Express Delegation Upholds DOL Rule Barring Third-Party Employers from the FLSA Companionship Exemption
1. Introduction
This appeal arose from an enforcement action brought by the Secretary of Labor against WiCare Home Care Agency, LLC and its owner, Luis D. Hernandez (collectively, “WiCare”), a home-care business employing in-home care providers in Pennsylvania. The Secretary alleged that, between January 2019 and May 2021, WiCare failed to pay required minimum wages and overtime premiums under the Fair Labor Standards Act (“FLSA”).
The central legal issue on appeal was WiCare’s challenge to a Department of Labor regulation—29 C.F.R. § 552.109(a)—that bars “third party employers” from claiming the FLSA’s “companionship services” exemption. WiCare argued the regulation is inconsistent with the statutory exemption in 29 U.S.C. § 213(a)(15) and therefore unlawful.
WiCare also raised additional defenses: that it did not engage in “commerce” for FLSA coverage purposes; that it was not a “third party employer” under the regulation; and that the District Court should not have awarded liquidated damages.
2. Summary of the Opinion
The Third Circuit affirmed summary judgment for the Secretary. It held that Congress expressly delegated to the Secretary of Labor authority to “define and delimit” the terms of the companionship exemption in 29 U.S.C. § 213(a)(15), and that the Secretary lawfully exercised that delegated authority by promulgating 29 C.F.R. § 552.109(a), which excludes third-party employers from the exemption.
The court rejected WiCare’s remaining arguments: (i) FLSA coverage was supported by Congress’s finding that domestic service employment affects commerce; (ii) WiCare fit the regulation’s contextual meaning of “third party employer” (i.e., not the consumer or a family/household member); and (iii) liquidated damages were proper because WiCare did not show good faith and reasonable grounds, particularly given DOL fact sheets explicitly stating third-party employers cannot claim the companionship exemption.
3. Analysis
3.1. Precedents Cited
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Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024)
Role in the opinion: The court relied on Loper Bright to frame the post-Chevron interpretive landscape and, critically, to emphasize that courts must respect statutory provisions that expressly delegate definitional authority to agencies. The Third Circuit highlighted Loper Bright’s recognition (including its discussion of the FLSA) that express delegation remains a firm basis for agency rulemaking authority. Here, that express delegation is embedded in the companionship exemption’s text: “as such terms are defined and delimited by regulations of the Secretary.” -
Batterton v. Francis, 432 U.S. 416 (1977)
Role in the opinion: Cited (via Loper Bright) as a canonical example of Congress expressly delegating authority to an agency to give meaning to statutory terms. It supports the Third Circuit’s premise that this case is not about implied deference; it is about a direct textual transfer of definitional power from Congress to the agency. -
Morgan v. Allison Crane & Rigging LLC, 114 F.4th 214 (3d Cir. 2024) and Huber v. Simon's Agency, Inc., 84 F.4th 132 (3d Cir. 2023)
Role in the opinion: These cases supply the standard of review for summary judgment (plenary review on appeal applying the same standard as the District Court). While not substantive FLSA precedents, they anchor the procedural posture: WiCare faced an adverse summary judgment record, including deemed admissions from failing to respond to the Secretary’s statement of undisputed facts. -
Sec'y U.S. Dep't of Lab. v. Am. Future Sys., Inc., 873 F.3d 420 (3d Cir. 2017)
Role in the opinion: This precedent governs liquidated damages review (abuse of discretion) and the employer’s burden to avoid liquidated damages by showing both good faith and reasonable grounds for believing it complied with the FLSA. The Third Circuit applied Am. Future Sys. to conclude WiCare did not meet that burden.
3.2. Legal Reasoning
29 U.S.C. § 213(a)(15) expressly allows the companionship exemption’s terms to be “defined and delimited by regulations of the Secretary,” the Secretary could lawfully narrow the exemption to exclude third-party employers in 29 C.F.R. § 552.109(a).
(a) Express delegation, not implied deference.
The court treated WiCare’s challenge as largely foreclosed by the statute’s own text. Unlike a scenario where an agency claims interpretive primacy from ambiguity alone, the companionship exemption includes an explicit instruction that its “terms” are subject to being “defined and delimited” by the Secretary’s regulations. The Third Circuit therefore concluded that the Secretary’s decision to “delimit” the exemption by excluding third-party employers was within the authority Congress granted.
(b) The regulation’s substantive content: excluding third-party employers.
The operative regulatory sentence—“[t]hird party employers ... may not avail themselves of the minimum wage and overtime exemption”—functions as a categorical limit. The court upheld that categorical limit as a permissible boundary-drawing exercise under the delegated authority to “delimit” the exemption’s scope.
(c) FLSA coverage and “commerce.”
WiCare argued it was not subject to the FLSA because it did not engage in “commerce.” The court rejected this argument by pointing to Congress’s finding in 29 U.S.C. § 202(a) that “employment of persons in domestic service in households affects commerce,” and noting it was undisputed WiCare employed domestic service workers. The court thus found “no basis” for WiCare’s attempt to evade statutory coverage on that ground.
(d) “Third party employer” by regulatory context.
Although 29 C.F.R. § 552.109(a) does not define “third party employer” expressly, the Third Circuit treated the surrounding language as dispositive: the rule contrasts third-party employers with “the individual [receiving companionship services] or member of the family or household using the services.” From that context, the court derived a functional definition: a third-party employer is an entity that is neither the consumer nor the consumer’s family/household member. A home-care agency like WiCare squarely fits that contextual definition.
(e) Liquidated damages: fact sheets undercut good faith and reasonableness.
Under 29 U.S.C. § 216(b), liquidated damages are the default equal amount to back wages; avoidance requires the employer to show good faith and reasonable grounds. WiCare leaned on DOL “fact sheets,” but the cited materials stated the opposite of WiCare’s position—explicitly that third-party employers are not permitted to claim the companionship exemption, and that exemption availability depends on the working relationship. The court reasoned these publications made WiCare’s asserted belief unreasonable, so the District Court did not abuse its discretion in awarding liquidated damages.
3.3. Impact
Although designated “not precedential,” the decision is practically significant for FLSA enforcement and home-care industry compliance within the Third Circuit:
- Reinforcement of DOL authority after Loper Bright. The opinion illustrates a key pathway for agency rule durability: express statutory delegations remain powerful even as courts scrutinize agency interpretations more closely in the wake of Loper Bright Enters. v. Raimondo.
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Reduced room for third-party home-care agencies to claim the companionship exemption. Employers structured as agencies (rather than the consumer/family employing directly) should expect courts to treat them as “third party employers” under
29 C.F.R. § 552.109(a), making minimum wage and overtime compliance the baseline. - Liquidated damages risk where guidance is contrary. Reliance on agency guidance can backfire if the guidance clearly contradicts the employer’s practices; this opinion underscores that such materials may defeat “reasonable grounds,” not support it.
- Procedural lesson: deemed admissions can be case-dispositive. WiCare’s failure to respond to the Secretary’s statement of undisputed facts helped cement the wage calculations and liability posture that carried through summary judgment and appeal.
4. Complex Concepts Simplified
- “Companionship services” exemption (29 U.S.C. § 213(a)(15)): A statutory carve-out that can remove certain domestic-service companionship workers from the FLSA’s minimum wage and overtime protections—but only as the exemption is “defined and delimited” by the Secretary’s regulations.
- “Defined and delimited by regulations of the Secretary”: A congressional instruction giving the Department of Labor authority to specify what the exemption covers and where it stops. “Delimit” includes drawing boundaries that exclude certain employment arrangements.
- “Third party employer” (29 C.F.R. § 552.109(a)): In this context, an employer that is not the care recipient (or the recipient’s family/household) but instead a separate entity—commonly, a home-care agency—that employs the caregiver and assigns them to clients.
- Liquidated damages (29 U.S.C. § 216(b)): Typically an automatic doubling of unpaid wages. An employer can avoid them only by proving both subjective good faith and objective reasonableness.
5. Conclusion
The Third Circuit affirmed that 29 C.F.R. § 552.109(a) lawfully bars third-party employers from invoking the FLSA companionship exemption because Congress expressly empowered the Secretary to “define and delimit” that exemption in 29 U.S.C. § 213(a)(15). The court also reaffirmed broad FLSA coverage for domestic service employment, applied a contextual reading to classify WiCare as a third-party employer, and upheld liquidated damages where employer reliance on agency publications was unreasonable. In combination, the opinion strengthens the enforceability of the DOL’s third-party limitation and signals continued judicial reliance on explicit delegations of rule-defining authority in federal labor law.
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