The DOL announced a final rule on September 17, 2013 revising the FLSA's application to domestic service. Most notably, the revision provides minimum wage and overtime protections to direct care workers who provide essential home care assistance to elderly people and people with illnesses, injuries or disabilities.

Among other things, the revised regulation narrows the duties that fall within the definition of exempt "companionship services." Employers that could previously claim an exemption based on this criteria will no longer be able to do so. The amended regulation redefines "companionship services" as "the provision of fellowship and protection." It defines the incidental provision of care as assistance with activities and incidental activities of daily living such as grooming and preparing meals. To qualify for the exemption, the care provided must be made up of no more than 20% of the worker's time in a given workweek. The regulation is designed to limit the FLSA exemption to those for whom domestic service is not a vocation, but instead is part of a more "casual" arrangement.

The regulation also provides that third party employers, such as home care agencies, may no longer claim the companionship or domestic services exemptions. It defines a "third party" as any entity that is not the individual, family member or household retaining the services. What constitutes an "employer" is governed by case law and the "economic realities" test. Where a joint employment relationship exists, all joint employers are responsible for compliance, both individually and jointly. Although the individual, family member or household employing the direct care worker may claim the exemption where applicable, the third party employer is still required to comply with FLSA minimum wage and overtime requirements.

The new rule clarifies that direct care workers who perform medically related services for which training is required do not qualify for an exemption. This determination is based on the actual services provided, not the actual training or occupational title of the worker. Workers performing medically related tasks will not be exempted.

The regulation also modifies the recordkeeping requirements for live-in domestic service workers who are entitled to minimum wage protections. Although they are still exempt from the overtime pay requirement, an employer may no longer rely on an agreement establishing the worker's hours. Instead, the employer, or the worker at the employer's discretion, must maintain precise records of the hours actually worked. The parties may agree to exclude sleep, meal and other relief periods. However, the amended regulation requires that if free time is interrupted by a call to duty, the interruption must be counted as hours worked.

Fifteen states already extend state minimum wage and overtime protections to direct care workers, and an additional six states and the District of Columbia mandate state minimum wage protections. Nevertheless, many more US workers will be entitled to minimum wage and overtime compensation than ever before. The impact on employers in this industry is likely to be a much greater expenditure in employee compensation and a greater risk of wage and hour litigation for non-compliance. Although the numbers are an approximation, the DOL predicts that the revised regulation will affect nearly two million direct care workers.

For more information about the application of the FLSA's final rule, see the DOL's Fact Sheet.