Overtime & Wage Rules for Home Care Workers

Yes. Under the current FLSA rules, most home care workers employed by agencies are entitled to overtime pay at 1.5x their regular rate for hours worked over 40 in a workweek. The DOL eliminated the companionship exemption for third-party employers in its 2015 final rule. However, a July 2025 proposed rule would reinstate exemptions for agency-employed companions and live-in workers, and DOL enforcement has been paused via Field Assistance Bulletin 2025-4 pending the rulemaking outcome. Agencies should continue paying overtime until a final rule is published. Home care payroll software can help automate overtime calculations and flag compliance risks.

The companionship services exemption (29 U.S.C. 213(a)(15)) exempts workers who provide fellowship, protection, and basic care -- such as meal preparation, light housework, and companionship -- to elderly or disabled individuals from FLSA minimum wage and overtime requirements. Since the 2015 DOL final rule, this exemption has only been available to individuals or families who directly employ a companion, not to third-party agencies. The DOL proposed reinstating the exemption for agencies in July 2025, and enforcement was paused in that same month.

Yes. Under the FLSA continuous workday doctrine, travel time between client locations during the workday is compensable work time. Once a caregiver begins their first assignment, all travel to subsequent client homes during that day must be paid. The initial commute from home to the first client and the final commute home are generally not compensable. The Third Circuit has ruled that failure to pay travel time constitutes a willful FLSA violation, which extends the statute of limitations to three years.

Employers may deduct up to 8 hours of sleep time from a 24-hour or longer shift, but three conditions must be met: (1) there must be an express or implied agreement between employer and employee, (2) the employer must provide adequate sleeping facilities, and (3) the employee must usually get at least 5 hours of uninterrupted sleep. All sleep interruptions must be counted as hours worked. For shifts under 24 hours, all time on duty must be paid regardless of sleep.

Under the FLSA, employers must retain basic payroll records -- including employee name, SSN, address, hours worked, wages paid, and overtime amounts -- for at least 3 years. Supporting documents on which wages are based (timecards, schedules, wage rate tables, work orders, deduction records) must be kept for at least 2 years. Many states require longer retention periods. Caregiver payroll software stores these records digitally with automated retention policies. Best practice is to keep all records for at least 4 years to cover the 3-year FLSA statute of limitations for willful violations.

FLSA violations can result in: (1) back pay for up to 2 years of unpaid overtime (3 years for willful violations), (2) an equal amount in liquidated damages (effectively doubling the back pay), (3) civil penalties of up to $2,451 per violation, and (4) attorney's fees and court costs. Willful violations can also lead to criminal prosecution with fines up to $10,000 and imprisonment. Home care class-action lawsuits routinely result in multi-million-dollar settlements. The DOL recovered over $274 million in back wages in fiscal year 2024. Investing in caregiver payroll software with automated compliance checks is far less expensive than defending a wage-and-hour lawsuit.