Update on the Overtime Exemption Rule

May 11, 2016

Thanks to ANCOR we are able to share the following update:

Background

Last July, pursuant to President Obama’s directive to DOL to update the Fair Labor Standards Act to increase the threshold at which workers are exempt from overtime requirements, DOL released the proposed rule “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees”. The rule proposes to more than double the threshold at which workers are exempt from overtime requirements, from about $23,000/year to over $50,000/year, with the threshold automatically increasing over time.

 

While we agree that the Overtime Exemption Rule should be modernized and the salary level increased, without additional funding, many of our members will either be forced to cut wages to direct support professionals, serve fewer people, or both. At a time when more people than ever rely on these services to continue to live in their communities – with thousands more on waiting lists across the country – this would be devastating.

 

Current Status

In addition to advocating for a lower salary threshold in the final rule, we have been pushing aggressively for similar treatment accorded providers and states in the final DOL’s Home Care rule – to acknowledge that Medicaid-dependent providers and their payers need more time to secure additional state funding to pay for the significantly increased costs. Although it’s still anyone’s guess what the final rule will include, this is what we know and what we are hearing:

  • We expect the final rule may be published as early as this week, but probably no later than the end of May.

  • By law, DOL need only provide employers with 60 days to comply with the new regulations.

  • Several media outlets have reported the minimum salary level for exemption will be set at $47,000 (rather than the $50,440) as proposed. This info is attributed to a congressional staffer, and although it cannot be confirmed, it is likely a credible source.

  • We do not have any other information about changes to the salary or duties tests. However, Tammy McCutchen, Esq, of Littler Mendelson is predicting that the final rule: (1) will provide for annual increases based on inflation; (2) will not allow employers to count bonuses towards the minimum salary level; and (3) may make changes to the duties tests to limit the amount of time exempt employees may perform non-exempt work.

  • Legislation has been introduced to stop the rule, H.R. 4773 / S.2707 — the Protecting Workplace Advancement and Opportunity Act. If it passes both bodies of Congress, it will surely be vetoed by the President when it reaches his desk. Congressional observers are predicting with confidence that the Republicans will not have the votes to override the President’s veto. ANCOR has consistently supported the intent of the proposed rule, advocating more constructively for a reasonable salary threshold (15th percentile/approximately $30,000), and is not supporting this legislation.

  • Business groups such as the National Federation of Independent Businesses are rumored to be actively planning to challenge the final rule in court.


As this is part of the overall effort to lift wages for all Americans the efforts may not influence this rule.  VNPP began last year to work with the members of the Virginia General Assembly to make them aware of the crisis facing providers if the rule takes effect.  We will continue those efforts!