Agencies and other third-party employers of live-in household employees and home companionship providers, take note: the long-delayed regulations reclassifying many of these workers as non-exempt employees entitled to minimum wage and overtime under the FLSA are now in effect.
Articles Discussing Wage And Hour Issues In Particular Industries.
On August 21, 2015, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Department of Labor’s Home Care Rule.1 Based on that decision, the effective date of the Home Care Rule is October 13, 2015.
In Montano v. Montrose Restaurant Associates, Inc., the U.S. Court of Appeals for the Fifth Circuit was presented with what may seem like an easy issue: does including a “coffeeman” in a tip pool invalidate the tip credit? The Fifth Circuit’s answer? It depends. While the court attempted to articulate a test that would provide some clarity, it may be such a fact-intensive inquiry that it does not provide employers much guidance.
Until recently, the U.S. Department of Labor (DOL) had long interpreted the federal Fair Labor Standards Act (FLSA) as exempting companionship-services workers and live-in domestic service workers employed by third-party employers (i.e., “home care agencies”) from the FLSA’s minimum wage and/or overtime requirements. In 2013, however, the DOL adopted regulations reversing that established position, finding that the FLSA’s minimum wage and overtime requirements protect home care agency workers and sending shockwaves throughout an entire industry.
On August 21, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) upheld the United States Department of Labor’s (“DOL’s”) Home Care Rule and reversed the lower court’s decisions vacating the new Rule. In the Home Care Rule, issued in October 2013, the DOL declared that third-party employers of home care “companions” or live-in caregivers for the elderly and disabled could no longer avail themselves of the longstanding statutory exemption from overtime requirements. The new Rule also set a maximum 20 percent threshold for any caregiving services to be provided by home care companions, regardless of their employer, to qualify for exempt status. The effect of the new Home Care Rule(s) is to require overtime to be paid for the first time to more than 90% of all home caregivers throughout the country.
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.
BREAKING NEWS: The D.C. Court of Appeals ruled today that the US Department of Labor’s (“DOL”) Final Rule on the Application of the Fair Labor Standards Act to Domestic Service (the “Final Rule”) is valid, because it is “grounded in a reasonable interpretation of the statute (FLSA) and is neither arbitrary nor capricious.” Under the Final Rule, home care agency workers are no longer covered by the FLSA’s companionship services exemption or its live-in domestic worker exemption. This decision is of serious concern to the home care industry. Whether the decision will be appealed to the U.S. Supreme Court remains to be seen.
In accordance with the Ninth Circuit and several other federal court rulings, the Court of Appeals for the Fourth Circuit yesterday held that an employee cannot bring a claim for wages based on allegedly misappropriated gratuities under the FLSA. Trejo v. Ryman Hospitality Props., 2015 U.S. App. LEXIS 13204 (4th Cir. July 29, 2015).
The U.S. Department of Labor (DOL) recently issued its long anticipated proposal to update the regulations on overtime exemptions for certain “white collar” employees.Under the Fair Labor Standards Act, workers are entitled to overtime pay of 1 ½ times their regular rate of pay for hours worked over 40 in a workweek, but there are exemptions for executive, administrative, and professional employees (among other exemptions). In order to qualify for one of these three exemptions, an employee must meet both a “duties” test and a “salary” test. The new proposed regulations would modify the salary test by increasing the minimum required salary from $455/wk. ($23,660 annually) to $921 per week ($47,892 annually). The salary levels were last updated in 2004. Check out our newest HRW Alert for more information about how these regulatory changes can affect your company as well as how to submit comments to the Department of Labor. Please click this link for your copy of the full HRW Alert.
Reversing a district court decision, and declining to follow decisions from a number of other courts, including the Fourth and Fifth Circuits, the Ninth Circuit has deferred to the Department of Labor’s (DOL) “flip-flopped” view of whether the FLSA’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles,” applies to auto dealer service advisors/service writers.
In Navarro v. Encino Motorcars, LLC (9th Cir. Mar. 24 2015), the U.S. Court of Appeals for the Ninth Circuit addressed an issue of first impression in the Circuit: whether individuals who worked for automobile dealerships as “service advisors” were exempt from the Fair Labor Standards Act’s (“FLSA”) overtime premium pay requirements. In reversing the district court’s decision, the Navarro court held the FLSA’s exemption for automobile dealership salesman, partsman, and mechanics did not apply to service advisors.
On December 17, 2014, Judge Charles Norgle of the Northern District of Illinois granted summary judgment to an employer on all counts in a tip credit case where servers argued they were engaged in activities outside of their server duties. In Schaefer v. Walker Bros. Enterprises, Inc., 10 CV 6366, plaintiffs alleged that their employer violated the Fair Labor Standards Act (FLSA) and the Illinois Minimum Wage Law (IMWL) by: (1) incorrectly using a tip credit to pay plaintiffs an hourly rate less than minimum wage while requiring plaintiffs to perform duties outside of their tipped occupation; and (2) failing to properly inform plaintiffs of their intent to apply the tip credit to plaintiffs’ wages.
On Thursday, January 22, 2015, the U.S. Department of Labor (DOL) appealed the U.S. District Court for the District of Columbia’s two orders that vacated both major provisions of the DOL’s Home Care Rule. Originally intended to be effective on January 1, 2015, the new rule would have excluded third-party employers from relying on the companionship and live-in domestic worker exemptions and would have drastically narrowed the definition of companionship services under the Fair Labor Standards Act (FLSA). On December 22, 2014, and on January 14, 2015, the court vacated both regulatory changes.
On Wednesday, January 14, 2015, the U.S. District Court for the District of Columbia vacated the U.S. Department of Labor’s new rule that purported to narrow the definition of “companionship services” exempt from overtime under the Fair Labor Standards Act. Rejecting the DOL’s arguments in support of the new rule, the court found that the statutory exemption of home care companions “clearly targets workers who provide services to those who need care. . . . Limiting that care to only 20 percent of a worker’s total hours defies logic, and Congressional intent.” The court concluded, “Here, yet again, the [DOL] is trying to do through regulation what must be done through legislation. And, therefore, it too must be vacated.”
At the eleventh hour, a District of Columbia federal court today issued a Temporary Restraining Order (TRO) preventing a U.S. Department of Labor (DOL) rule from taking effect on January 1, 2015 that would have drastically narrowed the “companionship services” exemption from overtime under the Fair Labor Standards Act (FLSA). This order followed the same court’s previous ruling on December 22, in which the court struck down another part of the DOL rule that would have prevented third-party employers from availing themselves of the companionship and live-in exemptions at all.