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Federal Court Vacates Key Component of Labor Department FLSA Rule Set to Take Effect January 1, 2015

On December 22, the U.S. District Court for the District of Columbia issued a decision in the case of the Home Care Association of America et al v David Weil, et al. The decision grants the home care community's motion for partial summary judgment and vacates the U.S. Department of Labor's efforts to deny third-party employers access to the existing companion care exemption under the Fair Labor Standards Act (FLSA). The Department's rule, modifying the FLSA, was set to take effect on January 1, 2015. While we are excited about this victory for HCAOA members and the clients they serve, the decision does not vacate the entire regulation and does not resolve concerns with the Labor Department's updated definition of companion care. In his decision, Judge Richard J. Leon states "Undaunted by the Supreme Court's decision in Coke, and the utter lack of Congressional support to withdraw this exemption, the Department of Labor amazingly decided to try to do administratively what others had failed to achieve in either the Judiciary or the Congress." Judge Leon further states "The language of the exemption provision is quite clear: 'any employee' who is employed to provide companionship services, or who resides in the household in which he or she is employed to perform domestic services, is covered by the exemption."  HCAOA has long held the Labor Department's regulatory actions in this area were outside the bounds of the law. 

What's Next

HCAOA and its litigation partners will be seeking action by the court to vacate the remaining component - definition of companion care - that is scheduled to go in effect on January 1. We are looking to have a restraining order issued by the court in the short term while arguing for the entire rule to be vacated. 

Considering that HCAOA will be incurring additional costs to continue to litigate the companion care lawsuit, we are urging members to contribute funds to the HCAOA General Fund- donate HERE to help offset the continued costs to the association. Our victory this week is only the first step as we face the federal government who will bring extensive resources to continue to fight on this issue. We urge you to contribute today! 

Recognizing that this will impact how our member companies prepare for the rule's implementation, please see the following information that provides some general direction to determine whether a caregiver falls within the companionship services exemption. As a general rule of thumb, the services performed by the caregiver must meet the following requirements in order to qualify for the exemption:

1) Be primarily fellowship and protection. 

2) Not more than 20% of the total hours worked per person and per workweek may be used for providing "care."  "Care" includes providing assistance with  activities of daily living such as feeding, dressing, bathing, etc.

3) No domestic services may be performed primarily for the benefit of other members of the household.   At this time, there is no guidance on how to interpret the word "primarily" in this context.

4) No medically related services are permitted that require trained personnel (i.e., RNs, LPNs and CNAs). 

If these requirements are met, the caregiver will be exempt from minimum wage and overtime pay under the FLSA effective January 1, 2015.

The Actions Leading Up to the Court's Decision                   

The Court's decision follows a series of legal proceedings including a recent hearing in U.S. District Court for the District of Columbia court based on a Request for Expedited Hearing to hear oral arguments on the case. Judge Richard J. Leon presided over the hearing held on November 19. Upon hearing the oral arguments from both sides, Judge Leon closed the proceedings by indicating that he would render a decision in December.

The Arguments in the Case

DOL attorneys argued that the Secretary of Labor has authority to define the scope of the FLSA companionship services and live-in domestic service worker exemptions, as explained by the Supreme Court in Long Island Care at Home Ltd. v. Coke. As stated in their response, "In creating these exemptions, Congress granted the Secretary broad general authority to prescribe "rules, regulations, and orders" implementing them, as well as explicit authority to "define and delimit" the scope of the companionship services exemptions." Further, they argued that the Secretary promulgated the regulations at issue in this case through notice-and-comment rulemaking, based on his determination that the existing regulatory provision regarding third party employment in the domestic service context was outdated. They concluded that because the Secretary filled a statutory gap through notice-and-comment rulemaking and did so in a reasonable manner. .

In arguments presented by HCAOA attorneys, we outlined the Department's failure to reconcile the Rule with the legislative history of the FLSA and provide an adequate justification for the Department's reversal of its longstanding enforcement of the FLSA exemptions. We emphasized that the DOL has arbitrarily ignored or improperly discounted the facts underlying the prior policy of exempting home care companion and live-in services. Further, we argued that the Rule capriciously undermines the intent of Congress to encourage deinstitutionalization of care, control costs of care, and maintain continuity of care for a longer number of hours each day. Substantial evidence in the record strongly indicated that each of these factors will be adversely impacted by the Rule. We concluded that the "...Court should find that the Department has failed to justify the new Rule with substantial evidence in the record as a whole, and the new Rule must be found to be arbitrary and capricious as a result."

We supplemented our primary legal arguments with specific concerns in response to the DOL Policy Statement issued on October 9. Specifically, we argued the DOL's Policy Statement confirms that a broad cross-section of organizations, including Medicaid directors, directors of developmental disabilities services, organizations representing people with disabilities and several state governments, agree with us that the new Rule will have serious adverse impacts on the provision of home care and should at a minimum be postponed from taking effect.  We further argued that the Policy Statement highlights the need for expedited consideration in our call for a summary judgment, necessitating the request for the expedited hearing before the Court.

2014: A Year of Heightened Advocacy

HCAOA wants to thank its members for their advocacy efforts during 2014.  You helped address concerns at the state and federal level on a range of important issues to the home care community. Those efforts helped to raise the visibility of home care service providers and also began a dialogue with state and federal officials on a range of important issues.

In 2014, you responded to alerts on a range of state and federal issues.  Some 3,657 messages were sent via HCAOA's grassroots advocacy system in 2014.  This covered a range of issues including the FLSA Rule, federal worker misclassification legislation, employer-related provisions of the health reform law, state accreditation requirements, and issues related to the Domestic Worker Act that found its way into state and federal legislation.

The Year Ahead

The political changes that have taken place at both the state and federal level are likely to create a new environment for legislative activity in Congress and in states around the country. HCAOA is preparing for this new era with an agenda to address the short and long-term needs of the home care community. 

The public policy agenda for the HCAOA for the coming year will include:

Federal Level

• Support Home Care Federal Tax Policy Legislation
• Support Worker Misclassification Legislation
• Support Employer-Related Reforms to the Affordable Care Act
• Support Legislative Reforms to the Fair Labor Standards Act Relating to Domestic Worker Services

• Support Efforts to Address Home Care Workforce Shortages

State Level

• Promote a Home Care Value Resolution
• Promote State Licensure for Home Care Providers
• Provide HCAOA Members with Issue Specific Guidance on Critical State Legislative/Regulatory Concerns, to include:
  •    Domestic Worker Act
  •    Accreditation
  •    Registries

Highlights of the 2014 4th Quarter

Congress Enacts ABLE Act as Part of Tax Extender Bill

On the evening of December 16, 2014, the U.S. Senate cleared a $41.6 billion package of temporary tax breaks by a vote of 76-16, closing out the 113th Congress.  Senate passage, following House passage of the bill (HR 5771) earlier this month, revives the tax credits for only the 2014 tax year, leaving some lawmakers pledging to revive plans to build a long-term package next Congress into an ambitious tax overhaul effort. The package includes about 50 tax breaks large and small, including the research and development credit for business, deductions for state sales taxes, and many others.

The package includes a House-passed measure creating tax-free accounts for individuals with disabilities that have been compared to 529 accounts that exist for higher education.  Allowable uses of funds saved in these new ABLE accounts (named for the title of the House bill) can be used for costs including personal support services.  HCAOA believes these tax preferred accounts can assist individuals and their families in addressing the costs of home care services.  HCAOA endorsed this legislation and urged its enactment.

Please click HERE for more information on the tax extender provisions and the new ABLE Accounts. 

Federal and State Election 2014 Wrap Up

While many eyes were on the Congressional election results, the states were busy deciding the fate of over 6,000 state legislative seats and over 30 gubernatorial races. The importance of these midterm elections cannot be overstated. The "red wave" that swept Congress is also evident at the state level. Republicans controlled 59 of 98 partisan legislative chambers prior to the election. Republicans now control 67 legislative chambers, five more than their previous record, and will hold supermajority status in at least 16 states. In 24 states the Republicans will now hold control of both chambers and the Governor's office. Democrats have control of the legislature and executive office in only six states, by comparison.

In Congress, Republicans have had a remarkable change of fortune moving from 45 Senate seats in the 113th Congress to 55 seats in the forthcoming 114th Congress. Republicans made historic gains in the House of Representatives and will enjoy their largest majority since prior to the Great Depression with 247 members compared to 188 Democrats. 

Republican control of the Senate could prove helpful as HCAOA presses Congress for changes to the employer mandate provisions of the Affordable Care Act, and seeks relief from the Obama Administration's new companion care exemption rules which will be implemented as of January 1, 2015.

In addition, the 2014 elections contained several ballot initiatives of significance. Five states took up the issue of minimum wage.  These included Alaska, Arkansas, Illinois, Nebraska, and South Dakota. All five states approved the ballot measure providing for gradual increases to the state's minimum wage in 2015 and beyond.

2014 HCAOA Annual Leadership Conference Exceeds Expectations

Over 300 participants traveled to Kansas City for the HCAOA Annual Leadership Conference. This year's conference offered numerous presentations tackling challenges facing home care providers culminating in the "Perfect Storm." The conference provided in-depth information into critical policy issues such as the Affordable Care Act and the Companion Care exemption final rule. In addition, participants left the conference with valuable information on current issues, trends, and strategies that are charting the course for the home care industry.

Throughout the conference, over 40 leading vendors exhibited their latest offerings supporting member home care providers across the country. Participants took the opportunity to visit the exhibit hall to learn the newest competitive strategies, find out what's cutting-edge, and used the venue to network with key innovators across the home care industry.

As part of every Annual Conference, the HCAOA conducts its annual business meeting that includes the President's Report, the annual HCAOA Awards Ceremony and Board of Director Elections. 

• HCAOA President Peter Ross outlined his vision for the organization and how HCAOA can become more relevant to the home care industry.

• The HCAOA Caregiver of the Year Award recognizing a caregiver who demonstrates extraordinary commitment to the delivery of care to clients and their families. HCAOA congratulates this year's award winner Mary Hartsock of Right at Home. 

• The 2014 Allen Hager Award for Distinguished Service in Legislative Advocacy was awarded to Mike Rohan of All Trust Home Care.

• HCAOA congratulates Mike Rohan, Linda Grigerek and Kris Frank as the newest members of the HCAOA Board of Directors.  These new Board Members were officially installed at the November meeting of the HCAOA Board of Directors. 

The Conference was highlighted by the introduction of a custom designed mobile conference app that provided for an exceptional experience for participants. The app featured the conference schedule, speaker and vendor information, and provided a social media platform for participants to share their experiences throughout the conference. 

We would like to thank all of the sponsors, exhibitors, speakers and of course, the attendees, for contributing to the success of the conference!

We invite you to attend the 2015 HCAOA Annual Leadership Conference that will be held in Washington, DC September 27-30, 2015. Please save the date and stay tuned for more information as we begin planning for next year's conference!

Members Contribute Valuable Input towards Strategic Planning Process