No. 04-1315
In the Supreme Court of the United States
LONG
ISLAND
CARE AT HOME,
LTD.,
ET AL.,
PETITIONERS
v.
EVELYN
COKE
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
BRIEF FOR THE UNITED STATES AS
AMICUS CURIAE
HOWARD M.
RADZELY
Solicitor
of Labor
GREGORY F.
JACOB
Deputy
Solicitor
NATHANIEL I.
SPILLER
Assistant
Deputy Solicitor
EDWARD D.
SIEGER
Attorney
Department
of Labor Washington, D.C. 20210
|
PAUL D.
CLEMENT
Solicitor General
Counsel of Record
THOMAS G.
HUNGAR
Deputy
Solicitor General
DAVID B.
SALMONS
Assistant to the Solicitor
General
Department of Justice
Washington, D. C. 20530-0001
(202) 514-2217
|
QUESTION
PRESENTED
Whether
the court of appeals erred in holding that a Fair Labor Standards Act
regulation, 29 C.F.R. 552.109(a),
issued by the Department of Labor pursuant to delegated rulemaking authority and after notice and
comment, was not entitled to deference under Chevron
U.S.A. Inc.
v.
Natural Resources Defense Council, Inc.,
467 U.S. 837 (1984), and was not
enforceable.
TABLE OF CONTENTS
Statement
Discussion
A.
The court of appeals’ decision is inconsistent with this court’s
precedents, the text and purposes of the FLSA, and the Tenth Circuit’s decision
in Johnston
B.
The Court should grant the petition, vacate the
decision below, and remand to permit the court of appeals to reconsider its decision in light of DOL’s recent guidance making clear that Section 552.109(a) is an exercise of
legislative rulemaking authority
C.
The second question presented by the petition does not warrant further review
Conclusion
Appendix
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TABLE OF AUTHORITIES
Cases:
Auer
v. Robbins,
519 U.S. 452 (1997)
Bowles
v. Seminole Rock & Sand Co.,
325 U.S. 410 (1945)
Chevron U.S.A. Inc.
v. Natural Res. Def.
Council, Inc., 467 U.S.
837 (1984) ,
Christensen
v. Harris
County, 529 U.S. 576
(2000)
Chrysler
Corp. v. Brown,
441 U.S. 281 (1979)
Johnston v. Volunteers
of Am., Inc., 213 F.3d
559 (10th Cir. 2000), cert. denied, 531 U.S. 1072 (2001)
National Cable & Telecomm. Ass’n
v. Brand X Internet Servs.,
125 S. Ct. 2688 (2005)
Olmstead
v. L.C. ex
rel. Zimring, 527 U.S.
581 (1999)
Skidmore
v. Swift &
Co., 323 U.S. 134 (1944)
Stinson
v. United
States, 508 U.S. 36
(1993)
Thomas Jeferson Univ.
v. Shalala,
512 U.S. 504 (1994)
United
States v. Gonzales,
520 U.S. 1 (1997)
United States
v. Mead Corp.,
533 U.S. 218 (2001)
Welding
v. Bios Corp.,
353 F.3d 1214 (10th Cir.
2004)
White
v. Shalala,
7 F.3d 296 (2d Cir. 1993)
Statutes and regulations:
Administrative Procedure Act, 5 U.S.C. 551
et seq. :
5 U.S.C. 553
5 U.S.C. 553(b)(3)
Fair Labor Standards Act of 1938, 29 U.S.C. 201
et seq. :
§ 3(s)(1), 29 U.S.C. 203(s)(1)
(1970)
§ 3(s)(1)(A)(ii), 29 U.S.C.
203(s)(1)(A)(ii)
§ 6 29 U.S.C. 206
§ 7 29 U.S.C. 207
§ 13, 29 U.S.C. 213
§ 13(a)(1), 29 U.S.C. 213(a)(1)
§ 13(a)(3), 29 U.S.C. 213(a)(3)
§ 13(a)(15), 29 U.S.C. 213(a)(15)
§ 13(b)(3), 29 U.S.C. 213(b)(3)
Fair Labor Standards Amendments of
1974 Pub. L. No. 93-259, 88 Stat. 55
§ 29(b), 88 Stat. 76
29 C.F.R.:
Pt. 541
Section 541.118(a) (1996)
Pt. 552
Sections 552.1-552.7 (Subpt. A)
Section 552.2(c)
Section 552.3
Section 552.6
Sections 552.99-552.110 (Subpt. B)
Section 552.101
Section 552.109
Section 552.109(a)
Exec. Order No. 13217, 3 C.F.R.
774 (2002)
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Miscellaneous:
Application of Section 13(a) (15) to Third Party Employers,
Wage and Hour Advisory Memorandum No. 2005-1 (Dec. 1, 2005)
119 Cong. Rec. (1973):
p. 24,797
p. 24,798
p. 24,801
39 Fed. Reg. (1974):
p. 35,382
pp. 35,383 - 38,385
p. 35,385
40 Fed. Reg.(1975) :
p. 7404
p. 7405
58 Fed. Reg. (1993):
p. 69,310
p. 69,312
60 Fed. Reg. (1995):
pp. 46,787-46,798
p. 46,798
66 Fed. Reg. (2001):
p. 5481
p. 5483
p. 5485
pp. 5485-5486
p. 5486
p. 5488
67 Fed. Reg. 16,668 (2002)
69 Fed. Reg. (2004):
p. 22,122
p. 22,126
Op. Ltr. FLSA2005-12, 2005 WL 2086801 (Dep’t of Labor Mar. 17, 2005)
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In the Supreme
Court of the United States
No.
04-1315
LONG ISLAND CARE AT HOME,
LTD.,
ET AL.,
PETITIONERS
v.
EVELYN COKE
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
BRIEF FOR THE UNITED STATES AS AMICUS CURIAE
This brief is submitted in response to the order of this
Court inviting the Solicitor General to express the views of the United States.
STATEMENT
1. The Fair Labor
Standards Act of 1938 (FLSA), 29 U.S.C. 201 et seq.,
generally requires covered
employers to pay a
minimum wage and, for work hours that exceed 40 hours in a work week, one and
onehalf times an employee’s regular rate of pay. Fair Labor Standards
Amendments of 1974 (1974 Amendments), Pub. L. No.
93-259, 88 Stat. 55, generally
extend those requirements to “domestic
service” employees, but specifically exempt such employees providing “companionship services” to the
elderly or infirm. That exemption applies to:
any 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 are defined and
delimited in the regulations of the Secretary).
29 U.S.C. 213(a)(15).
Congress did not define either
“domestic service employment” or “companionship services” in the Act, but instead authorized the
Secretary of Labor “to prescribe necessary rules, regulations, and orders” regarding the 1974
Amendments. § 29(b), 88 Stat. 76.
Pursuant to that authority, the Department of Labor (DOL) promulgated
regulations exempting domestic service employees who provide companionship services from the minimum wage and
overtime requirements of the FLSA. 29 C.F.R. Pt. 552. First adopted in February
1975, those regulations make clear that domestic
service employees providing companionship services
are
exempt from the FLSA’s
minimum-wage and overtimepay requirements, even when they are employed by a third-party employer.
Section 552.109(a) of the regulations provides:
Employees who are engaged in providing companionship services, as defined in [29 C.F.R.] § 552.6,
and who are employed
by an employer or agency other than the family or household using their services, are exempt from the Act’s minimum wage and overtime pay requirements by virtue of
section 13(a)(15) [of the FLSA].
29 C.F.R. 552.109(a).(1)
The regulations at issue, including Section
552.109(a), were issued after DOL
undertook notice-andcomment rulemaking in accordance with the Administrative Procedure Act (APA), 5 U.S.C.
553. Initially, DOL proposed that employees who provide companionship services
and are employed by third parties would fall outside the scope of the
companionship exemption, on the ground that some third-party employment was covered by the FLSA before the 1974
Amendments. See 39
Fed.
Reg. 35,382, 35,385 (1974).
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After receiving and considering comments on the proposed
rule, however, DOL decided that third-party employment should be included
within the scope of the companionship exemption. See 40 Fed. Reg. 7404, 7405 (1975). DOL
acknowledged that its decision constituted
a change from the proposed rule, but explained that, under
the plain language of the FLSA, the “exemptions
can be available to such third party employers
since they apply to
‘any employee’ engaged ‘in’ the enumerated services. This interpretation is
more consistent with the statutory language and prior practices concerning
other similarly worded exemptions.” 40 Fed. Reg. at 7405. Thus, the final
regulation promulgated to implement the
1974 Amendments expressly applied the companionship services exemption to third-party
employers.
In 1993, DOL proposed to limit the companionship exemption
substantially by requiring that the person receiving companionship services be
the employer or joint employer of the domestic service employee. See
58 Fed. Reg. 69,310, 69,312
(1993). Seven comments on the proposed change were received by DOL, none of which was supportive
of the change. See 60 Fed. Reg. 46,797-46,798 (1995).
In 1995, DOL reopened and extended the comment
period for the 1993 proposed rule, and revised its proposal to allow the companionship services exemption for third-party employers to apply
only to employment by a
government agency or family member acting on behalf of an incapacitated elderly or
infirm person. 60 Fed. Reg. at 46,798. Again, DOL received very few comments
on the proposal, and in 2001 the agency acknowledged that the comments
reflected confusion about the impact and effect of the proposal. See 66 Fed.
Reg. 5481, 5485 (2001). Accordingly, the third-party employer exemption was
not limited.
In the 2001 Federal Register notice, DOL again
proposed to amend the regulations,
this time by revising the definition of “companionship services” to clarify the focus on the
element of “fellowship” and to eliminate the third-party exemption contained in
Section 552.109(a). 66 Fed. Reg. at 5485; see
id.
at 5488. In the notice of proposed rulemaking, DOL
recognized that “[u]nder the existing
regulation, employees who are employed by an
employer
or agency other than the family or household using the companionship services may still qualify for
the exemption.” Id.
at 5485. The
agency expressed the view that “the current regulations contain an internal
inconsistency” that would be resolved by the proposed change, and also stated
that the proposed new rule would not have a significant economic impact.
Id. at 5485-5486. In 2002, however, after the comment
period closed, DOL
withdrew the proposed rule because numerous commenters, including the Small
Business Administration (SBA) and the Department of Health and Human Services
(HHS), challenged DOL’s conclusion that the rule would have little economic impact. See 67 Fed. Reg. 16,668 (2002). Thus, although DOL
has periodically
considered alternative constructions, the regulation at 29 C.F.R. 552.109(a) has remained
unchanged since 1975.
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2. Petitioners employ approximately 40 home health care aides, who provide
companionship services to approximately 30 homebound patients in New York.
Pet. 8; Pet. App. 37a-38a, 79a. Respondent is a former employee of the petitioners,
who worked as a home health care attendant. Pet. App. 37a-38a. Respondent
brought suit against petitioners under,
inter alia,
Sections 206 and 207 of the FLSA, alleging that despite
working more than 40 hours a week,
she never received
overtime payments and that her hourly wage was less than the minimum wage. Pet.
App. 37a-42a.
The district court granted petitioners’ motion for
judgment on the pleadings and dismissed the case,
holding that respondent could not state a claim as a matter of law because
home health care workers are exempt from the minimum wage and overtime
requirements under
the companionship exemption of the FLSA and its
implementing regulations. Pet. App. 52a-53a. The court applied the standard set forth in
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc.,
467 U.S. 837, 844 (1984), and held that 29 C.F.R. 552.6 and
552.109(a) were not
arbitrary, capricious or manifestly contrary to the FLSA. Id. at
44a-52a.
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3. The court of appeals affirmed in part, vacated in part,
and remanded. Pet. App. 1a-30a. As relevant here, the court of appeals rejected
DOL’s arguments in favor of deference, see Gov’t C.A. Br. 12-29, and held that
29 C.F.R. 552.109(a) was not entitled to Chevron
deference because the agency did
not “self-consciously”
promulgate the rule in an exercise of congressionally delegated legislative
rulemaking authority. Pet. App.
19a-26a. The court acknowledged that the 1974 Amendments expressly delegated authority
to DOL to define and delimit the terms of the statute; that the regulation
was a long-standing,
contemporaneous construction; and that Congress has amended Section 213 of the FLSA seven
times since 1974 without expressing disapproval of the agency’s interpretation.
Id. at 20a-21a. In addition, the court recognized that the regulation
was the product of
notice-and-comment rulemaking, and that all other courts that have considered the issue, including Johnston
v. Volunteers of America, Inc., 213 F.3d 559
(10th Cir. 2000), cert. denied,
531 U.S. 1072 (2001), have applied Chevron deference and upheld the regulation. Pet. App. at
21a. The court concluded, however, that
DOL did not intend to use its delegated authority when promulgating 29 C.F.R. 552.109(a)
because the regulation is included within Subpart B of Part 552, entitled
“Interpretations,” and because another regulation at 29
C.F.R. 552.2(c) states that the “definitions required by
[29 U.S.C. 213(a)(15)] are contained
in § 552.3, § 552.4,
§ 552.5 and § 552.6.” Id. at 23a.
Relying on United States
v. Mead Corp., 533 U.S. 218 (2001), the court reasoned that the regulation was therefore
“interpretive,” as opposed to “legislative,” and thus not entitled to
Chevron
deference. Pet. App. at 21a-25a.
The court then concluded that the third party employment
regulation at 29 C.F.R. 552.109(a) was unenforceable under the less
deferential Skidmore
standard.
In the court’s view, the
regulation was inconsistent with Congress’s likely intent in enacting the 1974 Amendments,
inconsistent with Section 552.3’s definition of domestic service employment,
and the product of inadequate reasoning. Pet. App. 26a-29a.(2)
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4. After
the court of appeals issued its decision, and after this Court invited the
Solicitor General to express the views of the United States on the matter, DOL
issued authoritative agency guidance making clear that the promulgation of 29 C.F.R. 552.109(a) was an
exercise of DOL’s expressly conferred
legislative rulemaking authority. See Application of Section 13(a)(15) to Third Party Employers, Wage & Hour Advisory Mem. No. 2005-1 (Dec. 1, 2005), App., infra, 1a-17a; see also Op. Ltr.
FLSA2005-12, 2005 WL 2086801 (Mar. 17, 2005) (indicating that the Wage and Hour
Division “has not changed [Section 552.109(a)] or its interpretation thereof as
a result” of the Second Circuit’s decision in this case). Specifically, the
Advisory Memorandum states that “the Department considers the third party
employment regulations at 29 C.F.R. 552.109 to be authoritative and legally
binding,” and that the language of the regulation and its explanatory material
“makes it clear that at the time the final rule was promulgated, the Department believed that the availability of the
companionship
exemption to third party employers turned decisively on its pronouncement in the
regulations— something that could be true only of a legislative rule.” App., infra, 16a-17a.
Accordingly, DOL explained, “the
Department has always treated the third party employment regulations as legally binding legislative
rules, and it will continue to do so on an ongoing basis.” Id. at 17a.
The Advisory Memorandum also explains why Section 552.109(a) represents the
best reading of the statutory exemption contained in Section 13(a)(15), and can
be reconciled with other regulatory provisions. Id.
at
2a-16a.
DISCUSSION
The court of appeals held that a longstanding DOL
regulation, 29 C.F.R. 552.109(a),
promulgated pursuant
to the FLSA’s express grant of rulemaking authority to the Secretary of Labor,
is not entitled to judicial deference and is not enforceable. The primary basis for those rulings was the court’s conclusion that, because
Section 552.109(a) is
contained in a portion of the regulations styled “Subpart B—Interpretations,”
rather than in “Subpart
A—General Regulations,” DOL did not intend
its
promulgation of Section 552.109(a) to be an exercise of the legislative rulemaking
authority conferred by Congress. Pet. App. 22a-23a. Instead, the court of appeals
concluded, Section 552.109(a) should be viewed merely as an “interpretative”
rule not entitled to deference under
Chevron, U.S.A. Inc.
v.
Natural Resources
Defense Council, Inc.,
467 U.S. 837 (1984), even though the court acknowledged that Section 552.109(a)
“‘grants rights, imposes obligations, or produces other significant effects on private interests,’ as
legislative regulations do.” Pet. App. 22a-23a (quoting White
v. Shalala, 7 F.3d 296, 303
(2d Cir. 1993)).
Those holdings of the court of appeals are inconsistent
with this Court’s decisions, most notably
Auer
v.
Robbins, 519
U.S. 452 (1997), and
United States
v.
Mead Corp.,
533 U.S. 218 (2001), and with the Tenth Circuit’s decision in Johnston
v. Volunteers of America, Inc.,
213 F.3d 559, 562
(2000), cert. denied, 531 U.S. 1072 (2001), which expressly held that Section 552.109(a) is entitled
to Chevron
deference. The decision below is also inconsistent
with the plain terms of the FLSA, which strongly support the construction adopted by DOL in Section
552.109(a). As the amicus briefs filed in support of the petition attest,
moreover, the decision below will have a significant and disruptive impact on
the provision of government-funded home care to elderly and disabled
individuals.
For those reasons, and because of the important and
recurring nature of the questions raised in this case, it would be appropriate
for this Court to grant the petition for a writ of certiorari to review the
first question presented in the petition. The court of appeals’ errors, however,
were caused primarily by its mistaken conclusion, based on the structure of the
regulations, that DOL did not intend Section 552.109(a) to be an exercise of its delegated legislative rulemaking
authority. Because DOL has now made clear—in an authoritative agency guidance
issued after the court of appeals’ decision—that it
has always intended, and still
intends, Section 552.109(a) to be an exercise of its expressly delegated legislative authority, see
App., infra,
1a-17a, the better course would be
for this Court to grant the petition for a writ of
certiorari, vacate the judgment below, and remand
for further proceedings to allow the court of appeals to reconsider its holdings in light of
DOL’s authoritative interpretation
of its own regulations.
Petitioners also raise a second
question presented in
the petition: Whether the court of appeals should have permitted further
factual development before deciding whether Section 552.109(a) is entitled to Skidmore
deference. That
question is largely case-specific, is not the
subject of a conflict among the courts of appeals, and is not
implicated under the correct legal principles applicable to this case, which entitle the regulation to
Chevron,
not Skidmore, deference.
Accordingly, it does not warrant this Court’s review.
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A. The Court of Appeals’ Decision
Is Inconsistent With This Court’s
Precedents, The Text And Purposes Of The FLSA,
And The Tenth Circuit’s Decision In Johnston
1. The court of appeals erred in refusing to give Chevron
deference to the authoritative interpretation
set forth in 29 C.F.R. 552.109(a),
and in invalidating that regulation
under the minimal level of deference afforded by Skidmore v. Swift & Co., 323
U.S. 134 (1944). In Mead, this Court “consider[ed] the limits of Chevron
deference” and held “that administrative implementation of a particular
statutory provision qualifies for Chevron deference” when two conditions
are satisfied:
(1)
that “Congress delegated authority to the agency generally to make rules
carrying the force of law,” and
(2)
that “the agency interpretation
claiming deference was
promulgated in the exercise of that authority.” 533 U.S. at 226-227. Section
552.109(a) satisfies both of those conditions.
Congress delegated to the Secretary of Labor the authority
to “define[] and delimit[] by regulation” the terms of the companionship
exemption to the FLSA’s minimum wage and overtime requirements. 29 U.S.C.
213(a)(15). Regulations issued under that authority are entitled to
Chevron
deference, just as regulations promulgated
under the Secretary’s similar authority to “define[] and delimit[]” the FLSA’s
exemption in 29 U.S.C. 213(a)(1) for
employees employed in an executive,
administrative, or professional capacity were held to be entitled to
Chevron deference by this Court in Auer, 519 U.S.
at 457-458. Congress also delegated to the Secretary the authority “to
prescribe necessary rules, regulations, and orders” regarding the 1974
Amendments, which expanded the FLSA’s
coverage to include persons in domestic service and added 29 U.S.C.
213(a)(15). 1974 Amendments, § 29(b),
88 Stat. 76. That provision confers additional authority to promulgate binding
legal rules. See, e.g.,
National Cable & Telecomm. Ass’n v. Brand X Internet Servs., 125 S. Ct. 2688, 2699 (2005). DOL expressly relied on both sources of authority
when it promulgated the proposed and
final regulations that included
Section 552.109(a). See 40 Fed. Reg. 7404, 7405 (1975); 39 Fed. Reg. 35,382
(1974). Accordingly, Section
552.109(a) is entitled to the same Chevron
deference that the court below
properly gave to the related “companionship services” regulation, 29 C.F.R.
552.6. See Pet. App. 13a-19a.
The court of appeals reasoned (Pet. App. 22a-23a) that the
placement of Section 552.109(a) in a subpart of the regulations entitled
“Interpretations” renders Chevron inapplicable,
because it reveals that DOL “did not intend to use the legislative power
delegated in § 213(a)(15) when it promulgated § 552.109(a).” Pet. App. 23a. That
reasoning conflicts with this Court’s decision in
Auer. In
that case, the Court afforded Chevron
deference to a DOL regulation that
is indistinguishable for Chevron
purposes from Section 552.109(a). The regulation at issue in
Auer (like the regulation at issue
here) was promulgated by DOL pursuant to rulemaking authority conferred by the
FLSA, was the product of notice-and-comment procedures, and was set out in a
portion of the regulations styled “Subpart B—Interpretations,” rather than in
“Subpart A—General Regulations.” See 519 U.S. at 456-458; 29 C.F.R. 541.118(a)
(1996).(3) The Second Circuit’s refusal to give
Chevron
deference to Section 552.109(a) is
therefore directly at odds with
Auer.
More generally, the court of appeals’ reliance on the
“Interpretations” label is inconsistent with the fundamental principle that
“the framework of deference set forth in Chevron
does apply to an agency interpretation
contained in a regulation.”
Christensen
v. Harris County,
529 U.S. 576, 587 (2000) (emphasis
added). The mere fact
that a regulation “interprets” a statutory provision provides no basis for
deeming it a non-binding “interpretative” rule, particularly when, as here, the
agency has express statutory authority to promulgate the regulation and employs
notice-and-comment rulemaking procedures in doing so. A far more relevant
“touchstone” is whether the regulation is “one ‘affecting individual rights and
obligations.’” Chrysler
Corp. v.
Brown,
441 U.S. 281, 302 (1979). And as
the court of appeals acknowledged, Section 552.109(a) unquestionably falls into
that category. See Pet. App. 22a (“[T]he rule ‘grants rights, imposes
obligations, or produces other significant effects on private interests,’ as
legislative regulations do.”) (citation omitted).(4)
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2. The court of appeals’ decision also ignores the
language of the FLSA to which DOL’s construction gives full effect. The
companionship exemption applies to “any employee employed in domestic service employment
to provide companionship services.” 29 U.S.C.
213(a)(15). Congress’s use of the term “any” is
naturally read to
include all employees providing such services, regardless of who employs them.
See, e.g., United
States
v.
Gonzales,
520 U.S. 1, 5 (1997) (“Read naturally, the word ‘any’ has an expansive meaning, that is,
‘one or some
indiscriminately of whatever kind.’”) (citation omitted). Presumably, if
Congress had wanted to limit the exemption to employees who were employed by a
particular employer or industry, it would have said so expressly, as it has
done with other FLSA exemptions. See,
e.g.,
29 U.S.C. 213(a)(3) (exemption for “any employee employed by an establishment which is an amusement or recreational establishment, organized camp, or religious or
non-profit educational conference center”);
29 U.S.C. 213(b)(3) (“any employee of a carrier by air”). Instead, the statutory language
focuses on employee
activities rather
than the identity of the employer, and
uses broadly inclusive language to capture all such activities.
Contrary to the court of appeals’ conclusion (Pet.
App. 26a-27a), applying the
companionship exemption to employees of third parties is also fully consistent with Congress’s
purposes. As the district court recognized, the companionship services
exemption is intended “to allow those in need of such services to find such
assistance at a price they can afford.”
Id.
at 52a. In particular, legislators were concerned that working people
could not afford to pay for companionship services if
they had to pay FLSA wages. See
119 Cong. Rec. 24,797
(1973) (statement of Sen. Dominick, discussing letter from Hilda R. Poppell);
id. at 24,798 (statement of Sen.
Johnston); id.
at 24,801 (statement of Sen.
Burdick). That cost concern applies whether the companionship services are
“provided by the direct hiring of an employee or through the use of an
agency.” Pet. App. 52a. Applying the exemption to all employees who provide
companionship services is, therefore, fully consistent with congressional
purposes.(5)
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3. In addition, the Second Circuit’s invalidation of 29
C.F.R. 552.109(a) conflicts with the Tenth Circuit’s
decision in Johnston
and,
if left undisturbed, will have a substantial impact on the home care industry. In
Johnston,
the Tenth Circuit applied
Chevron
and upheld the regulation, despite
employee arguments that the regulation was “an interpretation which does not
have the effect of law” and was limited by 29 C.F.R. 552.3. 213 F.3d at 561.
That result conflicts with the decision below, which refused to give
Chevron
deference to 29 C.F.R. 552.109(a)
and invalidated the regulation. Despite respondent’s description of the ruling
as “dicta”
(Br. in Opp. 8), the Johnston
court
characterized its own
decision as a holding, 213 F.3d at 562. It is also irrelevant that the court
issued its decision before Mead was
decided, see Br. in Opp. 8; Pet. App. 21a-22a. Nothing in
Mead eliminates
Chevron
deference for agency regulations
issued under express rulemaking authority like that involved here, see
Mead, 533 U.S. at 230 n.12, and the
Tenth Circuit has adhered to Johnston
after
Mead was
decided, see Welding
v.
Bios Corp.,
353 F.3d 1214, 1217 n.3 (10th Cir.
2004)
The court of appeals’ invalidation of Section 552.109(a)
will have a substantial impact on the home care industry and could cause
serious disruption in the care that frail elderly and disabled individuals
currently receive. New York City, for example, estimates that the
court of appeals’ decision will
add $279 million a year to its costs of providing personal care services to 50,000
low income frail elderly and
disabled individuals through 60,000 personal care attendants, and that it is unclear whether state
and federal funding will be available to cover those increased costs. City of
New York et al. Amici Br. 2, 5-8. Other home care providers similarly argue
that they have limited resources and that the
court’s decision will increase their costs of labor
beyond the point at
which they have the ability to pay for them. Home Care Ass’n of New York State,
Inc. (HCA) Amicus
Br. 2, 15-19; Continuing Care Leadership Coalition, Inc. (CCLC) Amicus Br. 2, 9-10; National Ass’n of Home Care
& Hospice Inc. Amicus Br. 2-4; Home Care Council of New
York City, Inc. Amicus Br. 6-9. The federal government, which pays much of the
cost of providing home care services
through Medicare and Medicaid, 66 Fed. Reg.
5483 (2001), may also be adversely affected by the court’s decision. All this could lead to less care
and reduced continuity in care for the elderly and the infirm, and ultimately
to more institutionalization, see CCLC Amici Br. 7; HCA Amicus Br. 8-9, a
result contrary to federal government policy, see Exec. Order 13,217, 3 C.F.R. 774 (2002) (individuals with disabilities
should be placed in community settings
whenever possible);
Olmstead
v.
L. C. ex rel. Zimring,
527 U.S. 581, 587 (1999).(6)
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B. The Court Should Grant The Petition, Vacate The
Decision Below, And Remand To Permit The Court Of Appeals To Reconsider Its
Decision In Light Of DOL’s Recent Guidance Making Clear That Section
552.109(a) Is An Exercise Of Legislative Rulemaking Authority
DOL recently issued authoritative agency guidance that
makes clear that DOL has always intended, and still intends, Section 552.109(a)
to be an exercise of its expressly delegated legislative rulemaking authority.
Application of
Section 13(a)(15) to Third Party Employers,
Wage & Hour Advisory Mem. No. 2005-1 (Dec. 1,
2005), App., infra,
1a-17a; see Op.
Ltr. FLSA2005-12, 2005 WL 2086801 (Mar. 17, 2005) (indicating that the Wage and
Hour Division “has not changed [Section 552.109(a)] or its interpretation thereof
as a result” of the decision below). The Advisory Memorandum states that “the
Department considers the third party employment regulations at 29 C.F.R.
552.109 to be authoritative and legally binding,” and that the language of the
regulation and its explanatory material “makes it clear that at the time the
final rule was promulgated, the Department believed that the availability of
the companionship exemption to third party employers turned decisively on its
pronouncement in the regulations— something that could be true only of a
legislative rule.” App. infra,
16a-17a. DOL has therefore “always treated the third party employment
regulations as legally binding legislative rules, and it will continue to do
so on an ongoing basis.” Id.
at 17a.
The Advisory Memorandum also sets
forth the reasoning underlying DOL’s conclusion that Section 552.109(a)
represents the best reading of the statutory exemption contained in 29 U.S.C.
213(a)(15), and explains
how the language contained in Section 552.3 and 552.101 of the regulations, which the court of
appeals viewed as
inconsistent with the third-party exemption of Section 552.109(a) (see Pet. App. 27a-28a), can be
harmonized with Section 552.109. App.,
infra,
2a-16a.(7)
The Advisory Memorandum represents DOL’s controlling
interpretation of its own regulations, and is therefore entitled to a high
degree of deference. An agency interpretation of its own regulation “must be
given ‘controlling weight unless
it is plainly erroneous or inconsistent with the regulation.’”
Stinson
v.
United States,
508 U.S. 36, 45
(1993) (quoting
Bowles
v.
Seminole Rock & Sand Co.,
325 U.S. 410, 414 (1945)); Auer,
519 U.S. at 462; Thomas Jeferson Univ.
v.
Shalala,
512 U.S. 504, 512 (1994).
As indicated above, the principal basis for the court
of appeals’ holding that Section
552.109(a) is not entitled to Chevron
deference is its mistaken conclusion that “DOL did
not intend to use the legislative power delegated in § 213(a)(15) when it
promulgated § 552.109(a).” Pet. App.
23a. In the court’s view, “§ 552.109(a) does not qualify for
Chevron
deference because, by DOL’s own
account, it was self-consciously not promulgated in
exercise of Congress’s delegated authority pursuant to § 213(a)(15).”
Ibid.
The Advisory Memorandum now makes
clear that this central premise of the court of appeals’ decision is
erroneous—that DOL “has always treated the third party employment regulations as
legally binding
legislative rules, and it will continue to do
so on an ongoing basis.” App.,
infra, 17a.
Accordingly, the
Court should grant the petition for a writ of certiorari, vacate the judgment
below, and remand for further proceedings to allow the court of appeals to
reconsider its
holdings in light of DOL’s authoritative construction of its own regulations.(8)
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C. The Second Question Presented By The Petition Does
Not Warrant Further Review
With regard to the second question presented in the
petition, petitioners argue that, even if Section
552.109(a) does not receive Chevron
deference, the court
should
have allowed full development of a factual record before deciding that the regulation was not
entitled to Skidmore
deference. Pet.
i, 13, 23-26. Petitioners have not cited any cases holding that a court can or must look beyond the
agency’s rationale for its rule before engaging
in such review. There is, accordingly, no conflict
among the courts of appeals on that question. Nor does the case-specific question whether the factual
record in this case
was adequate to resolve the question of
Skidmore
deference otherwise warrant this Court’s review. Indeed,
the question of the appropriate factual basis for
Skidmore
deference should not even be
reached in this case because, under a proper understanding of the law, the
regulation is entitled to deference under
Chevron,
not
Skidmore.
CONCLUSION
The petition for a writ of certiorari should be
granted, the judgment of the court
of appeals should be
vacated, and the case should be remanded for further consideration in light of
DOL’s authoritative construction of its own regulations as set forth in the
Advisory Memorandum.
In the alternative, the petition for a writ
of certiorari should be granted, limited to
the first question presented in the petition.
Respectfully
submitted.
HOWARD M.
RADZELY
Solicitor
of Labor
GREGORY F.
JACOB
Deputy
Solicitor
NATHANIEL I.
SPILLER
Assistant
Deputy Solicitor
EDWARD D.
SIEGER
Attorney
Department of Labor
|
PAUL D.
CLEMENT
Solicitor General
THOMAS G.
HUNGAR
Deputy
Solicitor General
DAVID B.
SALMONS
Assistant to the Solicitor
General
|
DECEMBER
2005
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APPENDIX
December 1, 2005
WAGE AND HOUR ADVISORY MEMORANDUM
No. 2005-1
MEMORANDUM
FOR: REGIONAL
ADMINISTRATORS DISTRICT
DIRECTORS
FROM: ALFRED B. ROBINSON,
JR. Deputy Administrator
SUBJECT: Application
of Section 13(a)(15) to Third Party Employers
Policy and Interpretation for
Applying the
Section 13(a)(15) Exemption
The purpose of this memorandum is
to advise staff how to apply the Section 13(a)(15) companionship services
exemption in light of the Second Circuit’s decision in Coke
v.
Long Island Care at Home,
376 F.3d 118 (2nd Cir. 2004). As indicated in
Opinion Letter FLSA 2005-12, the Division continues to adhere to its regulation, set out at 29 C.F.R. § 552.109(a),
exempting companions who are employed by third parties from the minimum wage
and overtime requirements of the FLSA. Regional Administrators and District
Directors are instructed to continue to apply the exemption in states outside
the Second Circuit.
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Rationale for Applying the Exemption
The following explains and justifies the Division’s policy
to continue to apply the section 13(a)(15) exemption in all jurisdictions
except those that comprise the Second Circuit Court of Appeals.
The text of the FLSA makes the applicability of the companionship exemption dependent upon the nature
of an employee’s
activities and the place of their performance, without regard to the identity
of the employer. Section 13(a)(15) exempts “any 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
are defined and delimited by regulations of the Secretary).” 29 U.S.C. §
213(a)(15). This language is naturally read to exempt any employee who provides
companionship services to an aged or infirm individual in a private home. The
statute does not draw any distinction between companions who are employed by
the owners of the homes in which they are working and companions who are
instead employed by third party employers.
The Department’s regulations explicitly state that the
companionship exemption applies to companions employed by third party
employers. The Department promulgated the Part 552 regulations pursuant to its
express statutory authority under section 13(a)(15) to
define and delimit the terms of
the exemption, as well as its additional
authority to issue regulations to implement
the
1974 FLSA amendments. 40 Fed. Reg. 7404 (1975); see Fair Labor Standards Amendments of 1974, Pub.
L. No. 93-259, § 29(b), 88 Stat. 55, 76 (authority to issue implementing
regulations). Section 552.109(a) of Part 522
[sic]
provides:
Employees who
are engaged in providing companionship services, as defined in § 552.6, and who are employed by an employer or agency
other than the family
or household using their services, are exempt
from the Act’s minimum wage and overtime requirements by virtue of section
13(a)(15).
In promulgating 29 C.F.R. § 552.109(a), the Department explained that applying the exemption to
employees of third parties “is more consistent with the statutory language and
prior practices concerning other similarly worded exemptions.” 40 Fed. Reg.
7404, 7405 (1975). The Department continues to agree with that assessment
because the statutory phrase “any employee” indicates that the exemption is
naturally read to apply based on the activities of the employee, not identity of
the employer. See, e.g.,
29 C.F.R. § 780.303 (exemption in 29 U.S.C. § 213(a)(6)(A) for “any employee
employed in agriculture” turns on “the activities of the
employee rather than those of his
employer”); 29 C.F.R.
§ 780.403 (exemption
in 29 U.S.C. § 213(b)(12) for “any
employee
employed in” certain activities “may not apply to some employees of an employer engaged almost exclusively
in activities within the exemption, and it may
apply to some employees of an employer engaged
almost exclusively in
other activities”).
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Section 552.109(a) is also consistent with the policy objectives that Congress was pursuing
in creating the companionship exemption. Soon after the regulations were
promulgated, the Department explained that Congress was mindful of the special
problems of working fathers and mothers who need a person to care for an
elderly invalid in their home. Op. Ltr. WH-368, 1975 WL 40991 (DOL Nov. 25,
1975). In particular, legislators were concerned that working people could not
afford to pay for
companionship services if they had to pay FLSA wages. See 119 Cong. Rec. 24,797 (statement of
Sen. Dominick, discussing letter
from Hilda R. Poppell); id.
at 24,798 (statement of Sen.
Johnston);
id. at 24,801 (statement of Sen. Burdick). That
cost concern applies whether the working person obtains the companionship
services by directly hiring an employee or by obtaining the services through a
third party.
In Coke
v.
Long Island, supra,
the Second Circuit
ruled that section 552.109(a) of the Department’s regulations is inconsistent with congressional intent and
with section 552.3 of the regulations. The Department disagrees. As explained
above, Congress created the exemption to ensure that working families in need of
companionship services would be able to
obtain them, a concern that has nothing to do with the source of the
companions’ employment. Thus, it is unsurprising that the text of the statute
focuses exclusively on the nature of the activities that companions perform and
does not even hint that the source of a companion’s employment is a relevant
factor. Presumably, if Congress had wanted to limit the companionship exemption to employees
of a particular employer, it would have said so expressly, as it has done with
other FLSA exemptions. See,
e.g.,
29 U.S.C. § 213(a)(3) (exemption for “any employee employed by an establishment which is an amusement or recreational establishment, organized camp, or religious or
non-profit educational conference center”); 29 U.S.C. § 213(b)(3) (“any
employee of a carrier by air”).
Moreover, the congressional committee reports that discuss section 13(a)(15)
repeatedly emphasize that the key factors in determining whether an employee
qualifies for the companionship exemption are the nature of
the employee’s activities, see, e.g., H.R.
Rep. No. 93-913, at
33 (1974) (“The bill exempts . . . employees employed in the
capacity of
companion to an individual who, by reason of age or necessity, necessitates a
companion.”) (emphasis added); S. Rep. No. 93-690, at 20 (1974) (“It is not,
however, the Committee’s intent to include within the term ‘domestic service’ such activities as
casual babysitting and acting as a companion.”) (emphasis
added); 119 Cong. Rec. 24,801 (1973) (describing tasks performed by companions) (statements of
Sens. Burdick and Williams); H.R. Conf. Rep. No. 93-413, at 27 (1973)
(explaining that the kinds of services that are performed by trained personnel
such as nurses do not fall within the exemption), and the place that the activities
are performed. See, e.g.,
S. Rep. No. 93-300, at 22 (1973)
(“The domestic service must be performed in a private home which is a fixed
place of abode of an individual or family”); S. Rep. No. 93-690, supra, at 20
(same); 119 Cong. Rec. at 24,799 (“A dwelling used primarily as a boarding or lodging house for the
purpose of supplying
such services to the public, as a business enterprise, is not a private
home.”) (statement of Sen. Williams).
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The Department’s regulations are not only consistent with
congressional intent, but they are also internally consistent. The regulations
address the issue of third party employment in only one place—section
552.109(a), which clearly and explicitly provides that companions employed by
third parties can qualify for the exemption. The Department intentionally chose
to include third party employees within the exemption after careful
deliberation. When the regulations were first proposed, the Department drafted
section 552.109 to
exclude companions employed by third party employers from the exemption. 39 Fed. Reg. 35,382,
35,385 (1974). After reviewing the
comments it received,
however, the Department reconsidered its position. When the regulations were
issued in final form, the Department adopted the present language of section
552.109(a), which expressly includes companions employed by third party
employers within the exemption. The Department explained that “[o]n further
consideration, [it had] concluded that these exemptions can be available to
such third party employers since they apply
to ‘any employee’ engaged ‘in’ the enumerated services. This interpretation is more
consistent with the statutory language and prior practices concerning other
similarly worded exemptions.” 40 Fed. Reg. 7404, 7405 (1975).
The Department’s January 19, 2001 NPRM and the Second Circuit’s decision in Coke
v. Long Island identified a conflict between section 552.109(a)’s
pronouncement that
the companionship exemption extends to third party employers and section 552.3’s definition of “domestic
service employment.” See 66 Fed. Reg. at 5485; Coke v. Long
Island, 376 F.3d at 133-34. The Department has reviewed section 552.3 and another regulation, 29 C.F.R. 552.101(a), which also
addresses the concept of “domestic service employment.” The regulations’
definition of “domestic service
employment” is relevant to determining the scope of the companionship exemption because the
text of section 13(a)(15) exempts only those companions who are “employed in
domestic service employment to provide companionship services.” Thus, the
statute seems to contemplate that to qualify
for the exemption, an employee must both
“provide companionship services” and
be “employed in domestic service employment.”
If the definition of “domestic service
employment”
in sections 552.3 and 552.101(a) is properly read as excluding all third party employees, then those
provisions can fairly be said to
be significantly in tension with section 552.109(a), which expressly includes companions employed
by third party employers.
The Department does not believe, however, that sections
552.3 and 552.101(a), when properly read in context, speak to the issue of
third party employment. Neither provision explicitly mentions the subject. And
unlike section 552.109(a), there is no indication that the Department ever
considered the potential impact of the provisions on the coverage of third
party employees, much less that it actually intended the provisions to entirely
exclude them. To the contrary, at the time the regulations were promulgated the
Department seems to have
believed that sections 552.3 and 552.101(a) did not resolve the issue of third party employment, since
it included a separate section—section 552.109—in both the NPRM and the final rule to
expressly address the subject.
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Admittedly, there are phrases in sections 552.3 and
552.101(a) that could potentially
be read to exclude third party
employees from the definition of “domestic service employment.” Section 552.3
provides:
As used in section 13(a)(15) of the Act, the term domestic service
employment refers to services of a household nature performed 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 of automobiles for family use. It
also includes babysitters
employed on other than a casual basis. This listing is illustrative and not
exhaustive.
And
section 552.101(a) explains:
The definition of
domestic service employment
contained in § 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.
The statement in section 552.3 that domestic service employment is “performed by an
employee in or about the private home . . .
of the person by whom he or she is employed,”
and the statement in section
552.101(a) that domestic service employment “must be performed
in or about the private home of the employer,”
could be read to exclude companions who are employed by
third party employers
from the scope of the exemption. As explained above, however, there is no reason to believe that the Department intended the
provisions to have that effect. Because there are available readings of the
various regulations that allow them to be internally
reconciled, the Department believes that they can and
should be read in harmony. See generally
73 CJS Public
Admin.
Law and Proc. § 211 (2005) (“The court should read a regulation as an entirety,
and should harmonize the various parts and provisions of the entire regulation
and give them effect, if possible.”).
Sections 552.3 and 552.101 are best read as
describing the kinds of work that constitute domestic
service employment and establishing that such work must be performed in a
private home, rather than in a place of
business. The references in those
provisions to domestic
service employment needing to be performed in the home of the employer are not
intended to address the issue of third party employment, but rather are an extraneous
vestige of the language’s origin in the Social Security regulations.
See S. Rep. No. 93-690,
supra,
at 20. See also
20 C.F.R. § 404.1057 (social security regulation
describing “[d]omestic service in the employer’s home”); 26 C.F.R. § 31.3121(a)(7)-1(a)(2) (social security tax
regulation describing “[d]omestic service in a private home of the employer”).
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Because the Department borrowed the language of sections
552.3 and 552.101 from the congressional committee reports underlying the 1974
amendments to the FLSA without discussion or elaboration, the legislative
history must be consulted to determine their meaning. Significantly, while the
legislation was being drafted, Congress repeatedly referred to and discussed in
detail its view that work must be performed in a private home to qualify as
“domestic service employment.” For example, the 1974 amendments extending FLSA
coverage to domestic workers did so by referring to employees “employed in domestic service in a household.”
P.L. 93-259, § 7(b)(1), 88 Stat. 55, 62 (1974) (emphasis added). The
committee reports, in turn, described the newly covered workers using a variety
of phrases emphasizing the importance of the employment bring performed in a
private home: “domestic service employees in private
households,”
S. Rep. No. 93-300, supra,
at 20 (emphasis
added);
“domestic service
in and about a private home,” id.
at 22 (emphasis added); “domestic
service employees
employed in households,”
H.R. Rep. No. 93-232, supra,
at 31 (emphasis added); “household
domestic employees,” S. Rep. No. 93-758, supra,
at 27 (emphasis added); “employee in domestic service in a household,” id. (emphasis
added); “domestic service workers,” H.R. Rep. No. 93-913, supra, at 11;
and “private household workers.” S. Rep. No. 93-690,
supra,
at 19 (emphasis added). Indeed, the reports contain a detailed discussion of Congress’s
intention to require that covered domestic service be performed in a private
home:
The domestic service must be performed in a
private home which is a fixed place of abode of an individual
family. A separate and distinct dwelling maintained by an 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 purpose of
supplying such services to the public, as a business enterprise, is not a
private home.
S. Rep.
No. 93-300, supra, at 22. See also S. Rep. No. 93-690, supra, at
20 (same); H.R. Rep. No. 93-913, supra, at 33 (same). This passage is
particularly significant because it supplies content and meaning to the sentence
immediately preceding it—specifically, the previously referenced sentence that
draws upon the language of the Social Security regulations to define “domestic
service employment” and states that its generally accepted meaning relates to
“services of a household nature performed by an employee in or about a private home of the person by whom he or
she is employed.” The
fact that the sentence is immediately followed by a descriptive passage elaborating
on the sentence’s requirement that domestic service employment must be
performed in a private home, but
making no mention at
all of the issue of third party
employment, makes it clear that the sole purpose of the sentence is to specify the place where
domestic service employment must be performed.
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The sentence from the committee report is
incorporated virtually verbatim into section 552.3, with
the only modification
being the addition of a brief parenthetical specifying that a private home can
be fixed or temporary. In the view of the Department, when the sentence was
imported into the regulations from the committee report, it carried with it the
meaning ascribed to it by Congress. The Department signaled its understanding
that the sentence should be read as addressing place of performance but as not
speaking to third party employment in two distinct ways. First, the one change
the Department made
to the sentence was the insertion of a parenthetical explaining that, with respect to the place
of performance, a private home can either be fixed or temporary. The insertion
of the parenthetical shows that the Department was primarily concerned with clarifying the operative effect of the regulation on the
place of performance
requirement. Second, the Department drafted a separate regulatory provision
specifically to address the issue of third party employment. This
would have been entirely
unnecessary if the definition of domestic service employment excluded third party
employment—particularly at the
NPRM stage, when the
meaning of the two provisions
would have been aligned. In sum, all signs indicate that neither Congress nor the Department
intended the sentence that first appeared in the committee report and was then
incorporated into section 552.3 to be construed as excluding employees who are
employed by third party employers from the definition of domestic service
employment.
In fact, if the sentence in question were
construed as excluding all employees of third party employers from the
definition of domestic service employment, it would have the perverse effect of
excluding many domestic
workers from the coverage of the FLSA—despite
Congress’ express intent “to include within the coverage of the Act
all employees whose
vocation is domestic service,”
excepting only casual babysitters and companions
for the aged and infirm. See
S. Rep. No. 93-690, supra,
at 20 (emphasis added); see also H.R. Conf. Rep. No.
93-413, at 27 (1973); S. Conf. Rep. No. 93-358, at 27
(1973). Prior to the enactment of
the 1974 amendments,
the only domestic workers that were covered by the FLSA were those employed by
“covered enterprises,” which are currently defined by the FLSA as businesses with annual gross sales of at least $500,000 that
employ at least two
employees in interstate commerce. See
29 U.S.C. § 203(s); see also 29 U.S.C. § 203(s) (1970) ($250,000
threshold applicable at time of 1974 amendments). Two categories of domestic
workers generally were not covered prior to the amendments: those employed by
homeowners because there usually was no basis for individual coverage and those
employed by third party employers that did not meet the test for enterprise
coverage. There can be no question that Congress intended for the 1974
amendments generally to cover both of these categories, with only a few expressly enumerated exceptions. Yet if the
sentence in the committee report is construed as excluding all third party
employers from the definition of domestic service employment, then those
domestic workers who are employed by third party employers that are not
covered enterprises
would to this very day not be covered by the
FLSA.(9) That result is contrary to
Congress’ express intent, and cannot be correct.
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Sections 552.3 and 552.101(a) should also not be read as
addressing the issue of third party employment because doing so would render
them inconsistent with themselves. Section 552.101, which elaborates on the
definition of domestic service
employment provided by section 552.3, specifies that “private household workers”
are included within the definition of domestic
service employees. The term “private household workers” has long been understood
by both Congress and the Department to include the employees of third party
employers. During the
time Congress was considering the 1974 amendments to the FLSA, the Department
submitted reports defining the term as:
[A]nyone aged 14 and over working for wages, including
pay-in-kind, in or about a private residence
who was employed by (1) a member of the household occupying that residence or (2) a
household service business whose services had been requested by a member of the
household occupying that residence.
See
Department’s 1973 Report to Congress on Minimum Wage and Maximum Hours Standards under the Fair
Labor Standards Act at 27; 1974 Report at 31-32. The second prong of the
definition unambiguously includes domestic workers who are employed by third
party employers. It is not surprising that the Department incorporated
private household workers into the regulations’ definition of domestic service
employment, since Congress referred to the Department’s reports on several
occasions, see H.R.
Rep. No. 92-232, supra, at 31; H.R.
Rep.
No. 93-913, supra,
at 33; S. Rep. No. 93-690, supra,
at 19-20; 119
Cong. Rec. 24,796 (statement of Sen. Dominick), and repeatedly used the phrase
“private household workers” interchangeably with the term “domestic service
employees.” See
H.R. Rep. No. 93-233, supra,
at 31 (using the term “domestic service employees” and
“private household workers” in a single paragraph to describe the same set of
employees); S. Rep. No. 93-300, supra,
at 21-22
(describing the same set of employees in successive paragraphs using the interchangeable
terms “private household workers,” “domestics,” “household workers,” and
“domestic workers”); H.R.
Rep. No. 93-913, supra, at 33; S. Rep. No. 93-690, supra,
at 19. In fact,
the Department’s definition of “private household worker” was quoted in full
during the floor debate in the Senate on the amendments to the FLSA. See 119 Cong. Rec. at 24,796 (statement of Sen
Dominick). Since section
552.101(a) clearly states that at least some domestic workers employed by third
party employers are included within the definition of domestic service
employees, it makes no sense to construe the ambiguous language requiring that
domestic service “be performed in or about the private home of the employer” as
designed to exclude them.
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The governing rules of legal interpretation require the
Department to adopt a reading of the regulations that harmonizes them and
renders them internally consistent as a whole.
See Jay
v. Boyd, 351 U.S. 345, 360 (1956) (Court must read regulations “so as to give
effect, if possible, to all of its
provisions”); APWU v. Potter, 343 F.3d
619, 626 (2d Cir. 2003) (“[A] basic tenet of statutory construction, equally applicable to regulatory
construction, [is] that [a text] should be construed so that effect is given
to all its provisions, so that no part will be inoperative or superfluous,
void or insignificant, and so that one section will not destroy another unless
the provision is the result of obvious mistake or error”) (citations and internal
quotations omitted); Miller v. AT&T Corp., 250 F.3d 820, 832 (4th Cir. 2001) (“Whenever possible,
this court must reconcile apparently conflicting provisions”). If sections
552.3 and 552.101(a) were read to exclude third party employees from the
definition of domestic service employment, it would not only create a conflict with
section 552.109(a), but it would also be inconsistent with section 552.101(a)’s inclusion of “private household workers” within the definition of domestic service
employment and with Congress’s express intent “to include within the
coverage of the Act all employees whose vocation
is domestic service.” See S. Rep. No. 93-690, supra,
at 20; H.R. Conf. Rep. No. 93-413,
supra, at 27; S. Conf. Rep. No. 93-358, supra, at 27. By contrast,
when sections 552.3 and 552.101(a) are
read as requiring that domestic service employment be performed in private
homes, but as not addressing the issue of third party employment, the
regulations are fully harmonized and rendered internally consistent.
Consequently, the Department reads
sections 552.3 and 552.101(a) as not addressing the
issue of third party employment. Read in that context, I find no inconsistency
between sections 552.3 and 552.109(a). All prior statements by the Department
to the contrary, including the Department’s January 19, 2001 NPRM, see
66
Fed. Reg. at 5485, are hereby repudiated and withdrawn.
The Department is aware that the Second Circuit
suggested in Coke
v. Long Island Health Care, Ltd.,
376 F.3d at 131-33, that the Department’s regulations governing third party
employment were intended to be advisory interpretations only, and that they
therefore do not have the force and effect of law. That is not the case; the
Department considers the third party employment regulations at 29 C.F.R. 552.109
to be authoritative and legally binding. When the Department promulgated the final regulations in February 1975, it
noted that as originally proposed, section 552.109(a) “would not have
allowed
the [FLSA] section 13(a)(15) or
the [FLSA] section
13(b)(21) exemption for employees who, although providing companionship services, are employed
by an employer or agency other than the family
or household using their services.” 40 Fed. Reg.
7404-05 (emphasis
added). The Department stated in the final rule that it had changed its mind,
“conclud[ing] that these exemptions can be available
to such third party
employers since they apply to ‘any employee’ engaged ‘in’ the enumerated services.”
Id. at 7405 (emphasis added). The
highlighted language makes it clear that at
the time the final rule was promulgated, the Department believed that the availability of
the companionship exemption to third party employers turned decisively on its
pronouncement in the regulations—something that
could be true only of a legislative rule.
Accordingly, the Department has always
treated the third party employment regulations as legally
binding legislative rules, and it will continue to do so on an ongoing basis.
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Footnotes:
(1)
“Companionship services” are
defined, in relevant part, as:
those services which provide fellowship, care, and
protection for a person who, because of
advanced age or physical or mental infirmity, cannot care for his
or her own needs.
29 C.F.R.
552.6. The regulations also state that “domestic service employment”:
refers to services of a household nature
performed 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 of automobiles for family
use. It also includes babysitters employed on other than a casual
basis. This listing is illustrative and not exhaustive.
29 C.F.R. 552.3; see 29 C.F.R. 552.101 (“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.”). Sections 552.3 and 552.6 are contained in Subpart A of the
regulations, designated
“General Regulations,” whereas Section 552.109(a)’s thirdparty exemption is contained in Subpart
B, designated “Interpretations.”
(2)
The court of appeals denied a
petition for rehearing, but stayed issuance of the mandate. Pet. App. 31a-35a.
(3) DOL has since amended the
Part 541 regulations, and the current regulations are not divided into “General
Regulations” and “Interpretations” subparts. See 69 Fed. Reg. 22,122, 22,126
(2004) (codified at 29 C.F.R. Pt. 541).
(4) Respondent argues (Br. in Opp.
26-27) that if Section 552.109(a) is not interpretive, it is invalid because the Department
did not comply with
the APA’s notice-and-comment requirements because DOL deviated in the final
rule from the approach initially proposed. That argument is not properly before
the Court because it was untimely raised, Pet. App. 43a n.3, and the court of appeals did
not decide the issue,
id .
at 24a. The argument is also
meritless. The APA requires an agency’s notice of proposed rulemaking to include “either the terms or
substance of the proposed rule or
a description of the subjects and issues involved.” 5 U.S.C. 553(b)(3). The Department’s
notice set forth the
terms of the proposed Part 552 (39 Fed. Reg. at 35,383-38,385),
including a proposed provision
directed specifically to the subject of third-party employment
(id. at 35,385), and thereby complied
with 5 U.S.C.
553(b)(3).
(5) The court of appeals speculated
(Pet. App. 26a-27a) that Congress would
not have wanted to exempt the employees of third parties because, in
the court’s view, those employees were covered by the FLSA before the 1974
Amendments, which added the companionship exemption and generally were intended to expand coverage
rather than to eliminate
it. Contrary to the court of appeals’ understanding, however, not all employees
providing companionship services who worked for a
third party were covered by the
FLSA before 1974. Rather, the Act applied only “if the third party employer is a covered
enterprise meeting the
tests of sections 3(r) and 3(s)(1) of the Act.” 39 Fed. Reg. at 35,385;
see 29 U.S.C. 203(s)(1)(A)(ii)
(enterprise coverage currently requires $500,000
in sales or revenue); 29 U.S.C. 203(s)(1) (1970) (at time of 1974 FLSA amendments, $250,000 was required). There is
no reason to assume that when Congress extended FLSA coverage to domestic employment in 1974 it intended to deny the
companionship exemption to newly
covered third-party providers. Instead, as the Department explained in promulgating 29 C.F.R. 552.109(a),
construing the exemption to cover all
employees who provide companionship services “is more consistent with the
statutory language and prior practices concerning other similarly worded
exemptions.” 40 Fed. Reg. at 7405.
(6) Respondent mistakenly relies on the Department’s
statement in January 2001 that proposed
revisions to 29 C.F.R. 552.109(a) would not have a significant economic or budgetary impact on affected entities. Br.
in Opp. 3 n.1; see 66 Fed. Reg. at 5486. The Department did not make the proposed revisions because numerous
commenters, including multiple government agencies, “seriously called
into question [that] conclusion.” 67 Fed. Reg. 16,668 (2002).
(7)
The Advisory Memorandum explains
that DOL views the definitions of “domestic service employment” in Sections 552.3 and 552.101
as pertaining to the types of
employment and services covered by the exemption, and not as imposing a limitation based on the
identity of the employer.
App., infra,
5a-9a. “The references in those
provisions to domestic service employment needing to be performed in the home
of the employer are
not intended to address the issue of third party employment, but rather are an
extraneous vestige of the language’s origin in the Social Security regulations.”
Id.
at 9a.
(8) Although the court of appeals should have deferred to
DOL’s construction of its regulations as
set forth in the agency’s amicus brief submitted
in the court of appeals, see Auer,
519 U.S. at 462; Gov’t C.A.
Br. 12-15, the Advisory
Memorandum represents both a more formal and a more complete explanation of the
agency’s interpretation of its regulations.
An order from this Court granting the petition, vacating the decision, and
remanding for reconsideration is therefore appropriate.
(9) Unlike the sentence in the committee report, section
552.3 of the regulations purports to define
domestic service employment only “[a]s
used in section 13(a)(15) of the Act.” As mentioned previously, however,
since the Department copied the sentence from the committee report virtually
verbatim into the regulations, there is no reason to believe that the Department intended for it to have a different meaning
than the one that was attached to it by
Congress. Indeed, there is good reason
to believe that despite section 552.3’s purported limitation of the
definition to the companionship exemption, the Department in fact intended the provision to supply a general
definition of the term as used throughout
the Act. First, there is no other provision in the regulations that supplies an alternative definition of
domestic service employment. Second, the examples that the regulation
provides of workers that qualify as domestic service employees—including gardeners,
handymen, janitors,
grooms, and valets—have little or nothing to do with the provision of companionship services, but instead
fall within the broader category of domestic workers generally.
See 29 C.F.R. 552.3.
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