HOME CARE ASSOCIATION OF AMERICA, еt al., Appellees v. David WEIL, sued in his official capacity, Administrator, Wage & Hour Division, et al., Appellants.
No. 15-5018.
United States Court of Appeals, District of Columbia Circuit.
Argued May 7, 2015. Decided Aug. 21, 2015.
799 F.3d 1084
At the very least, such an approach makes for poor public policy. See Mobil Oil Corp. v. Att‘y Gen. of Com. of Va., 940 F.2d 73, 75 (4th Cir.1991) (“Public policy should encourage a person aggrieved by laws he considers [illegal] to seek a declaratory judgment ..., all the while complying with the challenged law, rather than to deliberately break the law and take his chances in the ensuing suit or prosecution.“); cf. Babbitt v. United Farm Workers Nat‘l Union, 442 U.S. 289, 298, 99 S.Ct. 2301, 60 L.Ed.2d 895 (1979) (plaintiffs “should not be required to await and undergo a criminal prosecution as the sole means of sеeking relief“); Gardner v. Toilet Goods Ass‘n, 387 U.S. 167, 172, 87 S.Ct. 1526, 18 L.Ed.2d 704 (1967) (requiring litigants to “refuse to comply ... and test the regulations by defending against government criminal, seizure, or injunctive suits against them” is not “a satisfactory alternative to [pre-enforcement review]“). I doubt that the Congress intended the AIA to operate in this manner. Cf. Nat‘l Rest. Ass‘n v. Simon, 411 F.Supp. 993, 996 (D.D.C.1976) (Bryant, J.) (“[R]efusing to file the required information, and contesting a possible government assessment of a fine ... puts the plaintiffs in the untenable position of either complying, with no judicial review, or of defying the government‘s interpretation of their legal obligations under the code, of being in essence a law-breaker. The Court cannot imagine that the Congress intended such an anomalous result in a system which depends for its very existence on the principle of voluntary compliance.“), cited approvingly in Cohen, 650 F.3d at 723.
Accordingly, I would follow Direct Marketing, Seven-Sky and Foodservice and conclude that the AIA does not bar this litigation from going forward. I therefore respectfully dissent.
Eric T. Schneiderman, Attorney General, Office of the Attorney General for the State of New York, Barbara Underwood, Solicitor General, Seth Kupferberg, Assistant Attorney General, George Jepson, Attorney General, Office of the Attorney General for the State of Connecticut, Lisa Madigan, Attorney General, Office of the Attorney General for the State of Illinois, Tom Miller, Attorney General, Office of the Attorney General for the State of Iowa, Brian E. Frosh, Attorney General, Office of the Attorney General for the State of Maryland, Maura Healey, Attorney General, Office of thе Attorney General for the Commonwealth of Massachu
Kate Andrias was on the brief for amici curiae Paraprofessional Healthcare Institute and 26 Consumer and Policy Organizations in support of appellants.
Arthur B. Spitzer was on the brief for amici curiae Women‘s Rights, Civil Rights, and Human Rights organizations and scholars in support of appellants.
Judith A. Scott, Nicole G. Berner, Renee M. Gerni, Craig Becker, Lynn Rhinehart, William Lurye, and Claire Prestel were on the brief for amici curiae American Federation of Labor and Congress оf Industrial Organizations, et al. in support of appellants.
Jonathan S. Massey was on the brief for amici curiae Members of Congress in support of appellants.
Daniel B. Kohrman was on the brief for amicus curiae AARP in support of appellants.
Samuel R. Bagenstos was on the brief for amicus curiae the American Association of People with Disabilities in support of appellants.
Maurice Baskin argued the cause for appellees. With him on the brief was William A. Dombi.
Derek Schmidt, Attorney General, Office of the Attorney General for the State of Kansas, Jeffrey A. Chanay, Chief Deputy Attorney General, Toby Crouse, Special Assistant Attorney General, Mark Brnovich, Attorney General, Office of the Attorney General for the State of Arizona, Samuel S. Olens, Attorney General, Office of the Attorney General for the State of Georgia, Bill Schuette, Attorney General, Office of the Attorney General for the State of Michigan, Adam Paul Laxalt, Attorney General, Office of the Attorney General for the State of Nevada, Wayne Stenehjem, Attorney General, Office of the Attorney General for the State of North Dakota, Herbert H. Slatery, III, Attorney General, Office of the Attorney General for the State of Tennessee, Ken Paxton, Attorney General, Office of the Attorney General for the State of Texas, and Brad D. Schimel, Attorney General, Office of the Attorney General for the State of Wisconsin were on the brief for amici curiae States of Kansas, et al.
Stephanie Woodward was on the brief for amici curiae ADAPT and the National Council On Independent Living in support of appellees.
Michael Billok was on the brief for amicus curiae the Consumer Directed Personal Assistance Association of New York in support of appellees.
Michaelle L. Baumert and Henry L. Wiedrich were on the brief for amici curiae Members of Congress in support of appellees.
Before: GRIFFITH, SRINIVASAN and PILLARD, Circuit Judges.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
SRINIVASAN, Circuit Judge:
The Fair Labor Standards Act‘s protections include the guarantees of a minimum wage and overtime pay. The statute, though, has long exempted certain categories of “domestic service” workers (workers providing services in a household) from one or both of those protections. The exemptions include one for persons who provide “companionship services” and another for persons who live in the home where they work. This case concerns the scope of the exemptions for domestic-ser
Until recently, the Department of Labor interpreted the statutory exemptions for companionship services and live-in workers to include employees of third-party providers. The Department instituted that interpretation at a time when the provision of professional care primarily took place outside the home in institutions such as hospitals and nursing homes. Individuals who provided services within the home, on the other hand, largely played the role of an “еlder sitter,” giving basic help with daily functions as an on-site attendant.
Since the time the Department initially adopted that approach, the provision of residential care has undergone a marked transformation. The growing demand for long-term home care services and the rising cost of traditional institutional care have fundamentally changed the nature of the home care industry. Individuals with significant care needs increasingly receive services in their homes rather than in institutional settings. And correspondingly, residential care increasingly is provided by professionals employed by third-party agencies rather than by workers hired directly by care recipients and their families.
In response to those developments, the Department recently adopted regulations reversing its position on whether the
Appellees, three associations of home care agencies, challenged the Department‘s extension of the
I.
The
The 1974 Amendments also exempted defined categories of domestic-service workers from certain
In 1975, the Department of Labor adopted implementing regulations. Those regulations addressed the treatment of companionship-services workers and live-in domestic-service workers who are employed by third-party agencies. The regulations provided that the
Subsequently, in 1993, 1995, and 2001, the Department, citing dramatic changes in the provision of home care services, proposed regulatory amendments to remove third-party-agency employеes from the scope of the companionship-services and live-in worker exemptions. See Application of the Fair Labor Standards Act to Domestic Service, 66 Fed. Reg. 5481 (Jan. 19, 2001); Application of the Fair Labor Standards Act to Domestic Service, 60 Fed. Reg. 46,797 (Sept. 8, 1995); Application of the Fair Labor Standards Act to Domestic Service, 58 Fed. Reg. 69,310 (Dec. 30, 1993). In 2001, for example, the Department explained that “workers who today provide in-home care to individuals needing assistance with activities of daily living are performing types of duties and working in situations that were not envisioned when the companionship-services regulations were promulgated.” 66 Fed. Reg. at 5482. None of those proposals to alter the regulatory treatment of third-party-agency employees gained final adoption.
In 2002, the cоmpanionship-services portion of the third-party-employer regulation became the subject of a legal challenge brought by an employee of a third-party agency who sought overtime and mini
In 2013, the Department again considered reversing course on the third-party-employer issue, this time adopting a final regulation doing so. “In the 1970s,” the Department observed, “many individuals with significant care needs were served in institutional settings rather than in their homes.” Application of the Fair Labor Standards Act to Domestic Service, 78 Fed. Reg. 60,454, 60,455 (Oct. 1, 2013). But “[s]ince that time, there has been a growing demand for long-term home care.” Id. “As more individuals receive services at home rather than in nursing homes and other institutions, workers who provide home care services ... perform increasingly skilled duties” analogous to the professional services performed in institutions. Id. The Department concluded that, “given the changes to the home care industry and workforce” since the original 1975 regulations, the new regulation would “better reflect Congressional intent” behind the 1974 Amendments. Id. at 60,454. As authority for the new regulation, the Department cited, in addition to the statutory exemptions themselves, the general grant of rulemaking authority in
Under the new regulation, third-party employers of companionship-services and live-in employees may no longer “avail themselves” of the statutory exemptions. With respect to companionship services, the revised regulation states that “[t]hird party employers of employees engaged in companionship services ... may not avail themselves of the minimum wage and overtime exemption provided by section [2]13(a)(15).”
In 2014, appellees, a group of trade associations representing third-party agencies that employ home care workers, filed a lawsuit challenging the regulations under the Administrative Procedure Act. In December 2014, shortly before the new regulations were to take effect, the district
II.
We review the new third-party-employer regulation pursuant to the two-step Chevron framework. See Util. Air Regulatory Grp. v. EPA, 573 U.S. 302, 134 S.Ct. 2427, 2439, 189 L.Ed.2d 372 (2014). If “Congress has directly spoken to the precise question at issue,” then “the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842-43. But “if the statute is silent or ambiguous with respect to the specific issue,” we analyze “whether the agency‘s answer is based on a permissible construction of the statute.” Id. at 843.
The Department contends that its revised third-party-employer regulation lies within the scope of its rulemaking authority under the general agency delegation in
A.
Appellees contend that the new third-party-employer regulation fails at the first step of Chevron. In their view, the
The Court in Coke confronted three distinct statutory arguments about the applicability of the companionship-services exemption to employees of third-party providers. First, respondent Coke, the employee, urged that the 1974 Amendments “clearly express[] congressional intent to exempt only companions employed directly by private households,” not companions employed by third-party agencies. Brief for Respondent at 5, Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 127 S.Ct. 2339, 168 L.Ed.2d 54 (2007) (No. 06-593), 2007 WL 930417, at *5 (capitalization altered). Second, various amici, including the appellees here, made the opposite argument — viz., that the “unambiguous language” of the companionship-services exemption requires applying it to employees of third-party providers. Brief for National Association for Home Care & Hospice, Inc. as Amicus Curiae in Support of Petitioners at 3, Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 127 S.Ct. 2339, 168 L.Ed.2d 54 (2007) (No. 06-593), 2007 WL 527341, at *3. Finally, the petitioner home care agency, sup
The Supreme Court rejected the competing arguments that the statutory text unambiguously compels a result in either direction. The Court held that “the text of the
The Court‘s conclusion precludes appellees’ Chevron step-one argument. It is true that Coke addressed a challenge solely to the companionship-services portion of the prior regulation, while this case also encompasses a challenge to the live-in worker provision of the revised regulation. But the Coke Court‘s characterization of third-party-employer treatment as an “interstitial matter ... entrusted [to] the agency to work out” equally applies to the Department‘s authority under the
Appellees also stress that the companionship-services exemption provides for the Secretary to “define[] and delimit[]” its terms, whilе the live-in worker exemption contains no similar supplement. Compare
Appellees get no further in arguing that, even if the regulation upheld in Coke amounted to a valid exercise of the Department‘s authority to “define” the terms of the companionship-services exemption, the revised regulation does not. Appellees posit that, while the Secretary may define terms within the phrase “employee employed in domestic service employment to provide companionship services,” the Department exceeded its authority when, instead of “defining” that phrase, it issued a rule providing that third-party employers “may not avail themselves” of the exemption.
Indeed, in finding it within the Department‘s “broad grant” of authority to decide “whether to include workers paid by third parties within the scope” of the companionship-services exemption, the Court explicitly contemplated that the full range of potential outcomes lay within the agency‘s discretion. Id. at 167-68. “Should the
Appellees’ remaining step-one arguments are unavailing. Appellees contend that the Department‘s new rules conflict with the legislative history of the
For those reasons, we reject appellees’ challenge to the regulations at Chevron step one. The Department has the authority to “work out the details” of the companionship-services and live-in worker exemptions, and the treatment of third-party-employed workers is one such detail. Id. at 165-68.
B.
Because we conclude that Congress delegated authority to the Department to determine whether employees of third-party agencies should fall within the scope of the companionship-services and live-in worker exemptions, we proceed to Chevron step two. At that step, “if the implementing agency‘s construction is reasonable,” a court must “accept the agency‘s construction of the statute.” Fin. Planning Ass‘n v. SEC, 482 F.3d 481, 498 (D.C.Cir.2007) (quoting Brand X, 545 U.S. at 980). The Department‘s interpretation readily satisfies that standard.
Appellees’ Chevron step-two argument largely rehashes their step-one submission. Their primary contention is that “the total exclusion of third party employers from availing themselves of access to the companionship and live-in exemptions cannot be a permissible construction of the Act.” Appellees’ Br. 39-40. Coke belies that argument. As the Court explained, “the text of the
The Department‘s resolution of that question is entirely reasonable. The Department explained that bringing domestic-service workers paid by third-party employers within the
Based on its understanding of congressional intent, the Department reasoned that the 1974 Congress would have wanted the
C.
Appellees contend that, even if the new third-party regulation passes muster at Chevron step two, it should still be invalidated as arbitrary and capricious. See
Contrary to appellees’ suggestion, there is no requirement that the agency‘s change in policy clear any “heightened standаrd.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 514, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). Instead, we ask whether actions that are a departure from prior agency practice, like other agency actions, rest on a “reasoned explanation.” Id. at 515. A “reasoned explanation,” in the event of an alteration in approach, “would ordinarily demand that [the agency] display awareness that it is changing
The Department‘s explanation for its updated rule meets those standards. In addition to reasoning that its original regulation misapplied congressional intent, the Department justified its shift in policy based on the “dramatic transformation of the home care industry since [the third-party-employer] regulation was first promulgated in 1975.” 78 Fed. Reg. at 60,481. When Congress enacted the 1974 Amendments, the “vast majority of the private household workers were employed directly by a member of the household.” Report to the Ninety-Third Congress by the Secretary of Labor: Minimum Wage and Maximum Hours Standards Under the Fair Labor Standards Act 28 (Jan. 19, 1973). By the time the Supreme Court decided Coke in 2007, the vast majority of home care workers were instead employed by third-party agencies. See Brief of the Alliance of Retired Americans, et al. as Amici Curiae in Support of Respondent at 6, Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158, 127 S.Ct. 2339, 168 L.Ed.2d 54 (2007) (No. 06-593), 2007 WL 951137, at *6.
The duties of typical home care workers also changed. In the 1970s, many individuals with significant needs received care in institutional settings rather than in their homes. See 78 Fed. Reg. at 60,455. Since that time, there has been an increased emphasis on the value of providing cаre in the home and a corresponding shift away from institutional care. As the Department recognized even by 2001, “[d]ue to significant changes in the home care industry over the last 25 years, workers who today provide in-home care to individuals needing assistance with activities of daily living are performing types of duties and working in situations that were not envisioned when the companionship-services regulations were promulgated.” 66 Fed. Reg. at 5482.
In light of the Department‘s reasoned explanation for its change in policy, we conclude that its departure from past practice was neither arbitrary nor capricious.
D.
Appellees see a “strong[] indicat[ion]” in the administrative record that removing third-party-employed workers from the scope of the exemptions “will make home care less affordable аnd create a perverse incentive for re-institutionalization of the elderly and disabled.” Appellees’ Br. 44. The Department disagreed with that characterization in the final rule, concluding that care recipients would be benefitted, not harmed, by the new regulations. See 78 Fed. Reg. at 60,459, 60,483. The Department‘s conclusion has ample support in the record.
When issuing the final rule, the Department acknowledged the existence of certain comments claiming that the proposed changes would harm home care workers and recipients. “[R]aising the cost of service provided through home care agencies,” those comments suggested, “would incentivize employment through informal channels rather than through such agencies.” 78 Fed. Reg. at 60,481. Some commenters also argued that expanding
Fifteen states, the Department explained, already “provide minimum wage and overtime protections to all or most third party-employed home care workers” who would come within the
Appellees suggest that, even if the Department‘s conclusions are defensible with regard to the companionship exemption, we should still invalidate its revised approach with regard to the live-in exemption because only four of those fifteen states require payment of overtime to live-in domestic-service employees. Apрellees’ Br. 46. The Department was aware of those differences when making its decision, however, as it included a table in the final rule detailing the nuances of each state‘s overtime and minimum-wage laws. 78 Fed. Reg. at 60,510-12. Whether focused on fifteen states or a subset of four states, the Department‘s core observation—that commenters could point to no evidence indicating that extension of protections to home care workers in the relevant states effected an increase in institutionalization or workforce turnover—remains true.
The Department instead reasonably credited comments suggesting that the new rule would improve the quality of home care services. The “rule will bring more workers under the
III.
In addition to challenging the third-party-employer regulation, apрellees also challenge
In light of our disposition with respect to the third-party-employer regulation, appellees cannot show that the revised definition of companionship services causes their member companies injury in fact. See Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). Appellees conceded before the district court that, until the court vacated the third-party-employer regulation, their members “lacked standing to pursue injunctive relief against [the enforcement of
*
For the foregoing reasons, we reverse the district court‘s judgments and remand for the entry of summary judgment in favor of the Department.
So ordered.
SRINIVASAN
CIRCUIT JUDGE