Providers not completely off the hook in wage ruling

Home healthcare providers scored a victory in federal court Monday when a judge said the U.S. Department of Labor can't force them to pay minimum wage and overtime to some workers.

But that doesn't mean providers are necessarily off the hook. The judge didn't address another part of a rule issued this year by the U.S. Department of Labor that significantly narrows the definition of companionship services, which have long been exempt from wage and hour protections.

In his ruling Monday, U.S. District Court Judge Richard Leon noted that congressional attempts to make similar changes have failed and the fact that the Department of Labor created a new rule to provide protections anyway “is nothing short of yet another thinly veiled effort to do through regulation what could not be done through legislation” and “bespeaks an arrogance to not only disregard Congress's intent, but seize unprecedented authority to impose overtime and minimum wage obligations in defiance of the plain language” of the law.

Home health providers said the decision will help them continue to provide affordable, quality care. The Home Care Association of America, the International Franchise Association and the National Association for Home Care and Hospice sued the government in June over the rule, saying it would “destabilize” the home care industry and rob seniors and the disabled of quality, affordable care.

Others, including the Obama administration, decried the ruling as unfair to workers.

The Paraprofessional Healthcare Institute, an organization representing home health aides and other healthcare workers, noted that the industry has seen its revenue double in the past decade while many of its workers, a majority of whom are minority women, “earn poverty wages.” “As a nation, we cannot afford to consider these anything other than 'real' jobs, deserving of the same basic labor protections that are afforded nearly every other American worker,” the group said in a statement.

But the paraprofessional group also argued that exceptions to the pay protections, regardless of the court's decision, should be “rare” given the new definition of companionship.

Until now, companions who provided “fellowship, care and protection” to the elderly or disabled have been exempt from minimum wage and overtime pay protection. The new Department of Labor rule, however, narrows the exemption to only those who spend no more than 20% of their time providing actual care. And that rule still stands despite the judge's ruling.

It wasn't clear Tuesday how many workers might fall under that new definition, but the Paraprofessional Healthcare Institute says it should mean that most companionship workers will now be eligible for minimum wage and overtime despite the judge's decision.

The Department of Labor said it disagreed with the judge's decision and is reviewing the ruling, calling its new wage and hour rules “the right policy—both for those employees, whose demanding work merits these fundamental wage guarantees, and for recipients of services who deserve a stable and professional workforce allowing them to remain in their homes and communities.”

The department's statement, however, likewise noted that the part of the rule changing the definition of companionship services still stands, meaning that as of Jan. 1, employers of home care workers “will be obligated to consider the duties such workers perform in evaluating whether they must pay wages in compliance with the minimum wage and overtime requirements.”

Meanwhile, industry groups praised the judge's decision, albeit with caveats about the part of the rule that remains in place.

“This decision is a victory for clients of home care providers, including seniors and individuals with disabilities, who depend on these essential services to remain in their homes and independent,” Phil Bongiorno, executive director of the Home Care Association of America, said in a statement.

The association's statement also noted, however, that “this decision does not vacate the entire regulation and does not resolve concerns with the Labor Department's updated definition of companion care.”

Val Halamandaris, president of the National Association for Home Care & Hospice, said in a statement he celebrates the judge's decision and looks “forward to the next phase of the lawsuit, which will be designed to fully restore the companionship exemption which has survived in federal law for almost 50 years.”

The ruling Monday also vacated a part of the rule that would have required companies to pay overtime to live-in domestic workers.

The new rule is set to take effect Jan. 1, but the Department of Labor said in October that it won't enforce it until June 30, 2015, and for the six months after that will exercise discretion in deciding when to bring enforcement actions.

Follow Lisa Schencker on Twitter: @lschencker