The U.S. Department of Labor (DOL) recently issued a Final Rule narrowing the companionship exemption to the Fair Labor Standards Act (FLSA) and extending the FLSA’s minimum wage and overtime protections to in-home health care workers.  This rule will make FLSA protections applicable to nearly 2 million additional workers, including certified nurse assistants, home health aides and personal caregivers.

The U.S. Department of Labor (DOL) issued a Final Rule on September 17, 2013, updating its regulations (29 CFR Part 552) to narrow the companionship exemption to the Fair Labor Standards Act (FLSA) and to extend the FLSA’s minimum wage and overtime protections to many more in-home health care workers. 

Background

While the FLSA has generally provided overtime and minimum wage protections to most domestic service workers for almost 30 years, certain domestic service workers have been exempted from these protections.  Domestic service workers employed to provide “companionship services” are not required to be paid minimum wage or overtime.  Further, live-in domestic service workers are not required to be paid overtime.  This Final Rule makes three key changes to 1975 rules that govern these exemptions.  First, the tasks that comprise exempt companionship services are defined more narrowly and more clearly.  Second, employers must maintain accurate time records for live-in domestic service employees.  Third, the exemption for companionship services and live-in domestic service employees may only be claimed by individuals, families and households utilizing those services.  The exemption can no longer be claimed by third-party employers, such as home health care agencies. 

The new rule takes effect on January 1, 2015, giving the relevant workers, consumers, families, home care agencies and Medicaid programs that provide funding for home care work time to implement the necessary changes.  According to the DOL, these changes will apply to nearly 2 million new workers.

Companionship Services 

“Companionship services” is now defined to mean the provision of fellowship and protection for an elderly person or person with an illness, injury or disability who requires assistance in caring for himself or herself.  Examples of fellowship and protection may include conversation, reading, games, crafts, accompanying the person on walks, going on errands, going to appointments or attending social events with the person. 

Under the Final Rule, “companionship services” also includes the provision of “care” if the care is provided attendant to and in conjunction with the provision of fellowship and protection, and if the care does not exceed 20 percent of the total hours worked per person per workweek.  “Care” is defined in the Final Rule as assistance with activities of daily living (such as dressing, grooming, feeding, bathing, toileting and transferring) and assistance with instrumental activities of daily living which enable the person to live independently at home (such as meal preparation, driving, light housework, managing finances, assistance with taking medications and arranging medical care).  For workweeks when more than 20 percent of time is spent performing care, the employee is entitled to minimum wage and overtime.

Performance of household work that primarily benefits other members of the household and performance of medically related tasks both result in the loss of the companionship exemption, and require the employee to be paid minimum wage and overtime pay for that workweek.  The determination of whether a task is medically related is based on whether the service typically requires training.

Live-In Domestic Service Employees

Live-in domestic service workers who reside in the employer’s home permanently or for an extended period of time and are employed by an individual, family or household are exempt from overtime pay, though they must still be paid at least the federal minimum wage for all hours worked.  Employers may enter into agreements with workers to exclude certain time from compensable hours worked, such as sleep time, meal time and other periods of complete freedom from work.  The recordkeeping requirements for employers of live-in domestic service employees have been revised to require employers to maintain an accurate record of hours worked by the live-in domestic service workers.  The employee may be required to document these hours and submit the record to the employer.

Availability to Claim Exemption

Third-party employers of direct care workers are not permitted to claim either the exemption for companionship services or the exemption for live-in domestic service employees, even when the employee is jointly employed by the third-party employer and the individual, family or household using the services.  Only the individual, family or household utilizing the services of the worker may claim an applicable exemption.  Accordingly, third-party employers (such as home care staffing agencies) must pay their workers the federal minimum wage for all hours worked, and overtime pay at time and one-half of the regular rate of pay for all hours worked over 40 in a workweek, regardless of duties.  Further, minimum wage and overtime laws vary by state, so employers must also ensure compliance with state laws.  Currently, 15 states extend minimum wage and overtime protections to home care workers, while another six states and the District of Columbia require minimum wages for such workers.