Readers will recall our earlier posts (accessible here) relating to the U.S. Labor Department's proposed regulatory revisions that would significantly limit the application of the federal Fair Labor Standards Act's Section 13(a)(15) exemption for companions.  While the period for public comment on these proposals closed in March, a letter from an organization representing the interests of the disabled community, the National Council on Disability, demonstrates that it might not be too late to influence the outcome through other avenues.

A copy of correspondence from NCD to USDOL recaps an August meeting in which the NCD expressed its concerns that the proposed rule could have a "devastating impact on the community of Americans with disabilities" who rely upon domestic-service providers.  NCD urged DOL to engage in a "negotiated rulemaking process" with the disability community in order to minimize these negative effects.  NCD also offered to serve as a facilitator during that process, including by offering research and identifying experts to provide input that would become a "formative part of the final rule."

Whether or in what way USDOL has responded to NCD's overture is unknown.  However, USDOL's taking into account thoughtful, considered contributions like those NCD has offered could certainly lead to a better outcome than basing final action upon the thousands of form-letter comments submitted earlier.  For example, it is at least possible that the proposals could be changed to ensure that the exemption remains available to third-party companionship-service providers through whom many disabled persons secure those services.  Whatever the likelihood is that there will be such a modification could be improved by USDOL's having a greater amount of high-quality information on the subject.

USDOL has not yet published a date for releasing a final rule, but the release might nevertheless come without forewarning.  Interested parties might want to consider promptly joining the NCD's call for a "negotiated rulemaking process."

UPDATE 12/27/12:   USDOL now projects that the final rule will be released in April 2013.

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There have been further developments regarding the U.S. Department of Labor's proposed regulation that would drastically limit the Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption.  A collection of our posts relating to these matters can be accessed here.

The comment period for the proposed regulation closed on March 21, but the fight over the exemption continues with the Senate's recent entry into the fray.  A group of 11 Republican senators has introduced S. 3280 to block the proposed regulation.  The "Companionship Exemption Protection Act" would amend the FLSA to preserve the current state of the exemption.

Two of the bill's sponsors, Senators Alexander (R-Tenn.) and Johanns (R-Neb.), argue that the proposed regulation would drive up the cost of in-home care and would force families to institutionalize seniors, thereby straining state Medicaid budgets.  Their proposal is a more-elaborate take on the matter than is the identically-named H.R. 3066, introduced in the House of Representatives last September by Nebraska Republican Lee Terry.  One feature the bills have in common is that each would remove the Secretary of Labor's authority to "define[] and delimit[]" the exemption.

The companionship exemption provides that the FLSA's minimum-wage and overtime requirements do not apply to employees "employed in domestic service employment  to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves . . .."  However, USDOL's proposed regulation would revised the exemption by, among other things, significantly reducing the scope of exempt activities and making the exemption inapplicable to workers employed by third-party staffing agencies.  The most significant practical impact of the proposed regulation would be that far fewer individuals would qualify for the exemption.

As we previously noted, proponents of the effort to narrow the exemption initially sought to do so through legislative action.  However, those efforts subsequently shifted to the regulatory arena, most likely on the basis of political considerations.  Now, the battle appears to have come full circle.

Incidentally, neither of these bills would affect the potential impact of USDOL's proposals upon the FLSA's Section 13(b)(21) overtime exemption applying to "any employee who is employed in domestic service in a household and who resides in such household . . .."

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UPDATE (03/10/12):   The U.S. Labor Department has again extended the deadline for submissions.  Comments must now be received by Wednesday, March 21, 2012.

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The U.S. Labor Department has extended the time for commenting upon the proposed provisions that would essentially spell the end of the federal Fair Labor Standards Act exemptions for companions and live-in domestic-service workers.  The new deadline is March 12, 2012.

This extension was announced over the objections of many who favor the curtailment of these exemptions.  The Paraprofessional Healthcare Institute, one of the groups pushing for the changes, put it this way:  "The companionship exemption [restriction] was included as part of President Obama's 'We Can't Wait' agenda, and we wholeheartedly agree."  According to PHI, the fact that more than 2,000 comments have been submitted already is cause for bringing public input to a close.

It is clear that the expected campaign to generate favorable comments has been underway.  As one example, many submissions say this, with little variation:

Along with [GROUP NAME HERE] and on behalf of home care workers across the country, I am writing in support of the Department of Labor’s proposed rule (RIN) 1235-AA05.  Home care workers provide an invaluable service to our older family members and people living with disabilities, working hard to help them stay in their homes.  The proposed rule, which would provide home care workers with minimum wage and overtime protections, is essential to stabilizing the quality and consistency of care for those who need care and to improving the quality of the jobs of those providing that care.  Enacting the rule takes one step toward ensuring a stable and skilled workforce to meet the growing demand for these services.  Thank you for recognizing the essential service home care workers provide by suggesting this rule.  We urge you enact it as soon as possible.

Perhaps the proponents' sense of urgency has been provoked by the fact that workers and employers who would be adversely affected by the proposed rules appear to have been voicing a counterbalancing opposition in greater numbers as the former deadline approached.

Now that the Labor Department has decided that the proposals can wait a little longer, those who wish to offer substantive arguments against them can take advantage of the additional time.  For instance, they might urge the Labor Department to consider the fact that, while Congress authorized it to "define[] and delimit[]" the companionship exemption, no such authority appears in the FLSA's live-in domestic overtime exemption.  Compare 29 U.S.C. § 213(a)(15) with 29 U.S.C. § 213(b)(21).  Moreover, not so long ago, it was the constitutional role of Congress to "enact" FLSA changes thought to be desirable for public-policy reasons.

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The U.S. Labor Department has officially published the proposed provisions that would drastically limit the federal Fair Labor Standards Act's exemptions for "companionship" workers and live-in domestic employees.  As we have reported, adopting these proposals in their current form will mean that the proportion of such companions and domestic-service workers who are exempt from that law's minimum-wage and/or overtime requirements will be far smaller than it is today.

The deadline for submitting objections or other comments is February 27, 2012.

The Labor Department has been essentially unresponsive to employers' questions about its intentions as it developed these proposals.  However, it is now clear that, all along, officials have been working closely with proponents and other employee-advocacy groups.  A December 20 telephone conference hosted by the Paraprofessional Healthcare Institute revealed that communications with the Secretary of Labor and others at the Labor Department by those who favor the practical elimination of the exemptions have been "intensive."  This extended to an earlier submission of "thousands" of comments urging the kinds of changes that have now been proposed.

PHI favors restricting the exemptions despite the organization's acknowledgement that these revisions could well be "painful"; that they "may force some consumers to pay more, or receive fewer hours of service"; that "some profit margins may indeed become narrower for a while"; and that "some workers will have fewer hours".

The coalition of proponents will be coordinating another round of numerous statements favoring the changes.  Moreover, one teleconference presenter disclosed that the Labor Department will be keeping tabs on how many incoming comments there are, which is likely a hint that officials are inviting reason to characterize support as having been overwhelming.

Indications are that the result might be preordained.  But even if this is so, employers who are against the proposals have all the more reason to submit their objections and recommendations.  Failing to do so could provide fuel for a later argument (such as in any future litigation questioning the authority for and/or attacking the contents of the revisions) that the "regulated community" expressed little disagreement.

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As we suspected, efforts to eviscerate the federal Fair Labor Standards Act's Section 13(a)(15) "companionship" exemption have now formally moved to the regulatory arena.  The U.S. Labor Department has proposed a regulation that would limit the exemption to a far-narrower segment of those employees who work as in-home caregivers.  This move no doubt reflects a political judgment that legislative measures to amend the FLSA itself (about which we wrote in June) would not emerge from Congress.
 
The Proposed Limitations Are Substantial
 
The exemption provides that the FLSA's minimum-wage and overtime requirements do not apply to employees "employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves . . .."  One of DOL's stated goals is to limit this exemption to companions employed only by the individual, family, or household using the worker's services. Under the proposal, third-party employers, such as those companies existing for the purpose of providing companionship services, apparently could not assert the exemption for their employees engaged in this work.  This would be true even if the employee is jointly employed by both the third party and the individual/family/household.
 
The proposed regulations would also reduce the scope of exempt activities from "fellowship, care, and protection" to "fellowship and protection".  DOL's examples of what would qualify as "fellowship and protection" include walks, watching television, and "incidental, personal care services, such as dressing and grooming."  However, if the companion provided "incidental, personal care services" to an extent that exceeded 20 percent of his or her total hours worked in a workweek, the exemption would be lost for that workweek.  "[G]eneral household work", such as vacuuming and laundry, would also destroy the exemption for the workweek in which it occurs.
 
So What's The Justification?
 
Congress authorized DOL to "define[] and delimit[]" the exemption.  However, DOL's two principal rationales for the proposal appear to have more to do with legislative considerations falling within Congress's bailiwick than with appropriate interpretative rulemaking.
 
First, DOL says that the earnings of in-home caregivers have not grown commensurately with those of the in-home-care services industry generally since the exemption was promulgated in 1975. In addition, DOL predicates its changes upon a perception that today's in-home workers are more properly characterized as professional caregivers as compared to their predecessors in the 1970s, when the statutory exemption was enacted.
 
Objections Must Be Registered Promptly
 
Many believe that the proposal will have significant negative consequences.  If the revision is adopted, they say, this will substantially increase labor costs for third-party employers who can no longer rely upon the exemption.  In turn, this will translate into an far-greater financial burden for individuals, families, and households who have been depending upon those service providers.  Both developments are likely to result in an appreciable drop in companionship jobs and employment opportunities – in other words, the revision would by no means be a job-creator.
 
Anyone wanting to comment on or object to this proposal should act quickly.  Submissions must be tendered within 60 days following the proposed rule's publication in the Federal Register.

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In late June, we noted legislation introduced in the Senate and in the House of Representatives that would essentially repeal the federal Fair Labor Standards Act's Section 13(a)(15) "companionship" exemption in any practical sense.  U.S. Labor Department regulations and interpretations elaborate upon how and to whom the exemption may be applied.

Recent correspondence (link below) from the 28-member Eldercare Workforce Alliance to U.S. Secretary of Labor Hilda L. Solis suggests that proponents of such a change are re-directing their focus from legislation to regulatory limitations.  This letter urges DOL to take "timely action" by imposing a "revised interpretation of the exemption that will extend greater federal minimum wage and overtime protection under FLSA to the more than 1,500,000 paid home‐ and community‐based care workers who provide essential services to our nation's older adults and people with disabilities."  It is highly likely that the "revised interpretation" this advocates will amount to gutting the exemption by regulation.  Perhaps this reflects a political calculation that the legislative prospects are unfavorable.

For some time now, DOL's regulatory agenda has included a very general item expressing an intention to revisit the exemption.  A number of questions were raised about this in the U.S. Wage and Hour Division's July 13 short-on-transparency "webchat", but these were met repeatedly with DOL's reply that it is "premature" to discuss whatever the looming "proposal" is.  The sole detail to emerge is that DOL expects to publish a Notice of Proposed Rulemaking in October.

While of course it remains to be seen what actually transpires, one may reasonably suspect that at least some of the forthcoming proposal will consist of concepts that also appear in the pending legislation.  For example, the proposal might well say that the exemption cannot apply to a worker who is employed by the agency supplying his or her services to an elderly person or to the person's family.

It is also probable that the time period for commenting on and registering objections to this proposal will be relatively brief.  Those who oppose cutting-back on the "companionship" exemption must be vigilant and should be prepared to act on short notice.

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Eldercare Workforce Alliance Letter.pdf (184.20 kb)

Another effort is afoot to limit the federal Fair Labor Standards Act's Section 13(a)(15) "companionship" exemption to the point of non-existence in any practical sense.  Last week, apparently-identical bills (S. 1273 and H.R. 2341 -- see currently available version below) were introduced in the Senate and the House which would have precisely this effect.  Similar measures were proposed last year, but the newer ones would impose even-narrower restrictions.

The FLSA's minimum-wage and overtime requirements do not apply to "any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves .  .  .."  "Domestic service employment" refers to services of a household nature the worker performs in or about the private home of the person by whom he or she is employed.  The term "companionship services" means providing care, fellowship, and protection to people who cannot care for themselves due either to advanced age or to physical or mental difficulties.  Additional U.S. Labor Department regulations and interpretations explain how and to whom the exemption may be applied.

If the proposed amendment becomes law, only an employee employed "on a casual basis" to provide companionship services could be eligible for exemption under Section 13(a)(15).  In turn, the phrase "on a casual basis" would be defined so as to make the exemption available only if:

♦   The companionship employment is irregular or intermittent;

♦   The work is not performed by someone whose vocation is to provide companionship services;

♦   The worker is employed only by the family or household using his or her services, rather than by another employer or agency (this is almost certainly designed to exclude even joint-employment arrangements involving, for instance, the worker, a home-healthcare agency, and the service recipients);

♦    The worker's employment by the employer is limited to no more than five hours "per week" (whether a calendar week, a workweek, or some other kind of "week" the bills do not say, nor do they clarify whether the five-hour limit is to be viewed as an average or as an each-"week" proposition); and

♦    The worker's employment by the employer may not extend beyond a "time period" of twelve "weeks" in a calendar year.

These last two restrictions are more stringent than was their counterpart in last year's proposed changes.

It is likely that most employees providing companionship services (and apparently all such workers employed by home-healthcare agencies and similar organizations) would no longer fall within the amended exemption.  It is entirely foreseeable that, instead of improving the circumstances of "direct care workers" and "older adults" whom the amendment purports to help, the changes would expose the interests of both groups to the principle of unintended consequences at the worst-possible time.

The bills have been referred to legislative committees at this point, so it does not appear that there will necessarily be immediate action.  Nevertheless, the Service Employees International Union supports the bills, so opponents of these measures should take them seriously and should waste no time in making their views known to their Senators and Representatives.

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S.1273 H.R. 2341.pdf (49.95 kb)