NAHC Files for Summary Judgment in Companionship Services Rule Lawsuit
On August 1, the National Association for Home Care & Hospice, along with co-plaintiffs Home Care Association of America and the International Franchise Association, filed a Memorandum in Support of Motion for Expedited Partial Summary Judgment (the Motion) in the lawsuit challenging new overtime pay rules.
The lawsuit aims to overturn the new Department of Labor rules restricting the application of the companionship services and live-in exemptions to minimum wage and overtime compensation requirements.
Specifically, the Motion seeks to set aside the third-party employer restrictions of the Rule that effectively eliminate the application of the exemptions to home care companies. The lawsuit is an effort to secure an injunction against the enforcement of the new rules before they are scheduled to take effect on January 1, 2015.
New Rule Misapplies Third Party Status
The Motion argues that the Department of Labor (DOL) exceeded its statutory authority by stating in the new Rule that “third party employers of employees engaged in companionship services may not avail themselves of the minimum wage and overtime exception even if the employee is jointly employed by the individual or member of the family or household using the services.” The Motion argues that the new Rule “imposed an unauthorized minimum wage and overtime requirement on employers (and joint employers) solely on the basis of their ‘third party’ status.”
For details, see page 6, here.
In a 2007 lawsuit brought by NAHC, the US Supreme Court held that the Department of Labor had the power to apply the companionship services exemption to employees of third party employers rather than limit its application to workers employed directly by the client. In Long Island Care at Home v Coke, the Department of Labor actually argued that it was not only permitted to do so, but that the law passed by Congress required it.
The Motion asserts that the Coke opinion re-affirmed the DOL’s authority to only fill “gaps” in the definition of statutory terms like “domestic service employment” and “companionship services,” not to “explicitly affirm [its’ authority to address the issue of third party employment in the domestic service context.”
For details, see pages 15-16, here.
The Motion cites ample statutory and regulatory precedent for keeping third party employers of employees engaged in companionship services and live-in domestic services within the exception. In the Motion, NAHC argues that the Fair Labor Standards Act (FLSA) has long exempted those “employed in domestic service employment to provide companionship services.” Furthermore, the Department of Labor had issued regulations, and rejected changes otherwise, that exempted third party employees for four decades leading up to the new Rule. The Supreme Court upheld the current regulations in 2007.
For details, see pages 4-5, here.
New Rule Violates Plain Language of FLSA
In short, the Motion argued that the DOL exceeded its authority in promulgating the new Rule, as it conflicts with the plain language in the FLSA. Specifically, the Motion states that the DOL lacked statutory authority “to deny employers the right to ‘avail themselves’” of applicable overtime exemptions. The Motion states that employers overtime obligations are “unequivocally nullified” with regard to “any employee” mentioned in the exemption provisions. Therefore, no category of employer can be required to pay overtime to employees that fall within these provisions as the exemption applies to “any employee.”
The relevant exemption provisions are: “any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves” and “any employee who is employed in domestic service in a household and who resides in such household.”
For details, see pages 11-12, here.
New Rule Violates Legislative Intent of FLSA
Further, the Motion argues that the Rule violates the legislative intent of the FLSA. Despite limiting the scope of other exemption provisions, Congress chose not to limit the scope of the relevant exemptions described above in order to “keep such services affordable for the families of the elderly and disabled.” The Motion cited statements in the Congressional Record to that effect.
For details, see page 14, here.
In the Motion, plaintiffs explain that the Department of Labor itself recognizes that requiring third party employers to pay overtime to companionship employees, would effect as much as 98% of current workers providing personal care services to the elderly and disabled, thereby increasing cost of care and disrupting the provision of these services. The Department advanced that information as part of its “friend of the court” brief submitted to the Supreme Court the Coke case.
NAHC also maintains that the Rule does not provide proper justification for reversing previous statutory and regulatory precedent of the exemptions. While the Department alleges that changes in the home care industry warrant the change in a policy that is nearly 40 years, the Motion points out that the industry is not much different than when the Department defended the current rule in 2007. More importantly, the needs of the elderly and disabled for economical personal care support is the same today as it was in 1975 when the original rule came out. The “employees” provide the same services to the same vulnerable population.
For details, see pages 17-21, here.
The Motion states that the Rule will be “deeply destabilizing” for home care. As mentioned both in the Motion and in a previous article, the Rule will create access issues to both personal care services, and home care workers. The rule change will reduce consumer’s care options, increase their costs, and limit the availability of essential caregivers. Workers will be relegated to part-time work even where they prefer full-time employment.
The issues presented in this lawsuit are very significant to all stakeholders: clients, workers, home care companies, and payers like Medicaid. If NAHC is successful with this phase of the lawsuit, the court will move on to the restrictive definition of “companionship services” in the new rule.
It can, however, be expected that plaintiffs’ success will mean an appeal by the government.
NAHC and its affiliate the National Council on Medicaid Home Care will keep its members informed on the developments of the lawsuit.