On Friday, the US Court of Appeals for the District of Columbia Circuit reinstated regulations that will allow more than 2 million workers to qualify for minimum wage and overtime protection. Now, the industry and its workers are preparing to deal with the aftermath.
Under the ruling, workers from third-party staffing agencies will no longer be exempt from federal minimum wage and overtime laws. Federal labor law had provided that exemption since 1974, treating the workers under regulations similar to those that apply to domestic aides hired by households.
In 1974, Congress amended the Fair Labor Standards Act (FLSA) to extend coverage to all “domestic service” workers, including those employed by patients and families or companies that were too small to be covered by the FLSA. At the same time, Congress created an exemption from the minimum wage and overtime compensation requirements for domestic service workers who provide “companionship services.”
The companionship services exemption was intended to apply to “elder sitters” whose primary responsibility was to watch over an elderly person or person with an illness, injury or disability, much as a babysitter would watch over a child. It also created an exemption from the FLSA’s overtime compensation requirement for live-in domestic service workers.
In 1975, the law was promulgated to define companionship services as “fellowship, care and protection,” which included things like helping with meal preparation, bed making, clothes washing and similar types of services. However, general household work could not exceed 20% of total work hours. The 1975 regulations also permitted third-party employers, or other home care worker employers (other than patients and family members), to claim both the companionship services and live-in domestic service employee exemptions. These regulations have remained largely unchanged since 1975.
But the home care industry has undergone dramatic changes since the 1970s. More people are receiving care at home rather than in institutions, and home care workers, including those providing companionship services, are being asked to perform duties that require more skill.
“What the court recognized is that Congress intended this exemption to apply to people who do casual work, not people doing home care work as a full-time vocation or job,” Peter Romer-Friedman, deputy director of litigation at the Washington Lawyers’ Committee for Civil Rights and Urban Affairs, told the Times.
The new regulations are expected to go into effect Jan. 1, 2016.
Proponents applauded the court’s decision. “This is an enormous step forward for home workers and for our country,” Mary Kay Henry, president of the Service Employees International Union, which has long advocated for the changes, told The New York Times.
“This is a tremendous victory for the 2 million-plus home care workers in America who, for so many years, were unjustly shut out of our nation’s basic wage and hour protections," Christine Owens, executive director of the National Employment Law Project, said in a statement. "We are thrilled that this historic ruling will remedy an injustice millions of dedicated, hardworking caregivers have had to tolerate for far too long. It will ensure that home care workers finally enjoy the same basic workplace protections enjoyed by most other workers in our nation.”
Home care agencies and other opponents say that the rule will result in more elderly people being institutionalized rather than being able to receive care in their homes. They’re planning to continue to fight the regulations.
“We're considering what our legal options are based on the decision at this point,” Phil Bongiorno, executive director of the Home Care Association of America, told Modern Healthcare. “We're just trying to keep care costs effective and affordable for our clients.”
Among other possibilities, the home healthcare advocates are considering requesting a Supreme Court review. But reversing the circuit court’s decision may be an uphill battle. According to the Times, the court relied on a 2007 Supreme Court case when making its decision. In that case, the Supreme Court ruled that “the 1974 law gives the Labor Department discretion over how to define the exemption, as long as the department’s interpretation is reasonable.”
In its decision on Friday, the court said that the Labor Department has already been granted the authority to resolve this issue, and that its interpretation in this case was reasonable.