Circuit Court reinstates home-care worker regulations

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Overtime and Minimum Wage Protections for Providers

The U.S. Court of Appeals for the District of Columbia Circuit has upheld new Obama Administration regulations that, for the first time, extend minimum wage and overtime protections to as many as two million in-home caregivers for the elderly and people with disabilities.

The 24-page ruling [PDF], published August 21, reverses a December 2014 ruling from the U.S. District Court for the District of Columbia, which found that the regulations exceeded the Department of Labor’s statutory authority.

In 1974, Congress amended the Fair Labor Standards Act expanded minimum wage and overtime protections to caregivers. However, the amendments included exceptions for people who “provide companion services for individuals who (because of age or infirmity) are unable to care for themselves” or are “employed in domestic service in a household and who resides in such household.”

The DOL enacted new regulations in 2013 interpreting these exceptions to only apply to workers directly hired by care recipients and their families, thus expanding FLSA protections to caregivers hired by third-party employers, which represents an estimated 90 percent of workers in the industry.

The District Court’s decision put the regulations on hold days before they were set to go into effect.

In 2007, a third-party hired caregiver challenged the exceptions at the Supreme Court, arguing that the 1974 Amendments entitled her to minimum wage and overtime protections. The Supreme Court unanimously upheld the Bush Administration’s interpretation of the statute, which barred the caregiver from such protections.

However, the Supreme Court also stated that “the text of the FLSA does not expressly answer the third-party employment question,” thus leaving room for subsequent administrations to come to alternative interpretations.

Nonetheless, District Court Judge Leon ruled that the text unambiguously prevented the Obama Administration from distinguishing between in-home workers hired by third parties and the care recipients and their families.

Pointing to the Supreme Court’s guidance, the three-judge panel at the D.C. Circuit unanimously reversed.

“The Supreme Court’s decision…confirms that the Act vests the Department with discretion to apply (or not to apply) the companionship-services and live-in exemptions to employees of third-party agencies,” Circuit Judge Sri Srinivasan wrote for the DC Circuit. “The Department’s decision to extend the FLSA’s protections to those employees is grounded in a reasonable interpretation of the statue and is neither arbitrary nor capricious.”

In coming to the decision, the Circuit Court agreed with the DOL’s argument that the new regulations are consistent with Congress’ intent in passing the 1974 amendments, to protect people employed to assist the elderly and people with disabilities. Accordingly, as the DOL argued, the exceptions, often referred to as the “babysitter exception,” can be reasonably interpreted narrowly.

“Since the time the Department initially adopted that approach, the provision of residential care has undergone a marked transformation,” the Circuit Court stated. “The growing demand for long-term home care services and the rising cost of traditional institutional care have fundamentally changed the nature of the home care industry.

“Individuals with significant care needs increasingly receive services in their homes rather than in institutional settings. And correspondingly, residential care increasingly is provided by professionals employed by third-party agencies rather than workers directly hired by care recipients and their families.”

Some disability rights advocates, however, have campaigned against the regulations, on the basis that the new protections, if not accompanied by additional funding to state Medicaid programs, may lead to reductions in workers hours.

ADAPT and the National Council on Independent Living filed an amicus brief [PDF] against the DOL regulations at the DC Circuit, while multiple other disability rights groups filed briefs at the lower court as well.