Executive Summary: Claims by home care workers for unpaid overtime have risen steadily since the U.S. Department of Labor, in 2015, eliminated the federal overtime exemptions that allowed agency employers essentially to pay no overtime wage premiums. This has greatly affected agency employers In New York, who are increasingly seeing class action suits being filed against them. It has also affected individuals, families and households in New York who hire home care workers directly, especially when the home care worker is an agency-employer worker who is continued for extra hours in a workweek. Since 2010, the New York Domestic Workers Bill of Rights has required "direct-hire" employers of home care workers to pay overtime at time and one half the worker's regular rate. When an agency worker is continued for extra hours by an individual, family or household, both can be held liable for unpaid overtime on all hours worked over 40 in a workweek, regardless of who scheduled the hours. Beyond the agency and individual, family, or household, others who have the power, whether or not exercised, to hire, employ, or pay the worker, such as a child or relative who takes care of a client's affairs or an attorney acting under a power of attorney or as a legal guardian, conservator, or trustee, are also at risk of being held liable.

NYS Domestic Workers Bill of Rights Act (DWBR). Since November 29, 2010, New York State has had one of the nation's strongest laws favoring domestic workers, including home care workers. Direct-hire home care employers are required to (i) pay no less than the NYS minimum rate of pay ($10.50 per hour in NYC effective December 31, 2016) (ii) pay overtime at one and one-half the employee's regular rate; (iii) provide three paid "rest" days per year after the first 12 months of employment (with a reduced number for those who worked less than 30 hours per week in the prior 12 months); and (iv) provide pay for accrued and unused rest days on termination for any reason. They also must provide workers with one-day-off-in-seven and pay at time and one half for any hours workers voluntarily work on this day off, whether or not the worker has worked more than 40 hours in the workweek. Workers in NYC also receive two additional paid sick days per year. The DWBR benefits undocumented immigrants the same as any other workers, and both can recover damages amounting to double the worker's unpaid wages and overtime going back six years, as well as interest and attorneys' fees.

USDOL's Final Rule on the Application of the Fair Labor Standards Act to Domestic Service. Since October 13, 2015, the FLSA's "companionship exemption" from federal minimum wage and overtime rules and "live-in" exemption from overtime rules were narrowed to make more home care workers eligible for straight time and overtime. The newly-revised companionship exemption can only be used by direct hire employers, not home care agencies, and only if the home care worker's duties are restricted to (i) "fellowship," meaning "to engage the person in social, physical, and mental activities, such as conversation, reading, games, crafts, or accompanying the person on walks, on errands, to appointments, or social events," or (ii) "protection," meaning "being present with the person in their home, or to accompany the person when outside of the home to monitor the person's safety and well-being." The worker cannot spend more than 20% of a workweek's hours assisting with "activities of daily living and instrumental activities of daily living," and cannot perform any "medically related services" or "general household services." However, even this limited exemption is unavailable in New York due to the DWBR.

The Final Rule also narrowed the FLSA's "live-in" domestic worker exemption from overtime to exclude agency-employed workers and to apply only to direct-hire workers. A direct-hire employer need not pay a live-in worker overtime wages if the worker (i) provide services in a private residence, (ii) is afforded a private room with bed, dresser, desk and lamp; and (iii) resides on the employer's premises on a "permanent basis" (works and sleeps at the employer's premises and has no home of his or her own) or for "extended periods of time" (works and sleeps at the employer's premises for at least five days a week (120 hours or more) or resides there for five consecutive nights or days at a time. Also, under federal law, the family need only pay a live-in worker for 13 hours worked during each 24-hour shift, deducting, where appropriate, (i) 8 hours unpaid sleep-time provided the worker "usually enjoys at least five hours of uninterrupted sleep," and (ii) 3 hours meal and break time, provided it is duty-free. The live-in exemption requires that the direct-hire employer and the worker enter into a written employment agreement, and the employer must keep records showing the exact number of hours worked and pay for all hours actually worked.

In New York, however, where thousands of home care workers work 24-hour shifts but do not qualify as "live-ins" under New York law, the law is unclear about how many hours worked they must be paid and when overtime must be paid. In 2010, the NYS DOL wrote an opinion letter implying that the federal rules apply. However, two NYS Supreme Courts, one in Kings County and the other in New York County, have since ruled that 24-hour shift workers who do not reside permanently in a client's home, qualifying as "residential employees" under New York law, must receive 24 hours wages for a 24-hour shift. Based on that rule, they must also be paid overtime at time and one-half their regular rate beginning during their second shift of the workweek, when they exceed 40 hours for the workweek. The Kings County decision is currently on appeal to the Appellate Division, 2nd Department.

How Do You Limit Your Overtime Liability Under Federal and NYS Law?

  1. Minimize joint liability exposure to overtime – If you are a potential joint employer, as the child, relative or attorney-in fact under a power of attorney or the legal guardian, conservator or trustee who has the power, whether or not exercised, to hire, employ or pay a home care worker, have your authority reviewed to see if your joint liability exposure can be eliminated or minimized.
  2. Enter into a written employment agreement with the worker to reduce overtime – Enter into a written employment agreement with the worker that states the worker's standard wage rate and overtime rate, shifts the burden of not reporting claimed underpayments to the worker, and enhances your credibility on a claim if no report is made. Also include an alternative dispute resolution provision compelling wage and hour claims to arbitration.
  3. Use wage and hour law to reduce overtime – Begin a worker's workweek on a day and time other than the calendar week at 12:00 AM if that will reduce overtime; use different wage rates for different types of hours worked to reduce the worker's regular rate for the workweek; use a "fluctuating workweek" method or another method for calculating wages, where appropriate, to further reduce overtime, and reduce the normal workweek to 35 hours, allowing for unpaid one hour meal breaks each day, which will let you add hours up to 40 in the work week without paying overtime.
  4. Acknowledge overtime risks your own actions create – Recognize that employing the same worker for a client as an agency provides runs a substantial risk of creating joint employment overtime liability for all hours worked over 40, regardless of who scheduled them, and that the client, the agency, and you can all be sued for damages.