New Proposed Rule on the Companionship Exemption: What You Need to Know

Background
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Back in 1975, the Department of Labor (DOL) defined a “companionship exemption” under the Fair Labor Standards Act (FLSA). This allowed care workers, especially those employed through third-party agencies, to be exempt from minimum wage and overtime rules. That rule stood for nearly four decades.

That all changed in 2013, when the DOL narrowed the exemption. They restricted who qualified, made agencies ineligible, and limited caregiving duties covered by the exemption.
 
What the New Rule Does

On July 2, 2025, DOL proposed a rule to restore the 1975 standards, bringing back the broader companionship and live-in exemptions for third-party employers, including home care agencies.
 
HCAOA lobbied DOL extensively for this change and our hard work paid off!
 
More on the new proposed rule:
 

• The new proposed rule reinstates third-party agency eligibility under the FLSA exemptions.
• The new proposed rule restores a broader definition of “companionship services” to include fellowship, protection, and care.
• DOL halted its enforcement of the 2013 rule immediately via Field Assistance Bulletin 2025‑4, issued July 25, 2025.

 
Why the Change?

The DOL argues the 2013 rule made home care more expensive and limited access for consumers. A GAO study showed it prompted restricted scheduling and fewer caregiver options. Plus, it added significant administrative burdens for providers, without boosting worker pay.
 
By contrast, DOL expects the restored exemptions to:
 

• Lower labor and compliance costs
• Expand scheduling flexibility
• Help agencies serve more clients efficiently
• Promote stability and continuity in caregiver relationships Ogletree+8Gertsburg Licata+8Thomson Reuters Tax+8TIME+3Home Care Association of America+3Thomson Reuters Tax+3Littler Mendelson P.C.

 
What’s Next?

The public comment period ends on September 2, 2025 at 11:59pm ET. DOL is seeking feedback on restoring the 1975 interpretation, potential parts of the 2013 rule that might stay, and the overall impact on worker pay, cost of care, and industry operations.
 
After the comment period, the DOL will review comments and decide whether to move forward or revise the proposal. If finalized, they’ll publish a final rule with an effective date.
 
Why This Matters for HCAOA Members

If finalized, this rule could be a game-changer:

• Agencies may reduce overtime costs and simplify payroll.
• Caregiving schedules could become more flexible and consistent.
• Families could see lower costs and better continuity of care.

What You Can Do Now
 

• Submit comments by September 2, 2025. HCAOA has a template and instructions ready to go: CLICK HERE
• Audit your current pay and scheduling practices.
• If the rule is finalized, you may need to update payroll systems, contracts, policies, and notices.
• Train HR and payroll staff so they’re ready to respond to changes quickly.