By: Ron Chapman, Jr. and Brent Hockaday
After nearly four decades of shelter, third-party home care agencies face the possibility of losing the protections of the companionship exemption of the Fair Labor Standards Act (“FLSA”). Decades ago, Congress carved out an exemption from the FLSA’s minimum wage and overtime requirements for workers in the domestic care industry who provide companionship services. These services include “care, fellowship, and protection” for the elderly and mentally infirm. The Department of Labor traditionally has applied this exemption to these workers regardless of whether the workers are employed by the clients they care for or a third-party agency.
The Department of Labor recently signaled its intention to issue regulations limiting the scope of the exemption to exclude companionship service workers employed by third-party home care agencies. Should these changes take effect, these agency providers would no longer enjoy the protections of the exemption, and instead would face significant minimum wage and overtime obligations. Without the protections of the exemption, home care agencies would be forced to compensate their employees who engage in companionship services at one-and-one-half times their regular rate of pay for all hours worked over 40 in a given week. Depending on an agency’s practices, this could increase overhead expenses drastically and/or create significant record-keeping challenges.
To navigate through these potential changes and avoid further exposure from the Department of Labor and/or potential litigation, third-party home care agencies should take preventive measures immediately. At a bare minimum, agencies should review their employee handbooks and job descriptions to ensure the scope of a companionship worker’s duties is narrowly tailored. More specifically, agencies should define what tasks or services are compensable. Additionally, these documents must make it clear that the agency will compensate employees only for the identified tasks. This will help to avoid ambiguity when the workers record their time or when reconciling time records.
Furthermore, agencies should exhaust all remedial measures at the company level with effective auditing practices. This can come in the form of electronic tracking of duties, task-coding specific actions taken during a shift, or conducting random or scheduled audits of the companionship workers. For maximum protection, agencies should participate in all of these activities so they can identify issues before negative patterns emerge. In order to take full advantage of these actions, company record-keeping is now essential. It will be imperative for agencies to retain all of their time records from workers engaged in companionship services for a minimum of three years. Third-party home care agencies that have not kept these records should start immediately. Finally, agencies should enforce all time-keeping policies strictly and set forth clearly-defined disciplinary actions for those employees who fail to comply. This can be done through a progressive discipline policy that highlights specific repercussions for workers who fail to follow the policy.
While these efforts may require some home care organizations to make modest investments and change some practices, the prospect of a class-action lawsuit and the corresponding potential exposure in the long-run makes the initial outlay well worth it. In short, home care agencies have the opportunity to thwart future costs that could, for some operations, mean the difference between staying operational and going out of business.
Ron Chapman, Jr. is a shareholder in the Dallas office of Ogletree Deakins, an international labor and employment law firm, and a member of the firm’s five-person Board of Directors. Brent Hockaday is an associate in the firm’s Dallas office.