Minimum Wage and Overtime Rules in the Home Healthcare Industry Remain Uncertain

A recent court decision has cast a shadow of uncertainty over new Department of Labor regulations that were meant to clarify the unsettled area of overtime rules in the home healthcare industry.  The regulations, scheduled to take effect January 1, 2015, narrow the scope of the home care exemption to the minimum wage and overtime pay provisions of the Fair Labor Standards Act (FLSA).

Prior to January 1, 2015, the FLSA exempts "any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary [of Labor]) . . .".  29 U.S.C. § 213(a)(15).  Under the new rule to take effect January 1, 2015, the home care exemption no longer applies to home care employees who work for a third-party agency or other business.  Revised 29 CFR § 552.109.

However, in a recent decision, the United States District Court for the District of Columbia invalidated this rule.  The court found the Department of Labor exceeded the authority delegated to it by Congress by changing the FLSA's statutory terms which exempt from the minimum wage and overtime provisions "any employee" who provides "companionship services," not just those employed by the client. The court chastised the Department of Labor for "yet another thinly veiled effort to do through regulation what could not be done through legislation." 

While the court's invalidation of the new rule appears to be a victory for the home care industry, the Department of Labor has announced it strongly disagrees with the court's opinion.  Thus, it remains unclear how the court's decision will affect the Department of Labor's enforcement of the new rule.  Moreover, in the same decision, the court found the Department of Labor acted within its authority by promulgating another new rule, also scheduled to take effect January 1, 2015, which revises the definition of "companionship services."  The more narrow definition may have the same effect of eliminating home care agencies' ability to take advantage of the exemption if their employees' duties do not fall within the new definition of "companionship services."

Under the new rule, "companionship services" include "the provision of fellowship and protection for an elderly person or person with an illness, injury, or disability who requires assistance in caring for himself or herself."  Revised 29 CFR § 552.6.  "The provision of fellowship means to engage the person in social, physical, and mental activities . . .".  Id.  "The provision of protection means to be present in his or her home or to accompany the person when outside of the home to monitor the person's safety and well-being."  Id.  "Companionship services" also include "the provision of care if the care is provided attendant to and in conjunction with the provision of fellowship and protection and if it does not exceed 20 percent of the total hours worked per person and per workweek."  Id.  "Care" means "to assist the person with activities of daily living (such as dressing, grooming, feeding, bathing, toileting, and transferring) and instrumental activities of daily living . . . such as meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care."  Id.

Home care employers who want to continue taking advantage of the home care exemption are well advised to seek legal counsel due to the uncertainty surrounding the enforceability of the new rule eliminating the exemption for third party employers.  Further, assuming the home care exemption is still available to home care agencies, employers must ensure their employees' duties fall squarely within the new definition of "companionship services" and any "care" services provided do not exceed 20% of each employee's weekly  hours per patient per week. 

If you have any questions about how the Department of Labor's new regulations affect your business, please contact Amanda MacDonald, amacdonald@clarkhill.com, (412) 394-2507; Stephanie Rawitt, srawitt@clarkhill.com, (215) 640-8515; Karen Karr, kkarr@clarkhill.com, (480) 684-1108; or Jim Stadler, jstadler@clarkhill.com, (616) 608-1164 or another attorney in Clark Hill's Labor and Employment Group.