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Court Prevents Implementation of New DOL Rule on "Companionship Services"

On December 31, 2014, a District of Columbia federal court issued a Temporary Restraining Order (TRO) preventing a U.S. Department of Labor (DOL) rule from taking effect on January 1, 2015, that would have drastically narrowed the "companionship services" exemption from overtime under the Fair Labor Standards Act (FLSA). This order followed the same court's earlier ruling in which the court struck down another part of the DOL rule that would have prevented third-party employers from availing themselves of the companionship and live-in exemptions at all.

The lawsuit challenging the new rule was filed on behalf of a coalition of associations representing third-party home care providers. In the lawsuit the coalition contends that the DOL's new rule exceeded its authority under the FLSA, which specifically exempts companionship and live-in employees from overtime requirements in order to maintain the affordability of home care services to the elderly and infirm. The court at least initially found merit to that argument.

A TRO is an extraordinary measure, and it can only stay in force for up to 14 days. The court set a hearing for January 9 on the coalition's motion for a Preliminary Injunction. The court indicated it expects to rule on the preliminary injunction at the hearing, but in any event no later than January 14. Assuming the court grants the preliminary injunction at that time, the exemption from overtime will continue in effect until a final ruling of the Court of Appeals.

If the TRO and/or preliminary injunction remain in effect, home care companies can continue to pay home care aides and personal care attendants without added overtime compensation except where state law requires it. Some minor changes to the DOL rule will take effect on January 1 and are not impacted by the court's December rulings.

Stay tuned, as it is clear that the Court will rule on the preliminary injunction in less than two weeks.


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