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Department of Labor Extends FLSA Protections to Direct Care Workers

by Martin Salcedo, Esq. - The Human Equation on 10/2/2013
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On September 17, 2013, the Department of Labor (DOL) announced a final rule that will extend the Fair Labor Standards Act’s minimum wage and overtime protections to most of the nation’s workers who provide home care assistance to elderly people and people with illnesses, injuries and disabilities. The DOL estimates that when it becomes effective on January 1, 2015, this new rule will extend the FLSA’s protections to nearly two million direct care workers.

According to the DOL, direct care workers remain among the lowest paid in the service industry because they have been denied minimum wage and overtime compensation under the FLSA’s companionship services exemption. The DOL suggests that courts have applied this exemption too broadly to encompass essentially all workers providing companionship services for those requiring care because of age or infirmity.

The final rule is designed to limit the applicability of the companionship services exemption. In addition to addressing various issues, such as recordkeeping, household work and live-in domestic service employees, the final rule makes two changes which are described by the DOL as being significant.

Prohibiting Third Party Employers from Claiming the Exemption

Under the final rule, third party employers of direct care workers, such as home care staffing agencies, are not permitted to claim the exemption for companionship services. Third party employers may not claim the exemption even when the employee is jointly employed by the third party employer and the individual, family or household using the services.

However, the individual, family or household may claim the exemption. So, even when there is another third party employer, the individual, family or household will not be liable for unpaid wages under the FLSA, provided the requirements of the exemption are met.

Limiting Definition of “Companionship Services”

The term “companionship services” means the provision of fellowship and protection for an elderly person or person with an illness, injury or disability who requires assistance. Under the final rule, “companionship services” also includes the provision of “care” that is provided as part of the fellowship and protection. “Care” is assistance with activities of daily living (e.g., dressing, grooming, feeding, bathing, toileting, transferring) and instrumental activities of daily living, which are tasks that enable a person to live independently at home (e.g., meal preparation, driving, light housework, managing finances, arranging medical care).

However, since the DOL believes that “companionship services” should be primarily focused on the provision of fellowship and protection, the companionship services exemption is not applicable when the “care” exceeds 20% of the total hours worked during a workweek. If more than 20% of time is spent performing “care” during a workweek, the employee is entitled to minimum wage and overtime.

Since “companionship services” do not include the provision of medically related services, the final rule clarifies that determining whether a task is medically related is based on whether the services typically require, and are performed by trained personnel, such as registered nurses, licensed practical nurses or certified nursing assistants. Performance of medically related tasks during the workweek results in loss of the exemption and the employee is entitled to minimum wage and overtime pay for that workweek.

The changes made by the final rule are likely to have a significant negative impact on third party employers of direct care workers. Even though the DOL believes the January 1, 2015 effective date provides sufficient time to make any necessary adjustments, legal challenges are anticipated.

If you would like to learn more about the Fair Labor Standards Act, click here. If you would like information about insuring against FLSA claims, click here.

The Human Equation prepares all risk management and insurance content with the professional guidance of Setnor Byer Insurance and Risk.

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