Federal Court Overturns Overtime Rule

On December 22, The US District Court for the District of Columbia ruled that the Department of Labor violated the plain language of the Fair Labor Standards Act (FLSA) with its regulation that excluded third-party employers from the application of the “companionship services” and “live-in domestic services” exemptions. The lawsuit was filed by three plaintiffs — the National Association for Home Care and Hospice, the Home Care Association of America, and the International Franchise Association.

The DoL rules, which are scheduled to take effect January 1, restrict the application of companionship services and live-in domestic services exemptions to the minimum wage and overtime requirements. The rule would have limited any exemptions only to those home care workers employed directly by the consumer or families. Home care agencies, which are considered “third party employers”, would have been excluded from any exemptions. The Court ruled against this limitation.

The lawsuit also challenges new definitions of “companionship services” that are in the DoL rule. However, that portion of the lawsuit has not yet been presented to the court. NAHC is urging the DOL to place a temporary hold on the entire rule, or may file an injunction prior to January 1st.

Yesterday’s ruling will have little impact on New Hampshire agencies providing home health aide services, since overtime is required by state law. However, the ruling will impact “live-in domestic services” and possibly block scheduling for overnight care.

The lawsuit challenged a rule that would prohibit the application of two overtime compensation exemptions: companionship services and live-in domestic services. It would have applied whenever caregivers were employed by anyone except the direct consumer of their services. 90 percent of care would have been affected by the new overtime rule. This change would have created higher care costs that would have been borne by consumers and financially strapped government funding programs, such as Medicaid.

In commecting on the courts decision, National Association of Home Care President Val J. Halamandaris said “this victory proves the value of industry unity.” He also commended the International Franchise Association and the Home Care Association of America who worked together with NAHC to file this suit against the U.S. Department of Labor. He also offered special praise for NAHC Vice President for Law, William A. Dombi, who managed and coordinated the litigation effort. “United, fighting on behalf of the elderly and disabled we cannot fail, divided, we cannot succeed,” said Halamandaris.

Halamandaris said that he and other members of the coalition are looking forward to the next phase of the lawsuit, which will be designed to fully restore the companionship exemption which has survived in federal law for almost 50 years. A related goal is to make it possible for agencies to once again provide live-in care for those seniors who need it.

Read the court documents here and here.

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