Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—3d Cir.: Employer of in-home care providers is third-party employer subject to FLSA minimum wage and overtime provisions, (Jan 8, 2026)

By Ronald Miller, J.D.

The FLSA’s companionship exemption provision contains an express delegation that allows the Secretary of Labor to define and delimit terms by promulgation of regulations.

The Third Circuit, in an unpublished decision, declined to vacate the Department of Labor’s Third-Party Regulation that denied third-party employers the benefit of an FLSA provision exempting “companionship services” workers from the Act’s protections as inconsistent with the FLSA. The appeals court rejected the employer’s contention that it was not subject to the Third-Party Regulation because it is not a third-party employer. Rather, the regulation clearly distinguishes a third-party employer from an employer who is “the individual [receiving companionship services] or member of the family or household using the services.” Therefore, the employer was a “[t]hird party employer[]” as so defined (Walsh v. WiCare Home Care Agency, LLC, No. 24-2565 (3d Cir. Jan. 6, 2026, unpublished)).

The employer employs in-home care providers. On February 15, 2022, the Secretary of Labor filed a complaint alleging that the employer failed to pay certain employees the minimum wage and overtime premium required by the FLSA.

After discovery, both parties moved for summary judgment. The Secretary asserted that between January 2019 and May 2021, the employer failed to pay 181 of its employees $468,414.25 in overtime wages, and failed to pay 88 employees $61,354.84 in minimum wages. The district court granted the Secretary’s motion for summary judgment and awarded $1,059,540.18 in total damages, consisting of $529,770.09 in back wages and an equal amount of liquidated damages. The employer timely appealed.

Companionship services. The FLSA excludes from its protections “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).” A regulation promulgated by the Secretary provides, however, that “[t]hird party employers of employees engaged in companionship services... may not avail themselves of the minimum wage and overtime exemption provided by section 13(a)(15) of the Act.” The employer argued that the third-party regulation is inconsistent with the FLSA’s overtime exemption for companionship workers and is for that reason unlawful.

As the Supreme Court recognized in Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 394 (2024), the FLSA’s companionship exemption provision contains an express delegation that allows the Secretary of Labor to define and delimit terms by regulations of the Secretary. In the Third-Party Regulation, the Secretary chose to “delimit[]” the scope of the companionship services exemption by excluding third-party employers from its reach. The Secretary’s decision to do so was a lawful exercise of its expressly delegated authority under the FLSA. Therefore, the Third Circuit declined to vacate the Third-Party Regulation as inconsistent with the Act.

Engaging in commerce. The appeals court found the employer’s arguments unavailing. The employer first asserted that it is not subject to the FLSA because it does not engage in “commerce” as defined by the Act. But the appeals court observed that Congress has found “that the employment of persons in domestic service in households affects commerce,” and it was undisputed that the employer employs persons in domestic service. Consequently, there was no basis for the employer’s assertion that its activity does not meet the statutory definition of “commerce.”

Third-party employer. The employer also argued that it is not subject to the Third-Party Regulation because it is not a third-party employer. While the Third-Party Regulation does not expressly define the term “[t]hird party employer[],” the regulation clearly distinguishes a third-party employer from an employer who is “the individual [receiving companionship services] or member of the family or household using the services. Context makes clear that a third-party employer is one who is neither the individual receiving companionship services nor a member of that individual’s family or household. Accordingly, the employer was a “[t]hird party employer[]” so defined.

Liquidated damages. Rejected also was the employer’s contention that, even if it were liable for violations charged, the district court abused its discretion by awarding liquidated damages. An employer may avoid liquidated damages by “show[ing] that it acted in good faith and that it had reasonable grounds for believing that it was not violating the Act.” Here, the employer argued that certain “fact sheets” published by the Department of Labor provided it reasonable grounds to believe that its employees were not subject to the FLSA. However, the appeal court disagreed, observing that one fact sheet cited by the employer provides that “[t]hird party employers of direct care workers... are not permitted to claim the exemption for companionship services.” Thus, the fact sheets affirmatively demonstrated the unreasonableness of the employer’s belief that it could claim the companionship exemption. Accordingly, the district court did not abuse its discretion in awarding liquidated damages.

The case is No. 24-2565.

Judge: Chagares, M.

Attorneys: Amelia B. Bryson, U.S. Department of Labor, for Martin J. Walsh. Grace Miller (O’Hagan Meyer) for WiCare Home Care Agency LLC and Luis D. Hernandez.

Companies: WiCare Home Care Agency, LLC

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