DOL Releases New Overtime Final Rule-Including Non-Enforcement for Some Medicaid Providers

By: Nicole Jorwic, Director of Rights Policy

The Department of Labor released the much anticipated final Overtime rule today, with the an effective date of December 1, 2016. Along with the rule, DOL announced a non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. The full policy will be published in the Federal Register next week. The non-enforcement policy will be in effect from December 1, 2016 (when the final rule goes into effect,) until March, 2019. In a call between The Arc staff and DOL and it’s Wage and Hour division, it was highlighted, that this non-enforcement timeframe aligns with the implementation timeline of the Home and Community Services final rule. This will allow HCBS Medicaid providers, who qualify, to prepare for the implementation.

From the DOL Website: Key Provisions of the Final Rule

The Final Rule focuses primarily on updating the salary and compensation levels needed for Executive, Administrative and Professional workers to be exempt. Specifically, the Final Rule:

  1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
  2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
  3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.

Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

DOL has released several documents for non-profits including guidance and a shorter fact sheet. Additional resources can be found on DOL’s website. DOL will also be hosting several webinars to provide additional information: register here.