Court Strikes Down Third Party Employer Provision of Home Care Rule
The largest area implicated by this decision is the third party employer regulation, which withdrew the availability of the companionship and live-in caregiver exemptions from third parties.
Companionship Exemption
The companionship exemption was impacted in two important ways by the Home Care rule. First, the rule established that the companionship services exemption is not applicable when the employee spends more than 20 percent of his or her work week performing care services. This portion of the regulation is not impacted by this decision, so the companionship exemption is available only when this percentage test is met.
Second, the rule set forth that the companionship exemption is not available to third party employers. This portion of the rule is impacted by this court decision, allowing third party employers to avail themselves of the exemption. This means that, for situations meeting the definition of and test for companionship, workers can receive straight pay, not overtime for work over 40 hours/week even when there is a third party employer.
Live in Exemption
Like the Companionship exemption, the DOL rule removed the availability of the live-in caregiver exemption from third party employers. This ruling allows third parties to utilize the exemption, enabling straight pay for live-in caregivers, including for those hours worked over 40. For details on what constitutes a “live-in” domestic service worker and other conditions of the exemption, see Fact Sheet #79B: Live-In Domestic Service Workers Under the FLSA at http://www.dol.gov/whd/regs/compliance/whdfs79b.htm.
While this ruling is important, this case has not been fully decided (there are other counts to be considered by the court) and there will likely be appeals filed, even on this limited judgment. It is possible that, at the conclusion of these legal proceedings, the original rule will be in full force and effect.
DOL has issued the following statement in response to the district court’s decision:
“The U.S. Department of Labor strongly disagrees with the district court’s opinion. As explained in our briefs to the court, the Department believes the revised third party regulation is legally sound. The Department had statutory authority to make the change at issue, and it properly promulgated the regulation through a robust notice-and-comment rulemaking process, engaging stakeholders throughout the industry. We are currently reviewing the decision. The Government has 60 days to appeal.
The Final Rule’s extension of minimum wage and overtime protections to most home care workers 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.
As of January 1, 2015, one of the Final Rule’s central changes, the revision of the outdated definition of “companionship services,” will go into effect. The district court’s opinion did not address this regulatory provision. Therefore, as of January 1, all employers of home care workers, including third party employers, will be obligated to consider the duties such workers perform in evaluating whether they must pay wages in compliance with the minimum wage and overtime requirements.
The Department will be continuing to provide extensive technical assistance to states and other stakeholders engaged in implementing the Final Rule.”
FMI: To read the court’s decision, visit:
https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2014cv0967-21.
The United States District Court for the District of Columbia has issued a partial summary judgment on two pieces of a lawsuit filed by the Home Care Association of America and other plaintiffs related to the Department of Labor’s (DOL’s) Home Care Rule. The decision notes that after consideration of the parties’ pleadings, the arguments of counsel and relevant law, and the entire record in this case, plaintiffs’ motion for a partial summary judgment is granted, defendant’s motion is denied and the third party employer restriction in the regulation, scheduled to go into effect on Jan 1, is vacated.