For several decades, home care “companions” have provided care to elderly individuals. The employers of these workers (whether privately employed by the family or employed by a third-party Home Care Agency) were not required to pay overtime (nor minimum wage in some states). This has been known as the “Companion Care Exemption” because these workers were exempt from federal wage and hour law as defined by the Fair Labor Standards Act (FLSA).
The effect of this exemption has been to keep wages low, thereby making overall care costs more affordable. However, worker advocacy groups have argued that many senior care workers live at or near the poverty level, despite working very long hours. As a result, the industry has frequently struggled to attract enough high-quality workers – a shortage that many experts predict will become more dramatic as our citizenry ages.
The DOL Announces Changes
In late 2013, the Department of Labor announced two changes. First, they said that the Companion Care Exemption would only apply in cases where the family is the direct employer. Therefore, all third-party workers (employed by a Home Care Agency) would be entitled to overtime effective January 1, 2015.
Second, the DOL narrowed the definition of “companion care.” It is now defined as service that is predominantly fellowship and protection in nature. If a worker is asked to keep the patient company (reading, watching TV, talking, playing games, strolling, etc.) and safe (make sure the gas on the stove is turned off, the heater is working, etc.), they can be classified as a companion – as long as less than 20% of the worker’s time is spent on ADLs (Activities of Daily Living such as bathing, dressing, meal preparation, light housekeeping, etc.).
The DOL Gets Challenged
The National Association of Home Care and Hospice (NACH) as well as the Home Care Association of America (HCAOA) challenged the Department of Labor, arguing that such a radical change would destabilize the industry and make care unaffordable for many elderly Americans. They asked U.S. District Judge Richard Leon to eliminate the DOL’s disparity between third-party employment and private employment as criteria for exemption and, secondarily, they asked the court to strike down the restricted definition of companionship services and reinstate the decades-old definition.
In late December, the court ruled that the DOL had overstepped their regulatory authority in this case. Despite pronouncing his opinion that caregivers should be entitled to overtime, the judge ruled that it was up to Congress, not the DOL or the judiciary. He thereby eliminated the requirement that third-party employers must pay overtime to all workers.
DOL Appeals and Wins
On August 21, 2015, the US Court of Appeals for Washington, DC unanimously ruled in favor of the DOL, effectively reversing Judge Leon’s decision. The court found the DOL was within its rights to change labor law for companion care workers. Everything outlined in the original ruling from late 2013 is now law so third-party agencies and families will need to comply with the changes. Enforcement won’t begin until January 1, 2016, but employees can file wage disputes before then if violations of these new minimum wage and overtime rules occur.
The Bottom Line
If you are hiring companion care or senior care, it's important to determine the kind of care and the amount of care your loved one needs. If your loved one is independent and only needs someone to help with fellowship and safety, a companion caregiver is likely the most affordable option for you. If your loved one needs more assistance and the schedule is going to require more than 40 hours each week, you should budget for overtime (1.5 times the regular rate of pay) or consider a team of caregivers in order to stay under the overtime threshold.
If you have more questions about the rulings or your situation, please don’t hesitate to call us for a free personalized phone consultation. We’re here to help!