The Final Word on How to Pay Home Healthcare Workers?

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The Final Word on How to Pay Home Healthcare Workers?

August 26, 2015

Since 2013, employers in the home health industry have been waiting for the final word on revised regulations by the Department of Labor (DOL) which would essentially prevent them from using the popular “companionship services” exemption from minimum wage and overtime pay. The wait may finally be over. A recent decision overturns a January 2015 ruling and holds that the DOL has the authority to extend the minimum wage and overtime protections to direct care workers employed by third parties.

Who are direct care workers?

  • Home health aides, personal care aides, caregivers, companions and/or other workers employed by a third party, including agencies.

  • Registered nurses, licensed practical nurses, certified nursing assistants, and/or other workers who provide medically related services, which typically require and are performed by trained medical personnel. (Some nurses may be covered by other FLSA exemptions.)

  • Workers who provide domestic services that primarily benefit other members of the household.

  • Workers who spend more than 20 percent of their time assisting with activities of daily living or instrumental activities of daily living.

How does the ruling impact employers?

Under the “new” regulations, employers generally will need to classify their direct care employees as non-exempt. This means that most direct care workers must now be:

  • Paid on an hourly basis for all hours worked;

  • Paid a minimum wage (local, state or federal – whichever is highest); and

  • Paid overtime for all time over 40 hours in a particular workweek (generally, time and one-half, but state or local rates may be higher). Some states also have additional criteria for overtime, including daily overtime.

In addition, under the “new” regulations “companionship services” have been redefined as: “the provision of fellowship and protection for an elderly person or a person with an illness, injury or disability who requires assistance in caring for himself or herself.” Employers should take note that an individual who spends more than 20 percent of the workweek providing “companionship services” will not qualify for the companionship exemption.

Timing and next steps for employers

Unfortunately, it is unclear when the DOL will begin enforcement of the new regulations. Initially, the regulations were set to take effect on January 1, 2015, with enforcement slated to begin on July 1, 2015. The DOL has not indicated whether it will provide employers with a similar window to ease into compliance, and may ultimately take the position that employers should have been prepared for the change by now.

Home health agencies and other employers of these types of workers should consider treating impacted employees as non-exempt as soon as possible to ensure compliance.

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