The United States Supreme Court has denied a request for a stay of the United States Court of Appeals for the District Of Columbia's ruling in the lawsuit challenging the U.S. Department of Labor's ("USDOL") "Final Rule" affecting minimum wage and overtime compensation for home care aides and live-in personal care services (known as the "companionship exemption" of the Fair Labor Standards Act, or FLSA).
Executive Summary. The United States Supreme Court has denied a request for a stay of the United States Court of Appeals for the District Of Columbia's ruling in the lawsuit challenging the U.S. Department of Labor's ("USDOL") "Final Rule" affecting minimum wage and overtime compensation for home care aides and live-in personal care services (known as the "companionship exemption" of the Fair Labor Standards Act, or FLSA). With this ruling, the Final Rule is expected to take effect on or about October 13, 2015, though the USDOL has formally stated that it will not begin enforcement proceedings under the Final Rule for 30 days following its effective date.
The Final Rule is the latest in a series of significant legal developments affecting wage and hour obligations in the home care industry, including the New York State Wage Parity Act ("WPA") and New York State Court decisions interpreting the New York Labor Law's "hours worked" rules. Detailed materials concerning these developments can be reviewed on our website homecareemploymentlaw.com.
Impact of the Final Rule. Upon its effective date, the Final Rule eliminates the application of the FLSA's "companionship services" exemption to employees of home care agencies throughout the United States, requiring that home care aides receive premium overtime compensation for hours worked over 40 in a work week at time and one-half their regular rate of pay. The "regular rate of pay" for a home care aide may vary from week to week depending, for example, on the employee's base rate of pay and differentials for weekend work.
Because the FLSA provides a "floor" beneath which an employee's pay cannot fall, for home care employers in New York, this means that the previous requirement that home care aides be compensated for overtime work at a rate of time and one-half the applicable minimum wage is no longer the law. Moreover, for home care employers who are required to pay their employees in accordance with New York's Wage Parity Act (WPA), this means that overtime compensation must be calculated based on the "regular rate" of $10.00 per hour (or higher, if the employee's hourly cash wage exceeds $10.00). Accordingly, under the WPA, an aide working in New York City is entitled to a minimum of $15.00 plus the supplemental benefit rate of $4.09 per hour (or $1.50 in Westchester, Suffolk and Nassau Counties) for each "overtime" hour worked.
Finally, a home care agency's potential liability is now more expansive as the Final Rule clarifies the FLSA's "hours worked" rules covering intraday travel between cases, waiting to be engaged time and on call time, among other time considered hours worked under the FLSA. These clarifications, coupled with New York State Court decisions involving "hours worked" principles as they relate to 24-hour sleep-in shifts, create new and substantial potential pitfalls for home care agencies operating in New York.
The Bottom Line. Upon its effective date, the USDOL's Final Rule becomes the latest in a series of legal developments that now require home care aides to be paid premium compensation for all overtime "hours worked" in a work week at one and one-half time the employee's regular rate of pay. This is a fundamental change in how home care aides are compensated.
If you have any questions regarding this Alert or would like our advice of your home care agency's particular facts and circumstances, please contact our Home Care Group members, Stephen Zweig, Philip Davidoff or Eric Su in FordHarrison's New York City office at (212) 453-5900, or the FordHarrison attorney with whom you usually work.