We previously wrote a Client Alert about the Department of Labor’s (DOL) new regulations that were poised to eliminate the exemption from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime provisions for certain home-health care workers. As expected, the new regulations were met with significant pushback from certain home care employers and industry associations, including a federal lawsuit led by the Home Care Association of America challenging the legality of the regulations [Home Care Association of America v. Weil, Case No. 14-cv-0967 (D.D.C.)]. That lawsuit was effectively decided last week when the U.S. District Court for the District of Columbia issued its second opinion, ruling against the DOL and vacating the portions of the new regulations that would have made more than 90 percent of home care workers eligible for overtime pay.

In its first opinion, issued Dec. 22, 2014, the court vacated the new “third-party employment” regulation that would have prevented the so-called “companionship exemption” from applying to any home-health care worker employed by a third-party agency. The court found that this regulation directly conflicted with the FLSA’s clear language and, therefore, could not survive. Although an important victory for home care employers, the court’s opinion did not address other portions of the new regulations, including those significantly narrowing the definition of “companionship services,” which would have nevertheless required agencies to begin paying most, if not all, of their home-health aides overtime beginning Jan. 1, 2015.

The court addressed the remainder of the challenged regulations in its second opinion issued Jan. 14, 2015. In this rather scathing opinion, the court rejected and vacated the DOL’s attempt to narrow the definition of “companionship services” such that traditional “care” activities (i.e. dressing, bathing, feeding, assisting with medications) could account for no more than 20 percent of the home care worker’s total hours worked per person and per workweek. In other words, under the new regulations, had a worker spent more than 20 percent of their time performing these traditional “care” activities, they could no longer be exempted from the FLSA’s minimum wage and overtime requirements. The court found this illogical, stating that the DOL was attempting to “write out of the exemption the very ‘care’ the elderly and disabled need, unless it were drastically limited in the quantity provided so as to be of little practical use.” The court further found that the DOL was “yet again… trying to do through regulation what must be done through legislation,” and therefore vacated the narrowed definition of “companionship services.”

The result, for now, is that both the “third party employment” regulation and the narrowed definition of “companionship services” are not in effect. Therefore, home-health care agencies may continue to operate under the laws as they have been for the past several years, and may continue to exempt their home care workers from the FLSA’s overtime and minimum wage provisions in accordance with those laws. It is very likely that the DOL will appeal the rulings in the Weil case, and, in fact, the DOL has already requested that the court enter final judgment to facilitate its ability to appeal. Employers will, therefore, need to stay tuned as the ultimate fate of these regulations continues to unfold.