In two recent decisions, the United States District Court for the District of Columbia (“DC District Court”) vacated two significant provisions of the United States Department of Labor’s (DOL) regulations affecting home care workers. These provisions aimed to significantly narrow certain longstanding exemptions provided to in-home care providers under the Fair Labor Standards Act (FLSA).
For more than 40 years, the FLSA has provided exemptions to third-party in-home care providers from having to pay certain domestic care workers minimum wage and overtime. The FLSA’s companionship exemption generally applies to persons in domestic service employment who provide care, fellowship and protection for individuals who are unable to care for themselves due to age or infirmity. Further, home care providers employing exempt companions, such as home health care agencies, are not required to pay the companions in accordance with the FLSA’s minimum wage and overtime requirements.
The DOL’s Home Care Rule
Despite the longevity and precedent regarding the FLSA exemption, in October 2013, the DOL issued its final rule extending the FLSA’s minimum wage and overtime protections to home care workers (“Home Care Rule”). The Home Care Rule, which was set to take effect January 1, 2015, significantly revised the definitions of “companionship services” and “domestic service employment” by limiting the types of activities that would qualify under the exemption. Specifically, the Home Care Rule made two significant changes: (1) the exemptions for companionship services and live-in domestic service employees may only be claimed by the individual, family or household using the services rather than third-party employers, including home health care agencies; and (2) the types of activities that comprise exempt “companionship services” were more narrowly defined.
The Home Care Rule, however, was extremely controversial not only because the rule overturned decades of precedent, but also many believed the DOL exceeded its authority in promulgating the Home Care Rule. In two successive decisions, the DC District Court agreed, vacating two controversial aspects of the DOL’s Home Care Rule.
DC District Court Vacates Regulation Regarding Third-Party Employers
On December 22, 2014, the DC District Court rendered its first significant decision, vacating the DOL’s regulation which excluded third-party employers from claiming the FLSA exemption. After a thorough review of the legislative history of the exemption, a textual analysis of the exemption, and Congressional intent, the DC District Court held that the DOL “not only disregard[ed] Congress’s intent, but seize[d] unprecedented authority to impose overtime and minimum wage obligations in defiance of the plain language” of the FLSA.
DC District Court Vacates Regulation Narrowing the Definition of “Companionship Services”
Following the first major blow to the DOL’s efforts to narrow the exemption, the DC District Court issued a second decision, vacating the final major provision of the DOL’s Home Care Rule. On January 14, 2015, the DC District Court vacated the DOL’s rule that significantly narrowed the definition of “companionship services” under the FLSA. Once again, the DC District Court determined that the DOL had exceeded its authority, holding “[I] cannot help but conclude that Congress’s intent in 1974 to exempt from minimum and overtime wage requirements domestic workers providing services, including care to the elderly and disabled, is still as clear today as it was forty years ago. Here, yet again, the [DOL] is trying to do through regulation what must be done through legislation.”
The Future of the Home Care Rule
The DC District Court’s decisions are seen as significant victories for third-party care employers, which employ the majority of home care workers in the United States. Predictably, on January 22, 2015, the DOL appealed both of the DC District Court’s orders that vacated significant portions of the DOL’s Home Care Rule. While it remains unclear when the U.S. Court of Appeals will hear the DOL’s appeals, the DOL has requested expedited consideration. In the meantime, however, the vacated provisions regarding third-party employers and the narrowed definition of “companionship services” are unenforceable by the DOL. Therefore, home health care agencies can continue to operate under the long-standing exemptions, but employers will need to stay tuned to the outcome of the DOL’s appeals.