Providers Face New Wage and Hour Regulations for Non-Medical Home Care Staff
The United States Department of Labor (DOL) recently made significant revisions to the federal minimum wage and overtime pay regulations. Beginning January 1, 2015, two important changes will be made to the “companionship exemption” for direct care workers who provide home care companionship services:
- the live-in exemption is being repealed; and
- employees providing companionship services must be paid minimum wage and overtime.
These changes will require only third party employers (e.g., home care agencies, senior living, and other aging-services providers) to pay minimum wage and overtime to direct care workers who provide hourly or live-in companionship services. This may place third party employers at a market disadvantage to self-employed caregivers, because an individual, family, or household who hires a self-employed caregiver may still claim the companionship services exemption.
“A growing number of aging-services providers are offering non-medical home care services, so we think it’s critical to understand the impact of these changes,” says Sarah Spellman, a health care principal with CliftonLarsonAllen.
Background on the regulations
Historically, regulations designed to protect workers by requiring minimum wage and overtime pay excluded direct care workers employed by a third party (e.g., home care agencies, senior living, and other aging-services providers) to provide companionship services, as long as a majority of their time at work was spent performing certain companionship service duties.
The Fair Labor Standards Act (FLSA) defined companionship services as those related to the “fellowship and protection” of the client, not household duties such as cleaning and home maintenance. To meet the companionship exemption, direct care workers must only spend a maximum of 20 percent of their time on assistance with activities of daily living (ADLs) and instrumental activities of daily living (IADLs).
The result is that aging-services providers who offer non-medical home care services will be required to pay these employees minimum wage and overtime pay. Live-in direct care workers will need to keep careful records of their time to avoid costly overtime. And providers will need to plan for possible growth of self-employed direct care workers hired and managed by clients and their families.
What remains the same
Much of the language regarding the companionship exemption in the FLSA remains unchanged, including:
- What constitutes a “private home”;
- Whether an employment relationship exists;
- Whether an employee is jointly employed by two or more employers; and
- What constitutes compensable “hours worked.”
How we can help
Providers should examine how this change will impact their operations, and the provision of live-in services. They should also explore marketing strategies that might help counter the advantage that self-employed caregivers will have. CLA assists aging-services providers in assessing the impact of changes in the industry that affect the delivery of senior living and home care services.