A federal appeals court on Friday revived Obama administration regulations that guarantee overtime and minimum wage protection to nearly 2 million home health care workers.
The ruling was a victory for worker advocacy groups and labor unions that have long sought higher wages for domestic workers who help the elderly and disabled with everyday tasks such as bathing or taking medicine.
It also was a win for the White House, which proposed the rules four years ago as part of an effort to go around an unwilling Congress in a bid to help low-wage workers through executive action.
A federal judge had scrapped the Labor Department rules earlier this year after finding that the agency had overstepped its authority. Since 1974, federal law has exempted home care workers hired through third-party staffing agencies from wage and overtime requirements.
But the U.S. Court of Appeals for the District of Columbia Circuit said the Labor Department has the power to interpret the law to change that exemption.
Writing for a unanimous three-judge panel, Judge Sri Srinivasan cited a "dramatic transformation" of the home care industry over the past four decades as a valid reason for the change. While most caregivers used to be directly employed by individual households, the vast majority of workers now work for staffing companies that service hundreds or thousands of customers, Srinivasan said.
He also noted a massive shift to providing care for the elderly in their own homes rather than in nursing homes, which requires workers to offer more advanced medical care and assistance to clients than the mere "companionship" services envisioned in 1974.
Two judges on the panel, Srinivasan and Nina Pillard, were appointed by President Barack Obama. Judge Thomas Griffith was appointed by President George W. Bush.
In a statement, the Labor Department called the wage rules "the right thing to do" and said they would help workers "whose demanding work merits these fundamental wage guarantees."
The rules were set to take effect on Jan. 1, but that was delayed by the legal challenge. Labor Department spokesman Stephen Barr said the new effective date now depends on the lawsuit being "fully resolved." That includes a 45-day window for the home care associations to seek rehearing.
Deane Beebe, vice president of policy at the worker advocacy group PHI, said the rules would help the industry attract new workers and stabilize a workforce that has up to 50 percent turnover each year.
"It's a very hard job, it's a very emotionally challenging job and it's a very socially isolating job," she said. "We need to make these attractive jobs if we're going to meet the demand for the services and support that the workers provide."
Home health care companies employing many of the workers have said overtime requirements would make it tougher for families to afford home care for aging parents.
Lobbyists for the $84 billion industry have argued that the new rules could even reduce the take-home pay of caregivers if companies decide not to send workers out for shifts longer than eight hours to avoid paying overtime.
William Dombi, vice president for law at the National Association for Home Care, said industry officials were still studying the decision and considering their options, including a possible appeal to the Supreme Court.
Fifteen states already extend state minimum wage and overtime protections to home care workers, and another six states and Washington, D.C., mandate state minimum wage protections. Several of those states, including New York, Illinois, Massachusetts and Maryland, filed legal papers supporting the rules.
On the other side, a coalition of nine states opposes the new rules, arguing they will increase state Medicaid costs and expose states to an unfunded liability. The states are Arizona, Georgia, Kansas, Michigan, Nevada, North Dakota, Tennessee, Texas and Wisconsin.
In June, Obama announced another set of rules that would make another 5 million workers eligible for overtime pay if they work more than 40 hours a week. Under the latest rules, salaried employees earning less than $50,440 a year would be assured overtime, up from the previous threshold of $23,660 a year.