The Home Care Rule, a regulation issued by the U.S. Department of Labor in 2013 extending minimum wage and overtime protections under the Fair Labor Standards Act (FLSA) to all companionship services workers employed by 3rd-party home care providers, will take effect and become enforceable on Nov. 13, 2015.
The reinstatement of the rule comes after a unanimous decision rendered August 21, 2015, by a 3-judge panel of the U.S. Court of Appeals for the DC Circuit that overturned a lower court decision vacating the rule.
In its opinion, the Circuit Court held that the Labor Department was entitled to deference in its interpretation of the statutory authority for the rule.
The plaintiffs in the case reportedly will seek review by the U.S. Supreme Court and are seeking a stay of the rule pending that review. It is expected that the Court of Appeals for the DC Circuit will rule on that petition shortly.
History of the Case: District Court Decision
The U.S. District Court for the District of Columbia invalidated the Home Care Rule, a regulation published by the Labor Department in October 2013 that would have significantly narrowed the definition of companionship services and would have required 3rd-party employers to pay home care workers minimum wage and overtime.
The Home Care Rule was slated to become effective on Jan. 1, 2015, and become enforceable 6 months later.
Home Care Association of America v. Weil
The first action taken by the court involved a memorandum opinion by Judge Richard J. Leon on December 22, 2014, in which the court ultimately invalidated the prohibition against third-party employers, such as agencies, from claiming the FLSA exemptions with respect to their home care workers.
Since 1974, Section 213(a)(15) of the FLSA has exempted from its overtime and minimum wage requirements, any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves.
Because this exemption specifically refers to "any employee," DOL had previously interpreted the statutory exemption to apply to any employee engaged in the services covered by the rule, regardless of whether the employee was employed directly by the service recipient or a third party.
The 2013 rule, however, excluded third party employers from claiming the minimum wage and overtime exemptions for these workers.
Judge Leon noted that several bills had been introduced in Congress over the years to amend the FLSA to exclude third-party employers from claiming the exemptions, but in each case, the legislation never even made it to a vote.
As a result, the judge characterized the 2013 rule as a “thinly veiled effort to do through regulation what could not be done through legislation.”
He further opined that such conduct by the DOL “bespeaks an arrogance to not only disregard Congress’s intent [through the existing provisions of the FLSA], but seize unprecedented authority to impose overtime and minimum wage obligations in defiance of the plain language of Section 213 [of the FLSA].”
As a result, the judge concluded that the 2013 regulation exceeded the DOL’s rulemaking authority insofar as the third-party prohibition is concerned.
The decision, however, let stand other provisions of the regulation that significantly narrowed the definition of companionship services.
Those provisions were slated to go into effect on January 1, 2015, but on December 31, 2014, the same judge issued a temporary restraining order that prohibits the regulation from taking effect until at least January 15.
Judge Leon heard arguments regarding the narrowed definition of companionship on January 9, and on January 14, issued a memorandum opinion that invalidated the DOL’s revised definitions, which with the December 22 action, has the effect of vacating the entire regulation.
The January 14 decision involved the definition of “companionship services.” Prior to the 2013 DOL revisions to the exemption rule, the term was defined to specifically include “care” for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs.
Services included household work related to the care of the person such as meal preparation, bed making clothes washing, etc.
The definition further included limited general household work not to exceed 20% of total weekly work hours, but did not include services that require and are performed by trained personnel such as a registered or practical nurse.
The 2013 rule significantly narrowed the definition by redefining care to mean assistance with activities of daily living (ADLs) and assistance with “instrumental activities of daily living,” such as driving and meal preparation. Most importantly, it limited the actual care component to 20% of the total hours worked per person and per workweek.
In his decision, Judge Leon began his analysis by acknowledging that the statutory definition of “companionship services” is at least somewhat ambiguous and that Congress has explicitly delegated authority to the DOL to define the term.
That said, however, the judge explained that DOL’s authority is constrained by the terms of the FLSA.
He noted that the 20% limitation on care in the 2013 regulation (as opposed to the existing rule which placed a 20% limitation on work that benefits the service recipient’s entire household rather than solely the individual service recipient) for all intents and purposes eliminates care from the exemption and thus contravenes the specific requirements of the FLSA.
Judge Leon addressed DOL’s insistence that the companionship exemption is intended to solely to provide an exemption for workers who are essentially babysitters for the elderly:
[DOL] repeatedly titles companions “elder sitters” and likens them to babysitters. (citation omitted). The legislative history [of the FLSA] indicates that this analogy was indeed in the minds of legislators at the time of the exemption’s passage. (citation omitted).
But what the [DOL] does not seem to realize, however, is that this analogy actually supports plaintiffs’ position.
Babysitters -- good ones at least -- do not simply sit and stare at their charges ready to call for assistance if something should go wrong. And their duties can extend far beyond playing games or making conversation. Babysitters provider care -- assistance with activities of daily living and instrumental activities of daily living -- to the extent the children they are watching are unable to care for themselves.
A babysitter, particularly one sitting for an infant or toddler, often is responsible for feeding, bathing and changing the clothes and diapers of the child.
Babysitters regularly prepare food for their charges and drive them to places they cannot reach on their own. If [DOL] believes otherwise, its staff needs to spend some more time with children!
The judge further noted that despite several opportunities to change the scope of the definition since 1974 when the existing definition was enacted, Congress did not show “one iota of interest in cabining the definition of companionship services.”
Thus, he explained, such failure to change the definition constitutes persuasive evidence that the interpretation in the existing regulation is the one intended by Congress.
As he did with the prohibition in the 2013 regulation against third party agencies claiming the companionship exemption, Judge Leon concluded that DOL is trying to do through regulation what must be done through legislation in Congress.
Accordingly, the judge vacated the regulation in its entirety.
