February 2012

On December 27, 2011, the Department of Labor (DOL) issued a series of proposed regulatory changes that would drastically affect the compensation structure for in-home health care agencies. As a result of the proposed changes, companies providing in-home care services are almost certainly going to need to reclassify their in-home care employees as non-exempt from federal minimum wage and overtime laws.

How did we get here? More than 35 years ago the federal Fair Labor Standards Act (FLSA) was amended to provide minimum wage and overtime coverage to “domestic service” workers. At the same time as “domestic service” workers were covered by the FLSA, certain workers were made exempt – including babysitters and “companions” who care for the aged and infirm. Moreover, live-in domestic workers were made exempt from the FLSA’s overtime requirements. Since then, the in-home care industry has expanded and many agencies in this industry have looked to the companionship exemption to relieve them from the obligation to pay minimum wage and overtime to employees who are sent to their clients’ homes to perform care services.

What are the main proposed changes?

First, the DOL has proposed to clarify what it considers to be a “companion” and therefore exempt from the FLSA’s requirements. The DOL would limit companions solely to people who provide fellowship and protection to someone because their age and infirmity makes them unable to take care of themselves (“companionship services”). The person would not need to provide companionship services exclusively, but spend no more than 20% of the time performing incidental personal care services (occasional dressing, grooming and driving to appointments), so long as those services are performed as part and parcel of the fellowship and protection being provided.

Second, the proposed definition of a companion would be limited solely to someone who is directly employed by the family or household using the companionship services. That is to say, no companion employed by a third party agency, company, family or household would be exempt from FLSA coverage under the companion exemption.

Third, because in-home care service providers would no longer be exempt when employed by a third-party agency or otherwise, employers would be required to maintain all necessary records of the amount of time worked by these employees. Agreements regarding the number of hours to be worked during a day or week, etc. will not be sufficient. Staffing agencies and other employees with off-site employees will need to devise creative methods for accurately tracking the number of hours worked by these in-home care employees and maintaining their employees’ integrity in reporting their hours.

Comments on these proposals will be accepted until February 27, 2012. Wessels Sherman will be drafting a series of comments and concerns regarding the DOL’s proposals. Any employer who wishes to have input in the firm’s comments is welcome to contact any experienced Wessels Sherman attorney.