This morning, the United States Court of Appeals for the District of Columbia upheld the federal Department of Labor’s revisions to the “companionship exemption” under the Federal Labor Standards Act. Home Care Association of America v. Weil, (D.C. Circuit, Aug. 21, 1015). Those revisions remove the companionship exemption from federal minimum wage and overtime requirements for domestic workers employed by third-parties. In addition, those revisions greatly narrow the definition of “companionship services”.

The federal Department of Labor in 2013 had significantly revised its FLSA regulations regarding the “companionship exemption.” 78 Fed. Reg. 60,454 (Oct. 1, 2013). As revised, third-party employers can no longer claim that their workers are exempt from federal minimum wage and overtime rules, even if the workers are providing companionship services. 29 CFR § 552.109. In addition, the rule greatly narrowed the definition of “companionship services,” so that if the worker is spending more than twenty percent of the worker’s time on the “provision of care,” the worker is deemed not to be providing “companionship services,” whether the worker is directly employed by the family or by a third party employer. 29 CFR § 552.6(b). “Provision of care” means assistance with the activities of daily living and instrumental activities of daily living. 29 CFR § 552.6(b).

The Home Care Association of America challenged the revised regulation in federal court, contending that the Department of Labor had exceeded its authority in adopting the revised regulation. The District Court agreed, and invalidated the regulation. In doing so, the District Court enjoined the Department of Labor from enforcing the regulation. The Department of Labor appealed. The D.C. Circuit reversed the District Court, upholding the regulation in full.

Although the D.C. Circuit has reversed, it also effectively stayed the effect of its decision, granting the challengers seven days to file a petition with the Court for rehearing or a petition for rehearing by the full D.C. Circuit. For the short term, at least, the revised regulation is not in effect, and will not be until the D.C. Circuit takes further action.

If the regulation goes into effect, it will have significant impact upon home care agencies and the consumer directed personal assistance program.

Impact upon Home Care Agencies

As third party employers, home care agencies will lose the complete benefit of the companionship exemption. Direct care workers must be paid no less than the federal minimum wage, and overtime upon working forty hours. Federal law requires that overtime be calculated at time and a half of the actual wage. Direct care workers also must be paid for travel time between patients.

The minimum wage and overtime calculations are somewhat different for live-in and twenty-four hour workers. Live-in workers must be paid for all hours worked. Their actual working hours must be carefully tracked. Scheduled uninterrupted breaks and sleep time do not have to be paid. Twenty-four hour workers may be paid a flat rate.

Impact upon the Consumer Directed Personal Assistance Program

For the Consumer Directed program, personal assistants, except in the narrowest of circumstances, must be paid at least the federal minimum wage, and overtime when working more than forty hours. This is without regard to whether a consumer directed fiscal intermediary is regarded as a joint employer. If a fiscal intermediary is not a joint employer, there is a theoretical possibility that the companionship exemption may still apply if a consumer receives eight hours or fewer of CDPAP services per week, but that will require a review of authorized tasks. This possibility arises from the definition of personal care services, Level I. This theoretical possibility may not be worth pursuing.

The same rules that apply for home care agencies will apply for twenty-four hour and live in personal assistants.

This amended regulation also has an impact upon the treatment of travel time. If a fiscal intermediary is regarded as the employer of a personal assistant, and the personal assistant works for more than one consumer served by that fiscal intermediary, the fiscal intermediary likely will have to pay the PA for travel time between consumers. There are many reasons why fiscal intermediaries should be concerned about whether they are acting as joint employers. This is one more.