Live-in nurses, home health aides, and other employees who care for the elderly won a significant victory earlier this month when a court upheld a Department of Labor rule requiring companies to pay these employees minimum wage and overtime. Previously, these workers were not entitled to these benefits.
Under the Fair Labor Standards Act, an employer must pay an employee a minimum wage of at least $7.25 (some states have increased this amount) and 1.5 times their hourly wage for working overtime. However, there are a number of exceptions to this law. Managers, administrators, salespeople, and other “white-collar” employees are exempt from these rules, as well as a host of others in various jobs. Employees who provided “companionship services” to the elderly or people with injuries, illnesses, or disabilities were also exempt. Live-in domestic service employees were exempt from receiving overtime pay, but not minimum wage.
The Department of Labor’s rule changed this. Under the new rule, companies with employees who provide companionship services must now pay these employees minimum wage and provide them overtime pay. Companies who employ live-in domestic service employees also must pay them overtime.
This rule was supposed to take effect on January 1, 2015, but a lawsuit filed by companies who employ domestic workers delayed it from taking effect until October 13, 2015. The Department of Labor has decided to enforce the rule on a limited basis until December 31, 2015. After that it will fully enforce the rule, and companies who fail to pay domestic workers minimum wage or overtime could be fined by the Department of Labor or sued by their employees.
One important thing to note: this rule does not apply to employees hired directly by a family or household. So, if you hire a friend to care for an elderly relative, you will not be required to pay that person overtime or minimum wage. The same is true for live-in employees: families and households who hire these workers do not have to pay them overtime.
As we have discussed at length, the Department of Labor has recommended major changes to overtime pay and minimum wage rules recently. These rules will likely take effect within the next few months, and employers need to be aware of them and know how they affect their employees. Consulting an attorney about these new rules could prevent an employer from facing lawsuits and fines, and thereby spending significant sums of money, for not complying with them.