D.C. District Court Vacates DOL’s New Rules on FLSA Exemption for Domestic Workers, Was Set to Go Into Effect January 1, 2015

On December 22, 2014, the U.S. Court for the District of Columbia decided to prevent the implementation of a new Department of Labor (DOL) policy, which would have become effective at the beginning of this year. The Court found that the DOL lacks the authority to change its regulation of home care providers employed by third-party agencies, making those workers no longer exempt from the minimum wage and overtime rules of the Fair Labor Standards Act.

Plaintiffs in Home Care Association of America et al. v. Weil et al. are agencies representing the interests of companies providing in-home health care services, who would have had to begin paying minimum wage and overtime pay to almost 1.9 million home care providers who had been classified as exempt from those requirements for the last forty years. Defendants are executives of the U.S. Department of Labor Wage and Hour Division (WHD). Privately-contracted domestic workers would have remained exempt, but all of those employed by third-party entities–now the vast majority–would have become protected under the FLSA. Needless to say, this change would have represented a new financial burden for the companies in question, so a broad challenge from the industry was predictable.

The home care industry had scored a major victory on these issues in 2007, when the Supreme Court ruled in Long Island Care at Home v. Coke that providers of “companionship services” employed by third-party agencies fell under the exemption; that is, they need not be paid minimum wage for all hours worked, and need not be paid one-and-one-half times their regular pay for hours worked above forty in a given week. These rules apply unless (i) the employee in question performs medical services that would typically be performed by trained personnel such as nurses, or (ii) they spend more than 20% of their work time doing general household work. The exemption was clearly intended to apply to employees whose principal responsibilities included basic monitoring and care of the patient.

After the Supreme Court’s decision in Coke, there were several unsuccessful attempts in Congress to remove these exemptions and require companies providing home care services to follow the same wage and hour rules as other companies. The pay received by most home care workers is relatively very low, and this situation is made worse by the fact that most of these workers are minority women.

Whatever social concerns might have motivated the DOL’s change of policy, however, the District Court found that the legal validity of the proposed policy change depended on narrow questions about the Department’s authority to change its regulations on its own. In short, the Court found that Congress’s intent in the FLSA was to make the exemption applicable to “any employee…who is employed to provide companionship services, or who resides in the household in which he or she is employed to perform domestic services.” As long as third-party-employed domestic service workers belong to this category, the Court reasoned, they are clearly exempt. The language of the statute clearly designates a category of workers defined by their job duties, not by the specific arrangement under which they are employed. The DOL has extensive authority to “close definitional gaps” in order to determine the scope of its regulations, and tried to stretch this authority to cover its action here, but the Court found that all such “definitional gaps” had already been closed. So there was no remaining “open question” that the DOL’s policy change could have been intended to answer; it was a spontaneous change of policy, and outside the Department’s authority.

The ruling does seem to be the kind of judicial review normally exercised by higher courts. We will have to wait to see whether those higher courts agree with the District Court’s seemingly gratuitous limitation of the DOL’s rule-making power.

If you believe your employer has violated your rights under the Fair Labor Standards Act, please contact The Harman Firm, LLP.