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Time Limited Non-Enforcement Policy for a Subset of Medicaid-Funded Providers


The Department of Labor's Final Overtime Rule updates the salary level required for the executive, administrative, and professional ("white collar") exemption to ensure that the Fair Labor Standards Act's (FLSA) intended overtime protections are fully implemented, and it provides greater clarity for workers and employers. The final rule updates the salary threshold under which most white collar workers are entitled to overtime compensation to equal the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage Census region, currently the South. The final rule will raise the salary threshold from $455 a week ($23,660 for a full-year worker) to $913 a week ($47,476 for a full-year worker) on December 1, 2016.

This information is intended to provide more information on the Department's announcement of a Time-Limited Non-Enforcement Policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.


Frequently Asked Questions

  1. When does the Overtime Final Rule take effect and how long will the non-enforcement policy last?
  2. Why is the Department issuing a non-enforcement policy with respect to the Overtime Final Rule for certain providers of Medicaid-funded services?
  3. Who is covered by this non-enforcement policy?
  4. What is this non-enforcement policy? What does it do exactly?
  5. Will the Department provide technical assistance during the non-enforcement period?
  6. Does the non-enforcement policy apply to all provisions of the FLSA?





1. Q. When does the Overtime Final Rule take effect and how long will the non-enforcement policy last?

A. The effective date for the Overtime Final Rule is December 1, 2016. The Department of Labor (the Department) is, however, implementing a limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. This non-enforcement period will last from December 1, 2016, to March 17, 2019.


2. Q. Why is the Department issuing a non-enforcement policy with respect to the Overtime Final Rule for certain providers of Medicaid-funded services?

A. The Department supports the goal of providing services to individuals with intellectual or developmental disabilities in integrated settings that support full access to the community and the provision of services through small, community based settings that maximize individuals' autonomy, quality of life, and community participation. The Department and the U.S. Department of Health and Human Services (HHS) have engaged in appropriate interagency discussions regarding the interaction between the aforementioned goal, the Overtime Final Rule and HHS' policy and regulatory priorities. During these communications, HHS expressed particular concerns about the Final Rule's impact on residential homes and facilities for individuals with intellectual or developmental disabilities with 15 or fewer beds. HHS also expressed concern that the effective date of the Overtime Final Rule could affect the federal government's efforts to encourage the use of such community-based providers, that the timing of the Final Rule could undermine compliance efforts of this subset of home and community-based services (HCBS) providers coming into full compliance with the HCBS Final Rule issued by the Centers for Medicare and Medicaid Services (CMS) published on January 16, 2014 (see 79 FR 2948), and that providing this subset of Medicaid-funded providers additional time to implement these requirements could help mitigate potential budgeting and implementation concerns for these providers. Based on these discussions, we believe that providers covered by this non-enforcement policy face a unique combination of challenges. The goal has been to shift care of individuals with intellectual or developmental disabilities to small community-based settings while also meeting the timeline for implementing the HHS rule impacting HCBS providers. In addition to the aforementioned unique challenges, these settings lack some of the flexibilities other employers can use to comply with the rule. They may have small staffs, are dependent on Medicaid funding in state budgets, and serve vulnerable populations. Providing this subset of providers of Medicaid-funded services additional time to transition and seek technical assistance on the Overtime Final Rule without being subject to Department enforcement of the new salary threshold may mitigate some of these challenges and concerns.

The Department appreciates that other providers of Medicaid-funded services and other small entities may also require time to implement the Overtime Final Rule. In recognition of this, the Department set a delayed effective date of more than 180 days after publication of the Final Rule to provide time for covered entities to come into compliance.


3. Q. Who is covered by this non-enforcement policy?

A. This policy extends to providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. Under the policy, from December 1, 2016, to March 17, 2019, the Department will not enforce the updated salary threshold of $913 per week for this subset of employers.


4. Q. What is this non-enforcement policy? What does it do exactly?

A. The Department, during the non-enforcement period, will not bring enforcement actions against providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds for their failure to pay minimum wage or overtime to an employee who is paid on a salary basis, is paid a salary of not less than $455 per week, and who performs the duties of an exempt executive, administrative, or professional employee. During this non-enforcement period, however, the Department will enforce the Overtime Final Rule as to this subset of employers, where an employee meets the salary basis and duties test and earns less than $455 per week (the salary threshold that had been applicable under the 2004 Overtime Rule) and will enforce all other provisions of the Overtime Final Rule and the Fair Labor Standards Act as to these employers.

The non-enforcement policy will allow the Department to devote its time and resources to providing assistance to these employers, and in particular allow such employers to work with their state legislatures and HHS, so they can make thoughtful decisions about how to implement the Overtime Final Rule (concurrent with their implementation of the HCBS Final Rule issued by CMS).


5. Q. Will the Department provide technical assistance during the non-enforcement period?

A. During the period covered by the 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 Department will also continue to update and expand its comprehensive overtime website.


6. Q. Does the non-enforcement policy apply to all provisions of the FLSA?

A. No. The non-enforcement policy only applies to these providers with respect to the revised salary level ($913 per week) set in the Overtime Final Rule. It does not apply to any other alleged Fair Labor Standards Act (FLSA) violations by these providers. This includes employees paid on other than a salary basis (as defined in the Department's regulations), employees who do not meet the duties test for exemption, or employees paid on a salary basis of less than $455 per week for whom the employer claims the white collar exemption.