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DOL Releases Guidance on the FLSA's Final Rule on the Companionship Exemption
Practical Law Legal Update 5-565-5845 (Approx. 4 pages)
DOL Releases Guidance on the FLSA's Final Rule on the Companionship Exemption
by Practical Law Labor & Employment
| Law stated as of 21 Apr 2014 • USA (National/Federal) |
The Department of Labor (DOL) Wage and Hour Division released guidance on its final rule expanding minimum wage and overtime protections for domestic caregivers under the Fair Labor Standards Act (FLSA). The new changes go into effect on January 1, 2015.
On April 15, 2014, the DOL's Wage and Hour Division released guidance on the final rule expanding minimum wage and overtime protections for domestic caregivers by limiting permissible exemptions from the Fair Labor Standards Act (FLSA), and eliminating the exemption for third-party employers. The new changes go into effect on January 1, 2015.
The final rule changed existing FLSA regulations of domestic service workers by:
- Broadening the FLSA's application to domestic service workers by narrowing the list of tasks that make up "companionship services" to limit the number of workers eligible for the minimum wage and overtime exemption under the duties test.
- Limiting the availability of exemptions to the individual or household using the services, and not permitting third-party employers to claim the exemptions.
- Expanding recordkeeping requirements to require employers to maintain hourly work records for live-in domestic workers.
The DOL's guidance provides explanations of the final rule's impact on shared-living arrangements, including:
- Examples of living arrangements that will be affected, based on the specific facts of the arrangement and not the names of the programs or how Medicaid or the state categorize them.
- Whether an employment relationship exists between the provider and the consumer, which will often be determined by the location of the living arrangement. The guidance suggests that:
- when a consumer moves into a provider's home, the provider likely is not an employee because the provider typically determines the schedule and routine within the home and therefore controls the conditions of work; and
- when a provider moves into the home of a consumer the provider likely is the consumer's employee.
- Whether an employment relationship exists between the provider and a third-party who facilitates the arrangement. The guidance provides that it will be based on several factors, including:
- the degree of oversight the third-party exercises over the arrangement and other surrounding circumstances;
- the location where the care is provided; and
- whether the provider must seek the third-party's permission for vacations, days off or other absences, instead of providing notice of these occurrences.
- If an employment relationship exists:
- whether the employer is a covered employer under the FLSA; and
- whether the employee is not exempt under the FLSA.
- How the FLSA's minimum wage and overtime provisions will apply to live-in employees, for whom it is often difficult to determine the numbers of hours worked because the employee lives on the employer’s premises but does not work the entire time. The guidance advises that an agreement outlining the approximate number of hours worked each week is an acceptable proxy for a more precise count of hours worked.
For more information on the DOL's final rule, see Legal Update, DOL Proposed Rule Would Revise Companionship and Live-in Worker FLSA Regulations.