Legal Alerts

DOL’s Third-Party Domestic Service Employer Regulation Vacated


The Department of Labor’s third-party employer regulation, 29 C.F.R. Sec. 552.109, was vacated in a ruling by a federal district court in the District of Columbia. The district court concluded that the DOL cannot manipulate the definition of the wage-hour exemption enjoyed by third-party employers to effectively rewrite the exemption out of the law (Home Care Association of America v. Weil, December 22, 2014, Leon, R.). The regulation was scheduled to go into effect on January 1, 2015.

Since 1974, Congress has exempted third-party providers of home care services from having to pay minimum wage or overtime pay to those employees who provided domestic companionship services to seniors and individuals with disabilities, or to pay overtime wages to live-in domestic service employees. On October 1, 2013, the DOL issued a new regulation that did away with these longstanding exemptions. The Home Care Association and others sued, challenging this regulation as an arbitrary and capricious exercise of authority inconsistent with Congress’ language and intent.

The regulations currently specify that the exemptions cover companions and live-in domestic service workers who are “employed by an employer or agency other than the family or household using the services.” The Supreme Court, In Long Island Care at Home, Ltd. v. Coke, concluded that the third-party rule was valid and binding. Although bills introduced in Congress seeking to abolish this exemption failed, the Department of Labor tried to do administratively “what others had failed to achieve in either the Judiciary or the Congress.”

The Court determined that Congress directed the DOL to define statutory terms, and include “any employee” who provides services according to those definitions, not on who pays the check. Accordingly, the DOL’s Third-Party Employer regulation at Sec. 552.109 was vacated.

The case number: 14-cv-967 (RJL).

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