Pennsylvania Litigation Blog

After the U.S. Supreme Court ruled in 2007 that home health aides employed by third parties are exempt from overtime requirements under the federal “domestic services” exemption, the question of whether these same home health aides were also exempt from Pennsylvania’s minimum wage and overtime requirements under its “domestic services” exemption still remained. On September 4, 2008, the Pennsylvania Commonwealth Court answered that question in the negative in a case brought by Bayada Nurses, Inc. against the Pennsylvania Department of Labor & Industry (“L&I”).

As background, Pennsylvania’s Minimum Wage Act (“MWA”) exempts from minimum wage and overtime requirements “[d]omestic services in or about the private home of the employer.” Unlike the federal regulations, however, Pennsylvania’s regulation defines “domestic services” more narrowly as “work in or about a private dwelling for an employer in his capacity as a householder, as distinguished from work in or about a private dwelling for such employer in the employer’s pursuit of a trade, occupation, profession, enterprise or vocation.”   And unlike the federal regulations, Pennsylvania does not have a “companionship services” provision that would cover employees employed by third parties, such as Bayada’s and many other agencies’ home health aides.

Unlike the U.S. Supreme Court, which voiced concern that denying the exemption to home health aides would force millions of sick people unable to afford home care into institutions, the Commonwealth Court was unmoved by this public policy argument. Instead, the Commonwealth Court focused on whether the L&I regulation is a valid exercise of the department’s authority, and whether it is reasonable and consistent with Pennsylvania law. The Commonwealth Court concluded that L&I acted properly when it defined domestic services as “work in or about a private dwelling for an employer in his capacity as a householder.” “The regulation is reasonable, and it genuinely tracks the underlying meaning of [the MWA].”

The Commonwealth Court rejected Bayada’s argument that Pennsylvania’s “domestic services” exemption should be interpreted consistently with the federal exemption under the FLSA. The FLSA, reasoned the Court, specifically provides that state laws may establish higher minimum wages or a shorter workweek, and that the FLSA does not pre-empt state wage and hour laws that are more beneficial to workers.

Bayada argued alternatively that the Company and its “householder” clients are joint employers of the home health aides and therefore meet Pennsylvania’s more narrow definition of “domestic services.” The Court disagreed, however, finding that Bayada, and not the clients, controlled the work of the home health aides. Notably, Bayada assigns and maintains the right to discharge the aides, pays their wages, and bills the clients an hourly rate plus overhead to cover workers compensation, insurance and taxes.

For now, the question of whether home health aides employed by third-party agencies in Pennsylvania must be paid minimum wage and overtime is “yes” -- though it remains to be seen whether the Commonwealth Court’s decision is appealed.

Bayada Nurses, Inc. v. Commonwealth, No. 477 MD 2007, 2008 WL 4067442 (Pa. Cmwlth. Sept. 4, 2008).