A recent federal court decision has added to the confusion surrounding the application of the U.S. Department of Labor's (DOL) "home care" overtime rule and New York's "13-hour" rule regarding compensable work hours for certain home care aides. In De Carrasco v. Life Care Services, Inc., 2017 WL 6403521 (S.D.N.Y. Dec. 15, 2017), the U.S. District Court for the Southern District of New York held—in conflict with other courts—that the home care rule took effect on January 1, 2015, but found that home care aides who work 24-hour shifts are not entitled to pay for meal and sleep periods.

The Home Care Rule

On September 17, 2013, the DOL issued a final rule that eliminated the Fair Labor Standard Act’s (FLSA) minimum wage and overtime exemption for home care workers employed by home care agencies and other companies. The new regulations, which were to take effect on January 1, 2015, were challenged immediately in court. In December 2014 and January 2015, the U.S. District Court for the District of Columbia invalidated the DOL’s final rule in a pair of opinions.1 However, the D.C. Circuit Court of Appeals ultimately reversed the lower court, and reinstated the DOL’s final rule.2 As a result of the decision by the court of appeals, it was widely understood at the time that the effective date of the DOL’s final rule would be October 13, 2015.

However, in a string of decisions,3 with De Carrasco being the latest and third such case from the Southern District of New York, courts have held that the effective date of the DOL final rule was January 1, 2015, the date it originally was scheduled to take effect. The courts reasoned there is a presumption of retroactivity in civil cases mandating that the lower court’s decisions were a legal nullity. In other words, a decision by an appellate court has retroactive effect on all cases still open and pending at the time.

Notably, these decisions are not binding on the federal courts in New York, and no court in the Eastern District of New York has weighed in on the issue. In addition, a few federal courts outside of New York have held that the effective date of the DOL final rule was October 13, 2015.4 While the home care industry must wait for a federal appellate court to weigh in to ensure finality on this issue, these decisions will still have a significant effect on the home care industry. If the DeCarrasco and other opinions are upheld, aides can argue that they are entitled to be paid overtime at the difference between one and one-half times the minimum wage rate and one and a half-times the regular rate of pay between January 1, 2015 and October 13, 2015.

New York’s 13-Hour Rule

In the midst of these negative decisions affecting the home care industry, the federal court in De Carrasco became the third federal court5 to hold that the New York State Department of Labor’s (NY DOL) “longstanding and consistent interpretation that compensable hours worked under the State Minimum Wage Law do not include meal periods and sleep time of home care aides who work shifts of 24 hours or more.”

As previously reported, home care agencies have historically paid “live-in” home care aides 13 hours of a 24-hour shift in accordance with the NY DOL's well-established policy and guidance. That previously unchallenged pay practice, colloquially known as the “13-hour rule,” permitted employers of home care aides working 24-hour shifts to pay aides for 13 hours, provided the aides are afforded 8 uninterrupted hours for sleep, and 3 uninterrupted hours for meals, regardless of whether the aides worked in residential or non-residential facilities.

Within the past eight months, a trio of New York State Appellate Division decisions6 refused to give deference to the long-standing NY DOL policy and guidance, and ruled that non-residential home care aides employed by third-party agencies must be paid for every hour of a 24-hour shift, regardless of sleep and meal periods.

However, the De Carrasco decision is notable because it is the first court to rely upon the NY DOL’s recently issued emergency regulations codifying its longstanding policy concerning the 13-hour rule, and the accompanying explanatory statement for the emergency regulations detailing the NY DOL’s historical application of the policy.7 The court found the NY DOL’s explanation of its policy concerning the 13-hour rule to be controlling and, like the court in Bonn-Wittingham v. Project O.H.R. (Office for Homecare Referral), Inc.,8 expressly disavowed the New York Appellate Division decisions holding to the contrary.

As is evident, the state of the law applicable to home care agencies is in flux. Employers must nevertheless continue to consult with their counsel to ensure a go-forward strategy for compliance is in place while the courts sort out these myriad issues.

Littler continues to closely monitor legal developments affecting the homecare industry and we have developed strategies for compliance specifically tailored to the alternative compensation and staffing models.