In January of 2015, new rules issued by the U.S. Department of Labor went into effect regarding the “companionship exemption” from the FLSA’s minimum wage and overtime rules. Overall, the new rules narrowed the scope of the exemption. The D.C. Circuit Court of Appeals recently found that the new rules are valid exercises of administrative authority and overturned a lower court’s order that vacated certain portions of the rules.
In Home Care Association of America, et al. v. Weil, a group of trade associations challenged two key components of the DOL’s rules regarding the companionship exemption. No. 15-5018 (D.C. Cir. Aug. 21, 2015). First, the plaintiffs challenged the DOL’s rule that states that third-party employers of employees engaged in companionship services may not avail themselves of the exemption. 29 C.F.R. § 552.109. Second, the plaintiffs challenged the DOL’s narrower definition of “companionship services,” which defines the term to include the provision of care – such as meal preparation, driving, light housework, managing finances, assistance with medications, and arranging medical care – but only if those activities do not exceed 20% of the total hours worked. 29 C.F.R. § 552.6. Under the new rules, the remainder of the time is supposed to be devoted to “fellowship and protection” activities, such as conversation, reading, games, crafts, going on walks, running errands, and accompanying the person to appointments or social events to monitor the person’s safety and well-being.
The district court initially found that both of the challenged provisions were unlawful. The district court reasoned that excluding employees of third-party employers and limiting care activities to 20% or less of work hours contravened the plain terms of the statute.
The D.C. Circuit Court of Appeals disagreed and held that both of the provisions of the new DOL rules were entitled to Chevron deference. The court based its analysis primarily on the Supreme Court’s decision in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007). In Coke, the Supreme Court held that the text of the FLSA does not specifically answer the third-party employment question and that the legislature had granted authority to the DOL to decide the issue. The court concluded that the Supreme Court’s decision in Coke precluded the challengers’ arguments concerning third-party employment.
With respect to the DOL’s rule limiting care activities to 20% or less of work hours, the court held that it did not have jurisdiction to decide the issue. The court reasoned that because the third-party employer exclusion was valid, none of the plaintiffs were eligible for the companionship exemption. As a result, none of the plaintiffs suffered any harm from the 20% limitation and did not have constitutional standing to address the issue.
Takeaway: Unless there is a successful appeal to the U.S. Supreme Court, the DOL’s new companionship exemption rules are valid and enforceable.