Happy New Year from the DC District Court - Companionship Exemption Lives On!! - EndNotes February 2015

by Poyner Spruill LLP

​Home care patients, caregivers and the entire home care community celebrated a huge victory to kick off 2015. The U.S. District Court for the District of Columbia (DC court) vacated the U.S. Department of Labor’s (DOL’s) revised regulations, pertaining to the companionship exemption, scheduled to go into effect on January 1 of this year.  The revised rules would have eliminated the long-standing exemption from the minimum wage and overtime pay requirements under the Fair Labor Standards act (FLSA) for home care companies employing individuals who provide companionship and live-in domestic services to the elderly or infrm.  Under the DOL’s revised regulations, only an individual, household or family that directly employs a companion would have qualified for the exemption. In addition, the regulations would have significantly narrowed the definition of companionship services. The revised rules would have essentially eviscerated the companionship exemption. 

The DC court issued a series of rulings in late December 2014 and early January 2015 that agreed with the National association for Home Care & Hospice’s (NAHC’s) challenge to the new DOL rules, and concluded that the new rules were invalid and violated the FLSA. The court ultimately concluded that the regulatory changes proposed by the DOL, which would change regulations in place under the FLSA since 1975, would destabilize the entire home care industry and adversely affect these services for millions of elderly and infrm Americans.

The DC court first ruled in December 2014 that home care patients are entitled to equal rights, regardless of the payor of their bill, so the proposed exclusion of workers employed by third-party home care companies from the overtime pay exemption violated the plain language of the FLSA. In that ruling, the court pointed out the language in the FLSA that states that any employee providing companionship or live-in domestic services falls within the scope of the exemption. Therefore the focus is the type of service provided, not who pays the check. Following its first ruling in this case, the court held in its January 2015 ruling that DOL’s new regulation, which would redefine companionship services and live-in care, was contrary to the plain language of the FLSA that specifically includes personal care in the definition. In making its decision to vacate the proposed regulations, the court took an unusual path, granting the NAHC’s request for a temporary restraining order in one aspect of the case and then agreed to block all challenged parts of the proposed regulations without a trial.

In its rulings to protect caregivers and their ability to work full time, the court focused on the strength of these particular exemptions under the FLSA and how they have remained intact for nearly 40 years. The exemptions have survived an unsuccessful challenge before the U.S. Supreme Court and multiple failed efforts by legislators in the majority party to get out of committee with changes to the law. In as arguably as direct a statement as any judge might make about the nature of the DOL’s revised regulations, the court stated in its December 22, 2014, opinion, “…the Department of Labor amazingly decided to try to do administratively what others had failed to achieve in either the Judiciary or the Congress.” 

The DOL fled an appeal on January 23, 2015, in the U.S. Court of appeals for the District of Columbia to challenge the court’s rulings. If the DOL’s request to expedite the appeal is granted, briefing could be completed by mid-April 2015 and a decision on the appeal could come as early as June 2015. NAHC has made clear its intention to defend the court’s ruling and continue fighting the DOL’s revised companionship exemption, so that the exemption lives on and home care providers can continue operating under the well-established rules. However, the DOL’s revised regulations at issue in the pending appeal certainly appear to reflect an agency perspective that does not favor the exemption. For this reason, home care providers would be well-advised to examine their policies and procedures related to companionship and live-in domestic services to ensure they are in line with the parameters of the well-established law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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