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Photo of What Does the Decision in <em>Home Care Association of America v. Weil </em>Mean for Home Care Employers in New York?

What Does the Decision in Home Care Association of America v. Weil Mean for Home Care Employers in New York?

Labor & Employment Alert
December 24, 2014

In a welcome decision for home care providers, on December 22, 2014, a federal judge in Washington, D.C., vacated important changes to federal regulations that had been scheduled to become effective January 1, 2015, and that would have excluded home care providers from claiming the federal companionship exemption for minimum wage and overtime. While the decision is no doubt good news for home care providers, there are important limitations about which providers need be aware. Most importantly, the decision does not, at this point, impact the significant narrowing of the type of work that may be considered exempt “companionship services.” This narrowed definition of “companionship services,” which is still scheduled to become effective January 1, 2015, materially limits the type of work that exempt home care aides may perform. In addition, the decision may be challenged by the Department of Labor, leaving an uncertain future for the companionship exemption.

The Current Companionship Exemption

Under the federal Fair Labor Standards Act (FLSA), employees are generally entitled to overtime at the rate of one-and-one-half times their regular rate of pay for all hours worked in excess of 40 per workweek. However, certain employees are exempt from this overtime requirement, including those who provide “companionship services.” Under FLSA regulations effective through December 31, 2014, “companionship services” are services that provide fellowship, care, and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs. These regulations permit an exempt companion to perform “general household work,” such as vacuuming and dusting, provided such work does not exceed 20 percent of his or her total weekly hours.

In Long Island Care at Home, Ltd. v. Coke, 549 U.S. 1105 (2007), the Supreme Court upheld the Department of Labor's previous position that aides who were employed by an employer other than the family or household using their services qualified for the companionship exemption. As a result, aides who provided “companionship services” and who were employed by agencies in the home care industry were ordinarily considered exempt from overtime under the FLSA.

On the state level, the impact of the FLSA’s companionship exemption varied by jurisdiction. For example, New York only partially recognized the companionship exemption. Under New York law, employees who are exempt from overtime under the FLSA companionship exemption have nevertheless been entitled overtime at a wage rate of “one-and-one-half times the basic minimum hourly rate” under New York law. See 12 N.Y.C.R.R. § 142-2.2.

Proposed Regulatory Changes to Federal Companionship Exemption

On October 1, 2013, the Department of Labor promulgated a Final Rule that made a number of changes to the companionship exemption under the FLSA. Most notably, the Final Rule eliminated the companionship exemption for “third-party providers” of home care services. As a result of this change, home care providers were preparing to begin paying companions overtime at the rate of one-and-one-half times their regular rate of pay. The Final Rule also provided that if an aide performed any general household work during a week, it would cause the aide to lose the companionship exemption for that week. In addition, the Final Rule made important changes to the definition of “companionship services,” eliminating “care” from the definition and leaving only “fellowship and protection,” which were defined narrowly.1  The Final Rule allowed incidental “care” services to be performed attendant to and in conjunction with the provision of fellowship and protection services, but such care services could not exceed 20 percent of an aide’s total hours worked per patient or per workweek. The Final Rule includes a non-exhaustive list of incidental “care” services that are subject to this 20 percent cap, such as dressing, grooming, toileting, driving to appointments, feeding, doing laundry, and bathing. All of the changes contemplated under the Final Rule were scheduled to go into effect on January 1, 2015.

The Decision

In Home Care Association of America v. Weil, U.S. District Judge Richard J. Leon, a 2002 George W. Bush appointee, concluded that the Department of Labor was not filling a statutory gap in eliminating the companionship exemption for third-party employers, as he found that Congress had already directly spoken on this issue. To reach this finding, the court narrowly read the Supreme Court’s decision in Long Island Care at Home, Ltd. v. Coke and determined that the Department of Labor’s third-party provider regulation was a “wholesale arrogation” of congressional authority. Thus, the court vacated the third-party provider section of the Final Rule. The court noted, however, that other sections of the Final Rule, including the significantly narrowed definition of “companionship services,” were not affected by its decision.

The Bottom Line

Most home care providers that employ aides have not focused on the impact of the narrowed definition of “companionship services” under the Final Rule, believing that the third-party provider exclusion rendered the issue moot. The Home Care Association of America decision, however, places the focus squarely on this narrowed definition as it vacates the third-party provider exclusion and, at least for now, leaves the narrowed definition of “companionship services” intact. Accordingly, home care providers that wish to rely on the companionship exemption after January 1, 2015, must ensure that the time aides spend performing “care” services do not exceed 20 percent of their weekly hours per patient and per week, and that they do not perform any general household work.

In sum, for the moment, the Home Care Association of America decision means that New York home care providers will need to pay previously exempt companions overtime at time-and-one-half their regular rate of pay, unless they (a) spend 20 percent or less of their time (per patient and per week) performing “care” services, and (b) do not perform any general household work. If an aide does not satisfy both of these conditions, he or she will need to be paid time-and-one-half overtime effective January 1, 2015. But employers should stay tuned, as the one thing that seems certain is that we have not heard the last word on this subject.

1 “Fellowship” means to engage a person in social, physical, and mental
activities, such as conversation, reading, games, crafts, accompanying the person on walks, on errands, to appointments, or to social events.  “Protection” means to be present with a person in their home, or to accompany the person when outside of the home, and to monitor the person’s safety and well-being.