FLSA2006-13NA — Private agency employees working in supported living homes for developmentally disabled individuals and section 13(a)(15)

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U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

June 23, 2006 FLSA2006-13NA

Dear Name*:

This is in further response to your request for an opinion asking how the companionship services
exemption under section 13(a)(15) of the Fair Labor Standards Act (FLSA) (copy enclosed) applies
to agency employees working in supported living homes for developmentally disabled individuals that
are operated by private community agencies in your state.

According to your letter, private agencies operate supported living homes for developmentally
disabled individuals. The companion is an employee of the sponsoring agency, which pays the
salary, benefits, and housing costs for the employee. Neither the individuals living at the home nor
their families pay the companion directly or indirectly. Employees of these agencies live in the homes
as companions caring for the individuals with disabilities. Usually, the supported living homes are
occupied by multiple, unrelated individuals with developmental disabilities for whom companionship
services are provided.

In a telephone conversation with a member of your staff, we received additional information
regarding the operation of the homes. Financial support for the developmentally disabled individuals
comes from sources such as Medicare payments, federal and state Medicaid payments, and
Supplemental Security Income payments. Generally, up to three developmentally disabled
individuals live in the homes. They often are placed in a home after leaving a state institution,
typically with other individuals also leaving the institution. They may have some choice in selecting
housemates, in that the providers attempt to ensure that the residents will be compatible; however,
their choices are limited. There is at least one staff member present in the home at all times, and
perhaps additional staff members and/or supervisors depending upon the level of disability of the
residents. Meals are furnished to the residents, and residents may have some input in the selection
of the meals at some homes, although some providers have fixed weekly menus. Often the service
provider owns the home and leases it to the residents, although other types of arrangements also
exist. Some providers are for-profit companies, while others are not-for-profit entities. Although the
residents may assist with keeping the house clean if they are able, the provider has overall
responsibility for maintenance and upkeep of the home.

To qualify for the section 13(a)(15) companionship services exemption, the work itself must qualify
as domestic service employment, which means that it must be performed in or about a private home.
29 C.F.R. § 552.101(a) (copy enclosed). Employees working in dwelling places that are primarily
rooming or boarding houses do not qualify for the exemption, because the places they work are not
private homes; rather they are business establishments. 29 C.F.R. § 552.101(b). Based on the
information provided and the factors the courts have considered when evaluating whether similar
supported living facilities were the private homes of the disabled individuals, it is our opinion that the
facilities you describe are not private homes for purposes of the exemption. Whether a living
arrangement qualifies as a private home is a fact-specific determination, and we base this conclusion
on the facts of this case. See Wage and Hour Opinion Letter February 9, 2001 (copy enclosed). To
the extent that any particular home varies from that description, a different determination might
result.

The legislative history of this exemption states that “a dwelling house used primarily as a boarding or
lodging house for the purpose of supplying such services to the public, as a business enterprise, is
not a private home.” S. Rep. No. 93-690, at 20 (1974). The Senate Report also discusses the term
“private home,” noting that “the domestic service must be performed in a private home which is a
fixed place of abode of an individual
or family. A separate and distinct dwelling maintained by an

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U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

individual or family in an apartment house or hotel may constitute a private home. However, a
dwelling house used primarily as a boarding or lodging house for the purpose of supplying such
services to the public, as a business enterprise, is not a private home . . . .” Id. (emphasis added).
See also Johnston v. Volunteers of Am., 213 F.3d 559 (10th Cir. 2000), cert. denied, 531 U.S. 1072
(2001); Madison v. Resources for Human Development, Inc., 233 F.3d 175 (3d Cir. 2000); Wage and
Hour Opinion Letters May 14, 2001 and November 25, 1975 (copies enclosed).

The court in Welding v. Bios Corp., 353 F.3d 1214 (10th Cir. 2004), identified six factors that it and
other courts have considered relevant in evaluating whether a residence is a private home. The court
stated that the overall inquiry focuses on “who has ultimate management control of the living unit and
whether the living unit is maintained primarily to facilitate the provision of assistive services.” Id. at
1219. The first factor is whether the client lived there before beginning to receive services from the
provider, because if the individual would live there independently of the receipt of services that is a
“powerful indicator that the residence is a private home.” Id. The second factor is who owns the living
unit, because if the service provider owns the unit “that is a significant indicator that it is not a private
home.” Id. The third factor is who manages and is ultimately responsible for maintaining the
residence, such as by paying the mortgage or rent, paying utilities, providing clean linens and
providing food, because if the service provider has control over such essentials of daily living, “that
weighs strongly in favor of it not being a private home.” Id. at 1219-20. The fourth factor is whether
the client could live in the unit if the client were not contracting with the provider for services. The fifth
factor is the relative difference in the cost/value of the services provided and the total cost of
maintaining the living unit, and the sixth factor is whether the service provider uses any part of the
residence for its own purposes such as an office for employees.

Other courts have looked at additional factors, emphasizing that all relevant factors must be
considered. Those factors include: whether significant public funding is involved; who determines
who lives together in the home; whether residents live together for treatment purposes as part of an
overall care program; the number of residents; whether the clients can come and go freely; whether
the employer or the client acquires the furniture; who has keys and access to the home; and whether
the provider is a for profit or not for profit entity. See, e.g., Johnston v. Volunteers of Am., 213 F.3d at
563-65; Linn v. Developmental Services of Tulsa, Inc., 891 F. Supp. 574 (N.D. Okla. 1995); Lott v.
Rigby, 746 F. Supp. 1084 (N.D. Ga. 1990).

Thus, the fact that the home is the sole residence of the client is not enough to make it a private
home under the FLSA. For instance, in this situation, the residents in the homes described are
placed in a residence outside their family home and without the full-time, live-in care of a relative.
They are housed in a residence with strangers who are also in need of the care being provided, and
they are housed together for the purpose of providing needed services. The service provider often
owns the residence, and the clients did not live there prior to moving there to receive services. The
clients’ choices of what to eat and with whom to live are circumscribed. Although the residents may
assist with the upkeep of the home, the provider is ultimately responsible for the maintenance and
upkeep of the residence. Government funding is a revenue source and, given the high ratio of staff to
clients, it appears that the cost of the services likely is a significant portion of the cost of the
residence. Therefore, these residences are not private homes, and the work performed by private
agency companions at such facilities would not come within the scope of the exemption provided by
section 13(a)(15) of the FLSA. See Wage and Hour Opinion Letter May 14, 2001.

This opinion is based exclusively on the facts and circumstances described in your request and is
given based on your representation, express or implied, that you have provided a full and fair
description of all the facts and circumstances that would be pertinent to our consideration of the
question presented. Existence of any other factual or historical background not contained in your
letter might require a conclusion different from the one expressed herein. You have represented that

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U.S. Department of Labor
Employment Standards Division
Wage and Hour Division

this opinion is not sought by a party to pending private litigation concerning the issue addressed
herein. You have also represented that this opinion is not sought in connection with an investigation
or litigation between a client or firm and the Wage and Hour Division or the Department of Labor.

Sincerely,

Barbara R. Relerford
Office of Enforcement Policy
Fair Labor Standards Team

Enclosures

Section 13(a)(15) of the Fair Labor Standards Act
29 C.F.R. § 552.101
WH Opinion Letter February 9, 2001
WH Opinion Letter May 14, 2001
WH Opinion Letter November 25, 1975

*
Note: The actual name(s) was removed to preserve privacy in accordance with 5 U.S.C. 552 (b)(7).