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May 20, 2016

What the new overtime rule means for health care

Daily Briefing

    The Obama administration on Wednesday released a final rule that will extend overtime pay to approximately 4.2 million workers in the United States, including hundreds of thousands of health care workers.

    Rule details

    Under the rule, which takes effect on Dec. 1, workers with annual salaries up to $47,476 will be eligible for overtime pay—almost double the $23,660 overtime income threshold currently in place. The $47,476 threshold includes employees' regular annual salaries as well as certain nondiscretionary bonuses of up to 10 percent of the threshold.

    The salary threshold will be automatically updated every three years.

    The rule will apply to employees who work more than 40 hours in one week. Employers will be required to pay qualifying employees 1.5 times a worker's usual salary for any work that is done over the 40-hour limit.

    Implications for health care workers

    According to Modern Healthcare, among health care workers, the rule most likely will affect:

    • Medical and pharmacy technicians;
    • Medical and physical therapist assistants;
    • Nurses; and
    • Paramedics.

    The average mean salaries for those professionals range from $25,710 to $47,010, Maria Castellucci reports for Modern Healthcare.

    The Department of Labor estimates that the rule will directly affect about 200,000 hospital workers and 300,000 non-hospital health care workers.

    The dangers of underpaying—or overpaying—health care workers

    The rule temporarily exempts Medicaid-funded home health care providers and health care facilities with no more than 15 beds that treat individuals with disabilities. Such providers will have to implement the rule beginning March 17, 2019.

    However, Home Care Association of America Executive Director Phil Bongiorno says most home health care providers will have to comply with the rule earlier because they are privately operated. Bongiorno predicts that the new requirements could cause financial strain for small home health care businesses, which he says could result in increased costs for services and lower employee wages.

    According to data from the Bureau of Labor Statistics, the average mean salary for home health care workers is $24,050. An estimated 470,710 individuals are employed as home health care workers, the data show.

    The rule will have some indirect effects, Melanie Trottman and Eric Morath write for the Wall Street Journal. Some employers will react to the rule by raising workers' salaries above the overtime threshold, but other employees may have their hours cut back, the Journal reports (Castellucci, Modern Healthcare, 5/18; White House fact sheet, 5/17; DOL final rule, 5/18; Starner, Healthcare DIVE, 5/18; Trottman/Morath, Wall Street Journal, 5/17).

    How to ensure financial incentives motivate staff year-round

    Individual performance goals help staff invest in organization-wide strategic priorities—but many organizations struggle to keep employees focused on goals year-round.

    The HR Advancement Center's study offers six best practices to sustain staff interest in goals through meaningful financial incentives and regular goal check-ins with their managers.


    More from today's Daily Briefing
    1. Current ArticleWhat the new overtime rule means for health care

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