House panel hears testimony on site-neutral payments, potential for Medicaid cuts to providers

Under new legislation introduced in the U.S. House of Representatives on Thursday, the $47,476 salary threshold for overtime pay eligibility would be phased in over three years rather than become effective on Dec. 1 as planned by a rule finalized by the Labor Department in May. The Labor Department opposes the bill, saying that U.S. workers have waited long enough for the changes.

The Overtime Reform and Enhancement Act (H.R. 5813) was introduced by Reps. Kurt Schrader (D-OR), Jim Cooper (D-TN), Henry Cuellar (D-TX) and Collin Peterson (D-MN). All are members of the Blue Dog Coalition, an official House caucus of 15 fiscally conservative Democrats.

The Labor Department’s final overtime rule, opposed by several associations representing senior living operators, doubles the salary threshold — from $23,660 to $47,476 per year — under which most salaried workers will be guaranteed overtime pay when they work more than 40 hours per week. That threshold will be updated automatically every three years. Overtime payment requirements had last been updated in 2004.

The proposed act, however, would implement a more gradual increase of the overtime salary threshold — to $35,984 this Dec. 1; $39,814 on Dec. 1, 2017; $43,645 on Dec. 1, 2018; and $47,476 on Dec. 1, 2019. Additionally, the bill calls for the elimination of the automatic threshold increases that are required every three years under the final rule.

In a press release, the four congressmen who introduced H.R. 5813 said that they support overtime pay protections for workers, but they believe the salary threshold for eligibility should be increased gradually so that businesses have time to adapt.

“Since the DOL’s immediate phase-in date was announced, we’ve heard from business owners and their employees who are worried about implementing this increase overnight,” Schrader said. “Without sufficient time to plan for the increase, cuts and demotions will become inevitable, and workers will actually end up making less than they made before.”

U.S. Secretary of Labor Thomas E. Perez, however, said that millions of workers should not be made to wait more time “for the overtime rules to catch up to reality.”

“The president and I think that American workers have waited long enough for a fair day’s pay for a long day’s work,” he said in a statement. “That’s our vision of an economy that works for everyone. By delaying implementation and removing the automatic updating of the salary threshold, the proposed legislation stands in stark contrast to that vision.”

The bill has been sent to the House Committee on Education and the Workforce. The House will reconvene Sept. 6 after the Republican and Democratic national conventions in July, district work weeks for the entire month of August, and Labor Day.

The overtime rule was first proposed in the July 6, 2015, Federal Register. A recent survey of senior living chief financial officers by Ziegler revealed that CFOs are more worried about the overtime rule than they are minimum wage increases. Approximately 73% of survey respondents indicated that the overtime rule will have a moderate to significant negative effect on their organizations, whereas approximately 57% said that minimum wage increases have had a similar negative effect.