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Affordability and higher quality of life are two of the most attractive attributes of nonmedical homecare for the elderly. For a reasonable hourly fee, a reputable homecare agency will place a properly trained, adequately screened and legally documented caregiver in the elderly consumer’s home to assist him or her with activities of daily living and provide the much-needed companionship many seniors require. Particularly in the case of around-the-clock help or “live-in” companions, agencies can make quality homecare affordable to seniors and still derive a modest profit in part because, under current law, “companion” workers are exempt from payment of overtime and minimum wage law under the Federal Labor Standards Act (FLSA). A live-in companion is defined as a worker who, in exchange for a competitive per diem wage plus free room and board, agrees to be employed to provide around-the-clock care to his or her elderly client. Contrary to what some believe, live-in workers do not literally work 24 hours each day. Live-ins are entitled to eight hours of uninterrupted sleep and in many cases enjoy ample downtime during the day. Under the FLSA, an employer does not have to pay overtime to “any employee engaged in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves.” 29 U.S.C. ‘ 213(a)(15). By federal regulation, that exemption was extended to companionship services performed by caregivers “who are employed by an employer or agency other than the family or household using their services.” 29 C.F.R. ‘ 552.109(a). For the last 30 years, homecare agencies have relied on the regulation for the proposition that they are entitled to the benefits of this exemption. If the companionship exemption were eliminated, companions would be entitled to overtime compensation for hours worked in excess of 40 in a workweek. In the case of live-in companions, the loss of such exemption would make the cost of receiving care at home cost-prohibitive for all but the most affluent individuals. Pending before the U.S. Supreme Court, however, is litigation that, depending on the outcome, may result in the extinction of the companionship exemption for third-party employers such as homecare agencies. TEST CASE In Coke v. Long Island Care at Home, Ltd., 376 F.3d 118 (2d Cir. 2004)(“Coke I”), the the 2nd U.S. Circuit Court of Appeals held that the companionship exemption cannot be used by a homecare agency to avoid paying its caregivers minimum wage and overtime compensation. To date, the Coke ruling is the first and only federal appellate court to rule that such exemption is unavailable to homecare agencies. Previously, in Johnston v. Volunteers of America, Inc., 213 F.3d 559 (10th Cir. 2000), the 10th U.S. Circuit Court of Appeals explicitly held that third-party employers can avail themselves of the companionship exemption to avoid paying companion workers overtime. The facts at issue in the Coke case are relatively simple. Evelyn Coke, a New York homecare attendant, sued her employer in the U.S. District Court for the Eastern District of New York alleging that it failed to pay her overtime compensation in violation of the FLSA. Specifically, she claimed that the federal regulations defining and interpreting the companionship services exemption were unreasonable. With the support of the Service Employees International Union, Evelyn Coke brought the case against her employer as a test case. The district court ruled for the employer, holding that Coke’s employment was subject to the FLSA’s exemption for employees engaged in “companionship services.” On appeal, however, the 2nd Circuit sided with Coke. The portion of the companionship services exemption regulation that extended the exemption to third-party employers such as homecare agencies was invalid and therefore nonenforceable, the 2nd Circuit held. The ruling foreclosed an agency’s ability to continue to rely on the companionship exemption in order to avoid paying overtime compensation to companion workers for any hours worked in excess of 40 in a workweek. The defendants in Coke asked the U.S. Supreme Court to review the 2nd Circuit’s decision. On Jan. 23, 2006, the high court granted the homecare agency’s certiorari petition and, in an interesting procedural development, vacated the judgment and remanded the case back to the 2nd Circuit for further consideration in light of a U.S. Department of Labor’s Wage and Hour Advisory Memorandum No. 2005-1 (Dec. 1, 2005). According to the Solicitor General’s amicus brief in support of certiorari, the DOL’s memorandum reiterated the DOL’s position that the exemption is available to “home health care aides employed by third-party companies or agencies” and demonstrated that, in holding the exemption unenforceable, the 2nd Circuit had run afoul of Congressional intent. PROHIBITIVE COSTS PREDICTED Despite the Supreme Court’s remand and the existence of the DOL memorandum, on Aug. 31, 2006, the 2nd Circuit issued an opinion in which it adhered to its original decision invalidating the regulation in question. Coke v. Long Island Care at Home, Ltd., 462 F.3d 48 (2nd Cir. 2006)(“Coke II”). Fortunately, on Jan. 5, 2007, the U.S. Supreme Court granted the defendants’ petition for certiorari, paving the way for the Supreme Court to resolve the matter once and for all. As the final arbiter of federal law, the Supreme Court’s ruling on this issue will affect homecare agencies across the nation, not just those that conduct business in the three original jurisdictions affected by the 2nd Circuit rulings in Coke I and II. Attorney J. Martin Acevedo serves as general counsel to Companions & Homemakers, Inc, a provider of homecare services for older adults in Connecticut.

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