by Kristin Rowan, Editor

Recent Department of Labor (DOL) changes to the overtime law appear to be at odds with a court ruling. Last week, The Rowan Report reported on Pennsylvania’s 3rd circuit court decision allowing the DOL to interpret meaning and create the rule that 3rd party employers cannot use the exemption to overtime rule. They must pay overtime according to the Fair Labor Standards Act (FLSA). The decision is in direct opposition to the DOLs intent to revert back to allowing the exemption and to its statement that it will no longer uphold the rule. The Rowan Report reached out to care at home attorney Angelo Spinola to get his take on the Pennsylvania court’s decision and how it impacts care at home.

Angelo was a presenter at last year’s National Alliance for Care at Home (The Alliance) annual meeting, during which he discussed the DOL proposal to change the FLSA. In his remarks, Spinola emphasized that the exemption change is huge for home care. He also provided some specific examples showing how the change will benefit caregivers.

Overtime law changes, according to the DOL, will:

• Reduce labor costs
• Provide greater scheduling flexibility
• Expand access to home care services
• Reduce overhead for agencies

Angelo added additional context from a real-world perspective.

First, you can still pay overtime. Payroll policies of any agency with an overtime program in place will supercede the DOL rule. However, those policies need to be written and part of your contractual agreement with the caregiver.

Secondly, some states have their own overtime laws, which also override the FLSA. Not every state will be impacted by the change.

Additionally, removing the overtime requirement brings back day rates instead of hourly pay, which can be beneficial for caregivers and patients. This reinstatement also impacts bonus payments. Currently, gift cards, bonuses, on-call premiums, and similar incentives are incorporated into rates for overtime. Without the exemption, agencies can bring back bonuses designed to encourage longevity, productivity, or other behaviors, and those incentives will not be subject to overtime rules.

The practical reality is, with overtime rules in place, many agencies will not allow caregivers to work more than 40 hours. Thus, patients end up with more unique caregivers, which leads to less continuity of care. The other consequence is that caregivers seek to make up those hours at other agencies or by taking on another part time job. Without the exemption, caregivers can work more hours, the patient gets fewer unique caregivers and benefits from improved continuity of care. Scheduling is less complicated without having to consider the part-time job.

Angelo:

It definitely seems like it’s two different views on the same issue, and I think we will see that for a while, until and unless the Department of Labor actually issues new regulations and interpretations. They have alluded that they are going to do that, maybe by simply not enforcing the rule. Still, at the end of the day, it is the current rule, there is the requirement to pay overtime.

RR:

Can you speak to the PA decision, then, as it relates to that?

RR:

Can you speak to the PA decision, then, as it relates to that?

RR:

Does this case have any impact, then, on the DOL reverting back to pre-2013 when 3rd party agencies could take the exemption?

wAngelo:

If this court is taking the position that the DOL can decide, then that should not impact the DOL’s next subsequent decision to decide again that third parties can use the exemption.

Remember, this is just a Court of Appeals decision, and the court itself says that it is not precedential. What I wonder is, what happens now if the Department of Labor in the future decides that they no longer think that agencies should use these exemptions? Does this pave the way for that kind of future action? Prior to this case, the Chevron deference probably would apply, because the authority all points to the ability for third parties to be able to use the exemption.

When you look at when the exemptions were applied to the FLSA, there was no limitation of who could use them. The limitation was about what kind of work the employee performed, who they performed it for. If it was assistance with ADLs and IADLs in a personal home, then you could rely on the exemptions.

Then came the efforts to limit those exemptions over several years, via Congress and a Supreme Court challenge. In the Koch decision, in the early 2000s, the Supreme Court said, “Third-party employers can rely on the exemption, because there is nothing in the language that suggests they cannot.”

In response, the DOL took it in their own hands and changed it, before there was a limitation from the Chevron deference. Now they want to change it back. I think that is where the weight of authority is, so I think they will be able to survive any deference challenge.

I think this case actually supports that argument: “We get to decide what we want to do. Look at what Pennsylvania said.” Nevertheless, I still believe it’s going to be a challenge for the DOL to flip it back again. They will have to go through all that history of what Congress had said, and what the Supreme Court said. Still, this decision certainly helps any future administration, should they choose to flip things back to the way they sit today. All this assumes that the DOL does, in fact, change it, which I think they will.

RR:

There is a portion of the home care industry that wants the exemption to stay as it is, and another that says, no, it needs to go back to the way it was. I wonder if that is in any way going to impact whether or not the Department of Labor in this administration moves forward, or maybe pauses on changing that language.

Angelo:

I think there’s a growing understanding of what the reinstatement of the exemptions would mean. There is a narrative that it must mean that caregivers will lose their right to overtime pay, and will therefore be compensated unfairly, meaning less. Agencies are coming around to understanding that isn’t going to happen, because the market will not allow it to happen. This explains why caregiver rates have increased in recent years. They will go work somewhere else if you don’t compensate them fairly. So, the nature of the compensation is likely to change. It may look more like bonuses, or incentives, or things that you would do for exempt employees.

RR:

I want to make sure I am presenting this correctly here. When this changes, will it open up some possibilities in home care? If a family is paying for 10 or 12 hours per day, paying for overtime makes a huge difference and they would likely opt for fewer hours or a second caregiver. But, with the exemption, you have fewer caregivers on one case, better continuity of care, and possibly more care hours.

Angelo:

That is exactly right. What agencies do now is they often limit the caregiver to 40 hours, and then that caregiver has to go find a job at a second agency if they want to work 70 or 80 hours. In that scenario, caregivers bounce around multiple clients, who have to utilize multiple caregivers, especially if they require a lot of hours. A lot of those clients have memory issues and a vulnerable immune system. On top of mental confusion issues, the more exposure you have to different people, the more unique bacteria and germs come into the house, the more at risk you are.

You can see how much better it is, on several levels, for a caregiver to work many hours with one client. That is usually the client’s preference anyway. 

RR:

You said you think it’s pretty certain at this point that the Department of Labor is going to change that ruling back to the 1974 version. Do you anticipate lawsuits against that change?

Angelo:

I think we’re probably going to. It’s such a big deal, I would expect to see something. I would think that the advocacy groups and the unions are already likely prepared for that. When the change in 2013 was announced, the industry rallied, and we were prepared to file. So, it would not shock me in any way, if that same response returned.

RR:

I appreciate your time and helping all of the industry understand these sometimes very confusing changes in labor laws. I anticipate that once the Department of Labor makes their final decision, we’ll be back in touch to talk again about what it means, when it will be enforced, and what any pending lawsuits will have to say about it. We’ll keep everybody abreast of what these changes are going to mean for the industry.

Angelo:

Yeah, this will be one to track for sure. We are going be tracking this for the next 12 months at least.

RR:

I think for the industry and for the agencies that we talk to, the most important thing is following the law as it stands, regardless of what it is. What do they need to follow right now? What is the date on which they need to change what they’re doing, and whether or not a rule change gets overturned in another court case. They want to be in compliance, and we want to ensure what we report helps our readers to do just that.

Today, the overtime rule is in effect and agencies are required to pay overtime. That will continue to be true until the Department of Labor actually implements this change they’re talking about, regardless of what anybody else is saying.

Angelo:

That’s right. The only thing that really has changed right now is that the Department of Labor themselves are not enforcing the 2013 rule per the field assistance bulletin that went out, but that has no impact on private litigation.

RR:

Thank you so much. I really appreciate you taking the time to talk, and I’m sure I’ll see you next week.

Angelo:

Absolutely, I’ll see you at Home Care 100.

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Kristin Rowan is the owner and Editor-in-chief of The Rowan Report, the industry’s most trusted source for care at home news. She is also a sought-after speaker on Artificial Intelligence, Technology Adoption and Lone Worker Safety. She is available to speak at state and national conferences as well as software user-group meetings.

Kristin also runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in content creation, social media management, and event marketing. She works with care at home software providers to create dynamic content that increases conversions for direct e-mail, social media, and websites.  Connect with Kristin directly at kristin@girardmarketinggroup.com or www.girardmarketinggroup.com

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