On July 2, 2025, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rulemaking that would reverse key provisions of a 2013 rule extending Fair Labor Standards Act (FLSA) protections to certain domestic service workers. If finalized, the proposed rule would reestablish exemptions for third-party employers of live-in domestic workers and those providing companionship services, effectively removing minimum wage and overtime protections for many workers in the home care industry.
Background
The 2013 Final Rule extended minimum wage and overtime protections to most home care workers by limiting the applicability of the FLSA’s companionship services and live-in domestic worker exemptions when such workers were employed by third parties. The proposed rule contends that the 2013 rule improperly departed from Congressional intent and resulted in unintended consequences for care recipients and providers.
Key Details of the Proposed Rule
- Third-party employers, such as home care agencies, would once again be able to claim the FLSA’s exemption for workers providing companionship services.
- Live-in domestic workers employed by third parties could also be exempt from FLSA overtime and minimum wage requirements.
- This rule would effectively reinstate the DOL’s pre-2013 interpretation of the FLSA’s domestic service exemptions.
Interim Enforcement Guidance from the Wage and Hour Division
On July 25, 2025, while a new final rule is pending, the Wage and Hour Division (WHD) published FAB 2025-4, Home Care Enforcement Guidance, to address a change in WHD enforcement in the home care industry. The guidance, which was issued to the WHD’s field staff, provides enforcement instructions until the effective date of any final rule that the Department of Labor issues regarding the 2013 final rule.
According to the guidance, WHD field staff will:
- Discontinue enforcement of the 2013 final rule, including open cases.
- Not take any enforcement action against third-party employers claiming the 13(a)(15) or 13(b)(21) FLSA exemptions.
- Not factor in time limitations when determining exemption applications for companionship services.
Implications for Employers
If adopted, the proposed rule would alter the obligations of home care agencies and other third-party employers in the following ways:
- Employers could again classify certain home care employees as exempt from FLSA minimum wage and overtime protections.
- Timekeeping and payroll processes may need to be updated to reflect renewed exemption eligibility.
- Wage and hour claims related to misclassification could decrease, but compliance oversight will remain essential.
Next Steps for Employers
Employers in the home care industry or those who retain third-party domestic service providers should consider the following actions:
- Review Classification Practices. Conduct an audit of domestic service workers currently classified as non-exempt under the 2013 rule to assess potential changes if the proposed rule is finalized.
- Monitor the Comment Period. The proposed rule is open for public comment for 60 days following its publication in the Federal Register. Employers may submit comments and monitor for any updates or clarifications.
- Evaluate Vendor Agreements. If your organization contracts with home care or domestic service providers, confirm how vendors are addressing classification and wage compliance.
- Prepare for Implementation. Plan for operational changes in the event the rule is finalized, including updates to pay practices, employee communications, and policy documentation.
- Remain Mindful of State and/or Local Wage and Hour Laws. Where federal guidelines conflict with state and/or local law, employers must follow the requirement that provides the greatest benefits to employees.
HR Works will continue to monitor this topic and provide updates as more information is made available.
