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Section 13(a)(15) of the Fair Labor Standards Act (FLSA or the Act) provides an exemption from the Act’s minimum wage and overtime pay requirements for domestic service employees engaged in providing companionship services for individuals who (because of age or infirmity) are unable to care for themselves. Section 13(b)(21) of the FLSA provides an exemption from the Act’s overtime pay requirement for domestic service employees who reside in the household in which they provide services. In this rulemaking, the Department proposes to rescind a 2013 rule which, among other changes, precluded third-party employers from claiming either exemption and established limits on the amount of certain types of duties that exempt companions could perform. See 78 FR 60454 (Oct. 1, 2013).

Statement of Need:

Section 13(a)(15) of the Fair Labor Standards Act (FLSA or the Act) provides an exemption from the Act’s minimum wage and overtime pay requirements for domestic service employees engaged in providing companionship services for individuals who (because of age or infirmity) are unable to care for themselves. Section 13(b)(21) of the FLSA provides an exemption from the Act’s overtime pay requirement for domestic service employees who reside in the household in which they provide services. In this rulemaking, the Department has proposed to rescind a 2013 rule which, among other changes, precluded third-party employers from claiming either exemption and established limits on the amount of certain types of duties that exempt companions could perform. 91 FR 28976; see also 78 FR 60454 (2013 rule).

Summary of the Legal Basis:

The exemptions at issue in this rulemaking were added to the FLSA by Congress in the 1974 FLSA Amendments, which included a broad grant of rulemaking authority empowering the Secretary of Labor to "prescribe necessary rules, regulations, and orders with regard to the amendments made by this Act." 1974 Amendments, Pub. L. No. 93-259, 29(b), 88 Stat. 76. Additionally, the FLSA’s sec. 13(a)(15) exemption for employees who provide companionship services provides that the scope of that exemption should be defined and delimited by regulations of the Secretary. 29 U.S.C. 213(a)(15).

Alternatives:

The Department considered two alternatives in its proposed rule. First, the Department considered the alternative of preserving the status quo under the current regulations. Second, the Department considered the alternative of retaining some changes from the 2013 rule in lieu of a wholesale return to the pre-2013 regulations specifically, retaining all changes to the regulatory text in part 552 introduced by the 2013 rule except for the third party provision codified at 29 CFR 552.109 and limits on the provision of care codified in 29 CFR 552.6(b). This approach would, for example, keep the 2013 rule's updated definition of the job duties which constitute care and its removal of outdated domestic service worker examples like governesses, footmen, and grooms.

Anticipated Costs and Benefits:

Anticipated costs for the final rule are under development. In its proposal, the Department discussed potential costs such as longer work hours and/or reduced pay for affected home care workers, lower morale for home care workers, increased worker turnover in the home care industry, added difficulty attracting workers to the home care industry, and modest rule familiarization costs. See 90 FR 28982.  Anticipated benefits for the final rule are also under development. In its proposal, the Department discussed potential benefits such as reduced labor costs for home care provider agencies, reduced costs for home care services for consumers, reduced Medicaid expenditures for the Federal government, expanded access to home care services, and reduced institutionalization of individuals who are in need of care. See 90 FR 28981-82.

Risks:

Under development