The FLSA defines "employer" and "employee" broadly, but workers who are independent contractors (meaning they are in business for themselves rather than economically dependent on an employer) are not employees and do not have to be paid according to the requirements of the Act. To determine whether the worker is an independent contractor or an employee, factors to consider include:
1) The extent to which the services rendered are an integral part of the principal's business.
2) The permanency of the relationship.
3) The amount of the alleged contractor's investment in facilities and equipment.
4) The nature and degree of control by the principal.
5) The alleged contractor's opportunities for profit and loss.
6) The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor.
7) The degree of independent business organization.
Most home care workers will be employees, and not independent contractors, of the individual who receives services (or the individual's family, household, or other representative) and/or a third party agency that arranges the home care.
Where a worker is performing duties that fit within the definition of companionship services, the individual receiving services (or his or her family or household) may claim the companionship services exemption, but any third party employer of that worker may not. This means that the third party employer is responsible for ensuring that the worker is paid minimum wage and/or overtime compensation in compliance with the Fair Labor Standards Act and the individual, family, or household will not be held responsible for any wages that are not paid.
The same is true of the live-in domestic service employee exemption. No third party employer may claim the exemption, but an individual, family, or household may claim it if the worker meets the exemption's residency requirements. In other words, if the exemption is properly claimed, the individual, family, or household will not be held responsible for any overtime compensation the third party employer fails to pay.
Under the Final Rule, an individual, family, or household who employs a worker providing companionship services to an elderly person or person with illness, injury, or disability may claim the companionship services exemption from the Act's minimum wage and overtime pay provisions if the employee meets the "duties test." Similarly, an individual, family, or household who employs a worker who resides on the employer's premises to provide domestic service may claim the live-in domestic service employee overtime pay exemption under the Final Rule if the employee meets the residency requirements. See Fact Sheet: Application of the Fair Labor Standards Act to Domestic Service; Final Rule for additional information.