# Application of the Fair Labor Standards Act to Domestic Service > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2011-32657 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** December 27, 2011 - **Citation:** 76 FR 81190 ## Text DEPARTMENT OF LABOR Wage and Hour Division 29 CFR Part 552 RIN 1235-AA05 Application of the Fair Labor Standards Act to Domestic Service AGENCY: Wage and Hour Division, Department of Labor. ACTION: Notice of proposed rulemaking. SUMMARY: The Department of Labor (the Department or DOL) proposes to revise the current Fair Labor Standards Act (FLSA or the Act) regulations pertaining to the exemption for companionship services and live-in domestic services. Section 13(a)(15) of the FLSA exempts from its minimum wage and overtime provisions domestic service employees employed “to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).” Section 13(b)(21) of the FLSA exempts from the overtime provision any employee employed “in domestic service in a household and who resides in such household.” These exemptions were enacted in 1974 at the same time that Congress amended the FLSA to extend coverage to domestic service employees employed by private households. The regulations governing these exemptions have been substantively unchanged since they were promulgated in 1975. Due to significant changes in the home health care industry over the last 35 years, workers who today provide in-home care to individuals are performing duties and working in circumstances that were not envisioned when the companionship services regulations were promulgated. The number of workers providing these services has also greatly increased, and a significant number of these workers are being excluded from the minimum wage and overtime protections of the FLSA under the companionship services exemption. The Department has re-examined the regulations and determined that the regulations, as currently written, have expanded the scope of the exemption beyond those employees whom Congress intended to exempt when it enacted §§ 13(a)(15) and 13(b)(21) of the FLSA. Therefore, the Department proposes to amend the regulations to revise the definitions of “domestic service employment” and “companionship services.” The Department also proposes to clarify the type of activities and duties that may be considered “incidental” to the provision of companionship services. In addition, the Department proposes to amend the record-keeping requirements for live-in domestic workers. Finally, the Department proposes to amend the regulation pertaining to employment by a third party of companions and live-in domestic workers. This change would continue to allow the individual, family, or household employing the worker's services to apply the companionship and live-in exemptions and would deny all third party employers the use of such exemptions. DATES: Comments must be received on or before February 27, 2012. ADDRESSES: You may submit comments identified by RIN 1235-AA05, by either one of the following methods: Electronic comments, through the Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Mail: Address all written submissions to Mary Ziegler, Director, Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW., Washington, DC 20210. Instructions: Please submit one copy of your comments by only one method. All submissions must include the agency name and Regulatory Information Number (RIN) 1235-AA05. Please be advised that comments received will be posted without change to http://www.regulations.gov, including any personal information provided. Because we continue to experience delays in receiving mail in the Washington, DC area, commenters are strongly encouraged to transmit their comments electronically via the Federal eRulemaking Portal at http://www.regulations.gov or to submit them by mail early. For additional information on submitting comments and the rulemaking process, see the “Public Participation” heading of the SUPPLEMENTARY INFORMATION section of this document. Docket: For access to the docket to read background documents or comments received, go to the Federal eRulemaking Portal at http://www.regulations.gov. FOR FURTHER INFORMATION CONTACT: Mary Ziegler, Director, Division of Regulations, Legislation, and Interpretation, U.S. Department of Labor, Wage and Hour Division, 200 Constitution Avenue NW., Room S-3502, FP Building, Washington, DC 20210; telephone: (202) 693-0406 (this is not a toll-free number). Copies of this proposed rule may be obtained in alternative formats (Large Print, Braille, Audio Tape, or Disc), upon request, by calling (202) 693-0675 (not a toll-free number). TTY/TTD callers may dial toll-free (877) 889-5627 to obtain information or request materials in alternative formats. Questions of interpretation and/or enforcement of the agency's current regulations may be directed to the nearest Wage and Hour Division (WHD) District Office. Locate the nearest office by calling the Wage and Hour Division's toll-free help line at (866) 4US-WAGE (866) 487-9243 between 8 a.m. and 5 p.m. in your local time zone, or log onto the Wage and Hour Division's Web site for a nationwide listing of Wage and Hour District and Area Offices at: http://www.dol.gov/whd/america2.htm. SUPPLEMENTARY INFORMATION: I. Electronic Access and Filing Comments Public Participation: This notice of proposed rulemaking is available through the Federal Register and the http://www.regulations.gov Web site. You may also access this document via the Wage and Hour Division's home page at http://www.wagehour.dol.gov. To comment electronically on Federal rulemakings, go to the Federal eRulemaking Portal at http://www.regulations.gov, which will allow you to find, review and submit comments on documents that are open for comment and published in the Federal Register . Please identify all comments submitted in electronic form by the RIN docket number (1235-AA05). Because of delays in receiving mail in the Washington, DC area, commenters should transmit their comments electronically via the Federal eRulemaking Portal at http://www.regulations.gov, or submit them by mail early to ensure timely receipt prior to the close of the comment period. Submit one copy of your comments by one method only. II. Background Congress extended FLSA coverage to “domestic service” workers in 1974, amending the law to apply to employees performing services of a household nature in or about the private home of the person by whom they are employed. See 29 U.S.C. 202(a), 206(f), 207(l). Domestic service workers were made subject to the FLSA even though they worked for a private household and not for a covered enterprise. Domestic service workers include, for example, employees employed as cooks, butlers, valets, maids, housekeepers, governesses, janitors, laundresses, caretakers, handymen, gardeners, and family chauffeurs. Senate Report No. 93-690, 93rd Cong., 2d Sess. p. 20 (1974). The 1974 Amendments also created an exemption from both the minimum wage and overtime pay requirements of the Act for casual babysitters and persons “employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).” 29 U.S.C. 213(a)(15). Congress also created a more limited exemption from the overtime pay requirement for domestic service employees who reside in the household where they work. 29 U.S.C. 213(b)(21). Congressional committee reports describe the bases for extending the minimum wage protections to domestics as “so compelling and generally recognized as to make it hardly necessary to cite them.” Senate Report No. 93-690, at p. 18. Private household work had been one of the least attractive fields of employment. Wages were low, work hours were highly irregular, and non-wage benefits were few. Id. The U.S. House of Representatives Committee on Education and Labor stated its expectation “that extending minimum wage and overtime protection to domestic service workers will not only raise the wages of these workers but will improve the sorry image of household employment. * * * Including domestic workers under the protection of the Act should help to raise the status and dignity of this work.” House Report No. 93-913, 93rd Cong., 2d Sess., pp. 33-34 (1974). The legislative history explains that the 1974 Amendments were intended to include all employees whose vocation was domestic service, but to exempt from coverage babysitters and companions who were not regular bread-winners or responsible for their families' support. It was not intended to exclude trained personnel such as nurses, whether registered or practical, from the protections of the Act. See Senate Report No. 93-690, at p. 20. Senator Williams, Chairman of the Senate Subcommittee on Labor and the Senate floor manager of the 1974 Amendments to the FLSA, described companions as “elder sitters” whose main purpose is to watch over an elderly or infirm person in the same manner that a babysitter watches over children. 119 Cong. Rec. S24773, S24801 (daily ed. July 19, 1973). Senator Williams further noted that all other work, such as occasionally making a meal or washing clothes for the person, must be incidental to that primary purpose. Id. On February 20, 1975, the Department issued regulations and interpretations in 29 CFR part 552 implementing the domestic service employment provisions See 40 FR 7404. Subpart A of the rule defined and delimited the terms “domestic service employee,” “employee employed on a casual basis in domestic service employment to provide babysitting services,” and “employment to provide companionship services to individuals who (because of age or infirmity) are unable to care for themselves.” Subpart B of the rule set out statements of general policy and interpretation concerning the application of the FLSA to domestic service employees. Section 552.109 contained the Department's position that the exemptions contained in § 13(a)(15) and § 13(b)(21) of the Act (exemptions for companions or live-in domestic service workers) were applicable to employees of a third party employer or agency. On December 30, 1993, the Department published a notice of proposed rulemaking in the Federal Register, inviting public comments on a proposal to revise 29 CFR 552.109 to clarify that, in order for the exemptions under § 13(a)(15) and § 13(b)(21) of the FLSA to apply, employees engaged in companionship services and live-in domestic service who are employed by a third party employer or agency must be “jointly” employed by the family or household using their services. Other minor updating and technical corrections were included in the proposal. See 58 FR 69310. On September 8, 1995, the Department published a final rule revising the regulations to incorporate changes required by the recently enacted changes to Title II of the Social Security Act and making other updating and technical revisions. See 60 FR 46766. That same day, the Department published a proposed rule reopening and extending the comment period on the proposed changes to § 552.109 concerning third party employment. See 60 FR 46797. The Department did not finalize this proposed change. On January 19, 2001, the Department published a notice of proposed rulemaking to amend the regulations to revise the definition of “companionship services” to more closely mirror Congressional intent. The Department also sought to clarify the criteria used to determine whether employees qualify as trained personnel and to amend the regulations concerning third party employment. On April 23, 2001, the Department published a proposed rule reopening and extending the comment period on the January 2001 proposed rule. See 66 FR 20411. This rulemaking was eventually withdrawn and terminated on April 8, 2002. See 67 FR 16668. III. Need for Rulemaking The home care industry has undergone a dramatic transformation since the Department published the implementing regulations in 1975. There has been a growing demand for long-term in-home care for persons of all ages, in part because of the rising cost of traditional institutional care, and because of the availability of funding assistance for in-home care under Medicare and Medicaid. The growing demand for long-term in-home care for persons is also partly due to the significant increase in our aging population. 1 1 See Shrestha, Laura, The Changing Demographic Profile of the United States, Congressional Research Service p. 13-14 (2006). In response to the growing demand for long-term in-home care, the home health care services industry has grown. According to the National Association of Home Care (NAHC) publication, Basic Statistics About Home Care (March 2000), data from the Department of Health and Human Services' Health Care Financing Administration (HCFA) showed that the number of Medicare-certified home care agencies increased from 2,242 in 1975 to 7,747 in 1999. In the NAHC 2008 update, this number increased to 9,284 by the end of 2007. The number of for-profit agencies not associated with a hospital, rehabilitation facility, or skilled nursing facility, i.e., freestanding agencies, increased more than any other category of agency from 47 in 1975 to 4,919 in 2006. These for-profit agencies grew from 2 percent of total Medicare-certified agencies in 1975 to 68 percent by 2006, and now represent the greatest percentage of certified agencies. Public health agencies, which constituted over one-half of the certified agencies in 1975, now represent only 15 percent. Public funds pay the overwhelming majority of the cost for providing home care services. Medicaid payments represent nearly 40 percent of the industry's total revenues; other payment sources include Medicare, insurance plans, and direct pay. Based on data from the Centers for Medicare and Medicaid Services (CMS), Office of the Actuary, National Health Care Expenditures Historical and Projections: 1965-2016, Medicare and Medicaid together paid over one-half of the funds to freestanding agencies (37 and 19 percent, respectively). State and local governments account for 20 percent, while private health insurance accounts for 12 percent. Out-of-pocket funds account for 10 percent of agency revenues. There has been a similar increase in the employment of home health aides and personal care aides in the private homes of individuals in need of assistance with basic daily living or health maintenance activities. Bureau of Labor Statistics' (BLS) national occupational employment and wage estimates from the Occupational Employment Statistics (OES) survey show that the number of workers in these jobs tripled during the decade between 1988 and 1998, and by 1998 there were 430,440 workers employed as home health aides and 255,960 workers employed as personal care aides. The combined occupations of personal care and home health aides constitute a rapidly growing occupational group. BLS statistics demonstrate that between 1998 and 2008, this occupational group has more than doubled with home health aides increasing to 955,220 and personal care aides increasing to 630,740. ( http://www.bls.gov/oes/current/oes399021.htm ). The growth in demand for in-home care and in the home health care services industry has not resulted in growth in earnings for workers providing in-home care. The earnings of employees in the home health aide and personal care aide categories remain among the lowest in the service industry. Studies have shown that the low income of direct care workers including home care workers continues to impede efforts to improve both jobs and care. 2 Protecting domestic service workers under the Act is an important step in ensuring that the home health care industry attracts and retains qualified workers that the sector will need in the future. Moreover, the workers that are employed by home care staffing agencies are not the workers that Congress envisioned when it enacted the companionship exemption i.e., neighbors performing elder sitting, but are instead professional caregivers entitled to FLSA protection. In view of the dramatic changes in the home health care sector in the 36 years since these regulations were first promulgated and the growing concern about the proper application of the FLSA minimum wage and overtime protections to domestic service employees, the Department believes it is appropriate to reconsider whether the scope of the regulations are now too broad and not in harmony with Congressional intent. 2 See Brannon, Diane, et al., “Job Perceptions and Intent to Leave Among Direct Care Workers: Evidence From the Better Jobs Better Care Demonstrations” The Gerontologist, Vol. 47, No. 6, p. 820-829 (2007). IV. Proposed Regulatory Revisions A. Domestic Service Employment (29 CFR 552.3) Current § 552.3 states that “As used in section 13(a)(15) of the Act, the term domestic service employment refers to services of a household nature performed by an employee in or about a private home (permanent or temporary) of the person by whom he or she is employed.” The current definition also lists various occupations which are considered “domestic service employment.” The Department proposes to update and clarify the § 552.3 definition of “domestic service employment” in order to reflect the changing workforce. The Department proposes to remove the qualifying introductory language “[A]s used in section 13(a)(15) of the Act” because the definition of domestic service employment has broader context than simply those employed to provide babysitting services on a casual basis and those performing companionship services. The proposed definition also removes the language that the domestic service work be performed in or about the home “of the person by whom he or she is employed.” This language has been part of the regulations since first implemented in 1975; however, the Department believes the definition may be confusing and may be misread as impermissibly narrowing coverage of domestic service employees under the FLSA. The Senate Committee responsible for the 1974 Amendments looked at regulations issued under the Social Security Act for defining domestic service. The Department borrowed this language from the Social Security regulations without discussion or elaboration, and has consistently maintained that the phrase is extraneous vestige. See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 169-70 (2007) (concluding that § 552.3 does not answer the question on third party employment and that the Department's third party regulation at § 552.109 controls). Moreover, the legislative history states that Congress intended to extend FLSA coverage to all employees whose “vocation” was domestic service, but to exempt from coverage casual babysitters and companions who were not regular breadwinners or responsible for their families' support. See House Report No. 93-913, p. 36. Removal of this extraneous language more accurately reflects Congressional intent and clarifies coverage of these workers. Congress considered domestic service workers to include, for example, employees working as cooks, butlers, valets, maids, housekeepers, governesses, janitors, laundresses, caretakers, handymen, gardeners, and family chauffeurs. See Senate Report No. 93-690, p. 20. The Department included these occupations in § 552.3 as illustrative of domestic service workers. The Department proposes to delete the more outdated occupations in the list, such as governesses, footmen, and grooms, and to add additional modern day occupations such as nannies, home health aides, and personal care aides. The Department also proposes to include babysitters and companions to the list of domestic service workers, as workers in those occupations are domestic service workers, however, workers in those occupations may be exempt under FLSA § 13(a)(15) or § 13(b)(21). The list continues to be illustrative, not exhaustive. B. Duties of a Companion (29 CFR 552.6) The Department proposes to revise § 552.6, the regulation pertaining to companionship services for the aged and infirm. Current § 552.6 defines “companionship services” including “fellowship, care, and protection” provided to a person who, because of advanced age or physical or mental infirmity, can not care for his or her own needs. This regulation defines exempt services as including household work related to the person's care (such as meal preparation, bed making, washing of clothes, and other similar services). Under the current regulation, a companion may also perform additional general household work within the exemption if it is “incidental” and comprised of no more than 20 percent of the total weekly hours worked. This regulation further explains that the term “companionship services” does not include services relating to the care and protection of the aged or infirm which require and are performed by trained personnel, such as a registered or practical nurse. 1. Companionship Services In 1974 Congress amended the FLSA specifically to include domestic service workers (such as maids, cooks, valets and laundresses) as among those to be covered by the Act. Congress simultaneously created a narrow exemption for casual babysitters and those providing companionship to the elderly or infirm. The Senate debate of the companionship services exemption provides insight into the type of work Congress sought to exempt: Senator Burdick: I am not concerned about the professional domestic who does this as a daily living. But we have situations in which young people, a widow, a divorcee, or a family of low income, of necessity, must have someone sit with their children while they are at work. We have another category of people who might have an aged father, an aged mother, an infirm father, an infirm mother, and a neighbor comes in and sits with them. This, of course, entails some work, such as perhaps making lunch for the children, or making lunch for the infirm person, and may even require throwing some diapers in the automatic washing machine for the baby. This would be incidental to the main purpose of the employment. The Senator has used the word “companion” in the exception. When the Senator uses the word “companion,” the Senator does not mean that in the ordinarily accepted sense, that they are there to make them feel good. They are there to take care of them, he means, when he uses the word “companion.” Is that correct? Senator Williams: We use the situation in which people are in a household not to do household work but are there, first, as babysitters. I think we all have the full meaning in mind of what a babysitter is there for—to watch the youngsters. “Companion,” as we mean it, is in the same role—to be there and to watch an older person, in a sense. Senator Burdick: In other words, an elder sitter. Senator Williams: Exactly. 119 Cong. Rec. at S24801. The House Report offers further insight into Congressional intent with respect to those employees providing “companionship services” stating: It is the intent of the committee to include within the coverage of the Act all employees whose vocation is domestic service. However, the exemption reflects the intent of the committee to exclude from coverage babysitters for whom domestic service is a casual form of employment and companions for individuals who are unable because of age or infirmity to care for themselves. But it is not intended that trained personnel such as nurses, whether registered or practical, shall be excluded. People who will be employed in the excluded categories are not regular bread-winners or responsible for their families support. The fact that persons performing casual services as babysitters or services as companions do some incidental household work does not keep them from being casual babysitters or companions for purposes of this exclusion. House Report No. 93-913, p. 36. This legislative history indicates that Congress intended to remove from minimum wage and overtime pay protection only those domestic service workers for whom domestic service was not their vocation and whose actual purpose was to provide casual babysitting or companionship services. Congress also intended that a limited amount of incidental work, such as making a meal or washing diapers for the person being cared for, would not remove the worker from the exemption. In addition to the legislative history, the dictionary definition of “companionship” is instructive in understanding the scope of a companion as originally intended in the legislative history, that is, someone in the home primarily to watch over and care for the elderly or infirm person. The dictionary defines companionship as the “relationship of companions; fellowship,” and the term “companion” is defined as a “person who associates with or accompanies another or others; associate; comrade” and as a “person employed to live with or travel with another.” See Webster's New World Dictionary, p. 288 (2d College Ed. 1972). It further defines “fellowship” as including “a mutual sharing, as of experience, activity, interest, etc.” Id. at 514. The Department is concerned that the current regulatory definition of “companionship services” allows for the denial of minimum wage and overtime pay protection to workers who work in private homes and routinely perform general household work or provide medical care, and who may also provide fellowship and protection as an incidental activity to the household work or medical care. The current regulatory language places inappropriate emphasis on the “household work related to the person's care,” such as meal preparation, bed making, washing of clothes, and other similar services. These activities, particularly when combined with the current 20 percent tolerance for general household work, exempt workers for whom providing “fellowship and protection” is incidental to their employment as cooks, waiters, butlers, valets, maids, housekeepers, nannies, nurses, janitors, laundresses, caretakers, handymen, gardeners, home health aides, personal care aides, and chauffeurs of automobiles for family use. Therefore, the Department proposes to revise § 552.6 to clarify the tasks an exempt companion may perform and to more closely align the regulation with Congressional intent. The Department proposes to divide § 552.6 into four paragraphs. Proposed paragraphs (a), (b) and (c) will clarify what duties and activities may be considered “companionship services” and “incidental” to companionship services. Proposed paragraph (d) explains and clarifies that the companionship exemption is not applicable to medical care typically provided by personnel with specialized training. Current § 552.6 defines the term “companionship services.” Proposed § 552.6(a) also defines “companionship services” as “the provision of fellowship and protection for a person who, because of advanced age or physical or mental infirmity, is unable to care for themselves” and adds language that defines the terms “fellowship” and “protection.” The legislative history describes a companion as someone who “sits with [an infirm parent];” provides “constant attendance;” and renders services similar to a babysitter, i.e., “someone to be there and watch an older person,” an “elder sitter.” Such duties fall under the umbrella of fellowship and protection. Examples of activities that fall within fellowship and protection may include playing cards, watching television together, visiting with friends and neighbors, taking walks or engaging in hobbies. In addition, a companion may provide assistance with mobility and transfers. In the Department's view, “mobility” includes assistance with ambulation, including the use of a wheelchair or walker, and “transfers” include assisting the recipient in moving from one seating or reclining area to another. The Department believes that such tasks are consistent with what a babysitter or elder sitter would perform as contemplated by Senator Burdick in his explanation of the bill. The Department believes this expanded paragraph clarifies what is meant by “companionship services,” “fellowship,” and “protection.” Proposed § 552.6(b) explains that “companionship services” may include the intimate personal care services that the Secretary considers “incidental” to the provision of fellowship and protection. The proposed regulation limits a companion's duties to fellowship and protection with some allowance for certain incidental work, provided the incidental duties are performed concurrent with fellowship and protection of the individual and exclusively for that individual. The discussion of companionship duties in the legislative history allows incidental work, such as “making lunch for the infirm person” and “some incidental household work.” See 119 Cong. Rec. at S24801. However, such incidental services must be performed attendant to and in conjunction with the provision of fellowship and protection and in close physical proximity to the aged or infirm individual. Proposed paragraph (b) makes clear that such intimate personal care services that are incidental to the provision of fellowship and protection must not exceed 20 percent of the total hours worked in the workweek. Should the provision of these incidental services exceed 20 percent of the total hours worked in any workweek, then the exemption may not be claimed for that week and workers must be paid minimum wage and overtime. Proposed paragraph (b) also provides an illustrative list of permissible incidental services that may be provided by an exempt companion. In proposed § 552.6(b)(1), the Department proposes to include assistance with occasional dressing of the elderly or infirm person as an incidental activity. The Department believes that allowing assistance with dressing is consistent with Congressional intent, as assistance with dressing is something that would normally be contemplated by a babysitter or elder sitter. For example, a companion may assist an elderly or infirm person in laying down or arising from a nap which may either be preceded by shedding of some clothing or applying some clothing. Adjustments in weather may also require either the addition or subtraction of certain clothing or footwear, or the elderly or infirm person may, on occasion, need assistance in dressing after soiling their clothing by spilling food on their blouse or shirt during a meal, for example. This type of occasional dressing is permissible; however, the Department does not envision this task as being a regular and recurring part of the companion's duties. Further, the Department does not consider the application of special appliances or medical wraps (that require specialized training to apply) as part of assistance with dressing. In proposed § 552.6(b)(2), the Department proposes that an exempt companion be allowed to assist with occasional grooming, including combing and brushing hair, assistance with brushing teeth, application of deodorant, or cleansing of the person's face and hands, such as following a meal. The Department recognizes that occasional grooming of the aged or infirm person is consistent with the Department's goal of providing incidental intimate personal care services attendant to and in conjunction with the provision of fellowship and protection for the aged or infirm person. In proposed § 552.6(b)(3), the Department has included assistance with toileting, including assistance with transfers, mobility, positioning, use of toileting equipment and supplies (such as toilet paper, wipes, and elevated toilet seats or safety frames), diaper changing, and related personal cleansing. In the Department's view, assistance with toileting is carried out attendant to and in conjunction with the provision of fellowship and protection of the aged or infirm person. Because toileting is a basic human need and not a function that can be scheduled, the Department proposes to include it in the list of incidental tasks that may be performed by the exempt companion. The Department specifically invites comment on the inclusion of occasional toileting and diaper changing to the list of incidental activities performed by the exempt companion. Proposed § 552.6(b)(4) suggests that an exempt companion may occasionally drive the aged or infirm individual to appointments, errands, and social events. The Department believes there is some justification for a companion who provides “fellowship and protection” to accompany an aged or infirm person to certain appointments. There is, however, some concern that providing transportation may be more akin to the duties of a chauffeur than to the duties of a companion. The Department is mindful that drivers and chauffeurs were expressly considered by Congress as among those they intended to be covered by the Act. The Department is also concerned about issues such as extra costs for the domestic worker and/or their employer with respect to insurance coverage levels, for example. The Department proposes that occasional driving can be a component of incidental duties; however, with the cap on incidental duties at 20 percent, the Department anticipates that only a limited amount of time will be spent driving the aged or infirm person to appointments, errands and social events. The Department notes that while it seeks to limit the time an exempt companion spends driving the aged or infirm individual, the Department considers time spent accompanying an aged or infirm individual to appointments, errands or social events ( e.g., traveling via a taxi cab or using public transportation) to be providing fellowship and protection. The Department explicitly invites comment on the proposal to include driving among the incidental activities an exempt companion may perform. Proposed § 552.6(b)(5) provides that an exempt companion may provide occasional assistance with feeding the aged or infirm person, including food preparation and clean-up associated with feeding; however, the Department considers feeding through or assistance with a feeding tube to be medical care (that is typically provided by personnel with specialized training) that is excluded from the definition of “companionship services.” The Department notes that Senator Burdick stated in his floor speech that companionship was meant to include, “some work, such as perhaps making lunch for the children, or making lunch for the infirm person * * *.” 119 Cong. Rec. at S24801. The Department proposes to require that in order for food preparation to be considered as an incidental activity, the food prepared by the companion must be eaten by the aged or infirm person while the companion is present. The Department believes that this is consistent with the goal that incidental intimate personal care services be provided attendant to and in conjunction with the provision of fellowship and protection of the aged or infirm person. However, it is not the Department's intent that an exempt companion will be permitted to cook a week's worth of food while the aged or infirm individual is engaged in other activities, for example, because that would not be attendant to and in conjunction with providing fellowship and protection. Proposed § 552.6(b)(6) provides that an exempt companion may occasionally place clothing worn by the person in the hamper, deposit the aged or infirm person's clothing into the washing machine or dryer, and assist with hanging, folding, and putting away the aged or infirm person's clothing. The Department's review of the legislative history indicates that occasional, light laundry was contemplated by Congress in consideration of the casual babysitter and companionship exemptions. In their exchange, Senators Williams and Burdick indicated that one “may even require throwing some diapers in the automatic washing machine for the baby. This would be incidental to the main purpose of the employment.” 119 Cong. Rec. at S24801. Proposed § 552.6(b)(7), allows for occasional assistance with bathing the aged or infirm person. The Department does not consider bathing to be part of the regular duties of the exempt companion; however, the Department believes that in certain exigent circumstances, a companion may need to provide assistance with bathing to the elderly or infirm person. An example of exigent circumstances would be when the elderly or infirm person has an unexpected toileting accident requiring the need for bathing. Generally, the Department believes that bathing is something that can be scheduled to not coincide with the companion's duty hours, but proposes to allow reasonable but limited exceptions that more closely align to an imminent need to assist the elderly or infirm person with cleansing. The Department specifically invites comments with respect to the 20 percent threshold for incidental care services, and whether this percentage is an appropriate figure. Further, the Department invites comments on the list of services, whether additional services should be included or certain services should be excluded, whether the list should be an exclusive list of permitted incidental services, and whether the requirement that such services must be performed attendant to and in conjunction with the provision of fellowship and protection to the elderly or infirm person should be adopted. Proposed § 552.6(c), makes clear that work benefiting other members of the household, such as preparing meals for the household, performing housekeeping or laundry for the other members of the household does not fall within incidental duties for an exempt companion. Similarly, general household services not otherwise allowed in § 552.6(b) and (d), are not considered “companionship services.” The Department's proposal includes a change from the current regulation that allows the companionship services exemption to apply when the worker spends up to 20 percent of his or her time performing general household work which is unrelated to the care of the person. General household work that is not allowed under proposed § 552.6(b), such as vacuuming, washing windows, and dusting, is the sort of work that Congress sought to cover when it amended the Act in 1974 to reach domestic service workers such as maids and housekeepers, and therefore, companions are precluded from performing such tasks in order for the exemption to apply. The Department believes the proposed revisions to the definition strike a balance that implements Congress' twin goals of extending FLSA coverage to domestic service workers generally while exempting companions, by recognizing that the fellowship and protection provided by a companion are very different from the household chores performed by a maid or cook or laundress. Further, the proposed regulations also reflect that coverage under the FLSA is construed broadly and the exemptions are construed narrowly to effectuate the Act's remedial purposes. Thus, the performance of duties that are not for fellowship and protection of the aged or infirm person, or incidental to the provision of fellowship and protection, are not “companionship duties,” and therefore, any performance of general household work would result in the loss of the exemption for the week. The Department believes that the combination of proposed § 552.6(b) and (c) results in the narrow slice of the workforce that Congress intended to exempt under the companionship exemption. 2. Medical Care Proposed paragraph § 552.6(d) excludes from the definition of “companionship services” medical care that is typically provided by personnel with specialized training. The Department proposes in § 552.6(d) to continue to make clear that “companionship services” does not include care that is typically provided by personnel with specialized training and provides an illustrative and non-exhaustive list of examples of the type of care that is not considered “companionship services.” The Department proposes to maintain the exclusion of medical care from the definition of “companionship services,” but proposes to clarify that companionship services do not include the performance of medically-related tasks for which training is typically a prerequisite. The Department's experience indicates that many workers for whom the companionship exemption is claimed are categorized as personal care aides or home health aides. The Department understands that these workers often visit a care recipient for the purpose of providing wound care such as changing bandages, taking the care recipients vital signs, evaluating the care recipient's health and performing other diagnostic or medically-related tasks. While some personal care or home health aides may be engaged to perform companionship services, the Department is concerned that many such workers are primarily performing medically-related or personal-care-related tasks rather than providing fellowship and protection, and are being denied minimum wage and overtime pay protections through misapplication of the companionship services exemption. The Department proposes to exclude from the definition of companionship services medically-related duties such as medication management, the taking of vital signs (pulse, respiration, blood sugar screening, and temperature), routine foot, skin, and back care, and assistance with physical therapy. This list is illustrative, not exhaustive. Similarly, determining whether prescription medication needs to be taken would remove the domestic service worker from the companionship exemption. However, the Department notes that reminders of medical appointments or a predetermined medicinal schedule would be encompassed within companionship duties. For example, where the companion is provided clear instructions to remind the aged or infirm person to take medication that has been provided in a daily pillbox at a prescribed time and the companion exercises no discretion as to the amount or when the care recipient takes the medication, such work generally would be intimate personal care activities considered by the Secretary to be incidental to the provision of fellowship and protection. The Department believes, however, that Congress did not intend the companionship services exemption to apply to employees who perform medically-related duties, such as registered or licensed nurses, certified nursing assistants, or certified nursing aides. Tasks being performed by these workers that typically require medical training and are beyond what Congress envisioned when it stated that persons providing companionship services are present in the home, as a neighbor might be, to watch over an elderly person the way a babysitter watches over a child. The Department specifically seeks comment on whether the proposed rule appropriately reflects medical care tasks currently performed by home health aides or personal care aides which require training in order to perform. The Department also seeks comment on whether the rule should list additional examples of minor health-related actions that do not require training and could be included within companionship services, such as applying a band aid to a minor cut or helping an elderly person take over-the-counter medication. It is important to note that workers providing healthcare in homes are already subject to minimum wage and overtime protections. However, the Department invites comment on the potential effects of the proposed changes as discussed above on the delivery of companionship services and whether unique circumstances exist that impact the provision of companionship services in the context of the broader healthcare system. C. Third Party Employment (29 CFR 552.109) The Department also proposes to revise § 552.109, the regulation pertaining to third party employment. Current § 552.109 provides that employees who are employed by an employer or agency other than the family or household using the companionship services may be subject to the FLSA exemption from minimum wage and overtime pay for companions under § 13(a)(15). The current regulation also provides that live-in workers who are employed by a third party may be subject to an overtime exemption under § 13(b)(21) of the FLSA. Upon further consideration and analysis, the Department believes that these two exemptions from the minimum wage and overtime protections of the FLSA should not be applicable to employees of third party employers. The Department proposes to revise § 552.109 to limit the application of these exemptions to the individual, family or household employing the companion or live-in domestic worker, regardless of whether the family member employing the companion or live-in domestic worker resides in the home where the services are performed. The Department believes this proposed change better reflects the understanding of Congress when it created these exemptions. In addition, the Department believes amending this regulation is necessary to address the changes that have taken place in the home health care industry since this regulation was first promulgated. As noted by the Supreme Court, the Department has “struggled with the third party employment question.” Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 171 (2007). In 1974, the Department proposed a regulation that would have denied the exemptions in §§ 13(a)(15) and 13(b)(21) of the Act to employees who, although providing companionship or live-in domestic services, were employed by an employer or agency other than the family or household using their services. See 39 FR 35383. However, in the final regulation, promulgated in 1975, the Department concluded that the exemption could be applicable to employees providing companionship or live-in domestic services employed by such third party employers. See 40 FR 7404. In 1993, 1995, and 2001, the Department revisited this regulation specifically, proposing amendments that would have curtailed the applicability of these exemptions to the employees of third party employers. In revisiting the legislative history of the 1974 Amendments, the Department believes that Congress contemplated that individual family members, and not third party employers that already were covered by the FLSA, would be impacted by the extension of coverage to domestic service workers. “I just cannot imagine the housewife struggling with the paper work which would be required.” 120 Cong. Rec. S5269 (daily ed. Mar. 5, 1974) (statement of Sen. Fannin). “The position of the committee in adding complete coverage for domestics and thus adding additional recordkeeping and other chores for the American housewife * * *” 120 Cong. Rec. S5275 (statement of Sen. Dominick). Because Congress believed that private households would be impacted by the expansion of FLSA coverage, it is reasonable to conclude that Congress intended only private households to be entitled to the exemptions from FLSA protections for domestic service workers. Professional caregivers, such as those individuals employed by third party employers, are simply not the type of employment arrangements that Congress sought to exempt. In view of the professionalization and standardization of this growth industry that has taken place over the last three decades, it is the Department's position that employees providing companionship services who are employed in the vocation of caregiver by third parties should have the same minimum wage and overtime protections that other workers enjoy. Statements in the Congressional Record made by supporters of the amendment also demonstrate that Congress considered the impact that the expansion of FLSA coverage would have on poor women, many of them women of color, employed as domestics. Senator Williams noted that “the plain fact is that private household domestic workers are overwhelmingly female and members of minority groups,” and “[i]n failing to cover domestics under our basic wage and hour law we would be turning our backs on these people.” 119 Cong. Rec. S24799 (statement of Senator Williams). Senator Williams further emphasized that “[s]ince domestic employment is one of the prime sources of jobs for poor and unskilled workers, it is clear that there is an important national interest at stake in insuring that the wages received for such work do not fall below a minimal standard of decency.” Id. at 24800. Such statements indicate that Congress intended broad FLSA coverage for domestic workers. Poor, minority women, many of them immigrants, continue to comprise the great majority of the companion workforce today. The fact that 70 percent of home health care workers are employed by third party agencies—and fall outside of FLSA coverage under the current third party regulation—is an important indication that what Congress intended to accomplish in amending the FLSA in 1974 remains unfinished. 3 Moreover, under the 1974 Amendments, Congress explicitly extended FLSA coverage to domestic service employees who were not previously covered, i.e., those who worked only for a private family or a small business and not for a covered enterprise. Prior to 1974, employees who had worked for a covered placement agency, but were assigned to work in someone's home were covered by the FLSA. 39 FR 35385. Congress did not intend for the 1974 Amendments, which sought to extend the reach of the FLSA, to exclude workers already covered by the Act. The focus of the floor debate concerned the extension of coverage to categories of domestic workers who were not already covered by the FLSA, specifically, those not employed by an enterprise-covered agency. See, e.g., 119 Cong. Rec. at S24800 (“coverage of domestic employees is a vital step in the direction of insuring that all workers affecting interstate commerce are protected by the Fair Labor Standards Act”); see also Senate Report No. 93-690 at p. 20 (“The goal of the Amendments embodied in the committee bill is to update the level of the minimum wage and to continue the task initiated in 1961—and further implemented in 1966 and 1972—to extend the basic protection of the Fair Labor Standards Act to additional workers and to reduce to the extent practicable at this time the remaining exemptions.”) (emphasis added). Further, there is no indication that Congress considered limiting enterprise coverage for third party employers providing domestic services. The only expressions of concern by opponents of the amendment related to the new recordkeeping burdens on private households. Recognizing this intended expansion of the Act, the exemptions excluding employees from coverage must therefore be defined narrowly in the regulations to achieve the law's purpose of extending coverage broadly. This is consistent with the general principle that coverage under the FLSA is broadly construed so as to effect its remedial purposes, and exemptions are narrowly interpreted and limited in application to those who clearly are within the terms and spirit of the exemption. See, e.g., A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1945). Upon further analysis, the Department acknowledges that the regulatory rollback of coverage for many workers that resulted from current § 552.109 was not in accord with Congress' purpose of expanding coverage. 3 University of California San Francisco, Center for California Health Workforce Studies, An Aging U.S. Population and the Healthcare Workforce: Factors Affecting the Need for Geriatric Care Workers at 30 (Feb. 2006). In addition, 14 states already have statutes providing minimum wage and overtime protections to all or most third-party-employed home care workers who may otherwise fall under the federal companion exemption. These states are Colorado, Hawaii, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New York, Pennsylvania, Washington, and Wisconsin. Maine and California extend minimum wage and overtime protections to all companions employed by for-profit agencies. Five more states (Arizona, Nebraska, North Dakota, Ohio, and South Dakota) and the District of Columbia provide only minimum wage coverage only to home care workers, including companions, employed by third parties. Significantly, several of the states have instituted these protections in the last several years. For example, in January 2010 Colorado extended minimum wage and overtime protection to home care workers not employed by private households; in October 2003 Michigan extended minimum wage and overtime protection to home care workers employed by an employer with 2 or more employees and in July 2003 California extended minimum wage coverage to all companions employed by third parties and overtime coverage to companions employed by for-profit agencies. The fact that these state statutes exist negates many of the objections raised in the past regarding the feasibility and expense of prohibiting third parties from claiming the companionship and live-in worker exemptions. Members of Congress have also recently urged the Department to narrow the scope of these exemptions. In 2009, over 50 Members of Congress wrote to Secretary Solis, urging the Department to revise the companionship regulation because it “interpreted a narrow exemption Congress provided for `companionship services' to exclude all workers, including those employed by a third party, who provide in-home care for elderly or disabled people from the FLSA's wage and overtime protections.” See Letter from Representative Sanchez et al. to Secretary Solis, May 18, 2009; Letter from Senator Harkin, et al., to Secretary Solis, June 11, 2009. The Members also noted that most home care workers are women and often the sole bread winners for their families. The latter point is important because Congress stated that “[p]eople who will be employed in the excluded categories are not regular bread winners or responsible for their families' support.” Senate Report No. 93-690, at p. 20. The expanded coverage was needed to raise incomes for those workers who depended on domestic work as a “daily living,” which was the workforce that Rep. Shirley Chisholm described as the “thousands of ladies who have the sole responsibility for taking care of their families and will not be able to adequately support their families.” This situation continues today. One survey in New York City, for example, reported that 81 percent of home care workers served as the primary income earner for their family. 4 4 Gilbert, Lenora. Home Care Workers: The New York City Experience, Encyclopedia of Occupational Safety and Health, Vol. 3. (4th ed. International Labor Organization, 1998). In 2007, the Department's third party employment regulation was addressed by the Supreme Court. See Coke, 551 U.S. 158. In Coke, a home health care worker employed by a third party challenged the validity of the Department's regulation permitting employees of third parties to claim the companionship exemption. The Court acknowledged that the statutory text and legislative history do not provide an explicit answer to the third party employment question. Id. at 168. Rather, the FLSA leaves gaps as to the scope and definition of statutory terms such as “domestic service employment” and “companionship services,” and it provides the Department with the power to fill those gaps. Id. at 167. Further, when the Department fills statutory gaps with any reasonable interpretation, and in accordance with other applicable requirements, the courts accept the result as legally binding. Id. at 167-68. The Court noted that the 1974 Amendment “expressly instructs the agency to work out the details of those broad definitions” and explained that the regulation “concerns a matter in respect to which the agency is expert,” because whether the 1974 Amendment should extend protection to any third party companions turns “upon the kind of thorough knowledge of the subject matter and ability to consult at length with affected parties that an agency, such as the Department of Labor, possesses.” Id. at 167-68. The Court concluded that “whether to include workers paid by third parties within the scope of the definitions is one of those details” that Congress entrusted to the Department. Id. at 167. In Coke, the Department argued that the third party regulation was an exercise of its expressly delegated legislative rulemaking authority, and as such, was legally binding and must be accorded the highest level of deference. The position taken by the Department in Coke concerning deference, as affirmed by a unanimous Supreme Court, remains relevant as the Department reconsiders the scope of these exemptions. By engaging in a new round of notice and comment rulemaking, the Department is again appropriately exercising its expressly delegated rulemaking authority. The Department's proposal to revise the third party regulation is in no way inconsistent with the Court's ruling. Rather, the Court recognized that the statutory text does not answer the question and affirmed the Department's broad authority to promulgate regulations that define the scope of the exemption. The Court explicitly recognized that the Department may interpret its “regulations differently at different times in their history,” and may make changes to its position, provided that the change creates no unfair surprise. Id. at 170-71. The Court also recognized that when the Department utilizes notice-and-comment rulemaking in an attempt to codify a new regulation, as it is doing now, such rulemaking makes surprise unlikely. Id. at 170. It must be noted that the Department argued in Coke, as well as in Wage and Hour Advisory Memorandum (“WHAM”) 2005-1 (Dec. 1, 2005) (found at http://www.dol.gov/whd/FieldBulletins/index.htm ), that the third party regulation, as currently written, was the Department's best reading of these statutory exemptions. However, upon further consideration of the purpose and objectives behind the 1974 Amendments, the Department is no longer convinced that our prior reading is the best one. The purpose behind the Amendments, confirmed by the legislative history, was to extend FLSA coverage to domestic workers who were not employed by covered enterprises. In recognition that it was expanding coverage to workers employed by private households, Congress created the narrow exemption for casual babysitters and companions whose vocation is not domestic service. In light of the purposes behind the amendment and the exemption, § 13(a)(15) of the FLSA cannot and should not necessarily be read to apply to third party employers, as we argued for in the WHAM. The Department erroneously focused on the phrase “any employee,” instead of focusing on the purpose and objective behind the 1974 Amendments, which was to expand minimum wage and overtime protections to workers employed by private households that did not otherwise meet the FLSA coverage requirements. The Supreme Court has “stressed that in expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy.” U.S. Nat'l Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 455 (1993) (internal quotation marks omitted). The Supreme Court concluded that “the text of the FLSA does not expressly answer the third party employment question.” Coke, 551 at 168. Thus, the statutory phrase “any employee” cannot, standing alone, answer the question at hand, and after considering the purpose and objectives of the Amendments as a whole, the Department believes that the companionship exemption was not intended to apply to third party employers. Moreover, upon further reflection, the Department is no longer convinced that Congress' failure to limit the companionship exemption to employees of a particular employer is evidence of Congressional intent on this issue. WHAM at 2. In 1974, Congress understood that enterprises that employed domestic service workers to perform services in private homes were already covered employers under the Act and thus, their employees already received the protections of the FLSA even when they performed companionship services. There is no indication that Congress intended to narrow coverage of those employed by third party employers when this would be contrary to the intent and purpose of expanding coverage and protecting low-wage workers. By focusing on the impact that the 1974 Amendments would have upon private households during the debates, Congress presumably did not think it necessary to explicitly limit the narrowly created statutory exemptions to families and households who employ companions, causal babysitters and live-in domestics. Rather, Congress provided the Department with the power to fill these kinds of statutory gaps. The WHAM noted the ambiguity and lack of clarity in the companionship regulations, stating that “phrases in the [companionship regulations] could potentially be read to exclude third party employees from the definition of domestic service employment.” WHAM at 3. This admitted lack of clarity is one of the reasons the Department has revisited these regulations, and, upon further consideration, proposes amending this regulation to state that employees of third party employers may not use these exemptions. This proposed amendment, as explained above, is based upon a closer examination of the legislative history and legislative intent, the manner in which the home health care industry has evolved, an attempt to better harmonize the regulations pertaining to companionship, 36 years of enforcement experience, and additional information provided by stakeholders, Members of Congress, and individual states. Based on the foregoing reasons, the Department proposes to revise § 552.109(a) and (c) to apply the exemptions in §§ 13(a)(15) and 13(b)(21) of the FLSA only to workers employed by the individual, family or household using the worker's services. Further, to address concerns expressed in the legislative history that FLSA compliance would be a burden to the individual, family, or household, the Department believes it is consistent with the statute to maintain the §§ 13(a)(15) and 13(b)(21) exemptions for the individual, family, or household even if they engage the services of a third party employer. Therefore, if the individual, family, or household and the third party agency are joint employers, only the individual, family, or household is still entitled to assert the exemptions. However, regardless of whether a joint employment relationship exists, the exemptions are not available to the third party employer. Thus, all workers employed by a third party, whether solely or jointly, are entitled to the minimum wage and overtime protections of the Act. The Department further notes that if the employee fails to qualify as an exempt companion, such as if the employee performs incidental duties that exceed the 20 percent tolerance allowed under the proposed § 552.6(b), or the employee provides medical care for which training is a prerequisite, the individual, family or household member cannot assert the exemption and is jointly and severally liable for the violation. The proposed revision appropriately limits these exemptions to the scope Congress intended. Finally, the proposed regulation refers to “the individual or member of the family or household” who employs the companion or live-in domestic worker. It is the Department's intent that “member of the family or household” be construed broadly, and no specific familial relationship is necessary. For example, a “member of the family or household” may include an individual who is a child, niece, guardian or authorized representative, housemate, or person acting in loco parentis to the elderly or infirm individual needing companionship or live-in services. The Department invites comments on the proposed changes to the third party employment regulation, and specifically seeks feedback from home health care workers, organizations, and employers. D. Live-in Domestic Service Employees (29 CFR 552.102 and 552.110) The Department proposes revisions to the recordkeeping requirements in 29 CFR part 552 applicable to live-in domestic employees, in order to ensure that employers maintain an accurate record of hours worked by such workers and pay for all hours worked in accordance with the FLSA. Section 13(b)(21) of the Act, provides an overtime exemption for live-in domestic employees; however, such workers remain subject to the FLSA minimum wage protections. Current § 552.102 allows the employer and employee to enter into an agreement that excludes the amount of sleeping time, meal time, and other periods of complete freedom from duty when the employee may either leave the premises or stay on the premises for purely personal pursuits. Paragraph 552.102(a) makes clear that if the free time is interrupted by a call to duty, the interruption must be counted as hours worked. Paragraph 552.102(b) allows an employer and employee who have such an agreement to establish the employee's hours of work in lieu of maintaining precise records of the hours actually worked. The employer is to maintain a copy of the agreement and indicate that the employee's work time generally coincides with the agreement. If there is a significant deviation from the agreement, a separate record should be kept or a new agreement should be reached. The Department is concerned that not all hours worked are actually captured by such agreement and paid, which may result in a minimum wage violation. The current regulations do not provide a sufficient basis to determine whether the employee has in fact received at least the minimum wage for all hours worked. Proposed § 552.102(b) would no longer allow the employer of a live-in domestic employee to use the agreement as the basis to establish the actual hours of work in lieu of maintaining an actual record of such hours. Instead, the employer will be required to keep a record of the actual hours worked. Consequently, the language suggesting that a separate record of hours worked be kept when there is a significant deviation from the agreement is deleted. Nonetheless, proposed § 551.102(b) requires entering into a new written agreement whenever there is a significant deviation from the existing agreement. The Department also proposes to amend § 552.110 with respect to the records kept for live-in domestic employees. Current § 552.110 specifies the recordkeeping requirements for domestic service employees. Paragraph 552.110(b) provides that records of actual hours worked are not required for live-in domestic employees; instead, the employer may maintain a copy of the agreement referred to in § 552.102. It also states that the more limited recordkeeping requirement in this section does not apply to third-party employers and that no records are required for casual babysitters. Paragraph 552.110(c) permits, when a domestic service employee works a fixed schedule, the employer to use the schedule that the employee normally works and either provide some notation that such hours were actually worked or, when more or less hours are actually worked, show the exact number of hours worked. Paragraph 552.110(d) permits an employer to require the domestic service employee to record the hours worked and submit the record to the employer. For the reasons outlined above, proposed § 552.110(b) will no longer permit an employer to maintain a copy of the agreement as a substitution for recording actual hours worked by the live-in domestic employee. Instead, it requires that the employer maintain a copy of the agreement and maintain records showing the exact number of hours worked by the live-in domestic employee. Proposed § 552.110(b) also makes clear that the provisions of 29 CFR 516.2(c) do not apply to live-in domestic employees, which means that employers of such employees may not maintain a simplified set of records for live-in domestic employees who work a fixed schedule. As a result, § 552.110(c) is revised to clearly state that the provision does not apply to live-in domestic workers. The Department believes that the frequency of schedule changes simply makes reliance on a fixed schedule and noting exceptions too unreliable to ensure an accurate record of hours worked by these employees. In addition, the proposed changes to § 552.109 makes the reference in § 552.110(b) to third-party employers not being able to rely on the simplified recordkeeping requirements moot; consequently, it is removed from proposed § 552.110(b). The proposed regulations also revise § 552.110(d), thus no longer allowing the employer to require the live-in domestic service employee to record the hours worked and submit the record to the employer. As with other employees, the employer is responsible for making, keeping, and preserving records of hours worked and ensuring their accuracy. As is the case now, the Department does not require records for casual babysitters as defined by § 552.5; however, that provision is in a stand-alone paragraph, proposed 29 CFR 552.110(e). V. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its attendant regulations, 5 CFR part 1320, requires that the Department consider the impact of paperwork and other information collection burdens imposed on the public. Under the PRA, an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid Office of Management and Budget (OMB) control number. See 5 CFR 1320.8(b)(3)(vi). This action contains the following proposed amendments to the existing information collection requirements previously approved under OMB Control Number 1235-0018. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d), the Department has submitted these proposed information collection amendments to OMB for its review. Summary: The Department seeks to minimize the paperwork burden for individuals, small businesses, educational and nonprofit institutions, Federal contractors, State, local, and tribal governments, and other persons resulting from the collection of information by or for the agency. The PRA typically requires an agency to provide notice and seek public comments on any proposed collection of information contained in a proposed rule. See 44 U.S.C. 3506(c)(2)(B); 5 CFR 1320.8. The PRA requires all Federal agencies to analyze proposed regulations for potential time burdens on the regulated community created by provisions within the proposed regulations that require the submission of information. These information collection (IC) requirements must be submitted to OMB for approval. Persons are not required to respond to the information collection requirements as contained in this proposal unless and until they are approved by the OMB under the PRA at the final rule stage. This “paperwork burden” analysis estimates the burdens for the proposed regulations as drafted. The Department proposes to amend 29 CFR part 552 with respect to the records kept for live-in domestic employees. Proposed 29 CFR 552.102(b) would no longer allow the employer of a live-in domestic employee to use an agreement as the basis to establish hours worked in lieu of maintaining actual record of such hours. Instead, the employer will be required to keep a record of the actual hours worked. Concurrently, proposed 29 CFR 552.110(b) will no longer permit an employer to maintain a copy of an agreement as a substitute for keeping records of hours worked by the live-in domestic employee. Finally, the Department's proposed amendments to 29 CFR part 552 results in fewer employees being exempt from the minimum wage and overtime law. Employers must maintain records of hours worked for employees who are not exempt from minimum wage and overtime pay requirements. Therefore, the number of employees for whom an employer must maintain records of hours worked will increase under the proposed rule. This will increase the burden under 29 CFR part 516, the general recordkeeping regulation under the FLSA. Circumstances Necessitating Collection: The Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., sets the Federal minimum wage, overtime pay, recordkeeping and youth employment standards of most general application. Section 11(c) of the FLSA requires all employers covered by the FLSA to make, keep, and preserve records or employees and of wages, hours, and other conditions and practices of employment. A FLSA covered employer must maintain the records for such period of time and make such reports as prescribed by regulations issued by the Secretary of Labor. The Department has promulgated regulations at 29 CFR part 516 to establish the basic FLSA recordkeeping requirements. The Department has also issued specific recordkeeping requirements in 29 CFR part 552 which is the subject of this collection. The Department proposes to amend recordkeeping requirements in § 552.102 and § 552.110 regarding agreements for live-in domestic workers. The Department also notes that the proposed amendments to the definition of companion results in fewer employees being exempt from the minimum wage and overtime requirements of the FLSA. Purpose and Use: The Wage and Hour Division (WHD) and employees use this information to determine whether covered employers have complied with various FLSA requirements. Employers use the records to document FLSA compliance, including showing qualification for various FLSA exemptions. Technology: The recordkeeping aspect of this collection makes clear that the regulations prescribe no particular order or form of records and employers may preserve records in such forms as microfilm, or automated word or data processing memory is acceptable provided facilities are available for inspection and transcription of the records. Duplication: This information is not available through any other source. Minimizing Small Entity Burden: Although this information collection does involve small businesses, including small State and Local government agencies, the Department minimizes respondent burden by requiring no specific order or form of records in responding to this information collection. Moreover, employers would normally maintain the records identified in this information collection under usual or customary business practices. Agency Need: The Department is assigned a statutory obligation to ensure employer compliance with the FLSA. The Department uses records covered by this information collection to determine compliance with the FLSA. Special Circumstances: There are no special circumstances associated with this collection. Public Comments: The Department seeks public comments regarding the burdens imposed by information collections contained in sections 552.102 and 552.110 of this proposed rule. In particular, the Department seeks comments that: Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; enhance the quality, utility and clarity of the information to be collected; and minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submissions of responses. Commenters may send their views about these information collections to the Department in the same way as all other comments ( e.g., through the regulations.gov Web site). All comments received will be made a matter of public record, and posted without change to http://www.regulations.gov, including any personal information provided. An agency may not conduct an information collection unless it has a currently valid OMB approval, and the Department has submitted the identified information collection contained in the proposed rule to the OMB for review under the PRA under the Control Number 1235-0018. See 44 U.S.C. 3507(d); 5 CFR 1320.11. Interested parties may obtain a copy of the full supporting statement by sending a written request to the mail address shown in the ADDRESSES section at the beginning of this preamble or by visiting the http://www.reginfo.gov/public/do/PRAMain Web site. In addition to having an opportunity to file comments with the Department, comments about the paperwork implications of the proposed regulations may be addressed to the OMB. Comments to the OMB should be directed to: Office of Information and Regulatory Affairs, Attention OMB Desk Officer for the Wage and Hour Division, Office of Management and Budget, Room 10235, Washington, DC 20503, Telephone: (202) 395-7316/Fax: (202) 395-6974 (these are not toll-free numbers). Confidentiality: The Department makes no assurances of confidentiality to respondents. As a practical matter, the Department would only disclose agency investigation records of materials subject to this collection in accordance with the provisions of the Freedom of Information Act, 5 U.S.C. 552, and the attendant regulations, 29 CFR part 70, and the Privacy Act, 5 U.S.C. 552a, and its attendant regulations, 29 CFR part 71. OMB Control Number: 1235-0018. Affected Public: Businesses or other for profit, not-for-profit institutions. Total Respondents: 3,493,514. Total Annual Responses: 43,478,185. Estimated Burden Hours: 987,778. Estimated Time per Response: 2 minutes. Frequency: 24 times annually. Total Burden Cost (capital/startup): 0. Total Burden Costs (operation/maintenance): $22,580,605. VI. Executive Orders 12866 and 13563 Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action” because it is economically significant, under section 3(f) of Executive Order 12866, based on the Preliminary Regulatory Impact Analysis (PRIA) presented below. As a result, the OMB has reviewed this proposed rule. The Department also has concluded that this proposed rule is a major rule under the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq. ). Preliminary Regulatory Impact Analysis of the Proposed Revisions to the Companionship Regulations Background Under Executive Order 12866 (58 FR 51735, October 4, 1993), the Department must determine whether a regulatory action is “significant” and therefore subject to OMB review and the requirements of the Executive Order. Executive Order 12866 defines “significant regulatory action” as one that is likely to result in a rule that may have “an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities; create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.” This proposed rule meets the criteria for a significant regulatory action because it is anticipated to have an annual effect on the economy of $100 million or more. As a result, the rule is submitted to OMB for review. The provisions of the FLSA apply to all enterprises that have employees engaged in commerce or in the production of goods for commerce and have an annual gross volume of sales made or business done of at least $500,000 (exclusive of excise taxes at the retail level that are separately stated); or, are engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, elementary or secondary school, or an institution of higher education (regardless whether such hospital, institution or school is public or private, or operated for profit or not); or, are engaged in an activity of a public agency. There are two ways an employee may be covered by the provisions of the FLSA: (1) Any employee of an enterprise covered by the FLSA is covered by the provisions of the FLSA, and (2) even if the enterprise is not covered, individual employees whose work engages the employee in interstate commerce or in the production of goods for commerce or in domestic service is covered by the provisions of the FLSA. Covered employers are required by the provisions of the FLSA to: (1) Pay employees who are not exempt from the Act's requirements not less than the Federal minimum wage for all hours worked and overtime premium pay at a rate of not less than one and one-half times the employee's regular rate of pay for all hours worked over 40 in a workweek, and (2) make, keep, and preserve records of the persons employed by the employer and of the wages, hours, and other conditions and practices of employment. In 1974, Congress expressly extended FLSA coverage to “domestic service” workers performing services of a household nature in private homes not previously subject to minimum wage and overtime requirements. While domestic service workers are covered by FLSA minimum wage and overtime requirements even though they work for a private household and not a covered enterprise, Congress created exemptions from these requirements for casual babysitters and persons employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves. 5 5 29 U.S.C. 202(a), 206(f), 207(l), and 213(a)(15). Need for Regulation and Why the Department Is Considering Action In 1974, Congress extended coverage of the FLSA to many domestic service employees performing services of a household nature in private homes not previously subject to minimum wage and overtime pay requirements. Section 13(a)(15) of the Act exempts from its minimum wage and overtime pay provisions domestic service employees employed “to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).” Section 13(b)(21) of the FLSA exempts from the overtime pay provision any employee employed “in domestic service in a household and who resides in such household.” Since the 1975 regulations were implemented, the home health care industry has evolved and expanded in response to the increasing size of the population in need of such services, the growing demand for in-home care instead of institutional care for persons of all ages, and the availability of public funding assistance for such services under Medicare and Medicaid. As the industry has expanded, so has the range of tasks performed by workers providing companionship services. The range now includes assistance with activities of daily living (ADLs), instrumental activities of daily living (IADLs), and paramedical tasks (such as catheter hygiene or changing of aseptic dressings). 6 Public funding programs do not cover services such as social support, fellowship or protection. 7 According to the U.S. Department of Health and Human Services (HHS), “[s]imple companionship or custodial observation of an individual, absent hands-on or cueing assistance that is necessary and directly related to ADLs and IADLs, is not a Medicaid personal care service.” 8 6 PHI, 2010a. Background Report on the U.S. Home Care and Personal Assistance Workforce and Industry (Forthcoming). P. 22. 7 PHI, 2010a. p. 22. 8 “Understanding Medicaid Home and Community Services: A Primer,” Gary Smith, Janet O'Keefe, Letty Carpenter, Pamela Doty, Gavin Kennedy, Brian Burwell, Robert Mollica and Loretta Williams, George Washington University, Center for Health Policy Research, October 2000. The Department of Labor believes that the current application of the companionship services exemption in the home health care industry is not consistent with the original Congressional intent. The Department proposes to modify the definition of companionship services to exclude personnel who perform functions that require training in the performance of medically-related duties, and to provide only a 20 percent tolerance for intimate personal care services and related household work. As a result, to qualify for the companionship services exemption, workers must spend at least 80 percent of their time in activities that provide fellowship or protection. Those workers who are providing home health care services that exceed the 20 percent tolerance for intimate personal care services and related household work must be paid in accordance with federal minimum wage and overtime requirements. Objectives and Legal Basis for Rule Section 13(a)(15) of the FLSA exempts from its minimum wage and overtime pay provisions domestic service employees employed “to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary).” Due to significant changes in the home health care industry over the last 36 years, workers who today provide in-home care to individuals are performing duties and working in circumstances that were not envisioned when the companionship services regulations were promulgated. Section 13(b)(21) provides an exemption from the Act's overtime pay requirements for live-in domestic workers. The current regulations allow an employer of a live-in domestic worker to maintain a copy of the agreement of hours to be worked and to indicate that the employee's work time generally coincides with that agreement, instead of requiring the employer to maintain an accurate record of hours actually worked by the live-in domestic worker. The Department is concerned that not all hours worked are actually captured by such agreement and paid, which may result in a minimum wage violation. The current regulations do not provide a sufficient basis to determine whether the employee has in fact received at least the minimum wage for all hours worked. The Department has re-examined the regulations and determined that the regulations, as currently written, have expanded the scope of the companionship services exemption beyond those employees whom Congress intended to exempt when it enacted § 13(a)(15) of the Act, and do not provide a sufficient basis for determining whether live-in workers subject to § 13(b)(21) of the Act have been paid at least the minimum wage for all hours worked. Therefore, the Department proposes to amend the regulations to revise the definitions of “domestic service employment” and “companionship services,” and to require employers of live-in domestic workers to maintain an accurate record of hours worked by such employees. In addition, the proposed regulation would limit the scope of duties a companion may perform, and would prohibit employees of third-party employers from claiming the exemption. Summary of Impacts The Department projects that the average annualized cost of the rule will total about $4.7 million per year over 10 years. In addition to the direct cost to employers of the rule, there are also transfer effects resulting from the rule. The primary impacts of the rule are income transfers to home health care workers in the form of: increased hourly wages to reach minimum wage (about $16.1 million in the first year, negligible thereafter); payment for time spent traveling between patients (average annualized value of $34.7 million per year); and payment of an overtime premium when hours worked exceed 40 hours per week. Because overtime payments depend on how employers adjust scheduling to eliminate or reduce overtime hours, the Department considered three adjustment scenarios resulting in payment of: 100 percent of current overtime hours worked (average annualized value of $180.7 million per year); 50 percent of current overtime hours worked (average annualized value of $90.4 million per year); or no payment of overtime. On the basis of previous evidence on the impact of overtime pay, the Department judges that overtime payments in the range of scenarios 2 and 3 are more likely than scenario 1. Although the transfer of income to workers in the form of higher wages is not considered a cost of the rule from a societal perspective, higher wages do increase the cost of providing home health care services, resulting in the provision of fewer services. This reduction in the provision of services causes the market to function less efficiently, and this allocative inefficiency is a cost from a societal perspective. With a 3% real rate, the Department measures the range of average annualized deadweight loss attributable to this allocative inefficiency as $105,000 when no overtime pay adjustment is assumed, $36,000 when 50% of overtime pay is assumed to adjust and $3,000 when a 100% adjustment in overtime pay is assumed. The relatively small deadweight loss primarily occurs because both the demand for and supply of home health care services appear to be inelastic—that is, the equilibrium quantity of companionship services is not very responsive to changes in price, possibly due to the importance of these services and the coverage of many companionship services by Medicare and Medicaid. Table 1 summarizes the projected costs, transfer effects and impacts of the proposed revisions to the FLSA. Table 1—Summary of Impact of Proposed Changes to FLSA Average Annualized Value ($ mil.) Year 1 ($ mil.) Years 2-10 ($ mil.) a 3% Real Rate 7% Real Rate Costs Regulatory Familiarization Agencies $3.9 $0.3 $0.3 $0.7 $0.8 Families Hiring Self-employed 6.0 3.2 4.0 3.8 3.9 Total Costs 9.9 3.5 4.4 4.6 4.7 Transfers Minimum Wages (MW) To Agency-Employed Workers 13.0 0.0 b 0.0 b 1.5 1.7 To Self-Employed Workers 3.1 0.0 b 0.0 b 0.4 0.4 Travel Wages 26.7 27.8 45.8 35.4 34.7 Overtime Scenarios OT 1 139.3 144.8 238.8 184.2 180.7 OT 2 69.7 72.4 119.4 92.1 90.4 OT 3 0.0 0.0 0.0 0.0 0.0 Total Costs and Transfers by Scenario Reg Fam + MW + Travel + OT 1 192.1 176.2 289 226 222.2 Reg Fam + MW + Travel + OT 2 122.4 103.8 169.6 133.9 131.9 Reg Fam + MW + Travel + OT 3 52.7 31.4 50.2 41.8 41.5 Deadweight Loss Reg Fam + MW + Travel + OT 1 0.103 0.080 0.132 0.105 0.103 Reg Fam + MW + Travel + OT 2 0.042 0.027 0.044 0.036 0.036 Reg Fam + MW + Travel + OT 3 0.008 0.002 0.004 0.003 0.003 Disemployment (number of workers) Reg Fam + MW + Travel + OT 1 793 739 1,169 938 c Reg Fam + MW + Travel + OT 2 505 435 686 544 c Reg Fam + MW + Travel + OT 3 218 132 203 172 c a These costs are a range where the first number represents the estimate for Year 2; the second estimate for Year 10. b 2010 statistics on PCA and HHA wages indicate that few workers, if any, are currently paid below minimum wage ( i.e. in no state is the 10th percentile wage below $7.25 per hour). See the BLS Occupational Employment Statistics, 2010 state estimates, at URL: http://stats.bls.gov/oes/. c Simple average over 10 years. Columns may not sum to totals due to rounding. State Law Requirements In evaluating the economic impact of the proposed rule, it is important to consider the current wage requirements for home health care workers. There are numerous state laws pertaining to home health care workers. The State Medicaid Manual requires states to develop qualifications or requirements (such as background checks, training, age, supervision, health, literacy, or education, or other requirements) for Medicaid-financed personal care attendants. These state programs can each have multiple delivery models, with care being agency-directed or consumer-directed with care given by agencies or independent providers. These delivery models are not necessarily mutually exclusive. In general, for the purposes of this analysis, we refer to independent providers as workers providing services through informal arrangements, and therefore they are not counted in the statistics on home health care providers used as the basis for this analysis. A 2006 report by the HHS Office of the Inspector General (OIG) found that states have established multiple sets of worker requirements that often vary among the programs within a state and among the delivery models within programs, resulting in 301 sets of requirements nationwide. 9 Four of the consumer-directed programs in the OIG review had no attendant requirements. 9 U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG). States' Requirements for Medicaid-Funded Personal Care Service Attendants, available at http://oig.hhs.gov/oei/reports/oei-07-05-00250.pdf. (2006). Furthermore, states define these requirements differently, and specify different combinations of requirements in different programs. The most common requirements, and some characterization of how these might be defined by different programs, include: • Background Checks. May include the following: criminal background checks; checks of abuse or neglect registries; and checks of Federal or State exclusion lists for previous fraudulent or abusive activities. • Training. May include the following: First aid or cardiopulmonary resuscitation (CPR); basic health knowledge ( e.g., food and nutrition, blood-borne pathogens, hygiene, universal precautions); assistance with daily living activities ( e.g., patient transfer techniques, proper patient bathing and showering techniques, and grooming); program orientation ( e.g., beneficiary rights and responsibilities, safety, behavioral issues, patient confidentiality); training specific to an individual beneficiary's needs; or other training. • Supervision. Might be performed by registered or licensed practical nurses (RN or LPN); home health or personal care service agency staff; case managers; other qualified staff or individuals; or the beneficiary. • Minimum Age. Most commonly set at 18-years-old, but in some states might be 14-years-old, 19-years-old, or of “legal working age.” • Health. May include the following: Test negative for tuberculosis; be able to perform the services in the plan of care; meet an established minimum level of physical ability ( e.g., able to lift a certain weight or stand for a certain time); be free of communicable disease; pass a physical examination; or drug test. • Education/Literacy. Minimum requirements might include: An ability to read and write adequately to follow instructions or to keep records; a General Education Diploma (GED) or high school diploma; completed a certain grade; be a Certified Nursing Assistant (CNA) or a home health aide; have a Homemaker/Personal Care Service Provider certification issued by the state; be able to communicate with the beneficiary and/or supervisory staff; pass a competency test or have previous experience; have the skills, knowledge, and abilities necessary to perform the services needed; be able to meet the needs of the beneficiary; or be mature and sympathetic. • Other. Might be required to: Have a Social Security number; have an identification card; be a U.S. citizen; or meet state motor vehicle requirements if providing transportation. The number of states that included each requirement in at least one program and the number of state program sets that include each requirement are summarized in Table 1-1. Table 1-1—Six Most Common Attendant Requirements Requirement Number of states that utilized requirement in at least one program Number of sets containing requirement (of 301 sets) Background Checks 50 245 Training 46 227 Age 42 219 Supervision 43 198 Health 39 162 Education/Literacy 31 125 Source: DHSS OIG, 2006. p. 9. States' laws also vary in whether they extend minimum wage and overtime provisions to home health care workers. In many states companions or home health care workers are not explicitly named in the regulations, but often fall under those regulations that apply to domestic service employees. • 16 states extend both minimum wage and overtime coverage to most home health care workers who would otherwise be excluded under the current regulations: California, Colorado, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Jersey, New York, Pennsylvania, Washington, and Wisconsin. However, in some states certain types of these workers remain exempt, such as those employed directly by households or by non-profit organizations. Additionally, New York's overtime law provides that workers who are exempt from the FLSA and employed by a third-party agency need only be paid time and one-half the minimum wage (as opposed to time and one-half of the worker's regular wage). Minnesota's overtime provision applies only after 48 hours of work. • Five states (Arizona, Nebraska, North Dakota, Ohio, and South Dakota) and the District of Columbia extend minimum wage, but not overtime coverage to home care workers. There are again some exemptions for those workers employed directly by households or who live in the household. • 29 states do not include home health care workers in their minimum wage and overtime provisions: Alabama, Alaska, Arkansas, Connecticut, Delaware, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, New Hampshire, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, and Wyoming. 10 10 National Employment Law Project (NELP). 2011. Fair Pay for Home Care Workers, available at http://www.nelp.org/page/-/Justice/2011/FairPayforHomeCareWorkers.pdf?nocdn=1. Of the 22 jurisdictions that extend minimum wage to at least some home health care workers, 12 have a state minimum wage that is higher than the current federal minimum wage of $7.25 an hour. 11 These state laws are summarized in Table 1-2. 11 U.S. Department of Labor (DOL). 2011. Minimum Wage, available at http://www.dol.gov/dol/topic/wages/minimumwage.htm. Table 1-2—State Minimum Wage and Overtime Coverage of Non-Publicly Employed Companions State State minimum wage [a] MW OT Neither Analysis and citations [b] AL x AK $7.75 x AZ 7.35 x Minimum wage but no overtime coverage for companions as defined in the FLSA. No state overtime law. See Ariz. Rev. Stat. Ann. §§ 23-362, 23-363; see also Office of the Attorney General of the State of Arizona, Opinion No. I07-002 (Feb. 7, 2007). AR 6.25 x CA 8.00 x All companions as defined in the FLSA are entitled to minimum wage. California's overtime rules create in terms of overtime four categories of workers who provide home care. (1) Those who are employed by non-profits and do no additional work beyond feeding, dressing, and supervising the person do not receive overtime. (2) Those who are employed by non-profits but do additional work beyond feeding, dressing, and supervising do receive overtime. (3) All for-profit workers receive overtime regardless of their job description. (4) County-employed home care worker, of whom there are approximately 367,000, receive up to $11.50 an hour straight time per their union contracts and may also receive overtime under those contracts. Industrial Welfare Commission Order No. 5-2001, “Judge Orders State to Halt Wage Cut for California Home Care Workers, http://www.seiu.org/2009/06/judge-orders-state-to-halt-wage-cut-for-california-home-care-workers.php (last visited Jun. 28, 2011); PHI, 2010a. p. 14. CO 7.36 x x Minimum wage and overtime coverage for third-party-employed home care workers who do work beyond Colorado's definition of “companion.” Colorado's definition of “companion” is much narrower than the FLSA definition. Companions may not help to bathe and dress the person, do any amount of housekeeping, or remind the person to take medication. People who do those tasks are more than just “companions” they are “personal care” attendants. Personal care attendants are entitled to minimum wage and overtime. However, PCAs employed directly by private households are exempt from minimum wage and overtime. Colorado Minimum Wage Order No. 26 § 5; 7 Colo. Code Regs. § 1103-1:5. CT 8.25 x DE 7.25 x DC 8.25 x Minimum wage for companions as defined in the FLSA. D.C. Mun. Regs. tit. 7, § 902.1, 902.3, 902.4 (West 2011). FL 7.25 x GA 5.15 x HI 7.25 x x Minimum wage and overtime coverage for companions as defined in the FLSA, but exemption for those employed directly by private households. Haw. Rev. Stat. § 387-1. ID 7.25 x IL $8.25 x x Minimum wage and overtime coverage for any person whose primary duty is to be a companion for individual(s) who are aged or infirm or workers whose primary duty is to perform health care services in or about a private home. There may be an exemption for those employed solely by private households as a result of a general exemption for employers with fewer than four employees. 820 Ill.Comp. Stat. § 105/3(d); Ill. Adm. Code § 210.110. IN 7.25 x IA 7.25 x KS 7.25 x KY 7.25 x LA x ME 7.50 x x Minimum wage and overtime coverage for all companions as defined in the FLSA. No relevant exemptions. Me. Rev. Stat. Ann. tit. 26, §§ 663, 664. MD 7.25 x x Minimum wage coverage for all companions as defined in the FLSA. Overtime coverage for most home care workers but exemption for workers employed by non-profit agencies that provide “temporary at-home care services”. Md. Code Ann., Lab. & Empl. § 3-415. MA 8.00 x x Minimum wage and overtime coverage for all companions as defined in the FLSA. No relevant exemptions. Mass. Gen. Laws Ch. 151, § 1. MI 7.40 x x Minimum wage and overtime coverage for companions as defined in the FLSA, but exemption for live-in workers. Mich. Comp. Laws § 408.394(2)(a). Exemption for workers employed solely by private household as a result of exemption for employer with fewer than two employees. Mich. Comp. Laws § 408.382(c). MN 6.15 or 5.25 for employers grossing under $625,000 per year x x Minimum wage and overtime coverage after 48 hours for all companions as defined in the FLSA, but nighttime hours where companion is available to provide services but does not actually do so need not be compensated. Minn. Stat. § 177.23(11). MS x MO 7.25 x MT 7.35 x x Minimum wage and overtime coverage for companions as defined in the FLSA, but exemption for those employed directly by private households. Mont. Code. Ann. § 39-3-406(p). NE 7.25 x Minimum wage but no overtime coverage for companions as defined in the FLSA. No state overtime law. De facto exemption for most households as a result of general exemption for employers with fewer than four employees. Neb. Rev. Stat. §§ 48-1202, 48-1203. NV 8.25 x x Minimum wage and overtime coverage for companions as defined in the FLSA, but exemption for live-in workers. Also, business enterprises with less than $250,000 annually in gross sales volume need not pay overtime. Nev. Rev. Stat. § 608.250(2)(b). NH 7.25 x NJ 7.25 x x Minimum wage and overtime coverage for all companions as defined in the FLSA. No relevant exemptions. N.J. Stat. Ann.§ 34:11-56a et seq. NM 7.50 x NY 7.25 x x Minimum wage coverage for all companions as defined in the FLSA. N.Y. Labor Law § 651(5). There is overtime coverage for all companions but those employed by third party agencies receive overtime at a reduced rate of 150% of the minimum wage (rather than the usual 150% of their regular rate of pay). N.Y. Labor Law §§ 2(16), 170; N.Y. Comp. Codes R. & Regs. tit. 12, § 142-2.2. Overtime coverage for live-in workers after 44 hours/week (rather than the usual 40 hours) at the same rates detailed above. Id. NC 7.25 x ND 7.25 x Minimum wage but no overtime coverage for companions as defined in the FLSA. However, companions who are certain first or send-degree relatives of the person receiving care do not receive minimum wage. Additionally, nighttime hours where companion is available to provide services but does not actually do so need not be compensated. N.D. Cent. Code § 34-06-03.1. OH 7.40 x Minimum wage but not overtime coverage for companions as defined in the FLSA. Ohio Rev. Code Ann. § 4111.03 (A) § 4111.14 (West 2011). Additional overtime exemptions for live-in workers. Id. § 4111.03(D)(3)(d). OK 7.25 x OR 8.50 x PA 7.25 x x Minimum wage and overtime coverage for companions as defined in the FLSA, but exemption for those employed solely by private households. Pa. Stat. Ann. tit. 43, § 333.105(a)(2). Bayada Nurses v. Commonwealth of Pennsylvania, 8 A.3d 866 (Pa. 2010). RI 7.40 x SC x SD 7.25 x Minimum wage but no overtime coverage for companions as defined in the FLSA. No state overtime law. S.D. Codified Laws §§ 60-11-3, 60-11-5. TN x TX 7.25 x UT 7.25 x VT 8.15 x VA 7.25 x WA 8.67 x x Washington minimum wage and overtime coverage for most companions as defined in the FLSA, but exemption for live-in workers. Wash. Rev. Code § 49.46.010(5)(j). WV 7.25 x WI 7.25 x x Minimum wage and overtime coverage for most companions as defined in the FLSA, but overtime exemption for those employed directly by private households, Wis. Admin. Code § 274.015, and those employed by non-profit organizations. Wis. Admin. Code §§ 274.015, 274.01. Companions who spend less than 15 hours a week on general household work and reside in the home of the employer are also exempt from minimum wage. Wis. Admin. Code § 272.06(2). WY 5.15 x Abbreviations: MW = Minimum Wage, OT = Overtime, FLSA = Fair Labor Standards Act. Sources: [a] DOL, 2011; [b] NELP, 2011. Data Sources The primary data services used by the Department to estimate the number of workers, establishments, and customers likely to be impacted by the proposed rule include: • Bureau of Labor Statistics (BLS) 2009 Occupational Employment Survey, employment and wages by state for SOC codes 39-9021 (Personal Care Aides) and 31-1011 (Home Health Aides); • BLS Quarterly Census of Employment and Wages, 2009 for NAICS 6216 and 62412; • BLS National Employment Matrix, 2008; • 2007 Statistics of U.S. Businesses, for NAICS 6216 and 62412; and • 2007 Economic Census, by state for NAICS 6216 and 62412. The key limitation of this set of data sources is that it results in an inconsistency between the Department's best estimate of agency-employed caregivers (from the 2009 BLS Occupational Employment Survey), and its best estimate of independent providers directly employed by families (from the 2008 BLS National Employment Matrix). The Occupational Employment Survey (OES) is employer based, and does not collect data from the self-employed. The National Employment Matrix (NEM) obtains estimates on the self-employed from the Current Population Survey. However, it is not possible to match the OES estimates by subtracting the estimated number of self-employed workers from the NEM. Because these two estimates cannot be completely reconciled, the Department uses each source as the best estimate for one segment of the labor market and acknowledges there is some inconsistency between the two. Care Recipients and Demand for Services Demand for home health care services is anticipated to continue to grow in the next few decades with the aging of the “baby boomer generation.” According to PHI: Nearly one out of four U.S. households provides care to a relative or friend aged 50 or older and about 15 percent of adults care for a seriously ill or disabled family member. Over the next two decades the population over age 65 will grow to more than 70 million people [the U.S. population 65 years and older was estimated at 40 million in 2009 12 ]. Additionally, with significant increases in life expectancy and medical advances that allow individuals with chronic conditions to live longer, the demand for caregiving is expected to grow exponentially. The growth in the demand for in-home services is further amplified by an increasing preference for receiving supports and services in the home as opposed to institutional settings. This emphasis has been supported by the increased availability of publicly funded in-home services under Medicaid and Medicare as an alternative to traditional and increasingly costly institutional care. 13 12 2011 Statistical Abstract, U.S. Census Bureau. 13 National Alliance for Caregiving and the American Association of Retired Persons. 1997. Family caregiving in the U.S.: Findings from a national study. Available from http://www.caregiving.org. While many recipients of home health care services are elderly, about two-fifths of those in need of these services are under 65 and include those with varying degrees of mental or developmental disabilities. This group of home health care recipients is also anticipated to grow rapidly as more individuals opt for home-based care over institutional settings. 14 It is estimated that the demand for home health care workers will grow to approximately 5.7 to 6.6 million workers in 2050, an increase in the current demand for workers of between 3.8 and 4.6 million (200 percent and 242 percent respectively). 15 The home health care industry has grown significantly over the past decade and is projected to continue growing rapidly; for example: 14 PHI, 2003. The Personal Assistance Services and Direct-Support Workforce: A Literature Review, available at http://www.directcareclearinghouse.org/download/CMS_Lit_Rev_FINAL_6.12.03.pdf. 15 HHS, 2001. Pgs. 4, 5, and 7. • The number of establishments in Home Health Care Services (HHCS) grew by 70 percent between 2001 and 2009; during that same period, the number of establishments in Services for the Elderly and Persons with Disabilities (SEPD) grew by 355 percent. 16 16 U.S. Bureau of Labor Statistics (BLS). 2008. National Employment Matrix—Search by Occupation, available at http://data.bls.gov/oep/nioem?Action=empios&Type=Occupation. • Between 2008 and 2018 the number of home health aides is projected to increase by 50 percent and the number of personal care aides by 46 percent. Employers and Funding Sources This section focuses on the employers of workers who are currently classified as companions and common sources of funding for the services they provide; the next section describes the workers and the work they do. Services in the home health care industry are provided through two general delivery models: Agencies and consumer-directed (which often use independent providers and family caregivers). Figure 2 provides a visual overview of the home care and personal assistance industry and the two primary models for service provision, which are discussed in more detail in the sections that follow. Figure 2. Overview of the Home Health Care Industry and Funding Sources EP27DE11.001 Agency Model Under the agency model a third-party provider of home care and personal assistance services (usually a home health care company) employs the home care workers and is responsible for ensuring that services authorized by a public program or contracted for by a private party are in fact delivered. 17 There are currently about 73,000 establishments providing these services. The services are paid for through public programs such as Medicaid, Medicare, and other state programs, and through private sources such as private health insurance or out-of-pocket payments. In 2009, public programs (Medicare, Medicaid, and other government spending) accounted for about 75 percent ($63.1 billion) of the $84.1 billion in annual revenue dispersed to these agencies. 18 17 Seavey and Marquand, 2011, pg. 26. Available at: http://www.directcareclearinghouse.org/download/caringinamerica-20111212.pdf. 18 Seavey and Marquand, 2011, pgs 22, 23. Available at: http://www.directcareclearinghouse.org/download/caringinamerica-20111212.pdf. Agencies providing home care and personal assistance services are covered by two primary industries: Home Health Care Services (HHCS, NAICS 6216), and Services for Elderly and Persons with Disabilities (SEPD, NAICS 62412). 19 HHCS is dominated by for-profit agencies that are Medicare-certified and depends on public programs for three-quarters of its revenue. 20 SEPD is a rapidly growing industry that is dominated by small non-profit enterprises. Table 2-1 provides an overview of these two industries in terms of number of employees, establishments, payroll and wages, and estimated revenues. 19 These two industries are the primary employers of workers currently classified as companions; however, based on data reported by BLS in the National Employment Matrix there are approximately 25 other industries that also employ these workers. Since these other industries employ so few of the workers under consideration here they will be minimally affected by this proposed rule. 20 Seavey and Marquand, 2011, pgs 20-22. Available at: http://www.directcareclearinghouse.org/download/caringinamerica-20111212.pdf. Table 2-1—Summary of HHCS and SEPD, 2009 Industry Employees [a] Establishments Total wages ($ mil.) Avg weekly wage Est. revenue ($ mil.) SEPD + HHCS 1,714,000 73,200 $413,181 $464 $80,307 SEPD 679,600 49,100 133,247 377 28,645 HHCS 1,034,400 24,100 279,934 520 51,662 [a] Employees include HHA, PCA, and other occupations. Sources: BLS QCEW 2009; BLS National Employment Matrix, 2008. These two industries primarily employ workers as home health aides (HHA) and personal care aides (PCA) in addition to other occupations. However, not all of the HHA and PCA employed by these agencies work as companions under the companionship exemption; these agencies provide a variety of health-related services that may be delivered in private homes (and potentially companionship services) or in public or private facilities (and not defined as companionship services). Simply put, only a fraction of the 1.7 million employees listed in the table above are currently working as exempt companions who may see changes in their wages and/or work schedules as a result of the proposed rule. Within these two industries there are three broad employer types: Home health care companies, for-profit franchise chains, and private-duty home care companies. The latter two types are smaller, emerging types of employers that focus on the provision of non-medical care for clients. Home health care companies focus on providing medically-oriented home health care services and non-medical home care or personal assistance services. Many of these agencies are Medicare-certified; those that avoid obtaining certification do so because they do not provide the skilled nursing care required by Medicare. These companies also derive a significant portion of their revenue from the provision of medical devices to customers. 21 21 PHI, 2010a. p.2. Consumer-Directed Models Under the consumer-directed model, the consumer or his/her representative has more control than in the agency-directed model over the services received, and when, how, and by whom the services are provided. The approaches to delivering services under this model range from the more formal state-organized systems to informal arrangements coordinated through word-of-mouth between care recipients. In the public version of this model, the care is funded either by Medicaid, directly by states, or through programs or grants administered by the HHS Centers for Medicare & Medicaid Services (CMS). Other recipients arrange for and pay for care privately through informal negotiations with individual service providers. In this model, the customer may act as the sole or a joint employer and has varying degrees of responsibility for interviewing, hiring, training, managing, and firing the provider. Due to the sometimes informal nature of the consumer-directed employment arrangements, there are no data on the total number of customers under this model, and there is limited information on the total number of providers. BLS National Employment Matrix data show that 127,000 Personal Care Aides (about 16 percent) are employed in private households and 61,500 (about 8 percent) are self-employed, for a total of 188,500 workers (about 23 percent) that may provide services as independent contractors. 22 Fewer Home Health Aides are employed in this manner, with 1,700 (less than one percent) working for private households and 16,400 (about two percent) who are self-employed. Combining the data for Personal and Home Health Aides suggests that 206,600 of these workers (about twelve percent) may be either self-employed or employed in private households. The Department believes that these workers can reasonably be described as independent providers that directly provide caregiver services to families, perhaps through informal arrangements. 22 BLS, 2008. However, consumer-directed employment is sometimes referred to as a “grey market;” that contains an element of “over-the-back-fence network of women [who are] usually untrained, unscreened, and unsupervised, but more affordable without an agency's fee, less constrained by regulations and hired through personal recommendation.” 23 The term “grey market” is sometimes used to suggest that at least some of these private arrangements are designed to avoid applicable labor laws; the extent to which care recipients use private arrangements for this purpose is unclear; there is very little information available about this segment of the market for home health services. It is also possible, and likely, that care providers who are employed by an agency or who provide services through a state registry also occasionally provide services through informal arrangements. The Department's best estimate of consumer-directed employment is summarized in the previous paragraph, and we are unable to estimate the extent to which the group of providers described above participates in the informal market. We are also unable to characterize the extent to which other providers not included in this estimate participate in the “grey market.” 23 Gross, J., New Options (and Risks) in Home Care for Elderly. New York Times available at http://nytimes.com/2007/03/01/us/01aides.html. (March 1, 2007). There is no consolidated source of data on state consumer-directed programs; however, PHI offers an overview of what programs are offered: Seven states have no publicly-funded consumer-directed program, 38 states offer options under one or more Medicaid Waivers, seven states offer options under Medicaid Home Health programs, and 12 states offer consumer/participant-directed options under Medicaid Personal Care Option. 24 24 Seavey and Marquand, 2011, pg 28. Available at: http://www.directcareclearinghouse.org/download/caringinamerica-20111212.pdf. Of those states that do offer a consumer-directed program, some have im [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2011-32657. Public record. Not legal advice.