Got a Granny? Minimum Wage and Overtime Premium Extended to In-Home Companions

In a long anticipated move, the U.S. Department of Labor (DOL) recently announced that it will issue a final regulation that will extend the minimum wage and overtime premium protections afforded by the Fair Labor Standards Act (FLSA) to most in-home companionship workers. The final regulation is anticipated to be published in the Federal Register sometime in early October.

This is a major policy shift, which not only affects the staffing companies that provide such workers, but also affects individuals who have hired someone on their own. If you currently have, or anticipate having, an elderly or disabled relative or friend who needs “in-home care services,” regardless of who actually “employs” them, the cost of providing such services will likely increase.

The DOL will now define home care services to describe “services performed by workers in private homes and whose job titles include home health aide, personal care attendant, home maker, companion and others.” With an aging population and changes in health care delivery systems, the demand for in-home care for persons of all ages and with all sorts of medical conditions has exploded. The DOL estimates that an additional two million workers will come under the guarantees of the federal minimum wage and time and one-half premium after 40 work hours in a week mandated by the FLSA.

Recognizing that many such workers are employed directly by either the individual receiving the services or a family member, there is a widespread assumption that many such in-home employees are currently underpaid. Clearly, the DOL’s new regulation is not only designed to raise the earnings of these workers, but also seeks to kill the “off the books” nature of many of these employment relationships. Even those employees who simply provide non-professional, non-skilled “sitting” services will be covered by the new regulations. Newly covered employees who are engaged through employment agencies or other third party companies will also be covered.

In recognition of the dramatic expansion of employee rights these regulations create, the new rules will become effective January 1, 2015. The DOL has stated that this long lead-time will allow all the various federal, state and private insurance funding sources sufficient time to come into compliance.

The bottom line is that anyone who employs a home care worker will have to pay the minimum wage (currently at $7.25 per hour), pay time and one half the base wage for all hours worked over 40 in any one work week, and keep all of the legally mandated records, including detailed records of all hours worked. Also, be sure to consult the laws in your state, where the state law may provide a higher minimum wage or more restrictive regulations. The new rules are complex and sometimes confusing. If you are using in-home companions or other workers be sure you understand your obligations. The FLSA is one of the few employment laws that carries criminal penalties for offending employers.