01.16.2012 U.S. DOL Proposes Broad Changes in Its Interpretation of the Companionship and Domestic Worker Exemptions under the Fair Labor Standards Act
On December 27, 2011, the U.S. Department of Labor Wage and Hour Division (DOL) published a notice of a proposed rulemaking (NPRM) announcing drastic changes to DOL’s historic position that all employers of companionship and domestic service workers are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA) under the 1974 amendments to the Act. Given the longstanding nature of the policy, the law appeared settled, especially since the United States Supreme Court issued a unanimous decision in June 2007 deferring to DOL’s interpretation. As a result of the NPRM, DOL has placed the law in a state of flux and opened the door to possible new litigation regarding the rights of certain workers to minimum wage and overtime pay for duties thought to fall within the scope of companionship services.
What DOL Regulations Have Provided Since 1975
Pursuant to DOL’s original and longstanding interpretation of the 1974 FLSA amendments, live-out workers who provided companionship services for aged or infirm individuals have not been entitled to federal minimum wage and overtime pay, whether employed by a household, third party or jointly through a household and a third party. By comparison, live-in workers who performed such services have been entitled to receive federal minimum wage for all on-duty hours, as defined by written agreement. Whether live-in or live-out, all employers have been able to require companionship workers to perform household duties for the benefit of the whole family without losing the applicable exemption, provided the time spent on such duties did not exceed 20 percent of the total hours worked in the applicable workweek.
Drastic Changes Proposed
Here is how private households and third party employers of companionship and domestic service workers will be impacted if the proposed rule changes are implemented:
Households that directly employ a companionship worker will be able to claim the exemption from minimum wage and overtime, but only in workweeks in which at least 80 percent of the worker’s hours are devoted exclusively to companionship services, fellowship and protection for an aged or infirm individual who cannot care for himself or herself. The remaining 20 percent of the worker’s time must be limited to the performance of permissible “incidental” duties such as occasional dressing, grooming, toileting, driving to appointments, meal preparation, feeding, laundry, and bathing (under exigent circumstances). DOL proposes to exclude from the scope of permissible incidental work those duties that are regularly performed by personal care and home health aides such as medication management, taking vital signs, routine foot, skin and back care, and assistance with physical therapy, even when employed by a private household. Requiring a companionship worker to perform housekeeping, laundry or cooking duties for other members of the household, even if those duties consume less than 20 percent of the total hours worked, will deprive the household employer of the right to claim the FLSA exemption for all hours worked in the applicable workweek.
- Third party employers will be ineligible to claim the exemption for companionship and domestic service workers, even if such workers are employed jointly by private households. Henceforth, third party employers will be required to comply with DOL recordkeeping and “hours worked” rules with respect to such workers (rendering travel time between client visits after the start of the work day compensable, for example) and will be subject to DOL compliance audits and could be assessed sizeable back wages by the government. In individual and collective action lawsuits brought under the new rule, third party employers could face liability for unpaid FLSA wages as well as liquidated damages, attorney’s fees and costs. Although many home health agencies may go under as a result of these added labor and defense costs, the individual officers, directors and shareholders of these entities may nevertheless find themselves personally liable for FLSA judgments due to the Act’s expansive definition of the term “employer.”
The public has until February 25, 2012 to submit comments on the proposed rule. DOL estimates with respect to the economic impact of the proposed rule changes on small employers (including private households) are believed to be grossly understated, particularly given the limited payments for such services made available under public and private insurance.
If you have any questions about the proposed rule or its implications, please contact Mary Pivec at (202) 293-8128 firstname.lastname@example.org or Ashley Winsky at (757) 473-5316 or email@example.com.