Labor Dept. Proposal Harms Seniors, Workers, Franchise Small Business Owners, IFA Member Testifies

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FOR IMMEDIATE RELEASE


Contact:

Alisa Harrison, 202-628-8000

Matthew Haller, 202-662-0770

aharrison@franchise.org

mhaller@franchise.org

@franchising411


LABOR DEPT. PROPOSAL HARMS SENIORS, WORKERS, FRANCHISE SMALL BUSINESS OWNERS, IFA MEMBER TESTIFIES


WASHINGTON, March 20, 2012 – The U.S. Department of Labor’s proposed rule to eliminate the companion care exemption would negatively affect caregivers, seniors and small business owners, according to testimony delivered today to the House Education & Workforce Subcommittee on Workforce Protections by IFA member Wynn Esterline, a Home Instead Senior Care franchise owner in Adrian, Mich.


“It is very apparent that the Department of Labor analysis has substantially understated the negative impact of the proposed rule changes on our businesses, on our clients and on our employees,” said Esterline.


Esterline testified about his experience following the passage of a similar law in Michigan. The Michigan law has negatively impacted Esterline’s business, including the caregivers he employs and the seniors he serves, leading to decreased wages for workers, increased cost of care for seniors and more administrative work for his business as he seeks to comply with the new regulations.


Esterline’s testimony highlighted a Feb. 23, IFA cost-impact study demonstrating the DOL proposal will significantly raise the cost of care for seniors and negatively impact a growing sector of the economy responsible for creating thousands of new jobs.


“This is a solution to a problem that does not exist and will only harm those who need companion care the most, our nation’s seniors,” said IFA Vice President of Government Relations & Public Policy Jay Perron. “By requiring overtime pay for companion care workers, the Department of Labor is continuing its disappointing track record of imposing costly, burdensome and unnecessary regulations at a time when an increasing number of seniors are enjoying companion care as a cost-effective alternative to traditional care. We urge the DOL to respectfully withdraw its proposal in light of the impact this regulation will have on workers, small business owners and clients, including many seniors, in the companion care industry.”


According to a survey of franchise business owners accompanying the cost-impact study, 78 percent of companion care franchise business owners expect the DOL’s proposed rule changes to have a significant impact on their business, 69 percent expect a significant increase in costs and 75 percent expect to raise fees to their clients if the DOL rules are enacted. Several companion care franchise business owners voiced specific concerns regarding the potential impact DOL rules would have to their business if enacted.


Key findings of the report highlighted in the testimony show:


  • The average amount of overtime worked by companion care employees in these franchise agencies is three times greater than DOL’s estimate.

  • More than 4,000 franchise businesses and nearly 340,000 companion care workers in this sector may be negatively impacted by higher costs and less continuity of care if the DOL proposed rule changes if enacted.

  • DOL’s analysis understates other costs, such as not considering additional management costs for adding staff to avoid the cost of paying overtime.

  • The impact of price increases on customers, to cover additional overtime costs, was greatly underestimated.

  • Companion care agencies expect nearly one quarter (23%) of their clients will be forced to seek institutional care or “underground services” from unlicensed providers.

  • Many seniors and others who receive companion care services may be negatively impacted due to the higher fees and interruptions to the continuity of their care.


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About the International Franchise Association

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. Celebrating over 50 years of excellence, education and advocacy, IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising. Through its media awareness campaign highlighting the theme, Franchising: Building Local Businesses, One Opportunity at a Time, IFA promotes the economic impact of the more than 825,000 franchise establishments, which support nearly 18 million jobs and $2.1 trillion of economic output for the U.S. economy. IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law and business development.

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