The Fair Labor Standards Act (FLSA) requires employers to pay covered, non-exempt employees the minimum wage for all
hours worked and overtime for all hours worked in excess of 40. Congress expanded the protections of the FLSA in 1974 to
“domestic service” workers—i.e. those who provide household services in a private home—but simultaneously exempted
workers providing “companionship services” to persons with illnesses, injuries, or disabilities and live-in domestic service
workers. These exemptions were intended to exempt casual babysitters and individuals who provided companionship services
from the FLSA, but were not targeted at trained medical personnel.
Over the last few decades, the home care industry has undergone a dramatic transformation. Today, more and more people
prefer to receive health care services from direct care workers (such as certified nursing assistants, home health aides,
personal care aides, and caregivers) at home rather than in nursing homes or other institutions. This is due, at least in part, to
the rising cost of institutional care. As a result, the demand for direct care workers significantly increased and, over time, the
workforce became increasingly professional. Despite the growth and professionalization of home care work, direct care workers remain among the lowest
paid in the service industry. Due to the changes in the industry and because the traditional exemptions for companionship services and live-in domestic
service workers no longer align with Congress’s intent behind the exemptions, the Department of Labor revised its regulations last month.
The most noteworthy change is that home health care agencies—who staff nearly all of the two million direct care workers in the United States—can no
longer claim the FLSA exemptions for companionship services and live-in domestic service employees. These exemptions may now only be claimed by
individuals, families, or households. In other words, home health care agencies must now pay at least the federal minimum wage and overtime pay to all
workers employed to perform domestic service employment, including those who perform companionship services or are live-in domestic service
employees. Additionally, the revised rules: (1) allow employers to request that live-in workers track their hours; (2) narrow the definition of the
“companionship services” for individuals, families, and households who can still claim the exemption; and (3) clarify that those who perform medically-
related services, for which training is typically a prerequisite, cannot be classified as companionship workers. Affected employers must implement these
changes starting January 1, 2015.
These changes are significant because the various contours of the FLSA now apply to roughly two million direct care workers, making it more expensive for
many employers to employ these workers. Moreover, FLSA violations often carry high exposure for employers given that hundreds or even thousands of
employees may choose to “opt-in” to the suit. Not only are these cases expensive to litigate, but they also allow aggrieved employees to collect unpaid
wages, liquidated damages, costs, and attorneys’ fees. Based on the available remedies, these cases are exceptionally attractive to plaintiff’s attorneys
and the number of FLSA suits has tripled over the past decade.
Although every wage-and-hour issue is different and there are several intricacies of the Department of Labor’s new ruling, home health care agencies must
be aware of these new changes. We recommend that affected employers: (1) re-examine their minimum wage, overtime, and record-keeping policies; (2)
implement the appropriate changes into their employment policies; and (3) inform their employees of the changes. If you have any questions regarding
FLSA, or any other issue touching employment practices, please contact a member of our Employment Practices Liability Group.