On September 17, 2013, the U.S. Department of Labor's Wage and Hour Division announced a final rule extending the Fair Labor Standards Act's minimum wage and overtime protections to cover certain direct care workers such as certified nursing assistants, home health aides, personal care aides, caregivers and other companions who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities. The new rule will take effect January 1, 2015.
 
Since 1974, the Fair Labor Standards Act ("FLSA") has covered workers who perform a "domestic service" – i.e., services of a household nature performed by a worker in or about a private home, whether permanent or temporary. This term includes services performed by companions, babysitters, cooks, waiters, maids, housekeepers, nannies, nurses, janitors, caretakers, handymen, gardeners, home health aides, personal care aides, and family chauffeurs, among others.  However, the FLSA also provides for a Companionship Services Exemption, exempting certain domestic service workers from minimum wage and overtime protection including, but not limited to, casual babysitters and domestic service workers employed to provide "companionship services" for an elderly person or a person with an illness, injury, or disability if they meet certain regulatory requirements described below.  
 
The amended regulations narrow the Companionship Services Exemption in two ways. First, they narrow the definition of "companionship services". Second, they provide that the exemption may only be claimed by the individual, family, or household using the services.
 
Under the revised regulations, the term "companionship services" means the provision of "fellowship" and "protection" for an elderly person or a person with an illness, injury, or disability who requires assistance in caring for himself or herself. "Companionship services" also include the provision of care, such as assisting a person with activities of daily living, provided that that such care requires no more than 20 percent of the employee's time worked for the person during the workweek. "Companionship services" do not include the performance of medically related services or household work not performed primarily for the elderly person or person with an illness, injury or disability who requires assistance, or household services.  Also, under the revised regulations, the Companionship Services Exemption is only available to the individual, family, or household solely or jointly employing the worker, and only if the companionship services duties test is met.  Third party employers of direct care workers, such as home care staffing agencies, are not permitted to claim this exemption, even when the employee performs companionship services and is jointly employed by the third party employer and the individual, family, or household using the services.  As such, third party employers must pay their workers the Federal minimum wage for all hours worked and overtime pay at time and one-half of the regular rate of pay for all hours worked over 40 in a workweek.