The Fair Labor Standards Act (“FLSA”), requires employers to pay nonexempt employees minimum wage for all hours worked and overtime wages for hours worked in excess of 40 in a single workweek. Among the various exemptions from these provisions, Congress has included an exemption for specific types of domestic service workers. According to the FLSA, the overtime and minimum wage requirements do not apply to “any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary”) 29 U.S.C. § 213(a)(15). This exemption is often referred to as the “Companionship Services Exemption”. Also according to the FLSA, the overtime requirements do not apply to “any employee who is employed in domestic service in a household and who resides in such household.” 29 U.S.C. § 213(b)(21). This exemption is often referred to as the “Live-in Domestic Employee” exemption.
In 1975, The Department of Labor (“DOL”) promulgated regulations implementing and further defining the FLSA’s exemptions. Regarding the Companionship Services Exemption, the DOL has defined companionship services as “those services which provide fellowship, care, and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs. Such services may include household work related to the care of the aged or infirm person such as meal preparation, bed making, washing of clothes and other similar services.” 29 CFR 552.6 . The regulations stated that companionship services could include limited general housework, if such work did not exceed 20 percent of total weekly work hours. The DOL also defined domestic service employment as referring to “services of a household nature performed by an employee in or about a private home (permanent or temporary) of the person by whom he or she is employed.” 29 CFR 552.3. The DOL further defined live-in workers as “domestic service employees who reside in the household where they are employed.” 29 CFR 552.102. Lastly, the 1975 regulations promulgated by the DOL state that the exemptions also cover companions and live-in domestic service workers “employed by an employer or agency other than the family or household using their services.” 29 CFR 552.109. It is this last aspect of the regulation that has afforded third party employers the ability to take advantage of the Companionship Services exemption and the Live-in Domestic Employee exemption for 40 years. However, the DOL no longer believes such third parties may take advantage of these exemptions. The DOL also seeks to limit the amount of time exempt Companionship Service providers can spend on “care” services.
The DOL promulgated a new regulation, which went into effect January 1, 2015, that states third party employers of employees engaged in companionship service may not avail themselves of the minimum wage and overtime exemption and that third party employers of employees engaged in live-in domestic services may not avail themselves of the overtime exemption provided by the FLSA. It is this new regulation that has third party employers up in arms, as a majority of those employed in Companionship Services are not employed by those individuals or families in need of their services, but rather, by third parties. According to the DOL, the new rule would extend minimum wage and overtime protections to nearly 2 million workers.
The new rule also revised the definition of “companionship services” which limits the amount of time such employees can dedicate to “care” services. These services would be subject to a 20 percent cap and includes dressing, grooming, toileting, driving to appointments, feeding, doing laundry and bathing.
On December 22, 2014, U.S. District Court Judge Richard Leon issued an opinion and order in a case brought by trade associations representing the interests of those businesses employing workers who would no longer be exempt under the revised rules. In Home Care Association of America v. Weil, Judge Leon vacated the third party regulation amended by the new rule. On January 14, 2015, and in the same suit, Judge Leon vacated the modified definition of “Companionship Services.” Judge Leon rulings were based on his opinion that the revised regulations were contrary to the intent of Congress.
The DOL has appealed the decisions, but for now the longstanding FLSA minimum wage and overtime Companionship Services and Live-in Domestic Employee exemptions remain in effect. However, if the DOL is ultimately successful in overturning Judge Leon’s decisions, the new rules would go into effect and nearly 2 million workers will no longer be exempt from the FLSA’s minimum wage and overtime provisions. Look for a decision from the United States Court of Appeals for the District of Columbia in June or July of 2015.