BREAKING NEWS: The D.C. Court of Appeals ruled today that the US Department of Labor's ("DOL") Final Rule on the Application of the Fair Labor Standards Act to Domestic Service (the "Final Rule") is valid, because it is "grounded in a reasonable interpretation of the statute (FLSA) and is neither arbitrary nor capricious." Under the Final Rule, home care agency workers are no longer covered by the FLSA's companionship services exemption or its live-in domestic worker exemption. This decision is of serious concern to the home care industry. Whether the decision will be appealed to the U.S. Supreme Court remains to be seen.

What Questions Do Home Care Agencies Need To Have Answered?

  1. When will the change in the law be considered effective? The Final Rule was initially to be effective January 1, 2015, before it was invalidated by the district court. The D.C. Court of Appeals has reversed the district court, and remanded for entry of summary judgment in favor of the DOL. How will the District Court's earlier decisions, or a delay in issuing its decision on remand, delay the effective date? What position will the DOL take on the effective date?
  2. When will the DOL begin to enforce the Final Rule? When the Final Rule was originally issued, the DOL said it would delay enforcement for six months from the effective date or until June 30, 2015, and for the remainder of 2015, would exercise prosecutorial discretion in determining whether to bring enforcement actions. Will the DOL still provide for a meaningful transition period?
  3. How does validation of the Final Rule affect private attorney lawsuits and class actions? Agencies are now obligated to pay time and one half the worker's regular rate of pay for hours worked over 40 in a workweek. If a worker receives a base rate and a higher rate for certain hours (e.g. weekend), calculation of a worker's overtime rate will be more difficult because it requires a weighted blending of the two rates to provide the regular rate of pay for that week. Employers who do not comply may be targeted by plaintiff's lawyers.
  4. How does validation of the Final Rule affect enforcement actions by the NYS Department of Labor? The Final Rule effectively eliminates the differing treatment of workers under New York law based on whether they are employed by agencies or directly by households. Formerly, under the NYS Domestic Workers Bill of Rights, for- profit agency home care workers who qualified as "companions" under federal law only had to be paid overtime at one and one half the NYS minimum rate of pay. Now all agencies, for-profit and not-for-profit, must pay home care workers overtime at one and one-half times the individual worker's regular rate of pay.
  5. What effect does the Final Rule have on the "hours worked" rules applicable to the home care industry? Is there a difference in the treatment of "live-in" workers versus "sleep-in" workers? What type of written agreements with 24 hour case workers must be entered into? Is it a "duty-free" hour if the worker is required to remain on-call on the premises? How must sleep time and travel time be handled?