White Collar Overtime Rule: How Senior Care Providers Need to Prepare

UPDATE: The Department of Labor published the final White Collar overtime rule on May 18, 2016. The salary thresholds are less than predicted at $913 per week and $47,476 per year. The new regulations are set to take effect on December 1, 2016.

A proposed Department of Labor rule currently under review has major implications for all employers in that it changes overtime exemptions for white collar employees. The so-called “White Collar” rule, proposed last year, sets the minimum salary level for full-time administrative, executive and professional exemptions at the 40th percentile of weekly earnings for full-time employees.The final proposed rule was sent to the White House Office of Management and Budget for review in mid-March. This means that the regulation, in its final form, could take effect as soon as four to six weeks, or up to three months, from that time—well ahead of the fall schedule that was anticipated initially. Employers will have 60 days to comply if and when the rule takes effect.

Senior care providers should prepare for this rule with the expectation that it will become final in this time period, as advised by industry association Argentum in a recent bulletin.

“It is apparent DOL is moving expeditiously, which means if the proposed rule is implemented, employers will have a very short timeline to comply,” Argentum advised. “Argentum encourages you to plan and prepare for the proposed rule, as it could go into effect as early as mid-June to mid-July 2016.”

All employers, regardless of the size of their staff, are subject to the rule.

What the new White Collar overtime rule means

The White Collar rule essentially makes certain salaried employees exempt from overtime protections only when they meet a certain salary minimum—the 40th percentile of weekly earnings for full-time employees. Current predictions place that salary floor at $970 per week or $50,440 per year. (UPDATE: The salary thresholds in the published rule are less than anticipated: $913 per week, or $47, 476 per year.) This means that employees whose salaries are under the $50,440 minimum will be subject to overtime wage protections for hours they are required to work beyond a 40-hour work week or for certain healthcare employees beyond 8 hours in a day and 80 hours in a bi-weekly pay period (note that state laws may vary).

Argentum and association counterpart the American Seniors Housing Association (ASHA) have opposed the rule through written comments, noting the negative impact it will have on senior living providers. According to the associations, the rule, as proposed, would restrict the flexibility of businesses to provide quality service and care to residents; hinder career advancement opportunities; injure the morale of reclassified exempt workers; spur lawsuits; and raise administrative costs without any benefit to employees.

“This is an unprecedentedly high level for exempt status under the white collar exemptions, even when earlier wage minimums dating back more than 75 years under the [Fair Labor Standards Act] are adjusted for inflation,” the associations wrote in their comments submitted in 2015. “Under the newly proposed, drastically increased salary level, many employees in senior living facilities who should be considered exempt will no longer be able to qualify for exempt status, regardless of their job duties.”

There is no guarantee that a final rule would mirror the proposed rule, but should it take effect on the accelerated time schedule, providers will have little time to prepare. Getting systems and processes in place to accommodate the rule in advance will best serve employers when and if the rule takes effect.