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Final Rule Expands Application of the Fair Labor Standards Act’s Minimum Wage and Overtime Pay Provisions to Domestic Service Workers

September 26, 2013

The U.S. Department of Labor (DOL) recently revised its own regulations to significantly narrow the definition of what it called “companionship services” so that many direct care workers — such as certified nursing assistants, home health aides, personal care aides, and other caregivers — will be protected by the Fair Labor Standards Act (FLSA) as of January 1, 2015. 

The change marks the latest step in the evolution of the FLSA. For many decades (from 1938 through the mid-’70s), its minimum wage and overtime protections did not apply to individuals employed by households in domestic service, such as cooks, housekeepers, maids, and gardeners. Congress amended the FLSA in 1974 to explicitly apply its minimum wage and overtime pay provisions to “domestic service” workers in 1974. The 1974 amendments did, however, exempt casual babysitters and domestic service workers employed to provide “companionship services” to elderly persons or persons with illnesses, injuries, or disabilities. Congress also created an exemption (but only from the overtime pay requirement) for live-in domestic service workers. 

The DOL states that its new and significantly narrower definition of “companionship services” is based on the agency’s determination that: 

[t]here has been a growing demand for long-term home care for persons of all ages, and as a result the home care industry has grown dramatically. Despite this industry’s growth and the fact that many direct care workers perform increasingly skilled work previously done by trained personnel, direct care workers remain among the lowest paid in the service industry, impeding efforts to improve both jobs and care. 

Many direct care workers employed by individuals and third parties have been excluded from the minimum wage and overtime protections of the FLSA under the current companionship services exemption, which courts have read broadly to encompass essentially all workers providing services in the home to elderly people or people with illnesses, injuries, or disabilities regardless of the skill required to provide the care. This broad application of the exemption harms direct care workers, who depend on wages for their livelihood and that of their families, as well as the individuals receiving services and their families, who depend on a professional, trained workforce to provide high-quality services and continuity of care. In view of these changes, the Department has revised its regulations concerning domestic service workers in large part to narrow the companionship services exemption to apply only to the types of workers Congress intended to fall outside the scope of the FLSA.

More details about the DOL’s Final Rule can be found in the agency’s Domestic Service Final Rule Frequently Asked Questions page and its Fact Sheet on Application of the Fair Labor Standards Act to Domestic Service, Final Rule.

Due to the significant financial impact that the Final Rule will have on companies providing home care services, there very well may be challenges to its legitimacy and enforceability in the federal courts. 

For more information on how this may impact your business, please contact: