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Companions, Caregivers, and Tax Exemptions

Companions, Caregivers, and Tax Exemptions

Individuals and families who hire in-home care workers are considered employers. Employers have certain responsibilities, both to their employees and to the IRS. As more seniors and people with disabilities opt to live at home instead of in a group setting, more individuals and families are hiring people to provide services in private homes. Because of this, the federal government has stepped in to regulate pay requirements and tax exemptions for different types of workers.

Companion VS Caregiver

According to the FLSA (Fair Labor Standards Act), no person who is directly employed by an in-home care agency can be classified as a companion. The only way someone can be classified as a companion is if the family directly employs them. So, if a service provider or agency is involved, they are classified as a “caregiver” and not just as a “companion.”

This is important because companions are not protected by minimum wage and overtime standards the way caregivers are. These employees are considered exempt from FLSA standards.

Duties of Exempt Companions

A companion caregiver provides many of the same services as other in-home employees. They spend quality time with a person, share meals, drive to appointments and social calls, assist with bills and mail, monitor medications and diet, and make sure you’re safe.

However, exempt companions can only spend a maximum of 20% of their time with the client helping with personal care. This includes dressing, grooming, bathing, feeding, mobility assistance, and assistance with incontinence. If your companion spends, for example, 12 minutes per hour or more performing these duties, s/he is considered an hourly employee under the FLSA and is no longer exempt from payroll requirements.

Also, exempt companions must not perform any housekeeping beyond light meal preparation (such as heating up dinner or helping you prep and cook a meal to share). If they live with you, they should tidy up after themselves, but if they do your laundry, make your bed, water your plants, run errands for you and so on, they are no longer exempt.

Basically, for a companion to be exempt, they need to be hired by an individual or family, and their duties only include keeping you company.

If you are unsure whether or not your employee is exempt, contact Acumen Fiscal Agent. We’re dedicated to helping those living with a disability manage their finances.