Final Rule Impacts Domestic and Household Workers

When the federal Fair Labor Standards Act (FLSA) was enacted, it did not apply to workers who were employed directly by households and performed domestic service work, such as cooking, housekeeping, cleaning, and gardening. In 1974, Congress explicitly extended many of the protections of the FLSA to “domestic service” employees. However, Congress left exempt from the Act’s minimum wage and overtime protections, those domestic service employees who provide “companionship services” for the elderly or persons requiring assistance caring for themselves as a result of an illness, injury, or disability, and any employee who resides in the household for which he or she provides service.

Since the federal Department of Labor published its initial regulations interpreting the FLSA in 1975, the home care industry has undergone a dramatic transformation. In the 1970s, individuals in need of significant care generally received those services from institutional facilities such as nursing homes. Over time, there has been a significant shift from expensive institutional facilities to private home care subsidized by Medicare and Medicaid. This shift allows individuals in need of care to remain in their homes and communities.

As more individuals choose to receive services at home, rather than in nursing homes or other institutions, workers who provide home care services perform increasingly skilled duties. In 2013, the Department of Labor revised the regulations to better reflect the substantial increase of skilled medical attendants in the home care industry and workforce. Those regulations (the “Final Rule”) went into effect earlier this year.

Under the Final Rule, “direct care workers” are employed as certified nursing assistants, home health aides, personal care aides, and caregivers. Today, direct care workers are not the unskilled workers that Congress envisioned when it enacted the companionship services exemption in 1974, but are instead professional caregivers. As such, the Department of Labor amended the regulations to reflect Congress’ initial intent in extending the FLSA to home care workers.

The Final Rule makes several significant changes of which employers should be aware. First, the tasks that comprise “companionship services” are more clearly defined. Second, the exemptions for companionship services and live-in domestic service employees are limited to the individual, family, or household using the services. Lastly, the recordkeeping requirements for employers of live-in domestic service employees are revised. These requirements must be read in conjunction with the California requirements for domestic care workers.

Companion Services:

Employees who perform companion services are exempt from the minimum wage and overtime protections provided under FLSA. The original regulations exempted workers who performed companion services for elderly people or persons who require assistance caring for themselves because of an illness, injury or disability. This definition was very broadly construed by courts and resulted in many skilled, professional caregivers falling into the exemption.

To remedy this, the new regulations more narrowly define “companionship services” as the provision of fellowship and protection. Companionship services may also include the provision of care if the care is provided in conjunction with the provision of fellowship and protection, and does not exceed 20 percent of the total hours worked per person and per workweek.

Fellowship means to engage the person receiving services in social, physical, and mental activities. Protection means to be present with the person receiving services in his or her home or to accompany the person when outside of the home to monitor the person’s safety and well-being. Fellowship and protection may include activities such as conversation; reading; games; crafts; and accompanying the person on walks, on errands, to appointments, or to social events.

Care is limited to assistance with activities of daily living (ADLs) and instrumental activities of daily living (IADLs). ADLs may include activities such as dressing, grooming, feeding, bathing, toileting, and transferring. IADLs are tasks that enable a person to live independently at home. These activities may include meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care. If the direct caregiver spends more than twenty percent (20%) of his or her total weekly hours performing ADLs or IADLs they do not qualify for the companion services exemption and must be paid minimum wage and overtime.

Live-in Domestic Service

A live-in domestic service employee is exempt from the minimum wage and overtime protections provided under FLSA. The new law does not change the definition of a live-in domestic service worker. However workers who work several consecutive twenty-four (24) hour shifts are often confused with live-in employees. Therefore an employer should pay close attention to the actual definition of a live-in worker to properly distinguish between these workers and those who work consecutive twenty-four (24) hour shifts.

A live-in domestic service employee is defined as a worker who resides in the private home where he or she works on a permanent basis or for an extended period of time. On a permanent basis means that the worker works and sleeps on the employer’s premises seven days per week and therefore has no home of his/her own other than the one provided by the employer. Extended periods of time means that the worker works and sleeps on the employer’s premises for five days a week (for a total or 120 hours or more) or works and sleeps on the employer’s premises for five consecutive days or nights. Therefore, any live-in domestic service employee who works and sleeps on the employer’s premises for at least five consecutive days or nights will be exempt from the minimum wage and overtime requirements of the FLSA.

Who Can Claim the Exemptions?

Under the previous rule, all home care workers providing companionship services or live-in domestic services were exempt. Under the new rules, third party employers may no longer claim these exemptions and are required to pay all home care workers minimum wage and overtime. Third party employers include home care agencies, public agencies, or not-for-profit organizations.  However individuals, families, or households may still claim the exemptions, provided that the criteria (discussed above) are met.

Recordkeeping Requirements:

Under the new rules, the employer must also keep accurate records of all time actually worked by live-in domestic workers. The employer may shift responsibility for creating and submitting records to the employee. However, the employer is ultimately responsible for maintaining the records. An employer and a live-in domestic service worker may enter into an agreement regarding the employee’s meal, sleep, and other breaks or in other words, time for which the employee is completely free of work. The employer should keep a copy of this agreement.

How Does This Compare to California Law?

In 2013, California passed the Domestic Worker Bill of Rights (DWBR), which took effect on January 1, 2014. The DWBR provides overtime for domestic workers, including live-in domestic workers, who are personal attendants. Employees who work in the home but are not a personal attendant are not covered by the DWBR, which means that overtime requirements are governed by California Wage Order Number 15. The Wage Orders provide different overtime protections depending on whether the work performed is live-in or non-live-in.

A personal attendant is any person employed by a private householder or by any third party employer recognized in the health care industry to work in a private household to supervise, feed, or dress a child or person who needs supervision because of advanced age, physical disability, or mental deficiency. General personal attendant duties include feeding, bathing, dressing, and direct supervision of any person under care. If a domestic worker spends more than 20 percent of his or her time performing work other than supervising, feeding, and dressing a child or person who needs supervision, he or she is not considered a personal attendant. Non-attendant duties generally include making beds, housecleaning, cooking, laundry, or other duties related to the maintenance of a private household or the premises. Employers must pay personal attendants overtime for all hours worked over nine in a workday or over forty-five hours in a week.

There are several exceptions, including, but not limited to, certain family members, workers employed by a licensed healthcare facility, persons performing services through the In-Home Supportive Services, and persons employed pursuant to a voucher. If employees fall into any of these exceptions they are not covered under the DWBR, and their overtime entitlements are governed by the IWC Wage Orders.

What This Means For Employers:

The DWBR took effect in 2014, which means that the effect of the FLSA updates should not be as shocking to California employers. The most significant impact of the Final Rule is on third party employers who are no longer entitled to claim the companion services and live-in domestic service exemptions. However, California domestic worker registry or referral agencies were already required to comply with overtime requirements. Therefore the FLSA amendments will have the biggest impact on out of state employers or employers that also have agencies out of state. These employers must be sure to comply with all applicable overtime and minimum wage laws.

Under the FLSA amendments individuals, families, or households are also subject to shifting regulations. Employers must conduct a factually intensive analysis to ensure that the direct service provider hired actually falls within the exemption. If worker provides: (1) medical services typically performed by trained medical personnel; (2) services primarily for the benefit of the household instead of the elderly or injured person; or (3) spends more than 20% or his or her time assisting with ADLs or IADLS, the worker will not qualify for the exemption and must be paid minimum wage and overtime. California employers attempting to use this exemption should also make sure that employees are not entitled to overtime under California law.

Further, if you employ a live-in domestic service worker, review and (if necessary) revise your record keeping system. If an employee records his or her own time, it is recommended that appropriate safeguards are implemented to ensure the employee complies with lawful policies and procedures. You, as the employer, will be liable for violations even if it was actually the employee who did not keep adequate records