Quick Hits

• The Wage and Hour Division is proposing to broaden its definition of companionship services to allow third-party employers to claim the exemption for their employees providing such services and broaden the definition of what comprises such services.
• Pending the new rule, the Wage and Hour Division has immediately suspended enforcement of the 2013 rule, including all ongoing and future investigations.
• Comments on the proposed rule must be received by the DOL by September 2, 2025.

From 1974 to 2013 (extended to 2015), employees performing companionship services via third-party home healthcare employers were exempt under the FLSA as regulated by the DOL’s then-regulations. 29 U.S.C. 213(a)(15) provides that any employee employed in “domestic service” or who “provide[s] companionship services for individuals” is exempt from the minimum wage and overtime requirements of the FLSA. In 2013, the DOL revised its regulations to narrow its interpretation and disallow third-party employers from relying on this domestic service exemption. In addition, it narrowed the definition of “companionship services.” Following litigation, the DOL started enforcing its revised regulations in 2015.

On July 25, 2025, the DOL issued Field Assistance Bulletin No. 2025-4 relating to “Home Care Enforcement Guidance,” stating that the WHD will immediately suspend all enforcement provisions included in the 2013 rule until the proposed rule is issued as a final rule.

The New Proposed Rule—Returning to the Old

The proposed rule seeks to return to the DOL’s 1974 – 2013 regulations classifying third-party home healthcare workers as exempt from minimum wage and overtime under the FLSA. Notably, in 2007, the Supreme Court of the United States, in Long Island Care at Home, Ltd. v. Coke, unanimously affirmed the validity of this provision and the DOL’s discretion to apply (or not) the companionship services and live-in exemptions to employees of home healthcare companies. In its holding, the Supreme Court relied on its Chevron v. Natural Resources Defense Council opinion, which held that courts should defer to a federal agency’s reasonable interpretation of an ambiguous law (known as the Chevron deference).

In 2013, the DOL narrowed the regulatory definition to exclude caregivers employed by a third-party agency. The Home Care Association of America sued the DOL, claiming the 2013 regulations were a wrongful extension of the FLSA’s protections and not a reasonable interpretation of the statute. At that time, the DOL took the position that it would not enforce the 2013 regulations until the outcome of the case. In 2015, the United States Court of Appeals for the D.C. Circuit affirmed the lower court’s decision, finding that the DOL had the discretion to apply (or not) these exemptions to third-party employers. The Supreme Court declined to hear the appeal. Accordingly, in November 2015, the DOL began enforcing the now-current regulations.

In the years following 2015, numerous home healthcare companies were caught unaware of the 180-degree shift in the DOL’s interpretation of the FLSA. They knew of the regulation and then that it was not being enforced, but not the enforcement starting in November 2015. Accordingly, employers were investigated and fined for failing to pay overtime, resulting in millions of dollars paid to employees as back wages. Home healthcare companies that serviced families on government-funded health insurance were not reimbursed by the government for the half-time overtime (which would not be in their contracts as they were exempt) and, thus, the employers had to pay employees (who often were caregiving for their own family member) more than they were paid for the work from the government, resulting in significant loss.

On June 28, 2024, the Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo, overruling the longstanding Chevron deference (which was relied upon in the 2015 litigation upholding the DOL’s 2013 regulation shift). As a result, the DOL’s proposed rule relies on the Loper Bright ruling and seeks comments as to whether, with respect to third-party employers, its 1974 interpretation of the FLSA’s domestic exemption is a “better reading of the FLSA’s statutory text.”

Comments on the proposed rule must be received by the DOL by September 2, 2025.

Suspension of the 2013 Rule

Pursuant to the July 25, 2025, field guidance, WHD investigators must “immediately discontinue enforcement of the 2013 final rule, including open cases.” WHD investigators may not investigate or enforce the 2013 final rule against third-party employers (including home care agencies) that rely on the domestic services exemption. Further, for purposes of WHD investigations, WHD investigators are to include in “exempt ‘companionship services’” “the provision of fellowship, protection, and care.”

WHD investigators also may not consider any limits on the time home care workers provide “care” when determining whether they are providing companionship services. “Care” may include “duties related to activities of daily living, such as dressing, grooming, feeding, bathing, toileting, and transferring; and instrumental activities of daily living, such as meal preparation, light housework, managing finances, assistance with taking medications, and arranging medical care.”

Finally, the DOL field guidance notes that services provided by trained personnel, such as registered nurses or licensed practical nurses, are not affected by the field assistance bulletin, and “are not to be considered exempt, even when providing ‘companionship services.’”

Key Takeaways

A return to the pre-2013 regulations is expected to have a significant impact on the home healthcare industry and the millions of home healthcare aides. The DOL believes expanding the regulations will “significantly reduce regulatory burden” for consumers and providers of home care services, which may “help to expand access to home care services.” It also noted the shortage of qualified workers in the home care industry, and the importance in having “continuity between home care workers and the individuals they help” (often a family member). The DOL further acknowledged that the 2013 rule resulted in increased costs for home care providers with additional recruiting, hiring, and training. It also noted that despite the DOL previously stating that the 2013 regulation would attract workers to the industry, it declined by 11.6 percent between 2013 and 2019. This reversal would also be expected to impact healthcare providers who rely on government-funded health insurance that does not reimburse for overtime and caps the hourly reimbursement rate.

Although the WHD investigators have been instructed to suspend enforcement of the 2013 rule, such enforcement position does not supersede the law as currently written. FAB 2025-4 specifically cautions employers that the WHD still reserves its right to enforce specific matters as explicitly deemed appropriate by the administrator or designee. Further, this enforcement and proposed rule are related to the FLSA—not state law—which may provide for more employee rights (e.g., overtime).