FLSA Exemptions Further Defined

Providers of companionship services employed by health care agencies are exempt from minimum wage and overtime protections.

Employers faced with a case that involves provisions of the Fair Labor Standards Act (FLSA) often find themselves attempting to wade through the thicket of regulations without necessarily being aware of recent changes to the law that may have significant impact. The FLSA involves technical and often-changing interpretations of provisions within the Code of Federal Regulations and the rules and regulations of the Department of Labor.

One recent example is the U.S. Supreme Court decision on June 11, 2007 that upholds and further defines the limited companionship services exemption originally established in the FLSA challenged by the federal Court of Appeals’ ruling in Long Island Care At Home, Ltd. v. Coke, 2007 WL 1661472 (U.S. June 11, 2007).  Additionally, the Court also referred the issue to Congress for legislative remedy.

Since 1974, the FLSA has governed domestic and companionship services workers.

Adopted in 1938, the FLSA sets the minimum wage rate, overtime pay, regulates equal pay, record-keeping requirements and child labor standards. Since 1974, the FLSA specifically governs minimum wage and overtime rules for domestic service employment and companionship services.  But, domestic service employees, those performing general household work on a more than casual basis, are entitled to at least the Federal minimum wage and overtime, and those performing companionship services, as defined by the Department of Labor, have limited exemptions that do not require the payment of minimum wage and overtime.

The companionship services exemptions are in force only when ALL conditions are present.

The companionship services exemptions are in force when ALL conditions that constitute “companionship services” are present. They include 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. “Where this 20 percent limitation is exceeded, the employee must be paid for all hours in compliance with the minimum wage and overtime requirements of the FLSA.” (See Department of Labor Fact Sheet: Companionship Exemptions)

The Coke decision is important because it is estimated that currently over one million companion workers are employed by home healthcare agencies throughout the United States, and this ruling will have a significant impact on overtime considerations. In the South Florida market where the elderly population is significant, the impact can already be seen.  In a recent case brought against a high profile South Florida company that operates in the domestic companionship services market, a plaintiff alleged, unsuccessfully, that as an employee of the company she was entitled to overtime pay for providing domestic companionship services.

Home healthcare provider who is employed by a third-party agency meets the exemption under the FLSA.

In the Coke case, Evelyn Coke brought a similar action against her employer, Long Island Care at Home, Ltd., for unpaid wages, claiming the FLSA companionship services exemption was not applicable to individuals, like her, employed by third-party agencies. Coke challenged the enforceability of the Department of Labor regulation that specifically provides that persons employed by third parties are governed by the “companionship services” exemption. The federal Court of Appeals ruled in Coke’s favor finding that the exemption for home health-care providers should not apply to non-family employees because the intention of the regulation was to exempt companions, not individuals employed to assist with housekeeping and the activities of daily living.  

Definition of companionship services is broadly defined.

The Supreme Court decision to overturn the Appellate Court’s decision recognizes that the FLSA explicitly leaves gaps as to the scope and definition of certain statutory terms, including domestic service employment and companionship services, and provides the Department of Labor with the power to fill these gaps through its rules and regulations.  Accordingly, the Supreme Court found that the recently issued Department of Labor regulation, which broadly defines domestic service employment and companionship services to include services provided by a home healthcare provider who is employed by a third-party agency, meets the exemption under the FLSA and is an appropriate gap filler.

The FLSA and Florida law.

The Coke decision emphasizes the importance of minimum wage and overtime considerations under the FLSA and Florida law. Lawsuits alleging violations of minimum wage and overtime laws, such as the FLSA, are on the rise. As a result, it has become increasingly important for employers to pay close attention to the detailed requirements of the FLSA and to seek counsel to assist with the complex minimum wage and overtime compliance issues.