DOL Releases Final Rule on Domestic Service Exemption

On September 17, 2013, the United States Department of Labor (“DOL”) released a Final Rule revising its regulations on the domestic service exemption under the Fair Labor Standards Act (“FLSA”). The Final Rule will amend the applicability of the “companionship services” and “live-in domestic services” exemptions beginning January 1, 2015. Specifically, the DOL’s revised regulations will more narrowly define “companionship services” and prohibit third party employers (e.g. home care agencies) from claiming the exemptions.

When the domestic service exemption was created, the DOL intended to exempt employees who provided companionship services to the elderly or other persons who require assistance from the FLSA’s wage and hour provisions. However, as more individuals choose in-home care over care in a nursing home or other live-in facility, the workers providing these services have become more skilled than originally contemplated by the exemption. Thus, the DOL is limiting the application of the domestic service exemptions to: (i) increase wages for domestic service employees, (ii) improve the domestic service industry, and (iii) preserve Congress’s intent in applying the FLSA to domestic service employees.

Accordingly, only individuals, families, or households receiving services will be able to claim the companionship services or live-in domestic services exemptions, as long as all other requirements are met for the exemptions. Third party employers, such as home care or staffing agencies, will no longer be able to claim these exemptions. Therefore, third party employers must comply with the FLSA’s minimum wage and overtime requirements as they apply to non-exempt employees. Additionally, employers of live-in domestic service employees will be required to keep actual records of the hours worked by live-in domestic service employees.

The DOL’s Final Rule may very well be challenged in the courts, as the Final Rule effectively overrules a 2007 United States Supreme Court case. See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007).