DOL Ruling Requires Home Care Employers to Pay Overtime

Jun 29, 2016   Print PDF

By Aviva Kamm | Related Practice: Employment

On June 28, 2016, the U.S. Supreme Court declined to review a much-publicized ruling from the Court of Appeals for the District of Columbia, sending a clear message that companies that provide in-home caregivers to assist independent living are no longer exempt from receiving overtime pay.

The regulations changing a longtime exemption for in-home caregivers were passed by the Department of Labor in 2014 and were intended to become effective in early 2015. Due to a challenge in court, the applicability and enforcement of the regulations has been in limbo until yesterday’s ruling.

The new regulations apply to two categories of domestic workers: those who provide “companionship services” by visiting the home, and those who do so while living in the home. Previously, both types of workers would generally not be entitled to overtime pay, regardless whether the worker was hired by the individual in care (or his or her family) or by an outside provider or agency. Under the new rules, both types of workers will be eligible for minimum wage and overtime pay if they are employees of a business or other outside provider. Workers hired directly by the person being served or by his family will remain exempt.

The new regulations narrow the exemption in two ways: first, by barring third-party employers, such as home care agencies or staffing companies, from claiming the exemption for their placed employees, and second, by limiting the definition of “companionship services” to only permit 20 percent of the employee’s time to be spent providing medical or other care and requiring the vast bulk of time to be spent in “fellowship and protection” — essentially, spending time with the individual to facilitate social engagement or helping the individual with reading, hobbies, walks or social appointments.

Three trade organizations challenged the new regulations. They were successful in the trial court, which blocked the regulations, but that decision was reversed on appeal when the D.C. Court of Appeals ruled that the Department of Labor’s new regulations were valid and enforceable. The trade groups sought review by the U.S. Supreme Court. The Supreme Court this week announced its decision not to review the appellate ruling, thereby maintaining that ruling as it stands and affirming that the Department of Labor regulations are in effect. The Department of Labor has already announced its intention to use its resources for strategic enforcement of the rules, placing all companies and agencies that provide workers for in-home care under the lens of potential investigation.

Additional compliance information is available at the Department of Labor website:

Lawyers in our Employment group are ready to help businesses comply with the regulations. Please contact Aviva Kamm, Krista Nelson or Sarah Wixson if you have questions, would like help responding to this changed landscape, or are interested in a compliance audit or consultation on other employment law or personnel related issues.