All posts tagged 'companionship'
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Companionship Exemption Changes In Effect

August 24, 2015 04:20
by Ted Boehm


The latest twist in the ongoing saga involving the U.S. Department of Labor's changes in its regulatory provisions affecting the Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption and the FLSA's Section 13(b)(21) overtime exemption for "live-in domestics" came from the U.S. Court of Appeals for the District of Columbia Circuit.

DC Circuit Holds USDOL Acted Within Authority

Readers will recall that earlier this year a federal district judge held in Home Care Association of America v. Weil that USDOL exceeded its authority by attempting to preclude third-party employers from invoking these exemptions.  This holding undermined the viability of these regulations including by raising questions about whether or not other courts would be bound by the decision.

Reversing the district court, the appeals court now has held that the USDOL acted within its statutory authority when it ruled that third-party employers, such as home care agencies, could no longer avail themselves of the companionship exemption. The appeals court also upheld the USDOL's narrowed definition of "companionship services" within the regulations.

The industry groups which mounted the legal challenge to the USDOL's new regulations in Home Care Association of America v. Weil may seek to appeal this decision to the U.S. Supreme Court.  Of course even if such an appeal is filed, there is no certainty that the Supreme Court will accept review of the case or that it would issue a different decision.

The Bottom Line

Given the uncertainty regarding the prospects of further appeal at this point, third-party employers are now essentially back to where they were when the USDOL's final rule became effective on January 1, 2015.  In other words, third-party employers such as home care agencies who no longer are able to rely upon the "companionship" exemption due to USDOL's revisions would be wise to continue their preparations to be in compliance with the FLSA's compensation requirements.  For one thing, the USDOL previously stated that agency officials "will give strong consideration to an employer's efforts to make any adjustments necessary to implement the Final Rule" in deciding whether to take action for the remainder of 2015.

Indeed, it is not clear how or whether these court decisions have impacted USDOL's earlier announcement that it would not bring any enforcement actions for a six-month period after January 1, 2015 and would exercise "prosecutorial discretion" in bringing enforcement actions for the remainder of 2015.  Regardless of whether USDOL continues to abide by that timeline, the agency's forbearance will not preclude current or former employees from filing their own FLSA lawsuits.

 

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Judge Vacates Parts of USDOL Home-Care Regulation

January 16, 2015 04:27
by Kevin Troutman  & Ted Boehm

A federal judge has scuttled key aspects of the U.S. Department of Labor's rule that would have extended the federal Fair Labor Standards Act's minimum-wage and overtime requirements to many home care workers starting January 1, 2015.  Although USDOL will likely appeal the court's rulings, for now home care agencies may anticipate that USDOL will not be enforcing those requirements as to home care aides and personal care attendants who fall within that law's companionship and live-in-domestic exemptions under the regulations that USDOL sought to change.

DC Court Strikes Down Controversial Regulation

In recent weeks, the U.S. District Court for the District of Columbia issued a series of rulings that blocked the most controversial aspects of USDOL's amended FLSA rule on the companionship and live-in exemptions from going into effect.  Here is a short recap:

♦   October 1, 2013:  USDOL issues final rule that narrows the definition of "companionship services" under the FLSA exemption and prohibits third-party employers, such as agencies, from applying the companionship exemption to its employees; USDOL's intent is to make more of these workers eligible for minimum wage and overtime; rule is to go into effect on January 1, 2015.

♦   December 22, 2014:  Following a court challenge by associations that represent third-party home care providers, the D.C. federal court strikes down the portion of the new regulation that would have prevented third-party employers from relying on the companionship and live-in exemptions.

♦   December 31, 2014:  D.C. court issues a temporary stay to prevent the narrowed definition of "companionship services" from going into effect on January 1, 2015.

♦   January 9, 2015:  D.C. judge hears arguments from both USDOL and associations affiliated with home care providers on whether the temporary stay should be extended.

♦   January 14, 2015:  D.C. court vacated in their entirety pertinent portions of the USDOL regulation defining the "companionship exemption."  USDOL stated that it strongly disagrees with this decision, stands by its Final Rule, and is considering all of its legal options.

Good News for Home Care Providers, But Stay Tuned

These recent rulings mean that home care agencies might want to re-evaluate plans they had to change their pay practices to comply with the FLSA's minimum-wage and overtime provisions for workers who would not have met the revised companionship or live-in regulations.

But stay tuned, because it is unclear whether these rulings will be upheld on appeal or how other federal courts might react to them in the meantime, such as in the context of FLSA litigation brought by private litigants.  Remember, too, that state or local laws might require that minimum-wage and overtime compensation be paid to home care workers, so be certain to check all applicable wage laws.

 

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Court Vacates Imminent Bar To Third-Party Employer's Claiming Companionship/Live-In Domestic Exemptions

December 23, 2014 04:54
by Ted Boehm

 

We have reported that the U.S. Labor Department's changes in its regulatory provisions affecting the federal Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption and the FLSA's Section 13(b)(21) overtime exemption for "live-in domestics" are set to become effective on January 1, 2015.  Perhaps the single most-significant aspect of the revisions set forth in the USDOL's "Final Rule" is the elimination of the exemptions as they relate to third-party employers, such as home-care agencies.

Now, a mere eight days before the effective date, the validity of this aspect of the regulation is suddenly in doubt:  A federal district judge has held in Home Care Association of America v. Weil that USDOL exceeded its authority by attempting to preclude third-party employers from invoking these exemptions.

Blunt Language From The Court

Judge Richard Leon of the U.S. District Court for the District of Columbia left no doubt about his assessment of USDOL's actions.  Observing that six legislative attempts to modify the "companionship" exemption in this way have failed since 2007, Judge Leon deemed this part of USDOL's revisions to be a "thinly-veiled effort to do through regulation 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 plain language of [the exemptions].  It cannot stand."

At the heart of Judge Leon's holding is his determination that USDOL's impending elimination of the exemptions where third-party employers are concerned is due no judicial deference.  In his view, Congress instructed USDOL to define the character of the services performed by companionship and live-in domestic employees but did not delegate to it the authority to limit the exemption based upon who the employee's employer is.  As he put it, "[t]he focus is on the type of services provided, not who pays the check."

The Bottom Line

This development is a welcome one for affected employers, but there is still a question as to whether this part of the new regulations will ultimately survive in its current form.  For one thing, we anticipate that USDOL will appeal the ruling, so the long-term status of the third-party-employer regulation is unsettled. Employers should confer with counsel about what their options are at this point.

Note that the other aspects of USDOL's impending regulations remain unaffected by this ruling and are at the moment still scheduled to go into effect on January 1.  Among other things, in this ruling the court did not vacate changes in the coming re-definition of what constitutes "companionship" services.

 

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USDOL Defers Enforcement Action On "Companionship" Changes

October 8, 2014 03:51
by Ted Boehm

 

For some time now, we have followed the U.S. Labor Department's efforts to curtail the federal Fair Labor Standards Act's Section 13(a)(15) "companionship" exemption.  Those efforts culminated in a Final Rule published in October 2013.  The revisions will effectively eliminate the exemption in many current-day scenarios, primarily by making it unavailable to third-party employers such as home-care agencies.

The Final Rule provides that these modifications become effective on January 1, 2015, and a number of affected parties have implored USDOL to postpone this.  Some reporting on yesterday's USDOL announcement rejecting these requests suggested that the changes' effective date has been delayed.  It has not been; USDOL has in fact expressly refused to grant any such delay.

So What DID Happen?

Instead, USDOL announced a "time-limited non-enforcement policy" which simply delays enforcement activity by that agency.  USDOL says that it will not bring any enforcement actions pursuant to the amended regulations for a period of six months (until June 30, 2015).  After that date, it will "exercise prosecutorial discretion in determining whether to bring enforcement actions" during the subsequent six-month period (until December 31, 2015).

USDOL says that it is doing this in light of feedback it received from a variety of organizations representing disability advocates and from certain states.  For instance, Maryland and Pennsylvania apparently requested an extension of the Final Rule's effective date in order to adjust their publicly-funded home-care programs in order to comply with the modified regulation.

The Bottom Line

Home-care agencies and other third-party employers who will no longer be able to rely upon the "companionship" exemption due to USDOL's revisions will be wise to continue their preparations to be in compliance with the FLSA's compensation requirements as of January 1.  For one thing, USDOL says that, during the "prosecutorial discretion" period from July 1 until December 31, 2015, agency officials "will give strong consideration to an employer's efforts to make any adjustments necessary to implement the Final Rule" in deciding whether to take action.

Moreover, while USDOL's delayed-enforcement policy is welcome, the agency's forbearance will not preclude one or more employees or former employees from filing their own FLSA lawsuits.  In other words, individuals can bring FLSA minimum-wage and/or overtime claims in court at any point in 2015, regardless of what USDOL does or does not do.

 

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USDOL Guidance Released On "Adult Foster Care", "Shared Living Arrangements"

April 15, 2014 01:18
by Ted Boehm

We reported earlier that the U.S. Labor Department has issued a Final Rule re-stating the requirements for and limitations upon the federal Fair Labor Standards Act's Section 13(a)(15) "companionship exemption".  The changes are effective in January 2015.  As has been widely discussed, this exemption will then no longer be available to third-party employers under the new regulations.

These regulations will also affect the Section 13(b)(21) overtime exemption for so-called "live-in domestics", that is, employees employed in domestic service in a household who reside in that household.  Beginning in January, third-party employers will not be able to rely upon the exemption for these employees.

Changes Provoked "Shared Living" Questions

USDOL's revisions prompted many stakeholders to voice concerns about other FLSA-related nuances of "shared living" arrangements.  The agency recently responded with Administrator Interpretation No. 2014-1, which addresses how the FLSA applies to "adult foster care" or "shared living arrangements".

The guidance focuses upon living arrangements in which one or two "consumers" of services and a "provider" of those services share a home, as opposed to group-home settings or facilities having multiple workers and shifts.  In its illustrations of typical shared-living arrangements, USDOL gives the example of a "college student moving into the extra bedroom in a home owned by an 80 year old man who needs assistance with bathing and dressing in the mornings . . .."  The student would be the service "provider", and the homeowner would be the "consumer" of those services.

USDOL gives another example of a "consumer [who] moves into the home of the provider and becomes part of the provider's family, sharing in family meals and activities . . . [and] the provider provides constant care and attention to the consumer, including by transporting him to his doctor's appointments . . .."  Here, the tenant is the "consumer" of services, while the homeowner is the service "provider".

Is The Provider An FLSA "Employee"?

Particularly noteworthy is the analysis of whether an employment relationship exists in the shared-living arrangement:

♦   Between the provider and the consumer, or

♦   Between the provider and a third-party who facilitates the arrangement.

As a part of that evaluation, USDOL provided some "rules of thumb" centering on the location of the living arrangement.

The Interpretation suggests that, when the consumer moves into the provider's home, in "most circumstances" USDOL is likely to deem the provider not to be the consumer's employee.  USDOL's rationale is that the provider typically determines the schedule and routine within his or her own home so as to control the conditions of work, that is, the provider is not taking direction from the consumer.  Conversely, the guidance suggests that it will "often . . . be the case that a provider who moves into the home of a consumer is the consumer's employee."

The factors for determining whether a provider is an employee of a third-party facilitator include things like:

♦   The degree of oversight the third-party exercises over the arrangements and other surrounding circumstances;

♦   Whether the arrangement occurs in the provider's house (which might tend to favor a finding of non-employment) or a separate location (which might tend to favor a finding that the provider is employed by the third-party); and

♦   Whether the provider must seek the third-party's permission for vacations, days off, or other absences, instead of simply providing notice of these occurrences.

The Bottom Line

The Administrator Interpretation provides further insight into how USDOL will analyze certain aspects of shared-living arrangements.  It might even influence how courts view them.

But the guidance is by no means exhaustive or conclusive.  For one thing, litigation about whether someone is an independent contractor under the FLSA will not abate anytime soon, and courts are not bound by what USDOL says.

Instead, whether a provider is found to be an FLSA employee is ultimately going to depend upon of a variety of factors under the less-than-precise "economic reality" test.  For instance, the location of the services provided could be outweighed by other considerations in particular situations.  Even USDOL's guidance itself is hedged with qualifiers such as "generally", "often", "most circumstances", and so on.

Providers subject to the FLSA who are non-exempt employees must be paid in compliance with that law's minimum-wage, overtime, and timekeeping requirements.  Some such providers employed by third-parties might be exempt from those requirements today but no longer will be in January.

Employers of such providers should immediately evaluate what they must do or plan to do ensure FLSA compliance.  This analysis should take into account unique ways in which the FLSA affects these relationships, such as how to determine hours worked generally, how to treat sleep-time, and many other considerations.

 

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Companionship-Exemption Regulation To Be Released (Updated 09 20 13)

September 17, 2013 09:06
by Ted Boehm

Months after its April 2013 target date, the U.S. Labor Department announced this afternoon that it is issuing a Final Rule re-stating the requirements for and limitations upon the "companionship" exemption in the federal Fair Labor Standards Act's Section 13(a)(15).  USDOL reportedly will publish the actual regulation in the Federal Register "on or about October 1."

As readers will recall from our prior posts, this exemption says that the FLSA's minimum-wage and overtime requirements do not apply to employees "employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves . . .."

The Final Rule apparently becomes effective over a year from now, in January 2015.  Judging from USDOL's statements today, the exemption's parameters will be changed substantially.

Among the most-significant modifications will be that third-party employers, such as home-care staffing agencies, will no longer be able to assert the exemption for their employees performing companionship work.  USDOL says that this will be true even when the employee is jointly employed by both the third-party provider and the individual or family receiving the worker's services.  Only the individual, family, or household employing a companionship worker will be able to rely upon the exemption (provided that the other exemption criteria are also met).

Another noteworthy change appears to be that the scope of the phrase "companionship services" will have been narrowed considerably.  Reflecting USDOL's contention that the exemption should be primarily focused upon "fellowship and protection", exempt status would be lost if the companionship worker performs more than an incidental amount of "care" services (for example, dressing, grooming, meal preparation, driving, etc.).  Under the coming rule, the exemption would be lost for any workweek in which "care" services exceed 20 percent of the employee's total hours worked in that workweek.

We will be examining the Final Rule in greater detail once it appears in the Federal Register.

 

UPDATED 09 20 13:   We link below to a copy of what we understand to be the pre-publication version of the Final Rule package that USDOL says it will publish in the Federal Register "on or about October 1."

The actual changes at the document's conclusion are of course the heart of the matter, but USDOL's explanatory comments, views, rationales, and statements of intention are indispensable to an understanding of what is being done.  The material will also be important to any who decide to mount a court challenge to the validity of USDOL's changes.

 

29 C.F.R. Part 552 Final Rule.pdf (1.36 mb)

 

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Input Might Still Be Possible On Proposed "Companionship" Restrictions (Updated 12 27 12)

December 26, 2012 02:14
by Ted Boehm

Readers will recall our earlier posts (accessible here) relating to the U.S. Labor Department's proposed regulatory revisions that would significantly limit the application of the federal Fair Labor Standards Act's Section 13(a)(15) exemption for companions.  While the period for public comment on these proposals closed in March, a letter from an organization representing the interests of the disabled community, the National Council on Disability, demonstrates that it might not be too late to influence the outcome through other avenues.

A copy of correspondence from NCD to USDOL recaps an August meeting in which the NCD expressed its concerns that the proposed rule could have a "devastating impact on the community of Americans with disabilities" who rely upon domestic-service providers.  NCD urged DOL to engage in a "negotiated rulemaking process" with the disability community in order to minimize these negative effects.  NCD also offered to serve as a facilitator during that process, including by offering research and identifying experts to provide input that would become a "formative part of the final rule."

Whether or in what way USDOL has responded to NCD's overture is unknown.  However, USDOL's taking into account thoughtful, considered contributions like those NCD has offered could certainly lead to a better outcome than basing final action upon the thousands of form-letter comments submitted earlier.  For example, it is at least possible that the proposals could be changed to ensure that the exemption remains available to third-party companionship-service providers through whom many disabled persons secure those services.  Whatever the likelihood is that there will be such a modification could be improved by USDOL's having a greater amount of high-quality information on the subject.

USDOL has not yet published a date for releasing a final rule, but the release might nevertheless come without forewarning.  Interested parties might want to consider promptly joining the NCD's call for a "negotiated rulemaking process."

 

UPDATE 12/27/12:   USDOL now projects that the final rule will be released in April 2013.

 

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Senators Move To Preserve FLSA's "Companionship" Exemption

June 15, 2012 00:40
by Ted Boehm

There have been further developments regarding the U.S. Department of Labor's proposed regulation that would drastically limit the Fair Labor Standard Act's Section 13(a)(15) "companionship" exemption.  A collection of our posts relating to these matters can be accessed here.

The comment period for the proposed regulation closed on March 21, but the fight over the exemption continues with the Senate's recent entry into the fray.  A group of 11 Republican senators has introduced S. 3280 to block the proposed regulation.  The "Companionship Exemption Protection Act" would amend the FLSA to preserve the current state of the exemption.

Two of the bill's sponsors, Senators Alexander (R-Tenn.) and Johanns (R-Neb.), argue that the proposed regulation would drive up the cost of in-home care and would force families to institutionalize seniors, thereby straining state Medicaid budgets.  Their proposal is a more-elaborate take on the matter than is the identically-named H.R. 3066, introduced in the House of Representatives last September by Nebraska Republican Lee Terry.  One feature the bills have in common is that each would remove the Secretary of Labor's authority to "define[] and delimit[]" the exemption.

The companionship exemption provides that the FLSA's minimum-wage and overtime requirements do not apply to employees "employed in domestic service employment  to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves . . .."  However, USDOL's proposed regulation would revised the exemption by, among other things, significantly reducing the scope of exempt activities and making the exemption inapplicable to workers employed by third-party staffing agencies.  The most significant practical impact of the proposed regulation would be that far fewer individuals would qualify for the exemption.

As we previously noted, proponents of the effort to narrow the exemption initially sought to do so through legislative action.  However, those efforts subsequently shifted to the regulatory arena, most likely on the basis of political considerations.  Now, the battle appears to have come full circle.

Incidentally, neither of these bills would affect the potential impact of USDOL's proposals upon the FLSA's Section 13(b)(21) overtime exemption applying to "any employee who is employed in domestic service in a household and who resides in such household . . .."

 

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Proponents "Can't Wait" For Demise of Companionship, Live-In Domestic Exemptions (UPDATED: 03/10/12)

February 24, 2012 01:56
by John E. Thompson  & Ted Boehm

UPDATE (03/10/12):   The U.S. Labor Department has again extended the deadline for submissions.  Comments must now be received by Wednesday, March 21, 2012.

___________________________________________________________________

The U.S. Labor Department has extended the time for commenting upon the proposed provisions that would essentially spell the end of the federal Fair Labor Standards Act exemptions for companions and live-in domestic-service workers.  The new deadline is March 12, 2012.

This extension was announced over the objections of many who favor the curtailment of these exemptions.  The Paraprofessional Healthcare Institute, one of the groups pushing for the changes, put it this way:  "The companionship exemption [restriction] was included as part of President Obama's 'We Can't Wait' agenda, and we wholeheartedly agree."  According to PHI, the fact that more than 2,000 comments have been submitted already is cause for bringing public input to a close.

It is clear that the expected campaign to generate favorable comments has been underway.  As one example, many submissions say this, with little variation:

Along with [GROUP NAME HERE] and on behalf of home care workers across the country, I am writing in support of the Department of Labor’s proposed rule (RIN) 1235-AA05.  Home care workers provide an invaluable service to our older family members and people living with disabilities, working hard to help them stay in their homes.  The proposed rule, which would provide home care workers with minimum wage and overtime protections, is essential to stabilizing the quality and consistency of care for those who need care and to improving the quality of the jobs of those providing that care.  Enacting the rule takes one step toward ensuring a stable and skilled workforce to meet the growing demand for these services.  Thank you for recognizing the essential service home care workers provide by suggesting this rule.  We urge you enact it as soon as possible.

Perhaps the proponents' sense of urgency has been provoked by the fact that workers and employers who would be adversely affected by the proposed rules appear to have been voicing a counterbalancing opposition in greater numbers as the former deadline approached.

Now that the Labor Department has decided that the proposals can wait a little longer, those who wish to offer substantive arguments against them can take advantage of the additional time.  For instance, they might urge the Labor Department to consider the fact that, while Congress authorized it to "define[] and delimit[]" the companionship exemption, no such authority appears in the FLSA's live-in domestic overtime exemption.  Compare 29 U.S.C. § 213(a)(15) with 29 U.S.C. § 213(b)(21).  Moreover, not so long ago, it was the constitutional role of Congress to "enact" FLSA changes thought to be desirable for public-policy reasons.

 

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Clock Now Ticking On "Companionship", Live-In Domestic Restrictions

December 31, 2011 02:52
by John E. Thompson

The U.S. Labor Department has officially published the proposed provisions that would drastically limit the federal Fair Labor Standards Act's exemptions for "companionship" workers and live-in domestic employees.  As we have reported, adopting these proposals in their current form will mean that the proportion of such companions and domestic-service workers who are exempt from that law's minimum-wage and/or overtime requirements will be far smaller than it is today.

The deadline for submitting objections or other comments is February 27, 2012.

The Labor Department has been essentially unresponsive to employers' questions about its intentions as it developed these proposals.  However, it is now clear that, all along, officials have been working closely with proponents and other employee-advocacy groups.  A December 20 telephone conference hosted by the Paraprofessional Healthcare Institute revealed that communications with the Secretary of Labor and others at the Labor Department by those who favor the practical elimination of the exemptions have been "intensive."  This extended to an earlier submission of "thousands" of comments urging the kinds of changes that have now been proposed.

PHI favors restricting the exemptions despite the organization's acknowledgement that these revisions could well be "painful"; that they "may force some consumers to pay more, or receive fewer hours of service"; that "some profit margins may indeed become narrower for a while"; and that "some workers will have fewer hours".

The coalition of proponents will be coordinating another round of numerous statements favoring the changes.  Moreover, one teleconference presenter disclosed that the Labor Department will be keeping tabs on how many incoming comments there are, which is likely a hint that officials are inviting reason to characterize support as having been overwhelming.

Indications are that the result might be preordained.  But even if this is so, employers who are against the proposals have all the more reason to submit their objections and recommendations.  Failing to do so could provide fuel for a later argument (such as in any future litigation questioning the authority for and/or attacking the contents of the revisions) that the "regulated community" expressed little disagreement.

 

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