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White House Releases New Rule on Overtime for Office Staff

By Stephen Tweed

Well, here comes another overtime rule that will affect home care leaders.  The White House revealed on Tuesday (5-17-16) the details of a sweeping change in how salaried workers will be paid going forward.

You’ve all heard about the Department of Labor rule change that eliminated the Companionship Exemption for overtime for home care workers. Under that rule change, home care companies must pay overtime for caregivers working more than 40 hour per week, and must pay them minimum wage.

This new rule will essentially doubles the salary threshold for salaried office employees.  In the past, anyone making $23,660, or about $455 a week and performing certain types of administrative or professional work were exempt from overtime.  In many cases, schedulers in home care companies fit into this category, and the schedulers have not been receiving overtime pay if they work more than 40 hours taking on-call evenings and weekends.

The new rule increases that salary threshold to $47,476 or about $913 per week.  That means if you have office staff making less that the $47, 476, you will need to pay them on an hourly basis and pay overtime after 40 hours.  It also means that your office staff will have to “punch a time clock” at the beginning and end of their work day. That also means you’ll have to figure out how to pay staff members who take on-call evenings and weekends.

The Obama administration originally proposed this rule change last summer, and set the threshold at $51,544.  The DOL made concessions after receiving 270,000 comments during the comment period. Labor Secretary Thomas Perez said the salary threshold was originally intended to exempt high-paid executives.  Over the years, the rule began to impact low-level retail supervisors and entry level office workers who often work 50 to 70 hours per week.

The new rule is schedule to take place on December 1, 2016.  The Department of Labor indicated it is there intent to adjust the threshold every three years.

What This Means for Home Care CEOs

While the details of this new ruling are still coming out, and attorneys will be reviewing the rule and developing guidance, here are some things you will need to get ready for by the end of November:

  • Develop hourly pay rates for your office staff members who earn more than $455 a week.
  • Develop a time and attendance tracking process so that office workers can “clock in” and “clock out.”
  • Set up a system to track how much staff members work when they are taking on-call evenings and weekends.
  • Set up a system to determine the “regular rate of pay” when offering bonuses or paying at different rates for different work

For example, If you pay one rate for regular hours in the office, but a lower rate for taking on-call, then you will need to calculate the “regular rate of pay” to then determine the overtime amount.

Bonuses

For purposes of calculating overtime pay, section 7(e) of the FLSA provides that non-discretionary bonuses must be included in the regular rate of pay. Non-discretionary bonuses include those that are announced to employees to encourage them to work more steadily, rapidly or efficiently, and bonuses designed to encourage employees to remain with the agency. The regular rate of pay must be recalculated each pay period if the worker receives a bonus or has different rates of pay.

Here’s a Fact Sheet from the DOL Wage and Hour Division that explains this overtime calculation.

Stay tuned to the Home Care CEO Forum for updates on the application of this rule, and how other CEO Round Table Members are adapting to it.

To participate in our monthly Virtual CEO Round Table conversations on the most relevant topics in home care, become a Member of the Home Care CEO Forum.

 

 

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