Home Health & Hospice Week

Will it save you from a big financial hit?

Keep your eye on the U.S. Supreme Court if you aim to prevent excessive overtime pay from eroding care and profit margins.

On Jan. 5, the nation's high court said it will review a key case concerning the overtime exemption for home care aides.

Case history: On Sept. 1, the U.S. Court of Appeals for the Second Circuit reaffirmed its earlier 2004 decision holding that home health agencies cannot use what's known as the "companionship exemption" to the Fair Labor Standards Act (FLSA), the federal law that lays out requirements for minimum wage and overtime pay (see Eli's HCW Week, Vol. XV, No. 33, p. 258, and No. 39).

If the Second Circuit decision stands, it would mean home health agencies in the court's jurisdiction--New York, Connecticut and Vermont--would have to pay home health aides time-and-a-half whenever the employee worked more than 40 hours in a given week. Plus, the decision could set the stage for a national ban on applying the exemption to home health aides.

As a result, HHAs would take a huge hit financially, says Stephen Zweig, partner in the New York City offices of Ford & Harrison. Follow Case Closely Ray of hope: The fact that the Supreme Court has agreed to review the case--Long Island Care at Home et al v. Coke--is great news for agencies, says Mark Kissinger of the Home Care Association of New York State.

That's because the Supreme Court could reverse the Second Circuit decision that invalidated the overtime exemption for services provided through third-party employers such as home health agencies.

Legal twist: More than just HHAs are likely to watch the case closely, however, notes Zweig. Because the Coke case hinges on how much legal deference a court should give to an administrative agency's interpretation of a law--any law--the Supreme Court's decision has broad ramifications, he explains.

The key question: Should the Second Circuit have given the U.S. Department of Labor's guidance on the FLSA the same level of deference as the statute itself? If the Supreme Court answers "yes," home health agencies will reap the benefit.

Impact: If the Supreme Court rules that the DOL's Advisory Memorandum regarding the companionship exemption deserves a high level of deference, HHAs will retain the right to apply the FLSA's companionship exemption, explains Zweig.