Home Care Regulation That Effects Independent Contractor Caregivers

As a home care registry, you’re probably concerned about the treatment of 1099 independent contractors, versus W2 employees. 

In this article, we’ll talk about: 

• What it is
• What it means for you
• How it may come back

What is the Companionship Services Exemption (CSE)? 

Let’s go back to 2013. The Companionship Services Exemption was published as a Final Rule from the Department of Labor as part of the Fair Labor Standards Act (FLSA). What this did was: 

• Solidified that independent contractor caregivers are entitled to the federal minimum wage 
• Overtime protection for home care workers

Although the rule was published in 2013, these measures weren’t in effect and enforced until January of 2016. At this point in time, this disqualified third-party employers from the exemption while making the exemption harder for families to utilize. 

In 2015, however, the companionship exemption was narrowed to services that are focused on fellowship and protection of a client. Essentially, if your client hours were mostly spent on personal care services like activities of daily living, your workers were still beholden to FLSA and not the exemption. 

Now, legislation pertaining to the exemption is in play at the federal level. We’ll see how it plays out. In the meantime, let’s go into the details of what this new version would mean for you.

What would the new Companionship Services Exemption (CSE) mean for you? 

Michigan representative, Tim Wahlberg sponsored a piece of legislation back in 2015: H.R.3860: Ensuring Access to Affordable and Quality Home Care for Seniors and People with Disabilities Act. 

What it would do is: 

• Make companionship services exempt from FLSA using a broad definition 
• These exemptions would also extend to third-party employers like caregiver registries 
• Independent contractors that work with registries would also be exempt from maximum hour requirements 

These relaxed regulations would make operations easier for caregiver registries. The driving force of this piece of legislation is to eliminate regulations as a bottleneck to families and seniors in need of care. 

What’s more, the bill has the support of “key industry groups and home care organizations including: the International Franchise Association, the National Association of Home Care and Hospice, the Home Care Association of America, and Home Instead, Inc,” according to a 2015 press release when the bill was originally introduced. 

Although this isn’t a perfect solution to caregiver registry and industry concerns, there are limited options from the federal government’s purview and it has agreement across the post-acute care spectrum. 

To sum up the benefits of the new CSE for caregiver registries: 

• Independent contractor caregivers and clients would have more negotiating ability
• Both groups (caregivers and clients) have more control over their terms of work
• This would protect registries from final DOL regulations on employees 

The caveat is that certain state laws may complicate the execution of a bill like this passing. For example, for states that have Domestic Workers’ Bill of Rights, and state-specific overtime laws there would need to be more clarification. 

What’s next? 

H.R.3860 was sponsored by Tim Wahlberg back in 2015, and since then: 

• It was referred to the House Committee on Education and the Workforce in 2015
• Then, it was referred to the Subcommittee on Workforce Protections in 2016

There’s a long legal road ahead for the bill, but it would go something like this: 

• The subcommittee will hold a hearing to ensure that members learn about the reason why this bill was introduced and whether it’s worth passing on to the full committee.
• This would lead to a vote from the subcommittee and pass (or not pass) it on to the full committee. 
• The full committee would hold a “markup” meeting to discuss the bill and make changes on it if they choose to. Upon approval, it would then go to the House of Representatives for a vote.
• Once the House of Representatives votes on it, if it passes, it would then go to the Senate.
• If the Senate votes on it and approves it, then it would go to the President for his signature.
• At that point, it would either be signed into law or vetoed. Subsequently, if vetoed, Congress can override that with a ⅔ majority vote.

The process can take an average of a year and a half for a bill to become law. Many factors are in play, including the political climate surrounding the bill and the nature of its contents. 

Given that the bill supports independent contractors and broadens the definition of companionship services, it would have a better chance of passing if a Republican president is elected in 2024. There is a chance that it would go through otherwise, but less than that of a Republican presidency. 

If you want to improve its chances of passing, you have a few options: 

• Call your local Senator and Representatives and urge them to support this legislation
• Write an Opinion article in your local newspapers talking about the legislation and why your neighbors and industry thought leaders should support it as well. 
• Start a change.org petition (or a similar site) to continue the conversation

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At Ally, we’re committed to not just being a caregiver registry platform, but a comprehensive experience for you. That means being a trusted partner to relay updates in a timely fashion that keeps you compliant—and informed.