On December 1, new rules for calculating overtime issued by the U.S. Department of Labor (DOL) go into effect. Behavioral healthcare organizations could see unexpectedly higher overtime costs or even potential fines if they do not comply.
The key element of new DOL rules—and one that is likely to be particularly significant for behavioral healthcare organizations—is a much higher salary threshold that defines which employees are eligible to be paid for overtime. A higher salary benchmark means more workers will fall under the nonexempt status, meaning they are eligible for overtime pay.
In the past, employees who earned a salary of $455 per week ($23,660 per year) or more could be classified as exempt—not eligible for overtime pay. The new rules increase the salary for the exempt classification significantly to $913 per week ($47,476 per year), a level that will be adjusted for inflation periodically.
For some treatment center operations, the new overtime rules could translate into higher payroll costs as more employees clock in extra time beyond the benchmark 40 hours per week.
“There is probably going to be a pretty high rate of noncompliance [among behavioral healthcare organizations] with people continuing to work long shifts without getting paid overtime and exposing facilities to penalties,” says Harry Nelson, managing partner with Nelson Hardiman LLP, a healthcare law firm based in Los Angeles.
If they do not adjust to the new regulations, providers could find themselves subjected to Department of Labor investigations and the related attorney’s fees and fines that go with any violations, Nelson tells Behavioral Healthcare.
Providers must rethink staffing “to avoid substantially higher personnel costs” caused by a larger amount of overtime under the new regulations, he says. Smaller organizations that rely on a team of just a few people who often work longer shifts to provide clinical coverage might have to make service adjustments. Larger organizations generally have more staffing options and therefore more flexibility when it comes to personnel management and staffing shifts.
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