Labor & Employment Law Daily Companionship overtime exemption applies to employees of third-party caregiver service
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Friday, February 21, 2020

Companionship overtime exemption applies to employees of third-party caregiver service

By Wayne Garris Jr., J.D.

Under Colorado law, employers do not have to pay overtime wages to “companions, casual babysitters, and domestic employees employed by households or family members to perform duties in private residences.”

Reversing a federal district court, the Tenth Circuit held that a class of home health-care workers were “companions” under Colorado wage and hour law and not entitled to overtime compensation law. The employees argued that the Colorado wage order, which exempted “companions, casual babysitters, and domestic employees employed by households or family members to perform duties in private residences” from receiving overtime compensation did not apply to them because they were employed by a third-party employer. The appeals court acknowledged that the language of the statute was ambiguous, but after applying principles of statutory interpretation, it concluded that the most reasonable interpretation of the statute required inclusion of companions employed by third party employers. Furthermore, the Colorado Division of Labor had consistently interpreted and applied the law as including companions employed by third party employers (Jordan v. Maxim Healthcare Services, Inc., February 19, 2020, Holmes, J.).

Companionship exemption. Under Colorado law, employers are exempt from paying overtime wages to “companions, casual babysitters, and domestic employees employed by households or family members to perform duties in private residences.”

The employee, a home health-care aide that worked for a staffing company filed suit alleging that the employer violated Colorado law by failing to pay her and other home health aides overtime wages. The parties agreed that the employee is a companion under Colorado law, however the employee asserted that the exemption only applies to companions who are employed by households or family members to perform duties in private residences. Because the employee and the other members of the class were employed by a third-party staffing company, they contended they were entitled to overtime compensation. The employer argued that the household modifier applied to all “companions, causal babysitters, and domestic workers” thus the plaintiffs were not entitled to overtime compensation.

The parties cross-moved for summary judgment. The district court granted summary judgment for the employee agreeing that the exemption only applied to companions who worked in private residences. The employer appealed.

Ambiguous statute. The Tenth Circuit began by explaining that the relevant statute is ambiguous, so it employed various methods of statutory interpretation to reach its conclusion.

Plain meaning. The parties disagreed as to whether, in the statute, the household modifier applied only to the term “domestic employees” or if it also applied to the terms “companion” and “casual babysitter.” The appeals court acknowledged that the application of the modifier was ambiguous but concluded that an examination of the definitions of the terms “domestic employees,” “causal babysitters,” and “companions” lead it to conclude that the household modifier applied to all of the terms.

After listing dictionary definitions of each job description in the statute, the court noted that the “thread running through these three employee categories is a close personal connection—a commonality that indicates that the Division [of Labor] intended the companionship exemption to apply to household workers who have such a connection with those receiving their services.” For example, a companion is more of a friend than an employee and a babysitter is one who cares for the employer’s children when the employer isn’t home.

The court reasoned that household modifier did not then apply to companions. The plain meaning of companion implied a certain personal relationship that the Division intended to exempt from the overtime requirements. A domestic employee, on other hand, could be a companion or casual babysitter, but could also be an individual who has no relationship with an individual or a family and his hired to perform a discrete act, such as house cleaning.

Even after its plain meaning analysis, the court conceded that the meaning of the statute was ambiguous, so it moved on to other methods of analysis.

Harmony with enabling statute. The court noted that the employee’s interpretation of the companionship exemption would violate the enabling statute. According to the employee, the statute requires third-party employers to pay companions overtime wages, but “households or family members” who employ companions to perform similar duties are exempt from overtime requirements. The court noted that this interpretation treats employers in the same industry unequally, thus rendering the term “companion” void by operation of the enabling statute.

Surplusage. According to the court, it disfavors “constructions that render [regulatory] language superfluous.” Both parties’ proposed interpretations resulted in superfluous language, but the court was ultimately persuaded by the employer because surplusage canon favored the employer’s interpretation.

According to the court, limiting the household modifier to domestic employees allows the term “companions” to refer specifically to those employees to work for employers other than households or family members. Under the employee’s interpretation, the term “companions” would be meaningless since a companion is a type of domestic employees.

Agency interpretation. In addition to canons of statutory interpretation, the court relied on the Colorado Division of Labor’s past interpretation of the statute in determining that the exemption applies to all companions. The Division provided two opinion letters to the employer in which it stated that ‘the treatment and interpretation of the companions exemption in the Wage Order w[ere] intended to mirror the companions definition and associated regulations contained in federal law.’ Furthermore, the Division rejected two administrative claims brought against the employer for unpaid overtime asserting that the exemption only applied to household employees. The court concluded that “since 1998, the Division has consistently interpreted the companionship exemption as applying to companions employed by third-party employers.”

Deference. The employee argued that the law did not require the court to show any deference to the Division’s opinion letters or administrative decision, the employer disagreed. The court declined to reach a decision on the issue of the degree of deference owed, but noted that Colorado law allows the court to treat the Division’s interpretation as persuasive authority.

The court concluded that the Division’s interpretation is persuasive. The court found that the companionship exemption was ambiguous and only reached an interpretation of the exemption through analysis of the “ordinary and peculiar” meanings of the relevant terms and other aids of statutory construction. The Division’s interpretation of the statute has been “longstanding and consistent” the court noted, and gave the court greater confidence its decision that the exemption extended to companion employees who worked for third-party employers.

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