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D.D.C.: Revised Regulations re Companionship Exemption Reinstated; DOL Acted Within Its Rulemaking Authority and the New Regulation Grounded in Reasonable Interpretation of the FLSA
This case was before the D.C. Circuit on the Department of Labor’s appeal of a lower court’s decision that held the DOL’s recent amendments to the companionship exemption regulations to be unenforceable. Specifically, in 2 separate decisions, the same lower court judge had invalidated the new regulations, both as they applied to third-party staffing companies and as they revised the definition of companionship duties within the scope of the exemption. The D.C. Circuit reversed the lower court’s decision and reinstated the revised regulation, finding that the DOL acted within its rulemaking authority with regard to the revision pertaining to third-party staffing companies. The D.C. Circuit declined to reach the second issue regarding the definition of companionship services, because it held that the plaintiffs lacked standing to challenge same in light of the fact that the exemption was inapplicable to them under the regulation in the first instance.
Explaining the issue before it, the court stated:
The Fair Labor Standards Act’s protections include the guarantees of a minimum wage and overtime pay. The statute, though, has long exempted certain categories of “domestic service” workers (workers providing services in a household) from one or both of those protections. The exemptions include one for persons who provide “companionship services” and another for persons who live in the home where they work. This case concerns the scope of the exemptions for domestic-service workers providing either companionship services or live-in care for the elderly, ill, or disabled. In particular, are those exemptions from the Act’s protections limited to persons hired directly by home care recipients and their families? Or do they also encompass employees of third-party agencies who are assigned to provide care in a home?
Until recently, the Department of Labor interpreted the statutory exemptions for companionship services and live-in workers to include employees of third-party providers. The Department instituted that interpretation at a time when the provision of professional care primarily took place outside the home in institutions such as hospitals and nursing homes. Individuals who provided services within the home, on the other hand, largely played the role of an “elder sitter,” giving basic help with daily functions as an on-site attendant.
Since the time the Department initially adopted that approach, the provision of residential care has undergone a marked transformation. The growing demand for long-term home care services and the rising cost of traditional institutional care have fundamentally changed the nature of the home care industry. Individuals with significant care needs increasingly receive services in their homes rather than in institutional settings. And correspondingly, residential care increasingly is provided by professionals employed by third-party agencies rather than by workers hired directly by care recipients and their families.
In response to those developments, the Department recently adopted regulations reversing its position on whether the FLSA’s companionship-services and live-in worker exemptions should reach employees of third-party agencies who are assigned to provide care in a home. The new regulations remove those employees from the exemptions and bring them within the Act’s minimum-wage and overtime protections. The regulations thus give those employees the same FLSA protections afforded to their counterparts who provide largely the same services in an institutional setting.
The D.C. Circuit held that the DOL acted within its rulemaking authority when it issued the regulations at issue and that they were not arbitrary and capricious. For these reasons it held the regulations were proper and enforceable:
Appellees, three associations of home care agencies, challenged the Department’s extension of the FLSA’s minimum-wage and overtime provisions to employees of third-party agencies who provide companionship services and live-in care within a home. The district court invalidated the Department’s new regulations, concluding that they contravene the terms of the FLSA exemptions. We disagree. The Supreme Court’s decision in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 127 S.Ct. 2339, 168 L.Ed.2d 54 (2007), confirms that the Act vests the Department with discretion to apply (or not to apply) the companionship-services and live-in exemptions to employees of third-party agencies. The Department’s decision to extend the FLSA’s protections to those employees is grounded in a reasonable interpretation of the statute and is neither arbitrary nor capricious. We therefore reverse the district court and remand for the grant of summary judgment to the Department.
To read the entire decision click Home Care Association of America v. Weil.
In an announcement that has long been awaited by workers advocates and those in the home health industry as well, today the United States Department of Labor (DOL) announced a final rule, to go into effect on January 1, 2015, which extends the FLSA’s minimum wage and overtime protections to home health aides that perform typical CNA tasks in the homes of the aged and infirm. In an email blast, the DOL reported:
The U.S. Department of Labor’s Wage and Hour Division announced a final rule today extending the Fair Labor Standards Act’s minimum wage and overtime protections to most of the nation’s direct care workers who provide essential home care assistance to elderly people and people with illnesses, injuries, or disabilities. This change, effective January 1, 2015, ensures that nearly two million workers – such as home health aides, personal care aides, and certified nursing assistants – will have the same basic protections already provided to most U.S. workers. It will help ensure that individuals and families who rely on the assistance of direct care workers have access to consistent and high quality care from a stable and increasingly professional workforce.
Among other things, the final rule overrules the 2007 holding of the Supreme Court in Long Island Care at Home, Ltd. v. Coke, and requires 3rd party employers such as staffing agencies to pay companions and home health workers overtime under the FLSA when they work in excess of 40 hours per week.
The New York Times provides a pretty good synopsis of the changes to the Companionship Exemption, provided by the final rule:
Under the new rule, any home care aides hired through home care companies or other third-party agencies cannot be exempt from minimum wage and overtime coverage. The exemptions for aides who mainly provide “companionship services” — defined as fellowship and protection for an elderly person or person with an illness, injury or disability who requires assistance — are limited to the individual, family or household using the services.
If an aide or companion provides “care” that exceeds 20 percent of the total hours she works each week, then the worker is to receive minimum wage and overtime protections.
The new rule defines care as assisting with the activities of daily living, like dressing, grooming, feeding or bathing, and assisting with “instrumental activities of daily living,” like meal preparation, driving, light housework, managing finances and assisting with the physical taking of medications.
The companionship exemption will not apply if the aide or companion provides medically related services that are typically performed by trained personnel, like nurses or certified nursing assistants.
Live-in domestic service workers who reside in the employer’s home and are employed by an individual, family or household are exempt from overtime pay, although they must be paid at least the federal minimum wage for all hours worked.
DOL to Issue Notice of Proposed Rulemaking to Amend the Companionship and Live-In Worker Regulations
The DOL announced yesterday that it would be issuing proposed amended rules regarding companionship and live-in workers’ eligibility for overtime under the FLSA. A preview of the announcement from the DOL’s website explains:
“While Congress expanded protections to “domestic service” workers in 1974, these Amendments also created a limited exemption from both the minimum wage and overtime pay requirements of the Act for casual babysitters and companions for the aged and infirm, and created an exemption from the overtime pay requirement only for live-in domestic workers.
Although the regulations governing exemptions have been substantially unchanged since they were promulgated in 1975, the in-home care industry has undergone a dramatic transformation. There has been a growing demand for long-term in-home care, and as a result the in-home care services industry has grown substantially. However, the earnings of in-home care employees remain among the lowest in the service industry, impeding efforts to improve both jobs and care. Moreover, the workers that are employed by in-home care staffing agencies are not the workers that Congress envisioned when it enacted the companionship exemption (i.e., neighbors performing elder sitting), but instead are professional caregivers entitled to FLSA protections. In view of these changes, the Department believes it is appropriate to reconsider whether the scope of the regulations are now too broad and not in harmony with Congressional intent.
Proposed Changes to the Companionship and Live-In Worker Regulations
On December 15, 2011 the Department announced that it will publish a Notice of Proposed Rulemaking (NPRM) to revise the companionship and live-in worker regulations for two important purposes:
- To more clearly define the tasks that may be performed by an exempt companion
- To limit the companionship exemption to companions employed only by the family or household using the services. Third party employers, such as in-home care staffing agencies, could not claim the exemption, even if the employee is jointly employed by the third party and the family or household.
Although the Office of Management and Budget (OMB) has reviewed and approved the attached Notice of Proposed Rulemaking (NPRM), the document has not yet been published in the Federal Register. The NPRM that appears in the Federal Register will specify the dates of the public comment period and may contain minor formatting differences in accordance with Office of the Federal Register publication requirements. The OMB-approved version is being provided as a convenience to the public and this website will be updated with the Federal Register’s published version when it becomes available.”
Among other things, the proposed rule would overrule the 2007 holding of the Supreme Court in Long Island Care at Home, Ltd. v. Coke, and require 3rd party employers such as staffing agencies to pay companions and home health workers overtime under the FLSA when they work in excess of 40 hours per week.
Click Notice of Proposed Rulemaking to read more.
Direct Care Job Quality Improvement Act Would Amend the FLSA to Include Basic Labor Protections for Home Care Workers
The Direct Care Job Quality Improvement Act [S. 1273/H.R. 2341] – a bill that would help create a more stable, valued direct care workforce was introduced on 6/23/2011, by Rep. Linda Sanchez (D-CA) and Sen. Robert P. Casey, Jr. (D-PA). Senator Tom Harkin (D-IA), Chairman of the Senate Health, Education, Labor and Pensions committee and Sen. Bernie Sanders (I-VT) were also original co-sponsors of the Senate bill. The House bill had twenty-one original co-sponsors. This legislation takes major steps towards ensuring the health, autonomy and well-being of more than 13 million Americans with long-term care needs today and an estimated 27 million by 2050.
The Direct Care Job Quality Improvement Act would amend the Fair Labor Standards Act (FLSA) to include basic labor protections for home care workers. Currently, FLSA covers domestic service workers and most direct care workers in institutional settings such as nursing homes; however, the law continues to exclude home care workers from basic minimum wage and overtime protections.
In addition to extending wage and overtime protections for home care workers, The Direct Care Job Quality Improvement Act would:
- Establish data collection and reporting requirements to monitor important workforce indicators such as size, compensation levels, turnover rates and vacancies.
- Improve the recruitment and retention of direct care workers by providing grants to states to expand and support efforts aimed at recruiting, training and retaining an adequate supply of direct care workers.
To read more about the proposed legislation click here.
“Change is too slow coming for the nation’s one million home care aides. In 2007, the Supreme Court unanimously upheld a 1975 federal labor regulation that defines home care aides as ‘companions.’ That definition exempts home care employers — often for-profit agencies — from having to pay the federal minimum wage or time and a half for overtime.
In explaining their decision, the justices pointed out that the law gives the Labor Department, not the court, the power to change the regulation. Yet, more than two years later, the regulation still stands.
Last month, 15 senators sent a letter to Hilda Solis, President Obama’s labor secretary, urging her to eliminate the “companion” exemption. A month earlier, 37 House members sent a similar letter. But beyond a statement from Ms. Solis expressing concern and pledging to look into the matter, there has been no progress.”
Go here, to read the entire editorial piece appearing in the July 9, 2009, New York Times.