For over 30 years, employers that have provided home care services have relied upon the “companionship services” exemption of the FLSA to avoid paying the federally required minimum wage and overtime to workers. However, the Department of Labor (“DOL”) recently issued a new rule that significantly changes the denial of overtime pay for domestic service workers and caregivers under the Fair Labor Standards Act. Beginning January 1, 2015, the new rule will narrow the exemption and will require many employers to pay minimum wage and overtime to direct care workers, including home health aides, personal care aides, and certified nursing assistants. Most significantly, the DOL is revising the definition of “companionship services” to narrow the duties that fall within the term and is prohibiting third party employers, such as home care agencies, from claiming the companionship or live-in exemptions. The major effect of this rule change is that more direct care workers will be protected by the FLSA’s minimum wage and overtime provisions.
According to the Fair Labor Standards Act, the term “companionship services” means 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. Under the new 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 it does not exceed 20 percent of the total hours worked per person and per workweek. The DOL opined that “companionship services” should be primarily focused on the provision of fellowship and protection, with an allowance for certain care services in order to support consumers in living independently in their homes. In effect, under the new rule, if a “companion” spends more than 20% of their weekly time performing services such as assisting with dressing, grooming, feeding, bathing, toileting, transferring, meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care, then the “companion exemption” is not applicable and the employee is entitled to both the minimum wage and overtime pay. The rule also limits household work to that benefitting the elderly person or person with an illness, injury, or disability. Household work that primarily benefits other members of the household, such as making dinner for another household member or doing laundry for everyone in the household, results in loss of the companionship exemption and thus the employee would be entitled to minimum wage and overtime pay for that workweek. However, it should be noted that the definition of companionship services does not include the provision of medically related services which are typically performed by trained personnel.
Although the new rule may be subject to some debate, we feel that the narrowing of the FLSA exemption is important. The DOL estimates that there are approximately 1.9 million home health care employees that are denied overtime pay by the “companion services” exemption. By “fixing the loophole”, the DOL is attempting to assure that these employees, many of which are paid at or just above minimum wage, will receive overtime. Moreover, it is clear that the rule change is directed at the home health care companies, and will have no effect for an individual hiring a home care companion for their sick family member.