Federal Court Strikes Down Overtime Wage Rules for Some Home Care Workers

Reversing a hotly contested wage rule decided earlier this year, a U.S. District Court ruling prior to the holiday Christmas that overturned certain minimum wage and overtime protections for home care workers has spurred mixed reactions between advocacy groups and industry stakeholders. 

Considered a major victory by home care trade associations, the ruling in the case Home Care Association of America v. David Weil strikes down new overtime rules promulgated by the U.S. Department of Labor (DOL) that would have taken effect January 1, 2015. 

Specifically, the court sided with plaintiffs including the Home Care Association of America, the National Association for Home Care & Hospice (NAHC) and the International Franchise Association, which challenged a rule that would prohibit the application of two overtime compensation exemptions: companionship services and live-in domestic services. 

In other words, the court’s decision allows home care agencies and other third-party payers to continue denying minimum wage and overtime pay to home care workers who provide “fellowship and protection” as opposed to personal care.

It would have also exempted workers employed by home care agencies and other third-party payers who provide services on a live-in basis.

Had the rule been enacted, 90% of care would have been affected, said NAHC in a statement on the court ruling.

The trade group also argued that had the rule taken affect, it would have created higher care costs that would have been borne by consumers and “financially strapped” government funding programs like Medicaid.

“This is a victory for elderly and disabled persons who rely on home care,” said NAHC President Val Halamandaris. “This victory proves the value of industry unity. United, fighting on behalf of the elderly and disabled we cannot fail, divided, we cannot succeed.”

And while the home care industry considers this a major triumph, for others the ruling is far from celebratory. 

Caregiver advocacy groups, such as the Paraprofessional Healthcare Institute, argue that the ruling perpetuates the exploitation of home care aides who provide vital services to millions of Americans.

“As a nation, we cannot afford to consider these anything other than ‘real’ jobs, deserving of the same basic labor protections that are afforded nearly every other American worker,” PHI stated in a release. “Quality long-term services and supports depend on a well-trained, well-compensated, and stable workforce.”

Others, like the not-for-profit organization The National Employment Law Project (NELP), shared the sentiment that the district court’s ruling sends the message that the work of home care workers is not real labor.

“It is appalling that the $90 billion home care industry, which has seen its revenues double in the last decade, would seek to avoid the most basic of labor protections for its employees, the right to minimum wage ad overtime pay,” said NELP Director Christine Owens in a written statement. 

The D.C. court based its decision on U.S. Supreme Court ruling that the DOL doesn’t have the authority to extend minimum wage obligations to third-party agencies, and that the agency violated language of the Fair Labor Standards Act with the rule that excluded third-party employers from application of the “comprehensive services” and “live-in domestic services.”

What’s baffling to Owens is the plaintiffs’ opposition to the federal “fair-pay” rules, because many of the for-profit home care agencies represented in the lawsuit already operate in states where state minimum wage and overtime protections apply.

“This either suggests that they’re not taking the wage requirements seriously in those states, or that their claims of hardship and burden from having to comply with basic pay rules—laws that almost all other employers somehow manage to adhere to—are very much overstated,” Owens said.

This year, home care workers have rallied throughout the country in efforts to gain better wage and labor protections. Mostly comprised of women and disproportionately women of color, home care workers have been touted as among the lowest-paid workers in the country—median hourly wages of $9.61—in a labor sector projected to explode with demand.

The federal court’s ruling does, however, leave in place the DOL’s definition of companionship, which limits the application of the exemption to workers who provide fellowship and protection and spend less than 20% of their working hours on personal care. 

“The D.C. District Court’s decision yesterday to vacate one section of the new rules is erroneous and regrettable, but fortuntartely, its impact will be relatively limited,” Owens said. “The new home care regulations will go into effect on January 1, 2015 and will still cover most home care workers.”

Written by Jason Oliva