Appeals Court Upholds Home Care Workers Wage Rule

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By Gayle Cinquegrani

Aug. 21 — A Labor Department rule that extends minimum wage and overtime coverage to an estimated 2 million home care workers was upheld by the U.S. Court of Appeals for the District of Columbia Circuit Aug. 21.

The appeals court ruled the lower court erred in finding the Labor Department overstepped its authority in issuing the home care rule, which covers all home care workers, including live-in workers, who are employed by a third party such as a home health-care agency.

The Labor Department and workers' groups hailed the ruling as a means of bringing basic wage protections to a workforce consisting largely of minority women who often must rely on government benefits to supplement their meager incomes.

“It is a great day for our nation's 2 million home care workers” as well as “for the people they provide services for,” Deane Beebe, media relations director for the Paraprofessional Healthcare Institute (PHI), said during a telephone media call Aug. 21.

Christine Owens, executive director of the National Employment Law Project, said during the media call “the impact of this decision is just enormous.” The decision “affirms the Labor Department's authority to issue regulations interpreting the statutes it administers,” she said.

The home care workers rule, which was to have taken effect Jan. 1, reinterpreted the Fair Labor Standards Act's exemption for workers who provide companionship services to the elderly and people with illnesses or disabilities.

Rule Covers All Workers Employed by Agencies

The rule covers all home care workers, including live-in workers, who are employed by a third party such as a home health-care agency, regardless of their job duties. The rule also applies to workers who are employed directly by the consumer or consumer's family primarily to perform medical duties or domestic duties that benefit other household members.

Under the rule, the only workers who remain exempt from the FLSA's minimum wage and overtime provisions are those employed directly by a consumer or consumer's family to provide companionship services such as playing cards, visiting with neighbors and taking walks.

The U.S. District Court for the District of Columbia invalidated major parts of the rule, however. On Dec. 22, 2014, Judge Richard J. Leon invalidated the part of the rule that excluded third-party employers from taking advantage of the companionship exemption (Home Care Ass'n of Am. v. Weil, D.D.C., No. 1:14-cv-00967, 12/22/14). 

Then in a Jan. 14 ruling, Leon vacated the rule’s definition of companionship services (Home Care Ass'n of Am. v. Weil, D.D.C., No. 1:14-cv-00967,1/14/15)). The judge determined Congress didn't give the DOL the authority to change the FLSA's statutory terms.

The appeals court disagreed. “The Department has the authority to ‘work out the details' of the companionship-services and live-in-worker exemptions, and the treatment of third-party-employed workers is one such detail,” the appeals court said.

It said the U.S. Supreme Court confirmed in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 12 WH Cases 2d 1089 (2007), that the FLSA gives the Labor Department the “discretion to apply (or not to apply) the companionship-services and live-in exemptions to employees of third-party agencies”.

“The Department’s decision to extend the FLSA’s protections to those employees is grounded in a reasonable interpretation of the statute and is neither arbitrary nor capricious,” according to the opinion.

DOL, Advocacy Groups Applaud Decision

“The decision confirms this rule is legally sound. And just as important, the rule is the right thing to do—both for employees, whose demanding work merits these fundamental wage guarantees, and for recipients of services, who deserve a stable and professional workforce allowing them to remain in their homes and communities,” the Labor Department said in an Aug. 21 statement. “The DOL has led an unprecedented implementation program to help employers prepare for compliance, including offering an extensive and individualized technical assistance program, providing a 15-month period before the effective date to aid compliance, and adopting a time-limited non-enforcement policy.”

“Home care workers are providing in the home many of the same services they would provide in institutions or hospitals,” Owens said, and therefore should be covered by the same wage laws as workers who provide similar services outside a home care setting.

Beebe noted the dire conditions faced by many home care workers who have not been paid wages that meet federal minimum wage or overtime standards. More than half of home care workers are eligible for public benefits because of their “substandard wages,” she said. Ninety-one percent are women, and more than half are “people of color.” Describing the work as “very hard” and “socially isolating,” she said the turnover rate is “tremendous,” with one of two home care jobs being vacated each year.

Home Care Industry Has Changed

The rule responds to “significant changes in the home care industry,” PHI President Jodi M. Sturgeon said in an Aug. 21 statement. Today's home care industry consists of nearly 100,000 businesses, and as the population ages, one million new home care jobs will be created during the next decade, PHI said.

The court's decision is “a first step to addressing this labor shortage” among home care workers, Sturgeon said. “As the number of people wanting long-term services and supports in their homes continues to climb, we need a multi-faceted national response to transforming long-term services and supports that acknowledges the crucial role of direct-care workers in creating a more equitable and reliable system of care.”

“We will be moving full steam ahead to ensure that states and employers implement the new regulations in a way that supports workers and consumers,” Catherine Ruckelshaus, NELP’s general counsel and program director, said in an Aug. 21 statement.

Bloomberg BNA was unable to reach representatives of the Home Care Association of America, which challenged the rule in court.

Among groups that filed public comments opposing the rule when it was proposed in 2011, the most common argument was that it would increase the cost of home care. Opponents also predicted the quality of home care would decline if consumers had to hire more workers for shorter shifts to avoid paying overtime. They also pointed out that a reduction in hours actually could cause home care workers' incomes to decline, even if their hourly wage increased.

Judge Sri Srinivasan wrote the opinion, which Judges Thomas B. Griffith and Cornelia T.L. Pillard joined.

The Home Care Association was represented by Maurice Baskin of Littler Mendelson P.C. in Washington, D.C. Alisa B. Klein of the Justice Department in Washington, D.C., represented the DOL.

To contact the reporter on this story: Gayle Cinquegrani in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Text of the opinion is available at