Michigan home health care companies and the home health care industry are facing significant changes under the U.S. Department of Labor’s (DOL) proposed rule change to the Fair Labor Standards Act’s (FLSA) 1975 “companionship exemption.”
Proposed FLSA Revision
On December 27, 2011 the DOL published a notice of proposed rulemaking to revise the companionship and live-in worker regulations applicable to home health care workers employed by third-party companies. This proposed revision would extend the FLSA’s overtime and minimum wage coverage to these employees, which have previously been exempt from the FLSA since 1975.
Obviously if this revision is enacted it will significantly change the home health care industry. Consider for example that the DOL’s proposed rule would potentially mean higher paychecks for an estimated 1.7 million home care workers. This is because employers covered by the FLSA must generally pay the federal minimum wage and one and a half times an employee’s regular hourly wage for each hour or part of an hour that the employee works in excess of 40 hours in one week. 29 USC 207(a)(1).
But an increase in wages also means higher labor costs for a number of home-care companies. Such increase would likely be passed along to customers, many of which are likely to be on fixed incomes and rely on Medicare and Medicaid reimbursements.
To some extent, however, the impact of the proposed change to the FLSA companionship exemption would be muted because a number of states already provide coverage of home care workers under state minimum wage and overtime laws. Additionally, the DOL’s proposed rule would also benefit those home care employers that are already paying overtime despite the federal exemption.
Reason for the Revision to the FLSA Home Health Care Exemption
According to the FAQ page maintained by the DOL, the FLSA changes are needed:
Due to significant changes in the home health care industry over the last 35 years, workers who today provide in-home care to individuals are performing duties and working in circumstances that are markedly different than when the companionship services regulations were first promulgated. The nature of the employment relationship and the scope of duties being performed by workers in the home are different than originally contemplated when the exemption was first enacted.
The impetus for the DOL’s proposed rule can actually be traced back to 2001 when the outgoing Clinton Administration proposed a revision to the labor rules to allow federal protections to apply to personal home care aides. The Bush administration, however, reversed those revisions and returned to the 1975 exemption.
In 2007, the U.S. Supreme Court affirmed the 1975 companionship exemption in ruling against a home care aide who sued her employer over unpaid overtime. See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007). In this decision, the U.S. Court noted that any change to the exemption rule must come from Congress or the Labor Department, which brings us full circle with the DOL’s December 2011 proposed rule change.
Submitting Comments Concerning the Proposed Revision to the FLSA Home Health Care Exemption
The DOL’s proposed rule will be subject to comments, which may be submitted by following this link. Alternatively, comments may be sent in hard copy to Mary Ziegler, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washington, D.C. 20210. All Comments regarding the DOL’s proposed rule must be identified by RIN 1235-AA05 and be received on or before February 27, 2012.
For Michigan home health care providers looking for more information about what this proposed revision will mean to your business, contact Jason Shinn or see the DOL’s fact sheet on the proposed rule change, the DOL’s FAQ, or the DOL’s comparison chart showing the differences between the current and proposed rule.