The US Supreme Court has held that companionship services employees are exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act (FLSA) regardless of whether they are paid directly by the individual or family receiving their service or by a third-party home care company or agency. The case, Long Island Care at Home, Ltd. v. Coke, was decided on June 11, 2007.

The Court reversed a decision by the US Court of Appeals for the Second Circuit, which had invalidated a Department of Labor (DOL) regulation interpreting the FLSA's companionship services exemption to include home care workers employed not by the individuals receiving the service but by third-party agencies. The employee in the case, Evelyn Coke, argued that the DOL was exceeding its authority by interpreting the statute's exemption that broadly, and the Second Circuit agreed. The Supreme Court, however, disagreed and concluded that the DOL has the authority to interpret the statute to include within the exemption companionship services workers paid by third parties.

The importance of the decision is that entities that employ companionship and home care workers to provide services may be treated as exempt from the FLSA's minimum wage and overtime provisions. Of greater significance, perhaps, is the possible reaction to the Court's decision by labor organizations. The Service Employees International Union (SEIU) reportedly financed Ms. Coke's litigation in large part. It is likely that the SEIU and other labor organizations will seek a legislative change to require that companionship services workers paid by agencies receive minimum wage and overtime. In addition, it is likely that organized labor, and particularly the SEIU, will seek to organize employers of companionship services workers to attempt to obtain through collective bargaining minimum wage and overtime protections not otherwise required by law. Employers must constantly be wary of such organizing attempts and be educated about lawful and effective methods of maintaining their union-free status.