DOL Final Rule on Overtime IDMA July 12, 2015

May 18, 2016 President Obama and Secretary Perez announced the publication of the DOL final rule updating the overtime regulations Last updated during the Ford Administration Stated goal: Ensure workers are paid a fair day’s pay for a hard day’s work Though the final rule sets a lower salary level than was anticipated, it has sent shock waves through the industry

Currently, standard salary level is set at $455 per week or $23,600 annually Current standard salary is below the poverty line for a family of 4 Effective December 1, 2016, the standard salary level will be set at $913 per week or $47,476 annually

The Final Rule doesn’t change anything other than the threshold at which overtime is supposed to be paid All other aspects of FLSA still apply Certain categories of workers such as teachers, doctors and outside sales reps continue to be exempt from the regulation

What determines if an employee is “exempt” Duties Test – EAP – Executive, Administrative or Professional Salary Test – as of 12/1/16 $913 per week To claim a white collar exemption, both tests must be met

Duties Test Executive – The employee’s “primary duty” must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise and managing 2 full-time employees as well

Administrative – The employee’s “primary duty” must include the exercise of discretion and independent judgment with respect to matters of significance Professional – (Learned or Creative) The employee’s “primary duty” must be to perform work that either requires advanced knowledge in a field of science or learning or that requires invention, imagination, originality or talent in a recognized field or artistic or creative endeavor

How is on call time treated? If an employee must remain on the premises while on call, the time is considered “hours worked” and therefore considered for the purpose of overtime If an employee can leave the premises and “engage in personal activities” while on call the hours are not compensable and therefore not considered “hours worked” and not considered for purpose of overtime

Travel time – Time spent by an employee as part of his/her principal activity, such as travel from jobsite to jobsite during the workday is considered hours worked. Training and Seminars – Attendance at lectures, meetings, training programs and similar activities are viewed as working time unless all of the following criteria are met.

Attendance is outside the employee’s regular working hours Attendance is in fact voluntary The course, lecture or meeting is not directly related to the employee’s job; and The employee does not perform any productive work during such attendance

Bonuses, commissions and incentives – for the first time employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level Incentives tied to productivity and profitability Must be paid at least quarterly

Are non-profits excluded from the Final Rule Enterprise coverage – annual revenues of at least $500,000 As a general matter, non-profit organizations are not covered enterprises unless they engage in ordinary commercial activities that result in sales made or business done that meet the $500k threshold. Activities that are charitable in nature are not considered commercial activities

However, regardless of the dollar volume of business, FLSA apples to hospitals, institutions primarily engaged in the care of older adults and people with disabilities who reside on the premises, etc. Individual coverage – An employee who engages in interstate commerce or in the production of goods for interstate commerce is covered by FLSA As little as making a phone call or opening the mail or e-mail is all that is required

What options are available? Raise salaries to maintain exemption Pay current salaries with overtime over 40 hours Reorganize workloads, adjust schedules or spread hours worked Adjust wages

DOL Time-Limited Non-Enforcement Policy Providers of Medicaid funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds Non-enforcement period lasts until March 17, 2019 $455/week threshold is still in place

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