The U.S. District Court for the District of Columbia ruled December 22 that the Obama Administration exceeded its executive authority when it promulgated new rules extending minimum wage and overtime protections to an estimated two million previously uncovered caregivers.
As a result, the regulations, which were supposed to go into effect January 1, are vacated, although the Department of Labor has 60 days to appeal the decision.
In 1974, Congress amended the Fair Labor Standards Act to include domestic service employees. However, it exempted the law’s minimum wage and overtime protections from people who “provide companion services for individuals who (because of age or infirmity) are unable to care for themselves.” It also exempted overtime protections for people “employed in domestic service in a household and who resides in such household.”
Due to the expansion of the elderly population and people with disabilities receiving home-care services, these so-called “companion care” and “live-in domestic employee” exemptions now encompass more than two million people.
The DOL proposed new regulations in 2011 that would close these loopholes for all workers employed by third-party employers, which represent about 90 percent of currently uncovered caregivers. The exemptions would remain for workers employed directly by the household receiving services.
The Home Care Association of America, the International Franchise Association and National Association for Home Care and Hospice filed a lawsuit against the DOL in June 2014, on the basis that the 1974 amendments did not provide the DOL discretion to distinguish between employees hired by third parties or households.
The District Court agreed, finding that the rules ran contrary to Congress’ intent in passing the law and thus were outside the scope of the executive branch’s authority.
“Congress surely did not delegate to the Department of Labor here the authority to issue a regulation that transforms defining statutory terms into drawing policy lines based on who cuts a check rather than what work is being performed,” Judge Richard L. Leon wrote in the decision.
These exemptions gained national attention in 2007, when the Supreme Court unanimously ruled that Evelyn Coke, an in-home care worker who worked 70 hours a week, was not legally entitled to overtime pay under the 1974 amendments.
Since then, three bills have been introduced in the Senate, as well as three in the House of Representatives, that would amend the law to close the loophole. None of these bills has been voted out of committee.
For Judge Leon, this legislative background was further evidence of his view that the Obama Administration, in passing the rules, attempted to circumvent Congress’ authority.
“This unequivocally represents a lack of Congressional intent to withdraw this exemption from third-party employers,” he wrote. “The fact that the Department issued its Notice of Proposed Rule Making after all six of these bills failed to move is nothing short of yet another thinly veiled attempt to do through regulations what could not be done through legislation.
“Such conduct bespeaks an arrogance to not only disregard Congress’ intent, but seize unprecedented authority to impose overtime and minimum wage obligations in defiance of the (law’s) plain language.”