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FLSA's 'Companionship Services' Exemption Challenged

In Coke v. Long Island Care (22-Jul-2004) the Federal Court of Appeals ruled that the Fair Labor Standards Act (FLSA) regulations (29 C.F.R. § 552.109(a)) - which specifically apply to "companionship services" - are internally inconsistent and not owed the high level of deference usually granted federal regulations. The court held that Congress intended to exempt from minimum wage and overtime only caregivers employed by the household where the care is being given, not individuals employed by a third party to assist with housekeeping and the daily activities of living. So, the regulation's exemption was not enforceable against Coke, who was not employed by the household but by a separate company.

HISTORY: The FLSA was enacted in 1938 to regulate minimum wages, maximum working hours, and child labor in industries within interstate commerce. In 1974, domestic service employees were added to the categories of employees covered by the minimum wage and maximum hours provisions through amendments to the FLSA. However, these amendments also created the companionship services exemption, excluding from the FLSA's minimum wage and overtime requirements those domestic service employees who provide companionship services to the elderly in their homes. The creation of a companionship services exemption was supported by important public policy considerations. Caregivers who are exempt from the FLSA can provide lower cost services, and thus, the companionship services exemption enables more elderly and disabled people to receive needed services that might otherwise be unaffordable. For some of these individuals, the only alternative to home care and the receipt of companionship services would be institutionalization.

There were several legislative attempts to expand the FLSA coverage applied to 'companions for the elderly and infirm' in the late '90's. The proposed amendments included a change in the definition of companionship services which would deny the application of the exemption if the employee was employed by someone other than a member of the family in whose home he or she works, revise the duties which would qualify for the exemption, and to clarify the criteria to be used to determine whether employees qualify as "trained personnel" who are not exempt under the companionship services exemption. None of the legislation was enacted. Thus, as the law currently stands, and particularly in view of the Secretary's withdrawal of his proposal to limit the exemption, the companionship exemption continues to apply to home health aides unless an exception to the exemption applies.

SUMMARY: This remains a very gray area in domestic employment, as there are numerous legal challenges to various provisions of the companionship exemption working their way through the courts. The private employment of an eldercare worker in a private residence may still qualify for the companionship exemption; however from a practical perspective very few families can find qualified, competent workers who are willing to work for compensation below the minimum wage. Be advised that the professional accreditation of the eldercare worker may invalidate the FLSA exemption. When in doubt, and particularly when dealing with elder care workers with RN, LPN, and CNA licenses, we recommend that you follow the FLSA rules for domestic workers enforcing minimum wage and overtime rules. It is expected that the Court's decision will spur the Department of Labor to modify its regulatory standards on a nationwide basis in the near future. Congressional action is not expected at this point in an election year. Be aware that as of 2001 approximately 20 states has waived the FLSA companionship care exemptions either in whole or part.

Overtime: Effective August 23, 2004, FLSA is amended to require that all workers who make less than $23,660 per year, or $455 a week, be paid overtime. This does not change the treatment of domestic workers, as all domestic employment is considered 'non-exempt' and all wages for domestic employment are subject to overtime.

Link to FLSA 29 CFR §552

August 2004 - The information contained in this article is provided for general information and background only and is not to be construed as specific legal advice. Individuals who wish to utilized the FLSA's Companionship Services exemption are advised to seek qualified legal advice on their circumstances prior to the employment of the caregiver.

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