The Fair Labor Standards Act (FLSA) has long provided an exemption for overtime wages to employees engaged in "companionship services," such as in-home caretakers who sleep at their patients' homes. Recently, however, the Department of Labor (DOL) released a new rule significantly limiting those employees eligible for the exemption status. The new rule, effective Jan. 1, 2015, will also entirely prohibit third-party employers, such as home care agencies, from taking advantage of the exemption. As a result, employees of these agencies will soon be entitled to the benefits of the FLSA's overtime provisions.
Limiting the Definition of "Companionship Services"
The DOL defines "companionship services" as "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." The new rule limits the classification of caretakers engaged in companionship services by specifying that such employees must also be engaged in "fellowship and protection" and that the "care" services must not exceed 20 percent of the employee's weekly work hours. "Fellowship and protection" are defined to include activities such as conversation, reading, games, crafts, accompanying the person on walks, going on errands and similar acts. The DOL defines "care" as activities such as dressing, grooming, feeding and bathing. In short, the new rule limits the companionship exemption to include only those employees truly engaged as social and emotional companions, rather than those aiding a patient in life's bare necessities. Therefore, employees engaged in the performance of medically related tasks, such as nurses, will no longer be eligible for the companionship exemption.
Additionally, the new rule specifies that the companionship services must aid one specific person by excluding "household work," such as cooking or doing laundry for everyone in a household. Employees, such as maids, who are engaged in these tasks will no longer be subject to the companionship exemption and will be entitled to overtime pay going forward.
Employers of Domestic Servants Must Now Maintain a Record of Hours Worked
If employed by an individual, family or household, live-in domestic servants will remain exempt from overtime pay, as long as they are paid at least the federal minimum wage for all hours worked. Furthermore, the FLSA will continue to exclude activities such as sleeping, eating and other off-hours periods from that time for which compensation is required. However, under the new rule, employers of domestic servants must now maintain a record of the hours their employees work.
Third-Party Employers Are Now Barred from Utilizing the Companionship Exemption
Perhaps the most wide-sweeping change brought about by the new rule is its effect on third-party employers of care workers. Under the rule, no third-party employer may take advantage of the exemption, regardless of whether an employee's duties would fit within the companionship services exemption. Therefore, businesses such as home care staffing agencies will soon be required to pay their employees overtime wages even if those employees are strictly engaged in companionship services. In order to comply with the new DOL rule, effective Jan. 1, 2015, employers with employees engaged in companionship services should review their current overtime policies and procedures related to those employees to determine what changes need to be implemented.