D.C. Circuit Vacates Portions of New Home Health Care Regulations and Temporarily Stays Change in Definition of “Companionship Services”

WagsAndHourOnly days before the January 1, 2015 effective date of new overtime regulations promulgated by the U.S. Department of Labor (DOL) with sweeping implications for the home health care industry, a U.S. District Court Judge for the D.C. Circuit, Richard Leon, sharply criticized the DOL in an opinion holding major portions of the new regulations to be invalid. Home Care Association of America v. Weil (D.C. Cir. 2014).

Most significantly, the court held that the DOL lacked the power to eliminate the long-standing exemptions from overtime requirements for those providing companionship services and/or live-in domestic services through a third-party employer.  The potential magnitude of the issue is enormous, as roughly 90 percent of home health and personal care aides are employed by third parties, rather than directly by the individual or household needing services.

The decision is the latest in a series of events prompted by attempts to narrow and/or eliminate those exemptions and is not likely to be the last. In 2007, the U.S. Supreme Court rejected a challenge to the validity of the long-standing inclusion of employees paid by third parties within the companionship services exemption, sparking no less than six later attempts through Congress to amend the FLSA in response, all of which failed to move. In view of this background, Judge Leon chided the DOL’s final rule as “nothing short of yet another thinly-veiled effort to do through regulation what could not be done through legislation.”  Judge Leon called the DOL’s attempt to eliminate the exemptions “a wholesale arrogation of Congress’ authority in this area!”  “Such conduct,” he wrote, “bespeaks an arrogance to not only disregard Congress’ intent, but seize unprecedented authority … .”

Despite the emphatic tenor of Judge Leon’s opinion and its holding, uncertainty remains for the home health care industry as 2015 begins. In addition to the certainty presented by further appeals, the decision did not address separate questions about the validity of other parts of the new regulations, including whether narrowed definitions for “domestic service employment” and/or “companionship services” might yet be upheld (the court noted those issues were not before it on the motion upon which it ruled).

Following the decision, the plaintiffs filed a motion requesting a temporary stay of the revised definition of “companionship services,” for 14 days until January 15, 2015. Judge Leon granted the stay and will hold a hearing on the plaintiff’s motion January 9, 2015.

Employers in the home health care industry should continue to keep a careful eye on ongoing developments, and seek appropriate counsel on the specific effects of various aspects of the revised FLSA regulations as a whole.