By: W. Melvin Haas, III
Sarah M. Phaff
Constangy, Brooks, and Smith, LLP
Wage and hour law has seen many changes this year, and almost all of them have had or will have a serious impact on employers.
Companionship – A Thing of the Past
As of January 1, 2015, the companionship exemption under the Fair Labor Standards Act (FLSA) will cease to exist.
Generally, all employees covered by the FLSA are entitled to minimum wage and overtime. Overtime is paid to employees for hours worked over 40 hours per week at a rate not less than one and one-half times their regular rate of pay. However, the FLSA does designate certain employees as exempt from minimum wage and overtime requirements. These employees must meet specific duties tests for their particular exemption, and many of them must also meet the salary basis test of $455 per week or a salary of $23,600.00 per year.
Under the current regulations, employees who provide home health care services or “companionship” services in a private home are often considered exempt from the minimum wage and overtime requirements of the FLSA. Companionship services “means services for the care, fellowship, and protection of persons who because of advanced age or physical or mental infirmity cannot care for themselves. Such services include household work for aged or infirm persons including meal preparation, bed making, clothes washing and other similar personal services. General household work is also included, as long as it does not exceed 20 percent of the total weekly hours worked by the companion.” This does not include the work performed by trained practical or registered nurses, though registered nurses may be exempt under the professional exemption if they meet the requirements.
However, under the new regulations third party employers of direct care workers (such as home care staffing agencies) are not permitted to claim either the exemption for companionship services or the exemption for live-in domestic service employees. Third party employers may not claim either exemption even when the employee is jointly employed by the third party employer and the individual, family, or household using the services. However, the individual, family, or household may still claim any applicable exemption. The new regulations also redefined companionship services and the record keeping requirements for live-in domestic service employees.
So what does this mean? It means many home care staffing will no longer be able to take advantage of the exemption come January 1, 2015 and will be required to keep track of worker hours and pay overtime.
Raising the Minimum
On February 12, 2014, President Obama issued an executive order raising minimum wage from $7.25 per hour to $10.10 per hour for federal contractors beginning January 1, 2015. The Health, Education, Labor and Pensions (HELP) Senate Committee is currently debating a minimum wage increase for all employees of the same amount. Employers should keep an eye out for the results of this legislation.
And Then There is More . . .
On March 13, 2014, President Obama issued a Presidential Memorandum directing the Secretary of Labor to revise the overtime regulations. It appears that the President’s initial target is to raise the salary basis from $455 per week, making fewer employees eligible for exemption from overtime requirements under the FLSA. While the memorandum has not specifically established a new threshold, it has been said that the salary basis could double. Likewise, the Department of Labor may revise the duties tests making it harder for employees to meet the test. A change in these regulations or rules could produce a rise in litigation, as well as substantial change to current staffing models. Employers should be on the lookout for an opportunity to comment on any new proposed rules.
Employers should review their staff to determine what employees are being treated as exempt and which ones are being treated as nonexempt. Employers should also review the job duties and salary basis of any employees being treated as exempt to ensure that they meet the current exemption tests. Lastly, employers should ensure that they are meeting all the record keeping requirements under the FLSA.
If you have any further questions, you should consult an experienced labor and employment lawyer.