Millions of full-time healthcare workers will be eligible for overtime pay under a new federal rule that nearly doubled the threshold at which companies can deny it. But not all in the healthcare industry are cheering the news.
The new Obama administration rule is expected to affect a total of 4.2 million workers. The increase to $47,476 will start this December and will affect employees who clock in more than 40 hours a week. The policy updates rules that date back to the 1930s and require employers to pay 1.5 times a worker's regular salary for any work past 40 hours a week.
Healthcare professions that will likely be affected by the overtime threshold increase are nurses, medical and physical therapist assistants, medical and pharmacy technicians, and paramedics. Average mean salaries in these professions range from $25,710 to $47,010. That includes approximately 4.1 million workers, according to 2015 data from the U.S. Bureau of Labor Statistics.
Medicaid-funded home-care providers for individuals with disabilities or facilities with 15 beds or fewer are exempt from implementing the new rule until March 17, 2019.
But most home-care providers will likely be unaffected because those businesses are often privately operated, said Phil Bongiorno, executive director of the Home Care Association of America, which represents 2,500 home-care providers.
Bongiorno said he predicts that the overtime threshold hike will cause financial strain for small home-care businesses, leading to increased costs for services and less pay for staff.
“We're limiting hours and shifts, and caregivers are actually making less,” Bongiorno said.
Average mean salary for home healthcare services is $24,050 with approximately 470,710 employed in the profession, according to May 2015 data from the Bureau of Labor Statistics.
Joel Rice, a partner focused on employers at Fisher & Phillips, said small businesses will likely raise salaries for employees close to the upper limit. Other employers may adjust hours or decrease pay as a result, he said.
Rice noted the December deadline gives employers sufficient time to adapt to the overtime ruling. The Obama administration first proposed the increase last year.
Labor Secretary Tom Perez said the administration took several steps in the final rule to address business concerns: The threshold was lowered from the original proposal of $50,440; bonus payments can count toward the threshold; and the rule will have a long phase-in before taking effect Dec. 1.