This article was written by Carolyn E. Sieve (Of Counsel in the Orange County office of Ogletree Deakins) and Robert R. Roginson (Shareholder in the Los Angeles office of Ogletree Deakins).
On August 21, 2015, the United States Court of Appeals for the D.C. Circuit in Home Care Association of America v. Weil reinstated the U.S. Department of Labor’s regulations extending the federal minimum wage and overtime requirements for home health care workers employed by third-party employers.
The federal appeals court decision overturns a lower court opinion from January of this year that struck down the new regulation just before it was scheduled to go into effect. However, the appeals court decision does not mean that the minimum wage and overtime requirements will go into effect immediately. The case will likely now return to the district court with instructions by the court of appeals to issue a decision upholding the regulations unless there is further review of the case by either the full panel of the D.C. Circuit or the Supreme Court of the United States.
The case arises out of a challenge brought by several home health care associations to the Department of Labor (DOL) regulation. Those associations argued that the regulation was inconsistent with the actual language of the Fair Labor Standards Act (FLSA) and the congressional intent in creating the minimum wage and overtime exemptions. The lower court judge agreed with the associations and invalidated the new regulation, concluding that the regulation contravened the FLSA exemptions.
In its 24-page opinion reversing the lower court, the D.C. Circuit ruled that the DOL’s regulation was grounded in a reasonable interpretation of the federal FLSA. The appellate court relied largely on a 2007 decision issued by the U.S. Supreme Court in determining that the DOL was vested under federal law with the necessary discretion to limit the scope of the minimum wage and overtime exemption that previously had applied to home health care workers.
The court cited “a marked transformation” in the provision of residential care since the minimum wage and overtime exemption was first adopted in 1974, and noted that previously, the provision of professional care primarily took place outside the home in institutions and nursing homes and that the individuals who provided the services in the home were principally “elder sitters” and not the type of professional caregivers employed by third-party agencies in present times.
The appellate court found that the DOL’s regulation to bring home health care workers employed by third-party employers within the FLSA’s minimum wage and overtime protections was reasonable and consistent with congressional intent.
The federal appeals court also struck down the home health care associations’ challenge to the portion of the new regulation defining the scope of the “companionship services” encompassed by the companionship-services exemption under the FLSA. On this issue, the court ruled that the associations do not have standing to maintain the challenge in federal court.
The challenge addressed yet another part of the DOL’s new regulation that narrowed the scope of the remaining minimum wage and overtime exemption. This regulation eliminated the exemption for those individual caregivers who perform general household work and for those individual caregivers who spend more than a limited amount of time devoted to assisting with activities of daily living. The appeals court concluded that since the third-party employers could no longer take advantage of the companionship services exemption, they no longer could claim they were injured by the narrowing of that exemption.
The August 21st decision paves the way for the DOL regulation that extends the federal minimum wage and overtime requirements to home health care workers employed by third-party employers to go into effect in its entirety. Third-party employers of home health care workers should take appropriate steps now, if they have not done so already, to ensure they comply with all applicable minimum wage and overtime and record-keeping requirements for their home health care workers if and when it is determined that the new regulation will take effect.
Note that some states already require third-party employers to pay overtime and minimum wage to home health care workers and personal attendants, but those state laws may include requirements that differ from the FLSA’s overtime requirements. For example, California’s Domestic Worker Bill of Rights—Assembly Bill 241, which was signed by the governor in 2013—requires that overtime compensation be paid to personal attendants for hours worked that exceed 9 hours per day or 45 hours per week.
The FLSA, on the other hand, requires overtime payments for hours worked that exceed 8 hours per day or 40 hours per week. In these cases, employers must be careful to ensure that they are complying with both state and federal law.