Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—W.D. Pa.: Third-party employer regulation pertaining to live-in domestic workers conflicted with FLSA, (Nov 2, 2026)

By Ronald Miller, J.D.

The Live-In Exemption exempts from the FLSA’s overtime pay requirements “any employee” meeting its other expressly stated requirements, namely, those employees who are employed in “domestic service in a household” and “who resides in such household.”

The Department of Labor exceeded its authority when it promulgated its 2015 Third-Party Employer Regulation, ruled a federal district court in Pennsylvania. That part of the regulation pertaining to employees engaged in live-in domestic service employment was unlawful because it directly conflicted with the text of the FLSA. However, the Supreme Court’s decision in Long Island Care at Home, Ltd v. Coke precluded declaring unlawful the part of the regulation pertaining to employees providing companionship services. Accordingly, the parties’ respective motions for summary judgment were granted in part and denied in part (Intra-National Home Care, LLC v. U.S. Department of Labor, Nos. 20-1545 and 20-1773 (W.D. Pa. Oct. 29, 2026)).

Pre-enforcement challenges. Intra-National processes service and payroll documents for direct care workers who provide in-home companionship and assistance to elderly and disabled family or household members of low-income families. AgeWell employs direct care workers. In October 2020, the plaintiffs initiated declaratory judgment actions in pre-enforcement challenges to a DOL regulation providing that third-party employers may not avail themselves of two specific statutory exemptions from the FLSA’s minimum wage and overtime requirements, 29 C.F.R. § 552.109(a) and (c).

According to the plaintiffs, Section 552.109 should be set aside because it conflicts with the text of the FLSA and is contrary to law. They also allege that Section 552.109(a) and (c) should be set aside for the separate and independent reason that the DOL did not provide adequate justification or explanation and thus was arbitrary and capricious when promulgating it. Pending before the court were cross-motions for summary judgment.

In 1974, Congress amended the FLSA. It found that “the employment of persons in domestic service in households affected commerce” and amended Section 6 and Section 7 of the Act to extend the minimum wage and overtime pay provisions to such employees employed in “domestic service.” At the same time, Congress amended Sections 13(a) and (b) of the Act to exempt specified employees “employed in domestic service employment” from the newly expanded minimum wage and overtime pay provisions.

The Companionship Exemption” at Section 13(a)(15) states that the minimum wage and overtime pay requirements of Sections 6 and 7 shall not apply to an employee employed on a casual basis in domestic service to provide babysitting or companionship services. The “Live-In Exemption” states that overtime pay requirements of Section 7 shall not apply to an employee employed in domestic service in a household and who resides in such household.

Third-Party Employer Regulation. In 1975, the DOL promulgated regulations pertaining to the newly added domestic service provisions. In 2002, the 1975 Third-Party Employer Regulation was challenged, and in 2007 the Supreme Court ultimately deemed it valid in Long Island Care at Home, Ltd v. Coke, 551 U.S. 158 (2007). The 1975 Third-Party Employer Regulation remained undisturbed for nearly 40 years.

2013 Final Rule. In 2011, DOL published a Notice of Proposed Rule Making inviting public comments on proposed regulatory changes regarding the Companionship and Live-In Exemptions. Ultimately, the DOL published its Final Rule on October 1, 2013, becoming effective on January 1, 2015. This 2013 Final Rule contains the DOL’s 2015 Third-Party Employer Regulation, which remains in effect.

The 2015 Regulations include updated definitions of “domestic service employment” and “companionship services.” The term “domestic service employment” is defined as services of a household nature performed by an employee in or about a private home, 29 C.F.R. § 552.101. The term “companionship services” is defined as providing fellowship and protection for an elderly person or person with an illness, injury or disability who requires assistance, 29 C.F.R. § 552.6.

Citing the new definition of “companionship services,” the DOL’s Third-Party Employer Regulation replaces the 1975 version. Another part of the 2015 Third-Party Employer Regulations applies to the Live-In Exemption.

The 2015 Third-Party Employer Regulations carves out companionship services workers and live-in domestic service workers employed by third parties from the FLSA’s minimum wage and overtime provisions, Sections 13(a)(15 and 13(b)(21), even if they otherwise satisfy the requirements of these statutory exemptions.

Medicaid Care Waiver Program. The plaintiffs employ or otherwise process service and payroll documents for direct care workers who provide in-home companionship and assistance services to elderly and disabled family or household members of low-income families through the Medicaid Care Waiver Program. They are considered “third-party employers” of these direct care workers.

The Medicaid Care Waiver Program provides a flat hourly rate of pay that does not afford any increased amount for the extra half-time for overtime hours worked by associated direct care workers. The plaintiffs and other third-party agencies have long relied upon the FLSA’s Companionship and Live-In Exemptions from the FLSA’s minimum wage and overtime pay requirements that might otherwise be applicable.

The plaintiffs contend that they restructured the rates of pay applicable to their direct care workers to allow for overtime premium pay within the financial constraints of the Medicaid Care Waiver Program. The DOL deems this restructured arrangement to be a serious violation of the FLSA. According to the plaintiffs, the DOL has targeted third-party agencies such as themselves for investigation and civil prosecution under the Medicaid Care Waiver Program.

Independent interpretation of statute. Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), overturned Chevron, and instructs reviewing courts to independently interpret the statute at issue and effectuate the will of Congress subject to constitutional limits. The APA separately empowers a reviewing court to hold unlawful and set aside a regulation as arbitrary or capricious if it is not “reasonable and reasonably explained.” Accordingly, the court began by analyzing the statutory language.

Companionship exemption. The main question presented in this case was whether the DOL’s 2015 Third-Party Employer Regulation was or was not “in accordance with the law.” The Companionship Exemption creates a nondiscretionary exemption from the minimum wage and overtime pay provisions of the FLSA. For coverage under the Companionship Exemption, Congress legislatively infused its statutorily defined term “employee” with the broadest possible meaning. Moreover, nowhere in the text of the Companionship Exemption does Congress qualify coverage based upon the identity or nature of the employee’s employer.

Here, Congress did not carve out third-party employers from the Companionship Exemption because it did not say anything about the identity or nature of the employer in the statutory text. Thus, the court concluded that the best reading of the Companionship Exemption it that it exempts from the FLSA’s minimum wage and overtime pay requirements “any employee” meeting its other expressly stated requirements, namely, those employees “employed in domestic service employment to provide companionship services,” for those individuals who are “unable to care for themselves because of age or infirmity” and regardless of their employer’s identity or nature.

However, that did not end the court’s review of the Companionship Exemption. The court continued its textual analysis by: (a) recognizing any constitutional delegations to the DOL, (b) fixing and policing their boundaries, and (c) ensuring the DOL has engaged in reasonable decision-making within those boundaries. After doing so, the court concluded that such delegations did not alter its best reading of the Companionship Exemption.

Live-In Exemption. Next, the court turned to the Live-In Exemption at Section 13(b)(21). Here, Congress provided that the overtime provisions of the FLSA “shall not apply with respect to any employee who is employed in domestic service in a household and who resides in such household.” The Live-In Exemption plainly exempts from the FLSA’s overtime pay provisions “any employee” who provides services of a household nature in or about a private home in which the employee resides.

There is no text in the Live-In Exemption that would exclude employees of third-party employers from its coverage. There is no mention of an employer in the Live-In Exemption. Accordingly, the court concluded that the best reading of the Live-In Exemption exempts from the FLSA’s overtime pay requirements “any employee” meeting its other expressly stated requirements, namely, those employees who are employed in “domestic service in a household” and “who resides in such household.” The identity and nature of the covered employee’s employer is immaterial to the application of the Live-In Exemption. Consequently, the portion of the DOL’s Third-Party Employer Regulation pertaining to live-in domestic service employment directly conflicts with the statutory text enacted by Congress.

Further, the court concluded that any judgment issued in this case declaring unlawful or setting aside part of the DOL’s 2015 Third-Party Employer Regulation must relate to the plaintiffs who are seeking judicial review of that regulation after having been adversely affected or aggrieved by it, not the full universe of employers potentially excluded from the FLSA’s Live-In Exemption pursuant to the DOL’s 2015 Third-Party Employer Regulation.

The cases are Nos. 20-1545 and 20-1773.

Judge: Hardy, W.

Attorneys: Bruce C. Fox (Obermayer Rebmann Maxwell & Hippel) for Intra-National Home Care, LLC, and AgeWell Home Helpers, Inc. dba AgeWell Caregiver Service. James Wen, U.S. Department of Justice, for U.S. Department of Labor.

Companies: Intra-National Home Care, LLC; AgeWell Home Helpers, Inc.; AgeWell Caregiver Service

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