In 2013, the DOL promulgated a rule that served to eliminate the overtime exemption for companionship service workers, including live-in domestic service providers, employed by home care agencies and other third-parties. The new rule was to become effective on January 1, 2015. In the meantime, a lobbying group representing the interests of home healthcare companies filed suit in the U.S. District Court for the District of Columbia challenging the rule. The district court vacated the rule, finding it in conflict with the FLSA. However, last August, the U.S. Court of Appeals for the D.C. Circuit reversed the district court’s vacatur, reasoning that the rule was grounded in a reasonable interpretation of the FLSA and neither arbitrary nor capricious. Just last month, the U.S. Supreme Court denied the lobbying group’s petition for certiorari.
Against this backdrop, the U.S. District Court for the District of Connecticut was called upon to determine the effective date of the new rule. As artfully framed by the district court, the case, Kinkead v. Humana, Inc., “raise[d] a basic but well-settled question about the intersection of law and time.” In particular: “Are employers like the defendants in this case liable to pay overtime only from the date that the D.C. Circuit’s mandate issued in October 2015 to overturn the district court’s decision that vacated the rule? Or are employers liable to pay overtime as of the agency’s initial effective date in January 2015?” Applying “the well-established rule that judicial decisions are presumptively retroactive in their effect and operation,” the court determined that the rule became effective in January 2015, as originally contemplated by the DOL. The court reasoned that the defendants’ purported reliance on the district court’s decision was, in light of this presumption, unjustified. As such, the plaintiffs’ overtime entitlement kicked in as of January 2015.
Lawrence Peikes, Wiggin and Dana LLP