U.S. Dept of Labor to Cut Overtime Exemption for Home Caregiver Agencies

The Fair Labor Standards Act exempts from minimum wage and overtime law:

domestic service employees employed ``to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as 
such terms are defined and delimited by regulations of the 
Secretary). 

Section 13(b)(21) exempts any employee employed "in domestic service in a household

and who resides in such household."

Under current regulations, an employer such as an agency can employ these caregivers and live-ins and treat them as exempt under the FLSA.  That is, qualifying employees would be paid a certain amount of money to perform the duties without tracking their time or receiving overtime premiums.  Presumably, the agencies markup this rate to add overhead and profit and then charge the patient a fixed amount of money for the service.

The U.S. DOL has issued a proposed regulation (here)  that would prohibit home care agencies from treating caregivers as exempt.  However, individual caregivers not employed by an agency or its individual employer (the patient or patient's family) still may assert the exemption.  (Note - After a humongous analysis and notice of proposed rule making, the proposed regulations are all the way at the very end of the link).  Here is the section that applies to third party agencies:

Sec.  552.109  Third Party Employment.

    (a) Third party employers of employees engaged in companionship services within the meaning of Sec.  552.6 may not avail themselves of the minimum wage and overtimeexemption provided by section 13(a)(15) of the Act, even if the employee is jointly employed by the individual or member of the family or household using the services. However, the individual or member of the family or household, even if considered a 
joint employer, is still entitled to assert the exemption, if the employee meets all of the requirements of Sec.  552.6.
    (b) * * *
    (c) Third party employers of household workers engaged in live-in domestic services within the meaning of Sec.  552.102 may not avail themselves of the overtime exemption provided by section 13(b)(21) of the Act, even if the employee is jointly employed by the individual or member of the family or household using the services. However, the individual or member of the family or household, even if considered a 
joint employer, is still entitled to assert the exemption.

This is one cryptic draft regulation. Even if the individual's family is a joint employer with whom?? The public can comment until Feb. 27, 2012.  Maybe they'll clear it up.

The proposed regulation also revises the definition of "companionship services" and "live-in domestic services.  To see those, click the link above and scroll way down to the draft regulation at 552.6.  Employees who do not pass the duties tests in these regulations also must be treated as non-exempt - by individual employers and agencies alike.

California employers will be affected by this, because the federal rule will apply even if California would extend the exemption to home agencies.  If federal law says no exemption, that controls.   Also, this change would not affect most employers. But it sure will affect people who count on home care agencies to deliver services.  Who is going to pay for the overtime and other obligations (like record keeping) that the lost exemption will cause?   

DGV