February 27, 2012

Public Interest Comment on DOL Fair Labor Standards Rule

Exempt Status of Companionship and Live-in Services
  • Antony Dnes

    Chair in Economics, University of Hull in the UK
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Among its regulatory effects, The Fair Labor Standards Act (FLSA) establishes a minimum wage, requires overtime payments to be made when the working week exceeds 40 hours, and requires record keeping in relation to nonexempt workers,4 with the aim of protecting these workers from the unacceptable conditions of employment thought likely to emerge in some labor markets. The FLSA was extended to most domestic workers in 1974, but allowed an exemption for domestic workers hired as companions and/or live-in domestic workers, who may be employed directly by the client or through an agency.5 Such workers often carry out their duties as Home Health Aides (HHA) or Personal Care Aides (PCA), and companions may provide assistance with daily living such as meal preparation, grooming, exercise, toileting, and minor medical support services retaining FLSA exemption as long as these elements are incidental to companionship and as long as any general housework elements do not exceed 20 percent of working time.

Companions are currently exempt from minimum wage and overtime protection, and live-in domestics are exempt from overtime and certain record-keeping requirements. However, the DOL has expressed concern that the FLSA regulations have inadvertently expanded the scope of the exemption beyond the type of companionship employee that Congress intended to exempt, because the home-care industry has grown in a manner tending to supply companionship jointly with assistance with daily living. The DOL sees the changes as reason to propose a revision of the regulations in relation to the scope of the exemptions covering companionship (and live-in services) to (i) revise the definitions of companionship services, (ii) clarify the nature of incidental services undertaken by companions, (iii) limit exemptions to companionship and live-in domestic workers directly employed in the home, and exclude from the exemptions those employed by agencies, and (iv) require all employers to keep records of hours worked by live-in domestic workers to ensure proper payment of wages.

Notably, the proposed definition of companionship services excludes the economies of scope that appear to be developing in home-care services, as basic companionship can be blended advantageously with a variety of simple personal-care and health-care services. This comment asks the DOL to reconsider its proposals in terms of whether the contemplated changes are really likely to cure any genuinely identifiable problems. Is it socially harmful to allow a flexible, low-wage fringe to continue in existence in home care? Can the compliance costs be justified for the proposals? The suggestion here is that both questions provoke a negative answer. Finally, is there a risk that some vulnerable elderly and/or infirm citizens may be excluded from home-care services as costs rise?