Companionship Services Lawsuit Advances
Court Ruling Expected Next Month
November 21, 2014 09:24 AM
NAHC’s lawsuit challenging the US Department of Labor rule that virtually eliminates the Fair Labor Standards Act (FLSA) exemptions for “companionship services” and “live-in domestic services” was presented to federal US District Judge Richard J. Leon on Wednesday, November 19, 2014. Judge Leon heard oral arguments on the pending cross-motions for summary judgment. The judge indicated that he intends to issue a ruling in December, prior to the January 1, 2015 effective date of the new rules.
At issue in the lawsuit is whether the US Department of Labor acted beyond the scope of its authority when it issued the rule that eliminates the application of both exemptions where the worker is employed by a home care agency or other entity rather than directly and exclusively by the consumer of services or someone in their household. In addition, the lawsuit challenges the redefinition of “companionship services” in a manner that obliterates any application to the personal care services usually provided by home care companies.
At the hearing, NAHC argued that the Labor Department (DoL) rule is equivalent to an “administrative fiat” in that is turns around a nearly 40 year standard on the overtime exemptions, contrary to the plain language of the FLSA, in contravention to express congressional intent, and in conflict with the US 2007 Supreme Court decision in Long Island Care at Home v. Coke. Of late, the White House has been under fire on a number of fronts for usurping the power of Congress and using rule changes to get a policy change that Congress does not support. A big part of the NAHC argument is that Congress had the chance three times to change the FLSA to do what the Department of Labor is doing in its rule change, but rejected those changes. Such is a significant indication of congressional intent - especially when such actions occur after a Supreme Court upheld the original exemption rules.
It was also pointed out to the Court that DoL is taking the position that it has the power to carve out a class of employers from the application of an FLSA exemption. That action is unprecedented in the FLSA history and, if upheld by the court, would mean that DoL could discriminate against certain employer types in any or all of the other FLSA exemptions without congressional approval.
The government’s response, presented by the US Department of Justice, was that DoL has broad powers to “define and delimit” the FLSA exemptions. That power, Justice claims, must be respected unless it has been used in an arbitrary and capricious manner. Justice also argued that the court must give great deference to its interpretation of the laws. Justice stated that the Coke case supports the DoL position that the exemption law is ambiguous, necessitating “gap filling” by DoL on the meaning and application of the exemptions.
Judge Leon pressed both parties on their legal positions in the case. However, the judge expressed concerns about the DoL reliance on the Coke decision and questioned whether there was any expressed legislative intent to exclude third-party employers. The court had the Justice attorney admit that DoL determined that at least 90% of the workers engaged in personal care services worked for a home care company rather than directly employed by the consumer of the services. In doing so, the court exposed the reality of the new rules as effectively eliminating the exemptions.
At the close of the hearing, Judge Leon explained that he intends to issue a decision in December, prior to the effective date of the new rules. If the judge issues a decision favorable to NAHC, it can be expected that the DoL will appeal it. Further, it can be expected that DoL would ask that the court stay any adverse judgment. In such case, we believe that the judge would not grant a stay because it would permit the rule to go into effect. Since DoL itself intends to not enforce the new rules for 6 months, NAHC would explain to the court that a stay would allow for private attorneys to enforce the rules against vulnerable state Medicare programs, Agencies on Aging, Independent Living Centers, as well as home care companies.
All of this translates to a “wait and see” what the court decides next month. NAHC is hopeful there will be a favorable ruling.