Home care workers support consumers of home care services, typically individuals with disabilities and older adults, with their personal care needs. Some of the activities that home care workers perform include helping with activities of daily living (ADLs) such as dressing, grooming, eating, or bathing, as well as instrumental activities of daily living (IADLs) that enable a person to live independently such as meal preparation, driving, light housework, managing finances, and assisting with medications. Home care services may be provided by one or more worker(s); however, given the personal nature of the work, experts have noted the benefits of maintaining continuity among home care workers, and consumers often prefer to receive care from a limited number of workers. Home care needs depend on many factors including each consumer’s functional limitations and the availability of informal supports, such as those provided by family members, so the amount of time a home care worker provides care can vary. For example, home care workers may provide a few hours of home care per week or up to 24 hours per day depending on an individual’s needs. Home care workers may be employed directly by the consumer or by a third party home health care agency that matches workers with consumers. Examples of traditional types of home health care companies include: for-profit home care agencies, voluntary non-profits, and private not-for-profit home care agencies. A variety of public and private sources pay for home care services. The majority of home care is paid for by public sources, such as Medicaid. Medicaid is a federal-state program that provides health care services to certain low-income populations. Individuals who qualify for Medicaid and receive coverage for home care services include individuals aged 65 or older and individuals who are disabled or blind. Although Medicaid is jointly financed by the states and the federal government, it is directly administered by the states, with oversight from the Centers for Medicare & Medicaid Services (CMS), within the Department of Health and Human Services (HHS). State Medicaid spending for most services is matched by the federal government at a rate that is based in part on each state’s per capita income according to a formula established by law. State Medicaid programs cover home care services through a wide and complex range of options within Medicaid, which include providing this coverage as an alternative to institutional care. The Medicaid program requires states to cover certain home health services, and states may also elect to cover additional home and community-based services under their Medicaid programs, or through special waivers that allow them added flexibility in covering these services. CMS has been working in partnership with states, consumers, providers, and other stakeholders to create a sustainable, person-driven long-term support system. According to CMS, the system aims to allow people with disabilities and chronic conditions to exercise choice and control, and to access quality services that assure optimal outcomes, such as independence and quality of life. States have an obligation to provide Medicaid services to eligible individuals with disabilities in the most integrated setting appropriate to their needs, consistent with title II, part A of the Americans with Disabilities Act, which is overseen by the Department of Justice. The FLSA is the primary federal statute that establishes standards for minimum wage, overtime pay, and child labor. The FLSA requires that workers who are covered by the act and not specifically exempt from its provisions be paid at least the federal minimum wage (currently $7.25 per hour) and 1.5 times their regular rate of pay for hours worked over 40 in a workweek. The 1974 amendments to the FLSA extended coverage to workers employed in “domestic service” but established an exemption from the minimum wage and overtime provisions for individuals providing “companionship services” to older adults or people with disabilities. The amendments also created a more limited exemption from the overtime pay requirements for domestic service employees who reside in the household where they work (live-in domestic service workers). In 1975, DOL, the federal agency responsible for overseeing and enforcing the FLSA, issued the existing regulations which implemented these provisions and, among other things, defined “companionship services.” These regulations define companionship services as those which provide ‘‘fellowship, care, and protection’’ to an elderly person or individual with a disability, and include household activities related to the care of that person such as preparing a meal, making the bed, and washing clothes, for example. Additionally, these regulations permit third party employers, such as home care services agencies, to claim the companionship services exemption for workers (which we refer to in this report as the companionship exemption). In October 2013, DOL issued a final rule, commonly referred to as the Home Care Rule, revising its existing regulations on domestic services employment and the companionship services exemption. The Home Care Rule, scheduled to go into effect January 2015, makes three main changes to the existing regulations: it updates terminology and narrows the definition of companionship services; it limits who may claim the companionship services and live-in domestic services exemptions by stipulating that third party employers, such as private home care agencies, will no longer be able to claim these exemptions; and it changes the record-keeping requirements for employers of live-in domestic services workers. As a result of these changes, more home care workers will be entitled to protections under the FLSA, which may include the right to time and one- half of their regular hourly wage when they work more than 40 hours in a week; compensation for time spent traveling between clients’ homes; and compensation when they wake to care for clients on overnight shifts. According to DOL, the workers who will be directly affected by the change to the companionship services exemption are predominantly women in their mid-40s or older and minorities who have a high school diploma or less education. The existing regulations define companionship services as “fellowship, care, and protection,” and the revised definition of companionship services includes “fellowship” and “protection” but limits the amount of time that a worker can spend on the provision of “care” (see fig.1). Under the Home Care Rule, examples of “fellowship” and “protection” include activities such as engaging in conversation, reading, accompanying the person on walks or to appointments, and being present to monitor the person’s safety and well-being. “Care” is defined to include assisting with activities of daily living and instrumental activities of daily living such as dressing, feeding, meal preparation, and light housework – precisely the types of activities that many home care workers engage in today. Under the existing regulations, which apply until the Home Care Rule goes into effect, workers may spend an unlimited amount of time providing these types of services and still be exempt from the FLSA minimum wage and overtime provisions. However, in order to qualify for the companionship services exemption under the revised regulation, the amount of time a worker spends on these types of activities may not exceed 20 percent of the total hours worked per person and per workweek. In the revised Home Care Rule, DOL also limited who may claim the companionship services exemption. Under the existing regulations, third party employers may claim the companionship services exemption and are not required to pay home care workers who qualify for minimum wage and overtime. However, under the revised regulation, third party employers, such as private home care agencies, will no longer be able to claim the companionship services exemption from minimum wage and overtime.claim the exemption if the home care worker primarily provides fellowship and protection and spends 20 percent or less of his or her weekly work hours per care recipient on activities of daily living (ADLs) and instrumental activities of daily living (IADLs) and if the worker meets certain other requirements (see fig. 2). When DOL was developing the Home Care Rule, it considered the growth in the home care industry and the resulting changes in the home care workforce. In March 2012, Congress held a hearing to examine the proposed rule and the possible effects of the narrowed definition of companionship services. According to testimony from a DOL official, the home care industry has “undergone a dramatic transformation” –due in part to increased demand for home care—since DOL issued its regulations on the companionship and live-in exemptions in 1975. For example, the official stated that the number of certified home health care agencies had increased from 2,242 in 1975 to more than 10,000 at the end of 2009. The DOL official stated that the demand for home care has increased as a result of the growth in the aging population, the rising costs of institutional care, and the availability of funding assistance from federally supported programs, such as Medicaid. Similarly, the number of home care workers has increased. The Bureau of Labor Statistics (BLS) has reported that the total number of home care workers has more than doubled in each of the last two decades–with nearly 2.1 million workers in 2012–and is expected to be among the fastest growing occupations in the coming years. DOL officials also told us that as the industry has grown, home care workers’ duties have become more specialized. Home care workers are assisting consumers with many more services than they had been when the exemptions were enacted. According to DOL officials, home care workers are increasingly providing specialized care, such as assistance with activities of daily living and limited medical-related care— services that were previously provided in nursing homes or other professional settings by trained nurses. With the expected continued growth in the demand for home care, DOL officials also told us that in developing the proposed rule, they considered how to improve worker wages and address high worker turnover. DOL officials have noted that the growth in the industry and worker responsibilities has not translated to growth in home care workers’ wages, which are among the lowest in the country.