Healthcare employers must be prepared for tough stance on overtime
Some medical professionals believe that by putting employees on salaries they won't have to pay overtime. This has not been true for decades and a new overtime rule adds teeth to Department of Labor regulations.
The Obama administration published new overtime regulations May 18 that become effective Dec. 1 and represent the first major overhaul of the exempt-from-overtime rules for a long time. The full document is 508 pages for those of you who need summer beach reading and I’ve outlined a few highlights to be used to structure your current and future workforce.
Overtime must be paid to non-exempt employees who work more than 40 hours per week unless they are exempt, according to the Department of Labor. This is not new.
Previously and until Nov. 30, an employee must fit into a certain category (executive, manager, professional) with corresponding duties (outlined in the regulation) and be paid more than $23,700 per year ($455 per week) to be exempt. There is a separate “highly paid” category and special rules for outside sales positions.
Simply calling an employee a manager is not enough to sidestep overtime. Job titles are not definitive; it is the compensation that clinches the deal, according to the final rule.
I think the biggest change announced in the Federal Register will be to boost a base salary to $913 per week with an employee who receives $47,476 per year. This marks an increase from $23,700 as noted earlier. The base salary amount will be updated every three years starting with the first update in 2020.
- Coping strategies for medical professionals:
- Raise salaries to retain exempt status
- Move non-exempt managers to hourly wages
- Adjust workloads, schedules and hours
- Adjust positions and job descriptions
- Pay a lower salary plus overtime (check the rule)
- Hire more help or outsource some duties
It is legal to comply early and to exceed the federal standards.
The Obama administration has taken a tough stance on wage-and-hour issues, referring to non-compliance as “wage theft” whether or not it’s intentional.
Wage-and-hour law works on a strict compliance standard that is set by the Department of Labor. Any problem, which includes time keeping protocols, schedule setting and failure to supervise work hours, is the fault of an employer, not the employee.
If an employee reports an incident to the government or if your organization is audited, the process can include a three-year review of payroll and time records, job descriptions and employee interviews.
Claiming someone is a salaried exempt employee but making him or her clock in-and-out is a dangerous practice because salaried employees are not supposed to punch a clock like hourly employees. It implies they are not really salaried and is seen as a ruse to avoid overtime. The best defense is to be in compliance before auditors arrive.
Any restructuring of compensation and/or workforce must be planned and completed with myriad discrimination laws in mind. Check with legal counsel on all legal questions and always check state law for state regulations.