The new cutoff for overtime eligibility? It's a fair question

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John O'Connor
John O'Connor

Last year, senior living operators worked like farm mules to prep for a new overtime rule. Then an 11th-hour reprieve put everything on hold.

Since then, there's been a lot of speculation about what will happen next.

Yesterday, we got a bit closer to finding out. For this, we can thank the Labor Department, which announced it would appreciate some feedback before rewriting the rule.

Under federal law, employees are to be paid time and a half once they put in 40 hours in a week. However, senior living operators and other businesses may exempt those whose duties are determined to be managerial in nature — and if those employees reach a certain salary threshold. The old floor was $23,000. Under the Obama plan, it would have leapfrogged to $47,476. In other words, anyone making less than $47,000 and change would be automatically eligible for overtime pay, regardless.

So it was hardly surprising that more than 20 states — flanked by business groups — expressed their displeasure by taking legal action. A friendly federal judge agreed just before the Dec. 1 implementation date.

You could almost hear the senior living field's collective sigh. Labor costs already represent the highest cost of doing business in this sector. Adding significantly to those outlays would have been a recipe for staffing reductions, thinner margins and perhaps closings, many operators had argued.

So if $23,000 is way too low (as many workers insist) and $47,476 is too high (as many operators claim), then what is a fair compromise?

The obvious answer is split the difference, which puts the new threshold at roughly $35,000. Some are predicting the number actually may be a bit lower, more like $31,000 to $33,000. As President Trump said this week when asked whether he plans to fire his attorney general, time will tell.

At this early stage, it's probably safe to make two predictions. The first is that when the dust settles, the final number will probably be somewhere between $30,000 and $36,000.

The second is that regardless of what that final number turns out to be, both sides will insist it is hugely unfair.

John O'Connor is editorial director of McKnight's Senior Living. Email him at john.oconnor@mcknights.com.

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