John O'Connor illustration
McKnight’s Editorial Director John O’Connor
John O'Connor
John O’Connor

Would your senior living organization like to deal with yet another compliance hurdle?

Well then, here you go: The nation’s highest court just ruled that workers pulling down C-suite compensation may still receive overtime pay, under certain conditions. No, I am not making this up.

In a 6-3 decision, the Supreme Court determined that a former employee who made more than $200,000 a year was still eligible. (The case in question is Helix Energy Solutions Group v. Hewitt.)

The determining factor here turned out to be the method used for calculating pay, rather than the pay itself. The plaintiff in this case wasn’t paid a salary. Rather, he received a daily rate for his labors. In the end, that made all the difference — at least as far as most of the justices were concerned.

Employees are not “deprived of [Fair Labor Standards Act] benefits simply because they are well paid,” Justice Elena Kagan wrote for the majority.

Joining her were Chief Justice John Roberts, along with Justices Amy Coney Barrett, Ketanji Brown Jackson, Elena Kagan, Sonia Sotomayor and Clarence Thomas.

Justices Samuel Alito, Neil Gorsuch and Brett Kavanaugh dissented from the majority opinion. Kavanaugh described the verdict as “head scratching.”

“Although the Court holds that [the plaintiff] is entitled to overtime pay under the regulations, the regulations themselves may be inconsistent with the Fair Labor Standards Act,” Kavanaugh noted.

So what does this mean for senior living organizations?

At a minimum, now is probably a good time to reexamine your organization’s overtime exemptions, to make sure they comply with state and federal rules. And while doing so, remember that the court determined that the salary basis requirement is met solely when employees are paid by the week or longer

This case comes as the lines separating labor and management continue to blur. A a recent report from the National Bureau of Economic Research claims there is a massive increase in listings for salaried positions carrying managerial titles. It’s essentially a ruse some firms are using in an effort to dodge overtime wages. Anecdotal evidence suggests that the tactic has not completely skipped the senior living sector.

My advice for any operators who might be tempted to go down this path is to proceed with extreme caution. For as a general rule, frontline employees cost a lot less than defense attorneys.

John O’Connor is editorial director for McKnight’s Senior Living and its sister media brands, McKnight’s Long-Term Care News, which focuses on skilled nursing, and McKnight’s Home Care. Read more of his columns here.