Jordan v. Maxim Healthcare Servs., Inc.

Decision Date19 February 2020
Docket NumberNo. 18-1290,18-1290
Citation950 F.3d 724
Parties Theresa JORDAN, individually and on behalf of the Proposed Colorado Rule 23 Class, Plaintiff - Appellee, v. MAXIM HEALTHCARE SERVICES, INC., Defendant - Appellant.
CourtU.S. Court of Appeals — Tenth Circuit

David B. Salmons (Lincoln O. Bisbee, Matthew J. Sharbaugh and Michael E. Kenneally, with him on the briefs), Morgan, Lewis & Bockius LLP, Washington, D.C., for Defendant-Appellant.

Robert E. DeRose, Barkan Meizlish Handelman Goodin DeRose Wentz, LLP, Columbus, Ohio (Jason J. Thompson, Sommers Schwartz, P.C., Southfield, Michigan; Timothy J. Becker and David H. Grounds, Johnson Becker, PLLC, St. Paul, Minnesota, with him on the brief), for Plaintiff-Appellee.

Before BRISCOE, HOLMES, and McHUGH, Circuit Judges.

HOLMES, Circuit Judge.

Under Colorado law, employers generally must pay all employees time-and-a-half wages for overtime hours. That said, the law carves out several express exemptions from this requirement. Specifically, employers need not pay overtime wages to "companions, casual babysitters, and domestic employees employed by households or family members to perform duties in private residences." 7 COLO. CODE REGS. § 1103-1:5 (2019) (the "companionship exemption"). The question before us is whether "companions" working for third-party employers—rather than for households or family members—fall within the companionship exemption. We hold that they do. Accordingly, exercising jurisdiction under 28 U.S.C. § 1291, we reverse the district court’s judgment concluding otherwise.

I

Maxim Healthcare Services, Inc. ("Maxim") is a for-profit staffing company that provides customers with in-home care.

Theresa Jordan worked for Maxim in Colorado as a home health-care worker. The parties do not dispute that in that capacity, Ms. Jordan and other similarly situated Maxim employees were "companions" under Colorado law, and Maxim concedes that it did not pay Ms. Jordan or its other "companions" time-and-a-half wages for overtime hours from 2012 through 2015.1 Ms. Jordan, on behalf of a class of Maxim companions, argues that this failure violated Colorado law.

A

Before turning to Colorado law, we offer a primer on federal wage-and-hour law, which undergirds our analysis of the state-law issues before us. The lynchpin federal law in this case is the Fair Labor Standards Act (the "FLSA"), 29 U.S.C. § 201 et seq. , which mandates that employers in interstate commerce pay employees one-and-one-half times their regular hourly rate for all overtime hours worked, id. § 207(a)(1). This overtime rate generally applies to "any employee in domestic service." Id. § 207(l). At the same time, the FLSA contains exemptions for certain classes of domestic-service employees, thereby relieving their employers from the overtime-pay requirement. Of particular relevance here is the statute’s exemption for domestic-service employees who "provide companionship services for individuals who ... are unable to care for themselves." Id. § 213(a)(15).

The U.S. Department of Labor, which is charged with implementing the FLSA, has promulgated regulations explicating this exemption. One such regulation, which was in effect during most of the years at issue here, defined "companionship services" as "those services which provide fellowship, care, and protection for a person who ... cannot care for his or her own needs." 40 Fed. Reg. 7404, 7405 (Feb. 20, 1975) (language formerly codified at 29 C.F.R. pt. 552, subpt. A, § 552.6 ). This regulation also specified that employees who "provid[e] companionship services ... and who are employed by an employer or agency other than the family or household using their services[ ] are exempt from the [Fair Labor Standard] Act’s ... overtime pay requirements."2 Id. at 7407 (language formerly codified at 29 C.F.R. pt. 552, subpt. B, § 552.109(a) ) (emphasis added). In other words, during most of the relevant period, federal law explicitly exempted from the FLSA’s overtime-pay requirement those companions who were employed by third-party employers.

B

Like the FLSA, Colorado statute provides for overtime pay "at a rate of one and one-half times the regular rate of pay." COLO. REV. STAT. § 8-6-111(4) (2019).3

To flesh out this provision, the Colorado General Assembly delegated to the director of the Division of Labor (the "Division") the authority to prescribe the "conditions and rules" governing overtime compensation. Id. The Division has done so by promulgating each year a new iteration of the Colorado Minimum Wage Order (the "Wage Order"),4 which regulates, inter alia , wages and hours for certain employers and employees in the state. The only statutory limitation on this authority is that all wage orders "shall apply equally to all employers in [an] industry or occupation." Id.

This appeal centers around the Wage Order’s overtime-pay requirement and the scope of a certain exemption to that requirement. In particular, section four of the Wage Order prescribes a general rule that all employees working in certain industries5 must be paid the statutorily set time-and-a-half pay rate for overtime hours. 7 COLO. CODE REGS . § 1103-1:4. Section five then identifies various exemptions to this requirement, including, as referenced supra , the companionship exemption. That exemption provides that "companions, casual babysitters, and domestic employees employed by households or family members to perform duties in private residences" are "exempt from all provisions of [the] Wage Order." Id. § 1103-1:5. The gravamen of the parties’ dispute is the phrase, "employed by households or family members to perform duties in private residences," which we frequently refer to herein in shorthand form as the "household modifier."

The Wage Order is short on details. Significantly, it is silent as to whether third-party employers such as Maxim must pay overtime wages to companions. Moreover, it does not define such key terms as "companions," "casual babysitters," and "domestic employees." See id. (defining other terms but not those); id. § 1103-1:2 (same).

That said, the Wage Order does not exist in a vacuum, but rather within the broader regulatory scheme within which it was promulgated. To begin, the Division has issued an Advisory Bulletins and Resource Guide (the "Bulletin") "for general advisory, clarification, and explanatory purposes," which includes a "Keyword Index" addressing some of the Wage Order’s terms that are central to our analysis. Aplt.’s App. at 263 (Excerpt of Advisory Bulletins & Resource Guide, dated Aug. 2005). The Bulletin, for instance, defines "companion services" as "services which provide fellowship, care and protection for a person, who due to advanced age or physical or mental conditions cannot care for his or her own needs." Id. at 277. And without qualification, that glossary entry also states the following: "[c]ompanions are exempt from all provisions of [the] Wage Order." Id. The Bulletin likewise includes an entry for "[c]asual babysitt[ing]," which it defines as "work performed on an irregular or intermittent basis and not performed by an individual whose full time work is babysitting." Id. at 278. And like companions, "[c]asual babysitters are exempt from all provisions of [the] Wage Order," according to the Bulletin. Id.

Through opinion letters, the Division has provided further context on the companionship exemption. For example, in response to Maxim’s inquiry to the Division in 2006 "concerning the companionship exemption and third party employers," the Division issued a letter detailing its "position" on the exemption as follows: "the practice of applying the companionship exemption in situations involving third party employers is acceptable under ... [the] Wage Order." Id. at 192–93 (Colo. Dep’t of Labor & Emp’t, Div. of Labor, Op. Letter (dated Aug. 3, 2006)). In so advising, the Division explained that "the treatment and interpretation of the companions exemption in the Wage Order was intended to mirror" the federal scheme, which in turn explicitly exempted companions employed by third-party employers from the overtime-pay requirement. Id. at 192. Six years later, the Division sent Maxim another opinion letter reaffirming this interpretation. See id. at 187–90 (Colo. Dep’t of Labor & Emp’t, Div. of Labor, Op. Letter (dated June 14, 2012)).

The Division has followed this interpretation of the Wage Order in practice, too. In response to a claim filed with the Division by a Maxim employee in 2012, the Division reiterated that Colorado’s companionship exemption was "intended to mimic federal law." Id. at 541 (Division’s Resp. to Maxim Emp.’s 2012 Claim, dated Aug. 28, 2012). Two years later, another Maxim employee filed a claim with the Division, in support of which that employee argued that the companionship exemption applied to only those companions "employed directly by households," not to those employed by third-party employers such as Maxim. Id. at 544 (Maxim Emp.’s Claim, dated June 24, 2014). The Division rejected that argument and concluded that it lacked "the statutory authority to pursue this matter further," once again noting its "position" was that "the treatment and interpretation of the companions exemption in the Wage Order is intended to mirror ... federal law." Id. at 546 (Division’s Resp. to Maxim Emp.’s 2014 Claim, dated July 23, 2014).

C

Against this statutory and regulatory backdrop, Ms. Jordan filed this putative class action in state court in May 2015. She alleged that Maxim violated Colorado law by refusing to pay her and other Maxim companions overtime wages as required by section 4 of the Wage Order. Maxim removed the suit to federal court.

Once in federal court, Ms. Jordan moved for partial summary judgment as to Maxim’s liability. In her motion, she argued that under the plain language of the companionship exemption, only those companions who were employed by households or family members were exempt from the Wage Order’s overtime-pay...

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