Authored by Alex Passantino
As noted previously on this blog, the U.S. Department of Labor’s Wage and Hour Division recently proposed to limit the application of the Fair Labor Standards Act’s companionship services exemption. After two brief extensions, the period for public comment on the proposal ended last Wednesday, March 21, 2012.
The proposed regulation relates to a 1974 amendment to the FLSA that created an exemption from the minimum wage and overtime requirements for individuals who are engaged in providing “companionship services” to the elderly or infirm. Specifically, the exemption applies 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 (as such terms are defined and delimited by regulations of the Secretary).
29 U.S.C. 213(a)(15).
The Current Rule
In 1975, the Department of Labor promulgated regulations related to companionship services. In those regulations, the Department permitted the application of the exemption to employees of third-party employers (i.e., employers other than the individual or family for whom the employee is providing companionship services). Moreover, the Department defined “companionship services” as
those services which provide fellowship, care, and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs. Such services may include household work related to the care of the aged or infirm person such as meal preparation, bed making, washing of clothes, and other similar services.
29 CFR 552.6.
The exemption also applies to the performance of “general” household work, provided that the work does not exceed 20 percent of the total weekly hours worked. Id. Also excluded from the term “companionship services” is the provision of services “relating to the care and protection of the aged or infirm which require and are performed by trained personnel, such as a registered or practical nurse.” Id.
The Department concluded in 1975 that its regulations were “more consistent with the statutory language and prior practices concerning other similarly worded exemptions.” 40 Fed. Reg. 7405 (1975). Nevertheless, since 1975, the Department twice has proposed to amend the domestic services regulations. Both times, however, it has declined to do so. Indeed, in 2007, the Department vigorously defended its regulations — to the United States Supreme Court — as being the “most consistent” with the statute.
The Proposed Rule
On the heels of 37 years of Departmental defense of the current regulations (and 37 years of Congressional acquiescence in the Department’s explanation and interpretation of Congressional intent in passing the 1974 Amendments), the Department once again proposed to revise the companionship services regulations. Specifically, the proposed rule would eliminate the companionship services exemption for third-party employers (thus requiring the payment of minimum wage and overtime), severely limit the ability of the companion to engage in “meal preparation, bed making, washing of clothes, and other similar services [for the aged or infirm person]” by subjecting these tasks to the 20% limitation now applicable to “general” household work, and reinforce the prohibition on the provision of medical care.
The proposal immediately garnered attention far in excess than might be expected for an FLSA rulemaking involving a single, relatively specifically-applicable exemption. President Obama announced the proposed rulemaking at the White House in advance of its publication in the Federal Register. The House of Representatives Education and the Workforce Committee held a subcommittee hearing on “Ensuring Regulations Protect Access to Affordable and Quality Companion Care.” Senator Alexander questioned Secretary of Labor Hilda Solis about the proposal at a hearing of a Senate Appropriations subcommittee.
Not surprisingly given the public attention and the presence of the proposed rule at the intersection of labor issues and health care, response to the proposal was intense. The public docket shows that approximately 9500 commenters submitted their views on the Department’s proposal. Comments were submitted by a wide range of businesses, organizations, and individuals. Private duty companies, companionship services workers, disability rights organizations, consumers of companionship services and their families, small businesses, trade associations, labor unions, governmental entities, and Members of Congress (among many others) expressed their opinions of the Department’s proposed rule.
The comments ranged from short statements of approval or disapproval to comprehensive analyses of the anticipated economic and societal impact in the event that the Department published a final rule mirroring the proposal. Some commenters addressed their desire to expand the FLSA’s minimum wage and overtime requirements to companionship services workers. Others expressed their concern with the profound shift that such an expansion would have on an aged or infirm individual’s continuity of care, the ability of society to maintain a sufficient supply of home care aides, the potential for increased cost to taxpayers, the liability of American families for minimum wage and overtime violations (and the cost of recordkeeping requirements), and the ability of small businesses to create jobs, among other issues. Numerous comments also suggested alternative language and different policy choices.
The Department must now consider and analyze the thousands of comments it received, and determine whether to proceed with a final rule in the same form as it was proposed, modify the rule to address some of the more significant concerns raised in the comments, or abandon the rulemaking in its entirety. This process can take months; the Department has not yet established a target date for completion of their review and publication of the final rule.
In addition to the regulatory proceedings, several Senators and Representatives have proposed (or are working on) pieces of legislation defining the parameters of the companionship services exemption through statute (thereby “trumping” the Department’s regulatory proposal) and/or otherwise significantly limiting the Department’s rulemaking authority with respect to this exemption. Whether and when such legislation will advance remains to be seen.
Ultimately, despite the potential for significant legislative or regulatory upheaval in the industry, the regulation remains unchanged as of today. Employers of companionship services workers continue to be subject to the rules at Part 552 of the Code of Federal Regulations.
We will, of course, continue to keep you advised of any updates.