• Proposed Revisions to FLSA Companionship Exemption Create New Headaches for Employers
  • January 12, 2012
  • Law Firm: Proskauer Rose LLP - New York Office
  • On December 27, the United States Department of Labor (the "DOL") proposed amended regulations which would, if ultimately enacted, dramatically alter the wage and hour landscape for domestic companions. Historically, workers providing companionship services to the aged and/or infirm have been exempt from the minimum wage and overtime protections of the Fair Labor Standards Act (the "FLSA").[1] Under the current regulations, workers providing "companionship services" - defined as "fellowship, care and protection for a person who because of advanced age or mental or physical infirmity cannot care for his or her own needs" - are eligible for the companionship services exemption, provided they do not spend more than 20 percent of their work time on "general household work."

    Since the enactment of the FLSA in 1938, demand for companionship services has grown dramatically and such services have increasingly been provided by third-party organizations. The current regulatory scheme does not distinguish between workers privately employed by a private individual or family, as contrasted to workers employed by a third-party. In Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007), the Supreme Court of the United States affirmed that domestic workers employed by third-party providers of companionship services could qualify for the FLSA exemption. Today, the great majority of domestic workers are employed by third-party providers and therefore are not paid overtime under the FLSA.

    The intent of the DOL's proposed regulations is the elimination of the companion services exemption for domestic workers employed by third parties. If the regulations are adopted, these workers will no longer be exempt under the FLSA and will be subject to federal overtime and minimum wage requirements. This change would effectively pre-empt state overtime laws applicable to domestic workers, including §142-3.2 of Title 12 of the New York Code Rules and Regulations, which requires FLSA-exempt companions to be paid overtime at one-and-one-half times the minimum wage.  The proposed regulations also seek to restrict the types of tasks that exempt companions - those privately employed by individuals and/or their families - are able to perform for their clients. A privately employed companion who spends more than 20% of his or her time performing "incidental services" including dressing, grooming, toileting, driving to appointments, feedings, laundry and bathing, under the newly proposed regulations, would be eligible for overtime payment. Thus, even privately employed companions will be able to do little more than provide company for their clients.

    Criticism of the proposed regulations has focused primarily on the increased costs of companionship services, both to consumers and to taxpayers. There has been little discussion regarding the impact - both regulatory and practical - of the proposed regulations on the operations and record-keeping practices of agencies providing third-party companionship services. The proposed regulations would require providers to "make, keep and preserve a record showing the exact hours worked" by each employee. Until now, employers have been permitted to simply keep an agreement as the basis for establishing hours worked in lieu of maintaining time-records.

    These technical requirements are only the beginning of the recordkeeping nightmare facing providers as a result of the proposed regulations. Live-in companions typically work unsupervised in their clients' homes for periods up to and sometimes exceeding twenty-four hours. All of this time, however, is not compensable. Under the FLSA and in most states, companions are not entitled to compensation for meal times and/or time spent sleeping during the shift. The employer, either an individual or agency, under the proposed regulations, will have the burden of keeping adequate records of these non-compensable periods and, in many states, the precise "clock-in" and "clock-out" times for each such break. Unlike workers at a factory, however, who swipe their cards to electronically record their breaks and meal times at a timekeeping unit, companions are largely unsupervised and will, out of necessity, be largely responsible for reporting and recording their own time worked. Employers will have little ability to monitor or audit the time submitted for meal and sleep periods. Moreover, the failure to properly record times of these periods will not only constitute a violation of the recordkeeping requirements of the regulations, but will also be construed against the employer in any DOL investigation, litigation or quasi-judicial hearing.

    The DOL's proposed regulations were officially posted on December 27, 2011. Comments to the regulations must be submitted within sixty days, or February 27, 2012. Comments can be submitted electronically at http://www.regulations.gov.

    [1] Several states have separate requirements regarding companion wage obligations.