U.S. Supreme Court to Address Companionship Exemption Under FLSA

In mid-2004, the United States Court of Appeals for the Second Circuit became the first federal appellate court holding that the companionship services exemption under the federal Fair Labor Standards Act (“FLSA”) could not be used by home health agencies to avoid paying its home care attendants minimum wage and overtime pay. (Coke v Long Island Care at Home, Ltd., 376 F3d 118 (2d Cir 2004)). Citing a 2005 Wage and Hour Advisory Memorandum issued by the Department of Labor (DOL), the US Supreme Court remanded the Coke case back to the Second Circuit for reconsideration. The Second Circuit stuck to its original decision, and the home health agency at issue has asked the United States Supreme Court, again, to overturn that decision. On January 5, 2007, the Supreme Court agreed to hear the case.

Congress provided exemption from both minimum wage and overtime requirements of the FLSA for domestic service workers who provide companionship for the elderly and infirm. 29 U.S.C. § 213(a)(15). For nearly 30 years, the DOL has interpreted this section to apply to companionship employees who are employed by “third party” home health agencies other than the family or household actually using their services. Granted, the DOL has periodically proposed eliminating this exemption for third party employers but, following public comment, has invariably chosen not to do so.

If the Supreme Court upholds the Second Circuit’s decision, it will be a dramatic reversal in longstanding wage-and-hour practices making companionship services affordable for the elderly and infirm. The Second Circuit’s decision is in direct conflict with the Tenth Circuit, which has held that companion employees need not be employed directly by the family or household receiving services for the exemption to apply.

Regulations of the Wage and Hour Division (29 CFR § 552.1-552.110) establish the criteria that must be met before the companionship services exemption applies to an employee.

(1) The Services Provided Must Constitute “Companionship Services,” or “…those services which provide fellowship, care and protection for a person who because of advanced age or physical or mental infirmity, cannot care for his or her own needs. Such services may include household work related to the care of the aged or infirm person such as meal preparation, bed making, washing of clothes, and other similar services.”

(2) General Household Work May Not Exceed 20% Of the Total Weekly Hours Worked. Household work related to personal care, which would not constitute “general” household work, would include preparing meals, making beds, washing clothes or other related similar services such as washing dishes, sweeping the floor after meals or scrubbing the bathtub after a bath. Other housekeeping activities not related to the individual’s personal care, such as dusting furniture, vacuuming, washing floors and windows, or cleaning refrigerators and ovens, must be considered to be non-exempt ”general household work“ which is subject to the 20% time limitation.”

(3) Non-Trained Personnel (the exemption is not available for employees whose duties require the training of a registered nurse or a licensed practical nurse).

(4) Services must be provided in or about the private home of the person (that is, not group homes or assisted living facilities, according to the DOL).

(5) Joint Employment With the Client. The exercise of some supervision and control by the client over the employee providing the services can be sufficient to create the employment relationship for this purpose (e.g., the client’s involvement in choosing the employee who provides services, participation in scheduling, and participation in choosing the services to be performed).

The Coke decision is very significant for all home health agencies that rely on the FLSA’s companionship services exemption to exempt their employee’s from minimum wage and overtime pay. Directly applicable only in New York, Vermont and Connecticut, the Coke case creates a precedent that must be addressed by the Supreme Court. We will keep you advised of any ruling.