The U.S. Department of Labor (DOL) is proposing a major shift in labor rules for domestic workers, aiming to reinstate Fair Labor Standards Act (FLSA) exemptions for caregivers and companions employed by third-party agencies. This change could reshape how home care agencies manage payroll and scheduling, potentially impacting millions of workers and the families they serve. Read on to understand the proposal, its implications, and how you can weigh in before the September 2, 2025, comment deadline.
Background: The 1975–2013 Exemption Timeline
- 1975: Congress extended FLSA coverage to domestic workers but exempted those providing “companionship services” (e.g., fellowship, care, protection) and live-in caregivers from minimum wage and/or overtime. Employers — including agencies — could claim the exemption, allowing up to 20% of weekly hours on general household tasks
- 2013: DOL narrowed the exemption to limit “care” to 20% of weekly hours and barred third-party employers from using it. This rule applied throughout November 2015
What the New Proposal Would Change
- Return to “Care” inclusive definition: The rule would reinstate the broader 1975 definition — allowing meal prep, bed-making, laundering related to care, and not cap “care” at 20% of hours
- Allow agency exemption: Third-party agencies (home care or staffing) could again classify qualifying workers as exempt — even when not directly employed by the household
These changes would apply to both the “companionship” and “live-in domestic service” exemptions.
Why the DOL Is Reversing Course
- Cost & access concerns: A GAO study found that the 2013 rule led agencies and Medicaid programs to limit hours to avoid overtime, reducing access and increasing scheduling complexity.
- Minimal wage benefits: Wages and earnings didn’t significantly rise post2013, and turnover rates remain high (~80%); workforce shrank ~11.6% from 2013–2019
- Care continuity matters: The care sector argues consistent caregiver assignments build trust and quality, which the narrow 2013 rule jeopardized.
What Employers & Workers Should Know
- Comment period: The public can submit input until September 2, 2025.
- If finalized: Home care agencies in FLSA jurisdictions may reconfigure compensation, exempt workers from overtime/min wage, and simplify payroll systems. But agencies must still follow stricter state laws.
- Next steps: Employers should audit current pay policies, payroll codes, and state-standard compliance now in case the rule becomes final.
Frequently Asked Questions
Q1: Who would be affected?
A: Approximately 3.7 million home health/personal care aides in the U.S., including those employed by agencies — though state laws may still impose non-exempt requirements.
Q2: Does this affect direct hires by families?
A: No — families currently could claim the exemption for “companionship” under either rule. The change mainly restores agency eligibility and expands task inclusion.
Q3: Do caregivers get lower pay if exempted?
A: Possibly. Exempt status removes overtime/minimum wage protections. However, DOL estimates most workers earn ~$16.12/hr — well above federal minimum — meaning few would be affected by losing minimum wage protections.
Q4: Could this increase hours without overtime?
A: Yes, exempt status allows agencies to assign longer shifts without overtime pay — which may benefit continuity but reduce overall income for caregivers.
Q5: What should agencies do now?
A:
- Analyze current pay structure and time-tracking.
- Evaluate state-specific wage & hour laws.
- Plan policy updates and revise employment contracts post-rule finalization.
Q6: What about caregiver morale and recruitment?
A: DOL acknowledges concerns; losing overtime might hurt morale or retention. They invite comments on the rule’s potential impact on wages, care costs, and workforce supply
Bottom Line
The proposed rule marks a significant shift — rolling back the 2013 limitations, expanding exemptions to agencies, and enabling broader caregiver responsibilities. Employers and caregivers alike should weigh benefits of scheduling flexibility and continuity against potential wage restrictions. With public comments due September 2, it’s time to prepare, assess, and respond.
How to Submit a Comment:
You may submit comments identified by Regulatory Information Number (RIN) 1235-AA51 using one of the following methods:
- Electronic Submission: Submit your comments via the Federal eRulemaking Portal at www.regulations.gov. Follow the on-screen instructions to complete your submission.
- Mail: Send written comments to:
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
If you would like assistance in preparing your comment, please feel free to contact our firm.
Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit Revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.