Written by Stephen E. Zweig
7/10/2013
Executive Summary: It has been reported that the Department of Labor (DOL) will issue a rule this month revising its regulations to eliminate the Fair Labor Standards Act’s (FLSA) companionship exemption for agency-employed home care workers. This rule will expose home care agencies to significant wage and hour liability they never had before. Yet, agencies can take steps to limit their exposure to individual and class action lawsuits for overtime, other violations of the FLSA, and accompanying state law claims.
How Did This Happen?
On December 27, 2011, the DOL issued proposed regulations to amend the companionship exemption under the FLSA. Despite a 36-year history of applying the exemption to home care agency workers, the revised regulations would limit its coverage to workers employed directly by a client or family.
In justifying its stance, the DOL claimed that those “employed by home care staffing agencies are not the workers Congress envisioned when it enacted the companionship exemption, e.g. neighbors performing elder sitting, but are instead professional caregivers” and the DOL “is no longer convinced that its prior reading (of the exemption) was the best one.” The DOL admitted that the revised regulations amount to “the transfer of income from businesses and their owners to workers,” but claimed that this redistribution of income is warranted and “is not likely to have a significant economic impact on a substantial number of small entities.”
This “about face” upends the DOL’s earlier defense of a broad exemption covering agency-employed home care workers, which resulted in a unanimous U.S. Supreme Court decision in 2007 deferring to the DOL’s expertise and upholding that exemption.
Home Care Employment Law 