A Cautionary Note On That "Companionship Services" Rule
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As we have previously reported, a federal district court for the District of Columbia recently vacated new U.S. Department of Labor regulations promulgated under the Fair Labor Standards Act, which (1) barred third-party employers from claiming minimum wage and overtime exemptions for "companionship" domestic service workers, and (2) narrowed the definition of "companionship services" considered exempt from the minimum wage and overtime requirements of the FLSA.
Not surprisingly, the DOL appealed the district court decision in Home Care Association of America v. Weil, and asked the U.S. Court of Appeals for the District of Columbia Circuit for an expedited briefing schedule. That request was granted, and briefing is expected to be completed by April 2. Oral argument is expected to be expedited, as well.
According to the DOL, it's an open question whether the Home Care ruling applies to anyone other than the parties to the lawsuit. Most commentators believe that it does, but the legal arguments presented in Home Care have not been presented in other federal district courts. Thus, a private party might seek to enforce the new DOL regulations by suing in a different court, which could come to a different conclusion about the new regulations' validity and application. Until the final disposition of the appeals process in the Home Care case, third-party employers of companionship providers and other stakeholders should be aware that there is some uncertainty about potential liability through private enforcement of the new regulations.
Moreover, if the district court decision is overturned on appeal, it could mean the rule as finalized by the DOL might apply back to its effective date of January 1, 2015. Given the high stakes associated with this litigation, the losing side is likely to seek review by the U.S. Supreme Court.
One final caution: Third-party employers of companionship providers should review applicable state laws in this area, as some state laws require payment of the state minimum wage and overtime to such employees.
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