KEY TAKEAWAYS:

• The Department of Labor’s Wage and Hour Division has proposed revisions to the Fair Labor Standards Act that would exempt domestic service workers who provide companionship services from both minimum wage and overtime requirements

• The proposed revisions would also exempt live-in domestic service workers from overtime requirements

• The proposed change would not override any applicable state law regarding minimum wage and overtime

The Fair Labor Standards Act (FLSA) in 2013 issued a rule that prohibited third-party employers such as home care providers from claiming either the minimum wage or overtime exemption, thus narrowing the definition of exempt “companionship services.”

On July 2, 2025, the Department of Labor (DOL) Wage and Hour Division issued a proposed rule to revert to the FLSA’s 1975 provisions that exempted domestic service employees who provided companion services from both minimum wage and overtime requirements and exempted live-in domestic service employees from overtime requirements.[1]

This new proposed rule is in response to the Department of Labor’s concerns that the 2013 rule “might not reflect the best interpretation of the FLSA and might discourage essential companionship services.” The DOL accepted comments on the proposed rule until September 2.

FLSA Minimum Wage and Overtime Exemptions History

The FLSA was amended in 1974 to extend coverage to all domestic service workers, including those employed by private households or small companies not previously covered by the FLSA.[2] However, at the same time, Congress created exemptions for two categories of such employees. First, there was an added exemption from both the minimum wage and overtime requirements for employees providing companionship services for individuals unable to care for themselves.[3] Second, there was an exemption from the overtime requirements for “any employee who is employed in domestic service in a household and who resides in such household.”[4] In 1975, the FLSA was officially applied to domestic service employment at 29 CFR part 552, including these exemption provisions.[5]

In 2007, these provisions were unanimously upheld by the Supreme Court of the United States in Long Island Care at Home, LTD, v. Coke, 551 U.S. 158 (2007). There, the court held that because the statute and legislative history were ambiguous as to whether third-party employers could avail themselves of the exemptions, the DOL’s delegated rulemaking authority applied to the exemptions. However, in 2013, the DOL revised the companionship services and live-in employee regulations to narrow the scope of these exemptions.[6] The revisions reduced the scope of permissible job duties for exempt companion workers and precluded third-party employers, such as home care agencies, from claiming the exemptions.[7]

In response to the 2013 revisions, The Home Care Association of America sued the DOL arguing that the revisions were wrongful interpretations of the FLSA. The United States Court of Appeals for the District of Columbia Circuit found that the revisions were a valid exercise of the DOL’s rulemaking authority.[8] Accordingly, the 2013 revisions became effective on November 12, 2015, and have remain unchanged.

Reasoning and Potential Effects of the Proposed Changes

The DOL’s stated purpose behind the current proposed rule is to better comport with the statutory and congressional intent to exempt home care employees from FLSA coverage, as enacted in 1975, while also seeking to reduce the burden on consumers and providers with the hope of expanding overall access to these services.

Moreover, the DOL reasons that while the 1975 statutory exemptions do not explicitly, or implicitly, exclude third-party employers, such an interpretation would be consistent with the DOL’s understanding of the 1974 FLSA amendments. The DOL acknowledges that the 2013 rule is still valid despite Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), which eliminated Chevron deference and held that the courts, not federal agencies, are best to determine the reading of statutes. Still, the DOL believes this needs to be revisited. The 2013 rule change led to reduced earnings for affected workers and an 11.6-percent decline in the number of home care workers.

With an estimated 3.7 million home care workers currently employed by third-party agencies, these proposed changes are expected to have a significant impact on the industry. The proposed changes, should they go into effect, could result in some or all these workers becoming exempt under the FLSA. However, it is important to remain abreast of state minimum wage and overtime requirements, as those will still apply to these workers.

The DOL expects these proposed changes to encourage more providers to become involved in the operations of home care, thus increasing the availability of these workers for vulnerable populations. However, the DOL also cautions that it could negatively impact the morale of workers if they are working more hours and receiving less pay considering their exempt status to minimum wage and overtime requirements.

In line with this proposed rule, on July 25, 2025, the DOL’s Wage and Hour Division issued a Field Assistance Bulletin No. 2025-4 (‘Bulletin’) to suspend enforcement of all provisions of the 2013 rule until the effective date of any final rule resulting from the proposed rule.[9] The Bulletin expressly notes that it does not limit the DOL’s Wage and Hour Division’s ability to enforce the FLSA or any other applicable statute or regulation.  Additionally, the DOL’s Wage and Hour Division reserved its right to exercise enforcement in specific matters explicitly deemed appropriate. Importantly, this Bulletin and the proposed rule relate solely to the FLSA and do not affect any applicable state law that may provide rights and requirements relating to minimum wage or overtime.

Employers should continue to stay abreast of the status of the proposed rule to ensure that all affected employees are paid correctly for all hours worked. Furthermore, employers must always remain aware of the governing state law regarding minimum wage and overtime to ensure complete compliance.

If you have questions about how this proposed rule may affect your business, please contact:

• Nicole A. Flynn
• Cali L. Chandiramani
• Caroline J. Berdzik
• Stephen C. Mazzara
• Scott R. Green
• Christopher P. Maugans
• Or another member of the Employment and Labor practice group.

[1] See https://www.regulations.gov/docket/WHD-2025-0001.

[2] See Fair Labor Standards Amendments of 1974, Public Law 93–259 § 7, 88 Stat. 55, 62 (1974).

[3] See 29 U.S.C. 213(a)(15).

[4] See 29 U.S.C. 213(b)(21).

[5] See 40 FR 7404 (Feb. 20, 1975).

[6] See 78 FR 60454 (Oct. 1, 2013).

[7] See 29 CFR 552.6; 29 CFR 552.109.

[8] See Home Care Association of American v. Weil, 799 F.3d 1084 (D.C. Cir. 2015).

[9] See https://www.dol.gov/sites/dolgov/files/WHD/fab/fab2025-4.pdf?bufu8buhhmr.