New overtime rule could bring 'devastating realities,' operator says

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New overtime rule could bring 'devastating realities,' operator says
New overtime rule could bring 'devastating realities,' operator says

The director of human resources for an Idaho-based assisted living operator predicts the loss of jobs for workers and fewer housing options for Medicaid beneficiaries if the federal government greatly increases the salary threshold for overtime pay.

In an Aug. 16 letter to the Labor Department on behalf of Meridian, ID-based Ashley Manor and affiliates, Cory Sanford called those potential effects “two very likely and devastating realities.”

The department is seeking input such as that given by Sanford before crafting a new rule related to circumstances under which certain workers would be entitled to overtime pay. The deadline for commenting is Monday. For more information, see the request for information in the Federal Register.

An overtime rule finalized in May 2016 under President Obama would have doubled the salary threshold — from $23,660 to $47,476 per year — under which most salaried workers would be guaranteed overtime pay when they work more than 40 hours per week, and that threshold would have been updated automatically every three years. Organizations representing senior living operators had opposed it.

The rule was the subject of legal battles, including an injunction that prevented it from going into effect. June 30, the Labor Department under President Trump said it planned to develop its own rule rather than continue an effort to enact changes decided under the former administration. Aug. 31, a federal judge declared the rule unlawful.

Ashley Manor provides memory care services through 60 “small home” model assisted living communities in primarily rural areas of Colorado, Idaho and Oregon, Sanford said in his letter, posted to regulations.gov.

Approximately 87 of the company's 600 workers would be affected if a salary threshold as high as the one proposed in the Obama administration rule's salary threshold were to be implemented, he added. The cost to convert those employees to nonexempt, hourly status would be $585,000, with an annual cost of $1.5 million to increase their salaries to the new threshold, Sanford said.

Those expenses would lead to the consolidation and elimination of jobs, he said, and Ashley Manor would have to “drastically reduce or eliminate entirely” the admission of residents receiving Medicaid assistance.

“The reimbursement rates are not sustainable now at current expense levels,” Sanford said. “This is vulnerable population we have been proud to serve and would be disappointed to see this requirement exacerbate an already critical access problem for this demographic.”

Possible solutions

Ashley Manor supports incremental increases to wage minimums for exempt positions, he said, but wants the government to consider differences among industries and geographical areas.

“The cost of living differences are drastic between New York City and Fort Lupton, Colorado, and a salary standard applied equally at a national level is grossly oversimplifying economic principles that impact cities differently depending upon size, location, demographics, and other data,” Sanford said. He suggested that states be allowed to consider such factors and implement overtime rule changes much as they do minimum hourly wages.

“At a minimum, we suggest completely eliminating the proposed automatic annual increases to the minimum salary and increase minimum salary to a more manageable and reasonable amount, such as $30,000 per year,” he said.

Morale a factor, too

Employee morale could be affected by a substantial increase in the salary threshold, Sanford added.

The company's 40 administrators, who are salaried and currently exempt from overtime, often spend time outside of their communities running errands for residents, visiting hospitalized residents, attending funerals of former residents and performing other similar tasks, he said.

“This often results in willingly working more than 40 hours per week yet is the reason we hear from them frequently that they ‘love to do what they do,' ” Sanford wrote.

Reclassifying administrators as nonexempt employees, he said, might “jeopardize their personal satisfaction by limiting and tediously tracking the many inspiring activities they enjoy as part of their responsible position.”

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