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In a huge victory for home healthcare providers across the country, the United States District Court for the District of Columbia recently vacated the Department of Labor’s proposed regulatory changes to the companionship exemption under the Fair Labor Standards Act (FLSA). Those changes were set to take effect in January 2015.  The District Court’s rulings restored, at least for now, the full companionship exemption under the FLSA.

The History of the Companionship Exemption

In 1938, Congress enacted the FLSA which set minimum standards of living for workers by requiring the payment of minimum wage and overtime for employees working in excess of 40 hours per week. In setting these standards, however, Congress recognized certain exemptions.  For example, workers who were employed directly by a household in domestic service were not originally included in the wage protections. In 1974, Congress changed the law to extend wage protections to virtually all domestic service workers but provided a limited exception from this new requirement for workers who performed casual babysitting and companionship for the aged or infirm (the companionship services exemption). This exemption has remained virtually unchanged for the last 40 years.

The DOL’s Proposed Amendments

The DOL recently sought to effectively overturn the longstanding rule by narrowing the definition of companionship services and domestic service employment and seeking to exclude third party providers of home care services from utilizing the exemption. The ultimate impact of these proposed changes would be to effectively make most home care workers eligible for minimum wages and overtime pay. In its efforts to implement these changes, the DOL claimed that, over the last 35 years, significant changes to the Health Care Industry have occurred and employees are working in circumstances and providing services markedly different than when the regulations were promulgated. It maintained that the nature of the employment relationship and the scope of duties required of the employee have drastically changed. A coalition of associations representing home care providers across the U.S. challenged this position and the proposed changes by initiating litigation in Federal Court in Washington D.C. In two separate opinions, the United States District Court for the District of Columbia shot down the proposed amendments aimed at eliminating third party providers and redefining what constitutes companionship services.

District Court Rejects DOL’s Proposition

In rejecting the DOL’s position and vacating the proposed amendments, the District Court stated that Congress’ intent rings true in the language of the statute which reads unequivocally that “any employee” who is employed to provide companionship services, or who resides in a household in which he or she is to perform domestic services, is covered by the exemption. The Court further stated that the statute contains no explicit or implicit delegation of authority to the DOL to parse groups of employees based upon the nature or status of the employer. The District Court further rebuked the DOL for imposing wage and overtime obligations in direct defiance of the statute and for attempting to do through regulation what could not be done through legislation.

It is critical to note that the two opinions of the District Court do not modify any state or local wage/overtime regulations pertinent to workers performing companionship services or live-in domestic services. Moreover, the plight of the DOL to attain minimum wage and overtime pay for home care employees is not over as these decisions will likely be appealed.