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DOL overtime exemption rises on Dec. 1

The Department of Labor overtime regulation change goes into effect on December 1, affecting nearly every business, company and organization with employees earning less than $913 per week for full-time work. 

While we hope our members and all nonprofits are well along in their planning for this significant change to overtime exemptions and ready to fully comply as of Thursday, Dec. 1, we wanted to share some of the resources available to those who are still working on an implementation policy.

As background, the DOL issued its Final Rule earlier this year, nearly doubling the overtime exemption – in short, employees making less than $47,476 annually are now eligible for overtime when working more than 40 hours per week. The previous threshold had been $23,660. Because of the significance of the change, implementation was delayed until Dec. 1 to allow for time to make the administrative and programmatic adjustments needed to comply with the Final Rule. The official notice, which includes everything that is changing under the OT Final Rule, can be read on the U.S. Department of Labor's website.

The Department of Labor also issued Special Guidance for Nonprofits, which you can download here. A fact sheet for nonprofits is also available.

The Providers’ Council recognizes that this is creating significant challenges for many human services organizations fulfilling state contracts. A survey conducted by the Council and other human services trades this summer showed that:

  • More than 9,400 FTEs from 83 responding organizations will be impacted by this change, which could cost organizations an estimated $23 million to $26 million when factoring in paying overtime and the effects of wage compression.
  • Estimates from a few large providers that have conducted position-by-position reviews and plans have indicated the impact could be a 2 percent increase in costs.
  • Of the 83 respondents, only 27 indicated they had the financial resources to absorb the costs. Some organizations said they may need to reduce services, reduce staff, reduce the number of clients served or convert some staff to hourly and reduce hours.

When Chapter 257 rates receive their initial review or their two-year rate reviews, we expect the Executive Office of Health and Human Services to include the new threshold for overtime into their model budgets and rate calculations.

If you have additional questions about the Department of Labor's changes to overtime pay or want to share the impact it may have on your organization, please contact Bill Yelenak at the Providers' Council.