The Labor Department’s new proposal to increase the salary threshold for employee overtime pay, announced Thursday, might have been expected, but it’s still of concern to some organizations representing senior living operators.
Under a salary level set in 2004, executive, administrative, professional and certain other employees who earn less than $455 per week ($23,660 annually) are eligible for overtime pay if they work more than 40 hours in a week.
The Labor Department’s new proposal would raise the standard salary level to $679 per week, or $35,308 per year. That compares with a threshold level of $47,476 per year announced by the Obama administration in 2016, which was enjoined by the courts.
The new proposal, according to the Labor Department, was developed after input received during several in-person listening sessions held around the country and more than 200,000 comments as part of a 2017 request for information.
So the dollar amount in the proposal “is about what a lot of folks expected,” Paul Williams, vice president of government relations at Argentum, told McKnight’s Senior Living.
“I think that most businesses took the stance that, even going back to 2016 with the original rule coming out, we knew the floor really wasn’t $23,660, but it also wasn’t really realistically for it to leap, effectively, to $50,000,” he added.
Williams also noted a provision in the proposed rule under which adjustments to the threshold would be considered every four years, calling it “a good thing.”
“There hasn’t been an adjustment to the threshold since 2004, which is too long,” he said.
Argentum, one of the organizations providing comments in 2017, continues to review the rule, Williams said. “We’ll get together with our members to make sure that there are provisions in there that will be good for our employees and good for our employers,” he said.
It’s the effects an increase ultimately might have on residents that concern the National Center for Assisted Living, Senior Director of Policy Lilly Hummel told McKnight’s Senior Living. Because of those effects, she said, assisted living operators should be exempt from the rule.
“While we’re encouraged that the administration has put forth a more moderate proposal, this rule is still concerning for the assisted living profession. Labor makes up a significant portion of overall operations, and increasing those costs could result in additional costs to the consumer,” she said. “Many assisted living communities also offer Medicaid to vulnerable residents, which is often underfunded. At a time when residents and their families are looking for more affordable long-term care options, assisted living — especially Medicaid providers — should be exempt from the overtime rule.”
LeadingAge, with members in assisted living, skilled nursing and other areas of aging services, is especially concerned about how the proposed rule would affect providers who depend on Medicare or Medicaid for payment, Vice President for Public Policy Communications Barbara Gay told McKnight’s Senior Living.
“Unlike employers in other sectors, long-term services and supports providers, most of whom rely on Medicare or Medicaid as their primary payer source, cannot simply raise their prices in order to cover increased labor costs,” she said. “A mandatory increase in labor costs will challenge our members, who are already contending with a severe workforce shortage, particularly among hourly staff.”
Gay said the “ideal” solution would be to increase reimbursements to providers when the salary threshold increases. “This would be a win-win, both for employers and for workers,” she said.
More information about the proposed rule is available at www.dol.gov/whd/overtime2019. Once the rule is published in the Federal Register, the public will have 60 days to submit comments for consideration.