We were delighted to learn recently that CNN.com published a piece I had submitted on the unintended consequences of the Obama administration's intention to change the Fair Labor Standards Act regarding overtime for home care workers. Leaving aside for the moment the merits of the adminstration's proposal and the cautions I was raising as it is considered, it was a milestone for our agency to be on the national stage debating a piece of legislation this important.
Most of the reader comments indicated that people thought I was concerned about the home care agency's profits, but the fact is that the law, if passed, would not affect our profit by a single dollar. That is because Massachusetts already has an overtime provision, so we pay overtime to everyone who works more than 40 hours. What those readers do not realize is this: Families do not agree to pay the higher rates associated with overtime - in 99.9% of cases, they decline the opportunity to have the same caregiver if they have to pay the overtime premium.
Some readers responded that the agency should just pay the premium without raising the price to the client, but that is just another way of charging the client - you have to raise the rates slightly, on everyone for every hour, so that you can cover the overtime charges when they occur. One way or another, the money in an agency all comes from the prices we charge our clients, so saying we should pay "out of profit" still means we have to charge clients enough to cover the cost.
The result I see from this is that we have caregivers who want to work more than 40 hours and are willing to do it, but who do not have the chance. We, the agency, do not lose any money - we just send a different caregiver at the same rate and it doesn't cost us any more than it would have otherwise. But the caregiver who would otherwise have had a chance to earn more, now cannot. That seems to me to be a counter-intuitive but actual result of the regulation under consideration and I think that point should be at least considered in the debate.
