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January 8, 1999


The opinion of the court was delivered by: Katz, District Judge.


The plaintiffs, an opt-in class of fourteen current and former employees of defendant Resources for Human Development, Inc. (RHD), claim that RHD underpays its employees for overtime because it does not include bonuses and its contributions to the employees' benefit plan in the employees' regular pay rate as required by the Fair Labor Standards Act (the FLSA). Before the court is the defendant's motion for summary judgment.*fn1

The Fair Labor Standards Act is intended to guarantee to employees certain minimum labor standards. See Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292, 80 S.Ct. 332, 4 L.Ed.2d 323 (1960). It does so principally by requiring the payment of a minimum wage and the payment of an overtime premium of one and one half times the employee's regular rate of pay for hours worked in excess of forty in a given week. See 29 U.S.C. § 206, 207(a). At issue in this case is whether the defendant is properly calculating its employees' regular rate. It uses their hourly wage, but plaintiffs argue it should be higher because it should include contributions to the benefit plan and bonuses. Preliminary to those issues, though, RHD argues that the FLSA's overtime pay rule is not applicable to plaintiffs at all because they are a type of employee exempted from the Act's coverage.

Companion Exemption

RHD argues that the plaintiffs are not covered by the FLSA because they are members of a class of employees exempted by statute. Specifically, the Act excludes from coverage "any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves." 29 U.S.C. § 213(a)(15). To fit within the exemption, then, the statute requires that three elements must be met: (1) the employees must be employed in domestic employment, (2) the employees must provide companionship services, and (3) the services must be for qualified aged or infirm individuals.

Exemptions from the FLSA are to be construed narrowly against the employer. It is the employer's burden to prove that its employees come within the scope of the exemption, and "any exemption from the Act must be proven plainly and unmistakenly." Friedrich v. U.S. Computer Servs., 974 F.2d 409, 412 (3d Cir. 1992). The specific requirements of the elements of the companion exemption are not set forth in the statute. Rather, they are articulated in the regulations and interpretations of the Secretary of Labor.*fn2 The regulations define "domestic service employment" as follows:

  services of a household nature performed
  by an employee in or about a
  private home (permanent or temporary)
  of the person by whom he or she is
  employed.*fn3 The term includes employees
  such as cooks, waiters, butlers, valets,
  maids, housekeepers, governesses,
  nurses, janitors, laundresses, caretakers,
  handymen, gardeners, footmen, grooms,
  and chauffeurs. . . . This listing is illustrative
  and not exhaustive.

29 C.F.R. § 552.3. To restate, to be employed in domestic employment, employees must perform household services in a private home.

Defendant cannot satisfy its burden of proving that its employees meet this test for domestic employment, because RHD's clients' homes are sufficiently institutionalized that they are not "private homes" within the meaning of the statute. The court's decision is informed by the similar analyses performed by other district courts in Linn v. Developmental Serve, of Tulsa, Inc., 891 F. Supp. 574, 577-80 (N.D.Okla. 1995), and Lott v. Rigby, 746 F. Supp. 1084, 1086-89 (N.D.Ga. 1990), as well as Terwilliger v. Home of Hope, Inc., 21 F. Supp.2d 1294, 1300 (N.D.Okla. 1998). See also Bowler v. Deseret Village Assoc., Inc., 922 P.2d 8 (Utah 1996). Each of these cases makes it clear that the private home determination is highly fact-specific and to be made on a case-by-case basis, and that no one factor is dispositive. To engage in the required analysis of the facts, it is first necessary to set forth a somewhat detailed description of the RHD program.*fn4

RHD is a non-profit corporation engaged in providing human services programs including head-start programs, community health centers, low income housing, transportation services, community living programs for adults with mental health and mental retardation challenges, drug and alcohol abuse programs, and assistance to homeless people. To do so, it is subdivided into several programs, and it employs a total of approximately 2,400 people. Plaintiffs are or were residential advisors in RHD's "Mandela" and "Visions" programs. These programs provide assistance, support, and training to adults who face mental health or mental retardation challenges. Stip. ¶¶ 1-4.

These RHD programs serve adults released from state mental hospitals or referred by other agencies who are not able to care for themselves on their own but do not need hospitalization. See Def.Ex. 1 (Bligen.Decl.) ¶ 2; Def.Ex. 3 (Johnson Decl.) ¶ 2. The case managers overseeing the individuals' de-institutionalization must find a service provider that will provide community living arrangements in a controlled setting. RHD, through its Mandela and Visions programs, is one such provider in the Philadelphia area. The RHD community living arrangements are considered a middle step to independence. Some of the clients can learn to live on their own, through a long and difficult process.

Each individual receives the services of a county case management team, which oversees the use of government funds based on a treatment plan developed by the county mental health professionals on the team, with the input of the individual, the individual's advocate, and family members. When a service provider such as RHD is involved, it also has input into the development of the treatment plan. The plan, the contents and implementation of which are controlled by state and federal regulations, specifies the individual's appropriate living arrangement. If RHD and the individual agree to place the person in the program after a referral from the case manager, state and federal resources that supported that person in the institution or prior living arrangement follow him or her into the RHD community living arrangement. See Pl.Ex. 2 (Bligen Dep.) at 5-7. Once RHD enters into a contract with the county undertaking to provide services for the individual, it must comply with the requirements of the plan to receive funding. County case managers and other county officials assess compliance through periodic review of documentation and quarterly and yearly inspections. See Pl.Ex. 4 (Cox — Scales Dep.) at 35.

RHD clients pay up to seventy-two percent of their monthly Social Security Disability payments to RHD, which goes toward rent and other ordinary household expenses such as food and utilities. See Def.Ex. 1 (Bligen Decl.) ¶ 6; Def.Ex. 3 (Johnson Decl.) ¶ 6. In the case of at least one residence, the amount paid by the client does not cover the lease expenses of the home.*fn5 For an apartment at the 1705 Hamilton Building for which RHD pays monthly rent of $649, the one client who lives there pays $375.41 monthly, which goes not only to rent but for food and utilities. The difference is made up by state and county funds. See Pl.Ex. 2 (Bligen Dep.) at 39. Utilities are frequently registered in the resident's name, see Def Ex. 1 (Bligen Decl.) ¶ 8; Def.Ex. 3 (Johnson Decl.) ¶ 8, but under the terms of the lease the utility charges are included as part of the client' room and board payment to RHD. See Def.Ex. 1B.

All residents of RHD housing are bound by the house rules, which include the following: no drugs or alcohol, no loud music, residents must be dressed if outside their bedrooms between 8:30 a.m. and 10:00 p.m., and residents are to "keep the staff of Mandela apartments informed as to their whereabouts at all times." These rules are in the rental agreement the client signs with RHD. See Def.Ex. lB.

RHD employees handle the personal spending money of some clients. Fifteen dollars per week (Social Security Disability provides thirty dollars each month, which amount is supplemented by the county) is disbursed by the county case manager to an RHD staff member, and the RHD staff then disburses the money to the client as provided in the individual's treatment plan. For clients who can handle fifteen dollars at a time, the whole amount is given to them once a week; for individuals who cannot manage such a sum of money all at once, it is disbursed in three dollar increments over the course of the week, See Pl.Ex. 2 (Bligen Dep.) at 22-25. RHD maintains a custodial account for receipt of the clients' Social Security benefits. Often, RHD is made the payee of the Social Security checks. See Pl.Ex. 5 (Jackson Dep.) at 40-41.

To the extent they are physically and mentally able, the residents are responsible for maintenance and upkeep of the homes, cooking their own meals, and washing themselves and their own clothes. See Def.Ex. 1 (Bligen Decl.) ¶ 8; Def.Ex. 3 (Johnson Decl.) ¶ 8; Def.Ex. 16 (Richards Dep.) at 64. The residents choose the food they purchase and meals they eat on a given day, as well as the clothes they purchase and the outfits they wear on any given day. See Def.Ex. 1 (Bligen Decl.) ¶ 9; Def.Ex. 3 (Johnson Decl.) ¶ 9.

A set of keys is kept at each location for use by the RHD staff while on duty. The RHD staff must knock before entering. Each client has keys to his or her house if able to do so. See Def.Ex. 3 (Johnson Decl.) at 7. Only six out of the eleven clients in the Mandela program have keys to the houses. Only three out of the eleven residents are ...

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