Two Revisions of the Fair Labor Standards Act

by Michael Haberman on September 25, 2013 · 0 comments


 

Home care companions are now eligible for overtime. This may have a major impact on this industry.

Home care companions are now eligible for overtime. This may have a major impact on this industry.

Revisions to the Fair Labor Standards Act generally are of a minor nature, such as occurred in 2011 removing some outdated definitions and examples. The last major revision of the FLSA was in 2004. However, this year we are dealing with two revisions of the Fair Labor Standards Act that have a bit more impact.

The Affordable Care Act

The PPACA or the ACA (also known as Obamacare) altered the Fair Labor Standards Act. It did not change the nature of the FLSA. The change it put in place is the requirement that all companies that have to comply with the FLSA, which is virtually and company of even modest size, must now deliver notices to employees explaining their rights under the ACA. If you are not aware of this requirement read this post.

Companionship Exemption

This change in regulations goes into effect January 1, 2015 and will have a significant impact on a subset of the healthcare industry. The USDOL announced in Fact Sheet: Application of the Fair Labor Standards Act to Domestic Service, Final Rule the 1975 regulations on overtime and minimum wage for companionship works had been substantially altered. They redefined companionship services and also rewrote the Fact Sheet #25: Home Health Care and the Companionship Services Exemption Under the Fair Labor Standards Act (FLSA).

Not only will agencies that have provided these companions in the past no longer be able to claim an exemption from overtime for these workers, “the scope of the phrase ‘companionship services’ will have been narrowed considerably. Reflecting USDOL’s contention that the exemption should be primarily focused upon ‘fellowship and protection’, exempt status would be lost if the companionship worker performs more than an incidental amount of ‘care’ services (for example, dressing, grooming, meal preparation, driving, etc.)” according to attorney Edward Boehm at Fisher & Phillips.

Additionally, “Under the coming rule, the exemption would be lost for any workweek in which ‘care’ services exceed 20 percent of the employee’s total hours worked in that workweek.”

Impact

There is a lot of conjecture on the impact of this ruling. The President of the SEIU union applauded the change and said it will provide a better situation for workers in the field. Industry sources contend that “Home-care companies will have little choice but to employ workers part time rather than full time as Medicaid payment rates and consumers with limited incomes cannot afford higher costs. Caregivers will in the end receive less pay” according it industry spokesperson Andrea Devoti, chairwoman of the National Association for Home Care & Hospice. Other observers note that many states already have these provisions in effect on the state level and this will provide no change for companies in those states. What the actual effect will be remains to be seen. But for companies operating such a business they do need to change their HR paperwork and payroll practices.


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