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Home Health & Hospice Week

Labor Law:

Overtime Exemption Changes Poised To Hit HH, Hospice Providers In The Wallet

Published on Thu Oct 05, 2023

Gauge how much anticipated revisions will cost you.

The feds’ new effort to expand overtime protections to certain employees could take a painful bite out of already strained budgets at home health and hospice agencies.

On Sept. 8, the U.S. Department of Labor issued a proposed rule defining which Fair Labor Standards Act (FLSA) regulations they intend to revise. The FLSA requires employers to pay covered nonexempt workers a federal minimum wage and overtime premium pay of at least 1.5 times the employee’s regular rate of pay for work in excess of 40 hours in a week.

Reminder: Employees are exempt from minimum wage and overtime pay if they are employed in a legitimate executive, administrative, or professional (EAP) capacity as defined by the DOL. This exemption from the FLSA is sometimes referred to as the white-collar or EAP exemption.

Currently, to fall within the exemption, an employee generally must:

  • be paid a salary, meaning a predetermined and fixed amount each pay period that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test);
  • be paid at least the specified weekly salary level, of $684 per week (or $35,568 annually) in the current regulations (the salary level test); and
  • primarily perform executive, administrative, or professional duties, per the DOL’s regulations (the duties test).

Resource: For detailed EAP definitions, explanations of the exemption tests and exemption examples go to: www.ecfr.gov/current/title-29/part-541.

Check Out What’s Proposed

The DOL intends to increase the standard salary level and the highly compensated employee total annual compensation threshold, as well as providing an automatic updating mechanism that would allow for the timely and efficient updating of all the thresholds to reflect current earnings data.

More specifically it will:

  • increase the standard salary level to $1,059 per week ($55,068 annually) based on current data;
  • increase the highly compensated employee (HCE) total annual compensation requirement to the annualized weekly earnings to $143,988 per year based on current data; and
  • automatically update these earnings thresholds every three years with current wage data to prevent future erosion of overtime protections and ensure greater predictability, and maintain their effectiveness.

The DOL is not proposing changes to the salary basis or duties test at this time.

The National Association for Home Care & Hospice and other industry experts believe that similar to the last increase to the salary threshold, the proposed revisions could substantially alter which employees qualify for EAP exemptions. The EAP status of many of these workers who are currently exempt could end up changing, and this change could allow them to receive overtime pay when they were ineligible before.

“Should the proposed changes become law, they will revolutionize how many Americans work and are compensated for their time,” stresses attorney Jesse Young with law firm Sommers Schwartz in online legal analysis.

Watch out: Plus, “publicity surrounding the proposed changes may cause employees to question their current classification and compensation,” advise attorneys Russell Bruch, Christopher Parlo, and Erik Makinen with law firm Morgan Lewis in online analysis.

Note: Review the 89-page rule at www.govinfo.gov/content/pkg/FR-2023-09-08/pdf/2023-19032.pdf. Twenty-eight Frequently Asked Questions about the Proposed Rule are at www.dol.gov/agencies/whd/overtime/rulemaking/faqs.

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