Home Health Workers to Receive Overtime in Companionship Exemption Court Ruling

What New Overtime Ruling Means for Your Home Healthcare Company

This summer was packed with wage and hour related hot topics: From raising the minimum wage to new overtime proposals. But last week, things got even hotter—especially for the home healthcare industry.

The US Court of Appeals for the District of Columbia reinstated regulations that will make more than 2 million workers eligible for wage and overtime protections. In this ruling, home healthcare agencies and other third party companies, can no longer claim the “companionship exemption” for their employees.

What is the Companionship Exemption?

In 1974, Congress created a companionship exemption from minimum wage and overtime compensation laws. This ruling made anyone who performed “companionship services” like watching over an elderly person or a person with an illness, exempt from basic wage and hour law. Initially, this exemption was meant for patients and family members who hired live-in caregivers, but the exemption eventually allowed businesses, like home healthcare companies, to claim the companionship exemption, too₁.

How Is the Companionship Exemption Changing?

The Department of Labor has issued significant changes to the companionship exemption. They will clearly define the job tasks that include exempt companionship services, and publish a new set of recordkeeping requirements for employers who hire live-in caregivers₂. However, the change that will have a significant impact on the home healthcare industry is that companionship service exemptions can only be claimed by an individual or family—not a third party company.

What This Means for Your Home Healthcare Company

The home healthcare industry operates notoriously on thin margins and largely on public assistance₃. These companies will need to find ways to cut costs, so they can pay their employees properly. The best way to do that? Limit overtime exposure.

How EPAY Can Help

The new ruling doesn’t have to cost your business. EPAY Systems offers a cloud based time and labor management solution that can help you manage your home healthcare workers and reduce labor costs by 5% or more. Stay on top of overtime exposure by setting up real time alerts to get notified when an employee reaches or is close to reaching overtime. Contact us to learn more.

Resources

1. http://www.healthcaredive.com/news/court-ruling-on-wages-could-shake-up-home-healthcare/404466/
2. http://hr.blr.com/HR-news/Compensation/FLSA-Fair-Labor-Standards-Act/Overtime-for-many-more-home-health-care-workers#
3. http://www.bizjournals.com/buffalo/news/2015/08/25/home-care-wage-ruling-will-have-financial-impact.html