Home Health & Hospice Week

Court ruling comes as a surprise.

A federal court has halted a Department of Labor rule expanding overtime costs for many private duty home health agencies and those that pay per visit. And the ruling might be a sign that companionship exemption restrictions aren’t set in stone either.

The DOL final rule at issue was set to change who qualified for the “white collar” executive, administrative, and professional (EAP) employee overtime exemption effective Dec. 1. The rule would have reset the minimum salary level needed to qualify for the exemption to $921 weekly in contrast to the current $455 weekly.

Impact: DOL estimates 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, would automatically become eligible under the final rule without a change to their duties, said Judge Amos Mazzant with the U.S. District Court for the Eastern District of Texas in a Nov. 22 ruling halting implementation of the rule.

The eleventh-hour ruling took many by surprise. “This case … filed by 21 states in late September 2016 … was seen by most authorities in the legal field as a ‘Hail Mary,’” notes attorney Eileen Maguire of Indianapolis-based Gilliland, Maguire and Harper in analysis of the decision.

“Many analysts thought that because [Mazzant] was one of President Obama’s first judicial appointees, he would have a tendency to side with the DOL’s positions,” observe attorneys Joseph Gross and Steven Moss with law firm Benesch, in analysis of the decision.

So how did the plaintiffs prevail, at least initially? To be exempt from overtime “regulations require an employee to (1) have EAP duties; (2) be  paid on a salary basis; and (3) meet a minimum salary level,” the ruling explains. “The Final Rule raises the salary level from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The salary level was purposefully set low to ‘screen out the obviously nonexempt employees, making an analysis of duties in such cases unnecessary.’”

DOL “has admitted that it cannot create an evaluation ‘based on salary alone,’” the rule continues.

“But this significant increase to the salary level creates essentially a de facto salary-only test.”

Conclusion: “Congress did not intend salary to categorically exclude an employee with EAP duties from the exemption. Therefore, the Final Rule … is contrary to the statutory text and Congress’s intent.”

The ruling also paused the DOL final rule’s automatic updates to the EAP salary level every three years, Benesch’s Gross and Moss point out.

Intact: The ruling also appears to leave standing the increase to “the minimum salary for the exemption for highly compensated workers from $100,000 to $134,000 annually,” notes law firm K&LGates in analysis of the decision. “The district court’s ruling does not address the highly compensated exemption.”

Just temporary: Keep in mind that this ruling is not permanent, and gives the court more time to fully consider the arguments at issue. “The preliminary injunction preserves the status quo until the court determines the Department of Labor’s authority to make the final rule as well as the validity of the final rule,” The Health Group in Morgantown, W. Va. notes in its analysis of the ruling.

Predicting the final outcome is dicey. But “it is more likely than not that the Court’s final decision will look a lot like this preliminary ruling,” expects the National Association for Home Care & Hospice. “However, there are no guarantees of that,” the trade group says in its member newsletter.

“The ruling will also provide an opportunity for an early glimpse as to where the incoming Trump Administration may go on minimum wage and overtime issues that could include NAHC’s efforts to restore the companionship and live-in exemptions,” the trade group adds.

Meanwhile, the case’s unknown future leaves agencies between a rock and a hard place when deciding how to proceed operationally (see story, this page).

Note: The ruling is at www.txed.uscourts.gov/d/26042.