Home care agencies in one state could soon lose the right to prevent caregivers from poaching their clients, a move opponents worry would devastate providers.
A provision recently added to the Connecticut state budget bans noncompete contracts and similar agreements in “homemaker, companion or home health services.” If passed, the legislation would remove home care agencies’ ability to restrict where caregivers could work or for whom they could provide services.
As a result, home care agencies would have no recourse if a caregiver and client decided to cut the provider out of the equation, according to Angelo Spinola, shareholder and attorney at international labor and employment law firm Littler Mendelson.
“The issue is that caregivers — the way the language reads — would be able to take a client that the agency introduced to the caregiver offline for a direct-hire-type relationship,” Spinola told Home Health Care News.
More than 130 home care agencies have united to form a coalition, which is represented by Littler Mendelson, to fight the legislation. Broadly, the coalition of providers are concerned caregivers will be able to steal their clients, leading to the overall quality of care in Connecticut declining.
“It’s very anti-business, [and] it’s shortsighted in that it will hurt consumers,” Spinola said.
For example, if a client were to hire a caregiver directly, that client wouldn’t have anyone to provide backup care if the caregiver is out sick.
While the Connecticut Senate has approved the budget, Gov. Ned Lamont can still veto line items, such as the provision. If Gov. Lamont — a Democrat — signs the budget without vetoing the provision, it will become law.
“We’re encouraging all the agencies and home care workers in the state to voice their concerns,” said Spinola.
Noncompetes and other restrictive contracts have become increasingly popular among home care agencies in recent years in an effort to retain caregivers.
While few industry experts recommend the use of noncompete contracts, which often prevent employees from working for competitors, many advise agencies to use nonsolicit agreements and direct-hire provisions.
Both are seen as a way to protect an agency’s relationship with its clients without restricting caregivers’ mobility.
Nonsolicit agreements restrict caregivers from taking clients or employees with them if they leave, while direct-hire provisions are client agreements that require customers to pay a fee, usually $5,000 to $10,000, if they hire an agency caregiver directly.
However, if this legislation — which Spinola says is the first of its kind — passes in Connecticut, such contracts would become void and unenforceable.
“This is the only law we are aware of and would be the strictest of its kind with these type of restrictions on agencies,” Spinola said.