How the Home Care Rule Impacts Senior Caregivers and Employers

A revision to rules issued by the U.S. Department of Labor (DOL) will make millions of salaried home care workers eligible to receive overtime pay. This rule, which takes effect in December 2016, raises the salary threshold for workers who will become eligible for time-and-a-half pay when working more than 40 hours a week.

The new DOL rule means employers will have to carefully track the hours of salaried employers to determine whether they are eligible to receive overtime pay. The number of workers who would be affected by the higher overtime threshold isn't clear. The DOL estimates approximately 4.2 million workers would be affected. The Economic Policy Institute estimates 12.4 million more employees, or 23% of all salaried workers, would gain the right to overtime pay.

Minimum wage and overtime protections are already in place for hourly home care workers. Those affected by the new rule are salaried employees who were ineligible for overtime pay because their salaries were too high.

The increase in the overtime threshold presents challenges to small home care businesses. In order to absorb their increased costs, many companies are limiting hours and shifts, switching payment methods to a per-visit basis, or a combination of both. Read on and we'll explain the new rules and what they mean to senior care workers and their employers.

What is the Home Care Rule?
Here's a quick rundown on the course of events surrounding the Home Care Rule:

• On September 17, 2013, the DOL issued revised rules to the Fair Labor Standards Act (FLSA). These changes affect employers of home care providers, including senior caregivers. Known as the Home Care Rule, the new rules provide minimum wage protection and overtime pay to more than 2 million home care workers who were previously ineligible for these benefits. The rules were originally scheduled to take effect on January 1, 2015.
• In June 2014, associations of home care companies, which opposed the new rules, filed suit, challenging the rules in federal court. This case was known as Home Care Association of America v. Weil.
• On August 21, 2015, a federal Court of Appeals issued a ruling declaring the rule was valid.
• The plaintiffs in the case filed a petition for a writ of certiorari, which is a request for a higher court to review a lower court decision. In this case, they asked the U.S. Supreme Court to review the decision of the Court of Appeals.
• On June 27, 2016, the Supreme Court denied the request. This means the Court of Appeals' opinion stands
  

What it All Means
The Home Care Rule leaves many changes in its wake, both for home care workers and their employers. We'll help you make sense of it all by explaining what's most important.

Home Companionship
Perhaps the most important revision in the law is a redefinition of companionship care. Previously, all senior caregivers who provided home companionship care in the home of a disabled or elderly person were exempt from minimum wage and overtime protection as provided by the FLSA. Under the new rules, third-party agencies can no longer claim companionship and live-in domestic service worker exemptions. In addition, there is now a more narrow definition as to what constitutes companionship services. As a result, federal minimum wage and overtime laws will now cover the majority of senior care workers.

Overtime Wages
Starting on December 1, 2016, the requirements for overtime exemptions for salaried employees will increase from $23,660 a year ($455 per week) to $47,476 a year ($913 per week). This means home healthcare agencies with salaried employees making less than $47,476 annually will have to pay overtime at a rate of 1.5 times the normal rate for all work exceeding 40 hours a week. This level will be reevaluated every three years and will be kept at the 40th percentile of full-time salaried workers. Some analysts predict this threshold could be moved to more than $51,000 a year.

Live-In Employees
The DOL’s Wage & Hour Division has issued guidelines stipulating the conditions that allow an employer to exclude up to eight hours of sleep time from the hours of a live-in employee. These conditions include:

• The employee must reside on a permanent basis in the private home where the household services are provided.
• The employer and employee must have a "reasonable agreement" to exclude sleep time.
• The employer must provide the employee with “private quarters in a homelike environment."

This is a broad overview of the conditions qualifying the employer to exclude sleep hours. For a complete description, see the DOL's Field Assistance Bulletin No. 2016-1.

Administrative Burdens
Since the nature of the home care and hospice business is usually based on visits, employee time tracking is expected to become a major administrative task for home care agencies. Accurate tracking of employees' hours will be extremely important in order to ensure the employer is complying with all aspects of federal law and to avoid costly litigation.

Litigation
The number of wage and hour lawsuits filed against home care firms has risen sharply since the Home Care Rule took effect. In the period from October 1, 2015 to June 24, 2016, 196 federal lawsuits were filed alleging home care and home healthcare companies violated the FLSA, with an estimated 600 lawsuits filed in state courts during the same timeframe. States considered to be likely hotspots for litigation include California, New York, and Colorado. In addition to lawsuits filed by individuals, the home care industry is facing increased scrutiny by the DOL.

Recommendations
The DOL’s Home Care Rule will most likely be permanent. Due to the increased risk of facing lawsuits for noncompliance and the increased scrutiny of the home care industry by the DOL, home care companies need to be extremely watchful to make sure they are in compliance with the FLSA's requirements in minimum wage, overtime, and recordkeeping. In addition, companies connected with independent contractor home care workers should undertake a complete review of their practices to determine whether those workers are correctly classified as independent contractors.