A recent United States Supreme Court case addresses minimum-wage and overtime regulations for “household employees,” including caregivers for the elderly. The case points out some interesting policy considerations, but is limited in its scope and may not have much direct effect on the care of the elderly—though it may strongly affect future care trends.

Federal wage-and-hour laws have long included an exemption for an employee whose job is to “provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves.” In other words, caretakers for the elderly and disabled do not have to be paid minimum wage, or overtime for work over 40 hours per week, if they are providing “companionship services.”

Everyone involved in the recent case agree that Evelyn Coke was providing exactly that kind of service. The wrinkle in her case was that she was working for a nursing service, Long Island Care at Home, Ltd., rather than directly for the seniors for whom she was providing care. An ambiguity in federal regulations opened the door to her argument that the exemption should apply only for caregivers who are employed directly by the elderly or disabled person.

The trial judge disagreed with Ms. Coke, and dismissed her complaint. She appealed to the Second Circuit Court of Appeals, which reversed the trial judge and ruled that the regulation in question was unenforceable.

The U.S. Supreme Court reversed the appellate court decision. The high court analyzed the arguments made by Ms. Coke, and accepted by the Court of Appeals, and (in a unanimous opinion written by Justice Breyer) upheld the Department of Labor’s regulations completely exempting companionship workers from both minimum wage and overtime rules. Long Island Care at Home, Ltd., v. Coke, June 11, 2007.

There may be as many as one million caretakers providing companionship services to individuals in their homes, but the court’s decision may not affect large numbers of workers. The rule had already unequivocally exempted caretakers who are employed directly by the individuals for whom they provide care (or members of their households, such as spouses), and the argument that minimum wage rules might apply was only available to those who worked for agencies. In addition, a number of states have already adopted their own minimum-wage rules, and not all of those exempt companionship workers.

One other reason the Coke case may be limited in its effect: it may provide the impetus to force a change in minimum wage and maximum hour regulations to home care workers. The last time the issue was addressed in Congress was in 1974, and the current dispute arose from Congress' attempt at that time to expand coverage of minimum wage/maximum hour requirements.

The effect of the court’s ruling on overall care costs may be more noticeable. New York City’s Medicaid agency estimated that complying with the intermediate court ruling might have cost as much as $300 million per year.

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