Department of Labor Issues New Regulations Expanding Eligibility for Overtime Pay
Last week the U.S. Department of Labor (DOL) announced new regulations that should dramatically affect employers such as hospitals, small and large medical practices, and other care facilities in the healthcare industry by expanding the number of employees potentially eligible for overtime pay. The new regulations are effective December 1, 2016. Before that date, most healthcare employers will need to make some tough decisions about how to make sure their pay practices are legally compliant while economically sensible.
As a general matter, one of the legal requirements for an employee to be exempt from overtime pay eligibility is that he or she is paid a threshold amount of weekly pay — as of now, $23,660 per year. The DOL’s new regulation more than doubles this threshold to $47,476. In other words, after December 1, 2016, those employees that are currently salaried and exempt from the law’s overtime pay requirement will be entitled to overtime pay unless the employer pays them $47,476 per year ($913 per week).
The healthcare industry is likely to be more affected than other industries because it has a greater number of lower paid but currently overtime exempt employees, such as individuals involved in administration, billing, and nursing. After December 1st, those currently exempt employees that earn less than $47,476/year will be entitled to overtime under the new regulation. Employers have several options for addressing this legal change such as: (1) reorganizing workloads or adjusting schedules to avoid having an employee exceeding 40 hours in a pay period; (2) raising salaries to meet the new $47,476 per year threshold; (3) paying overtime; or (4) adjusting the amount of an employee’s earnings to reallocate it between regular wages and overtime so the amount paid to the employee remains the same. The best option will depend upon the particular circumstances, the facilities’ or practices’ needs and operations.