Home Health & Hospice Week

Agencies that have already announced salary changes are in a bind.

A federal court decision handed down two days before Thanksgiving may have some home health agencies feeling thankful — and some not.

Months of preparations for a Department of Labor final rule expanding overtime pay for some workers may be for naught, since a federal judge has temporarily halted the Dec. 1 implementation of the rule (see story, p. 330).

Reminder: The rule would more than double the minimum salary level to qualify for the “white collar” executive, administrative, and professional (EAP) employee overtime exemption.

“Many employers had spent considerable efforts over the past year in planning how to implement the new overtime rule,” observe attorneys Joseph Gross and Steven Moss with law firm Benesch. “The DOL also spent considerable efforts in planning how to enforce it.”

Rule prep contained a number of components for many home care providers — particularly those with private duty business or that paid workers on a per visit basis:

• Time tracking. For employees who would no longer qualify for the exemption, agencies had to be sure they were paid overtime when they worked over 40 hours per week. For many providers, that meant implementing a system to track time worked instead of just counting visits.
• Reclassification. HHAs may have reclassified employees from exempt to non-exempt.
• Salary increases. Agencies may have increased salaries to boost employees into the exempt status category based on income.

Consider These 3 Options

So now that the final rule is temporarily halted, what should HHAs do? Many HHAs have already put in place or announced some of their preparations, notes The Health Group in Morgantown, W. Va. in analysis of the ruling.

“Employers have been preparing for this change for months, and the court’s injunction so close to the rule’s effective date creates challenges,” acknowledge attorneys with law firm K&LGates in analysis of the decision.

“The answer ... is not the same for all employers,” K&L advises. “In determining the next steps, employers will need to consider whether changes have already been communicated to employees and how quickly the employer can adjust its approach if the injunction is lifted.”

Consider these three options in mapping out your compliance plan:

1. Maintain the status quo and/or roll back changes. Under the ruling, the current $455 per week ($23,660 annual) salary level is still in place for complying with the exemption. “Agencies that have not already raised salaries or reclassified employees to nonexempt status do not have to pay increased salaries to maintain the exempt status of their affected employees,” counsels attorney Eileen Maguire of Indianapolis-based Gilliland, Maguire and Harper in analysis of the decision. “However, agencies must still ensure that their exempt employees truly meet the duties test and salary basis requirements to claim exemption from overtime.” “Employers should put their plans on hold, or modify them to reflect the new political climate,” advise Benesch’s Gross and Moss.

This option gets a bit trickier if you’ve already announced salary increases or actually put them into effect. Such HHAs “can change their pay practices in accordance with their state’s advance notice requirements,” Maguire advises. But expect employee pushback.

“Legal advice may be needed to appropriately address changes already made or contemplated in anticipation of the rule,” The Health Group offers.

Caution: The enforcement date for the rule’s changes may be swift if the ultimate court decision doesn’t go the same way as this preliminary injunction, K&L warns. And there’s always the possibility of an appeal. Be sure your decision now will allow you to comply on time if such a decision occurs. On the other hand, the DOL under the

Trump Administration may not even appeal a court decision striking down the rule, instead using it as an opportunity to go back and revise regulations such as this one and the tightening of the companionship exemption. In that case, options may range from eliminating any changes to this overtime exemption to proposing a less drastic change to the salary threshold for the exemption.

2. Partially implement rule-based changes. Many have already made sweeping changes based on the DOL final rule, such as switching employees to hourly wages and hiring new staff to avoid overtime liability, NAHC notes. Switching back from those costly changes may be unwise, particularly since the injunction is temporary only.

“Employers might choose to implement some changes (such as time tracking for employees who would have been reclassified as nonexempt) even if they do not fully proceed with changes that would have been required by the rule (such as the actual reclassification of employees as nonexempt),” K&L offers. “Employers with large numbers of employees who satisfied the duties test but fell below the new salary threshold may want to delay increasing salaries (or converting employees to non-exempt) until the fate of the overtime rule becomes clearer.”

Keep in mind: “Any such decision must consider what communications have been issued and what promises have been made to those employees,” K&L urges.

3. Proceed with/maintain changes. If you have already put the time and effort into preparation and announced salary increases and other changes to your staff, it may be best to hold the course — at least pending a final decision in the case.

Stay tuned: Monitor this case and related regulations to be sure you’re in compliance as new developments arise, legal experts advise.