Overtime Pay Rules for Private Caregivers


Many people who employ in-home caregivers think of them like teenage babysitters: You come up with an hourly fee (perhaps $40 to cover your evening out), and when you return home a few hours later, you slip them the cash and send them on their way. You likely don’t bother to report the payment to the IRS.

Although in-home caregivers have been historically treated like babysitters, federal regulations have clarified that they have little in common with babysitters and cannot be treated as such. Effective January 1, 2015, the U.S. Department of Labor clearly outlined protections for in-home senior care workers, and provides a helpful online self-assessment for families to walk through to determine if they are required to pay federal minimum wage and overtime pay.

Direct care workers, such as home health aides (HHAs), personal care aides, certified nursing assistants and senior caregivers who are employed independently to work in a private home are, for legal classification purposes, domestic service workers who are covered by the Fair Labor Standards Act (FLSA). Consequently, they must be paid federal minimum wage for all of the hours they’re providing services. If they work longer than 40 hours a week, then they are entitled to overtime pay. However, the average family looking for home-based elder care services isn’t familiar with the nuances of these rules or how to apply them.

Hiring an Independent Caregiver vs. a Home Care Agency

There are two main ways families go about hiring in-home care: independently via a registry/referral or through a home care agency. Home care agencies function as the third party employer for professional caregivers and a type of “middle man” for families. Agencies handle technicalities like screening, background checks, training, scheduling, bonding, workers’ compensation, payroll and taxes for their clients and employees.

Administrative details are very different if a family decides to hire an independent caregiver who is not affiliated with an agency. In this situation, the family becomes the employer and assumes responsibility for the tasks above as well as ensuring labor laws (such as overtime pay) and IRS rules are followed. Although hiring a private caregiver is thought to be less expensive, there are some important factors that you must take into consideration before accepting the time-consuming role of an employer.

When Do Caregivers Get Paid Overtime Rates?

Tafa Jefferson, CEO of Amada Senior Care, is very familiar with the regulations governing in-home care. He breaks down the most important rules into four simple questions that will help families determine whether private caregivers qualify for overtime pay and when.

  • Does your caregiver legally qualify as a domestic service worker? 
    According to the Wage and Hour Division of the U.S. Department of Labor, “domestic service workers provide services of a household nature in or about a private home.” Domestic service workers are protected by the FLSA, meaning they must be paid at least the federal minimum wage for all hours worked and overtime pay at time and a half the regular rate of pay for all hours worked over 40 in a workweek, unless they are subject to an exemption.
    While this fundamental question seems simple, Jefferson points out that the answer isn’t always clear. There are some gray areas when it comes to defining a “private home” and “household services.”
    “Only a residence that is legally deemed a private home can employ a domestic service worker as a caregiver,” he says. Determining the definition of a private home is handled on a case-by-case basis, but involves considerations like whether your loved one was already living in the place where they are now receiving care, who owns the residence, who maintains the residence, and whether it is a group setting. The overall living situation is used to evaluate if a family must comply with requirements for paying a direct care worker.
    For more detailed information on how private homes are defined, read Fact Sheet #79: Private Homes and Domestic Service Employment Under the Fair Labor Standards Act (FLSA).
  • Does your caregiver spend their time primarily providing “care” instead of “companionship”?
    “One of the most common exemptions that can be used to preclude in-home workers from minimum-wage and overtime eligibility is the ‘companionship services’ exemption,” Jefferson notes.
    Domestic service workers whose primary job is to provide companionship (i.e., fellowship and protection) to an elderly or sick person fall under this exemption. As long as they spend at least 80 percent of their time serving as a companion and no more than 20 percent of their time providing any kind of “care” services, they are exempt.
    Care services are defined as assistance with activities of daily living (ADLs) and instrumental activities of daily living (IADLs). Providing support with dressing, grooming, feeding, bathing, toileting as well as less hands-on functions like meal preparation, light housework, driving and making medical appointments are all considered care.
    Once this 80/20 threshold is crossed, the worker is legally reclassified as a nonexempt domestic service worker and must be compensated at least the minimum wage, plus overtime as necessary.
    For more information on the rules regarding this exemption, read Fact Sheet # 79A: Companionship Services Under the Fair Labor Standards Act (FLSA).
  • Does your caregiver work at least 40 hours a week? 
    Although we might not think of a caregiver as being “on the clock” whenever they are in the home with your loved one, Jefferson explains that in most cases, they are working and must be compensated like any non-exempt worker. That means they must earn a minimum wage and be paid overtime for any hours worked over 40 per workweek (any fixed and regularly recurring period of 168 hours—seven consecutive 24-hour periods). Thus, it is critically important to keep track of all hours worked on a written timesheet and account for meal and sleep breaks when the caregiver is legally not entitled to compensation.
  • Does your caregiver stay overnight or through meal breaks? 
    Caregivers often spend considerable time in a home, and they typically are so self-sufficient that they can take care of fitting their own meals and rest breaks into the care services they provide. However, Jefferson emphasizes that, as an employer, “you are obligated to keep track of these breaks in writing because it affects the hours they are considered to be working and entitled to compensation.”
    If your caregiver takes breaks to eat meals or to sleep on the premises, you must document when they do this and give them adequate time to have a bona fide break from work. If services are needed while they are supposed to be off duty, and they must interrupt this break period to see to their duties, this time can no longer be considered a break. The caregiver is then entitled to compensation for the duration of what was intended to be a break period, even if overtime pay is triggered.

If you answered yes to any of the four questions above, then it is likely that your caregiver is entitled to overtime pay if they exceed 40 hours of work per week. It’s not always easy to determine when to pay overtime to an independent caregiver, especially if they are a live-in caregiver. However, it is your job as a private employer to know whether your employee legally qualifies as a domestic service worker, keep track of hours worked, understand what constitutes a bona fide break, and distinguish between an in-home companion and a true caregiver.

Managing payroll, tax withholdings and recordkeeping for a private caregiver is often an added burden for families looking to hire elder care services for aging loved ones. If you feel unsure about taking on all these administrative responsibilities, you can turn to a professional home care agency.

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For more information on these rules, visit the U.S. Department of Labor Wage and Hour Division website.

Sources: Domestic Service Final Rule Frequently Asked Questions (FAQs) (https://www.dol.gov/agencies/whd/direct-care/faq); Rest Breaks and Meal Breaks (https://www.dol.gov/agencies/whd/direct-care/breaks)

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