Beginning on January 1, 2015, the Fair Labor Standards Act will extend its minimum wage and overtime protections to nearly all home health care workers. This changes the playing field for an estimated two million workers who provide home care assistance to the elderly, disabled and infirm. This rule also represents a sea change for companies providing home care services, which practically speaking, will require them to overhaul many of their employment practices.

Under this updated regulation, home health care workers will no longer qualify under the FLSA’s “companionship services” exemption if they provide “medically-related services for which training is typically a prerequisite.” Only those workers who provide “primarily fellowship and protection” to the elderly, disabled and infirm will still qualify for the companionship exemption. In other words, this exemption will only apply to a very small minority of individuals, and it certainly no longer applies to individuals employed by home care services employers.

The precise economic implications of this new rule remain uncertain. But an aging population of baby boomers means that home health care services will be in increasingly high demand and the industry will have to adapt both economically and legally to comply with the DOL’s new rule. The economic concerns for the industry include the potential for margin compression and the possibility that home health care providers will have to sacrifice consistent service providers in favor of rotating multi-person teams to avoid overtime costs. The DOL deliberately included an implementation window, allowing companies more than a year until the rule goes into effect. At a minimum, home health care companies must use that time to ensure that once the rule takes effect, their wage and hour practices will be FLSA-compliant, including by:

• Revising existing wage and hour policies, including by implementing policies and procedures that ensure home care workers do not work unauthorized overtime, and that disciplinary action is taken against those workers who do work unauthorized overtime.

• Upgrading payroll systems to ensure accurate tracking of time for overtime purposes.

• Revising employee handbooks and other required employee notices to clearly articulate that home care workers are overtime-eligible.

• Revising existing job postings to ensure that applicants understand they will be overtime-eligible.

Home health care service providers should seek the advice of counsel to ensure that their employment practices are in step with the FLSA before this rule goes into effect. Failure to comply with this new rule could subject companies to class actions seeking double damages and attorneys’ fees. For more information on this new rule, visit the home health care section of the DOL website here.