How New Overtime Regulations Will Affect Healthcare
By Christine Kern, contributing writer
The new guidelines will have a significant effect on healthcare costs across the board.
The White House has released details of the new Department of Labor overtime pay rules, raising the overtime exempt threshold from $23,660 to $47,476 per year. This is the cap under which most salaried workers are guaranteed overtime.
Under the new federal rule, the threshold at which companies can deny overtime was nearly doubled which will impact millions of full-time healthcare workers, according to Modern Healthcare. These changes will most significantly impact nurses, medical and physical therapist assistants, medical and pharmacy technicians, and paramedics, but will also have an effect on other layers of healthcare as well.
The new regulations also stipulate this new level will be automatically updated every three years to ensure workers continue to earn the pay they deserve. The rule will go into effect December 1, giving employers more than the 60 days than was expected to adjust to the new regulations.
The announcement included both a fact sheet and an email from President Obama on the new rule, which also raises the “highly compensated employee” threshold from $100,000 to $134,004. Over this cap, only a minimal showing is needed to demonstrate an employee is not eligible for overtime. There will be no changes to the existing “duties test,” and it will allow bonuses and incentive payments to count toward up to 10 percent of the new salary level.
According to a report prepared by Seyfarth Shaw, LLP last year, the changes will affect millions of healthcare employers and workers, particularly at the manger level, since many managers currently receive less than the new cap, particularly in certain geographies and clinical practices. They also warned, “Significant duties test changes could impact healthcare operations, where managers are expected to help out to improve patient experience.”
In an industry where there is already extreme pressure to lower costs, increase efficiency, and improve outcomes, these new regulations are only adding to the challenges of providing quality healthcare at affordable costs.
Critics of the new rule believe that they will be more expensive for employers and have a negative impact on salaried employees who are now required to track their hours to keep them under the 40-hour overtime limit.
“This is an extreme revision in the white-collar threshold,” David French of the National Retail Federation told the New York Times. “By executive fiat, the Department of Labor is effectively demoting millions of workers.”