In June 2007, the United States Supreme Court issued an important decision affecting the compensation of home healthcare employees. Rejecting a claim brought by a retired home healthcare attendant for unpaid minimum and overtime wages, the Supreme Court upheld a Department of Labor (“DOL”) regulation that exempts such employees from the minimum wage and overtime pay requirements of the federal Fair Labor Standards Act (“FLSA”). This unanimous decision affects an estimated one million workers nationwide who assist elderly and disabled people in their homes.

In 1974, Congress amended the FLSA to exempt from minimum wage and overtime requirements persons “employed in domestic service employment to provide companionship services for individuals . . . unable to care for themselves.” A question left open by the statute was whether the exemption applies only to workers employed by the persons who themselves receive the care in their household or whether it applies equally to workers employed by third parties—such as private agencies engaged in the business of providing home healthcare services. The DOL seemingly addressed this problem with a 1975 regulation that specifically applies the exemption to workers “employed by an employer or agency other than the family or household using their services.”

Notwithstanding that regulation, Evelyn Coke sued for minimum and overtime wages allegedly unpaid by her former employer, Long Island Care at Home, Ltd., which provides home healthcare services for the elderly and disabled. Coke challenged the validity of the DOL’s third-party regulation, arguing that it was unenforceable. The Supreme Court disagreed and declared the regulation to be valid and binding.

The Supreme Court focused on whether the DOL regulation was a valid exercise of the DOL’s power to “fill any gap” left by Congress in the implementation of the FLSA. In finding the regulation a valid gap-filling measure, the Court observed that the FLSA exemption refers only broadly to “domestic service employment” and to “companionship services,” and that Congress expressly instructed the DOL to “work out the details of those broad definitions.” It was therefore within the DOL’s authority to issue the regulation that applied the exemption to workers employed by “third parties.” The Supreme Court likewise disagreed with Coke’s argument that the third-party regulation was persuasive only (as opposed to “binding”).

The case was closely watched by the home healthcare industry, as the vast majority of homecare workers in the United States are employed by “third parties”—companies engaged in the business of providing homecare services. Paying overtime to employees like Coke could have cost the industry billions of dollars. This case highlights the high stakes involved in the interpretation of federal and state wage and hour laws.