Home Health & Hospice Week

Use risk analysis to determine your course.

Are you ready to gamble with your FLSA compliance status — or your budget? You’ll likely have to pick one as the companionship exemption issue plays out in the courts.

The Department of Labor finalized a new rule that prohibits home health agency workers from using the companionship exemption to minimum wage and overtime pay required by the Fair Labor Standards Act, as of  Jan. 1. The DOL later gave providers a grace period on federal enforcement until June 30. But the grace period didn’t apply to private litigants, which rendered it mostly useless for HHAs (see Eli’s HCW, Vol. XXIII, No. 35).

Victory: Last December a federal district court vacated the portion of the DOL rule that eliminated the companionship exemption for HHA workers.

Defeat: But on Aug. 21 a federal appeals court reversed that ruling. Plaintiffs are hoping the case will head to the Supreme Court next.

Now HHAs face a tough decision: go ahead and comply with FLSA overtime rules, or wait and see how the legal matter gets resolved — and risk noncompliance penalties or at least back pay?

On one hand: If agencies decide to opt for rule compliance, they could face hefty pay increases due mainly to time-and-a-half overtime requirements. They can avoid at least some of that pay increase by limiting the hours employees work — and thus disrupting worker continuity for clients, causing potential dissatisfaction.

On the other hand: If agencies hold off on complying with the rule while it is in legal limbo, their budgets and client satisfaction will fare better. But “continued use of the federal exemptions means continued risk and exposure to wage and hour violations and liabilities if DOL ultimately wins in this litigation,” cautions attorney Eileen Maguire with Gilliland, Maguire & Harper in Indianapolis. Remember, that could include “liquidated damages and attorney fees to the complaining parties in private lawsuits,” Maguire says.

Must do: “You will need to do your own cost and risk analysis of the liability you are willing to expose your agency and yourself to during this time of continued uncertainty,” Maguire advises.

Your decision may be made harder by the fact that the case’s outcome is far from certain. “It’s a difficult case to predict,” Maguire tells Eli. “Both sides have developed strong arguments and support for their respective positions as the litigation progressed.”

“This conflict really needs to be resolved by the U.S. Supreme Court, which we hope happens quickly to end all this uncertainty for agencies,” Maguire continues.

In the meantime, whichever route you decide on, you need to ready yourself for an ultimate unfavorable resolution to the case. “Be prepared to comply with all applicable minimum wage, overtime pay and recordkeeping requirements if and when it is determined DOL’s Home Care Rule will take effect,” Maguire counsels.