Will High Court Review DOL Home Care Wage Rule?

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By Ben Penn

Feb. 25 — Whether the U.S. Supreme Court opts to review an industry challenge to the Labor Department's regulation on home care employee wages hinges on an interpretation of the high court's 2007 ruling in another home care case, the petition and responding briefs show.

The petition for review, filed in November by the Home Care Association of America, the International Franchise Association and the National Association for Home Care and Hospice, argued that the ruling in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 12 WH Cases 2d 1089 (2007), did not consider or authorize the DOL's 2013 rule to extend minimum wage and overtime protections under the Fair Labor Standards Act to some 2 million home care employees.

The FLSA covers domestic service employees but exempts those who “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)” from the DOL.

The justices in Coke upheld the DOL's interpretation that the FLSA's companionship exemption applies to home care workers employed by third parties, finding that Congress gave the department the authority to “work out the details” of issues not expressly addressed in the statute, including “the treatment of third-party employers under the exemption” (112 DLR AA-1, 6/12/07).

The government's opposition brief filed Feb. 24 on behalf of David Weil, administrator of the DOL's Wage and Hour Division, argued that Coke already found that the department has the authority to interpret the companionship exemption and the issue of third-party employment.

Some observers have prognosticated that the odds are against the court taking up the case (217 DLR C-1, 11/10/15).

That's partly because the court already showed disinterest last October (194 DLR A-1, 10/7/15) when Chief Justice John Roberts denied an application by the rule's opponents for a stay of the U.S. Court of Appeals for the District of Columbia Circuit's Aug. 21 decision that upheld the DOL's final rule (162 DLR AA-1, 8/21/15).

However, the fact that the Supreme Court nine years ago agreed to consider Coke, which also addressed the FLSA's application to home care attendants, “does favor the court recognizing that this” topic “is of sufficient public import to consider it in this new stage,” William Dombi, vice president for law at the National Association of Home Care and Hospice, told Bloomberg BNA Feb. 23. Dombi and attorneys with Littler Mendelson P.C., represent the petitioners.

Three Issues Facing Court

The issues now facing the justices, as laid out in the petition, concern whether the Supreme Court intended in Coke to permit the DOL to “deprive all third-party home care employers … of their statutory right to avail themselves of exemptions to overtime under the FLSA”; whether the D.C. Circuit erroneously found that Congress intended to exclude these employers from the home care exemptions, thereby conflicting with the Coke ruling; and whether the rule is unreasonable because it creates new, unaffordable costs for states.

Third-party employers include the home care agencies that employ the caregivers, and are separate from the individuals and families who receive the direct care.

Two amicus briefs were filed with the court in recent months—both in support of the petition—one from a group of 12 states and another from advocates for people with disabilities. No amicus briefs were filed supporting Weil.

Intent of Coke

The petition and the opposition brief wrestled over the Supreme Court's intention when it unanimously ruled in Coke that the DOL has the authority to interpret the FLSA's companionship exemption.

Although the court in 2007 sided with a home care employer in determining that the FLSA's companionship exemption does extend to home health services, it also noted that “the text of the FLSA does not expressly answer the third-party-employment question” and that the statute “expressly instructs the agency to work out the details” of such definitions.

This means the justices gave the DOL the authority to issue the home care pay regulation it finalized in 2013 (180 DLR AA-1, 9/17/13), U.S. Solicitor General Donald Verrilli argued in the opposition brief on behalf of Weil.

By finding that Congress expected the DOL to answer the question of third-party employers under the companionship exemption, the court in Coke “demonstrate[d] that the Department did not contravene the statute by amending the third-party employment regulation,” the response stated.

Previously, the petitioners said the court in Coke “was not confronted with a rule that purported to exclude third parties altogether from ‘availing themselves' of the statutory exemption,” and therefore “neither considered nor authorized such a rule as is presented in the present case.”

Amicus Briefs Support Petition

An amicus brief from 12 states including Arizona, Arkansas, Georgia and Kansas detailed the budgetary shortfalls facing state Medicaid programs that fund a large share of home care services.

The DOL rule imposes on states “a substantial unfunded liability that they did not agree to bear, in derogation of their traditional sovereign rights, with the counterproductive result that these State programs likely will have to be reduced in scope,” the states said. This means “some of the very citizens currently being served may be unable to remain in their homes without the care previously provided.”

The concerns of those care recipients were further asserted in a brief from the National Council on Independent Living, which advocates for individuals with disabilities, and ADAPT, a grassroots disability activist group.

The unfunded liability for states required to provide attendants with overtime will “incentivize State Medicaid programs and private insurers to limit the hours attendants can work, thereby reducing the number of worker-hours available to provide services to people with disabilities,” NCIL and ADAPT contended. They argued that with hours capped and incomes decreased, employees will leave the industry, forcing many disabled people “to receive services in institutional settings which they would not have otherwise chosen, in violation of their rights.”

The petitioners will now have two weeks to file their reply brief, at which point the parties will wait for the high court to announce whether it will grant or deny review.

Although the Supreme Court would typically take 60-90 days to deny or grant certification, Justice Antonin Scalia's recent death creates a “wild card” scenario, Dombi said. “That could mean a different kind of process” in which “the court could wait until there's another justice on board.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com