New Overtime Pay Requirements for Domestic Employees
Recent additions and changes in both California and federal wage law have made it far more costly to employ household help. We explain below.
California Domestic Workers Bill of Rights - Effective
January 1, 2014
California's new "Domestic Workers Bill of Rights" ("DWBOR") mandates overtime pay for domestic employees, including childcare providers (e.g. nannies), caregivers for the disabled or elderly, house cleaners and personal attendants.
Effective January 1, 2014, California employers of these household employees will be required to pay time-and-a-half overtime premiums for any work beyond nine hours in one day, or beyond 45 hours in one week. Although the new requirements apply to "childcare providers," the statute specifically exempts "babysitters" who are either minors or are "casual babysitters" employed on an irregular and intermittent basis, as long as they do not perform a "significant amount of work" other than supervising, feeding and dressing children. Also exempted from this new requirement are workers who are close relatives (a parent, grandparent, spouse, sibling or child) of the employer, and employees who are employed under various State health and welfare programs or work for certain licensed facilities.
Companies providing home health care services and individuals who employ so-called "personal attendants" for their own care or care of a family member opposed the bill, arguing that the DWBOR will render home health care unaffordable. In response to these concerns, a "sunset" provision was added into the bill which will automatically repeal the DWBOR after three years and the Governor is required to convene a committee comprised of personal attendants and their employers to study and report on the impact of the law.
Federal Exemptions for "Companionship Services" and "Live-In" Domestic Service Employees Narrowed -
Effective January 1, 2015
Meanwhile, the U.S. Department of Labor ("DOL") announced revisions to its regulations under the Fair Labor Standards Act ("FLSA") defining the overtime pay exemptions for so-called "companionship services" and "live-in domestic service" providers. Effective January 1, 2015, the revisions will:
1) eliminate the companionship services and live-in domestic employee overtime exemptions for workers employed through an agency (as opposed to directly by the individual, family or household to whom the services are provided);
2) significantly narrow the exemption for workers employed by the individuals, family or household for whom the services are provided; and
3) increase recordkeeping requirements for employers of live-in domestic employees.
A. Elimination of Exemptions for Employees of Third-Party Employers
The elimination of the exemptions for employees who are not directly engaged by the homeowner (e.g., those engaged through an agency) is expected to significantly impact the home care industry as thousands of employees are currently exempt from overtime pay. Households who use an agency for these services will expect to pay more in 2015. Once the new law takes effect, these workers will become entitled to receive overtime premiums for hours worked in excess of 40 hours in the week. This is more protective than the DWBOR 45-hour threshold for overtime pay.
B. Narrower Definition of "Companionship Services" for Workers Directly Employed by Service Recipients or their Families
Under the current regulations, employers are not required to pay overtime premiums to employees who provide "companionship services," which are defined 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." Whereas, the current regulation does not separately define "fellowship," "care" and "protection", the new regulation provides separate definitions for each term and then narrows the definition of exempt companionship services to include only the provision of "fellowship" and "protection", but not "care." As a result, a worker who spends more than 20% of his or her work time providing "care" will no longer qualify for the overtime exemption.
The terms "fellowship" and "protection" are defined as follows:
"The provision of fellowship means to engage the person in social, physical, and mental activities, such as conversation, reading, games, crafts, or accompanying the person on walks, on errands, to appointments, or to social events."
"The provision of protection means to be present with the person in his or her home or to accompany the person when outside of the home to monitor the person's safety and well-being."
In contrast, "care" is defined as follows:
"The provision of care means to assist the person with activities of daily living (such as dressing, grooming, feeding, bathing, toileting, and transferring) and instrumental activities of daily living, which are tasks that enable a person to live independently at home (such as meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care)."
C. Employees Performing Household Work or "Medically Related Services" Excluded
The new regulation also excludes from the exemption any employee performing household work that primarily benefits members of a household other than the elderly, sick, injured or disabled person for whom companionship services are provided, such as cooking or washing laundry for the entire family or household.
Disqualification from the exemption will also result if the employee provides "medically related services," which are defined as services that "typically require and are performed by trained personnel, such as registered nurses, licensed practical nurses, or certified nursing assistants." Notably. the exclusion is not limited to nurses or nursing assistants and the determination of whether an employee is providing "medically related services" must be based on the services provided, not the employee's job title or certification.
The DOL predicts that "in many cases, direct care workers outside these named categories, particularly home health aides, will be excluded from the companionship services exemption." In other words, these employees become overtime pay eligible once the new Regulations take effect.
D. New Recordkeeping Requirements for
Live-In Employees
Under the current regulations, live-in domestic service employees may enter into verbal agreements with their employers to exclude certain hours from "compensable work time", meaning they need not be paid for such time as sleep time or meal times, as long as the employee is free from all work duties during that time. And, employers are not required to have written records of the employee's work hours. This will change under the new regulation. Once the new regulation takes effect, households must maintain an accurate record of all hours worked. However, the employer may meet this requirement by requiring the employee to keep a record of his or her hours and submit it to the homeowner. In addition to the hours worked, employees should be required to describe the amount of time spent on their various duties so it can be established they spent 80 percent of their work hours on fellowship and protection.
E. Joint Employer Liability
Some good news for those that use an agency for their household helpers.Under the new regulation, third party employers may not treat companionship services or live-in employees as exempt and will be obligated to comply with minimum wage, overtime and any other applicable requirements under the FLSA. The third party employer will remain fully and solely liable for compliance even if the employer is jointly employed by the individual, family or household receiving services and otherwise meets the requirements of the companionship services exemption. In other words, the individual, family or household receiving services will not be held jointly liable for FLSA violations as long as the requirements for the companionship services exemption are met.
F. Effect of FLSA Regulatory Revisions on California Employers
California household employers must follow the law which is more beneficial to employees. While there is no so-called "companionship services" exemption from California's overtime pay requirements, the California Wage Order covering domestic employees (Wage Order No. 15) does provide a similar exemption for so-called "personal attendants."
The Wage Order defines a "personal attendant" as a person employed "in a private household, to supervise, feed, or dress a child or person who by reason of advanced age, physical disability, or mental deficiency needs supervision" and who spends at least 80% of his or her work time engaged in such duties. In contrast, under the revised FLSA regulations an employee will be excluded from the companionship services exemption if he or she spends more than 20% of his or her work time engaged in the provision of "care," which is defined to include "dressing, grooming, feeding, bathing, toileting . . . meal preparation," etc." The only area of overlap between the California personal attendant and the federal companionship exemption is "supervision" of the child, elderly or disabled person by the caregiver. Supervision is analogous to "fellowship" and "protection" under the new federal regulations. Therefore, if the caregiver spends at least 80 percent of her work hours on such duties, overtime is only owed after nine hours in the day or 45 hours in the week.
What Home Care Industry Employers Should Do
1. Employers of home care workers should determine the increased costs of overtime pay and explore strategies for adjusting staffing and scheduling policies to reduce those costs.
2. If home care workers are paid on a salary or per-visit basis, consider changing them to hourly pay to simplify payroll.
3. Home care workers should be trained and required to accurately record all of their work hours, including meal and rest breaks, and should be required to certify the accuracy of their reported time in writing.
If you have any questions about the matters discussed in this issue of Compliance Matters, you may contact any member of the Firm. We are reachable at 818-508-3700 or www.brgslaw.com.
Richard S. Rosenberg
Founding Partner
