Overtime exemption rule threatens future of disability services

Providers of Medicaid-funded services are facing a dire threat to their ability to provide quality residential and day services for people with intellectual and developmental disabilities and autism. The proposed U.S. Department of Labor’s Overtime Exemption Rule threatens to be the straw that will break the camel’s back for many providers who are already seriously challenged by a myriad of federal, state, and local unfunded mandates.

This regulation, which is currently being finalized and is expected to be released later this year, would update the Fair Labor Standards Act (FLSA) to more than double the salary threshold at which workers are exempt from overtime requirements, with the salary level increasing automatically over time. According to an analysis performed by Avalere, a highly respected national consulting firm, this rule, if finalized as proposed, will cost Medicaid providers serving this population between one and two billion dollars.

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Though no doubt well-intended, if this rule is implemented as proposed and no additional funding is provided, many providers will have to make painful choices about the services they can provide. And some are likely not to survive this hit.

To be clear, neither I nor any of the 1,000 providers my association represents are opposed to paying our employees more. Direct support professionals and other employees of community service providers serve a critical function in their communities and the work they perform requires patience, skill, and dedication. They deserve robust compensation, along with benefits and opportunities for professional development. Quality services require a stable workforce – trusted, skilled workers to assist people to access their communities, obtain employment, and help with  the most basic and deeply personal needs.

But the way providers are funded makes this nearly impossible. Most providers, overwhelmingly nonprofits, are funded almost entirely by state and federal Medicaid dollars. They have no power to negotiate higher rates, even as operating costs rise and demand for services increases. As a result, most states have seen little to no increase in funding for these programs in the last decade, with many states being forced to cut funding during the Great Recession. This means that providers have almost no margin to absorb cost increases and no ability to raise wages without dramatically cutting back the services they provide.

Without additional funding, the added costs of the Overtime Exemption Rule would leave many providers with the Hobson’s choice of cutting the wages of their non-exempt staff, including direct support professionals, serving  fewer people, or both. At a time when more people than ever rely on these services to continue to live in their communities – with thousands more on waiting lists across the country – this would be devastating.

ANCOR agrees that the Overtime Exemption Rule should be modernized and the salary level increased, but unless it is accompanied by additional funding for providers or approached more gradually, it will harm the very workers it seeks to protect, as well as the people who rely on them. That is why we are calling on Congress to pass legislation to provide states with temporary assistance to increase Medicaid funding support for providers accordingly so that they can afford to comply with this rule and other unfunded mandates like it. Until adequate funding can be provided for publicly funded providers to comply with this rule, we urge the Department of Labor to implement a more manageable threshold and a rule that increases the salary threshold more gradually.

We take our mission of supporting people with intellectual and developmental disabilities to fully participate in their communities seriously. We urge Congress and the Administration to recognize the threat this regulation poses to our ability to continue to fulfill this mission, and work with us to fund the future of crucial disability services.

Merrill is the CEO of the American Network of Community Options and Resources (ANCOR), a national trade association representing more than 1,000 private providers of community living and employment services to more than 600,000 individuals with intellectual and developmental disabilities, and employing more than 500,000 direct support professionals and other staff.

 

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