NAHC Overtime Compensation Lawsuit: Update
March 6, 2015 10:36 AM
As earlier reported, the U.S. Department of Labor (DoL) appealed the decisions of the U.S. District Court that invalidated the new rules issued by the Department that would have redefined the “companionship services” exemption from the minimum wage and overtime compensation requirements under the Fair Labor Standards Act (FLSA). The court also invalidated the rule change that would prohibit the application of the companionship services and live-in domestic services exemptions to workers employed by home care companies. This article is an update of the actions that have occurred since DoL filed its appeal.
The Court of Appeals for the District of Columbia has set a briefing scheduled for the parties that will be completed in early April. Oral argument before a three-judge panel has been scheduled for May 7, 2015. With such scheduling, it is very possible that a decision could be issued before the court goes on its July recess. Still, the timing of when a ruling will be issued is very hard to predict.
The DoL filed its initial brief on February 20. In it, DoL argues that the district judge made a series of errors in interpreting the FLSA as well as court rulings on how to determine if a rule is within the power of a federal agency. DoL’s central argument is that the U.S. Supreme Court established that it is within the discretion of DoL to define and delimit the FLSA exemptions at issue. DoL further argues that its discretionary action must be upheld unless it is arbitrary and capricious. DoL’s position is that it has a reasonable basis to change the 40 year old rule because of the changes in the home care industry, the “professionalization” of home care aide work, and the shift of the work to a vocation rather than an avocation. These are the same arguments made by DoL at the district court level that were rejected.
An appeal is adjudicated somewhat differently than the original action before the District Court. First, the Court of Appeals does not need to determine if the district judge committed any legal errors. Instead, it is a “de novo” review, a fresh evaluation of the legal merits of the case. Another big difference is that in an appeal of this type of case, numerous other parties submit so-called “friend of the court briefs, otherwise known as amicus curiae briefs. These parties are not objective friends of the court. Each party must express to the court which side of the litigation it supports.
This lawsuit involves important issues that have been in contest before DoL, the courts, and Congress for many years. NAHC previously litigated similar issues before the U.S. Supreme court in 2005 and 2007. Then and now, the issue of overtime wages to home care aides draws in a wide variety of interests.
On February 27, numerous parties filed amicus briefs supporting DoL. Among those parties are unions, four states Attorney General, advocacy organizations representing seniors and persons with disabilities, Members of Congress, and worker and women’s rights advocacy groups. Beyond the legal issues, these parties generally argue that the workers are underpaid, take on the employment as “breadwinners,” and that better wages and overtime compensation rights will improve care by reducing turnover of home care staff. By and large, the arguments advanced by the “amici” mirror the comments the same parties made in the DoL rulemaking process.
NAHC’s reply brief is due on March 30. Thereafter, it is expected that numerous parties will submit amicus briefs in support of NAHC’s position. Among the expected amici are disability advocacy groups, state Medicaid programs, members of Congress, and business groups. Among other things, those amici will address concerns that DoL supporters did not. Specifically, these supporters will argue that Medicaid rates control worker compensation and that these rates are not rising to cover the cost of overtime. As a result, worker compensation is likely to suffer as employers restrict working hours to stay within the financial constraints imposed by Medicaid rates. Restrictions on work hours negatively impact home care consumers as they increase the number of workers needed to care for patients and trigger worker dissatisfaction and turnover. A number of state Medicaid programs are restricting or planning on restricting working hours to avoid overtime costs.
NAHC’s response to the DoL brief will argue that the plain language of the FLSA requires an application of the exemptions to workers employed by home care companies and that “companionship services” must include personal care. In addition, NAHC will argue that Congress is the forum for addressing the concerns raised by DoL amici, not a regulatory body or the courts. In 1974, Congress made a choice to protect individuals who need home care over the workers who provide it. Congress is the best forum to revisit that decision if needed.
A full discussion of the lawsuit and its ramifications will take place at the upcoming NAHC March on Washington. On March 23, a panel consisting of representatives from NAHC and the other plaintiffs in the lawsuit, the Home Care Association of America and the International Franchise Association will be joined by our legal counsel in the lawsuit. For more details, please click here.