Home Health Agencies Challenge Wage Law

ALBANY, N.Y. (CN) - Home health care providers sued New York State, claiming a new law that requires them to pay workers in the New York Metro area a so-called "living wage" of at least $9 an hour plus benefits is unconstitutional.

Lead plaintiff Concerned Home Care Providers, a trade group for home health care agencies serving New York City, Long Island and Westchester County, sued the state, Gov. Andrew Cuomo, the state Department of Health and its commissioner on Feb. 28, two days before the first phase of the Wage Parity Law took effect.

The new public health law requires that home care agencies in Metro New York that directly or indirectly receive Medicaid payments pay their home health care aides according to New York City's living-wage law - or risk losing their Medicaid reimbursement. The law took effect on March 1 for home care agencies in New York City. Next year, it will apply to agencies in Nassau, Suffolk and Westchester counties.

This year, the law requires that home care agencies in New York City pay their workers 90 percent of the city's $10-an-hour living wage; in 2013, they must pay 95 percent and in 2014, 100 percent of New York City's living wage.

Agencies that do not provide health benefits to home care aides must pay a living-wage supplement of $1.50 an hour, phased in according to the same percentages as the hourly wage, according to the complaint in Albany County Court.

Home care agencies in Nassau, Suffolk and Westchester counties would be required to raise wages in a similar year-by-year manner starting next year.

Beginning in 2016, the complaint states, the agencies must pay 115 percent of the New York City living wage or whatever may be outlined in similar ordinances that may be in effect in the suburban counties.

New York City's living-wage law dates to 2002, according to the website Living Wage NYC. The legislation, designed to take into account the cost of living in an area, governs how employees of service contractors doing business with the city are paid.

Home health aides provide care to the elderly, convalescents and the disabled at home or in care facilities, changing bandages, applying topical medications, and offering personal care services such as bathing, dressing and grooming.

According to the state Department of Labor, it is one of New York's fastest-growing job opportunities, with employment prospects "very favorable" and annual average openings estimated at 6,120 through 2018. Median annual pay is about $21,570 - on par with a retail sales position, according to Department of Labor wage data.

In their complaint, the home care agencies object to the role New York City's living-wage law plays in the new compensation scheme.

"Instead of prescribing a specific amount as a compensation mandate ... the Wage Parity Law provides, in part, that New York City shall dictate the mandate for the home health care agencies operating in New York City and Nassau, Suffolk and Westchester counties," the complaint states.

And if New York City raises its living-wage minimum, home care agencies will be required to do the same, according to the complaint.

The plaintiffs also object to a provision of the phase-in that requires that by 2014 home care agencies in New York City pay wages that mirror the city's living-wage law or an hourly average patterned after "whatever collectively bargained agreement covers the greatest number of home care aides in New York City."

That's likely to mean SEIU 1199, the health care union that represents some 40,000 home care aides in New York City.

The complaint suggests the SEIU had a role in the creation of the new Wage Parity Law. It notes the union - but no home-care trade group - had a seat at the table of the Medicaid Redesign Team, a panel Gov. Cuomo appointed soon after he took office in January 2011. It was given just weeks to come up with recommendations to rein in the cost of state and federal health services programs for the poor.

The redesign group held hearings across the state and took testimony and written suggestions for ways to improve the program - some 4,000 ideas in all - which the Department of Health whittled to 274 and then to 79. Among those, according to the complaint, was Proposal No. 61, which was promoted by SEIU.

"Proposal No. 61 did not speak to cost savings, quality improvements or enhanced efficiencies," the complaint states. "Rather, Proposal No. 61 called for the state to require, as a condition of participation in the Medicaid program, home care agencies to comply with local living-wage laws in the geographic region in which they operate."

As the redesign group worked on final recommendations to submit to the governor, it jettisoned Proposal No. 61. But according to the complaint, the idea resurfaced as Cuomo submitted amendments to his initial 2011-12 executive budget and, as the Legislature approved the budget, became the new addition to state public health law known as the Wage Parity Law.

On top of mandating the new pay structure for home care aides, the state's 2011-12 budget reduced Medicaid spending (state and federal share) by $5.9 billion - including reductions of about $523 million to home care agencies, according to the complaint.

Joining Concerned Home Care Providers as plaintiffs are American Chore Services Inc. dba City Choice Home Care Services (in New York City); Community Home Care Referral Service Inc., Eagle Home Care LLC, Pella Care LLC and Platinum Home Care Inc., all of which provide services in New York City and Nassau County; and St. Mary's Healthcare System for Children, in New York City, which operates St. Mary's Hospital for Children, Extraordinary Home Care and St. Mary's Community Care Professionals.

The plaintiffs ask the court to find the Wage Parity Law an unconstitutional delegation of legislative authority from the Legislature to New York City; that the law effectively pre-empts Suffolk, Nassau and Westchester counties from enacting or not enacting local legislation on pay for home care aides; and that the law deprives home care agencies of their property interests by making them pay a greater portion of their revenue to home care aides in Metro New York.

The plaintiffs seek a permanent injunction against the state's enforcement of the new public health law.

They are represented by Philip Rosenberg, with Wilson, Elser, Moskowitz, Edelman & Dicker, of Albany.

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