Payments and Perks: the DOL Announces a Proposal to Clarify What Qualifies as Overtime

By Marianna Michael

On Thursday, March 28, 2019, the U.S. Department of Labor (“DOL”) announced proposed changes to the overtime provisions of section 7(e) of the Fair Labor Standards Act.  In its current form, the statute generally requires employers to pay overtime if workers work more than 40 hours a week.  One exemption to the overtime rule includes the salary basis exemption, where employees generally must be paid at least $455 per week on a salary basis, unless they are outside sales employees, teachers and employees practicing law or medicine.

Overtime pay is equal to one and one half times the regular rate of pay.  In designating what is included under the regular rate of pay, the current provision makes a distinction between payments and perks.  With the proposed provision, the DOL seeks to clarify what qualifies as either a payment or perk in an attempt to discourage employers from offering incentives that are excluded from the calculation of overtime pay.

The proposed changes confirm that the following types of employer-provided benefits may be excluded from the regular rate of pay:

• the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes and employee discounts on retail goods and services;
• payments for unused paid leave, including paid sick leave;
• reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
• reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
• discretionary bonuses;
• benefit plans, including accident, unemployment and legal services; and
• tuition programs, such as reimbursement programs or repayment of educational debt.

This proposal is published for public comments and will remain open until May 28, 2019.  Comments may be submitted to the Notice of Proposed Rulemaking at www.regulations.gov. More information is available here.

DOL Releases Much Awaited Proposed Rule Raising Salary Minimum to $35,308 – Employers Have 60 Days to Comment

By Sharon Gold

On Thursday, March 7, 2019, the Department of Labor (“DOL”) released the much anticipated Notice of Proposed Rulemaking (“NPRM”) that significantly raises the minimum salary for exempt workers from $23,660 to $35,308.  It is estimated that if this rule is finalized, more than a million workers will either become eligible for overtime pay or have their salaries raised to meet the minimum.

Employers will recall that in late 2016, a mere few days before the salary minimum was supposed to be raised to $47,476, a federal judge in Texas blocked the rule.  Since that time, the DOL issued a Request for Information about the salary rule in 2017.  More than 200,000 employers and individuals commented.  In addition, the DOL had six in-person listening sessions in connection with the Request for Information.  The DOL indicated

DC Circuit Reinstates DOL Rule Applying FLSA’s Minimum Wage and Overtime Provisions to Home Care Workers

By Michelle D. Wyrick

On August 21, 2015, in Home Care Association of America v. Weil, the United States Court of Appeals for the District of Columbia Circuit cleared the way for the implementation of regulations extending the Fair Labor Standards Act’s (“FLSA’s”) minimum wage and overtime provisions to many home care workers. The court rejected a challenge to the United States Department of Labor’s (“DOL’s”) authority to change its interpretation of the scope of the FLSA provisions exempting from minimum wage and overtime guarantees domestic-service workers who provide either companionship services or live-in care for the elderly, ill, or disabled. The court’s ruling directly affects home care workers who are employed by third-party providers, like home health care agencies.

For four decades, the DOL interpreted the FLSA’s exemptions for companionship services and live-in workers to apply to employees of third-party providers. The old regulations specifically stated that domestic workers, who were employed “by an employer other than the family or household using their services,” were not included in the FLSA’s protections. Thus, traditionally, those workers have not been eligible for

Court Invalidates Rule Extending the FLSA’s Minimum Wage and Overtime Requirements to Home Health Care Workers Employed by Third Parties

By Brittany L. Hampton

The U.S. District Court for the District of Columbia struck down the U.S. Department of Labor’s regulations concerning the companionship services exemption to the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA). See Home Care Association of America v. Weil, No. 14-cv-967 (D.D.C. 2014). Under the FLSA, providers of home care services employed by a third party are deemed to fall within the FLSA’s domestic employee and/or companionship services exemptions. However, the Department of Labor’s Wage and Hour Division issued a Final Rule with an effective date of January 1, 2015 (but not to be enforced until July 1, 2015) effectively eliminating this exemption by revising the definition of “companionship services” and subjecting third-party providers to minimum wage and overtime requirements imposed by the FLSA.

The National Association for Home Care & Hospice, Home Care Association of America, and the International Franchise Association brought an action challenging the Final Rule under the Administrative Procedure Act arguing that the rule was arbitrary and capricious, and inconsistent with Congress’ intent. Specifically, the plaintiffs claimed the rule would “have a destabilizing impact on

Minimum Wage and Overtime Laws to be Applied to Home Care Employees

By Douglas L. McSwain

The U.S. Department of Labor (DOL) has adopted a new final regulation that extends minimum wage and overtime protections to direct care employees of home care agencies and other third parties.  Direct care workers include those who provide essential home care services such as home health aides, personal care aides, and certified nursing assistants.  An estimated two million additional direct care workers in the U.S. are expected to be covered by this new rule.

The final regulation will take effect January 1, 2015, so employers have time to consider its implications unless their direct care workforces are already covered by a state minimum wage or overtime law.  Fifteen states extend both minimum wage and overtime protection to direct care workers, and an additional six states, plus the District of Columbia, extend minimum wage protection. 

The DOL’s new regulation does not sweep within its protection every person who provides companionship services or assists another within a home setting.  Many comments were submitted to the DOL raising questions about the potential scope of the proposed rule, particularly as to its potential impact on those who merely provide companionship. The result in the DOL’s final rule was to extend protection to those performing medically-related services for which training is typically a prerequisite, but not to workers who are employed only by the person receiving services or his/her family or household and who primarily perform fellowship and protection activities, or care incident to these activities, such as providing company, visiting or engaging in hobbies, etc., with the person receiving services.

Labor Department Proposes to Eliminate Exemptions for In-Home Companionship Workers Not Directly Employed by a Family

By Edwin S. Hopson

The U.S. Department of Labor recently announced that it was filing a notice of proposed rule-making regarding its regulations pertaining to the exemption for companionship services and live-in domestic services.

Section 13(a)(15) of the Fair Labor Standards Act (FLSA) exempts from the minimum wage and overtime provisions domestic service employees who are 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 law also exempts from the overtime provision any employee employed “in domestic service in a household and who resides in such household.”

These FLSA exemptions, enacted in 1974, were later complimented by Labor Department-promulgated regulations in 1975.  Those regulations have not been amended or changed since 1975.  Since that time, the Department notes that there have been “significant changes in the home health care industry” and “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.” It also noted that 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.” Therefore, the Labor Department decided to reduce the scope of the exemption by amending its regulations to revise the definitions of “domestic service employment” and “companionship services.” The Department also proposed to clarify the type of activities and duties that may be considered “incidental” to the provision of companionship services.

Additionally, the Department proposed to amend the record-keeping requirements for live-in domestic workers. Finally, the Department proposed to amend the regulation pertaining to employment by a third party of companions and live-in domestic workers.

These changes would continue to allow the individual, family, or household directly employing the worker’s services to apply the companionship and live-in exemptions but would deny all third party employers of such workers the use of the exemptions.

Comments on the proposed changes to the regulations must be received by the Labor Department on or before February 27, 2012.

 The notice of proposed rule-making may be viewed at:

 http://www.gpo.gov/fdsys/pkg/FR-2011-12-27/html/2011-32657.htm