In-home domestic companionship service was exempt

Domestic service employees who provided companionship services to disabled persons in the employees’ homes were exempt from overtime compensation under applicable FLSA regulations, concluded the Eighth Circuit. Construing the phrase “private home” in 29 C.F.R. Sec. 552.3 for the first time, the appeals court found that every client lived in a dwelling that was private in relation to the employer. As a result, a district court correctly granted summary judgment to the employer. Additionally, the district court correctly granted summary judgment to the employer on a named plaintiff’s FLSA retaliation claim because she failed to provide evidence from which a jury could conclude that the asserted nonretaliatory bases for her termination were pretextual.

The employer, a nonprofit organization, provides services to disabled persons. Its employees provide companionship services to the employer’s clients at each client’s place of residence. In this instance, the clients lived with the employee who provided their care. The employer did not dictate that its employees and clients live together, did not mandate that clients move into its employees’ homes when they became clients, and it did not control the details of the living arrangements. The living arrangements were between the client and the employee acting as an independent third party.

DOL complaint

The employer paid its domestic service employees a flat daily rate without overtime. One of the named plaintiffs sent an email demanding an increase in her daily rate. She later told the employer that she filed a complaint with the Department of Labor. She was subsequently terminated. In fact, the employee had not actually filed the complaint.

Prior to her termination, the employee experienced other problems with the employer, including writing a “very hostile and accusatory” email to its CEO, which the employer regarded as insubordination and considered terminating her employment at that time. Further, just weeks before her termination, the employee was subjected to a home visit conducted by a state inspector for one of her clients. The home inspection revealed numerous performance deficiencies and concerns for the client’s welfare. The employer asserted that it terminated the employee on the basis of her insubordination and deficient performance, not her alleged complaint to the DOL.

Thereafter, the employee filed a collective action seeking overtime pay under the FLSA and Arkansas Minimum Wage Act. She also alleged that the employer wrongfully terminated her in retaliation for filing a complaint with the DOL. The district court granted summary judgment to the employer on all claims. The employees appealed.

“Private home”

This case called on the Eighth Circuit to construe the phrase “private home” as it appeared in Section 552.3. The employees argued that they did not provide services in a “private home” under the FLSA. In granting summary judgment, the district court cited the factors set forth by the Tenth Circuit in Welding v Bios Corp, 149 LC ¶34,800. The district court concluded that the employees provided services in residences that were “private homes” within the context of the FLSA. On appeal, the employees asserted that the court erred in applying the Welding factors. Here, the Eighth Circuit declined to adopt the Welding factors but nonetheless agreed with the thrust of the district court’s reasoning.

The Eighth Circuit construed the term “private home” in Section 552.3 for the first time. As an initial matter, the appeals court observed that the discussion of “private home” in prior cases has revolved around this question: Does the employer own or control the home? In this case, all the clients chose a living arrangement subject to some measure of control by a third-party who also happened to work for the employer. Thus, every client lived in a dwelling that was private in relation to the employer. The employer did not exert control over any term or condition of the living arrangement. Additionally, many of the clients paid rent. Moreover, many of the clients rented a specific room that constituted an identifiable dwelling unit within the property as a whole. Consequently, the appeals court concluded that the district court correctly granted summary judgment to the employer.

Retaliation

Further, the appeals court affirmed the district court’s ruling that the employee did not establish that the legitimate, nonretaliatory reasons that the employer provided for her termination were pretextual. While the employee successfully challenged the timing of her DOL claim, she failed to rebut the legitimate, nonretaliatory basis for her termination. Before her termination, the employee told the employer that she had filed a DOL complaint. Because the FLSA protects an employee when an employer mistakenly believes that she has engaged in a protected activity, the Eighth Circuit concluded that the employee satisfied the protected-activity element of a prima face case for retaliatory termination.

However, the prima facie analysis did not end the inquiry. Here, the employer provided evidence of a legitimate, nonretaliatory basis for terminating the employee, including insubordination, and an unfavorable performance report from a state inspector. The employee failed to put forth evidence beyond temporal proximity to show that a material fact dispute remained as to her termination. (Fezard v United Cerebral Palsy of Central Arkansas dba United Cerebral Palsy of Arkansas, 8thCir, 166 LC ¶36,408.)

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