Yesterday, the U.S. Department of Labor’s Wage & Hour Division announced its final rule regarding the application of minimum wage and overtime requirements to companionship services.  This rule — which was proposed nearly two years ago, has engendered a fair share of controversy as it dramatically redraws the playing field with respect to these workers at a time when more members of society are likely to need their services.  

As we noted at the time of the proposed rule’s publication, the most significant change will be a limitation of the exemption to companions employed only by the family or household using the services.  The Department’s regulations will prevent third party employers, such as in-home care staffing agencies, from claiming the exemption, even if the employee is jointly employed by the third party and the family or household.  The Department attempts to shield families and individuals, stating:  “the individual or member of the family or household, even if considered a joint employer, is still entitled to assert the exemption, if the employee meets all of the requirements of § 552.6.”

That, of course, would require the family or household to track the requirements of § 552.6, which is not as simple as it might seem.  The rule prohibits application of the exemption where the provision of care to the person exceeds 20% of the hours worked in the workweek.  Provision of care is defined as 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).”

Instead, the rule limits the application of the exemption to “fellowship” and “protection.”  Fellowship means “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 means “to be present with the person in his or her home or to accompany the person when outside of the home to monitor the person’s safety and well-being.”

Notably, any work performed by an employee that benefits the household as a whole (or any other household member) results in a loss of the exemption.  From WHD’s Fact Sheet:

Household work that primarily benefits other members of the household, such as making dinner for the entire family or doing laundry for another member of the household, results in a loss of the exemption, and the employee is entitled to minimum wage and overtime for that workweek.     

Presumably, WHD would exercise some reasonable discretion in its authority under this section, lest the accidental inclusion of someone else’s sock in a load of laundry result in overtime liability for a week of work.

Finally, the rule clarifies that the performance of medical-type services results in the loss of the exemption.  Again, from WHD’s Fact Sheet: 

The performance of any medically related services that typically require training results in a loss of the exemption during the workweek in which they are performed. In such a case, the minimum wage and overtime pay requirements apply to all hours worked during the workweek. 

Medically related services that typically require training by medical personnel include invasive or sterile procedures, or procedures that otherwise require the exercise of medical judgment; examples include but are not limited to catheter care, turning and repositioning, ostomy care, tube feeding, treating bruising or bedsores, and physical therapy.

At a time when individuals and families will need to rely increasingly upon home care services, the Department’s rule now all but requires them to become employers, complete with significant recordkeeping obligations.  As most real employers know, an FLSA exemption must be established by the employer.  Failure of individuals and families to keep records that demonstrate the application of the exemption will potentially expose them to significant liability.  [The Department, it should be noted, is careful to state that an individual, family, or household employing an exempt worker is not “required” to keep records, but that keeping the records would simply be a good business practice.]

Staffing agencies, registries, individuals, families, and households employing companionship services workers should take time to review the rule.  In its 358-page final rule, the Department estimates that it will take you approximately one hour to familiarize yourself with the FLSA’s requirements.  Luckily, the rule will not be effective until January 1, 2015.