Fact Sheet #79G: Applying the Fair Labor Standards Act to Shared Housing Programs, Including Adult Foster Homes and Paid Roommate Situations (2023)

The Department of Labor (“Department”) published a final rule on October 1, 2013 that extends the minimum wage and overtime pay protections under the Fair Labor Standards Act (“FLSA”) to many care workers ( such as home health aides, personal care attendants, and workers in similar occupations) who provide essential home care for people with disabilities and the elderly. The Standard enters into force on January 1, 2015.

At the same time as this fact sheet, the Department is publishing Administrator's Interpretation 2014-1 (“AI”) that discusses how the principles of the FLSA apply to “shared housing programs.” These are programs that provide supports and services that enable people with disabilities and older people to live in their own homes or with family members in their communities, as opposed to crowded settings like nursing homes or institutions, and where the person who receive assistance and the worker who provides it to live and share a life together. These programs go by various titles, such as "adult caregiver," "monitoring," "paid roommate," "sustainable living," or "life sharing."

This fact sheet, in conjunction with the AI, provides guidance on how the FLSA requirements may apply to home care work performed in shared living arrangements. Because the design of cohabitation programs can vary widely, the guidance contained in this fact sheet is not intended to take the place of a specific factual analysis of any particular cohabitation program and, more importantly, any specific agreement for cohabitation services. that program.

Terms within and scope of this fact sheet

Throughout this fact sheet, the term "consumer" refers to a person who receives services and "provider" refers to the person who provides those services. When the term “consumer” refers to the person receiving services as a prospective employer for purposes of the FLSA, it is used as an abbreviation; a consumer or that person's family, family member, or other representative may be the employer. The term "third party" means any entity other than the consumer or the consumer's family or household that is involved in the administration of a shared living program, such as a state, local government, or private agency, and may also be the provider's employer.

The common feature of shared housing programs is that they involve a consumer and paid service provider living and sharing a life together in a private home. Specific arrangements vary greatly among programs, states, and the preferences and needs of individuals receiving supports and services. Shared housing programs are usually funded by Medicaid, but may also include other public or private funds. While these programs are known by a variety of names, for purposes of the FLSA, it is the specific facts of the agreement between a provider, a consumer, and, if applicable, third parties that determine whether and how the FLSA applies, not the name or characterization of the program.

Regardless of what they are called in a given state, group homes or other models that involve workers entering a home in shifts to provide care do not constitute shared living in the sense that the Department uses the term here, and therefore therefore, they are not within the scope of this Fact. Leaf. Neither are personal arrangements when there is clearly no employment relationship (for example, a person caring for a disabled spouse or child without expecting compensation, or a person sharing an apartment with a disabled person out of friendship or mutual convenience without providing no formal service to the individual and no expectation of compensation). Additionally, the discussion below does not address workers, sometimes called temps, who are hired to provide assistance when the provider is unavailable or must be relieved of responsibilities. While such a worker is likely entitled to the minimum wage and overtime pay protections of the FLSA, that determination requires a separate evaluation of the circumstances of the individual's employment contract.

FLSA analysis for different models of shared life

A provider is entitled to receive at least the federal minimum wage and overtime pay in any work week to which the FLSA applies. The FLSA applies if three factors are present: there is aemployment relationship(in other words, the worker is an employee and not an independent contractor); the employer is acovered employer(ie, the employer is of the type or size required to comply with the Act); and the employee isnot exempt(In other words, an employer cannot claim any exemption from the Act's requirements.) If all three factors are present, the employee must be paid for all "hours worked." According to the FLSA, there are special rules to determine the hours worked for resident employees (including most two providers of shared accommodation) and, if certain conditions are met, the fair value of food, lodging and other facilities will count towards the requirement of minimum salary. The FLSA also allows wages to be paid in the form of a stipend, salary, or other non-hourly wages, when converted to an hourly rate each workweek, meets minimum wage and overtime pay requirements.

For the purposes of this fact sheet, shared living arrangements are grouped into three types: (1) those in which the consumer lives in the home of a provider; (2) those in which the provider resides in the consumer's home; and (3) those in which the provider and consumer move into a new home together. The application of the FLSA principles to each of these types of shared housing is described below.

1. Shared living in a provider's home

In this type of shared living arrangement, a provider allows a consumer to move into their existing home to integrate the individual into the shared experiences of a home and family. This type of shared living arrangement is common in many state Medicaid systems and is often referred to as "adult foster care" or "foster care." The key issue in this type of shared living arrangement is whether there is an employment relationship to which the requirements of the FLSA apply, that is, whether the provider is an employee of the consumer and/or a third party financing the cost of providing consumer attention. or is instead an independent contractor.

Determining whether a provider is an employee or an independent contractor requires considering the "economic realities" of the relationship between the provider and a potential employer. Economic reality tests examine a number of factors relevant to determining whether a provider is financially dependent on the consumer or a third party. The factual analysis distinguishes an independent contractor who runs his own business from a worker who, as a matter of economic reality, follows the usual path of an employee and is dependent on the employer he serves. Commonly considered factors, along with a more detailed explanation of economic reality tests, can be found inFact Sheet 13: Employment Relationship Under the FLSA. The FLSA does not require payment of minimum wage or overtime compensation for providers who are properly categorized as independent contractors.

1(a) Non-labor arrangements (ie, the provider is an independent contractor).

In most shared living arrangements in a provider's home, the provider will not be an employee of the consumer. Of the economic reality test factors, two – the degree of control exercised by the potential employer over the worker and the extent of the relative investments of the worker and potential employer – are most relevant to analysis in this type of program. shared living arrangements, and under typical circumstances, will also not point to the existence of an employment relationship. First, the provider often determines (taking into account consumer needs and preferences) much of the way daily life unfolds, such as routines and schedules within the home. In other words, while the provider takes consumer preferences into account, in general, an adult foster care provider will generally integrate the consumer into an existing set of circumstances rather than follow the consumer's lead. Second, in such arrangements, the supplier makes investments to assume the role of supplier, while the consumer does not. Specifically, the provider has obtained and maintains the home in which services are provided and may have made modifications to the home, such as making a bathroom wheelchair accessible or converting a first-floor room into a bedroom, to become a service provider. consumer.

In adult welfare arrangements where the role of the third party is limited, as is often the case, the provider will also not be an employee of a third party (such as the state, an adult welfare agency, or another third party acting on behalf of the state). ). . Specifically, under the economic realities test, the third party is unlikely to be an employer of the provider if the third party's involvement is to recruit providers to the program, facilitate consumer-provider matching, oversee quality management, and monitor compliance with licenses and other program requirements. once the agreement is established, and define the amount the adult foster care provider will be paid, i.e., if you do not determine if a provider will choose to participate in the program, if a provider will bring a given consumer into your home or yours, or, more importantly, how the daily activities of the household and the provision of services to the consumer will be carried out. However, as discussed below in Section 1(b), in circumstances where the third party is more involved in the workplace, there will often be an employment relationship between the third party and the provider.

Some state programs allow a family member of the consumer to be an adult foster care provider. The provider's status as a family member (as opposed to not being related to the consumer) and the fact that the consumer lived with the family member before becoming a provider is not decisive as to whether the family member family is an employee or an independent contractor. The same analysis of economic realities applies to all providers, whether or not they are members of the consumer's family.

1(b) Arrangements where there is an employment relationship.

Because the analysis of the existence of an employment relationship is fact specific, it may also be the case that a provider is an employee when a consumer lives in the home of a provider or a program is called an adult foster home or foster home . In arrangements where a third party (perhaps through a case manager) is so involved in the provider's relationship with the consumer that the role of the third party becomes one of directing and managing the workplace, the provider will be an employee of that third party rather than an independent contractor. For example, the provider is likely to be an employee of a third party who finds and rents a residence where an agreement can be held, or whose case manager makes frequent visits or calls the home specifically to instruct the provider on the specific tasks you must perform or ways to fulfill or fail to fulfill the duties. Additionally, if the adult foster care providers are party to a collective bargaining agreement with a third party, such as a state, that entity may be an employer of the third party if the terms of the agreement reflect sufficient involvement of the third party with the providers. ' Conditions of employment, such as wages and benefits.

In adult welfare arrangements where there is, in effect, an employment relationship between a provider and a third party, two other conditions (exemptions and coverage) must be examined before determining whether the employer is required to comply with the requirements of the FLSA. . First, as addressed in the October 2013 final rule, outside employers can no longer claim the minimum wage and overtime exemption for escort services or the overtime pay exemption for a resident domestic worker. The second condition is coverage. As further explained in the AI, any state or state agency that employs a home care provider is, by definition, covered by the FLSA, while a private agency may be covered if its annual gross billing is at least $500,000. And a provider employed by a private agency who doesn't meet that dollar limit would still be covered on an individual basis if they regularly travel between states while working. Under any of these conditions under which coverage is met, the provider is entitled to receive at least the federal minimum wage and third party overtime pay.

For cases where the FLSA applies, see Sections 4 and 5 below and the AI ​​for a discussion of certain FLSA principles related to hours worked and compensation.

2. Shared life in a consumer's home

In this type of shared living arrangement, a provider moves into a consumer's home to provide services such as offering companionship and protection, helping integrate the consumer into the community, or simply being present overnight in an emergency. These arrangements are sometimes called roommate arrangements. Typically, the provider lives rent-free in the consumer's home and may or may not receive an additional payment. These arrangements are usually funded by Medicaid, but may also be funded by another public or private program. The fundamental issue in these types of shared living arrangements is whether the consumer is the sole employer (and, if so, whether an exemption applies) or whether there is also a third party who is a joint employer. As explained in Section 1, determining whether or not an employment relationship exists requires evaluating the economic realities of the relationships between the provider and the consumer, as well as between the provider and any third parties.

2(a) withconsumersmust comply with the FLSA under these agreements

When a provider moves into a consumer's home to provide services, the provider will generally be the consumer's employee. Several facts lead to the determination that, in this type of shared living arrangement, the provider is not like a stand-alone business: the consumer likely sets the provider's hours, directs the provider how and when to perform certain tasks, and otherwise controls jobs. In addition, the provider is unlikely to have invested in the arrangement, whereas the consumer has purchased a house in which there is enough space for the provider to also reside and, as owner/tenant, has full control of the site where the event will take place. the work. is carried out.

After reaching the conclusion that an employment relationship exists between a supplier and a consumer, two other conditions must be considered before determining that the consumer is required to comply with the requirements of the FLSA. First, the consumer must be an employer covered by the FLSA. As explained in the AI, shared living arrangements in which the provider moves into the consumer's home almost certainly involves "domestic service employment," a category of employment largely covered by the Act. Therefore , the consumer will essentially always be a covered employer.

Second, depending on the agreement, a consumer who employs a provider may apply certain exemptions from minimum wage and/or overtime pay:

  • Exemption from escort services: Under the October 2013 Final Rule, the consumer is exempt from paying minimum wage and overtime for direct support workers who provide "accompaniment" and "protection" to consumers. If the provider performs medication-related tasks or spends more than 20% of work time providing "care" (defined as assistance with activities of daily living ("ADL") and instrumental activities of daily living ("IADL")) , the consumer cannot claim the exemption for escort services. To seeFact Sheet #79A: Escort Services Under the FLSA. While the applicability of this exemption must be reviewed based on the facts of a specific arrangement, it is likely that a consumer may apply the companion exemption in living arrangements where the sole responsibility of the provider is to spend nights at the consumer's residence in case of an emergency. .
  • Resident Domestic Service Overtime Exemption: If a provider lives in the consumer's home permanently or for extended periods (as opposed to, for example, working a night shift), as is often the case in shared living arrangements that take place in the home consumer, a consumer may claim the resident domestic service overtime exemption even if the escort services exemption cannot be claimed. For details on what constitutes a "resident" domestic worker and other exemption conditions, seeFact Sheet #79B: Resident Domestic Workers under the FLSA. In these circumstances, the consumer is only exempt from paying the FLSA overtime premium and is still required to pay at least the federal minimum wage for all hours worked (unless the escort services exemption described in paragraph former).

In situations where a consumer employs a provider, is a covered employer, and cannot claim FLSA exemptions, see Sections 4 and 5 below for a review of how certain FLSA principles apply, including the use rental or support to offset salary obligations and deal making. with suppliers to exclude certain sleep times and other personal breaks from work hours.

2(b) Sestates and other third partiesthey must also comply with the FLSA as joint employers under these agreements

A third party (such as the state, a shared living agency, or another third party acting on behalf of the state) may be a joint employer with a consumer in shared living arrangements in a consumer's home. Determining whether a third party is an employer under these programs requires consideration of economic facts tests as described above in Section 1 regarding arrangements that occur in a provider's home. (See alsoFact Sheets 13y 79E.)

One of several factors that must be considered when evaluating whether a supplier is an employee of a third party is the degree of control that the third party exercises over the arrangement. The more a third party is involved in directing how the vendor performs work (such as determining what tasks the vendor performs or how the vendor performs them), the more likely the third party is an employer and, therefore, is subject to FLSA. For example, if a provider has to ask a third party for authorization to leave the home or to make a change in the consumer's daily schedule, these facts weigh in favor of determining that the provider is employed. On the other hand, if a provider whose responsibility as a roommate is to sleep in the house must notify a third party that they will need to spend the night away from the residence, but the third party cannot deny the request or penalize them for taking the night off, they facts would not weigh in favor of employee status. In addition, if a third party bargains collectively with providers or participates in determining the providers' working conditions, such as, but not limited to, wages, vacation or sick leave, health insurance, or other benefits, the third party is likely to be a provider's co-employer.

A third-party employer in this type of shared living arrangement must pay its providers at least the federal minimum wage and overtime pay if it is an employer covered by the FLSA. As explained in the AI, the cohabitation regimes that occur in the consumer's home imply the provision of domestic services, to which special coverage rules apply; in these situations, any outside employer will almost always be a covered employer. A third party cannot claim any exemption from the FLSA in these circumstances; The Companion Services Waiver and Domestic Service Waiver are available only to consumers or their families or households.

3. Shared life in a new home created by consumer and provider

There is a wide spectrum of shared living arrangements, and it will not always be the case that the provider or consumer will pre-occupy the residence in which the arrangement is made. For example, the two of you may live together because neither of you previously lived in a residence that would accommodate both of you. Whether these situations are more like those described in Section 1 (co-residency in a provider's home) or Section 2 (co-residence in a consumer's home) depends on all the circumstances that affect who controls the residence and the relationship. Relevant facts include who identified the home, arranged for it to be purchased or leased, provided the common areas, maintained the home (eg, cleaned and repaired it), and paid the mortgage or rent. No single event is controlling.

In arrangements where the provider has primary control over the household and relationship, the consumer is unlikely to employ the provider, and the third-party employer of the provider test described in Section 1 applies. For example , if to become a caregiver for an adult, a person moves from a one-bedroom to a two-bedroom apartment, furnishes the apartment except for the second bedroom, and arranges certain improvements to meet program requirements, and then a consumer moves there. and your name is added to the lease, the provider is likely not an employee of the consumer.

By contrast, in regimes where the consumer exercises dominance over the domicile, whether in the situation where the consumer controls the newly established domicile or in the situation where dominance over the domicile is shared, it is likely that the consumer employs the provider and o the analysis described in Section 2 applies, even if a third party is an employer. For example, if a provider and consumer are matched as roommates through a Medicaid-funded program and then identify and rent an apartment of their choice, furnish the apartment, and take responsibility for keeping the apartment clean and purchasing groceries, assuming the consumer exercises control over the household, the provider is likely to be employed by the consumer. A full analysis has not yet been performed as per the discussion in Section 2.

4. FLSA Principles for Determining Hours Worked and Compensation for Shared Housing Providers

If, after an analysis of the specific facts of specific shared living arrangements, the consumer and/or the state or other third party must comply with the FLSA wage requirements, certain principles of the FLSA may be relevant.

reasonable agreements. Due to the intertwined nature of a resident provider's work and personal activities, it is often difficult to determine what constitutes hours worked (in other words, how much time should be paid). The employer and provider may come to a “reasonable agreement” to exclude from paid hours the amount of time the provider spends in typical private activities, such as eating, sleeping, entertaining, and other periods of complete freedom from all duties. Any service calls during these unpaid periods must be paid for. A sleep time of no more than eight hours may be excluded if the provider can generally enjoy uninterrupted sleep. To exclude out-of-service breaks, other than for eating and sleeping, they must be long enough to allow the provider to make effective use of his own time.

A reasonable agreement should also clearly and specifically identify the tasks to be performed by the provider. While certain Provider activities can be clearly categorized as work hours (such as helping a customer shower) and others clearly personal time (such as a Provider attending classes for a period of time when they are completely relieved of duty ), some activities do not always constitute on-duty or off-duty time. For example, attending a community event at a time when the Provider may choose to spend time apart from the Consumer may be considered a shared, unpaid social outing under a reasonable arrangement that only requires the Provider to assist the Consumer at certain times. . during the day. On the other hand, joint attendance at the same event may be considered as hours worked if the reasonable agreement establishes that the provider's duties include involving the consumer in this same type of community activities. Determining hours worked on some arrangements can involve a potentially complicated analysis; therefore, reasonable agreements between a service provider and an employer must accurately reflect the work to be performed and cannot be used to improperly limit the number of hours paid. Additionally, regardless of what the contract states, compensation must be made for the actual amount of time a provider spends performing job duties. For example, if the contract provides for 6 hours of paid assistance per day, but the consumer requires 9 hours on a given day, these additional hours must be counted as compensable hours worked.

As explained in the final rule (and noted in the AI), in the case of a provider who is a pre-existing family member or a family member of the consumer, some unpaid services, often referred to as "natural supports" in the context of the Medicaid programs, may be outside the scope of a reasonable agreement. If the reasonable arrangement does not treat the provider unequally because he is a relative or family member, such differentiation between the employment relationship and the family relationship is allowed.

Bedtime. For a supplier who permanently resides in the consumer's premises (that is, who has no other address), the employer, in certain circumstances, may exclude hours of sleep, even in contracts in which the supplier is obliged to remain on the premises overnight. This exclusion is only allowed when the time is during normal sleeping hours, that is, during the night and not during the day. More than eight hours of sleep per night cannot be excluded. As with other leaves, any interruption to sleep time from a call to service must be paid for regardless of an agreement to exclude the time. More importantly, to deduct sleep time, the provider generally must be paid for a few hours outside of sleep time, such as early morning, late night, or on weekends. While the Department has not defined a specific number of hours that must be compensated to allow the exclusion of sleep in arrangements where the provider is required to stay overnight on the premises, the circumstances must be such that the arrangement for work and free time is reasonable. . For example, if a provider and their employer agree to exclude eight hours of sleep per night and the provider is paid an hourly rate for services provided between 8:00 p.m. m. and 10:00 p.m. m. every night and 6:00 a.m. :00 am : 00 am every morning, this arrangement would normally be reasonable. Or if a provider's only responsibility is to be in the home five nights a week from 10 p.m. m. to 8 a.m. m., it would probably be reasonable to agree to treat two of those ten hours as hours worked and exclude the remaining eight hours as sleep hours. Also, it will generally be reasonable to exclude sleep time on weekdays if the provider and employer agree that the four hours per day spent at home on two weekdays and each weekend day are hours worked that must be make up for. On the other hand, if a provider's sole responsibility is to be in the home for eight hours each night, an agreement to exclude all the time the provider must be on-site would not be reasonable, nor would an agreement to consider a hour per day. for being hours worked.

rent and utilities. In some of these shared living arrangements, the provider receives partial or full compensation for being able to live rent-free in the consumer's home. Section 3(m) of the FLSA allows an employer to credit the fair value of food, lodging, and other amenities toward the minimum wage requirement, provided certain conditions are met. See AI for a complete list of requirements to claim this credit. Of course, the employer must still meet her wage obligation. For example, a vendor receives a cash wage of $180 per week for 30 hours of work, plus free rent and utilities worth $100 per week. Adding the salary plus rent and utility credit and dividing by the number of hours worked ($280 / 30), the result is a figure of $9.33 per hour. Assuming the rent and utility credit is taken correctly, this payment structure meets the federal minimum wage requirement. If, during the following week, the same provider worked 50 hours and received $300 in cash wages, plus $100 in rent and utilities, the employer's minimum wage obligation would still be met, but the provider would be compensated for the hours extra. Specifically, you would be paid a total of $400 or $8 ($400 / 50) per hour, and your employer would owe you half the normal rate for the 10 hours worked over 40, that is, an additional $40 ($8 x .5 x 10)—in compensation for overtime. In addition, the section 3(m) credit may be the only payment a resident employee receives, as long as it is sufficient to cover the employer's minimum wage obligation. For example, a provider whose reasonable agreement provides for 12 hours per week of paid work (with any time remaining on the premises excluded as time off or sleep time) may receive full compensation for non-payment of rent. If the fair value of his boarding is $500 per month (or $115.38 per week), his contract complies with the FLSA because he is paid $9.62 per hour ($115.38 / 12).

5. FLSA Compliance

If the FLSA's minimum wage requirement applies, the employee must be paid at least the minimum wage for all hours worked. If the overtime pay requirement applies, an employee must be paid one and one-half times their normal rate of pay for all hours worked over 40 in the workweek.

In shared living arrangements, a provider may be paid in the form of hourly wage, daily or monthly stipend, weekly or monthly salary, room and board, or as a combination of these payments. The FLSA allows an employer to receive credit for these various types of compensation, as described below.

5(a) Minimum salary

The federal minimum wage is currently $7.25 per hour. An hourly wage of as much or more satisfies the federal minimum wage requirement. If the employee is paid daily wages, the total amount of wages received in a work week divided by the number of hours worked in that week is the hourly wage, which must be equal to or greater than the minimum wage. For example, if a vendor makes $68 per day and works seven hours a day, five days a week, they are paid $9.71 ($68 x 5) / (7 x 5)) per hour, so the minimum wage requirement federal has been met. If an employee receives a monthly stipend, that amount is multiplied by 12 and divided by 52 to determine the weekly amount, which is then divided by the number of hours worked per week to calculate the hourly amount. So, a provider who makes $1,750 a month earns a weekly rate of $403.85 ($1,750 x 12/52), and if he works 40 hours in a given work week, he earns $10.10 ($403.85/40) per hour. The same formula also applies to salary or any other compensation that is not expressed as hourly wage.

5(b) Overtime

When the FLSA's overtime compensation requirement applies, an employee must be paid one and one-half times their normal hourly rate of pay for all hours worked over 40 in a workweek. For example, if a provider receives $57 as their daily rate and works seven hours each of the seven days of a given work week, they will receive an additional $36.63 for that week because their hourly rate is $8.14 ($57/7). , half of that is $4.07, and you should be paid overtime for 9 hours (the amount of 40+ people who worked in the week). To seeFact Sheet 23: FLSA Overtime Pay Requirements.

5(c) Record keeping

In addition to the minimum wage and overtime requirements, the FLSA requires employers to keep records about their employees, the hours worked, and their compensation. In particular, an employer of a resident provider must maintain a reasonable agreement with the employee regarding the hours worked and, effective January 1, 2015, when the Final Rule takes effect, will also be responsible for maintaining records of the hours worked. actual hours worked by the supplier. , rather than simply relying on a reasonable agreement. To seeFact Sheet #79C: Record-Keeping Requirements for Individuals, Families, or Households Employing Domestic Workers Under the FLSA.

Determining whether the FLSA's minimum wage and overtime pay requirements apply to certain shared living arrangements requires a specific factual analysis. This diagram, along with the discussion in the Fact Sheet, can help to generally illustrate if and how the FLSA applies to some common scenarios.

Fact Sheet #79G: Applying the Fair Labor Standards Act to Shared Housing Programs, Including Adult Foster Homes and Paid Roommate Situations (1)

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