Be prepared for new overtime rule affecting Direct Care Workers

On September 17, 2013, the U.S. Department of Labor issued its final rule regarding direct care workers. The change effectivy extends overtime protections to this group.

These workers, who provide essential in-home care for people who are elderly, injured, disabled, or suffering from illness, are currently exempt from the overtime rule of time-and-one-half of regular hourly wages for any hours worked over 40 in a standard, 7 day work week.  The new ruling will take effect Jan. 1, 2015.

Ruling expected to affect 1.9 million workers

This ruling is widespread, affecting an estimated 1.9 million U.S. workers who provide custodial care to those people dependent on their services.  “Direct care workers play a critical role in ensuring access to high-quality home care that many people need in order to remain healthy and independent in their communities, and they should be compensated fairly for this important work.” said U.S. Secretary of Health and Human Services Kathleen Sebelius in a news release announcing the change.  “We will continue to engage with consumers, states, advocates and home care providers in the implementation of this rule to help people with disabilities, older adults and their families receive quality, person-centered services,”

The DOL set the effective date for this ruling well in advance to allow third-party home care agencies enough time to adjust their staffing levels where needed and implement new policies regarding overtime scheduling.  Not only will home care agencies and their employees be affected by the ruling, consideration must also be given to those people who make use of this very important service which, in many cases, allows them to lead independent lives.

In order for agencies to remain profitable (or for non-profit agencies, be able to continue with the services they provide), they may need to limit total hours worked per week for many employees who are currently providing custodial care to one or more persons more than 40 hours per week.

Change affects continuity of care

Agencies may have to employ multiple staff members to serve each consumer to be able to provide continuity of care.  Many agencies rely on public funding to supplement payment for services.  No ruling has been given on public funding being increased to account for the increased hourly rate for overtime hours.  At this time, the same rate of payment that applies to regular hours will apply to any overtime hours worked, thus creating a shortage of funds for in home care agencies.

It is important to clarify that this ruling is directed towards those employees who work for home care agencies and other third-party employers to provide custodial care to consumers.  The ruling does not apply to in-home care workers who are employed directly by either the person requiring services, or that person’s family.  Overtime pay exemption will still apply to these workers after the Jan. 1, 2015 ruling takes effect.

The Department of Labor has created a new web portal with interactive web tools, fact sheets and other materials to help families, employers and workers understand the new requirements. These, along with information about upcoming webinars on the rule, are available at

BCN Services partners with multiple in-home care agencies to provide their PEO services.  We are prepared to guide our clients, or other who would benefit from our direction, through these changes that will strongly impact a business’s operation and profit.  If your company needs help with this or other initiatives affecting your operation, contact us for assistance.  We’re here to help.




Frank Lewandowski, Partnership Manager

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