Soon, in-home care workers will be protected by the FLSA. But will the law's exemptions and exceptions swallow the rule?

As the Baby Boomer generation ages, the use of in-home health care and companionship services will increase. Until very recently, most in-home or direct care workers were not protected by the Fair Labor Standards Act's minimum wage and overtime protections. Starting on January 1, 2015, a new rule drafted by the U.S. Department of Labor will take effect, extending minimum wage and overtime protections to most direct care workers in the United States.

Chicago-based labor and employment attorney Douglas Werman represents employees in wage and hour lawsuits. He says that the new regulations "will help increase living wages for nearly 2 million working people who are currently among the lowest-paid employees in the United States."

The 20-percent rule and other exemptions

The new regulations exempt direct care workers employed by individuals, families, and households. According to Werman, this exemption exists "because of a concern about imposing increased costs and record-keeping obligations on families struggling to take care of loved ones." However, "the DOL estimates that 70 percent of home-healthcare workers are employed by third party agencies," which is why the new regulations will have such a broad reach.

It is worth noting that the new regulations only exempt direct-care workers employed by individuals, families, and households when those workers provide companionship services. Employees that provide companionship services may also provide care services, but care services must not exceed 20 percent of the hours worked by the employee in a given week.

According to a U.S. Department of Labor (DOL) fact sheet, care services include "assistance with activities of daily living (such as dressing, grooming, feeding, bathing, toileting, and transferring) and instrumental activities of daily living, which are tasks that enable a person to live independently at home." However, "[t]he definition of companionship services does not include the provision of medically related services which are typically performed by trained personnel." The services do not have to be performed by a trained professional to disqualify the worker for the companionship services exemption. The DOL fact sheet is at http://www.dol.gov/whd/regs/compliance/whdfsFinalRule.htm.

Some may think this 20-percent exemption is a loophole that will allow employers of direct-care workers to avoid the new regulations. However, Werman says that this risk is nothing new. "The primary and actual job duties an employee performs determine whether an employee meets the requirements of an exemption." While employers can "manipulate the job duties to impact coverage under the new regulations," Werman points out that "that is the case with every exemption under the FLSA."

The new regulations also treat live-in domestic service workers differently. If a worker is employed by an individual, family, or household, and lives in the employer's home, then that worker is entitled to minimum wage protections, but not overtime pay. Live-in workers employed by a third party agency retain both minimum wage and overtime protections.

Workers are able to contractually exempt certain tasks from their hours worked, such as meal times, sleep times, and other free periods. However, the new regulations require employers to maintain accurate records of the hours worked and tasks performed. Employees may be requested to maintain their own records and submit them to the employer.

Federal enforcement power

The new regulations do not supersede state minimum wage requirements. This means that in some states, like Illinois, direct-care workers already had minimum wage and overtime protections. While this may seem like the new regulations are a backstop for Illinois law, Werman disagrees.

"The federal regulations…provide federal enforcement power, a private right of action to file a lawsuit in federal court, and increased damages for employees and against employers who are found to violate the law. They also reflect a federal policy to protect employees performing these low wage and vital jobs."

Werman has some compliance advice for employers affected by the new regulations. Among other things, employers must "keep detailed records of employees' duties and weekly hours, including lunch periods." Correctly calculating overtime pay is also important.

Werman also suggests that while "companionship employees have historically been paid on a day rate, salary, or per-visit basis," employers may want to consider a shift to hourly pay. Although the traditional pay model is still permissible under the new regulations, it "complicates the method for calculating overtime pay and increases the possibility of mistakes."

He also notes that live-in employees should enter into arrangements with their employers "to exclude bona fide periods of more than eight hours, make sure that adequate sleeping facilities are provided, and see that the employee's sleep is not interrupted."