Private Duty

DOL proposes raising minimum salary requirements for worker overtime exemption

Ensure all employees are properly classified and paid appropriately based on that classification and proposed salary level changes. Doing so will ensure your agency is in compliance before finalization of a newly proposed rule raising the salary threshold for employee overtime exemption.

The U.S. Department of Labor (DOL) on March 7 announced a proposed rule that would raise the minimum salary level required for employees to be exempt from overtime from $23,660 a year ($455 per week) to $35,308 a year ($679 per week).

Employers would be required to pay overtime for employees working more than 40 hours per week whose job duties and salary level categorize them as nonexempt. Labor contends the rule will allow 1 million additional American workers to become eligible for overtime.

The increase is significantly less than changes made under the Obama administration, which raised the salary exemption levels to $47,476 a year ($913 a week). That change was ruled invalid.

In an August 2017 decision, U.S. District Court Judge Amos Mazzant concluded that the DOL had set the salary threshold so high that it essentially eliminated the criteria of job duties in determining overtime exemption. Mazzant determined that is something the DOL doesn’t have the authority to do.

Get employee classification in order

The proposed changes could mean increased scrutiny on how home health and private duty agencies pay their staff, contends Eileen Maguire, attorney at Indianapolis-based Gilliland, Maguire & Harper, P.C.

It’s not enough to pay a salary simply to avoid the question of overtime, Maguire says. Agencies still must ensure employees are appropriately classified based on their job duties.

“I think because of the new salary level there will be renewed scrutiny on the exemptions. I think agencies need to understand all the requirements,” Maguire says.

Agencies currently struggle with appropriate classification.

“Where most agencies mess up on this and get in trouble is they haven’t properly classified the employees,” says attorney Elizabeth Pearson of Pearson & Bernard in Edgewood, Ky.

For example, Pearson had an agency client that was treating a physical therapy assistant (PTA) as an exempt employee and paying the employee per visit. But the employee should not have been classified as exempt based on the PTA’s job duties.

“Getting the exemption right is critical,” Pearson says.

Changes probably won’t rock the boat

Overall, however, proposed changes likely won’t have a major impact on home health or private duty home care agencies, Pearson says.

Most clinicians in the world of Medicare-certified home health earn more than $35,308 a year and as a result the rule wouldn’t affect them, says attorney Robert Markette of Indianapolis-based Hall, Render, Killian, Heath & Lyman.

For example, the average salary for a clinical supervisor in 2018 was $83,042, while the average salary for a case manager/team leader was $78,260, according to data from the Hospital & Healthcare Compensation Service in Oakland, N.J., which publishes the 2018-2019 Home Care Salary & Benefits Report annually in cooperation with the National Association for Home Care & Hospice.

In the world of private duty, meanwhile, the rule might have “some impact” but far less than under the Obama administration’s proposal of $47,476 a year, Markette says.

“I think this is a much more manageable number for everybody,” he says. Home care aides in Medicare-certified home health and in private duty won’t be part of the requirement because they don’t fit into the three white collar exemptions, Markette says.

While private duty agency leaders could qualify, they likely already earn salaries greater than $35,308 a year and as a result the rule wouldn’t affect most of them either, Markette says.

Ensure appropriate classification

Do the following to assess whether your agency is classifying current employees appropriately and whether Labor’s changes will have any impact:

  • Review exemption requirements. While the DOL is proposing changes to the minimum salary requirement, there are no proposed changes to the job duties tests that are also considered when determining an employee’s exempt or nonexempt status. Review the requirements currently in place at https://www.dol.gov/whd/overtime/fs17a_overview.pdf
  • Conduct a job duties audit of existing employees. Once you’ve reviewed the requirements and job duties associated with each of the different exemptions, make sure each of your employees is appropriately classified.

“The most important thing is that primary duties have to be what the [Fair Labor Standards Act] describes as meeting that exempt position’s job duties,” Maguire says. Classify employees based on job duties first, then move on to the question of payment, Pearson recommends.

“Conduct both tests, not just one,” Pearson says. “Classification is the predicate. Get that right first.”

  • Evaluate the way employees are paid. Once you’ve determined how an employee is classified, then you can examine whether they are paid appropriately based on the requirements, Pearson says.

For instance, those with an executive exemption can only be paid a salary, while employees with a professional or administrative exemption could be paid by fee such as pay per visit, Pearson says.

Employees who do not qualify for one of the designated exemptions must be paid at least the federal minimum wage for all hours worked and overtime pay at time and a half the regular rate of pay for all hours worked over 40 hours in a workweek. — Kirsten Dize (kdize@decisionhealth.com)

Related link: View the proposed rule at https://www.dol.gov/whd/overtime/overtime2019-nprm.pdf