Home Care Associations Seek Stay by SCOTUS of New Wage-and-Hour Rules, As the Effective Date of DOL Wage-and-Hour Regulations Quickly Approaches

Sheppard Mullin Richter & Hampton LLP

[co-author: Rachel Landauer]

Recently, the D.C. Circuit Court of Appeals ruled in Home Care Association of America, et al. v. Weil, that the Department of Labor’s (“DOL”) regulations about the inapplicability of certain statutory exemptions for third-party employers of home care workers are enforceable and that the federal minimum wage and overtime rules will apply to these types of home care workers. As a result, unless the Rule’s application is stopped or otherwise delayed, those acting in the home care industry need to be aware of changes soon to take effect, and employers in particular must be ready to meet their new obligations, as of October 15, 2015.

Concerned about the fast-approaching effective date, almost immediately after the ruling was entered, three home care agency associations sought a stay of the ruling. First, they unsuccessfully sought a stay with the D.C. Circuit. And, then, following the Court of Appeal’s refusal to stay the matter, the challengers now are seeking the United States Supreme Court’s intervention on the issue. In particular, in order for the parties to seek a ruling by the United States Supreme Court, the challenging associations are requesting that the Supreme Court stay the Circuit Court’s mandate giving effect to the rules until after the Court has an opportunity to consider a petition for certiorari that they intend on filing soon.[1]

At issue in Home Care Association of America is whether the DOL had statutory authority to promulgate its 2013 regulations establishing, among other changes, that third-party employers of home care workers cannot claim certain statutory exemptions.[2] Historically, under the statutory exemptions for companionship services and live-in workers, home care workers were excluded from the federal laws for minimum wage and overtime protections under the Fair Labor Standards Act (“FLSA”). Yet, the DOL-issued Regulations did away with that exemption for these employees. The D.C. Circuit’s recent August 2015 decision reversed an earlier district court ruling that had held the DOL acted outside its statutory authority in promulgating the Regulations, thereby vacating the third-party employment regulations.

In so ruling, the D.C. Circuit relied heavily on a 2007 Supreme Court case, Long Island Care at Home, Ltd. v. Coke, in which the Supreme Court held that the “text of the FLSA does not expressly answer the third-party employment question” and that the DOL has discretion regarding the scope of the exemption as applied to third-party employees.[3] The D.C. Circuit also found that the Agency’s new position—supported by its findings of congressional intent to expand protections and that the new rules would benefit residential care consumers—is reasonable and that the Regulations are not arbitrary or capricious.

The Rule will take effect on October 13, 2015, absent a contrary order by the Supreme Court or delay by the DOL. The latter relief seems especially unlikely, considering that the Agency recently announced in the September 14 issue of the Federal Register that it will begin enforcement of its Regulations on the issue just 30 days after the Rule takes effect (i.e., as of November 12, 2015). While the Agency has stated that it will use discretion in bringing actions against employers through December, home care agencies (and others) should be aware that an employee is permitted to file a private civil suit at any time after the Rule takes effect. Accordingly, employers in the home care arena must ensure that their employees are being compensated consistent with applicable federal minimum wage and overtime laws.

[1] The full opinion is available here.

[2] A factsheet on the final rule is available here.

[3] 551 U.S. 158, 167-68 (2007).

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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