NAHC Comments on DOL Proposed Rule to Increase Salary Threshold for Overtime Exemption
September 9, 2015 10:36 AM
On Friday, September 4, the National Association for Home Care & Hospice (NAHC) submitted comments to the Department of Labor (DOL) regarding its proposed rule that would change standards for Executive, Administrative and Professional exemptions from overtime compensation under the Fair Labor Standards Act (FLSA). Earlier this year, DOL issued a proposed rule that would raise the minimum compensation level to qualify for an exemption from minimum wage and overtime requirements under theFLSA (see previous NAHC Report article here for an analysis of the proposed rule). The current minimum of $455 weekly has been in place for a number of years. Under the proposed rule, levels would be automatically adjusted annually. DOL estimates that in 2016 the minimum would rise to $970 weekly ($50,440 annually).
In a letter to Mary Ziegler, Director of the Division of Regulations, Legislation, and Interpretation at the Wage and Hour Division of DOL, NAHC President Val J. Halamandaris specified several problematic aspects with the proposed rule for home care and hospice, and provided corresponding recommendations for modifying the rule to prevent disruptions in care and overall compensation for home care and hospice employees. “The harm to patients and employees triggered by that proposal can be avoided by either withdrawing it or modifying the qualifying level in line with the recommendations set out below,” Halamandaris wrote. “In addition, whatever change that DOL settles on should not be implemented without adequate lead time for home care and hospice employers to adjust within the context of the federal and state funded health care programs. That would mean that the effective date of any change should be no earlier than 24 months after the rule is final with a phased‐in approach thereafter.”
Following are the specific recommendations NAHC submitted in the letter:
1. Link any changes in minimum salary and fee basis compensation to corresponding and necessary changes in health program reimbursements.NAHC articulated the fact that “home care and hospice employers do not control the price of their services and thereby can not avail themselves of standard types of adjustments such as increasing their service price to address a new cost.” As a result, NAHC stated: “In the event that DOL proceeds to a final rule, DOL should link the changes in minimum salary and fee basis compensation to corresponding and necessary changes in health program reimbursements. This can be done through the timing of the changes and the issuance of an Executive Order to all such programs that use federal monies.”
2. Permit home care and hospice workweeks to be measured on a 14‐day basis. NAHC expressed that the “scheduling of home care and hospice services is based on patient needs, not the compensation model of the employer.” With patient needs extending to 24 hours a day, 365 days a year, home care and hospice utilizes the same management model and compensation system used by many hospitals and nursing homes, which has dedicated weekend staff with“varying shift lengths and weekend/holiday pay differentials that provide fringe benefit variances as well,”and provides “compensatory days off in order to balance workloads with patient needs.” As a result,“DOL should modify its rules” to include health care related home care and hospice into the special overtime provisions under 29 CFR 778.601. This would “permit home care and hospice workweeks to be measured on a 14‐day basis.” While DOL currently limits the overtime provision to hospitals and residential care establishments, the provision’s authorizing statute refers to “the care of the sick, the aged, or the mentally ill or defective who reside on the premises” and should apply to home care and hospice as well. NAHC stated: “Distinguishing hospital and nursing home employees from home care and hospice employees is not reasonable or rational. The measure should be whether the work is the same kind of care, by the same health care professionals, and for the same patient needs, not the type of building the where the care is provided. By applying a 134‐day workweek standard in home care and hospice, it will allow those employers the ability to manage the scheduling of their workforce to meet their patient’s needs without unnecessary barriers from FLSA rules.”
3. Limit the proposed changes in minimum weekly compensation to salary basis compensation only. Home care and hospice use a “fee basis” or “per visit” compensation model for professional health staff such as registered nurses and therapists. This compensation model allows the employee to perform work on a schedule consistent with patient needs and provides incentive earnings for the employee as the volume of patient visits increases. “With the proposed minimum compensation level to qualify for the overtime exemptions, a 7‐day workweek standard for overtime combined with per visit compensation will require home care and hospice companies to completely modify their recordkeeping on worker time,” NAHC stated. “It is estimated that such changes will double payroll management costs.” Home care and hospice providers would be required to restructure staffing to “limit overtime hours that could not be financed with current government health care program rates” and increase staffing to “fill the care voids created by limiting total work hours of any employee.” However, in many areas of the country, there is already a shortage of nurses and therapists, so the change would also limit patient access to home care and hospice. Therefore, in addition to shifting to a 14-day/80-hour standard, “DOL should limit the applicability of the proposed change in minimum qualifying weekly compensation to salary basis compensation” in order to “retain the benefits that employees, employers, patients, and government payers get through the prudent use of ‘per visit’ compensation to home care and hospice professionals.”
4. Evaluate the impact and feasibility of a geographically indexed qualifying minimum salary that reflects variations in current costs and compensation.Program payment rates often vary based on the location of the provider or the patient’s residence. Payment rates for Medicare home health benefits vary, NAHC stated, “from a low of 0.3447 in parts of Puerto Rico to 1.7709 in Contra Costa, California.” This means that “home health agencies get area specific recognition of wage costs while the employer is subject to a single national standard on the wage level needed to qualify for the overtime exemption.” As a result, employers in currently low wage index areas would need “to increase compensation far more than those in currently high wage index areas.” Therefore, NAHC recommended that DOL evaluate the impact and feasibility of a geographically indexed qualifying minimum salary that reflects variations in current costs and compensation. If such a model is feasible, DOL should modify its rule accordingly.”
To read the full letter containing NAHC’s comments on the proposed rule, please click here.