[UPDATED] Labor Rule to Increase Overtime Burdens on Home Health Providers

Overtime pressures for home heath care agencies will increase following the Department of Labor’s (DOL) final rule on overtime requirements for salaried employees issued this week.

The rule increases minimum salary requirements for overtime exemptions for salaried workers from its current level of $23,660 per year, or $455 per week, to $47,476 a year, or $913 per week. The long-awaited rule will take effect December 1, 2016. Home health care agencies with salaried employees under that new threshold will have to pay overtime wages—1.5 times an employee’s regular rate—for labor beyond 40 hours within a workweek.

“It’s going to be a significant administrative burden, more so for home care and hospice because the nature of the business is visit-based in many ways,” William Dombi, vice president for law at the National Association of Home Care and Hospice (NAHC), told Home Health Care News. “We expect that the institution of tracking time is going to be a major task for home care agencies.”

The rule, which has not seen a salary adjustment since 2004, could impact millions of Americans. While the Obama Administration has been working on bumping the salary cutoff for some time, the issue has been embattled since the DOL proposed significantly raising the threshold last year.

While minimum wage and overtime protections are already implemented for hourly home care workers, the latest rule – known as the “other” overtime rule – affects salaried employees who may have previously been making too much to be eligible. As a result, home health agencies are largely expected to react similarly to the salary exemption limit compared to the changes to hourly workers, including possibly cutting hours to avoid overtime limits, modifying compensation methods by switching from a per-visit basis, or a combination.

“Home health agencies are going to have to pay attention to this rule because of the nature in which they compensate professional staff,” Dombi said. “Many home care companies pay on a per visit basis, and they don’t track hours. Businesses are going to look at all the options – raising the compensation level above the exemption, cutting and tracking hours, modifying the compensation method or simply paying overtime. A business might do a combination of all those.”

However, Medicaid-funded home care agencies that serve individuals with intellectual or development disabilities will have until March 17, 2019, to implement the new rule, according to the Labor Department. DOL will engage in outreach with these agencies for technical assistance during the time-limited, non-enforcement policy. The policy also extends to Medicaid-funded residential care facilities with 15 or fewer beds.

Multiple small business groups have slammed the department’s actions, warning that the effects will negatively impact multiple industries and small business interests.

“The sheer ignorance displayed by the Department of Labor in failing to heed the concerns of the nation’s small business community will result in severe repercussions that will harm workers, small businesses, housing affordability, job growth and the economy,” the National Association of Home Builders (NAHB) said in a statement. “By radically doubling the current overtime salary limit of $23,600 to $47,476, this blatant regulatory overreach will essentially hurt many of the workers the rule was meant to help.”

The group also called on Congress to pass legislation to protect small business interests amid other wage pressures across the industry.

The new salary threshold comes on the heel of numerous other wage changes impacting home health providers. About 2 million home care workers began receiving minimum wage and overtime benefits last fall following the Labor Department’s decision to extend these benefits in 2013. A lawsuit fighting that decision and its implementation has since made its way all the way to the Supreme Court, but the outcome remains in “limbo,” after the highest court delayed consideration of the case. With only eight current justices on the bench, the court is seemingly locked in a 4-4 split decision on many issues.

Written by Amy Baxter