New home health care rules

Most employers of home health care workers are aware of the labor law changes affecting their industry starting in January. Many of these employers, however, do not fully appreciate the adjustments they will have to make to their payroll and employment practices to comply with the new rules.

Starting Jan. 1  home health care workers classified as “companions”, who are employed by third-part companies, are no longer exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA). Workers directly employed as companions, by the individual, household, or family receiving the services, are still eligible for the exemption but the type of work they can do is limited due to a change in the U.S. Department of Labor’s (DOL) definition of companionship services which no longer includes care of the individual, only “fellowship and protection”.  In October, the DOL announced that it would delay enforcement of the rule until July 1, 2015. However, the rule is still technically in effect on Jan. 1, which means that employees could file private suit for violations occurring after that. 

So essentially, third-party employers who provide companionship services to their clients must now pay all of their employees at least the federal minimum wage and overtime pay after 40 hours in a workweek. The majority of these employees were already paid at least minimum wage but it was common for employers to not pay overtime.  

Paying overtime sounds simple enough but due to a variety of pay practices at home health care companies the actual implementation of correct overtime payment will be quite complicated. For example, many home health care employers pay by the day or by the client. Employers also pay non-discretionary bonuses for work performance and extra pay when employees are on call.

Other common practices include paying mileage between visits instead of hours worked, paying set weekly salaries to non-exempt employees, not recording all hours worked, not recording meal and break time, and not recording sleep time for employees who work more than a 24-hour shift. All of these practices complicate the new overtime requirement. For starters, all work time must now be recorded so that overtime can be paid when an employee exceeds 40 hours in a week.

That includes rest breaks, travel between clients, morning meetings, trips to the main office to drop off equipment and paperwork, etc. Employers can continue to pay a weekly salary, or a day rate, or a client rate, but they must track all of the hours worked so that any hours over 40 are compensated correctly. Paying a non-exempt employee by any of these methods does not exempt them from overtime pay. When employers pay non-discretionary bonuses and extra amounts for on-call pay, that compensation must be included in the weekly calculation of the regular rate of pay so that the corresponding overtime rate is accurate. 

It should be noted that in several states, the state labor law already required that workers providing companionship services be paid minimum wage and overtime.  However, the majority of states in the U.S. had laws that mirrored the old FLSA exemption. 

Several employers have asked whether Colorado’s overtime exemption for companionship work still applies to their employees. Even though they now have to pay overtime after 40 hours in a week per the federal change, they want to know if they are also liable for overtime after 12 hours in a day. Per conversations held with the Director of Labor of Colorado’s Dept. of Labor and Employment, Michael McArdle, the companionship exemption applicable under Colorado State Minimum Wage Order 30 is reflective of the FLSA exemption prior to the new federal changes and there is no proposal to change it for the upcoming Minimum Wage Order 31. More information on the Colorado Division of Labor’s definition of companionship can be found in its Advisory Bulletin and Resource Guide published in March 2012.

If you employ home health care workers, make sure you know the rules and how to stay in the compliance. A seemingly simple thing like overtime can have many hidden complications. It will take several weeks, if not months, for a company to adjust to all of the changes that must be made to payroll, time keeping, and logistics. Begin making changes now so that you’re off to a good start in 2015!