The U.S. Court of Appeals for the D.C. Circuit recently reinstated regulations from the U.S. Department of Labor (DOL), extending federal minimum wage and overtime requirements to home health workers employed by third-party employers.

Home Care Association of America v. Weil, No. 15-5018 (Aug. 21, 2015) concerns plaintiffs-appellees Home Care Association of America (Home Care) and two other associations that represent third-party employers of home health workers. Appellees challenged a DOL’s Final Rule from 2013, which amends the long-standing regulation that companionship workers employed by third-party employers are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA).

Currently, the FLSA provides federal minimum wage and overtime protections to those employees performing “domestic services,” including those persons employed as cooks, butlers, valets, maids, and housekeepers, among others. Exempt from these protections are two categories of domestic service workers: first, those “employed in a domestic service employment to provide companionship services for individuals who…are unable to care for themselves…” and second, those who are live-in domestic-service workers. DOL regulations extended these exemptions in 1975 to individuals employed by third-party agencies.

The DOL’s Final Rule reverses these earlier provisions, discontinuing the third-party employer exemptions and further defining the scope of companionship services. In doing so, the DOL found that the earlier exemptions conflicted with the Congressional intent of the 1974 amendments by recognizing a recent increase in home health services and workers’ increasingly skilled duties, many of which are akin to those professional services performed in institutions.

At the trial level, the U.S. District Court for the District of Columbia granted Home Care partial summary judgment, vacating key provisions in the Final Rule. In doing so, it declared invalid the revised third-party employer regulations, ruling that the Final Rule contravened the statutory text.

On appeal, the Circuit Court reversed the trial court’s finding, relying heavily on the 2007 Supreme Court decision Long Island Care at Home, Ltd. v. Coke. In its decision, the court concluded that the DOL has the appropriate authority to define the scope of the FLSA as it sees fit and has flexibility to clarify statutory “gaps” with rules and regulations that are not arbitrary or capricious.

In its reversal, the court found that the DOL’s new provisions were consistent with Congressional intent to “include within the coverage of the Act all employees whose vocation is domestic service,” regardless of who they were employed by. The court went on to note the changing nature of home health, observing that when Congress first enacted the 1974 Amendments, the vast majority of workers were employed by a member of the household, but by 2007, the vast majority of home health workers were employed by third-party agencies.

Lastly, the appellees asserted that discontinuing this exemption would be detrimental to patient health, and that doing so would result in the increased institutionalization of the elderly and accelerate workforce turnover. The court disagreed, acknowledging that 15 states currently provide for minimum wage and overtime protections to all or most third-party employed home health workers, yet there was no reliable data indicating any such issues.

An appeal by Home Care to stay the Circuit Court’s ruling was denied by Chief Justice John Roberts and the Final Rule will take effect October 13, 2015. While the DOL will not enforce these regulations until 30 days later, employers may be liable for civil suits immediately after the Final Rule takes effect.