DOL Limits Caregiving Options for the Poor and Elderly

Beginning January 1, 2015, the Department of Labor’s new rule goes into effect which restricts companionship and live-in service exceptions to minimum wage and overtime requirements. These changes could dramatically change live-in services that some home care agencies in New Hampshire provide.

Nurse talking with aged man at homeThis final rule redefines “companionship services”  and requires overtime pay and minimum wage for those offering the service.  Companionship services have been redefined and limited to “fellowship,” “protection” and personal care. The Department of Labor believes this will protect domestic service workers, while provider groups maintain the new rule could be tough for the industry and for those who rely on home care services through Medicaid and Medicare.

According to care groups, the new rules regarding live-in care workers and companionship service providers will hinder a person’s access to home care services in two ways.  Once the rule goes into effect in January, patients will no longer be able to receive companion service without taking on many other complex tasks, including handling tax laws to dealing with worker’s compensation.

When the Fair Labor Standards Act was originally conceived, a number of exceptions were made to minimum wage requirements and overtime, including exemptions for care providers, but the DoL now argues that home health care services and client needs have changed dramatically over the past twenty years, and minimum wage and overtime exemptions should no longer apply to caregivers working for home health agencies.


The Fair Labor Standards Act (FLSA) , which prescribes standards for the basic minimum wage and overtime pay, affects most private and public employment was amended in 1974 to cover all domestic service workers but exempted from minimum wage and overtime domestic service employees who provide “companionship services” to elderly people or people with illnesses, injuries, or disabilities who require assistance in caring for themselves.  The Act also exempted overtime from domestic service employees residing in the household.

The Act is administered by the Employment Standards Administration’s Wage and Hour Division within the U.S. Department of Labor (DOL).  The DOL believes “lack of FLSA protections harms direct care workers, who depend on wages for their livelihood and that of their families, as well as the individuals receiving services and their families, who depend on a professional trained workforce to provide high-quality services.

 The Lawsuit

On June 6, 2014 a lawsuit was filed in the United States District Court for the District of Columbia by the National Association for Home Care & Hospice (NAHC), the Home Care Association of American and the International Franchise Association seeking a declaratory injunction against the Department of Labor.  They are asking that the Department overturn the new rules restricting the application of companionship services and live-in exceptions.

The revised standards for the exemptions will exclude application to employees employed by home care agencies (“third-party employers”). The modified “companionship services” exemption, combined with the live-in domestic services exemption, will apply to workers directly employed by a client or family member. According to the lawsuit, the rule change will reduce consumer’s care options , increase their costs and limit the availability of essential care workers. Home care workers will be harmed as well, relegated to part time work even if they seek full-time employment.

If enacted the home-bound, elderly, infirm, sick, dying and people with severe physical or mental disabilities receiving service will be required to become, in essence, small businesses. They will be personally responsible for the myriad of complex tasks that employers face such as compliance with tax laws, workers compensation, unemployment compensation and the Fair Labor Standards Act.  The plaintiffs ascertain the new rules will destabilize the entire home care industry while creating serious access to care problems for seniors and persons with disabilities.

Going Forward

What this means for home health agencies is that all caregivers, regardless of their qualifications, skills, or tasks performed, must be paid minimum wage.  Additionally, overtime must be paid to caregivers that work over 40 hours a week.  Caregivers must be paid for all time actually worked, whether live-in or live-out. Personal care-related services are limited to no more than 20 percent of the hours worked. Under this definition, the vast majority of Medicaid personal services will be subject to minimum wage and overtime requirements.

If a caregiver is completely free to pursue personal activities, then they are not required to be paid for those hours.  However, if a caregiver is not free to pursue these activities, then they must receive pay at least equal to minimum wage and those hours are counted toward overtime.  While these are significant changes, it is the belief of the DOL that this will create a more qualified and stable caregiving industry.

 Update from National Association for Home Care and Hospice 10-15-2014

Home Care Association of New Hampshire article regarding hiring an individual verses hiring an agency

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