Home care is one of America’s fastest-growing industries. From 2022 to 2060, the population of adults aged 65 & older in the U.S. is projected to increase exponentially from 57.8 million to 88.8 million.
The number of adults aged 85 & older is estimated to nearly triple over the same period, from 6.5 million to 17.5 million!
This demographic shift is the primary driver of job growth in the direct care workforce.
These aides – mostly women and people of color – help seniors and people with disabilities live at home. Yet their wages remain among the lowest in the economy. The Fair Labor Standards Act (FLSA) of 1938 guarantees minimum wage and overtime pay for caregivers to most U.S. workers, but domestic “companionship” workers were largely carved out of those protections.
That carve-out and recent federal rule changes have created confusion and uncertainty for home care agencies. As a result, even the long‑awaited “Final Rule” on home care wages is far from settled, making caregiver compliance a moving target.
When Congress extended FLSA coverage to “domestic service” in 1974, it exempted workers providing companionship services to the elderly or infirm (and live-in caregivers) from minimum wage and overtime requirements.
In 1975, the Labor Department used its rulemaking power to define “companionship services” narrowly.
In practice, this long meant that home care agencies could often claim exemptions – by law, many third-party employers did not have to pay overtime to aides as long as they considered their work “companionship.”
All of this changed in the last decade. By the 2000s, most home care workers were no longer hired directly by families but by third-party agencies. In response to this industry shift, the Obama Administration’s Wage & Hour Division in 2013 issued a final rule tightening the companionship exemption.
Effective January 1, 2015, the 2013 rule precluded third-party employers (home care agencies) from claiming the exemption, meaning agency-hired aides now must receive federal minimum wage and overtime pay.
In other words, after 2015, all home care agencies should have been paying overtime (and travel time, etc.) when workers exceed 40 hours a week. The Department projected this change would transfer roughly $322 million per year from agencies to workers (more pay and overtime premiums).
However, the 2013 rule was immediately challenged. A federal judge blocked it in late 2014, but the D.C. Circuit Court of Appeals upheld the rule in 2015, and the Supreme Court refused to stay it (allowing it to take effect).
By late 2015, agencies legally could no longer use the companionship exemption. The new rule did take effect (after lengthy litigation), and agencies were on notice to comply with FLSA overtime rules.
Notably, the 2013 “Final Rule” did not remain final. In 2019, the Trump Administration reversed course. The Labor Department issued a new final rule (effective 2020) restoring the old 1975 definitions: once again allowing third-party home care agencies to claim the companionship (and live-in) exemptions.
In plain terms, the 2019 rule meant agencies could opt out of paying overtime to many caregivers, reverting to the pre-2015 status. This back-and-forth underscores how the “final” rule can change with administrations.
Today – in mid-2025 – we’re in yet another chapter. The Biden Administration has proposed to scrap the 2013/2020 flip-flop entirely and return to the broad 1975 exemptions.
On July 2, 2025, DOL’s Wage & Hour Division published a proposed rule that would reinstate the companionship and live-in exemptions for agency-hired caregivers. In effect, the proposal would undo the 2015 requirements, once again allowing agencies not to pay overtime for most home care workers. The DOL is accepting public comments through September 2, 2025.
Meanwhile, on July 25, 2025, the agency quietly issued a Field Assistance Bulletin instructing investigators to stop enforcing the 2013 rule and to close all open cases involving overtime violations for home care workers.
Thus, although the 2013-15 Final Rule extended wage protections, it has now been put on hold. The DOL’s guidance effectively means that – for now – agencies will not be pursued federally for failing to pay overtime, even though the “rule” is still on the books for private lawsuits. This sudden halt in enforcement has alarmed advocates.
One analysis notes that if the proposed rollback is finalized, up to 3.7 million caregivers (agency-employed personal care aides, home health aides, etc.) could lose their FLSA protections.
– Trump DOL Rule Would Strip Home Care Workers of Wage Protections – CEPR
In short, the federal law that was supposed to be final is very much pending.
Amid federal uncertainty, many states have stepped in with their own rules. Home care agencies must remember that state law can be stricter than federal law. For example:
Other states have passed domestic worker protections too. Massachusetts, Oregon, Illinois, Washington D.C., and others include home care and direct-care workers in their overtime and minimum wage laws. (For instance, Massachusetts’ new domestic workers act now guarantees overtime pay for hours over 40.)
Even if the federal FLSA exempts these workers, state law governs when it is more generous. In practice, this means agencies in those states must continue paying overtime to home care aides as required by state rules – regardless of what the DOL does federally.
Bottom line for agencies:
Always follow the strictest applicable wage law. If your state law mandates overtime or a higher minimum wage for aides, you must comply, even if the federal exemption would allow otherwise.
With the federal “final rule” up in the air, home care agencies should take proactive steps:
| Recommendation | Description |
|---|---|
| Stay informed | Monitor the U.S. Department of Labor’s proposed rule and open comment period — changes are coming and you should watch updates through late 2025. Also, keep an eye on federal court cases or new legislation that could override DOL action. |
| Audit your pay practices | Review whether you’re paying the required state and federal wages and overtime. If you relied on exemptions and withheld overtime pay, evaluate your risk. (Note: While the DOL currently says it won’t enforce the 2013 rule for agencies, state laws may still apply and individuals can sue in civil court.) |
| Track work hours and travel | Maintain accurate records of hours worked — including travel between clients, training time, and break policies — because under the Fair Labor Standards Act, travel time and certain caregiver training may count as compensable work. |
| Plan for different scenarios | If a final rule restores exemptions, you may gain more flexibility — but be prepared for alternative outcomes (legal challenges, state-law changes). Build pay policies that can adapt whether or not the exemption is reinstated. |
| Educate staff and consumers | Ensure schedulers, caregivers, and clients understand how wages and overtime are calculated under both federal and state law. Transparent policies help avoid disputes when aides work long hours or travel between clients. |
Ultimately, an agency should comply with whichever rule provides greater worker protection to minimize liability. If a home health aide is entitled to overtime under your state law or even current federal law, paying them accordingly avoids claims of wage theft.
Even if the federal DOL stops enforcing the old rule, keep in mind that workers can still bring private lawsuits for unpaid wages owed under FLSA.
In sum, the so-called “Final Rule” on home care wage laws is a moving target. The federal protections that many agencies have been following can change with the next policy announcement.
Agency owners should stay vigilant: keep abreast of DOL announcements, comply with state wage-hour laws, and document everything. It may not be final, but understanding the stakes can help agencies protect themselves and their workers during this unsettled period.
By planning ahead and grounding pay practices in the most protective laws (often your state’s), agencies can weather the shifts. The men and women who rely on your care depend on a stable, fairly treated workforce – and sharing this guidance can help fellow providers across the industry.
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