Takeaways
- A proposed DOL rule would restore the FLSA’s companionship exemption from its minimum wage and overtime requirements for caregivers working in client homes. It also would eliminate a restriction on the amount of “care” that companionship workers can provide to elderly and “infirm” clients under the exemption.
- The proposal would restore the overtime exemption for live-in domestic workers employed by home care agencies.
- A 2013 rule that barred third-party home care agencies from using the companionship exemption remains in effect, but the DOL has instructed agency staff not to enforce the rule.
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The “companionship services” exemption to Fair Labor Standards Act (FLSA) minimum wage and overtime requirements would again be available to third-party agencies that employ home caregivers and live-in domestic service employees under a proposed rule issued by the Department of Labor (DOL) on July 2, 2025.
The DOL is accepting comments on the proposed rule through Sept. 2, 2025.
Enacted by Congress in 1974, FLSA Sec. 213(a)(15) exempts workers employed in “domestic service” or individuals who “provide companionship services for individuals” from minimum wage and overtime requirements. Section 13(b)(21) exempts from overtime (but not the minimum wage requirement) “any employee who is employed in domestic service in a household and who resides in such household.” The regulations enforcing these exemptions define companionship services as “fellowship, care, and protection for a person who … cannot care for his or her own needs.”
Proposed Rule: Rescinding 2013 Rule
In 2013, the Obama Administration’s DOL issued a final rule revising the regulation to exclude caregivers employed by third-party agencies from the exemption. The vast majority of such workers are employed by third-party agencies. Under the 2013 rule, the companionship exemption can be claimed only for caregivers and companions hired directly by the individual client (or a client’s family member). Third-party agencies that hired such employees to provide in-home care cannot claim the exemption.
The 2013 revision also restricted the time these exempt employees can spend on providing “care” to the elderly client or client with a “physical or mental infirmity” to just 20 percent of an employee’s weekly hours worked. “Care” refers to activities of daily living (such as feeding, bathing, and toileting), meal preparation, and similar assistance.
The current proposed rule would rescind the 2013 rule, restoring the exemption for employees of third-party home care entities and eliminating the 20 percent restriction on the amount of time exempt employees can spend providing “care.”
DOL Suspends Enforcement
The DOL has suspended enforcement of the 2013 rule while it reevaluates the rule’s provisions. On July 25, the Wage and Hour Division issued a Field Assistance Bulletin (FAB) advising agency staff to discontinue enforcing the 2013 rule against third-party home care agencies that claim the exemption, including in DOL cases currently pending. The FAB also instructed field staff not to consider limits on the time an employee spends providing “care” when determining whether the employee is providing companionship services for purposes of the exemption. The FAB noted, however, that the Wage and Hour Division may exercise its authority to enforce the provision in specific instances the wage and hour administrator deems appropriate.
The 2013 rule remains in effect, for now, and the FAB does not apply to private litigation. The DOL’s policy of non-enforcement is significant, though, because the home care industry has been a focus of DOL enforcement activity and litigation.
Impact on Home Care Industry
The proposed rule, if enacted, would be welcome news for third-party agencies that place companionship services and live-in domestic service employees in client homes. In comments submitted to the DOL, homecare agencies have noted the challenges of providing continuity of care to clients (who often have dementia or other conditions that make continuity of care particularly important) while controlling overtime costs. Their comments also note the struggle for caregivers who have faced restrictions on the hours they are allowed to work for the agency as a result, along with the considerable financial burden on clients — typically elderly individuals and people with disabilities who rely on these critical supports to remain in their homes.
Restoring the exemption for third-party agencies would bring clarity and significant relief to an industry that is a frequent target of wage and hour litigation. Third-party agencies have faced disputes over the compensability of sleep time and pay for time spent traveling between client sites, among other claims. In fact, a certiorari petition is pending before the U.S. Supreme Court, for review of a U.S. Court of Appeals for the Third Circuit decision against a home care agency on the compensability of breaks and travel time. (Nursing Home Care Management v. Secretary, U.S. Department of Labor, No. 23-2284.)
Third-party agencies must continue to comply with state and local minimum wage laws, including in jurisdictions that have not adopted the FLSA’s companionship exemption.
