ANCOR | National Issues

ANCOR Opposes DOL Proposed Changes to Companionship Exemption (March 19, 2001)

Mr. T. Michael Kerr, Administrator
Wage and Hour Division
Employment Standards Administration
U. S. Department of Labor
Attention: Fair Labor Standards Team, Room S-3516
200 Constitution Avenue NW.
Washington, DC 20210.

Re: RIN 1215-AA82,
PART 552--APPLICATION OF THE FAIR LABOR STANDARDS ACT TO DOMESTIC SERVICE

Dear Mr. Kerr:

The American Network of Community Options and Resources (ANCOR) is the national association of more than 700 private providers of supports and services to more than 150,000 people with mental retardation and other disabilities. ANCOR appreciates the opportunity to comment on the January 19, 2001 notice of proposed rulemaking to amend the Fair Labor Standards Act (FLSA) pertaining to the exemption for companionship services.

ANCOR has represented community agencies since 1970. A major focus of this organization is to help providers assure that they are complying with federal laws and regulations, including those associated with the Fair Labor Standards Act. The exemption for companionship services has played a critical role in enabling people with disabilities-particularly those with limited mental abilities-to remain in their own homes. The ability of human service agencies to serve as employers of companions has significantly enhanced this role.

While ANCOR strongly supports inclusion in regulation of an emphasis on fellowship, as proposed by the Department, we strongly oppose the revocation of third-party employment and any significant limitation of training for and duties of companions.

ANCOR has grave concerns regarding the Department's proposed regulation, cost estimates, and implications to national disability public policy, and our specific comments are attached. ANCOR's concerns and objections to the proposed rule are based primarily on the following beliefs:

· The Department has underestimated the potential impact on families as well as costs to state service delivery systems that are associated with the proposed rule changes.

· The proposed rule changes would devastate current disability public policy throughout the nation by eliminating a highly valued method of supporting people with disabilities.

· The proposed regulation inhibits implementation of recent court decisions, including the U.S. Supreme Court's decision in Olmstead, that require states to remove persons with disabilities from institutions and place them instead in home and community settings.

· The proposed regulation would add to the growing state waiting lists of people with mental retardation and other disabilities waiting for supports due to lack of State and Federal funding and lack of provider capacity.

· Elimination of the potential for third-party employment would discriminate against a class of people with mental disabilities who cannot perform complex functions of an employer, but who can demonstrate satisfaction or dissatisfaction with people who are working for them.

· In the absence of third-party employment, it is likely that many people now served under the companionship rules will require institutionalization, thereby increasing costs to both Federal, state and local government, and to people with disabilities and their families.

· This exemption is used primarily to reduce paperwork and complex calculations of the exact amount of overtime due each workweek, generally avoiding minimum wage and overtime requirements in only a technical sense.

· Congressional legislative history regarding this exemption is itself inconsistent.

· Given today's low unemployment rate across the country and current workforce shortage, the revocation of the third-party exemption will place additional strain on people with disabilities, families, third-party employers, and states in creating quality supports for people to remain in their own homes.

The proposed rule changes would devastate a highly valued method of supporting people with disabilities. ANCOR believes that the Department has significantly underestimated both the cost and the impact that these proposed changes would have on people with disabilities, their families and the state systems that support them. Elimination of the use of third-party employers will mean that many people will have to move from their own homes to more restrictive and more costly institutional settings. ANCOR's justification for this position is based partially on what has happened with the exemption over the last quarter century and our attached specific comments and recommendations.

The notice of proposed rule-making came as a surprise to ANCOR and its membership, and, we suspect, to other providers and families who depend upon this exemption to provide live-in companions and other companionship supports. Because the proposed rule was unexpected and was published one day prior to the inauguration of President Bush, ANCOR sent a letter February 20, 2001, to Secretary Chao requesting the new Administration to withdraw the proposed regulation. A copy of the February 20th letter to Secretary Chao is attached to ANCOR's specific comments.

This request was made pursuant to Chief of Staff Andrew Card's January 20th memorandum suspending regulatory action, including actions promulgating regulations, pending review by an agency head appointed by President Bush. ANCOR also requested, if Secretary Chao was not inclined to withdraw the proposed regulation, we suggested in the letter that the Department extend the comment period. Both the withdrawal and request for extending the comment period were requested in light of the regulatory review set forth in the Card memorandum and the new Administration's interest in sound regulatory practice and the avoidance of costly, burdensome, or unnecessary regulation.

ANCOR again asserts that the Department of Labor should carefully review the background for proposing this regulation, as well as the content of the proposed regulation issued on January 19th. It is ANCOR's belief that the proposed regulation should be withdrawn, giving the new Administration adequate time to properly research this issue.

ANCOR and its membership urge careful consideration of our attached comments and recommendations. ANCOR believes that the Department, after careful review of this issue and public comments, should not move forward with promulgating a final regulation until it undertakes a more accurate fiscal estimate of any changes as well as analysis of public policy implications for supports to people with mental retardation and other disabilities.

If you have any questions regarding ANCOR's comments to this NPRM, please do not hestitate to contact me at 703-642-6614.

Sincerely,

Suellen R. Galbraith
Director for Public Policy

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ANCOR Comments on FLSA Proposed Rule Change to
Domestic Service Exemption for Companionship Services (RIN 1215-AA82)

· Brief overview of the deinstitutionalization movement and its facilitation by companionship rules.

Since its founding, ANCOR members have been on the cutting edge in helping people with mental retardation and other developmental disabilities move from restrictive institutional settings to increasingly smaller living arrangements in the community. This did not happen overnight but occurred incrementally.

Since the 1970s, the field of mental retardation and developmental disabilities has promoted the provision of services in the least restrictive environment. Whenever possible, it is believed that this should be in the home of the person with a disability. Experience has demonstrated that the smaller the site and more individualized the supports, the greater the progress and satisfaction level of the person served. In increasing numbers, people with disabilities are living with roommates or by themselves with the aid of a companion. Not only does this promote self-dependence, it saves dollars spent on services-most of which are from public funds. If third-party employment is no longer permitted, it is likely that many people now served under the companionship rules will require institutionalization. It appears that the Department did not take the potentially higher costs of institutional care into account when estimates were made about the impact of these proposed changes; nor did it consider the impact on families. For older people with dementia and those with mental retardation or mental illness, third-party employment is often the key that enables them to remain at home.

In the 1980s, the Wage and Hour Division informed ANCOR about companionship rules. Our introduction to this remarkably flexible method of supporting people with disabilities coincided with growing efforts to maintain people in their own homes whenever possible. Advocates, self-advocates and professionals in the field urged providers to adopt this method of service delivery; and court monitors overseeing deinstitutionalization lawsuits required that the people moving to the community be placed in the smallest, most individualized living arrangements possible-In reply to: a home of their own. People with disabilities have flourished in these settings and a surprising number have been able to live with roommates or by themselves with the aid of a companion.

In fact, court decisions have promoted home and community-based supports. In conjunction with court decisions to deinstitutionalize persons with mental retardation and other disabilities in Oklahoma (for example, the Hissom case), court officials have urged the state to utilize companionship as a means of returning individuals to the community and fostering home-based supports. Oklahoma has developed a service delivery system that is heavily dependent upon the companionship exemption. The U.S. Supreme Court in its July,1999 Olmstead decision found that unnecessary institutionalization was discrimination and as such is prohibited under the Americans with Disabilities Act. The high court's decision recommended that states take affirmative steps to put the Olmstead holding into action. The court found that the standard of reasonable
modifications would be met if the state were to demonstrate that it had a comprehensive, effectively working plan for placing qualified persons with mental disabilities in less restrictive settings, and a waiting list that moved at a reasonable pace....

The DOL's proposed rule changes would devastate the disability field's most highly valued method of supporting people with disabilities.

· The Department has underestimated the potential impact on families as well as costs associated with the proposed rule changes.

ANCOR doubts that the Department took the potentially higher costs of institutional care into account when estimates were made about the impact of these proposed changes under Executive Order 12866, the Small Business Regulatory Enforcement Fairness Act, the Unfunded Mandates Reform Act, and others. (Please see our more specific comments at the end of this letter.) ANCOR believes that the Department has significantly underestimated not only the cost but the impact these proposed changes would have on people with disabilities, their families, employees and the state systems that support them.

In the absence of third-party employment, it is likely that many people now served under the companionship rules will require institutionalization. For older people with dementia or those with mental retardation, third-party employment is imperative to enable these individuals to remain at home. In the years since this exemption was passed, support at home has become recognized and promoted by individuals, families and government alike for its humanitarian aspects as well as its potential for reducing the costs of care. It is far preferred over institutional care by those who are knowledgeable about supports for people who are aging and disabled. Living at home is certainly preferred by persons with disabilities and their families.

· Companionship rules have provided a valuable support option and considerable flexibility, and are inconsistent with current public policy regarding supports for people with disabilities.

This exemption is used primarily to reduce paperwork and complex calculations of the exact amount of overtime due each workweek, generally avoiding minimum wage and overtime requirements in only a technical sense. In their current form, the regulations have permitted considerable and highly valued flexibility for individuals with disabilities and for families who need some support to keep a family member at home. The exemption enables employees to receive a guaranteed income, and permits employers to more accurately budget the amount that will be due in most workweeks. In today's economy and with the unemployment rate so low across the nation, the market prevails and people who are dissatisfied with their jobs quickly leave to find other work.

In 1974, far more people lived in institutions, particularly if they required a high level of personal care. There is now broad recognition that many services do not require skilled nursing, and highly trained personnel have been relieved from these kinds of duties, enabling people to live alone or

with one or two others. In addition, family members and employees (both with a minimal amount of technical training) are performing services once provided only by highly trained nursing staff. Changes in the duties of companions are consistent with changes in the types of support family members and other non-professionals now provide at home.

· Congressional legislative history itself is inconsistent.

There is inconsistency in the printed legislative history itself. If, as stated in Report language, Congress intended to exempt from coverage babysitters AND companions who were not regular bread-winners or responsible for their families' support, why then exempt companions from overtime? People who work in any job for 40 or more hours a week are likely to be regular bread winners or at least partially responsible for their families' support.

It is also inconsistent to have casual employment that includes overtime. Statutory language specifically exempts any employee employed on a casual basis in domestic service employment to provide babysitting services OR any employee employed in domestic service to provide companionship services. . . (Emphasis added.) The term casual in the statute applies only to babysitters, not to companions; and the phrase casual basis also is specifically not applied to companions as it is to babysitters in federal regulations Sec. 552.106. It is only babysitters who must be employed on a casual basis to be exempt. This seems consistent with an historic understanding that babysitters and companions were to be treated differently in this regard.

In addition, Senate Report No. 93-300, to accompany S.1861, The Fair Labor Standards Amendments, page 22, includes the statement: It is not, however, the Committee's intent to include within the term 'domestic service' such activities as babysitting and acting as a companion. This is stated despite the fact that the statute itself addresses people employed in domestic service to provide companionship. (Emphasis added.)

Inconsistencies in the Department statements also occur in the way some of the data are presented. It is ironic to note that on one hand the Department states that: more than 90 percent of the workers employed in occupational categories addressed by this rulemaking already receive wages at rates above the current federal minimum wage, and they typically work fewer than 40 hours per week [so that] the rule will not have a significant economic impact. On the other hand, under "Reasons Why Action is Being Considered," the Department states that: more recent experience indicates that the 'companionship services' exemption is being asserted in an expansive way for many more workers than we believe the Congress originally intended based on a careful analysis of the background and legislative history to the exemption. Vast numbers of workers employed in regular vocations to provide domestic services and care for individuals in their private homes are being excluded from FLSA coverage as a result of this misapplication of this exemption, which we believe is contrary to the intent and specific purposes of the 1974 FLSA amendments. The Department has used this conflicting logic to issue these proposed rule changes. ANCOR does not believe workers are being exploited.

When considered together, these statements make it difficult to tell exactly what the intention of Congress was, and what the impact of the exemption is today.

· Proposed changes are inconsistent with current public policy regarding supports for people with disabilities.

It is also difficult to tell exactly what the intention of Congress would be today in the context of the significant changes that have occurred in human service delivery since the exemption was passed. In 1974, far more people lived in institutions, particularly if they required a high level of personal care. The unfortunate history of institutional care is that the necessary services often were not provided.

Today family members and employees (both with a minimal amount of technical training) are performing services once provided only by highly trained nursing staff. Changes in the duties of companions are consistent with changes in the types of support family members and other non-professionals now provide at home. There is now broad recognition that many services do not require skilled nursing, and highly trained personnel have been relieved from these kinds of duties, enabling people to live at home with family members or on their own in the community. These changes must be acknowledged before any assumption is made about the intention of Congress as it might be in today's world.

· Impact of rescinding third-party employment will be harmful to individuals and families.

ANCOR believes that the Department has erred in its assessment in paragraph VIII Effects on Families, that these rule changes will not adversely affect the well-being of families. Many families have stated that they do not wish to serve as the employer of record for companions, but will have to either assume this role or place family members in institutional settings if third-party employment is no longer permitted. In either case, family life will be significantly disrupted. Older people with dementia who wish to continue to remain at home and people with mental retardation who do not have family members or guardians who are willing to serve as employers also may have to move from their homes to receive necessary supports. There is broad agreement in the U.S. that people who are aging or disabled should remain in their own homes as long as possible and that this is the most desirable place for them to live. Current rules governing companionship services support this public, advocacy and Congressional policy. The proposed rules do not.

· Compliance with the definition of domestic services should focus upon control of the home rather than who serves as employer of record.

It is not inconsistent to allow the companionship exemption to be applied to an entity that serves as the employer of record in behalf of the person in whose private home the work is being performed, as long as the private home is owned/ leased/controlled by the person who is aging or disabled (or by that individual's family or guardian). The exemption for companionship services in section 13(a)(15) of the FLSA is limited to employees who are domestic service employees. While domestic service was not defined by Congress in the Act, the Senate report reflects Congress' view that: the generally accepted meaning of domestic service relates to service of a household nature performed by an employee in or about a private home of the person by whom he or she is employed (Senate Report No. 93-690, p. 20.) The regulations mirror Congressional intent in defining domestic service employment as services of a household nature performed by an employee in or about a private home (permanent or temporary) of the person by whom he or she is employed (29 CFR 552.3). ANCOR believes that the housing in which supports are provided is the key distinction for companionship services. Companionship should be provided in the true home of the person who receives supports. Lodging houses and group homes controlled by an agency should not qualify.

Control over the provider should also be in the hands of the person who receives supports -- or that person's family or guardian - but joint employment by a third-party should not invalidate this exemption for individuals and families who are unable or unwilling to perform the duties associated with formal employment. This is quite different from the provision of services in a home controlled either by the employing agency or by the person who provides the direct support. When support is provided in a home controlled by an agency it is clear that the agency makes final decisions about both who lives and who works in the house. When support is provided in a home controlled by the direct support provider (like in traditional foster care), decisions are ultimately in the hands of the direct support provider. In the latter case, if the provider decides he or she no longer wishes to serve in this capacity it is the person with a disability who must move out of the residence and find another home. In contrast, when the home is owned/leased/controlled by the person who is aging or disabled, it is that person (or the family/guardian) who makes decisions about hiring and firing, and the employee must leave the home when a change is made. These are critical differences. When the home is controlled by the individual/family/guardian, employment clearly falls within the Department definition of joint employment found in 29 CFR part 791.2.

The living arrangements that will be the most severely affected involve employees often called paid roommates. These are people who live in the home of the person with a disability, sharing life and providing fellowship, care and protection for a mutually agreed upon flat fee. As noted in Sec. 785.23, which pertains to employees who live in housing controlled by a corporate employer: It is, of course, difficult to determine the exact hours worked under these circumstances and any reasonable agreement which takes into consideration all of the pertinent facts will be accepted. However, over the years, the facts found acceptable for an employee who resides on the employer's premises in a community living arrangement have become more and more rigid.

Today, supporting people who live in a group home owned/leased/controlled by a private or public agency now requires that the live-in employee be a full time employee, and under recent interpretations of a 1988 enforcement policy (disputed by some) even employees who make a group home their legal residence must work in the home a minimum of eight hours in each of five consecutive 24-hour periods. In contrast, when someone lives in the home of a person with a disability as a companion an agreement can be reached about the number of hours that will be considered work each week. These may be spread over seven days some weeks and involve fewer than eight hours in the home during the middle of the week, with more hours worked on weekends.

This enables these companions to hold a full-time job or attend school, which is consistent with the Department's description of Congressional intent. Under 785.23, up to eight hours each night can be considered uncompensated sleeptime. In companionship situations with people who truly live together, the companion might have a longer period of time at the end of the day without responsibility for the person he/she supports.

We believe that it was the intent of Congress to focus upon where services are provided-rather than who performs some of the technical functions of employer-as long as the person receiving support and/or that person's family/guardian has a role in deciding who serves as a companion and the types of functions performed in his or her behalf. The key is that the work be performed in the homes (permanent or temporary) under ultimate control of the person who receives support. This provides a far more stable environment for people who are aging or disabled and who wish to remain in the familiar environment of their own homes when staff changes are required. This provision has existed in the regulations for more than 25 years and should be maintained. Decisions about whether or not companionship services can be provided in a home should be a function of where the individual lives, not who serves as the employer of record.

In the field of developmental disabilities, decisions about the supports an individual is to receive are made jointly with the individual and family members (where this relationship exists), the provider and sometimes a representative of the funding entity. In 1993 and 1995, ANCOR's opposition centered on the fact that a formal requirement for joint employment would pose a legal risk to the very people with disabilities whom this provision is designed to assist and protect-particularly where wage and hour violations of the requirements for companions occur. ANCOR added that: People who are disabled to the degree that they require support in their homes--and their families-should not be burdened with the added responsibility required by joint employment and should be able to make arrangements for companions through a third party. It was the legal responsibilities implied by these earlier proposed changes, rather than the intent that the individual receiving supports have some control over decision-making, to which ANCOR objected. This is consistent with our current position.

Joint employment by a third party should not invalidate this exemption for individuals and families who are unable or unwilling to perform the duties associated with formal employment.

· Benefits associated with third-party employment.

Revocation of this provision would be especially unfortunate for people who own their own homes but have no family involved to assist with the duties conferred on employers and who are unwilling or unable to perform (because of the very nature of their disability) the necessary functions themselves. These people can, however, demonstrate satisfaction or dissatisfaction with people who are working for them, and can generally participate in decisions about the services they need, thereby acting as joint employers. They can also exercise choice in terms of the agency they wish to hire to serve as the third-party employer.

In many states, individuals are not permitted to request criminal background checks that agencies can obtain, leaving them in a far more vulnerable position when hiring companions themselves. In addition, Medicaid payments (which pay for much home care) cannot be made directly to individuals but must go through a third party agency to pay for care. Today, many states are urging providers to become fiscal intermediaries as a method of placing greater control in the hands of the person served, distancing the role of the agencies, but protecting funds of people who cannot control them themselves, and assuring some oversight of the way those services are performed.

The provision that permits third-party employment is a tremendous benefit to families who are reluctant or unable to take on the technical responsibilities and burdens associated with employment. Employer responsibilities are complex. A third-party employer can assume responsibility for conducting criminal background checks, training, issuing paychecks, making Social Security and withholding tax payments, issuing W-2 forms in order to protect the individuals who need support. It can not be overestimated the extent to which the provision in regulation that permits third-party employment is a great benefit both to the individuals who require some care and protection and to their families who are hesitant to take on the technical responsibilities associated with employment.

Third-party employment is also a benefit to the employees, particularly where they receive other benefits like added liability insurance protection and paid health insurance which individuals and their families are unlikely to provide. Where third-party employers are not currently paying for all of the hours a companion is in the home, and where states are unwilling to increase reimbursement levels to comply with requirements of new rules, some agencies will have to reduce employee benefits like paid health insurance and personal leave time in order to obtain the funding necessary to comply.

· Negative impact particularly disruptive for people with limited mental abilities.

The Department's proposal to amend the regulations pertaining to employment by a third party would be particularly unfortunate for people-whether aged or disabled-who have a mental infirmity (language used in Sec. 552.6 which we believe is a population that Congress intended to cover). It is difficult, if not impossible, for such individuals to perform the functions of an employer but they can, with support, remain in the family home or within their own homes if some other entity becomes the employer of record with responsibility for all payroll duties. A third-party employer can assume responsibility for issuing paychecks, making Social Security and withholding tax payments, issuing W-2 forms, etc. -- and for other employer responsibilities like performing background checks to protect the individuals who need support. Today, many states are urging providers to become fiscal intermediaries to place greater control in the hands of the person served, distancing the role of the agencies, but protecting funds of people who cannot control them themselves.

We suspect that the major reason why rules for paying other types of domestic service employees are violated so extensively in the U.S. is because of the reluctance of perfectly competent people to participate in complex requirements mandated for employers. Permission to use third-party employment assures that there is compliance with these requirements.

· Revocation of third-party employment discriminates against people with limited mental abilities.

ANCOR strongly believes that revocation of third-party employment discriminates against people with limited mental abilities who cannot perform the complex functions of an employer. In view of their vulnerability, these individuals are protected against discrimination by the Americans with Disabilities Act. Their wishes should be accommodated and third-party employment continued so that they can remain in their own homes. Elimination of the potential for third-party employment would discriminate against a large class of people with mental disabilities who cannot perform complex functions of an employer, but who can demonstrate satisfaction or dissatisfaction with people who are working for them. In view of their vulnerability, people with limited mental abilities are protected against discrimination by the Americans with Disabilities Act.

· Opposition to 1993 and 1995 proposed rule changes was related to the burden formal employment would place on people with limited mental abilities.

In 1993 and again in 1995, when the Department published a proposal to amend this exemption so that it would not apply unless the person receiving the companionship services acted, alone or jointly, as an employer, ANCOR was one of the few number of entities that submitted comments. While ANCOR agrees that companionship must occur in a home owned/leased/controlled by the person who requires supports (or that individual's family/representative), the Association argued that: It should not matter whether a companion is hired directly by the person who needs supports, or is hired by a third party who assumes the employment responsibilities. Certainly in the field of developmental disabilities decisions about the supports an individual is to receive are made jointly with the individual and family members (where this relationship exists), the provider and sometimes a representative of the funding entity. Fundamental to this is the understanding that when the individual who receives supports does not get along with the companion a change will be made. Control by the person who receives supports implies joint employment, no matter who pays for those services. Our major argument in 1993 and 1995 centered on the fact that a formal requirement for joint employment would pose "a legal risk to the very people with disabilities whom this provision is designed to assist and protect - particularly where wage and hour violations of the requirements for companions occur." We added that: People who are disabled to the degree that they require support in their homes-and their families-should not be burdened with the added responsibility required by joint employment and should be able to make arrangements for companions through a third party.

It was the legal responsibilities implied by these earlier proposed changes, rather than the intent that the individual receiving supports have some control over decision-making, to which ANCOR objected. This is consistent with our current position.

· Greatest advantage of the exemption is in the flexibility it provides.

The greatest advantage offered by companionship services is not the exemption per se, but the flexibility it provides, especially for a category of employees often called paid roommates. These are people who live in the home of the person with a disability, sharing life and providing fellowship, care and protection for a mutually agreed upon flat fee. As noted in Sec. 785.23, which pertains to employees who live in housing controlled by a corporate employer: It is, of course, difficult to determine the exact hours worked under these circumstances and any reasonable agreement which takes into consideration all of the pertinent facts will be accepted. However, over the years, the facts found acceptable for an employee who resides on the employer's premises have become more and more rigid. Today, supporting people who live in a group home owned/leased/controlled by a private or public agency now requires that the live-in employee be a full time employee, and under recent interpretations of a 1988 enforcement policy (disputed by some) even employees who make a group home their legal residence must work in the home a minimum of eight hours in each of five consecutive 24-hour periods. In contrast, when someone lives in the home of a person with a disability as a companion an agreement can be reached about the number of hours that will be considered work each week. These may be spread over seven days some weeks and involve fewer than eight hours in the home during the middle of the week, with more hours worked on weekends. This enables these companions to hold a full-time job or attend school. Under 785.23, up to eight hours each night can be considered uncompensated sleeptime. In companionship situations with people who truly live together, the companion might have a longer period of time at the end of the day without responsibility for the person he/she supports. The burden of paying for all of the hours required under 785.23 would significantly increase the cost of services to individuals, families and/or the government entity who is supporting the provision of in-home services. It should not be necessary to pay a "roommate" for all of the hours he or she is in the home when the person supported is there, even if the two interact, watch TV together or sit in a room together reading. Life together takes on a far more natural flow.

These types of arrangements have become valued employment for many people, particularly for students or others who have responsibilities such as other employment during the day and who are provided with free room and board and some additional income to meet personal expenses. Under companionship services as they currently exist, both the employee and the third-party employer can budget these arrangements more readily and avoid the tedious recordkeeping that is associated with typical group home support. It is the flexibility provided in the companionship exemption rather than the exemption itself that encourages its use. As data have shown, most of the people so employed make more than the minimum wage for hours actually worked.

· Routine household, personal care and medical duties are not inconsistent with and can coincide with companionship services.

ANCOR believes that it is possible to provide companionship in association with other duties. They need not be mutually exclusive. ANCOR readily agrees that the term companion implies a relationship that goes well beyond the performance of routine household, personal care and medical duties and that-although not mentioned specifically in statutory language, the term companion itself implies fellowship. We agree that: the person being served or assisted [should] interact on a close personal basis, for a significant percentage of the time, [for] the companionship services exemption [to] be applicable. And further that: Whatever the specific activity, it must involve personal interaction between the in-home care provider and the [person supported] in order for the proposed companionship services exemption to apply. We agree also that: Of course, the precise nature of what activities constitute fellowship will vary, depending upon the needs, capabilities, and interests of the [person supported].

Some household work like vacuuming and dusting is appropriate under companionship. Certainly performance of these duties in behalf of other family members (which we have understood has been the Department's definition of "general household work") could reasonably be prohibited altogether. However, it is important to be certain that a limited amount of such tasks that are related to the care of the individual continue to be permitted. If such duties took an inordinate amount of time, the family or agency should hire someone else to perform housekeeping functions, as some ANCOR members have done when supporting people who cannot perform these tasks themselves. A limitation on the percentage of time spent on these tasks is appropriate but potentially involves some recordkeeping.

· Duties and level of training of companions today is generally similar to that of family members and friends of people with disabilities.

While ANCOR supports the Department's focus on fellowship and protection, we do not believe that this need be to the exclusion of the performance of routine personal care or even some medically related duties. After all, statutory language talks about people who are unable to care for themselves. This implies that a care component is involved and provided as it might be by family members of a person who is unable to care for him- or herself.

While it was not intended that the statute exclude trained personnel such as nurses, whether registered or practical, from the protections of the Act, it is not inappropriate for companions to have some specialized training. As the various needs of individuals differ, so will the care component. Many medically related duties are now performed by family members that were previously performed only by medical professionals such as RNs or LPNs. It is now recognized that such a high level of training is not required.

There are not enough licensed professionals to perform these services in family homes on a daily basis, and such a high level of training is simply not necessary. Most of the training in the field of developmental disabilities, at least, deals more with broad human service information in areas like developmental disabilities itself, and issues such as life safety, rather than in complexities of medical procedures. When compared to the training required for RN or LPN certification (currently used as the standard in regulation and mentioned in report language), states are requiring far less for companions. Consider the amount of time spent: 60 hours represents just one and one-half weeks of training and 75 hours is not quite two weeks, which is very different from the amount of training required for RNs and LPNs.

Once again, training is not dissimilar to that obtained by families who are confronted by disability. In this era of concern for personal safety it does not seem unreasonable to require some training prior to providing "care and protection" to a person who is elderly or disabled. The statutory exclusion of RNs and LPNs implies that some training is appropriate in order to provide the care and protection required.

Medication administration and some other medically related tasks are appropriate for companions. It is difficult to consider the issue of medically related training without considering the changes that have occurred and the roles now assumed by family members and other non-medical personnel. ANCOR debates whether this role actually includes medication management, the phrase used by the Department; rather it is medication administration.

Oversight of when and which medications should be taken can be required where an individual receiving support cannot be relied upon to remember when to take medication or how many of which types of pills. Family members are also helping people with diabetes who have visual limitations and cannot read blood sugar levels, and are helping draw insulin into a syringe and sometimes are even giving injections. Assistance with range-of-motion exercises certainly requires a lower level of expertise, but these are all functions that family members perform and which enable people who are elderly or disabled to remain more physically active and self-dependent. It is no longer assumed that people must remain in a skilled care setting in order to receive these kinds of medically related support, or that those who provide these types of supports must be highly trained.

SPECIFIC ANCOR RECOMMENDATIONS:

1. These rules should not be published until a more accurate estimate of their impact can be adequately analyzed.

--In regard to Executive Order 12866:

The Department estimates that the proposed rule would not have an annual effect on the economy of $100 million or more or produce a significant economic or budgetary impact on affected entities. However, as noted above, a greater effect might occur if third-party employment is no longer permitted and some of the people who now live at home were required to move to an institutional setting at higher cost. This could create a major increase in costs of the Federal/State Medicaid program. ANCOR has no way of estimating how many people who are currently supported in their own homes would be institutionalized if the proposed rule changes are promulgated. We suggest that this rule not be finalized until the Department can get a more accurate accounting of actual potential costs.

--Potential involvement of the Small Business Regulatory Enforcement Fairness Act:

The Department has determined (based on 1997 data) that 16,486 (or 98%) agencies in the home health care field alone had revenues (in the case of tax exempt firms) or receipts (in the case of non-exempt firms) of less than $10,000,000 and therefore qualify as small businesses. For purposes of this analysis, the Department therefore assumed that most of the entities potentially affected by this proposal would likely meet the applicable criteria defining a small business in the home health care industry. It seems logical to then assert that the Small Business Regulatory Enforcement Fairness Act might also be affected if the proposed changes result in an annual total effect on the economy of $100 million or more. This could occur if people currently supported under companionship services have to be institutionalized when families are no longer permitted to rely on third-party employers that are small business entities.

--Potential involvement of the Unfunded Mandates Reform Act:

For similar reasons, ANCOR believes the Unfunded Mandates Reform Act of 1995 could be affected if this rule includes a Federal mandate that results in increased expenditures by State, local, and tribal governments in the aggregate of more than $100 million. Increased expenditures by the private sector of more than $100 million are also possible should families no longer be permitted to rely on third-party employers and decide instead to institutionalize family members who have used companionship services.

--Potential involvement of Executive Order 13132 (Federalism):

Once again, we believe that the Department may have underestimated the economic effects under the rule, and that the proposed changes could have substantial direct effects on the States. This will occur if State Medicaid budgets are affected by the numbers of people who will move to institutional settings because they or their families/guardians are unable or unwilling to become direct employers and fiscal intermediaries are considered to be joint employers.

--The affect on the Regulatory Flexibility Act:

The Regulatory Flexibility Act might also be affected should large numbers of elderly and disabled people now living at home be required to move to institutional settings. Certainly the flexibility provided to families by the proposed changes would be curtailed to a great degree; and that afforded to agencies who place companions in personal homes would be significantly limited.

--Potential Impact of Reporting, Recordkeeping, and Other Compliance Requirements of the Rule:

The Department states that this proposed rule contains no reporting, recordkeeping or other compliance requirements. While it is true that all employers covered by the FLSA must comply with its minimum wage, overtime pay, child labor, and generally applicable recordkeeping requirements with respect to each employee who is not otherwise exempt from the FLSA's requirements; individuals and families who have been able to rely on third-party agencies to employ companions will now have to themselves become small employers and begin complying with a substantial system of record and reporting requirements.

In addition, implementation of proposed requirements that would limit the amount of time that could be spent on personal care and housekeeping would significantly increase paperwork for human service organizations, as would the substitution of compensation based on hourly rather than fixed wages. This flexibility is the most valued part of the companionship exemption to many and it would be lost if the proposed rule is promulgated.

--Differing Compliance or Reporting Requirements for Small Entities:

While reporting requirements would not be different for small entities, to the extent that individuals and families that have no experience as employers would have to become small employers, this proposed rule would potentially create considerable disruption. Those who are willing to become direct employers would have to familiarize themselves with many federal reporting and compliance requirements if third-party employment of companions is prohibited.

--Clarification, Consolidation, and Simplification of Compliance and Reporting Requirements:

We disagree that minimum wage and overtime rules are: relatively simple and easy to comply with, particularly if (1) recordkeeping is increased, (2) hourly pay must be used instead of salaries, (3) rigid sleeptime requirements are applied, and (4) families are required to become employers of record. While no particular order or form of records would be required, employers would have to develop such forms themselves and institute methods of reporting.

2. ANCOR opposes the addition of language to Sec. 552.3 Domestic service employment, and Sec. 552.109 Third party employment, which would exclude third-party employment.

The justification for this position appears within our extensive discussion above.

3. ANCOR is opposed to the extension of Sec. 552.109(c) to companions.

It is ANCOR's belief that application of FLSA Sec. 13(b)(21) and 29 CFR Sec. 552.109(c) appears to apply to domestic service employees other than companions. It has been the ANCOR understanding that, since the exemption for companions is, statutorily, an exemption from both minimum wage and overtime, 29 CFR Sec. 552.109(c) does not apply to companions but to other types of domestic service employees. In addition, Section 13(b)(21) is sufficiently removed in the Act from the section exempting companionship services from minimum wage and overtime requirements to imply that it does not apply to companions. As noted earlier, to apply it to people who share a home with a person with a disability would eliminate some of the most valued types of personal relationships through in-home support.

4. The Department's Alternative 1 for Sec. 552.6 Companionship services for the aged or infirm, is the most appropriate.

It is appropriate to assume that fellowship occurs in conjunction with the provision of personal chores like bathing and grooming. It is difficult to maintain records of exactly how much time is spent on each type of duty, and the very act of having to maintain such records to demonstrate that the companion is remaining within the limitation on exempt duties could be troublesome and detract from the fellowship that is sought. In fact, the major reason why agencies seem to use this exemption is not to avoid paying the minimum wage but to avoid the burdensome recordkeeping and computation of the exact amount of overtime due each workweek that accompanies work in community living arrangements owned/leased/ controlled by an agency.

A limit of 20 percent on household work directly related to the individual's care is also reasonable. This represents eight hours in a 40-hour workweek and 12 hours in a 60-hour workweek, which should be more than adequate for someone employed as a companion to offer fellowship and care to perform household functions in behalf of the person who receives support.

Routine household, personal care and medical duties are not inconsistent with and can coincide with companionship services. These duties need not be mutually exclusive. The term companion implies a relationship that goes well beyond the performance of routine household, personal care and medical duties and -- although not mentioned specifically in statutory language, the term companion itself implies fellowship. It is consistent with this term that: "the person being served or assisted [should] interact on a close personal basis, for a significant percentage of the time, [for] the companionship services exemption [to] be applicable." And further that: Whatever the specific activity, it must involve personal interaction between the in-home care provider and the [person supported] in order for the proposed companionship services exemption to apply.

The performance of household work in behalf of other family members (which we have understood has been the Department's definition of "general household work") could reasonably be prohibited altogether.

The performance of routine personal care and even some medically-related duties should also be permitted under companionship services. This is consistent with the statutory language that talks about people who are "unable to care for themselves." This implies that a care component is involved and provided as it might be by family members of a person who is unable to care for him- or herself.

It is not inappropriate for companions to have some specialized training. As the various needs of individuals differ, so will the care component. Many medically related duties are now performed by family members that were previously performed only by medical professionals such as RNs or LPNs. It is now recognized that such a high level of training is not required. Most of the training in the field of developmental disabilities deals primarily with broad human service information in areas like developmental disabilities itself, and issues such as life safety, rather than in complexities of medical procedures. When compared to the training required for RN or LPN certification (currently used as the standard in regulation and mentioned in report language), states are requiring far less for companions. Sixty hours represents just one and one-half weeks of training and 75 hours is not quite two weeks, which is very different from the amount of training required for RNs and LPNs. Training is not dissimilar to that obtained by families who are confronted by disability, it is just more concentrated for people who wish to work as companions. In this era of concern for personal safety it does not seem unreasonable to require some training prior to providing "care and protection" to a person who is elderly or disabled. The statutory exclusion of RNs and LPNs implies that a lesser amount of training is appropriate in order to provide the care and protection required of a companion.

Medication administration and some other medically-related tasks are appropriate for companions. (It should be noted that this is quite different from "medication management,"the phrase used by the Department.) Oversight of when and which medications should be taken can be required where an individual receiving support cannot be relied upon to remember when to take medication or how many of which types of pills. Family members are also helping people with diabetes who have visual limitations and cannot read blood sugar levels, and are helping draw insulin into a syringe and sometimes are even giving injections. Assistance with range-of-motion exercises certainly requires a lower level of expertise, but these are all functions that family members perform -- some on a daily basis -- and which enable people who are elderly or disabled to remain more physically active and self-dependent. It is no longer assumed that people must remain in a skilled care setting in order to receive these kinds of medically related support, or that those who provide these types of supports must be highly trained. These are appropriate tasks for people who serve as companions.

5. ANCOR opposes adoption of Alternative 2.

Alternative 2 for Sec. 552.6 would require the type of daily recordkeeping that ANCOR believes would detract from the fellowship the Department seeks to focus upon.

6. ANCOR opposes adoption of Alternative 3.

Alternative 3 for Sec. 552.6 also requires extensive daily recordkeeping and would probably limit the use of this exemption for people with significant physical limitations who require a high level of personal assistance services. It would also change a relationship during periods when an individual is recovering from an illness or injury where more time has to be devoted to personal care duties.

ANCOR appreciates having this opportunity to comment in behalf of people with disabilities, their families and guardians who are seeking to enable those with disabilities to remain at home. We hope you will give each of our comments close consideration and urge you to maintain flexibility currently permitted under rules implementing Section 13(a)(15) of the Fair Labor Standards Act. They have significantly contributed to national policies that support home care over institutionalization.