Since October 2013, when the Department of Labor issued a Final Rule extending overtime and minimum-wage protections to most home care workers previously deemed exempt, the home health industry has been on pins and needles. It received a reprieve in January 2015 when the district court invalidated the Final Rule. That reprieve, however, was short lived.
On August 21, the Court of Appeals for the D.C. Circuit upheld the DOL’s Final Rule in the case of Home Care Association of America v. David Weil. The decision follows the DOL’s challenge of a trial court's December 22 opinion vacating the “third-party employment” provision of the 2013 rule and a January 14 decision nixing the rule's narrower definition of “companionship services.” The Court ruled that the DOL has the authority to make the proposed changes to the companionship services exemption and that the DOL's proposed changes are based upon a reasonable interpretation of the statute. This effectively validates the rule that prohibited third-party employers from relying on the exemption.
By revising the companionship services definition and specifying that the exemptions for companionship services and live-in domestic service employees may only be claimed by individuals or families — not by third-party employers such as home health agencies — the Final Rule effectively shrinks the companionship exemption under the FLSA and bring nearly two million new workers under the statute's domain. The Final Rule, however, significantly narrows the definition of companions to those who spend no more than 20% of their time providing actual care, such as feeding and bathing. Perhaps even more importantly, it excludes from the exemption companionship workers employed by third parties, such as home healthcare providers.
Notwithstanding the Home Care Association’s procedural right to seek en banc and/or Supreme Court review prior to the issuance of the mandate, which should not occur for approximately 50 days, the DOL this week asked the D.C. Circuit court to expedite its issuance of the mandate approving the Final Rule, contending there’s no reason to pause implementation even in the face of a potential further review. The DOL has said it intends to implement the Final Rule thirty days after the mandate issues.
Labor groups cheered the August 21 Circuit decision, which reverse the lower court's ruling. Home healthcare industry groups, however, have warned that the DOL rule, if enforced, will destabilize the industry, leading to less in-home care and more institutionalization for the elderly and disabled.
The Home Care Association of America, the International Franchise Association and the National Association for Home Care & Hospice (NAHC) are suing the DOL over the Final Rule. This week, the groups said that the mandate, scheduled to take effect on October 13, should be stayed because they intend to file a petition for a writ of certiorari soon. They argue that if the appeals court doesn’t stay its mandate, employers will be irreparably harmed because the rule will be implemented while they pursue the high court review.
The weeks ahead promise to be filled with tension for home care operators as they await the outcome of the Motion for Stay filed with the U.S. Court of Appeals. Whatever the outcome, the DOL rules are certain to be a hot topic when the NAHC holds its annual meeting in Nashville in late October.