Department of Labor to Proposes Changes to Overtime Exemption for Salaried Workers
May 14, 2015 04:00 PM
The Obama Administration is making good on its promise to significantly change worker rights to minimum wages and overtime compensation. On May 5, 2015, the U.S. Department of Labor submitted a proposed rule for review by the Office of Management and Budget (OMB). That proposal would modify the standards for the application of overtime exemptions for professional and executive personnel who are paid on a salary basis. While the specifics of the proposal are not public, it is expected that the rule change would raise the minimum salary level required for an application of the exemptions and tighten the standards for determining whether and employee is a “professional” or “executive.”
The current minimum salary necessary to qualify for the exemptions is $455 per week. That level was set in 2004. Previous to 2004, the minimum salary level was $155 or $250 per week depending on the employee’s duties. The Administration had expressed concerns that individuals with wages less than $24,000 a year were being required to work an extensive amount of hours without additional compensation. In March last year, President Obama indicated that he wanted the standards to be updated and ordered the Department of Labor to begin work on a revision of the rules.
Speculation abounds on the content of the proposed rules, but many observers expect that the minimum salary level for qualification for the exemptions will likely double. A number of Washington think tanks have called for increases much higher and some Members of Congress have called for a salary level of $69,000.
The Department Labor under the Obama Administration has frequently shown interest in heightening worker wage protections. Along with the DoL effort to eradicate the companionship services and live-in domestic services exemptions, a more restrictive standard for the salaried executive or professional exemptions would be consistent with the President’s goals.
Home care and hospice, like many other industries, makes use of the salaried executive and professional exemptions. For instance, many companies pay professional clinical staff a base salary equivalent to the minimum exemption level and then add compensation on a per visit basis to incentivize productivity. If the salary minimum is raised significantly, home care and hospice companies will be handicapped in using this compensation method effectively.
The proposed rule will likely be released by OMB in a matter of weeks. At that point, the opportunity for public review and comment will begin. NAHC encourages its members to get prepared to evaluate the impact of the rule change on their business so that effective comments can be prepared. Gaining a full understanding of the number and makeup of staff currently subject to an exemption along with the number of hours worked by such staff is a good starting point. When the proposed rule is issued, providers can then evaluate the impact on an employee by employee basis.
NAHC will provide updates on any developments involving the proposed rule.