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Evans v. Caregivers, Inc.

United States District Court, M.D. Tennessee, Nashville Division

May 21, 2017

LISA EVANS and DENISE STARKS, individually and on behalf of all similarly situated persons, Plaintiffs,
CAREGIVERS, INC., and ROBERT DEBLASIO, individually, Defendants.


          ALETAATRAUGER, United States District Judge

         Before the court are (1) Plaintiffs' Motion for Conditional Certification, Approval of 29 U.S.C. § 216(b) Notice and Consent Forms, and to Order Disclosure of Contact Information for Current and Former Employees (Doc. No. 18); and (2) Defendants' Motion to Dismiss First Amended Complaint (Doc. No. 21). As set forth herein, the court will deny the defendants' motion and grant the plaintiffs'.

         I. Motion to Dismiss

         The plaintiffs were formerly employed by defendants Caregivers, Inc. and Robert DeBlasio (referred to hereinafter, collectively, as “Caregivers”). Caregivers is a home care staffing company that employs and places “caregivers” in private homes throughout the Middle Tennessee area to provide “lifestyle support” services for the aged and disabled, including assistance with dressing and bathing, light housekeeping, shopping, errands, meal preparation, assistance with medical appointments and medications, and other services. (Am. Compl., Doc. No. 16 ¶ 14.) The plaintiffs allege that Caregivers failed to pay them and other similarly situated employees overtime pay as required by the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207, beginning January 1, 2015.

         In its motion, Caregivers argues that the rule amending FLSA regulations to remove the overtime-pay exemption for home health aides employed by third parties did not go into effect until November 12, 2015 or, at the earliest, October 13, 2015. It argues on that basis that the claims brought by plaintiff Starks, whose employment terminated on September 11, 2015, must be dismissed in their entirety. Caregivers further argues that plaintiff Evans' employment terminated on February 26, 2015, such that her claims for overtime pay are limited to the three-month period between November 12, 2015 and February 26, 2016.

         A. Background

         The FLSA requires covered employers to pay their employees overtime wages at one and one-half times an employee's normal hourly rate for hours worked over 40 in a week. 29 U.S.C. § 207. For any violation, the Act authorizes an aggrieved employee to bring a collective action on behalf of herself and “other employees similarly situated.” See Id. § 216(b). The Act also contains numerous exemptions from its wage and hour requirements. In 1975, Congress enacted amendments to the FLSA that exempted from the Act's overtime provisions those employees engaged in “companionship services, ” that is, persons “employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves.” Id. § 213(a)(15). The regulations that accompanied this provision, for a long time, specified 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 their services, ” as well as those employed directly by the family. 40 Fed. Reg. 7407. See also Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 162 (2007) (concluding that the rule exempting domestic companions employed by third parties was valid and binding).

         In October 2013, the Department of Labor issued a final rule amending its regulations to preclude third-party employers like Caregivers from claiming the companionship services exemption. See 29 C.F.R. § 552.109(a) (“Third party employers of employees engaged in companionship services . . . may not avail themselves of the . . . overtime exemption.”). This new rule was to become effective January 1, 2015. See Application of the Fair Labor Standards Act to Domestic Service, 78 Fed. Reg. 60, 454 (Oct. 1, 2013) (codified at 29 C.F.R. pt. 552).

         On December 22, 2014-before the planned January 1, 2015 effective date-the United States District Court for the District of Columbia issued an opinion holding that the Department of Labor had exceeded its rule-making authority and vacating the rule as applied to third-party employers. Home Care Ass'n of Am. V. Weil, 76 F.Supp.3d 138 (D.D.C. 2014). On August 21, 2015, the Court of Appeals for the District of Columbia reversed the district court's vacatur. Home Care Ass'n of Am. V. Weil, 799 F.3d 1084 (D.C. Cir. 2015), cert. denied, 136 S.Ct. 2506 (2016). After the circuit court's decision, the Department of Labor issued guidance stating that it would not institute enforcement proceedings for violations of the amended regulations until 30 days after the Court of Appeals issued a mandate making its opinion effective, which the appellate court subsequently did on October 13, 2015. See Application of the Fair Labor Standards Act to Domestic Service: Announcement of 30-Day Period of Non-Enforcement, 80 Fed. Reg. 55, 029-01, 2015 WL 5309094 (Sept. 14, 2015). The Department of Labor began enforcing the amended regulations on November 12, 2015. See Application of the Fair Labor Standards Act to Domestic Service: Dates of Previously Announced 30-Day Period of Non-Enforcement, 80 Fed. Reg. 65, 646-01, 2015 WL 6447714 (Oct. 27, 2015).

         B. Discussion

         For purposes of the Motion to Dismiss, Caregivers does not dispute that it is a “covered employer”; that the plaintiffs provided companionship services; that they worked more than 40 hours per week on occasion; and that, under the amended regulations, the plaintiffs are no longer exempt employees. The parties dispute only the effective date of the new rule.

         To date, no circuit court of appeals has addressed the issue, and the district courts are somewhat split on whether the effective date of the new rule is January 1, October 13, or November 12, 2015. The first decision directly confronting the question, Bangoy v. Total Homecare Solutions, LLC, No. 1:15-CV-573, 2015 2015 WL 12672727, at *3 (S.D. Ohio Dec. 21, 2015), granted the defendant's motion to dismiss the plaintiffs' overtime claims, finding that the D.C. Circuit's reversal of the district court opinion invalidating the new rule had no retroactive effect and, therefore, that the rule did not become enforceable until one month after the mandate issued. The court believed that the defendant was “entitled to rely” on the Weil district court's vacatur of the rule and that any other result would place it and other employers “in an untenable position.” 2015 WL 12672727, at *3. The court further reasoned that the vacatur had the effect of rendering the rule “a nullity and unenforceable” before it ever went into effect, such that permitting a plaintiff to recover for a violation of the rule while the vacatur was in effect “would give the rule an impermissible retroactive effect.” Id. The court also believed that the Department of Labor's decision to delay any actions to enforce the new rule until November 12, 2015 “strongly suggest[ed]” that the new rule should not be given retroactive effect in cases between private parties. Id.

         After Bangoy, the District of Connecticut issued a published opinion addressing the same issue and reaching the opposite conclusion. In Kinkead v. Humana, Inc., 206 F.Supp.3d 751 (D. Conn. 2016), the plaintiff sought overtime wages for the period of time from January to May 2015. The defendants sought dismissal on the basis that the vacatur of the rule was in effect during the entire time that the plaintiff worked in 2015. In rejecting that argument, the court reasoned as follows:

The Administrative Procedure Act authorizes a federal court to “set aside” unlawful agency action, such as the agency's promulgation of a rule that is arbitrary or capricious, that exceeds the agency's authority or limitations under a statute, or that is otherwise not in accordance with the law. 5 U.S.C. § 706(2)(A) & (C). This language bespeaks an authority to set aside an entire rule, not merely to preclude its enforcement in a particular case.
Moreover, when a court vacates an agency's rule, such a vacatur restores the status quo before the invalid rule took effect, and the agency must initiate another rulemaking ...

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