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ALFA, ASHA: Proposed changes to labor exemptions will be 'harmful to industry'

September 9, 2015
by Pamela Tabar, Editor-in-Chief
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The Assisted Living Foundation of America (ALFA) and the American Seniors Housing Association (ASHA) are speaking out against the U.S. Department of Labor’s proposed changes to compensation qualifications for exempted employees, saying they will be detrimental to the senior living industry.

The labor department’s proposal includes amendments to what are called the “white collar exemptions” to overtime pay under the Fair Labor Standards Act (FLSA), including raising the minimum salary level for exempt status to $50,000—more than double the current minimum salary of $23,600.

“The proposed drastic increase in the minimum salary of exempt staff, if allowed to become final, would be harmful to employers as well as to many of their currently exempt employees, and to the senior living industry as a whole,” according to the seven-page letter the two associations co-submitted to the director of the Division of Regulations, Legislation and Interpretation at the U.S. Department of Labor. Reclassifying sectors of the workforce will be disruptive and injurious to morale, and could interrupt the flexibility needed to schedule workers for 24/7 senior care, the letter added.

The two associations specifically call out the amount of the proposed minimum salary, saying it will disproportionately affect some parts of the country, including the deep South and rural regions.

“By setting the minimum salary so high across the country and regardless of industry, the Department will force senior living employers to reclassify their currently exempt employees at disproportionately high rates. This certainly will happen in rural parts of the country and in areas where the cost of living is lower than average. The proposed new minimum salary is higher than the minimum salaries required now under any state laws. The new salary is much higher than the norm in those regions of the country where the cost of living is dramatically lower than on the coasts. In effect, the proposed rule could eliminate the white collar exemptions in significant portions of the country.”

The two groups suggest that the Department of Labor needs to consider different rules for senior care, because applying the same rules across all industries “fails to take into account the unique circumstance of Medicaid reimbursement that restricts the ability of many senior living facilities to absorb cost increases,” the letter states.

Another sticking point for ALFA and AHSA is the possibility that the Department of Labor also may try to revise the “job duties test” with a different formula, such as the percentage-of-time method. This would be problematic, the letter states, since many senior care workers perform exempt and non-exempt job duties at the same time.

The minimum salary requirements for exemption were last changed in 2004.