Acting Secretary of Labor Patrick Pizzella.
Acting Secretary of Labor Patrick Pizzella

The final overtime rule issued Tuesday by the Department of Labor garnered favorable comments from many industry groups representing senior living organizations and other long-term care providers, although concerns remained for those serving Medicaid beneficiaries.

The new rule, which will go into effect Jan. 1, raises from $455 to $684 per week the standard salary level over which executive, administrative or professional employees are exempt from the Fair Labor Standards Act’s minimum wage and overtime pay requirements. That’s equivalent to annual wages of $35,568 for a full-year employee as opposed to the current $23,660.

The rule also increases the total annual compensation level for “highly compensated employees” from $100,000 to $107,432 per year, and it allows employers to count nondiscretionary bonuses and incentive payments, including commissions, that are paid at least annually toward satisfying up to 10% of the standard salary level.

The Labor Department estimates that 1.3 million workers will be eligible for overtime pay under the rule.

“This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers,” Acting U.S. Secretary of Labor Patrick Pizzella said in a statement.

But the National Center for Assisted Living expressed concerns, as it had in previous comments to the Labor Department, about the effect the rule will have on operators who serve Medicaid beneficiaries.

“We have concerns about the implications of this rule for senior living providers,” NCAL Senior Director of Policy Lilly Hummel told McKnight’s Senior Living. “While we supported updating the rule, we are disappointed that considerations for long-term care, especially Medicaid providers, were not ultimately included, as this may indirectly result in increasing costs to residents.”

The rule generally was well-received among other provider groups.

“We are very pleased that the department carefully reviewed comments submitted by a wide range of stakeholders, including Argentum and others in the senior living industry, to craft a rule that is fair to employees and employers,” Argentum President and CEO James Balda told McKnight’s Senior Living.

Argentum and the American Seniors Housing Association had jointly filed comments about the rule in May. “Overall, the final rule reflects the major issues Argentum sought to address,” said Paul Williams, Argentum’s vice president, government relations.

LeadingAge, too, expressed satisfaction.

“The salary threshold in the Department of Labor’s final rule is just what we recommended when DOL started working on updating the Fair Labor Standards Act requirements in 2015,” Cory Kallheim, LeadingAge vice president of legal affairs and social accountability, told McKnight’s Senior Living. “We think the final rule strikes a reasonable balance in updating Fair Labor Standards Act requirements.”

The standard salary threshold of the final rule, $684 per week, is slightly higher than the one originally proposed earlier this year by the Trump administration, which was $679 per week, or $35,308 per year. But it’s much lower than one announced under the Obama administration in 2016: $913 per week, or $47,476 per year. That one was enjoined by the courts and subsequently was invalidated.

The last time the threshold was raised was in 2004. According to the Labor Department, almost everyone who commented on the department’s 2017 request for information, participated in listening sessions last year or commented on the department’s proposed rule earlier this year agreed that it was time for a change.

“Today’s rule is a thoughtful product informed by public comment, listening sessions and long-standing calculations,” Wage and Hour Division Administrator Cheryl Stanton said Tuesday. “The Wage and Hour Division now turns to help employers comply and ensure that workers will be receiving their overtime pay.”

The Labor Department had proposed reviewing the standard salary threshold every four years but in the final rule said that it plans to update the standard salary level and HCE total annual compensation threshold “more regularly in the future using notice-and-comment rulemaking” rather than every four years.

The final rule mentions that Argentum and ASHA, in their joint letter, were among commenters on the proposed rule that had “advocated for the Department to continue its practice of updating the salary whenever it deems such updates appropriate” rather than set a specific schedule.

The final rule also mentions LeadingAge as being among “[c]ommenters who supported the proposal [and] also stated that unlike the 2016 final rule, the proposal was suitable and manageable for low-wage regions and industries, and for small businesses.”

More information about the rule is available on the Department of Labor website.