Home Care Agencies Companionship Exemption Going Away

September 30, 2013

On September 17, 2013 the U. S. Department of Labor's Wage and Hour Division announced a final rule that extends the Fair Labor Standards Act's minimum wage and overtime protections to many of the nation's direct care workers who provide home care assistance to the elderly and persons with illnesses, injuries, or disabilities.

If you are a home care agency or other third party employer, effective January 1, 2015, you are required to pay at least the federal minimum wage and overtime pay to any direct care worker you jointly or solely employ, regardless of the worker's duties. Direct care workers are workers who provide home care services, such as certified nursing assistants, home health aides, personal care aides, caregivers, and companions.

Also effective January 1, 2015, agencies and other third party employers may no longer claim the overtime pay exemption for live-in domestic service workers.

It should be noted that the Department's final rule allows that exemptions for companionship services and live-in domestic service employees may only be claimed by the individual, family, or household that directly employs an individual for these services, rather than third party employers such as home health care agencies.

Minimum wage

The federal minimum wage is currently $7.25 an hour, though many states have their own minimum wage laws. When a worker is protected by both state and federal minimum wage laws, the worker is entitled to the higher minimum wage.

Overtime

Workers who are covered under federal overtime pay protections must be paid at a rate not less than one and one-half times their regular rate of pay after 40 hours of work in a workweek.

Recordkeeping

You are also required to keep basic employee time and pay records for any nonexempt direct care worker you employ, including the hours they work.

Going Forward

Given this significant change, home care agencies will need to analyze labor costs and determine if adjustments to their business plan are necessary.

SESCO can assist in auditing and ensuring compliance with wage and hour regulations. You may contact us by phone at 423-764-4127 or by email at sesco@sescomgt.com.