Court Decision Offers Guidance On Effective Date of FLSA Regulations

By Russell A. Hollrah

A recent decision provides support for the proposition that a home-care firm should not be liable for violations of the new U.S. Department of Labor (“DOL”) regulations governing domestic services prior to the appeals court decision upholding their validity.

By way of background, the DOL initially provided that the regulations would become effective January 1, 2015. The industry instituted a legal challenge to the regulations, Home Care Association of America v. Weil, resulting in the U.S. District Court for the District of Columbia issuing decisions in December 2014 and January 2015 vacating substantial portions of the regulations, including the portion that would prohibit a third-party employer from availing itself of the FLSA’s companionship services exemption. Following an appeal by the DOL, the U.S. Court of Appeals for the District of Columbia reversed the District Court decisions and upheld the regulations. This decision became effective October 13, 2015. The industry is currently seeking U.S. Supreme Court review of the decision.

In Bangoy v. Total Homecare Solutions, LLC, (S.D. Ohio Dec. 21, 2015), home healthcare workers instituted a putative class-action lawsuit against the defendant company, alleging violations of the FLSA and the Ohio Minimum Fair Wage Standards Act for the time period commencing January 1, 2015, and ending in late August 2015, when the defendant commenced paying overtime wages to home healthcare workers. The lawsuit was filed on September 4, 2015.

The court dismissed with prejudice the plaintiffs’ Complaint, holding that the defendant could rely on the District Court decisions in not paying plaintiffs overtime for the time period at issue in the case. The court reasoned that when the district court vacated the regulations prior to their effective date, the regulations became in the court’s words “a nullity and unenforceable.” Thus, to permit plaintiffs to recover for a violation of the amended regulations – while the District Court decisions vacating them remained in effect – would give the regulations what the court characterized as an “impermissible retroactive effect.” Moreover, the court reasoned that the fact that DOL indicated it would not bring enforcement actions for violations of the new regulations occurring before the Court of Appeals reinstated them strongly suggests that the regulations should not be given retroactive effect in cases between private parties.

Of interest to firms that operate in the State of Ohio, the court also dismissed the claims under the Ohio Minimum Fair Wage Standards Act, on the grounds that this Ohio law is to be construed in accordance with the FLSA.

The facts of this case explicitly address only the time period January 1 through August 2015. The court’s analysis arguably provides support for a similar outcome for the time period September through October 12, 2015, but that is not certain at this time.

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