August 11, 2020

Volume X, Number 224

August 11, 2020

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August 10, 2020

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DC Circuit Upholds DOL’s End to Companionship Exemption for Third-Party Agencies

The U.S. Court of Appeals for the D.C. Circuit today ruled that the U.S. Department of Labor’s decision to  reverse its prior position and extend the FLSA’s minimum wage and overtime protections to employees of third-party agencies who provide companionship services and live-in care within a home was a reasonable interpretation of the law.  The change rendering the FLSA’s so-called “companionship exemption” unavailable to companions and live-ins employed by third-party agencies was scheduled to take effect January 1, 2015 before several trade associations challenged it.  The challenge was initially successful as the district court both vacated the “third-party employment” regulation and rejected and vacated the DOL’s attempt to narrow the definition of “companionship services.”  Reversing the lower court, however, the D.C. Circuit found the DOL provided a reasoned explanation for its position that the existing regulation misapplied congressional intent, and justified its shift in policy based on what the DOL coined a “dramatic transformation” of the home care industry since the third-party employer regulation was promulgated in the 1970s when most private homecare workers were employed directly by a member of the household and not a third-party agency as is the mostly the case today.  The decision stands to bring monumental changes to the business model in the industry.  While further appeal to the U.S. Supreme Court is possible if not likely, industry employers again are urged to consult with counsel to develop their short and long-term compliance strategy.

Jackson Lewis P.C. © 2020National Law Review, Volume V, Number 233

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About this Author

Noel Tripp Principal Employment lawyer at Jackson Lewis Law Firm
Principal

Noel P. Tripp is a Principal in the Long Island, New York, office of Jackson Lewis P.C. Since joining Jackson Lewis as a summer associate in May 2005, he has practiced exclusively in employment law.

Mr. Tripp has been involved in matters pending before federal and state courts and administrative agencies covering the gamut of employment-related matters from discrimination and workplace harassment to wage/hour disputes and affirmative-action compliance. His principal focus is the defense of class and collective action...

631-247-0404
Douglas J. Klein, Jackson Lewis, arbitration attorney, labor employment lawyer
Associate

Douglas J. Klein is an Associate in the New York City, New York, office of Jackson Lewis P.C. He is engaged exclusively in the practice of labor and employment law on behalf of management.

Mr. Klein regularly appears in federal and state courts, at arbitrations and mediations and before administrative agencies such as the Equal Opportunity Commission, the National Labor Relations Board, the United States Department of Labor, the New York State Department of Labor, the New York State Division of Human Rights and the New York City Commission on Human Rights. Mr. Klein defends employers in a wide range of labor and employment matters such as collective and class action wage and hour cases, discrimination cases and unfair labor practice charges. He also appears on behalf of clients in representation and decertification proceedings and collective bargaining negotiations.

212-545-4000