Disability Providers Exempt from Harmful Labor Law

By Frank Kineavy


Photo: Shutterstock

Providers for people with disabilities will be exempt from a new U.S. Department of Labor mandate that would have potentially hindered their services for the people who rely on them.

The new rule, effective December 1, 2016, requires employers to provide their staff overtime pay for exceeding the 40-hour workweek. “With this Final Rule, the Department will ensure that white collar employees who should receive extra pay for overtime hours will do so and that the test for exemption remains up-to-date so future workers will not be denied the protections that Congress intended to afford them,” the mandate says.

The salary threshold to qualify, based on the Fair Labor Standards Act (FLSA), jumped from $23,660 to $47,476, with automatic increases in the future. Raising the maximum for overtime pay will greatly decrease the number of workers that are exempt from receiving the benefit. It will also force employers to track and report hours of their workers earning a gross annual income within the new threshold, requiring overtime compensation to any employee earning under $47,476.

President Barack Obama, in an email announcing the changes made to the FLSA, brought up the importance of overtime pay: “If you work more than 40 hours a week, you should get paid for it or get extra time off to spend with your family and loved ones.”

But these changes caused alarm throughout the disabled advocacy community because it may force cuts within the disability service industry. Many disability service agencies’ main income source is through Medicaid, which would not be prepared to adjust to the amount of employees becoming eligible for overtime pay once the effective date passes. In turn, people with disabilities would potentially lose essential services from providers who receive salaries via Medicaid. The Obama administration responded by delaying the enforcement of the new order for disability service employers until March 17, 2019.

According to the updated rule, the delay applies to “providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.”

“Throughout the duration of this non-enforcement policy, the Department will engage in outreach and technical assistance efforts, including to providers of services in settings covered by this policy,” the revision states.

Exemption for service providers such as home and community caretakers came only after a strong push from the American Network of Community Options and Resources (ANCOR,) representing over 1,000 private agencies providing disability services throughout the U.S.

“ANCOR is gratified that the Department of Labor has listened to the concerns of providers of long term supports and services for people with intellectual and developmental disabilities in adopting its new rule on Overtime Exemption,” ANCOR’s chief executive officer, Barbara Merrill, said of the Obama administration’s efforts. “The 34-month delay in department enforcement for residential providers is an important recognition that the rule poses unique problems for our members who rely almost exclusively on Medicaid to provide services to some of our most vulnerable citizens.”

Merrill added that the delayed enforcement is “not a complete solution,” but will initiate a discussion between agencies and federal and state lawmakers to ensure that funding won’t be an issue.

The Obama administration and the disability service industry are hoping the 34-month delay will allow certain unique factors to adjust properly.

“We will be working very closely with all the chief stakeholders in this because we have to work with the Medicaid funding stream to correct the compensation schemes and you can’t do that overnight,” Labor Secretary Thomas Perez said of the exemption.

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