The U.S. Department of Labor’s final rule extending the minimum wage and overtime requirements to most home care workers becomes effective January 1, 2015.

On September 17, the U.S. Department of Labor (DOL) announced major rule changes that will require most home care workers to be paid the minimum wage and overtime under the Fair Labor Standards Act (FLSA).1 The changes will take effect on January 1, 2015.

As was the case under the old rule, home care workers who provide “companionship services” are still exempt from the FLSA, but the new rule changes the pool of workers that will be entitled to minimum wage and overtime by more narrowly defining the previously broad and open-ended exemption for “companionship services.” The new rule also expressly prevents third-party employers, such as home care staffing agencies, from claiming exemptions for “companionship services.” The result is that most home care workers will now be covered by the FLSA, including the minimum wage and overtime requirements.

Summary of the New Definitions

Under the new rule, “companionship services” will now be defined as “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.” The new rule defines “fellowship” as “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 to social events.” “Protection” is defined as “to be present with the person in [his or her] home, or to accompany the person when outside of the home, and to monitor the person’s safety and well-being.”

The exemption for “companionship services” will now include only the performance of “care” services if that service is “provided attendant to and in conjunction with the provision of fellowship and protection, and does not exceed 20 percent of the total hours worked per consumer and per workweek.” The provision of “care” will now mean assisting the person with activities of daily living, “such as dressing, grooming, feeding, bathing, toileting and transferring,” and instrumental activities of daily living, “which are tasks that enable a person to live independently at home, such as meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care.”

“Companionship services” will not include household work that is performed primarily for the benefit of other members of the household or medically related services that are typically performed by trained personnel. Thus, only household work that benefits the elderly or disabled persons is eligible for the exemption.

The final rule also revises requirements for employers of live-in domestic service workers who are employed to live with the individuals they provide services for. In a continuation of the old rule, if employed directly by the individuals or their families, these live-in domestic service workers will be required to be paid the minimum wage but will also continue to be exempt from the overtime requirement. By contrast, as noted below, if the domestic service worker is employed by a home care staffing agency, the staffing agency can no longer take advantage of the overtime exemption.

No Exemption for Third-Party Employers

The change that will affect most workers and employers is the express elimination of the exemption for third-party employers of direct care workers (such as home care staffing agencies). These employers will no longer be permitted to claim an exemption for any companionship services or to claim the overtime exemption for live-in domestic service workers. As a result, all home care workers employed by a third-party employer will be required to be paid the minimum wage and overtime.

Practical Guidance

The rule changes issued for home care workers will become effective on January 1, 2015, giving employers of home care workers more than 15 months to prepare for these changes. During this lead time, third-party employers that provide “companionship services” or live-in domestic service workers to their customers should review their existing policies and procedures to ensure that they will be in conformity with the new rule’s requirements, including providing minimum wage and overtime to affected employees as well as updating any applicable payroll procedures and recordkeeping protocols. To facilitate the transition, employers should also develop a communications plan to explain the forthcoming pay changes to affected employees in advance of the effective date of the new rule.