1. Home Care Association of New York State
Changes to the FLSA Companionship Exemption and Other Wage & Hour Issues in the Home Care Industry Vincent E. Polsinelli Nixon Peabody LLP December 4, 2013
Home Care Association of New York State

2. Background
The Fair Labor Standards Act (FLSA) is the federal law that requires employers to pay employees minimum wage and overtime. The FLSA is enforced by the U.S. Department of Labor (DOL).
The New York Labor Law (NYLL) is the related NY state law that governs minimum wage and overtime pay to employees. The NYLL is enforced by the N.Y.S. DOL and is generally construed to be consistent with the FLSA.

3. FLSA’s Revised Regulations Affecting the Home Care Industry
The U.S. DOL has made a series of changes to its implementing regulations under the FLSA, effective January 1, 2015, which will significantly affect home care workers and agencies, including the following:
Limiting who may claim minimum wage and overtime exemptions (no third-party employers);
Revising (and narrowing) the definition of “companionship services;” and
Modifying the recordkeeping requirements for live-in workers.

4. Background on Two Key FLSA Exemptions
Generally, two types of domestic service employees are exempt from certain FLSA protections.
The two exemptions include:
An exemption from the FLSA’s minimum wage and overtime requirements for domestic service employees who provide “companionship services.”
An exemption from the FLSA’s overtime requirement only for employees who are “live- in” domestic service employees.

5. Who May Claim the FLSA Exemptions for Domestic Service Employees?
Third party employers of domestic service employees may no longer claim the companionship exemption or the live-in domestic service exemption regardless of the employee’s duties.
According to the DOL, third party employers may include private home care agencies or public agencies that administer a consumer-directed or other type of home care program.
The FLSA exemptions may still apply to domestic service employees who provide “companionship services” or live-in domestic services and are employed by individuals or their families.

6. New Definition of “Companionship Services”
“Companionship services” is defined generally as the provision of fellowship and protection.
It may include the provision of care if the care is provided along with fellowship and protection and does not exceed 20% of total hours worked per person per workweek;
It does not include domestic services provided primarily for the benefit of other members of the household; and
It does not include medically related services.

7. New Definition of “Companionship Services” (cont’d)
Fellowship = engaging the person in social, physical and mental activities, such as conversation, reading, games, crafts or accompanying the person on walks, on errands, to appointments, or to social events.
Protection = being present with the person in his or her home, or to accompany the person when outside of the home, to monitor the person’s safety and well-being.

8. New Definition of “Companionship Services” (cont’d)
Care = assistance with activities of daily living (“ADLs”) and instrumental activities of daily living (“IADLs”).
DOL examples of ADLs and IADLs:
ADLs: dressing, grooming, feeding, bathing, toileting, and transferring.
IADLs: meal preparation, driving, light housework, managing finances, assistance with the physical taking of medication, and arranging medical care.

9. New Definition of “Companionship Services” (cont’d)
Medically related services = services that typically require and are performed by trained medical personnel, such as RNs, LPNs, or CNAs.
DOL Examples: catheter care, turning and repositioning, ostomy care, tube feeding, treating bruising or bedsores, and physical therapy.
Determination is not based on the actual training or occupational title of the worker, but on the nature of the service provided.

10. U.S. DOL Flowchart for the Companionship Exemption
This worker must be paid at least the federal minimum wage and overtime rate.
This worker must be paid at least the federal minimum wage and overtime rate.
This worker must be paid at least the federal minimum wage and overtime rate.
YES
YES
YES
QUESTION 1
Is the worker
employed directly by the person being assisted or that person’s family or household?
QUESTION 2
Does the worker
provide medically
related services
that typically require
and are performed
by trained medical
personnel?
QUESTION 3
Does the worker
provide domestic services that primarily benefit other members of the household?
QUESTION 4
Does the worker spend more than 20% of his or her time assisting with activities of daily living or instrumental activities of daily living?
This worker is not covered by the law. He or she is not required to be paid federal minimum wage or overtime rate.
START HERE
YES NO NO NO NO
The worker is employed by another employer, such as an agency.
The worker must be paid at least the federal minimum wage and overtime rate, regardless of job duties.

11. Live-in Domestic Service Employees
Again, the FLSA exemption for live-in domestic service employees is not available for third-party employers.
Even if it applies, this exemption is limited to the overtime compensation requirements of the FLSA (not the minimum wage requirements).
A live-in domestic service employee is a worker who resides in the private home where he/she works on a “permanent basis” or for “extended periods of time.”
Domestic service employees who simply work 24-hour shifts are not necessarily covered by the exemption.

12. Recordkeeping Requirements for Live-In Workers
A household employer and a live-in domestic service employee may enter into an agreement regarding the employee’s meal, sleep, and other breaks (i.e., time for which the employee, if completely free from work, need not be paid). The employer must keep a copy of this agreement.
The employer must also keep accurate records of hours actually worked by the live-in domestic service employee.
The employer may assign the employee the task of creating and submitting those records to the employer, but the employer is ultimately responsible for having and keeping them.

13. Impact of Existing FLSA Rules: Joint Employment
Joint employment rules have not changed, but will have a significant impact because of eliminated or narrowed domestic service employee exemptions.
A domestic service employee may be employed by both the consumer, family, or household and a third-party entity. The DOL provides the following examples:
A family and a private home care agency could both employ a personal care assistant.
In a consumer-directed program, a consumer and a state agency administering the program could both employ a home health aide.

14. Joint Employment (cont’d)
The U.S. DOL uses the so-called “economic realities” test to determine whether a domestic service worker is in an employment relationship with a third party.
The economic realities test applies a host of factors, including but not limited to:
Who has the power to recruit, hire, or fire the worker;
Who has the power to direct, control, or supervise the worker or the work performed;
Who has the power to modify the terms and conditions of employment;
Who has the power to determine the pay rates or the methods of wage payment for the worker; and
Who performs payroll and similar functions.

15. Impact of Existing FLSA Rules: Hours Worked
All time that an employee spends performing work is hours worked and must be compensated.
All hours when the employee is “on duty” are considered hours worked.
This includes any period in which the employee is being “engaged to wait.”
Time when the employee is completely relieved from duty long enough to use the time for his/her own purposes is not considered compensable time.
Special rules apply to travel time and sleep time (although these rules have not changed).

16. Hours Worked: Travel Time
Travel time spent by an employee traveling as part of the employer’s principal activity must be counted as hours worked (see 29 C.F.R. § ), and those hours must be counted in determining if overtime is owed.
Under appropriate circumstances, travel time may be paid at a lower rate than other working time.
For example, travel time could be compensated at minimum wage, while time with clients is compensated at a higher rate.

17. Hours Worked: Travel Time (cont’d)
Ordinary home to work travel (and back) is not compensable (29 CFR §783.35).
Ordinary travel from home to first work site of the day is not compensable.
Ordinary travel from last work site of the day to home is not compensable.
However, compensation for home to work travel may be required if it exceeds “ordinary” levels (such as a one-day assignment to a much more distant work site).

18. Hours Worked: Travel Time (cont’d)
Although ordinary home to work travel is not compensable, it may become compensable if the employee performs more than de minimis work before leaving home in the morning (or after arriving home in the evening).
For example, if an employee reads a client file, prepares for her first work assignment, or spends time doing required paperwork before leaving home.
Beware: Performing such work before leaving home can result in the time spent on these tasks and the travel time to the first work site becoming compensable
Taking work calls on the way to the first site, if more than de minimis, may start compensation clock.

19. Hours Worked: Travel Time (cont’d)
After arriving at first work site, all time worked during the day, including travel time between work sites/assignments, is compensable.
Exception: If gap between assignments is large enough for employee to use time for his/her own purposes, then such time is not compensable
Travel between jobs for different employers is not considered hours worked.
Joint employment status is critical.

20. Hours Worked: Sleep Time
Under the FLSA, certain sleep time may be excluded from total hours worked:
Only where an employee is required to be on duty for 24 hours or more,
The employer and the employee may agree to exclude bona fide meal periods and a bona fide regularly scheduled sleeping period of not more than 8 hours from hours worked, “provided adequate sleeping facilities are furnished by the employer and the employee can usually enjoy an uninterrupted night’s sleep.” 

21. Hours Worked: Sleep Time (cont’d)
In this instance, any interruptions to sleep must be compensated, and if the employee cannot get at least 5 hours of sleep time during the scheduled period, the entire time period is considered compensable working time.
If an employee is on duty for less than 24 hours, all time must be paid, even if some of the time is spent sleeping (see 29 CFR §785.21).
Thus, sleep time must be included in determining whether overtime compensation is due.

22. Hours Worked: Meal Periods
Meal periods, usually of 30 minutes or more, are NOT considered hours worked.
But if the employee works during his/her meal (for example, by helping a consumer eat), he/she must be paid for the time.
Shorter rest periods are not meal breaks; they are hours worked and must be paid.