Court Rejects Overtime Pay For Home-Care Workers

Justices Also Deny Venue Change in Tobacco Suit

By Robert Barnes, Washington Post, June 12

The Supreme Court ruled yesterday that workers in the fast-growing home-care industry are not entitled to overtime pay.

The court unanimously agreed that a 1975 Labor Department regulation exempting workers paid by third parties from minimum-wage and maximum-hour rules was a valid exercise of the power given to the agency by Congress.

The ruling was one of several business-related decisions from the court yesterday. The justices also ruled unanimously that Philip Morris Cos. could not move a class-action lawsuit from a state court in Arkansas to what companies often believe is a more friendly climate in the federal courts.

The lawsuit claims that Philip Morris fraudulently labeled its "light" cigarettes. The U.S. government and a large coalition of states had argued that the case should remain in state court.

The home-care case was brought by Evelyn Coke, a 73-year-old retiree who worked for more than 20 years as a home-care provider. She sued her employer, Long Island Care at Home, because she was never paid overtime despite her long hours and sometimes overnight care for clients.

She and her lawyers challenged the Labor Department exemption, saying its development at a time when Congress was including more workers under wage and overtime laws could not be what lawmakers intended.

But the Bush administration said Congress clearly had left the decision up to the agency. Otherwise, the administration contended, wage and overtime provisions for companionship services would have been applied in the law.

The court, in an opinion by Justice Stephen G. Breyer, agreed.

"Where an agency rule sets forth important individual rights and duties . . . and where the rule itself is reasonable, then a court ordinarily assumes that Congress intended it to defer to the agency's determination," Breyer wrote.

The decision set aside a ruling by the Court of Appeals for the 2nd Circuit that had allowed Coke's lawsuit to go forward.

Home-care workers make up one of the marketplace's fastest-growing occupations, the growth fueled by an aging population and a desire to keep more of the aged in their homes rather than in institutions.

Coke's supporters said the decision will make it even more difficult to find workers to take home-care jobs, which often are low-paying and come without benefits.

"If we are to avert a home-care crisis in America, our leaders must invest in living wages and health-care coverage for home-care workers to ensure that we can meet the home-care needs of our growing elderly population," said Gerry Hudson, executive vice president of the Service Employees International Union, which represents about 400,000 of the estimated 1 million home-care workers.

"Unfortunately, today's Supreme Court ruling is a step in the wrong direction," he said. But home-care agencies had said an adverse ruling would have meant scores of lawsuits seeking retroactive pay and future wages that would have sent the cost of care skyrocketing. New York City, for instance, told the court that its Medicaid payments for such care would rise by as much as $250 million under the appeals court's decision.

William A. Dombi, vice president for law for the National Association for Home Care and Hospice, welcomed the court's ruling in Long Island Care at Home v. Coke, but said he is sympathetic to the workers and the union.

The decision, he said, "doesn't resolve the underlying problem about proper levels of compensation."

Breyer also wrote for a unanimous court in Watson v. Philip Morris, rejecting the tobacco company's claim that because it is heavily regulated by the federal government, it is entitled to move the lawsuit against it to federal court. It relied on a statute supplying federal court jurisdiction for "any person acting under" an "officer" of the federal government.

The decision is "terrific news" that could affect lawsuits in about 20 states against Philip Morris and R.J. Reynolds about their marketing of light cigarettes, said Edward L. Sweda Jr., senior attorney at the anti-smoking Tobacco Products Liability Project at Northeastern University.

Lisa Watson and Loretta Lawson sued Philip Morris for its marketing of Marlboro Lights and Cambridge Lights under the Arkansas Deceptive Trade Practices Act. The women say the company designed its cigarettes to score artificially low in tar and nicotine under the testing procedure required by the Federal Trade Commission.

The justices did not consider the merits of the claim, only reversing a lower court's decision that the proper venue was in federal court.

William S. Ohlemeyer, Philip Morris vice president and associate general counsel, called the court's ruling "narrow" and added, "we have compelling defenses to the Watson claim that have been advanced in state courts."

The company maintained in a statement that "Congress and the FTC created a comprehensive regulatory scheme for marketing 'low tar' and 'Lights' cigarettes" that protects it from such lawsuits based on state consumer fraud laws.

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