Co-authored by Gena Usenheimer and Jade Wallace

As we reported earlier this year, the U.S. Department of Labor has been fighting nearly 14 months of legal challenges in connection with its attempt to modify the FLSA’s companionship exemption. On Friday, the U.S. Circuit Court of Appeals for the District of Columbia upheld the DOL’s proposed regulations. Assuming no further developments, employers in a majority of states will need to modify their pay practices to conform with the new regulations, including employers in the 27 states that currently do not have minimum wage or overtime requirements in place for this category of worker.

Previously, individuals falling into the FLSA’s “companionship” exemption—many of whom are home health care aides employed by third-party agencies—were exempt from federal minimum wage and overtime requirements. The most significant changes to the newly upheld regulations: (1) eliminate the ability for third-party agencies to avail themselves of the exemption, (2) change the definition of “companionship” so as to exclude many home health care aides from the exemption’s coverage, and (3) require third-party agencies to pay overtime to live-in domestic service employees.

The newly upheld revisions will significantly reduce the number of individuals covered by the exemption, bringing many new employees within the FLSA’s minimum wage and overtime protections. Not surprisingly, the DOL celebrates Friday’s decision as “vital to nearly two million home care workers, who will now qualify for minimum wage and overtime protections.” Although there is no news yet on whether further appeal is expected or when the newly upheld regulations will go into effect, home health care agencies relying on the companionship exemption should be prepared to revise their pay practices in short order.