Supreme Court Declines to Take Appeal on Home Care Rule; True Victory for Home Care Workers

CAG Homecare worker2The Supreme Court has ended the legal battle against the recently won rights of home care workers to critical overtime and minimum wage benefits.

On Monday, the high court decided not to hear an appeal from several home care industry groups that argued the Department of Labor (DOL)’s expansion of minimum wage and overtime benefits to home care workers was an illegal and unjustified change to the Fair Labor Standards Act (FLSA). The court’s decision not to hear the case is a victory for home care workers, and an end to the court case Home Care Association of America v. Weil, which sought to take away minimum wage and overtime rights from home care workers.

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New DOL Regulation Will Help Savers Protect Themselves

Senior woman cookingIf you are saving for retirement or plan to do so in the future, a new regulation will help protect your hard-earned savings!

On Wednesday, the Department of Labor updated the definition of retirement investment advice and closed loopholes that permit some retirement investors to steer clients into investment products that aren’t in their best interest. Now, anyone offering individualized retirement investment advice must act under a fiduciary standard, meaning they must provide impartial advice in their client’s best interest. It is good news for Latinos and other small savers, as they are least able to absorb the shock of increased fees and decreased returns often seen with conflicted retirement investment advice.

Many Americans struggle to save enough for retirement. Latinos have the smallest retirement account balances of any group and often lack access to employer-sponsored retirement savings plans. They are also much younger than the general population, and as more enter the workforce—expected to comprise 18.6% of the labor force by 2020—it is essential that the retirement savings environment ensures the security of their nest egg and minimizes retirement account losses due to high fees and low returns on investments.

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Home Care Workers Are One Step Closer to Receiving the Protections They Deserve

By Stephanie Román, Economic Policy Analyst, NCLR

CAG-Homecare-worker2_smallLast Friday the U.S. Court of Appeals for the District of Columbia issued a decision that puts nearly two million home care workers in the United States one step closer to having critical minimum wage and overtime protections. The court’s decision upheld the Department of Labor’s (DOL) home care rule, providing home care workers with overtime and minimum wage protections, as a legal and justified change to the Federal Labor Standards Act (FLSA) after it was challenged by home care business associations. DOL appealed the lower court’s ruling in favor of the home care business associations, thus taking the case to the U.S. Court of Appeals for D.C. The department is now moving forward with its current policy of encouraging states and employers to take the necessary steps toward implementing the rule.

The court’s decision means that for the first time in U.S. history, home care workers will be recognized as workers worthy of the same basic overtime and minimum wage protections extended to all other workers. Friday’s decision comes after the Department of Labor’s January rule to address poverty-level wages and a lack of overtime compensation for home care workers was challenged in court by home care business associations.

The rule in question corrects a decades-long injustice of excluding home care workers from basic employment protections. Home care workers were left out of the 1974 update to the FLSA that expanded labor protections to domestic workers and have struggled to gain recognition and protections for their work. Home care workers provide individual care to elderly adults and assist people with disabilities with daily living tasks.

These workers are low-paid, predominately immigrant women and women of color. Poverty-level wages undermine the economic security of workers and their families and do not equate with the value that home care workers provide. Home care workers make an average of $9.70 per hour. NCLR has produced fact sheets and blog posts on these critical yet vulnerable workers.

The home care rule’s overtime and minimum wage protections are critical to current and future workers as the industry grows each year. In fact, home care has experienced a huge transformation over the years into a multibillion-dollar industry that is projected to keep growing as the U.S. population ages. This field has extremely high turnover rates. Investment in workers would help stabilize the workforce and make home care industry jobs the kind that will attract and retain dedicated workers.

Given Friday’s victory for the home care rule, DOL’s enforcement timeline for the rule depends on the legal actions taken by the businesses that challenged the department. Even as another challenge from the home care business associations may come, the U.S. Court of Appeals’ unanimous decision is heartening and should serve as a clear signal for states to act quickly and work to implement these basic protections for two million hardworking home care workers.

Join the Fight to Fix Overtime!

A new proposed overtime rule would benefit 2.1 million Latinos, but it won’t happen without you. It’s up to us now to show our support for overtime and tell Secretary Perez to make fixing overtime a reality. Visit fixovertime.org to calculate what the change could mean for your take home pay.

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From Conflict of Interest to Best Interest

By Amelia Collins, Legislative Fellow, NCLR

AgingLGBT_blogpic_4Thirty-eight million working-age households have nothing saved for retirement.

This retirement savings deficit is worse for communities of color, with 62 percent of Black and 69 percent of Hispanic households with no money in a retirement account. For those who do save, their account balances are disproportionately low: three in four Black households and four in five Latino households aged 25–64 have less than $10,000 in retirement savings, compared to one in two White households.

With too many Americans already struggling to save enough for retirement, any loss in retirement funds jeopardizes retirees’ financial security. One of the biggest drains on retirement savings is “conflicted advice.” Conflicted advice occurs when those giving advice can steer clients into higher-cost products to boost their own bottom line, even if those products aren’t the best for the client’s savings. Unfortunately, current regulations allow many who market themselves as financial advisers to make these conflicted recommendations. Back in April the Department of Labor (DOL) proposed an update to prevent conflicted advice on retirement investments. The proposed rule would ensure anyone providing investment advice for a fee—whether a registered investment advisor or a broker—will suggest products that are in the best interest of their client.

The DOL regulation would also strengthen the financial security of Hispanics, who are already disadvantaged in the retirement space. Barriers already prevent Latinos from saving enough for retirement, making it all the more imperative that the advice they receive helps them improve savings and bolster account balances.

Workers of color have less access to retirement savings vehicles compared to Whites: 38 percent of Latino employees, 54 percent of Black employees, and 54 percent of Asian employees aged 25–64 work for an employer that sponsors a retirement plan, compared to 62 percent of White employees.

Further, as Latinos tend to have lower balances in their retirement accounts, higher fees represent a higher proportion of their retirement savings absorbed by advisers and financial institutions. This makes Latinos even more vulnerable to financial instability. Quality standards for advice provided for a fee are especially important to Latino and other low-income consumers to ensure the advice they receive is truly in their best interest.

As part of the regulation process, the DOL asked groups for their input on the proposal. NCLR weighed in this week in support of the proposed rule and applauds the department’s commitment to a strong, workable rule. This Tuesday, the Senate Committee on Health, Education, Labor, and Pensions Subcommittee on Employment and Workplace Safety held a hearing on the proposal. Department of Labor Secretary Thomas Perez defended the rule, saying “as long as we don’t lose sight of the North Star—an enforceable best-interests commitment—we are very flexible on the question of how to get this work done.”