Wage & Hour Defense Blog : Wage & Hour Lawyer & Attorney : Epstein Becker Green Law Firm : DOL Enforcement, FLSA Coverage

By: Dean Silverberg, Evan Spelfogel, Peter Panken, Douglas Weiner and Donald Krueger

Reversing its prior stance, the U.S. Department of Labor (“DOL”) proposes to extend the minimum wage and overtime requirements of the Fair Labor Standards Act (“FLSA”) to domestic workers who provide in-home care services to the elderly and infirm. See Notice of Proposed Rulemaking to Amend the Companionship and Live-In Worker Regulations. In 1974, when domestic service workers were first included in FLSA coverage, the DOL published regulations that provided an exemption for such “companions”, whether employed directly by the families of the elderly and infirm, or by a third party employer/staffing agency. Now, heeding calls from organized labor and certain members of Congress, the DOL is moving to close this “loophole.” See“Is the Department of Labor Considering a Revision to the Domestic Service Exemption for Home Health Care Aides?” .

Specifically, the proposed rule would eliminate the exemption for third-party employers, like service staffing agencies, even if the employee is jointly employed by the staffing agency and the family. The new proposal if implemented, would likely drive up costs for families who wish to care for their elderly and infirm at home.

The change would be particularly onerous for Home Health Agencies if it is deemed to be merely a correction of a “misinterpretation” and given retroactive effect. This could lead to claims of past liability for extra overtime compensation for Home Health Agencies that had relied on the Department of Labor’s prior interpretation. The DOL’s prior interpretation, exempting third party employers and staffing agencies from FLSA overtime requirements had been upheld by the United States Supreme Court in the Coke case.

The change in the federal DOL’s interpretation could also affect State Wage Hour Regulations (like New York). These provide favorable treatment for employers of employees who are exempt under the FLSA.

The public has been invited to comment on the proposed new rule. Potentially adversely affected employers may use the public comment period to point out the impropriety of the proposed change after thirty five years of consistent industry wide application of the current rule. Employers might also point out that an unintended effect of the changed rule may be to force the care of the elderly and infirm from their homes to an institutional setting, such as a nursing home or assisted care facility.

By Doug Weiner and Brian Molinari

We live in a time of change. Last summer fifteen United States senators wrote an open letter to Secretary of Labor Hilda Solis to urge the U.S. Department of Labor ("DOL") to repeal the Domestic Service exemption from the minimum wage and overtime requirements of the ("FLSA") for home health care workers. Secretary Solis has expressed support for the effort to review this exemption, with a view toward closing this "loophole." Citing a $9 an hour industry-wide average wage, the senators argued in favor of extending federal overtime requirements to "thousands of low-wage workers, primarily women, who are doing difficult, dangerous, yet extremely important work."   Furthering public debate on the subject, the New York Times on January 28 ran an editorial in support of eliminating the Domestic Service exemption for home care aides.

The Domestic Service Exemption

Under current federal regulations, home health care aides who assist the elderly and infirm are exempt from the minimum wage and overtime requirements of the FLSA pursuant to 29 U.S.C. Section 213(a)(15) (exempting "any employee employed on a casual basis in domestic service employment to provide babysitting services or 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)").  In 2007 the United States Supreme Court upheld the current Department of Labor regulation allowing this exemption against a strong legal challenge from organized labor.  Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007).

The exemption applies to all workers in domestic service who provide companionship services for individuals unable to care for themselves due to either physical or mental infirmity. Domestic service is work performed within the residence of the family using the services. Companionship services are those that provide fellowship, care and protection to the elderly and infirm.  29 C.F.R. § 552.109(a). Home health care workers, whether employed directly by the family or by an employer or agency other than the household using their services, are currently exempt from the FLSA

Some state laws have already narrowed the federal exemption. Pennsylvania, for example, exempts only home health care aides employed directly by a family for work performed within their home, excluding from the exemption workers employed by a placement agency. New York requires the payment of time-and-one-half the minimum wage for overtime hours worked. Wherever a state law provides greater protection to employees than the FLSA, the state law prevails over federal law.

Potential Effects

Eliminating or modifying this federal exemption may increase the burden to working families who want to care for their loved ones at home. A change in the Domestic Service exemption may also have significant consequences for employers who provide home health care workers to families. Employers of home health aides often conduct background checks and provide training to workers before they arrive in the home to offer care for a family’s loved ones. There is an ever present danger that if costs of home care become prohibitive, economics will operate to push the elderly and infirm out of the home into nursing homes, or other institutionalized setting.

We will continue to monitor and post developments on this significant issue.