Family caregivers and households frequently wonder whether federal labor laws require pay, overtime, or recordkeeping when a relative provides care. This guide explains how the Fair Labor Standards Act (FLSA) and U.S. Department of Labor (DOL) guidance treat minimum wage, overtime, and key exemptions that commonly affect companion caregivers and live-in domestic workers. Readers will learn which workers are covered, when exemptions apply, how federal programs (like Medicaid HCBS waivers and Veteran-Directed Care) can create lawful payment routes, and practical steps to pursue compensation while staying compliant. The article maps FLSA basics, the companionship and live-in exemptions, recent DOL regulatory developments, federal program payment mechanics, navigation steps for getting paid, and tax and workers’ compensation implications. If you are exploring paid options for family caregiving, this resource combines legal explanation, comparison tables, actionable checklists, and clear next steps to check program eligibility and pursue lawful pay.

What Are the Fair Labor Standards Act Rules for Family Caregivers?

The Fair Labor Standards Act (FLSA) requires covered employers to pay a federal minimum wage and overtime at time-and-a-half for nonexempt employees, and the Wage and Hour Division enforces these rules for household and agency employment. The FLSA establishes a baseline: if a caregiver is an employee of a covered employer and no exemption applies, that caregiver is entitled to the federal minimum wage and overtime protections. Understanding whether a worker is a household employee, an agency-employed aide, or a live-in domestic staffer determines how the law applies and what employer responsibilities follow. Below is a concise list of the primary FLSA protections that affect caregiver compensation and illustrate practical implications for families and providers.

The key FLSA protections for caregivers include:

Minimum Wage: Covered employees must receive at least the federal minimum wage for all hours worked.
Overtime Pay: Covered nonexempt employees must be paid 1.5× their regular rate for hours worked over 40 in a workweek.
Recordkeeping: Employers must keep accurate records of hours worked and wages paid for covered employees.

These protections frame the next question: who counts as a covered worker under the FLSA and when do exemptions change that coverage.

Different employment models create different obligations, which the table below summarizes for quick comparison and planning.

What Does the FLSA Require for Minimum Wage and Overtime Pay?

The FLSA requires that covered employees receive at least the federal minimum wage for all hours worked and overtime at one and one-half times the regular rate for hours over 40 in a single workweek. The regular rate includes most payments and affects overtime calculations, so caregivers paid different rates or overtime premiums must have their regular rate calculated correctly. For example, a caregiver paid $15 per hour who works 48 hours should receive 40 hours at $15 plus 8 hours at $22.50, and employers must also maintain accurate time records. Understanding the mechanics of the regular rate and overtime computation helps families and agencies avoid underpayment and potential DOL violations, which leads into coverage questions that determine who is protected.

Who Is Covered Under FLSA for Caregiver Compensation?

Coverage under the FLSA turns on whether the worker is an employee of a covered employer and whether any statutory exemption applies; household employees and third-party agency employees are treated differently. Household employer coverage can depend on the household’s use of employees or on thresholds like household cash wages paid to employees in a year; agency-employed workers typically fall under employer responsibility of the agency. Joint employment can arise when an agency and a family both exercise control over the caregiver’s work, making multiple parties responsible for wages and taxes. Clarifying employer status is a necessary step before pursuing program payments or asserting wage rights, and that distinction informs how exemptions like the companionship or live-in rules apply.

How Does the FLSA Define Caregiving Work and Exemptions?

The FLSA and DOL guidance distinguish caregiving tasks (helping with activities of daily living, supervision, and protective tasks) from general household work, and they provide exemption frameworks that can exclude certain companion or live-in roles from minimum wage or overtime. Companionship services typically involve nonmedical assistance and social interaction, whereas personal care tasks tied to ADLs (bathing, dressing, transferring) often indicate employment beyond mere companionship. The identification of exempt duties requires analyzing task percentages, the nature of services, and employer type; this definition then feeds into practical planning for paid family caregiving and program eligibility.

What Is the FLSA Companionship Exemption and How Does It Affect Caregiver Pay?

The companionship services exemption excludes certain workers who provide fellowship and protection and perform nonmedical tasks from FLSA minimum wage and overtime protections when the exemption’s criteria are satisfied. The exemption focuses on the nature of duties—companionship, socialization, and nonmedical assistance—rather than clinical personal care, and it limits the amount of general household work the caregiver can perform if the exemption is to remain valid. This legal distinction directly affects whether a family member or paid companion must be paid minimum wage and overtime, so caregivers and employers must evaluate duties and time allocation carefully. Below are the core criteria and a table summarizing typical roles and whether the exemption applies.

Key criteria for the companionship exemption include:

The worker’s primary duties are companionship and protection rather than medical care.
Services are nonmedical in nature and do not require professional licensure.
General household work must be limited so the companionship role remains primary.

Understanding the “20 percent rule” and who typically qualifies for the exemption helps families decide if paying a family member triggers wage-and-hour obligations.

FLSA Exemptions for Domestic Companionship Services The Fair Labor Standards Act (FLSA) exempts workers “employed in domestic service employment to provide companionship services for individuals who (as determined by the Secretary of Labor) are unable to care for themselves” from the FLSA’s minimum wage and overtime provisions. ECONOMIC AND LEGAL ASPECTS OF FLSA EXEMPTIONS: A CASE STUDY OF COMPANION CARE., 2012

FLSA Companionship Services Exemption Explained Workers exempt from the FLSA because they provide "companionship services," such as home care for the elderly or disabled, are not entitled to minimum wage or overtime pay. Healthcare in the home: Reexamining the companionship services exemption to the Fair Labor Standards Act, 2003

What Are the Criteria for the Companionship Services Exemption?

The DOL treats companionship services as primarily social and protective tasks that are nonmedical, and the exemption applies only when those duties are the worker’s primary function. Courts and agency guidance evaluate whether duties such as feeding, medication administration, or complex ADLs predominate; if medical tasks or substantial household chores dominate, the exemption will not apply. Employers and families should document the scope and time allocation of tasks because the exemption can hinge on percentages of time spent on different activities. Clear documentation of duties and work schedules reduces disputes and leads into how the 20 percent rule operates.

How Does the “20 Percent Rule” Impact General Household Work?

The “20 percent rule” is an interpretive guideline used to assess whether general household work is incidental to companionship services; if general household tasks regularly consume a significant share of time, the exemption may be lost. General household work includes chores like cleaning, laundry, and maintenance that are not directly tied to companionship or protection, and families should compute time spent on these tasks across typical shifts to evaluate compliance. If a caregiver spends more than a limited portion of the workday on general household duties, the role likely becomes nonexempt and subject to minimum wage and overtime requirements. Accurately separating companion tasks from household chores affects program eligibility and wage obligations, which leads to considering who typically qualifies under varying state and program rules.

Which Caregivers Qualify for the Companionship Exemption?

Caregivers who primarily provide social interaction, supervision, and nonmedical support to an elderly or disabled person are the most likely to qualify for the companionship exemption, whereas aides who perform medical tasks, extensive ADLs, or long hours of household chores typically do not qualify. Paid family members can qualify if their duties align with companionship, but when state Medicaid programs or veteran programs designate family members as paid personal care aides, the exemption analysis must incorporate those program rules. State variations and program definitions can change applicability, so families should cross-check program requirements with FLSA criteria to determine proper classification and pay obligations.

Are Live-in Caregivers Exempt from Minimum Wage and Overtime Under Federal Law?

The live-in domestic service employee exemption provides specific rules for workers who reside in their employer’s home, but it does not automatically remove all wage protections; rather, it modifies how on-duty and off-duty time is treated for overtime and minimum wage calculations. Live-in status can affect whether certain periods are compensable and how overtime accrues, but breadth of duties and employer type continue to determine coverage. This section explains the live-in exemption, how pay is calculated for live-in caregivers, and how third-party employers influence exemption applicability. Understanding these distinctions helps families and agencies structure lawful live-in arrangements while protecting caregiver rights.

The live-in exemption is narrowly defined and depends on residency and the nature of hours worked; clear rules exist to separate sleeping/off-duty time from working time. Employers must identify hours that are compensable, maintain records of time worked, and ensure minimum wage thresholds are met for hours that count as work. If an agency employs a live-in caregiver or if joint employment exists, the agency’s responsibilities may alter exemption outcomes and wage obligations. Proposed and recent DOL rules consider how agency models interact with exemptions, and families should review agency contracts and role definitions to ensure responsibilities are clear. Determining which party must pay wages, withhold taxes, and provide documentation is essential for lawful live-in employment relationships.

What Is the Live-in Domestic Service Employee Exemption?

The live-in exemption applies to domestic service employees who reside in the employer’s home, and it changes the way certain hours—especially sleep periods and on-call time—are treated for wage calculations. The DOL recognizes that live-in workers may have periods of availability that are not compensable as working time if these periods are bona fide sleep time or otherwise not active work. However, when live-in caregivers perform active work tasks, those hours count toward minimum wage and overtime thresholds. Employers must therefore distinguish actively worked time from rest time and keep accurate records, which naturally leads to understanding pay and overtime calculations for live-in situations.

How Are Overtime and Minimum Wage Applied to Live-in Caregivers?

When live-in caregivers perform active caregiving or household tasks, those hours are generally compensable and must meet minimum wage and overtime rules when they push total weekly hours beyond the overtime threshold. Employers calculate overtime based on hours of active work in the workweek, and they must ensure the regular rate is computed correctly when additional forms of compensation exist. Common pitfalls include misclassifying on-call time as noncompensable and failing to track intermittent work; sound recordkeeping and transparent schedules mitigate these issues. Properly distinguishing compensable work from sleep or bona fide on-call time reduces the risk of wage disputes and informs employer obligations for taxes and benefits.

How Do Third-Party Employers Affect Live-in Caregiver Exemptions?

Third-party employers, such as home care agencies, can alter exemption analysis because joint employment may assign wage and hour responsibilities to an employer other than the household. When an agency hires or places a live-in caregiver, the agency typically retains payroll and compliance obligations, which can mean the caregiver is covered by minimum wage and overtime regardless of live-in status. Proposed and recent DOL rules consider how agency models interact with exemptions, and families should review agency contracts and role definitions to ensure responsibilities are clear. Determining which party must pay wages, withhold taxes, and provide documentation is essential for lawful live-in employment relationships.

What Are the Latest U.S. Department of Labor Regulations and Proposed Changes for Caregiver Pay?

DOL regulation history and contemporary rulemaking shape how exemptions are interpreted and enforced, and caregivers should follow the administrative record to understand potential changes that affect agency employment and exemption scope. The DOL has periodically updated guidance and rules affecting home care workers; recent proposed rules aim to clarify joint employer standards and the scope of companionship and live-in exemptions. Monitoring these developments enables caregivers and families to anticipate shifts in employer obligations and program interactions. The following timeline and summary explain the context for the 2025 proposed rule and how to participate in the rulemaking process.

A brief regulatory timeline captures the DOL’s major actions impacting home care workers and shows why current proposals matter for caregivers and agencies.

Prior rule changes and guidance: Past DOL guidance refined companionship and live-in interpretations influencing enforcement.
Court and administrative actions: Litigation and administrative reviews have shaped exemption limits over time.
2025 proposed rule: Recent proposals focus on employer definitions, joint employment, and clarifying agency roles.

These regulatory shifts lead to specific proposed changes that could broaden protections for agency-employed caregivers and change employer responsibilities, which is critical for deciding whether to seek program payments or insist on wage protections.

What Is the Historical Context of DOL Rules on Caregiver Compensation?

Historically, DOL rules and court decisions have alternately narrowed and clarified the scope of companionship and live-in exemptions, which has produced uncertainty for families and providers about wage obligations. Earlier guidance allowed broader application of the companionship exemption, while later interpretations emphasized the nature of tasks and time allocation, leading to more granular enforcement. This evolving context explains why caregivers should consult current DOL guidance and consider program rules when deciding on pay arrangements. Understanding historical shifts makes it clear why the 2025 proposed rule could influence agency employment models moving forward.

What Does the 2025 Proposed DOL Rule Mean for Home Care Workers?

The 2025 proposed rule aims to clarify which employers qualify as responsible for caregiver wages, how joint employment is assessed, and the application of exemptions to third-party employer arrangements. If finalized with broader coverage definitions, the rule could increase the number of caregivers entitled to minimum wage and overtime and shift compliance responsibilities to agencies or joint employers. For caregivers, the potential outcome means more predictable pay protections when an agency is involved, while households that directly hire caregivers would need to remain vigilant about recordkeeping and wage calculations. Monitoring the final rule and implementation timeline helps families and agencies prepare for compliance changes.

How Can Caregivers Participate in the Public Comment Period?

Caregivers and advocates can submit comments to the DOL during the formal public comment period for any proposed rule, and effective comments typically explain real-world impacts, provide examples, and request clarifications or specific changes. Participation involves reviewing the Federal Register notice for the proposed rule, preparing concise comments that describe personal or organizational perspectives, and submitting comments through the designated public comment portal by the deadline. Engaging in the rulemaking process helps ensure caregiver experiences inform the final rule, and staying informed about publication dates and deadlines ensures comments will be considered in the agency’s decision.

How Do Federal Programs Like Medicaid and VA Support Paid Family Caregivers?

Federal programs can create lawful pathways for family members to be paid caregivers by establishing program eligibility, payment flows, and employer structures that interact with FLSA coverage and exemptions. Medicaid HCBS waivers, Veteran-Directed Care (VDC), and certain paid family leave programs provide three primary mechanisms through which family caregivers can receive compensation, though each program differs in scope, eligibility, and payment administration. Comparing these programs clarifies how a family might lawfully pay a relative while complying with federal labor laws and program rules. The table below summarizes program differences and how payments flow to caregivers.

What Are Medicaid Waivers and Home and Community-Based Services?

Medicaid HCBS waivers allow states to fund in-home and community services that would otherwise be provided in institutions, and many waiver programs permit participant-directed models where beneficiaries pay family caregivers. States set eligibility and rules for who can be hired and how payments are administered, leading to variability between states; Indiana, Michigan, and Illinois have distinct program designs that may allow family caregivers to be paid when certain criteria are met. Families should confirm state waiver rules, required documentation, and employer arrangements to ensure lawful payment and to reconcile program requirements with FLSA considerations. Checking program specifics helps caregivers understand whether they must be treated as W-2 employees and how payroll should be handled.

How Does Veteran-Directed Care Provide Compensation?

Veteran-Directed Care offers eligible veterans flexible budgets and supports arrangements where veterans or caregivers can direct funds to pay family members for in-home assistance under VA rules, often with program-specific payroll or fiscal intermediary arrangements. VDC emphasizes participant choice and control over care resources, and in many cases allows family members to become paid caregivers when program eligibility and documentation are satisfied. Families should consult VA program materials for application processes and verify how payments will be processed to ensure proper wages, taxes, and compliance with any applicable labor rules. Understanding VA payment mechanisms clarifies whether the caregiver is a program-approved paid employee.

What Are the Federal and State Paid Family Leave Options for Caregivers?

Paid family leave programs provide wage replacement for eligible workers taking time off to care for a family member, and while benefit payments support caregivers financially, they usually do not function as direct employment pay for a family member providing day-to-day care. Federal and state programs vary: some states provide wage replacement that can be combined with other caregiver pay programs, while federal options remain limited and often supplement rather than replace dedicated caregiver compensation programs. Families should evaluate how paid leave benefits interact with Medicaid or VA caregiver pay to avoid double payments and to ensure appropriate tax and employment treatment.

How Can Family Caregivers Navigate Compensation and Get Paid Under Federal Labor Laws?

Caregivers who want to get paid should follow a stepwise approach: confirm whether the FLSA applies, determine employer status, evaluate exemption applicability, identify qualifying federal or state programs, and document duties and hours to meet payroll and tax obligations. Practical navigation includes compiling medical and functional need documentation, contacting state Medicaid or VA program administrators, and planning for employer responsibilities such as W-2 payroll, withholding, and workers’ compensation where applicable. The checklist below outlines actionable steps to move from uncertainty to lawful payment, and the following H3 subsections explain how service partners can support assessment, training, and weekly payroll management.

A step-by-step navigation checklist:

Assess employer and worker status: Determine whether the caregiver is a household employee, agency employee, or independent contractor.
Evaluate exemptions and duties: Itemize caregiver tasks and compute time spent on companion vs medical or household work.
Explore program options: Contact state Medicaid HCBS waiver administrators or VA program staff to confirm eligibility for paid care.
Document and set up payroll: Prepare records of hours, set up W-2 payroll if required, and plan for tax withholdings and reporting.

How Does Paid.care Help Assess Eligibility for Federal and State Programs?

Paid.care assists family caregivers by conducting eligibility assessments for government-funded programs such as state Medicaid waivers, HCBS, and veteran-directed care, focusing on the practical steps needed to confirm whether a family member can be paid under program rules. Paid.care’s services explicitly include eligibility checks via a mobile app for eligibility checks and program navigation, free care coaching, and guidance on next steps to apply for services; the company primarily serves families in Indiana, Michigan, and Illinois. The assessment process emphasizes documentation of the care recipient’s needs, the caregiver’s duties, and how program enrollment or participant-directed models can lawfully flow funds to a family caregiver, which prepares families for payroll and tax considerations.

What Support and Training Does Paid.care Provide to Caregivers?

Paid.care offers free care coaching, training, and 24/7 support to help caregivers meet program requirements and deliver quality care, with services designed to assist caregivers in understanding duties and documentation expectations. Training and coaching focus on care planning, safe caregiving practices, and compliance with program rules, which supports both the recipient’s well-being and the caregiver’s eligibility for paid programs. These supports reduce administrative friction and help families align daily care tasks with the legal definitions that affect exemption and employment classifications. The availability of ongoing coaching and training helps caregivers maintain quality and document care in ways that support payroll and program reporting.

How Are Weekly Payments Managed for Family Caregivers?

Paid.care manages weekly payroll for family caregivers as part of its service offering, using its mobile app to enable hour tracking, payment processing, and transparent records of wages that support tax reporting and program compliance. Weekly payment management includes capturing hours worked through the app, processing payroll on a weekly cadence, and providing documentation that both caregivers and employer-households can use for recordkeeping and tax purposes. This payroll function reduces the administrative burden on families who would otherwise struggle with withholding, W-2 issuance, and accurate pay calculations. Clear payroll processes also help ensure caregivers receive consistent compensation while maintaining regulatory compliance.

After reviewing how to navigate the program landscape and run payroll, families can decide whether to pursue eligibility checks and an application to engage paid caregiving through program pathways or third-party support.

Paid.care’s role in eligibility assessment and payroll provides a practical bridge between legal rights under the FLSA and operational steps to get paid while meeting program and employer responsibilities.

FAQs

Family caregivers may be covered depending on how their employment is structured. If a caregiver is hired through an agency or receives pay through a Medicaid-funded program, they are generally treated as employees under the Fair Labor Standards Act (FLSA). This means they must be paid at least the federal minimum wage and receive overtime pay when eligible. However, if the caregiver is an unpaid family member or part of an informal care arrangement, those protections do not automatically apply.
Under federal law, caregivers who are considered employees must receive at least the federal minimum wage and overtime pay for hours worked over 40 in a week. This includes many caregivers working through home care agencies or self-directed Medicaid programs. Some exceptions apply if the caregiver is classified as a live-in domestic worker or if specific state wage exemptions exist. Each state may also have its own wage and hour rules that extend additional protections.
The Department of Labor looks at who controls the work, pays the wages, and sets the schedule. If a caregiver is paid through a third party such as an agency, fiscal intermediary, or Medicaid program, that organization is usually considered the employer. In those cases, the caregiver falls under the FLSA and related labor laws. When the caregiver is directly paid by a family member without a formal employment setup, the arrangement is often viewed as private and may not fall under federal coverage.
Federal labor laws do not require employers to provide benefits such as health insurance, paid time off, or retirement plans. However, many state and local governments have created additional laws requiring paid sick leave or other benefits for home care workers. Caregivers employed through Medicaid or Veterans Affairs programs may also qualify for limited paid leave or worker protections. Reviewing the specific program or state policy is the best way to understand what benefits apply.
If a caregiver believes they were denied proper pay or overtime, they can contact the U.S. Department of Labor’s Wage and Hour Division to file a complaint. It is important to keep accurate time records and pay stubs to support the claim. In some cases, caregivers may also have state-level options for recovering back pay or correcting classification errors. Taking action early helps ensure fair compensation and compliance with labor standards.

How Caregiver Compensation Is Treated Under Federal Labor Laws: Your Guide to FLSA Rules, Minimum Wage, and Overtime Pay