What Does "No Companionship Exemption" Mean?

What Does "No Companionship Exemption" Mean? A Plain-English Guide

If you have seen the phrase "no companionship exemption" in a policy document, a contract, or a regulatory update and were not sure what it meant — you are not alone. It is one of those terms that gets used without much explanation.

Here is the short version, and what it actually means for caregiver registries.

What Is the Companionship Exemption?

The companionship exemption is a provision under the Fair Labor Standards Act (FLSA) that historically allowed certain home care workers to be excluded from federal minimum wage and overtime protections.

The idea was that workers providing companionship services — sitting with someone, keeping them company, doing light household tasks — were in a different category than traditional workers covered by the FLSA.

What Changed

In 2015, the Department of Labor updated the rules significantly. The exemption was narrowed. Under the updated rules:

• The exemption can only be claimed by the individual, family, or household employing the worker — not by a third-party employer like a home care agency
• Workers who spend more than 20% of their time on care tasks (bathing, dressing, medication reminders) no longer qualify for the exemption even under the old definition
• Home care agencies and most third-party employers lost the ability to use the exemption entirely

So What Does "No Companionship Exemption" Actually Mean?

When you see "no companionship exemption" in a policy or contract, it typically means: the employer cannot use the companionship exemption to avoid paying minimum wage or overtime to this worker.

In practical terms, it is a statement that the worker is entitled to full FLSA protections — minimum wage, overtime after 40 hours, and so on.

Want to learn more? Visit: The Return of the Companionship Exemption: What It Means for Caregiver Registries in 2025 

What This Means for Caregiver Registries

This is where it gets important for your business model.

Caregiver registries do not employ caregivers. Caregivers are independent contractors who set their own rates and choose their own clients. Because the registry is not the employer, FLSA minimum wage and overtime requirements apply differently — they govern the relationship between the caregiver and the client's household, not between the caregiver and the registry.

That said, the companionship exemption landscape is one more reason why maintaining a clean, documented independent contractor relationship matters. If a registry's operations look like employment — controlling hours, setting rates, directing the work — then FLSA protections, including overtime, can come into play in ways that were never intended.

The bottom line for registries: Understand what the companionship exemption covers and does not cover. Make sure your caregiver contracts, your rate-setting practices, and your day-to-day operations reflect a true independent contractor model. Consult your legal counsel if you have specific questions about how the exemption applies to your situation.

Curious why the DOL would call you? Visit: Why Would the Department of Labor Call Me? 

Want the Full Picture?

The regulatory history behind the companionship exemption is longer than this post. If you want to go deeper on how the 2015 rule change has played out and what it means for registries operating today, the breakdown below covers it in detail.

Talk to Ally here