On August 21, 2015, in Home Care Association of America v. Weil, the United States Court of Appeals for the District of Columbia Circuit cleared the way for the implementation of regulations extending the Fair Labor Standards Act’s (“FLSA’s”) minimum wage and overtime provisions to many home care workers. The court rejected a challenge to the United States Department of Labor’s (“DOL’s”) authority to change its interpretation of the scope of the FLSA provisions exempting from minimum wage and overtime guarantees domestic-service workers who provide either companionship services or live-in care for the elderly, ill, or disabled. The court’s ruling directly affects home care workers who are employed by third-party providers, like home health care agencies.

For four decades, the DOL interpreted the FLSA’s exemptions for companionship services and live-in workers to apply to employees of third-party providers. The old regulations specifically stated that domestic workers, who were employed “by an employer other than the family or household using their services,” were not included in the FLSA’s protections. Thus, traditionally, those workers have not been eligible for overtime under federal law. In 2013, the DOL adopted regulations reversing its interpretation. The new regulations bring employees of third-party providers who are assigned to provide care in a home within FLSA’s coverage. In contrast to the old regulations, the new regulations state that third-party employers of employees engaged in companionship services and employees engaged in live-in domestic service employment “may not avail themselves of the minimum wage and overtime exemption” provided by FLSA. 29 C.F.R. §552.109(a), (c) (2015).

The court decided that FLSA grants the DOL discretion to apply (or not apply) the companionship services and live-in exemptions to employees of third-party providers. Even though the DOL reversed its interpretation of those exemptions, the court concluded that the DOL’s new position was “entirely reasonable.” The DOL justified its change in position by arguing that the FLSA exemptions were intended to be narrowly applied and that there has been a “dramatic transformation of the home care industry since [the third-party-employer] regulation was first promulgated in 1975.” According to data cited by the court, although most home care workers were employed directly by a member of the household in 1975, by 2007, most home care workers were employed by third-party providers.

Affected employers, including home health care agencies, should prepare to comply with the new regulation. The Home Care Association of America may still seek further review of the court’s decision. In the meantime, in an update about the litigation posted on its website, the DOL has stated that it stands ready to provide technical assistance to states and other entities as they implement the new regulation.