Takeaway
In short, this case holds that the Labor Department could, through binding rulemaking, exempt agency-employed companionship workers from the FLSA’s minimum-wage and overtime requirements.
In 1974, Congress expanded the Fair Labor Standards Act’s minimum-wage and overtime protections to many domestic-service employees. At the same time, it exempted employees providing companionship services to elderly or infirm persons unable to care for themselves, leaving the Secretary of Labor to define and delimit key terms. The Department of Labor adopted a regulation providing that the companionship-services exemption includes workers employed by a third-party agency rather than by the household receiving the services.
Evelyn Coke provided companionship services to elderly and infirm clients through Long Island Care at Home, Ltd. She sued the agency and its owner, alleging unpaid minimum wages and overtime under federal and New York law. The District Court held that the Department’s third-party-employment regulation was valid and dismissed her claim. The Second Circuit twice held the regulation unenforceable, including after the Supreme Court initially vacated and remanded for consideration of a Labor Department advisory memorandum. The Supreme Court then granted review.
Issue #1
Whether the FLSA authorized the Department of Labor to include companionship workers employed by third-party agencies within the statutory exemption.
Holding
Yes. Congress delegated authority to the Department to define and delimit the exemption, and that delegation reasonably encompasses the treatment of workers paid by third parties.
Reasoning
The statutory language broadly exempts employees engaged in “domestic service employment” who provide companionship services, while expressly directing that those terms be “defined and delimited” by Labor Department regulations. The statute does not itself resolve whether the exemption turns on the identity of the employer, leaving that question as a gap for the agency to fill.
The third-party-employment question involves practical policy choices, including how to treat agencies of different sizes, family members living outside the recipient’s home, and workers who had varying degrees of FLSA coverage before 1974. Congress could reasonably leave those interstitial choices to the Department, which has expertise and can consult affected parties through rulemaking.
Neither the legislative history nor the Social Security Act’s different definition of domestic service supplies a clear contrary answer. Unlike the Social Security statute, the FLSA does not expressly require that work occur in the private home of the employer, and the legislative history reflects competing concerns about extending wage protection while keeping companionship care affordable.
Issue #2
Whether the Department’s general definition of “domestic service employment” displaced the more specific regulation exempting companionship workers employed by third parties.
Holding
No. The Department reasonably interpreted the specific third-party regulation to control over the general definition.
Reasoning
Read literally, the general regulation describes domestic service as work performed in a private home of the person who employs the worker, while the third-party regulation expressly includes companionship workers employed by outside agencies. But accepting the general regulation as controlling would produce consequences at odds with the 1974 amendments, potentially excluding third-party-employed domestic workers generally from FLSA coverage.
The third-party regulation directly addresses the precise question at issue: whether a companionship worker remains exempt when employed by an agency or other third party. The general regulation primarily identifies the kinds of household work that count as domestic service. Under the ordinary principle that the specific governs the general, the third-party regulation governs this narrower question.
The Department’s advisory memorandum, although issued after litigation began and directed internally, reflected the agency’s considered interpretation rather than an impermissible post hoc rationalization. The Department had repeatedly considered the third-party issue over many years, and its interpretation was neither plainly erroneous nor inconsistent with its regulations.
Issue #3
Whether the third-party regulation was merely interpretive and therefore entitled only to persuasive, rather than binding, judicial weight.
Holding
No. The regulation was a binding exercise of the Department’s congressionally delegated rulemaking authority and warranted Chevron deference.
Reasoning
The placement of the rule in a regulatory subpart titled “Interpretations” did not determine its legal force. The relevant inquiry is whether Congress intended the agency action to carry the force of law, not simply how the agency labeled or organized the regulation.
The Department promulgated the regulation through notice-and-comment rulemaking, and the rule directly affected the legal rights and obligations of workers and employers. The Department also treated the rule as binding for decades and used notice-and-comment procedures when considering amendments. Those features strongly showed that the agency intended to exercise delegated lawmaking authority.
Because the rule addressed a statutory gap, fell within the Department’s delegated authority, and reasonably resolved the third-party-employment question, courts were required to defer to it. The Second Circuit’s contrary reliance on the regulation’s “interpretive” label was insufficient to overcome those indicators of binding force.
Issue #4
Whether the Department’s 1974 notice-and-comment process was defective because the final third-party regulation lacked adequate notice or explanation.
Holding
No. The final rule was a logical outgrowth of the proposal, and the Department adequately explained its decision.
Reasoning
The proposed rule would have withheld the exemption from companionship workers employed by third-party enterprises already covered under the FLSA, while implying that workers employed by other third-party agencies would remain exempt. That proposal put interested parties on notice that the Department was considering how third-party employment should affect the exemption and that it could retain or abandon the proposed distinction.
The final rule withdrew the special treatment for already covered enterprises and exempted all third-party-employed companionship workers. That result was reasonably foreseeable from the proposal and thus satisfied the Administrative Procedure Act’s requirement of fair notice.
The Department gave a sufficient explanation for its choice, stating that the broader exemption better fit the statutory reference to “any employee” engaged in the listed services and conformed to prior treatment of similarly worded exemptions. Although brief, that explanation was reasonable and adequately addressed the agency’s policy choice.