Application of the Fair Labor Standards Act to Domestic Service

DEPARTMENT OF LABOR

Wage and Hour Division

29 CFR Part 552

RIN 1215-AA82

Application of the Fair Labor Standards Act to Domestic Service

AGENCY: Wage and Hour Division, Employment Standards Administration,

Labor.

ACTION: Final rule.

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SUMMARY: This rule revises regulations to incorporate changes

necessitated by amendments to Title II of the Social Security Act which

were enacted October 22, 1994, as Public Law 103-387 (Social Security

Domestic Employment Reform Act), and makes other updating and technical

revisions. A separate document published elsewhere in this issue

reopens the comment period regarding the proposed revision to

Sec. 552.109, which was published in the Federal Register on December

30, 1993 (58 FR 69310), to clarify the minimum wage and overtime

exemption under the Fair Labor Standards Act (FLSA) for certain

employees of third-party employers who provide domestic companionship

services.

DATES: This regulation is effective October 10, 1995.

FOR FURTHER INFORMATION CONTACT:

Richard M. Brennan, Acting Director, Division of Policy and Analysis,

Wage and Hour Division, Employment Standards Administration, U.S.

Department of Labor, room s-3506, 200 Constitution Avenue, NW.,

Washington, DC 20210, (202) 219-8412. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

This regulation contains no reporting or recordkeeping requirements

subject to the Paperwork Reduction Act of 1980 (Pub. L. 96-511). The

general FLSA information collection requirements (including

requirements contained in part 552) were approved by the Office of

Management and Budget under the control number 1215-0017.

II. Background

The Department published a notice of proposed rulemaking in the

Federal Register on December 30, 1993 (58 FR 69310), inviting public

comments until February 28, 1994, on the following technical

modifications to 29 CFR part 552:

(1) Revise Sec. 552.100(a)(1) to delete references to former

minimum wage

[[Page 46767]]

levels that have been overtaken by subsequent statutory increases in

the minimum wage since part 552 was last revised;

(2) Revise Sec. 552.100(c) to reflect updated credits, in a

percentage format, that can be taken by an employer for meals and

lodging furnished to a domestic service employee;

(3) Revise Sec. 552.101(a)(1) to change the reference ``20 CFR

404.1027(j)'' to ``20 CFR 404.1057'' pursuant to a redesignation in

regulations issued under the Social Security Act;

(4) Revise Sec. 552.105(a) to change the FLSA reference ``section

3(s)(4)'' to ``section 3(s)(1)(B)'' in accordance with the Fair Labor

Standards Amendments of 1989, 103 Stat. 938;

(5) Revise Sec. 552.2(b) to change the reference in the third

sentence from ``Section 7(1)'' to ``Section 7(l) (substituting a lower

case letter ``l'' for the number ``1'' in the parentheses); and

(6) Revise the last sentence of Sec. 552.104(b) to correct two

spelling errors.

In addition, the Department invited public comments on a proposal

to revise Sec. 552.109 to clarify that, in order for the exemptions in

FLSA sections 13(a)(15) and 13(b)(21) to apply, employees engaged in

providing companionship services and live-in domestic service employees

who are employed by a third-party employer or agency must also be

``jointly'' employed by the family or household using their services.

A total of 7 comments were received in response to the notice. All

focused their remarks on the proposed revision to Sec. 552.109

concerning joint employment and third-party employers. The Department

is continuing to consider this particular proposal, and a separate

document published elsewhere in this issue reopens and extends the

comment period regarding the proposed revision to Sec. 552.109.

III. Summary of Final Rule

A. Updates and Technical Revisions

No public comments were received on the updating and technical

changes that were proposed in the December 1993 notice, and such

revisions are adopted in the final rule as proposed.

B. Revisions Required by the ``Social Security Domestic Employment

Reform Act of 1994''

The Social Security Domestic Employment Reform Act of 1994 (Pub. L.

103-387, 108 Stat. 4071) was enacted into law on October 22, 1994.

Among other things, this law amended section 3121(x) of the Internal

Revenue Code of 1986 to change the ``threshold'' for withholding and

paying social security taxes on domestic workers from $50 per quarter

to $1,000 annually in 1995. In the case of years after 1995, the

applicable $1000 threshold is to be indexed in $100 increments rounded

down to the nearest $100. The new law also amended section 209(a)(6)

(formerly designated as 209(g)) of the Social Security Act (42 U.S.C.

409(a)(6)(B)) to exclude from the term ``wages'' cash remuneration paid

by an employer for domestic service employment if the cash remuneration

is less than the applicable dollar threshold as defined in section

3121(x) of the Internal Revenue Code of 1986.

As a consequence, the reference in Sec. 552.2(b)(1) to FLSA's

coverage of domestic service employees under section 6(f) of FLSA based

on section 209(g) of the Social Security Act and to a $50 cash

threshold must be modified to conform the regulatory language to the

recent statutory changes. This revision of Sec. 552.2(b)(1) is

technical in nature and based on the Social Security Domestic

Employment Reform Act of 1994 (Pub. L. 103-387, 108 Stat. 4071), about

which the Department has no discretion under section 6(f) of the FLSA.

Pursuant to 5 U.S.C. 553(b)(3) (A) and (B), this minor, clarifying

revision does not require prior notice and comment.

Executive Order 12866/Sec. 202 of the Unfunded Mandates Reform Act

or 1995

This final rule is not a ``significant regulatory action'' within

the meaning of Executive Order 12866, nor does it require a section 202

statement under the Unfunded Mandates Reform Act of 1995. The revisions

adopted in this rule are technical in nature or are otherwise required

by a recent statutory enactment of the Congress. In any event, the

revisions will not have a significant impact on the employment of

domestic service employees. Accordingly, these changes are not expected

to result in a rule that may: (1) 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; (2) create a serious inconsistency or

otherwise interfere with an action taken or planned by another agency;

(3) materially alter the budgetary impact of entitlements, grants, user

fees, or loan programs or the rights and obligations of recipients

thereof; or (4) raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

Executive Order 12866. Therefore, no regulatory impact analysis has

been prepared.

Regulatory Flexibility Analysis

This final rule will not have a significant economic impact on a

substantial number of small entities. The changes being adopted in this

rule simply conform the regulations to updates in related legislation

and are technical in nature. Therefore, the rule is not expected to

have a ``significant economic impact on a substantial number of small

entities'' within the meaning of the Regulatory Flexibility Act. A

regulatory flexibility analysis is not required.

Document Preparation

This document was prepared under the direction and control of Maria

Echaveste, Administrator, Wage and Hour Division, Employment Standards

Administration, U.S. Department of Labor.

List of Subjects in 29 CFR Part 552

Domestic service workers, Employment, Labor, Minimum wages,

Overtime pay, Wages.

Accordingly, part 552 of title 29 of the Code of Federal

Regulations is amended as set forth below.

Signed at Washington, DC, on this 31st day of August, 1995.

Maria Echaveste,

Administrator, Wage and Hour Division.

PART 552--APPLICATION OF THE FAIR LABOR STANDARDS ACT TO DOMESTIC

SERVICE

1. The authority citation for part 552 is revised to read as

follows:

Authority: Secs. 13(a)(15) and 13(b)(21) of the Fair Labor

Standards Act, as amended (29 U.S.C. 213(a)(15), (b)(21)), 88 Stat. 62;

Sec. 29(b) of the Fair Labor Standards Amendments of 1974 (Pub. L. 93-

259, 88 Stat. 76), unless otherwise noted.

2. Section 552.2(b)(1) is revised to read as follows:

Sec. 552.2 Purpose and scope.

(a) * * *

(b) * * *

(1) If the employee's compensation for such services from his/her

employer would constitute wages under section 209(a)(6) of title II of

the Social Security Act, that is, if the cash remuneration during a

calendar year is not less than $1,000 in 1995, or the amount designated

for subsequent years pursuant to the adjustment provision in

[[Page 46768]]

section 3121(x) of the Internal Revenue Code of 1986; or

* * * * *

Sec. 552.2 [Amended]

3. In Sec. 552.2, paragraph (b), the reference in the first

sentence of the concluding text is revised to read ``Section 7(l)''

instead of ``Section 7(1)'' (substituting a lower case letter ``l'' for

the number ``1'' in the parentheses).

4. In Section 552.100 (paragraphs (a)(1), (c) and (d) are revised

to read as follows:

Sec. 552.100 Application of minimum wage and overtime provisions.

(a)(1) Domestic service employees must receive for employment in

any household a minimum wage of not less than that required by section

6(a) of the Fair Labor Standards Act.

* * * * *

(c) For enforcement purposes, the Administrator will accept a

credit taken by the employer of up to 37.5 percent of the statutory

minimum hourly wage for a breakfast (if furnished), up to 50 percent of

the statutory minimum hourly wage for a lunch (if furnished), and up to

62.5 percent of the statutory minimum hourly wage for a dinner (if

furnished), which meal credits when combined do not in total exceed 150

percent of the statutory minimum hourly wage for any day. Nothing

herein shall prevent employers from crediting themselves with the

actual cost or fair value of furnishing meals, whichever is less, as

determined in accordance with part 531 of this chapter, if such cost or

fair value is different from the meal credits specified above:

Provided, however, That employers keep, maintain and preserve (for a

period of 3 years) the records on which they rely to justify such

different cost figures.

(d) In the case of lodging furnished to live-in domestic service

employees, the Administrator will accept a credit taken by the employer

of up to seven and one-half times the statutory minimum hourly wage for

each week lodging is furnished. Nothing herein shall prevent employers

from crediting themselves with the actual cost or fair value of

furnishing lodging, whichever is less, as determined in accordance with

part 531 of this chapter, if such cost or fair value is different from

the amount specified above, provided however, that employers keep,

maintain, and preserve (for a period of 3 years) the records on which

they rely to justify such different cost figures. In determining

reasonable cost or fair value, the regulations and rulings in 29 CFR

part 531 are applicable.

Sec. 552.101 [Amended]

5. In Sec. 552.101, the parenthetical reference in the first

sentence of paragraph (a) is revised to read ``(20 CFR 404.1057)''.

6. In Sec. 552.104, paragraph (b) is revised to read as follows:

Sec. 552.104 Babysitting services performed on a casual basis.

* * * * *

(b) Employment in babysitting services would usually be on a

``casual basis,'' whether performed for one or more employees, if such

employment by all such employers does not exceed 20 hours per week in

the aggregate. Employment in excess of these hours may still be on a

``casual basis'' if the excessive hours of employment are without

regularity or are for irregular or intermittent periods. Employment in

babysitting services shall also be deemed to be on a ``casual basis''

(regardless of the number of weekly hours worked by the babysitter) in

the case of individuals whose vocations are not domestic service who

accompany families for a vacation period to take care of the children

if the duration of such employment does not exceed 6 weeks.

* * * * *

Sec. 552.105 [Amended]

7. In Sec. 552.105, the reference in the fourth sentence of

paragraph (a) is revised to read ``section 3(s)(1)(B) of the Act * *

*''

[FR Doc. 95-22141 Filed 9-7-95; 8:45 am]

BILLING CODE 4510-27-M