United States: End Of Companionship Exemption?

Last Updated: May 9 2013
Article by Ted Boehm

In April, the U.S. Labor Department (DOL) is scheduled to announce regulations that will almost certainly increase the cost of employing individuals as home care aides who are considered “companions” under the Fair Labor Standards Act (FLSA). Currently, employers are not required to pay the federal minimum wage or overtime to such workers when they qualify for the companionship exemption under the FLSA. But DOL’s proposed rules would dramatically limit the exemption.  

Most significantly, the rules would make the exemption inapplicable to persons employed by third-party employers such as home-healthcare agencies. Under the new rule, such organizations would instead be required to pay not less than the federal minimum wage and overtime to employees who they might previously have been treating as exempt.  

The Current Rule

Since 1974, individuals who are employed in “domestic service employment” to provide “companionship services” to the elderly or infirm have been exempt from the minimum wage and overtime requirements of the FLSA.     

“Domestic service employment” refers to services of a household nature that the worker performs in or about the private home of the person by whom he or she is employed. “Companionship services” are currently defined to mean: “those services which provide fellowship, care and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs. Such services may include household work related to the care of the aged or infirm person such as meal preparation, bed making, washing of clothes, and other similar services.”  

Companionship services do not include services relating to the care of the aged and infirm which require and are performed by trained personnel, such as a registered or practical nurse.  But the exemption does include the performance of “general” household work, such as making beds and washing clothes, so long as this work is incidental to the “fellowship, care and protection” of the aged or infirm person and does not exceed 20% of the total weekly hours worked by the employee. Thus the “incidental” work is permissible, but is subject to the 20% cap.  

In sum, under the current rule, the following requirements must be satisfied for the exemption to apply:

  •  an employee must perform “companionship services”;
  •  “incidental” or general household work performed by the employee may not exceed 20% of the total weekly hours worked by the employee;
  •  the work must not be of the type which requires and is performed by nurses; and
  •  the work must be performed at the aged or infirm individual’s private home.  

DOL’s Rationale for the New Rule

In the DOL’s view, the individuals who provide in-home care today are not the type of workers that Congress intended to exempt when it passed the “companionship” exemption in the 1970s. According to the DOL, Congress intended to exempt “neighbors performing elder sitting” from the FLSA requirements and not the “professional caregivers” in today’s world.  

The exemption would no longer be available to third-party employers. One of the biggest changes within the proposed rule is that third party employers such as home-healthcare agencies or third-party staffing agencies would no longer enjoy the exemption. Instead, the exemption would only be available to the individual, family or household employing the companion.  

This change in particular would have a dramatic impact. According to the DOL, 70% of home-healthcare workers are employed by third party agencies. Going forward, these third-party employers would have to completely change the compensation model for these employees.  

More duties would be deemed “incidental” and subject to the 20% cap. The other significant change in the proposed regulation is the number of duties that would no longer constitute “protection and fellowship.” Many of these duties would instead be considered “incidental” or “general household” work and therefore subject to the 20% cap limitation.  

For example, washing and folding laundry would be considered an non-companionship duty. Similarly, driving an aged or infirm individual to appointments or errands would become an incidental duty and subject to the 20% cap. Meal preparation would also be restricted. It would remain an “incidental” activity, but only if the meal is eaten when the companion is present – preparation of a week’s worth of meals would not be an exempt activity if the meals are eaten when the companion is not present.  

Bathing would also be deemed “incidental” and subject to the 20% cap. Moreover, if a companion performed any of these duties for another member of the household, the exemption would be lost.  

The significance of the expanded “incidental services” category is that if the companion’s provision of these incidental services exceeds 20% of the employee’s total hours worked in any work week, the exemption is lost for that employee for that work week and the companion must be paid not less than the FLSA minimum wage plus any overtime due for that workweek.  

What Does It All Mean?

The proposed regulation will limit the “companionship exemption” to the point of non-existence in any practical sense. The vast majority of employers that currently utilize the exemption (third-party employers) will be required to begin paying the minimum wage and overtime, if they do not already.  

Moreover, even for families and individuals that will still be able to utilize the exemption, it is more likely that the exemption will be lost in a significant number of work weeks due to companions’ performing services that fall into the expanded “incidental services” category that is subject to the 20% cap limitation. All of this means that practically anyone who employs these domestic service companions, including third party employers and families, probably will have higher compensation costs going forward.  

Perhaps the last hope for staving off these changes is pending legislation that would block DOL’s rule. Arguing that DOL’s rule would drive up the cost of in-home care and force families to institutionalize seniors, legislators have proposed bills that would remove the Secretary of Labor’s authority to change the exemption.  

But given the prevailing gridlock in Congress, employers (other than families and individuals) are probably best served by planning to make the necessary changes to comply with the minimum wage and overtime requirements of the FLSA, rather than counting on a legislative reprieve. Finally, as always, employers should be mindful of any state law requirements that may apply to this area of wage and hour law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Ted Boehm
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.