BILL ANALYSIS Ó
AB 782
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Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
782 (Dababneh) - As Amended May 14, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill would include "home care aide domestic referral
agencies" as a new licensure category in the Home Care Services
Consumer Protection Act overseen by the Department of Social
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Services (DSS).
FISCAL EFFECT:
1)One-time costs to DSS likely in excess of $100,000 (GF) to
revise regulations for the new licensure category.
2)One-time costs to DSS for IT changes potentially in excess of
$400,000 (GF) required by adding a new licensing category.
3)Ongoing administrative costs to DSS potentially in excess of
$1 million (GF) for workload associated with the 200 to 300
licensees, offset by the authority to charge initial and
renewal fees for licensure.
COMMENTS:
1)Purpose. According to the author, "Both the employer based
home care organization that employs workers and the home care
referral agency models that refer independent workers are
legitimate resources for clients seeking home care services.
Consumers deserve to know that both models are licensed and
are required to provide comparable consumer protections. It
is appropriate that consumers enjoy a consumer protection
standard applied to the whole industry, not just part of the
industry, to minimize 'bad actors.' In addition, the entire
industry, not just the employer based model, should have
access to the proverbial 'good housekeeping seal of approval'
accorded the employer based model. The referral based model
provides legitimate, cost effective and flexibility of choice
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to the consumer, while providing assurance that workers have
been pre-screened and meet standards. ?This [bill] will ensure
full breadth of industry consumer protection and competitive
equity for both models."
2)Background. Existing law establishes the Home Care Services
Consumer Protection Act (the Act), enacted pursuant to AB 1217
(Lowenthal) Chapter 790, Statutes of 2013, which provides for
the licensure and regulation of home care organizations and
established a registry of home care aides. Home care
organizations directly employ home care aides and are
responsible for ensuring that home care aides have received
background check clearances, have been screened for
tuberculosis, and have received a minimum level of training
prior to providing care to a client.
The Act, however, did not provide for the licensure of
domestic home care aide referral organizations (DHCAROs) which
are a form of employment agency that refers independent home
care aides to prospective clients, but do not directly employ
the home care aides. Under the DHCARO model, consumers
typically establish "trust accounts" to make payments to the
referral agency trust, in lieu of making two separate payments
to the home care aide and referral agency. The referral agency
then retains a fee and pays the home care aide's wages from
the trust account, providing the worker with an IRS Form 1099
as an independent contractor.
3)Arguments in Support. Supporters claim that the enactment of
the Act established a consumer protection framework for home
care agencies that directly employ workers, but it did not
include the "other half" of the industry: referral agencies.
According to the Network of Domestic Referral Agencies
(NODRA), "Because AB 1217 regulated only part of the in-home
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care industry, in the interest of sound public policy relative
to protecting frail, dependent and elderly adults who use
in-home care as an alternative to a facility, it makes sense
to ensure that the spectrum of the in-home care industry
should have to adhere to industry wide standards?Licensure
should be conferred to provide incentives for both agency
models to offer consumer protection, peace of mind and
services at competitive prices."
4)Arguments in Opposition. The California Association for Health
Services at Home (CAHSAH), states the following, "Domestic
Referral Agencies (DRAs), only refer workers to consumers and
inform them that they 'may' be the employer of that worker.
When a home care worker is referred to a consumer by a DRA,
and the worker earns more than $750 per quarter or $1,900 per
year, the consumer usually has household employer obligations
to the worker. Because the DRA acts as a fiscal intermediary,
collecting payments for services from the consumer and then
paying the worker, consumers are often unaware that an
employment relationship exists between them and the worker.
Without a clear understanding of their responsibilities,
unknowing and unprepared consumers cannot make an informed
decision regarding the services that they are to receive, and
are faced with legal and financial liabilities if they do not
fulfill their obligations as household employers."
5)Prior Legislation.
a) AB 1863 (Jones), 2014, was substantially similar to this
bill. It was held on the Senate Appropriations Committee's
Suspense File.
b) SB 855 (Committee on Budget and Fiscal Review), Chapter
29, Statutes of 2014, revised and recast provisions of the
Home Care Services Consumer Protection Act and delayed
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implementation one year until January 1, 2016.
c) AB 1217 (Lowenthal), Chapter 790, Statutes of 2013,
established the Home Care Services Consumer Protection Act.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081