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By Kevin McGowan
Jan. 5 — A nonprofit organization serving people with developmental disabilities didn't have to pay overtime to employees who used their own homes to provide domestic and companionship services to the disabled clients, the U.S. Court of Appeals for the Eighth Circuit ruled Jan. 5.
Affirming summary judgment for United Cerebral Palsy of Central Arkansas, the court said the employees provided services in a “private home” within the meaning of the Fair Labor Standards Act's companionship exemption regulations that applied when the case arose in 2012. The Labor Department regulations' reference to a private home encompassed both a client's dwelling and the home of a service organization employee who chose to take clients into his or her home, the court said.
The Eighth Circuit's decision has limited impact as the DOL regulations interpreting the home care exemption have “changed substantially,” the court acknowledged. Those changes include elimination of the third-party employer provision on which United Cerebral Palsy had relied.
The U.S. Court of Appeals for the District of Columbia Circuit upheld the DOL's new regulations (162 DLR AA-1, 8/21/15), which took effect in late 2015 and make overtime pay available to many more home care workers (194 DLR A-1, 10/7/15).
Some employers are asking the U.S. Supreme Court to reverse the D.C. Circuit, but the justices haven't decided yet whether to review the case.
But the Eighth Circuit said the FLSA rules in effect in 2012 barred the claims of Lisa and Frederic Fezard and 10 other United Cerebral Palsy employees who opted into their collective action.
The Fezards contended that when they opened their home to disabled clients served by United Cerebral Palsy, it required additional work that should be compensated as overtime. A federal district court ruled the employees' dwellings were “private homes” covered by the FLSA exemption.
The Eighth Circuit analyzed the FLSA issue a bit differently from the district court but reached the same result.
“From an employer's perspective—the perspective relevant for purposes of the FLSA—it is irrelevant whether a client maintains a dwelling unit or pays a landlord to do so,” Judge Lavenski R. Smith wrote. “In either case, the employer is providing companionship services for the client in a private home. Although the district court's analysis of the dwelling units used a different terminology, it was focused on employer control of the living arrangement.”
Every client lived in a dwelling that was “private” in relation to United Cerebral Palsy, the court said. The employer exerted no control over where a client lived, the rent paid or any other term or condition of the living arrangement, the court said.
UCP's role was limited to facilitating a connection between the client and an employee who provided services, the court said.
Many of the clients involved paid rent to the Fezards or to the other employees who had clients reside in their homes, the court said.
“Such arrangements render the clients tenants, or subtenants, and confer upon them a legally significant interest in the dwelling unit—even if that unit constitutes only a part of a traditional single-family residence,” the court said.
The FLSA exemption applied because the dwelling units in which the employees provided services were private homes, the Eighth Circuit said.
Judges Diana E. Murphy and Michael J. Melloy joined in the decision.
The Sanford Law Firm in Little Rock represented the Fezards. The Barber Law Firm in Little Rock represented United Cerebral Palsy.
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