Exempt vs. Non-Exempt: New Department of Labor Rules

Time tracking in home health and home care has always been up for discussion.  Do you use salaried employees, per visit (PRN), or do you pay hourly?  Do you pay mileage or provide an allowance?  Most agencies have decided how to handle the travel component- paying mileage to staff who travel between patient homes.  However, the wage component or how to pay your staff, is still up in the air.

 

Be thankful though – the government is here to tell you how to run your agency with more regulation.  The Department of Labor’s new overtime rule goes into effect in a few months – December 1st – and is going to likely have a devastating effect on many agencies.

 

Your employees fall into one of two very important categories, most commonly referred to as: exempt and non-exempt.

  • Exempt: An employee who is exempt is NOT eligible for overtime.
    • Current Rule: An employee who earns over $455 per week or $23,660 per year is ineligible for overtime.
    • New Rule: An employee needs to earn over $913 per week or $47, 476 per year to be ineligible for overtime.

 

  • Non-Exempt: An employee who is non-exempt is eligible for overtime. This means that employees under the current rule, who earn less than $455 a week or $23,660 per year qualify for overtime.  However, under the new rule, employees who earn less than $913 per week or $47,476 per year are now eligible for overtime.

 

For an employee to be exempt, two “tests” must be met.  Should the employee not pass or meet the standards for both tests, the employee is automatically considered non-exempt.  An employee who only meets one of the standard/tests but not the other is considered non-exempt.

  1. Duty Test: This standard is met when an employee must have a license in order to perform their work. For therapists and RNs, their education and licensing requirements typically mean they pass the duty test. For office staff, LPNs/LVNs, home health aides, companions, and respite staff, the licensing component doesn’t matter making them fail this test and, therefore, eligible for overtime.
  2. Compensation Test: Agencies who use a hybrid version of hourly and per visit pay rates are going to fail this test and be required to pay overtime. Hybrid pay methodology is likely going to need to be carefully monitored or you could find your agency has violated the new DOL rules, without any actual wrongdoing. Agencies that pay salaries to professional staff are likely to be OK and won’t have to worry.

 

Agencies need to review all existing policies and procedures related to classifying and paying staff.  The DOL is going to be looking very closely at home health and home care to ensure compliance.  As many lawsuits have already been filed and have cost agencies their entire organization and license due to labor issues, you must not let this slide or think that it can’t happen to you.  It only takes one or two employees to file a complaint and bring down your entire agency for non-compliance.  Ignorance will not be an excuse or defense in this case and your agency can be held liable.  Please contact us if you have questions on how to properly ensure compliance while not damaging your tight bottom line.

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