Hunton Employment & Labor Perspectives

On Friday, August 21, 2015, the U.S. Court of Appeals for the District of Columbia Circuit upheld the U.S. Department of Labor’s (“DOL”) 2013 rule extending FLSA overtime and minimum wage protections to employees of home health care agencies who provide “companionship services” or live-in domestic care. The rule modified an exemption that was part of a 1974 amendment to the Fair Labor Standards Act (“FLSA”) that required domestic service workers to receive overtime and minimum wage, but excluded from those requirements employees who provide companionship services or live in the home where they work. Under the 2013 rule, the exemption for companionship services and live-in care only applies to workers employed by individuals or families who are receiving the care, not to employees of third-party home care providers. The 2013 rule also narrowed the definition of companionship services. Specifically, a worker only falls under the companionship exemption if the worker is employed directly by members of a household where the worker provides “fellowship and protection” (i.e. socializing with and monitoring the safety of elderly or infirm people) or if the worker provides daily living assistance, such as dressing and grooming, in conjunction with fellowship and protection, but does not spend more than twenty percent of their time providing such assistance.

In Home Care Assoc. et al. v. David Weil et al., the D.C. Circuit held that the 2007 U.S. Supreme Court’s decision in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007), granted the DOL “discretion to apply (or not to apply) the companionship services and live-in exemptions to employees of third-party agencies” and that the DOL’s decision to extend the FLSA’s protections to those employees was “grounded in a reasonable interpretation of the statute.” The Court also ruled that because it upheld the DOL’s 2013 rule preventing third-party employers from availing themselves of the companionship services exemption, the plaintiff-appellee home care providers “suffer[ed] no direct injury as a result of the [DOL]’s narrowed definition of companionship services” and thus lacked standing to challenge the narrowed definition.

Opponents of the controversial rule and revised definition of companionship services argue that the rule and narrowed definition do away completely with the original exemption that Congress intended with the 1974 amendment to the FLSA. They argue further that implementing the new rule will increase the cost of in-home healthcare and prevent many who need it from being able to afford it. The DOL and others who support the regulation counter that in-home care providers are entitled to the same coverage as their counterparts that work for a hospital. The D.C. Circuit’s decision marks a major victory for DOL, which first proposed a regulatory amendment to remove third party employees from the scope of the companionship services and live-in worker exemptions in 1993.