for comment.

Worker advocates want assurances that the added funding under Struzzi’s proposal will get to workers. Thanks to money from the federal American Rescue Plan Act, the state raised agencies’ hourly rate 8%.

But Therenthia Boddie, 66, a West Oak Lane resident who works 36 hours a week through an agency caring for her mother, never saw a raise in her $12.50 hourly wage.

Separately, State Sen. Maria Collett (D., Bucks and Montgomery) announced in April the formation of a bipartisan Home Care Caucus that will look for ways to increase funding for workers. Joining Collett in founding the caucus was State Sen. Joe Pittman, a Republican from Western Pennsylvania. Republicans control the state legislature.

“It’s difficult work, it is intimate work, it is necessary work, and they have to be valued for the work they are doing and paid appropriately for the work they are doing,” Collett said in an interview.

For now, though, there’s no letup in the number of investigations for the Philadelphia Labor Department office that enforces federal labor laws, district director James Cain said. The office’s territory covers Bucks, Chester, Delaware, Montgomery, and Philadelphia Counties, plus the state of Delaware.

“It’s still growing. The amount of work that we have, the violations that we’re finding, the violation amounts just continue to grow,” he said of home-care investigations. “Virtually every time we go out and do an investigation we find violations.”

One way to legally avoid overtime is to limit workers’ hours and spread the work among more workers, but that’s hard to do for two reasons.

Worker shortages are particularly acute in home care because of the relatively low pay of $12 to $14 an hour. Also, many of the caregivers are family members, and some seniors want only a family member to help them at home. Or adult children want to be the only caregiver. That can lead to huge amounts of overtime.

Allowing grown children to be caregivers for elderly parents is a good thing generally, experts said. “People would quit their job so they could take care of their mother,” said Diane Menio, executive director of Center for Advocacy for the Rights and Interests of Elders, a Philadelphia nonprofit.

But Menio said there’s potential for abuse in the form of hours being billed when workers are inattentive or providing no care.

When Penn Asian Senior Services, a Philadelphia nonprofit that offers home-care services known as PASSi, receives an authorization for a large number of hours — 70 to 80 hours is not unusual in a week — it’s often for a family caregiver who lives with the elderly person, chief executive Ken Yang said.

In those cases, PASSi’s coordinators work with the aides and the clients to ensure that they are receiving “effective and meaningful care” and that the aide is not overworked, Yang said, adding that PASSi is strict about paying proper overtime.

Sometimes agencies, including Successful Aging Care Net — an Upper Darby company ordered in March to pay $4.5 million in back wages and damages to 503 home health aides — even advertise for caregiver-client pairs.

Successful Aging’s home page said on May 5: “Apply to Provide Home Care to Your Loved One and GET PAID.”

That sets the stage for caregivers to act like free agents moving with their clients from one agency to the next, clocking as many as 16 hours every day for their client, as one caregiver did in a suit against an agency last year.

Three common illegal methods of avoiding paying workers overtime are misclassifying them as independent contractors, paying regular rates for overtime, and adjusting workers’ hourly rate depending on how many hours they work, Cain said.

If the worker is supposed to earn $12 an hour, but works 60 hours instead of 40, the employer might change the hourly rate, so the total still equals $480, or at least doesn’t include all the overtime pay, he said.

Lyons, of Community Legal Services, said it’s hard for home health workers to realize there’s a problem with their pay because they work in silos at clients’ houses. In other industries, workers figure out there’s a problem by talking to coworkers.

“Many home-care workers don’t know their rights are being violated or have a lot of confusion about what should be happening,” Lyons said. “There are so many of these schemes to get around paying overtime that are really well thought out and confusing. It’s not obvious to them.”

Falisa Hill, the home-care worker in East Mount Airy, said she worried that Red Lion, where she worked for three years through June 2019, wasn’t paying her correctly, but she didn’t know what to do about it.

That changed after she got a letter from the U.S. Department of Labor telling her that she would receive back wages and damages from another company she previously had worked for, One Helping Another Home Health Services LLC, in Philadelphia.

She thought the letter might be part of a scam, so she called the Labor Department to confirm it. She learned that One Helping Another had been ordered to pay a total of $371,039 in back wages and damages to Hill and 88 other caregivers in 2019. Hill recovered $9,718 in back wages from One Helping Another and $16,996 from Red Lion.

That’s when Hill told the Labor Department about problems she saw in her pay at Red Lion. Her pay stub would show some hours at time and a half, but she wasn’t actually getting overtime, because they would reduce her regular rate, she said. She never got more than her regular $13.50 an hour.

“It turns out they were doing things really underhanded and taking wages from people,” Hill said.

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.