D.C. District Court Vacates Regulation Impacting Overtime Eligibility Under Companionship Exemption

On December 22, 2014, the U.S. District Court for the District of Columbia vacated a key portion of a U.S. Department of Labor ("DOL") regulation amending the minimum wage and overtime exemptions for "companionship" domestic service workers. The regulation was scheduled to go into effect on January 1, 2015. On December 31, 2014, the Court issued an order staying implementation of the regulation until January 15, 2015. The Court has scheduled a hearing for January 9, 2015 to address the plaintiffs' motion for a preliminary injunction. It is expected to rule on that motion before the temporary stay expires.

As described in our October 13, 2014 post the "companionship exemption" in the Fair Labor Standard Act (FLSA) exempted from minimum wage and overtime requirements workers who provided "companionship services" to persons who, because of advanced age or physical or mental infirmity, could not care for themselves. The revised regulations issued by the DOL, and partially struck down by the Court, would have barred third-party employers from claiming the exemption for their workers who provide domestic services for others. This regulation would have extended federal minimum wage and overtime coverage to an estimated two million workers.In Home Care Association of America v. Weil U.S. District Judge Richard J. Leon explained that the United States Supreme Court, in Long Island Care at Home, Ltd. v. Coke, 549 U.S. 1105 (2007), had already rejected "a challenge to the validity of the long-standing inclusion of employees paid by third parties within the companionship services exemption." The Weil court also noted that following the Coke decision, bills to revoke the exemption were introduced by "the majority party in both the House and Senate in three consecutive Congresses (110th, 111th, and 112th)," however, they never "generated sufficient support to get out of committee and to the floor of either house of Congress."

In 2011, the Department of Labor took it upon itself to modify the scope of the companionship exemption, attempting to do through regulation what could not be achieved through legislation. It published a Notice of Proposed Rulemaking to, among other things, exclude third-party employers from the home companion exemption. The Department published the final rule on October 1, 2013. Several home care industry trade groups, including Home Care Association of America, the International Franchise Association, and National Association for...