Pending Federal Minimum Wage and Overtime Requirements for Home Care Workers Struck Down
On Wednesday, January 14, the U.S. District Court for the District of Columbia vacated Department of Labor (“DOL”) regulations that would have extended the minimum wage and overtime requirements imposed by the Fair Labor Standards Act (“FLSA”) to most home care employees across the country. Home Care Association et al v. Weil, 14-cv-967 (D.D.C. Jan. 14, 2015).
The DOL’s regulations, which were initially published in 2013, would have: 1) prohibited any third-party employers, such as home care organizations, from claiming the minimum wage and overtime exemptions for employees providing in-home companionship services (and limiting the exemption to individuals who were directly and exclusively employed by their client or the client’s family); and 2) redefined “companionship services” to provide that only 20% of exempt employees’ time could be spent providing care, including meal preparation, feeding, bathing, transportation, financial management, and arranging medical care. The DOL’s proposed regulations also expressly excluded any “medically related services” from the definition of companionship services. The regulatory amendments were scheduled to take effect on January 1, 2015.
In December 2014, the court vacated the portion of the regulations prohibiting third-party employers from claiming the companionship exemption, finding that the text of the FLSA expressly extended the exemption to all qualifying employees, regardless of the identity of their employer. While this December ruling left intact the DOL’s redefinition of companionship services, the employer groups challenging the regulations sought and obtained a temporary restraining order delaying the effective date of the regulations. Earlier this week, the court issued a second decision vacating the DOL’s redefinition of “companionship services,” finding that the recently-promulgated regulations narrowed the FLSA exemption to an extent not permitted by the statutory text.
In finding the DOL’s redefinition of companionship services unlawful, the court highlighted the FLSA language extending the companionship services exemption to all employees engaged in domestic services for “individuals who (because of age or infirmity) are unable to care for themselves.” The court held that the DOL had effectively written the exemption for providing care out of the statute. Although the court indicated that the DOL’s concern for the wages and working conditions of home care providers was “understandable,” it nonetheless concluded that the legislative process, and not regulatory action, was the proper means for achieving such a sweeping change to the federal minimum wage and overtime exemptions. The DOL has the opportunity to appeal both of the court’s rulings.
Notwithstanding the court’s decisions vacating portions of the DOL’s proposed regulations, employers should be mindful that some elements of the amended companionship services regulations were not challenged, and will remain in effect. Most notably, employers of “live-in” domestic services employees are subject to new recordkeeping requirements regarding these employees’ hours, and are no longer permitted to simply use a contract of employment or other written agreement to establish an employee’s compensable hours worked.
Moreover, some state laws (including New York’s) impose compensation and overtime standards for home care employees, and the District Court’s decision does not modify applicable state wage and hour laws.