Round 2: DOL Wins Right to Change Home Health Care Exemption

Until recently, the Department of Labor (DOL) interpreted the Fair Labor Standards Act (FLSA) to exempt from minimum wage and overtime pay those persons who provided “companionship services” (to the aged or infirm) [1] or were “live-in” domestic workers, [2] regardless who paid the domestic services worker. In 1975, the DOL issued regulations that applied these statutory exemptions to workers who were hired directly by families to work in their home and to employees placed in the home by third-party agencies.

In 2014, the DOL sought to reverse course and issued new regulations that withdrew the exemption from those workers providing the home health services if they were employed by a third party agency, and not the family.[3] Not surprisingly, home health care agencies challenged the new DOL regulations. As reported previously, the U.S. District Court for the District of Columbia struck down these new regulations in December 2014, concluding that the DOL had overstepped its bounds by trying to change this exemption after 40 years – see article.[4]  So, the home health care providers won “Round One.”

DOL appealed this ruling, and on August 21, 2015, the Court of Appeals reversed, finding that DOL had been granted very broad discretion to interpret and re-interpret these statutory exemptions.[5] The court found that DOL’s decision in 2014 to change its position and remove the exemption from the minimum wage and overtime protections to those employees hired by third parties was a reasonable interpretation of the FLSA. In doing so, the court noted that the administrative record developed by DOL showed that the home care industry had radically changed over the past 40 years such that most workers are now professional caregivers (not family members or friends). It also noted that caregivers employed by third party agencies are required to be trained and/or certified and these agencies typically make a profit from their employees’ services. In short, DOL won “Round Two.”

This decision, which recognizes DOL’s broad authority to “work out the details” of exemptions, may well have significance beyond this case.

The Court of Appeals sent a clear signal that it intends to grant DOL wide latitude when it redefines how FLSA exemptions as long as when it does so, it is not acting arbitrarily. The court did not seem bothered by the complete reversal of position by the DOL on the caregiver exemptions because the agency had gone through the required administrative process, including a detailed fact-finding process and comment period. It found based on this record that the DOL was able to articulate a “reasonable” basis for its substantial change of position. The DOL is currently going through this same type of process in connection with its announced intention to revise and narrow the “white collar” exemptions; those new “white collar” rules are expected later this year.

The ultimate outcome on whether these new rules on home health care exemptions become law may require a “Round Three” before the Supreme Court, but only if the plaintiffs decide to continue their fight with the DOL and court agrees to take the case. If no appeal occurs, then the Court of Appeals will remand the case to the District Court. At that point, the new home health exemption regulations will become effective upon the entry of the District Court’s Order.[6]

If your business operates in the home health care industry and you have questions about these new regulations, or if you have other questions about the DOL’s proposed new rules for white collar exemptions, the members of Gentry Locke’s Labor & Employment team will be glad to assist you.

[1] 29 U.S.C. § 213(a)(15).

[2] 29 U.S.C. § 213(b)(21).

[3] 29 C.F.R. § 552.109(a), (c) (2015), 29 C.F.R. § 552.6(b) (2015).

[4] Home Care Ass’n of Am. v. Weil, 76 F. Supp. 3d 138 (D.D.C. 2014).

[5] Home Care Ass’n of Am. v. Weil, No. 15-5018, 2015 U.S. App. LEXIS 14730 (D.C. Cir. Aug. 21, 2015).

[6] The original regulations were set to go into effect on January 1, 2015.

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