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Health Law Alert: Major Change in Overtime Law on the Horizon

January 14, 2016

The Fair Labor Standards Act is the federal law that establishes overtime-pay requirements for public and private employers, including health care providers. Under the law, non-exempt employees must receive overtime pay for all hours worked over 40 in a workweek at a rate not less than time and one-half of their regular rate of pay. Health care service employers often are able to avoid overtime premiums for many employees under the so-called “white-collar exemptions,” which apply to employees who make at least $23,660 annually and who perform certain qualifying job duties. 

All of this may soon change. In June 2015, the Department of Labor unveiled a proposed rule that seeks to increase the current minimum salary requirement for the white-collar exemptions from $23,660 per year to $50,440 per year. The DOL received over 250,000 comments on the impact of the proposed rule, including modification requests from various national health care organizations. A final rule likely will be issued in July 2016, but there has been no indication on when the new rule would officially take effect. It also is unknown at this time whether any suggestions from the comments will be included in the final rule. 

If the rule is enacted as proposed, health care service providers across the country will be impacted drastically. Many employees are not paid $50,440 annually, which means that employees making less than that amount would have to be paid time-and-a-half for all hours worked over 40 in a workweek. All health care providers should prepare themselves for the changes that are coming.