Caregiver pay and payroll for PA home care agencies

Agencies cannot use the companionship overtime exemption

A home care agency must pay its caregivers federal minimum wage and overtime, because the 2013 Labor Department rule bars third-party employers from the companionship and live-in exemptions.

Before that rule, agencies could treat companion workers as exempt. Now only the family or household that directly employs a worker can claim those exemptions, and an agency is a third party. Scheduling a caregiver across several clients in one week can push hours past the overtime threshold without anyone noticing.

Build the schedule with hours tracked across all clients, not per client. The overtime question is about the worker's week, not the family's.

The U.S. Department of Labor says the 2013 rule precluded third-party employers, like home care agencies, from claiming the companionship or live-in exemptions. — U.S. Department of Labor, Wage and Hour Division, retrieved 2026-09-27

The 2025 proposal has not changed the rule yet

The Labor Department proposed in July 2025 to return to its 1975 companionship regulations, but as of this page's check that remained a proposal, not a final rule.

Headlines about the proposal led some owners to assume the exemption was back. It is not, until a final rule says so and takes effect. Paying on the assumption that it will change is how an agency ends up owing back wages for every week in between.

Check the Wage and Hour Division's direct care page before you change pay practices. It is where a final rule would be announced.

July 2, 2025The Department of Labor published a notice of proposed rulemaking on July 2, 2025 proposing to return to the 1975 companionship regulations. — U.S. Department of Labor, Wage and Hour Division, retrieved 2026-09-27

Employee or independent contractor, decided by control

Whether a caregiver is an employee depends on who controls the work, the money and the relationship, not on what the contract calls them.

The IRS groups the evidence into behavioral control, financial control and the type of relationship. An agency that sets visit schedules, trains caregivers on its own procedures and pays by the hour is showing control on every count. That describes most agencies, which is why agencies employ and registries refer.

Getting this wrong means back payroll taxes, and often uninsured injuries. If you want the contractor model, build it as a registry from the start, following the agency-or-registry comparison.

The IRS examines behavioral control, financial control and the type of relationship to decide whether a worker is an employee or independent contractor. — Internal Revenue Service, retrieved 2026-09-27

Employers generally must withhold and deposit income taxes, Social Security taxes and Medicare taxes from wages paid to an employee. — Internal Revenue Service, retrieved 2026-09-27

Pennsylvania payroll registrations before the first paycheck

Register for employer withholding and unemployment compensation in myPATH as soon as you hire; unemployment registration is due within 30 days of the first covered work.

The registration covers full-time and part-time workers alike, which matters in home care, where much of the workforce works a few shifts a week. Once the Department of Labor and Industry finds you liable, it assigns an employer account number that appears on all your unemployment filings.

Late registration can cost up to $10,000 per assessment, according to Labor and Industry. Put the registration on the same checklist as the new hire's background check.

30 daysPennsylvania employers of one or more full- or part-time workers must register for unemployment compensation within 30 days after covered services are first performed. — Pennsylvania Department of Labor and Industry, retrieved 2026-09-27

up to $10,000Late UC registration can bring a penalty of up to $10,000 per assessment, per Labor and Industry. — Pennsylvania Department of Labor and Industry, retrieved 2026-09-27

Workers' compensation belongs in the payroll setup

Workers' compensation premiums are priced on payroll, and Pennsylvania requires the coverage from your first employee, so set it up alongside payroll rather than after it.

Carriers commonly check the estimate against actual payroll once the policy term ends, so an estimate that was too low tends to come back as a bill. Give the carrier accurate job descriptions too, since companion work and hands-on personal care may not be rated the same way.

The broader insurance picture, including the waiver program's liability requirement, is on the insurance page.

Pennsylvania requires workers' compensation for employers with at least one employee, whether part-time or full-time, including family members, unless all employees are in excluded categories. — Pennsylvania Department of Labor and Industry, retrieved 2026-09-27

Tell each client how the caregiver is paid and insured

Before services start, give every client written notice of whether their caregiver is your employee, along with fees and total costs by the hour or week.

This is the payroll decision surfacing in the client packet. Chapter 611 requires the fees and total costs of the services, and the disclosure of employee or contractor status with the tax and insurance obligations that follow. The Department's Consumer Notice of Direct Care Worker Status form is the usual vehicle.

Keep the signed notice in the client file. It is one of the first things an inspector looks for, next to the caregiver's screening records described in the background check guide and the training requirements.

Pennsylvania home care agencies must give consumers the fees and total costs of services on an hourly or weekly basis before services begin. — 28 Pa. Code § 611.57, Pennsylvania Code, retrieved 2026-09-27

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