Opinion ID: 3011219
Heading Depth: 2
Heading Rank: 2

Heading: The FLSA Companionship Exemption

Text: The District Court held the FLSA companionship exemption did not apply to RHD's Mandela and V isions employees. That provision excludes from FLSA minimum wage and maximum hours rules: [A]ny employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms ar e defined and delineated by regulations of the Secretary) . . . . 29 U.S.C. S 213(a)(15). The statute does not define domestic service employment. To construe the exemption, the District Court relied on 29 C.F.R.S 552.3, which defines domestic service as services of a household nature perfor med by an employee in or about a private home (permanent or temporary) of the person by whom he or she is employed. The term includes employees such as cooks, waiters, butlers, valets, maids, housekeepers, governesses, nurses, janitors, laundresses, caretakers, handymen, gardeners, footmen, grooms, and chauffeurs . . . . This listing is illustrative and not exhaustive. The District Court understood this regulation to mean the exemption applied only to employees who per form household services in a private home. See Madison, Civ. No. 97-7402, slip op. at 3. The District Court then concluded RHD could not establish that its clients' homes were `private' within the meaning of the statute. Id. at 4. We agree with the District Court's r eliance on 29 C.F.R. 8 S 552.3 to determine the meaning ofdomestic service. We also agree that in order for services to constitute a domestic service under Section 552.3, they must be provided in private homes.8 But there is scant regulation, legislative history, or case law to guide deter mination of whether the living arrangements here constituteprivate homes.
interpretations of private home The pertinent regulation discussing private home as used in 29 C.F.R. S 552.3 is not dispositive. It provides: (a) The definition of domestic service employment contained in S 552.3 is derived from the regulations issued under the Social Security Act (20 CFR 404.1057) and from the generally accepted meaning of the term. Accordingly, the term includes persons who are frequently referred to as private household workers. See S. Rep. 93-690, p. 20. The domestic service must be performed in or about the private home of the employer whether that home is a fixed place of abode or a temporary dwelling as in the case of an individual or family traveling on vacation. A separate and distinct dwelling maintained by an individual or a family in an apartment house, condominium or hotel may constitute a private home. (b) Employees employed in dwelling places which ar e primarily rooming or boarding houses ar e not considered domestic service employees. The places _________________________________________________________________ 8. Neither party disputes the role 29 C.F .R. SS 552.3 and 552.101 should play in our construction of 29 U.S.C. S 213(a)(15). If, as is the situation here, the underlying statute is ambiguous, we afford deference to formal agency regulations resulting from notice and comment rule making construing the statutory provision unless those regulations constitute an impermissible interpretation of the statute. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). There is no dispute the regulations construing 29 C.F .R. S 213(a)(15) are formal regulations. We find the pertinent r egulations to be reasonable and thus are guided by their definitions in our construction of the companionship exemption. 9 where they work are not private homes but commercial or business establishments. Likewise, employees employed in connection with a business or pr ofessional service which is conducted in a home (such as a r eal estate, doctor's, dentist's or lawyer's office) ar e not domestic service employees. . . . 29 C.F.R. S 552.101. Although the r egulation provides some guidance as to what constitutes a private home, it does not settle the question. The legislative history is similarly unhelpful. In discussing changes to the FLSA intended to cover domestic service employees--which in turn created the need for the companionship exemption at issue here--the House Report accompanying the 1974 Amendment to the FLSA noted: The domestic service must be performed in a private home which is a fixed place of abode of the individual or family. A separate and distinct dwelling maintained by the individual or family in an apartment house or hotel may constitute a private home. However , a dwelling house used primarily as a boarding or lodging house for the purposes of supplying such services to the public, as a business enterprise, is not a private home. House Rep. No. 93-913 reprinted in 1974 U.S.C.C.A.N. 2811, 2845. This discussion of private home does not provide a definitive answer either. The case law is divergent. In Terwilliger v. Home of Hope, Inc., 21 F. Supp. 2d 1294 (N.D. Okla. 1998), the United States District Court for the Northern District of Oklahoma faced a similar factual scenario. See id. at 1297-1298. Holding the homes in question were private, the court in Terwilliger noted the defendant did not acquire either the residence or the furniture for the client; 22% of the homes were owned by the client or the client's par ent or guardian, with the remainder rented or leased fr om third parties in the client's name; the defendant did not co-sign the lease and had no property interest in the client's residence; the defendant had keys to the residences only for emergency or consensual use; and the defendant paid rent fr om the client's trust account. Id. at 1300. The Terwilliger court 10 distinguished its holding from that in Linn v. Dev. Svcs., 891 F. Supp. 574 (N.D. Okla. 1995). Linn held homes were not private homes because the defendant acquired the homes and furniture; maintained keys to the homes; decided how many and which clients lived in the homes; frequently signed leases for the clients; and r eceived state money on the clients' behalf, which it then used to pay rent on the clients' behalf. Linn, 891 F. Supp. at 579. Terwilliger differed because the defendant ther e did not acquire the residences in question, maintained keys to the homes only for emergency and consensual use, and did not decide where and with whom clients would live. See id. at 1300. Thus, the homes in Terwilliger wer e held to be private. See id. at 1300. The Utah Supreme Court also has consider ed when domestic services are provided in a private home and therefore covered by the FLSA companionship exemption. That court applied four factors to reach its decision: (1) the facility's source of funding; (2) the public's degree of access to the facility; (3) the facility's status as a for -profit or notfor-profit organization; and (4) the size of the organization. See Bowler v. Deseret Village Ass'n, Inc., 922 P.2d 8, 13-14 (Utah 1996). Applying its test, the Court found the defendant, a privately funded, nonprofit Utah corporation which provides a residential and vocational `development habitation' for fourteen marginally mentally and physically handicapped adults, was more like a`private home' than an `institution' or a business enterprise. Id. at 11, 14. We conclude that none of these cases, nor the relevant administrative and legislative material, provides clear guidance in this matter. What is clear is that the determination of what constitutes a private home in the context of the FLSA companionship exemption must be made on a case-by-case basis, taking into account all aspects of the living arrangements.
are not private We construe FLSA exemptions narrowly against the employer. See Mitchell v. Kentucky Fin. Co., 359 U.S. 290, 11 295 (1959); Reich v. Gateway Press, Inc. , 13 F.3d 685, 694 (3d Cir. 1994). The District Court concluded, as a matter of law, that RHD had not overcome its significant burden in establishing its affirmative defense. W e agree. Several aspects of the Mandela and Visions living arrangements support the District Court's conclusion that the companionship exemption does not apply. For example, RHD clients do not have a possessory interest in their RHD homes. The right of RHD clients to remain in their housing depends completely on their continued relationship with RHD. If clients terminate that relationship, they cannot remain in RHD housing. This is not the kind of possessory interest individuals enjoy in a private home. RHD clients do not have full control over others' access to their RHD homes. RHD retains keys to the homes of all clients in the Mandela and Visions pr ogram. Indeed, RHD keeps the only set of keys with respect to nearly half the clients in the Mandela program. Less than half of the clients in that program (five of eleven) have keys to their houses. RHD clients do not have unfettered freedom in their dayto-day conduct. They must comply with rules that do not typically apply to adults in private homes. One such rule requires RHD clients to be dressed when outside their rooms between the hours of 8:30 a.m. and 10:00 p.m. This rule is incongruous with the notion of a private home.9 Given the contours of the living arrangements at issue here, and the rule that FLSA exemptions should be narrowly construed against the employer , we conclude as a matter of law the RHD residences are notprivate homes _________________________________________________________________ 9. As noted by the District Court, Terwilliger differs from this case in important respects. See Madison, Civ. No. 97-7402, slip op. at 8. In Terwilliger, the court placed a significant emphasis on the nature of the possessory interest clients had in the pr operty in question. The clients there had either an ownership or direct lessee interest in the property. See Terwilliger, 21 F. Supp. 2d at 1299-1300. In contrast, RHD's clients have significant restrictions placed on their interest and rights concerning the property. They sublease the property from RHD, and their right to remain on the property is tied directly to their continued involvement in the RHD-administered program. 12 for purposes of S 213(a)(15). We will affirm the District Court's holding that the FLSA applies to the plaintiffs' employment relationship with RHD. We now turn to the question whether RHD's contributions to the Fairshare accounts should be included in plaintiffs' regular and overtime pay rates.