
The Final Rule
The
DOL’s Final Rule was issued some time ago and
eliminates the overtime pay exemption that previously existed under the FLSA for
workers employed by third parties who provide either companionship services or
live-in care for the elderly, ill, or disabled. Prior to issuing the Final
Rule, the DOL interpreted the FLSA’s statutory overtime exemptions for
companionship and live-in services to cover workers employed directly by a home
care recipient, the care recipient’s family members, or by a third party provider
who placed the worker at a care recipient’s home. The new Final Rule, however,
limits this exemption to companionship and live-in care workers employed directly
by the care recipient, the recipient’s family, or the household using the
services. The Final Rule also contains other legal changes, including a
narrower interpretation of the types of tasks that qualify as “companionship
services” and revised recordkeeping requirements for employers of live-in
domestic employees.
The
Final Rule was supposed to take effect on January 1, 2015, and the DOL had
announced that it would delay enforcement for a six month transition period to
allow employers to prepare for the legal change. Third party providers got a reprieve,
however, when the federal District Court for the District of Columbia ruled in
December 2014 that the DOL had exceeded its authority in extending the FLSA overtime
pay requirements to third party employers. The District Court found that the
Final Rule’s focus on third party employers contravened the plain terms of the
FLSA and was, therefore, invalid.
Unfortunately
for third party employers, the D.C. Circuit Court of Appeals has reversed the
lower court’s ruling in Home
Care Association of America v. Weil. A unanimous Court of Appeals found that the DOL
had the discretion, based on its general rulemaking authority, to extend FLSA
overtime pay requirements to domestic companionship and care workers employed
by third-parties. In addition, the Court noted that the Final Rule is
consistent with “Congress’s evident intention to ‘include within the coverage
of the [FLSA] all employees whose vocation is domestic service,” in contrast to
the “type of assistance provided by a ‘neighbor’ or an ‘elder sitter.’” The Court
also took notice of the DOL’s reliance on changes in the homecare industry that
have taken place since the prior DOL rule was published in 1975.
What’s Next?
At this
time, it is unclear when the Final Rule will become effective. The Court of Appeals
has remanded the Weil case to the D.C.
federal district court for entry of summary judgment in favor of the DOL. If
either party to the case seeks further legal review, however, (such as a
petition for rehearing by the Court of Appeals or review by the U.S. Supreme
Court), an enforcement stay might be issued pending this further review. In
addition, the DOL could elect to voluntarily defer enforcement for a transition
period. Given this uncertainty, third party providers of home-care services
need to stay tuned for further developments and announcements from the DOL.
Should
the Final Rule become effective, affected employers will need to either start
paying overtime pay to covered home care workers for overtime hours or take
steps to prevent these workers from working overtime hours. Employers may
lawfully have policies that prohibit overtime hours without advance approval. Should
an employee violate this type of policy, an employer typically must still
provide overtime pay for the worked overtime hours but may discipline or fire
an employee for the policy violation. Where an employer elects to allow
overtime work and to pay overtime pay, the employer will need to take the
following steps to ensure compliance with the FLSA’s overtime pay requirements:
- Covered workers will need to be instructed to record all time worked so that the employer can determine if overtime hours have been worked in a given week and, if so, how much overtime pay is due.
- Under the FLSA, an employee subject to FLSA overtime pay rules must be paid 1.5 times the employee’s regular rate of pay for all hours worked over 40 hours in the employer’s seven day work week. An employee’s regular rate of pay includes any regular hourly rate of pay, plus any additional pay made pursuant to a contractual or guaranteed pay arrangement such as bonus or commission pay.
- Recent years have seen an uptick in wage and hour claims, including claims by workers that they have been forced to work “off the clock” time for which they should have been paid. Employers subject to the new overtime pay requirements should, therefore, ensure that they are familiar with the rules around counting time worked for overtime purposes, including pre-shift or post-shift work, remote work, on-call time, and travel time.
- State and local laws can supplement the FLSA. As such, employers should always check the state and local laws where the employee resides or works to determine if additional overtime pay requirements apply.
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