On September 17, 2013, the U.S. Department of Labor announced a final rule extending the Fair Labor Standards Act's (FLSA) minimum wage and overtime protections to direct care workers. Direct care workers include home health aides, personal care aides and certified nursing assistants. This rule change will apply to nearly two million direct care workers employed by home care agencies and other third parties. Direct care workers employed only by the individual he or she assists or by that person's family or household may be exempt from FLSA protection, depending on the character of the duties performed. Furthermore, this new rule also has a separate application with regards to live-in domestic service workers, which are individuals who provide services of a household nature and reside either permanently or for extended periods of time on the employer's premises.

FLSA Exemption for "Companionship Services"

Under current law, direct care workers are classified under the same "companionship services" category as babysitters, and they are exempt from FLSA coverage. This new rule creates a differentiation between direct care workers and those workers who solely provide "companionship services," such as babysitters and domestic service workers. It provides that direct care workers employed by home care agencies or third parties will no longer be exempt from FLSA coverage. Only workers employed directly by an individual, family or household who provide "companionship services" will remain exempt from minimum wage and overtime coverage. Companionship services are defined by the FLSA as fellowship and protection for a person who requires assistance, which includes activities such as providing company, visiting and engaging in hobbies. The employee can provide care in conjunction with companionship activities to a limited extent. The provision of care includes assisting the individual with activities of daily living, such as dressing and bathing, as well as tasks that include meal preparation and light housework. However, this type of care cannot exceed 20 percent of the total weekly hours worked by the companion. If the household work exceeds this 20-percent limit, then the FLSA's minimum wage and overtime requirements will apply to all hours worked by the individual. The companionship exemption will not apply if the aide provides medically related services that typically require training as a prerequisite.

Live-in Domestic Service Workers Under the FLSA

Domestic service workers who reside in the employer's home and are employed by an individual, family or household must be paid the federal minimum wage for all hours worked, but they will be exempt from overtime pay. In order to be considered a "live-in domestic service worker," the worker must reside on the employer's premises either permanently or for an extended period of time. An employee who lives, works and sleeps on the employer's premises seven days per week is said to reside permanently therein. A worker is said to reside for an extended period of time on the employer's premises when he or she lives, works and sleeps there for five consecutive days or for a period consisting of 120 hours or more per week. Employees who do not meet this definition must be paid the federal minimum wage, as well as overtime for all hours worked over 40 in a week.

Conflicting State Minimum Wage Laws - How the New Rule Will Apply

While the state minimum wage requirements are controlled individually by the states themselves, federal minimum wage law will supersede where the federal minimum is greater than the state minimum wage. The federal minimum wage is $7.25, yet according to industry officials, many home care workers already receive greater than the federal minimum but often do not receive time-and-a-half overtime pay when they work for more than 40 hours per week. Specifically, six states, including Arizona, California, Nebraska, North Dakota, South Dakota and Ohio, as well as the District of Columbia, provide minimum wage but no overtime protection. However, 15 states, including Colorado, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New York, Pennsylvania, Washington and Wisconsin, already extend state minimum wage and overtime protections to direct care workers, so these new rules will have less of an impact in those jurisdictions.

When Are the Revised Regulations Effective?

The rule will take effect on January 1, 2015, giving families that require the use of home health care aides, as well as state Medicaid programs, adequate time to prepare for the cost increase.

What Are the Ramifications of Non-Compliance?

When a violation of the FLSA occurs, the Department of Labor can request payment of any back wages due to employees and can bring suit for an equal amount in liquidated damages. Willful violators of the FLSA may be criminally prosecuted and fined up to $10,000 per violation and upon a second violation may face prison time.

Employers of direct care workers may want to carefully review their job descriptions and wage-and-hour policies prior to the effective date of this statute.