Court Prevents Implementation of New DOL Rule on “Companionship Services”
On December 31, 2014, the 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.
On January 14, 2015, the same court entered an Order striking down the new regulation. Instead of entering a preliminary injunction, the Court inviting the parties to submit additional briefing if they so desired, held oral argument, and issued a final Order on the merits of the rule.
The court first noted that the FLSA itself contains a “companionship services” exemption that applies to employees who provide services for persons who because of age or infirmity are unable to care for themselves. The statute makes it clear that such services are provided to elderly and disabled persons who are unable to care for themselves.
The court found that the DOL’s new regulation defines “care” so narrowly that it effectively prevents such workers from providing much of the care that is needed by the persons being served. In other words, the DOL’s regulation goes so far that it contradicts the statute. Administrative agencies can adopt regulations that implement or clarify the statute, but a regulation may not contradict the statute. For this reason, the new regulation cannot stand.
In reaching this conclusion, the court noted that the companionship exemption had been consistently interpreted since 1974. In the forty years since, Congress had amended the FLSA on several occasions. This series of events creates the strong impression that Congress approved the previous definition given to companionship services, and provided further evidence that the DOL’s new rule may not stand.
The DOL has not stated whether it will appeal this ruling. But for now at least, the new rule has been struck down.