Eighth Circuit Interprets Private Home under the FLSA Regulations' Companionship Exemption | Practical Law

Eighth Circuit Interprets Private Home under the FLSA Regulations' Companionship Exemption | Practical Law

In Fezard v. United Cerebral Palsy of Central Arkansas, the US Court of Appeals for the Eighth Circuit held that domestic service employees who provided services in their own private homes to individuals with cerebral palsy fit within the companionship services exemption of the Fair Labor Standards Act (FLSA) and were not entitled to overtime pay.

Eighth Circuit Interprets Private Home under the FLSA Regulations' Companionship Exemption

by Practical Law Labor & Employment
Published on 12 Jan 2016 • USA (National/Federal)
In Fezard v. United Cerebral Palsy of Central Arkansas, the US Court of Appeals for the Eighth Circuit held that domestic service employees who provided services in their own private homes to individuals with cerebral palsy fit within the companionship services exemption of the Fair Labor Standards Act (FLSA) and were not entitled to overtime pay.
On January 5, 2016, in Fezard v. United Cerebral Palsy of Central Arkansas, the US Court of Appeals for the Eighth Circuit held, in a matter of first impression, that domestic service employees who provided services in their own private homes to disabled clients fit within the FLSA's companionship services exemption and were not entitled to overtime pay. The Eighth Circuit found that the employees' work constituted domestic service employment in a "private home" covered by the FLSA companionship services exemption regulations because the employer organization did not exercise any control over the living arrangement and merely facilitated the connection between the employee and the client.

Background

Lisa and Frederic Fezard provided companionship services for clients of United Cerebral Palsy of Central Arkansas (UCP). The Fezards and other domestic service workers employed by UCP:
  • Provided these services in their own homes.
  • Were paid a daily rate.
  • Were classified by UCP as exempt under the FLSA's domestic-service-employment exemption.
The clients lived in the employees' homes as roommates and paid rent to the employees. UCP did not:
  • Require that its employees and clients live together.
  • Determine:
    • the details of the living arrangement; or
    • the amount of rent that the clients paid the employees.
The employees worked out those details with the clients.
Lisa Fezard:
  • Was terminated by UCP after:
    • falsely claiming that she had filed a complaint with the DOL; and
    • a state inspection of her home revealed job-performance deficiencies.
  • Filed a lawsuit with her husband in a federal district court seeking overtime pay under the FLSA and Arkansas law.
After a class action was certified, the district court granted summary judgment to UCP, finding that:
  • The residences in which UCP's employees provided the companionship services were "private homes" under the FLSA.
  • The employees were therefore covered by the companionship services exemption.
The employees appealed to the Eighth Circuit.

Outcome

The Eighth Circuit affirmed the district court's grant of summary judgment to UCP, holding that the work performed by UCP's domestic service employees in their own private homes:
  • Fell within the FLSA's companionship services exemption.
  • Were not entitled to overtime pay.
The Eighth Circuit noted that:
  • The FLSA exempts from its overtime requirements employees who:
    • are employed in "domestic service employment;" and
    • provide "companionship services" to disabled individuals.
    (29 U.S.C. § 213(a)(15).)
  • FLSA regulations define "domestic service employment" as work being performed in a "private home" (29 C.F.R. § 552.3).
  • FLSA exemptions are generally construed narrowly, with the employer bearing the burden of establishing that the exemption applies (Spinden v. GS Roofing Products Co., 94 F.3d 421, 426 (8th Cir. 1996)).
  • The Tenth Circuit applied a multi-factor test to determine whether a particular dwelling is a private home under the FLSA regulations, focusing on:
    • whether the dwelling was the client's private home prior to receiving the companionship services;
    • who owns, manages and maintains the unit;
    • whether the client would be permitted to live in the unit if the client had not contracted to receive the services;
    • the difference between the cost of the services provided and the total cost of maintaining the unit; and
    • whether the service provider uses the unit for business purposes.
The Eighth Circuit deviated from the Tenth Circuit's test in Welding because that test focused on comparing the employer’s facility to the client's home. The Welding test was not applicable to this case where the services were provided in the employees' homes and the employees were acting as independent parties.
The Eighth Circuit affirmed the district court's decision using a new analysis, finding that the employees' homes were private homes under the FLSA because UCP:
  • Did not exercise any control over:
    • the room where the client lived;
    • the amount of rent paid by the client to the employee; and
    • any other term or condition of the client's living arrangement.
  • Was limited to facilitating the connection between the employee and the client.
  • Had no right to evict a client who stopped using its services.

Practical Implications

The Eighth Circuit's decision in Fezard clarifies the FLSA's domestic service employment/companionship services exemption. However, this decision could be limited to its own facts, with the factors applied not being as determinative in cases where the clients do not live in the employees' private homes.