Federal Court Vacates Trump Administration Rule Targeting Homecare Workers’ Unions

The U.S. District Court for the Northern District of California today issued a decision in State of California, et al. v. Azar, vacating a Trump Administration regulation that sought to prohibit homecare workers who provide services under states’ Medicaid programs from paying for benefits like health insurance and union dues via payroll deduction. The Court held that the regulation was legally erroneous and contrary to law.

Homecare workers, who are predominantly women of color, do critical, lifesaving work but are typically paid poverty wages and denied benefits like health insurance or sick leave.  Oregon, Washington, California, Illinois, Minnesota, Connecticut, Massachusetts, and Virginia have enacted laws allowing Medicaid-funded homecare workers to collectively organize and bargain with state Medicaid agencies over basic terms and conditions of employment, such as wages, sick leave, and insurance.  As a result, homecare workers in these states have greatly improved their wages and benefits, and the states have benefitted from a homecare workforce that is better trained, resourced, and has much less turnover.

In July of 2019, the Centers of Medicare & Medicaid Services issued a rule that, for the first time in history, interpreted a longstanding provision of the Medicaid Act to prohibit Medicaid-funded homecare workers from using payroll deductions to pay for benefits like insurance or union dues.  This legal theory was promoted by anti-union groups, and if allowed to stand, would have weakened homecare workers’ unions and threatened homecare workers’ hard-fought gains.  States could have lost millions of dollars in Medicaid funding simply for recognizing homecare workers’ right to organize.  Today’s court order restores the status quo.

The lawsuit was initiated by a coalition of states led by California.  Altshuler Berzon LLP represented Service Employees International Union Local 503, United Domestic Workers AFSCME Local 3930, and several individual homecare workers from across the country, who intervened in the lawsuit to challenge the regulation.