Archives     Advertise     Editorial Calendar     Subscribe     Contact Us    


The New 9 to 5


 

Changes in Overtime Rules have Employers Scrambling for a New Game Plan by Dec. 1

A new overtime regulation issued pursuant to the Fair Labor Standards Act could impact countless hospital employees and other healthcare workers, and employers expect to feel the pinch. On Dec. 1, an estimated 4.2 million Americans now classified as exempt employees could be reclassified as non-exempt workers who are eligible for overtime pay.

Who will it Impact?


Yarnell Beatty

"Employers need to be looking at each job description," advised attorney Yarnell Beatty, vice president of Advocacy for the Tennessee Medical Association. "Those virtually certain to be affected are office workers, LPNs, home health aids, and anyone assisting other professionals with their duties. You'll also have individuals like coders and insurance and billing staff whose salaries might be below the threshold now. There are a lot of things that could happen."

The new rules will raise the current exempt employee salary threshold from $455 per week or $23,660 annually to $913 per week or $47,476 annually. That means employees who make less than $913 per week will be eligible for overtime irrespective of their job duties. Salary minimums will be automatically updated every three years with the first update scheduled for January 1, 2020.

Who will be Exempt?

Employees will be exempt from overtime rules if they meet the new salary level test as well as the standard duties test, which did not undergo changes in this final rule. Under the standard duties test, exempt employees include those classified as a bona fide executive, administrative, professional or outside sales employee.

Another exemption covers those who meet either the weekly salary requirement or make $27.63 an hour and work as a computer systems analyst, computer programmer, software engineer, or other similarly skilled worker in the computer field. There also is an exemption for qualified inside and outside sales staff, which does not include a weekly salary requirement, and is not affected by the new regulation. Highly compensated employees (typically physicians and other diagnosing professionals) currently receiving compensation of at least $100,000 ($134,004 beginning Dec. 1) are also exempt from the overtime requirements.

More Changes


Reid Estes Jr.

Dickinson Wright attorney Reid Estes Jr., member and practice department manager for Labor and Employment, anticipates many employers will switch exempt employees to non-exempt status to avoid a hefty salary hike necessary to preserve the exemption. But for salaried professionals who are accustomed to flexible schedules or working remotely, the move might not be a welcome one.

"If the company makes the decision to reclassify formerly exempt employees, they're going to shift job responsibilities and start tracking hours and will have to have a mechanism in place to track those hours," Estes said. "A lot of managers will see this as a demotion."

Another possible scenario is that pay increases to preserve exempt status might trigger a domino effect, requiring employers to adjust pay upstream. "If you're a manager and everyone under you gets a pay increase, we're going to see salary compression to where the manager is now making less relative to those he or she supervises, which will require adjustments too," he said.


What's an Employer to Do?

Beatty said employers operating close to their margin would have to strategically examine practices like the scheduling of non-exempt employees. "If you have an after-hours component, consider not scheduling the same non-exempt employees for both Saturday and Sunday," he advised. "Look at the cost benefit of paying overtime costs for those newly eligible instead of raising salaries above the threshold."

He also recommended enacting new policies to put a box around overtime and to make sure access to remote technology is controlled so 40 hours isn't exceeded. Employers also should correct errors in payroll immediately so they won't have time to accumulate before an employee starts complaining. Some might institute a 37-hour workweek schedule to allow for some wiggle room or replace full-time, non-exempt positions with part-time positions - a more doable solution for large employers.

"You might also take formerly salaried employees and pay a lower wage but guarantee pay for more than 40 hours, even if they work less," he said. Consider cutting base salaries or raising borderline salaries above the threshold, and look at your bonus structure. Employers also might give bonuses quarterly instead of annually and utilize non-discretionary bonuses and incentive pay to satisfy up to 10 percent of the salary level as allowed by the new rule.

Whatever the solution, it has to be legitimate. "If you're making changes in things like job descriptions to get around a rule, it can't be a paper fiction," Beatty warned. "Start preparing now. Read the rules and do a real assessment of impact. Identify those individuals who will newly come into the requirements of the rule. Do the math and figure out ways to make sure you're not getting yourself in a situation where the bottom line could be impacted, and you'll have to shut doors or cut staff or services. It's all a numbers versus rules exercise."

What Employers Should do Now

Courtesy of the Tennessee Medical Association

  1. Make sure all employees are properly classified as exempt or non-exempt. All employee job descriptions need to be updated and accurate as to what each employee actually does. If downsizing has occurred and an employee no longer supervises others, for example, this should be corrected in a revised job description.
  2. Identify employees who will, or likely will, become overtime eligible on Dec. 1.
  3. Look at your current overtime expenditures vis-à-vis what they might be estimated to be when the rules go into effect. Pay close attention to employees with a salary range near the threshold.
  4. Train staff members who move from exempt status to non-exempt on how the office tracks the amount of time worked.
  5. Update and revise policies. Make sure outdated policies like awarding "comp time" off for overtime worked are removed.
  6. Budget for any cost increases based on any additional employee eligible for overtime when the rules go into effect.
  7. Evaluate staff employment benefits. If a position is reclassified, then benefits might change if your practice has different benefits depending on exempt or non-exempt classification.

RELATED LINKS:

TMA

Dickinson Wright

 
Share:

Related Articles:


Recent Articles

The 2019 Legislative Agenda

A new governor and many new legislators make 2019 a learning year as the state's top healthcare organizations seek to address a number of old issues and tweak some new solutions unveiled last year.

Read More

Updated Cholesterol Guidelines Take a Personalized Approach

The American Heart Association and American College of Cardiology released updated cholesterol clinical guidelines in November 2018, taking a more nuanced approach to care over a patient's lifetime.

Read More

Sharing Data, Saving Lives

In an increasingly connected medical ecosystem where patient safety, health status improvement, and provider reimbursement are impacted at every point along the continuum, the need to efficiently, securely share data appears to have reached a tipping point.

Read More

New Rules in Heart Disease

A number of guideline changes and updates warrant more education around statin use and blood pressure monitoring, but local cardiologists say the higher standards are a game changer.

Read More

Dr. Ashish Shah: A Heart for Transplant Patients

Dr. Ashish Shah is the driving force behind the growth and innovation at one of the nation's busiest heart transplant programs.

Read More

Heart Monitor

Cardiovascular news of note.

Read More

ECMO Program Thriving at TriStar Centennial

A TriStar Centennial, a team approach is key to hospital's successful ECMO program.

Read More

Alexander Looks for Innovation, Asks Council Fellows for Input

Sen. Lamar Alexander asks stakeholders and future leaders to weigh in on ways to improve health outcomes, lower costs.

Read More

CMS Utilizes Dartboard Approach to Modernizing the Medicare Drug Benefit

Controlling pharmaceutical prices remains a hot topic, judging from the 6,415 comments received in response to the CMS proposed rule: "Modernizing Part D and Medicare Advantage to Lower Drug Prices and Reduce Out-of-Pocket Expenses."

Read More

A Conversation with LHC Director Molly Vice

Every company should have a succession plan. LHC plays a key role in planning for the next generation of leaders for an entire industry.

Read More

Email Print
 
 

 

 


Tags:
Dickinson Wright, Fair Labor Standards Act overtime rule, M. Estes Wright Jr., Tennessee Medical Association, Yarnell Beatty
Powered by Bondware
News Publishing Software

The browser you are using is outdated!

You may not be getting all you can out of your browsing experience
and may be open to security risks!

Consider upgrading to the latest version of your browser or choose on below: