May 15, 2015 Practice Points

Should Home-Care Providers Be Exempt from FLSA Wage Requirements?

The D.C. Circuit will soon decide.

By Samantha France

On May 7, 2015, the U.S. Court of Appeals for the D.C. Circuit heard oral arguments in the case of Home Care Association of America v. Weil, No. 15-5018 (D.C. Cir.). The case stems from federal regulations promulgated by the Department of Labor (final rule) that modified the regulations regarding the “companionship exemption” under the Fair Labor Standards Act (FLSA).

Under the FLSA, employees that work more than 40 hours per week are entitled to overtime pay at 1.5 times their regular rate of pay. However, workers who provide “companionship services” are exempt from this overtime requirement. Under the prior regulations set forth at 29 C.F.R. § 552.6, “companionship services” were defined as services that provide “fellowship, care and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs.” Such services included household work such as preparing meals, making beds, and washing clothes. As a result of the prior rule, home-care aides employed by home-health agencies were not entitled to minimum wage or overtime pay.

The final rule sought to narrow the definition of “companionship services” by limiting the duties that were included in the exempt services. Furthermore, the final rule provided that third-party employers, such as home-care agencies, would not qualify for the companionship exemption. Under the final rule, millions of home-care aides would be entitled to minimum wage and overtime pay. It should be noted that some states have already promulgated state laws that eliminate the companionship exemption at the state level.

The Home Care Association of America challenged the final rule by filing suit in U.S. district court. Home Care Association of America v. Weil, Civil Action No. 14-967 (D.D.C.). The U.S. court determined that the Department of Labor’s third-party-provider regulation exceeded the Department of Labor’s authority by seizing Congress’s lawmaking authority. On January 14, 2015, the court issued an order vacating the final rule’s revised definition of companionship services.

In January, 2015, the Department of Labor appealed the decision to the U.S. Court of Appeals for the D.C. Circuit. The Department of Labor issued the following statement on its website:

The Department issued the Home Care Final Rule to extend minimum wage and overtime protections to almost 2 million home care workers. The Department stands by the Final Rule. We believe the Rule is legally sound and is the right policy—both for those employees, whose demanding work merits these fundamental wage guarantees, and for recipients of services, who deserve a stable and professional workforce allowing them to remain in their homes and communities.

Meanwhile, the home-care industry argues that the industry cannot afford to pay its home-care aides increased wages and overtime unless government programs increase reimbursement for such services.

On May 7, 2015, the appellate court heard oral arguments regarding the matter. The Department of Labor argued that it is fully within its powers to fill in gaps regarding definitions in the law, arguing that the court should give deference to federal agency interpretations where the plain language of the statute does not provide the necessary definition or interpretation. The home-care parties’ arguments focused on the impact that the final rule had on consumers, and the impermissible encroachment by the Department of Labor in attempting to eradicate a statutory exemption.

This case is significant in that it will determine whether nearly 2 million home-care workers will be entitled to the same wage and overtime requirements as other health-care workers. If the new regulations are upheld, it would greatly impact the home-care industry, which would be subject to the FLSA’s wage and overtime requirements. While workers may benefit, the home-care industry will be faced with the challenge of lower reimbursement rates and increased expenses. This case poses difficult questions and issues for the appellate court to decide. Despite the decision, it is anticipated that the non-prevailing side in this litigation will proceed to appeal the matter to the U.S. Supreme Court.

— Samantha France, RezLegal, LLC, Jacksonville, FL

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