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Court Invalidates New FLSA Provision Relating to Home-Care Workers

WFNjBOx4On December 22, 2014 a federal judge struck down a new provision of the Fair Labor Standards Act (“FLSA”) that would have entitled most home-care workers to minimum wage and overtime just ten days before that provision was to take effect, according to Bloomberg BNA. As it stands, the FLSA exempts “any employee” who provides “companionship services” form the minimum wage and overtime provisions of the FLSA and also exempts “live-in” domestic service providers from the overtime provision of the FLSA. The new rule, proposed in December 2011, provoked over 26,000 public comments from industry and labor groups and others.

D.C. District Court Judge Richard L. Leon struck down provisions of the Department of Labor’s (“DOL”) new regulation that would have removed the minimum wage and overtime exemptions for home-care workers who are employed by third-party businesses, which, but for Judge Leon’s order, otherwise have made those individuals eligible for minimum wage and overtime. The Home Care Association of America and two other organizations brought suit against the DOL, claiming that the DOL violated administrative procedure in issuing this new regulation; Judge Leon agreed.

Although the D.C. District Court invalidate those provisions of the DOL’s new regulation, others remained intact. One provision that was not struck down narrows the types of duties for which home-care workers are exempt from minimum wage and overtime for “companionship services.” These services now include “only social, physical and mental ‘fellowship’ activities and ‘protection’ services, such as being present when a client is inside the home to monitor the person’s safety,” according to Bloomberg BNA. In short, this means that the number of activities for which a home-care worker will not receive minimum wage and overtime is smaller, thus making it easier for these workers to obtain these wage protections.

Jason Surbey, a DOL spokesperson, laid out the DOL’s strong disagreement with the court’s opinion and emphasized that the new, narrower definitions of “companionship services” will apply:

“As of January 1, 2015, one of the Final Rule’s central changes, the revision of the outdated definition of ‘companionship services,’ will go into effect,” Surbey told Bloomberg BNA. “All employers of home care workers, including third party employers, will be obligated to consider the duties such workers perform in evaluating whether they must pay wages in compliance with the minimum wage and overtime requirements.”

This is a good time to review a few of the basics regarding the FLSA, overtime, and minimum wages.

  • What isn’t covered by the FLSA? Among other things, the FLSA largely does not govern pay raises, vacation pay, sick pay, holiday pay, and severance pay. The FLSA also does not guarantee double time at any point, and working nights or weekends does not automatically entitle a worker to overtime unless that time causes them to have worked over 40 hours in that work week.
  • What is the federal minimum wage? Under the FLSA, the minimum wage is $7.25. States can decide to set their minimum wages above the federal minimum wage. $7.95 is also the minimum wage in Virginia. The minimum wage in the District is $9.50.
  • Who is entitled to minimum wage? There are two ways an employee can be protected or “covered” by the FLSA: enterprise coverage and individual coverage. Enterprise coverage applies to businesses and organizations (“enterprises”) that have at least two employees and (1) have an annual dollar volume of sales or business done of at least $500,000; (2) hospitals, businesses providing medical or nursing care for residents, schools and preschools, and government agencies. Individual coverage applies even when there is no enterprise coverage if the employee’s work regularly involves them in commerce between the states. The FLSA covers individual workers who are “engaged in commerce or in the production of goods for commerce.” As stated by the DOL:

Examples of employees who are involved in interstate commerce include those who: produce goods (such as a worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state, regularly make telephone calls to persons located in other States, handle records of interstate transactions, travel to other States on their jobs, and do janitorial work in buildings where goods are produced for shipment outside the State.
Also, domestic service workers (such as housekeepers, full-time babysitters, and cooks) are normally covered by the law.

  • Who is exempt from minimum wage? Some employees are exempt from minimum wage and overtime by law. Common exemptions include commissioned sales employees, computer professionals, drivers, driver’s helpers, loaders, mechanics, farmworkers, salesmen, partsmen, mechanics, seasonal and recreational establishments, executive, administrative, professional and outside sales employees, and a long list of other exemptions that can be found here.
  • What is the minimum wage if you’re a tipped employee? As explained by the DOL:

An employer may pay a tipped employee not less than $2.13 an hour in direct wages if that amount plus the tips received equal at least the federal minimum wage, the employee retains all tips and the employee customarily and regularly receives more than $30 a month in tips. If an employee’s tips combined with the employer’s direct wages of at least $2.13 an hour do not equal the federal minimum hourly wage, the employer must make up the difference.

  • When are you entitled to overtime? Overtime is due at a rate of one and one-half times an employee’s regular rate of pay after working 40 hours in a workweek.

Are you concerned that you’re not being paid fair wages for the time you’ve worked? Contact one of our attorneys today for a free consultation.