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A person that I've known for 20 years just recently started working where I live and now they are telling me that I can't remain friends and hang out with this person. That takes away my freedom of choice doesn't it? I just don't understand why people can't just let us live out lives as we see fit if we are of sound mind.

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I would agree that having a "friendship" with an aide you only know from the AL would be a no no. As said, you could be taken advantage of. Aides come and go.

But a friendship that started before you or friend became associated with the AL, I would question. I personally do not see why you can't still see each other out of the facility. Really, they may have some say as her employer but they have nothing to say about who you see.
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I'm from a small town and people often have their family members living where they work, they certainly can't force them to go no contact. There are always policies in place to protect both residents and staff from inappropriate liaisons but hopefully no one will fuss as long as your friend remains professional when on the job and you carry on your friendship discreetly.
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They want to be certain your friend does her job, without favoritism. No friendship while she is working, at all. Friendship needs to be outside her working hours.
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Are they allowing you the freedom to see anyone other than this long-time friend? If not, it may be covid related.
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I would ask the administrator of you ALF about their policy, and ask all questions you like about it. Request an appointment now. Especially if you and the caregiver were friends PRIOR to you entering the facility.
The reasons in general may be many. The forming of a "special friendship' may lead the elder to believe that they hold a special place in the heart of the caregiver, and this may inadvertently lead to their consciously or subconsciously expecting more care.
There is also a worry that special relationships can form where an elder comes to treasure a paid caregiver as much as or more than family; this may lead to changes in wills, where caregivers are left fund because of "special friendships" that begin to replace family in the mind of a perhaps vulnerable senior.
You may be told these reasons or others, but in general that is the thinking in some facilities.
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