[Federal Register Volume 81, Number 99 (Monday, May 23, 2016)]
[Rules and Regulations]
[Pages 32390-32391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11753]



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Vol. 81

Monday,

No. 99

May 23, 2016

Part II





Department of Labor





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Wage and Hour Division





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29 CFR Part 541





Defining and Delimiting the Exemptions for Executive, Administrative, 
Professional, Outside Sales and Computer Employees; Announcement of 
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 
and Defining and Delimiting the Exemptions for Executive, 
Administrative, Professional, Outside Sales and Computer Employees; 
Final Rules

  Federal Register / Vol. 81 , No. 99 / Monday, May 23, 2016 / Rules 
and Regulations  

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DEPARTMENT OF LABOR

Wage and Hour Division

29 CFR Part 541


Defining and Delimiting the Exemptions for Executive, 
Administrative, Professional, Outside Sales and Computer Employees; 
Announcement of 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

AGENCY: Wage and Hour Division, Department of Labor.

ACTION: Announcement of policy.

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SUMMARY: The Department of Labor's (Department or DOL) Final Rule 
revising the regulations for implementing the exemption from minimum 
wage and overtime pay for executive, administrative, professional, 
outside sales, and computer employees, published in the Rules section 
of today's Federal Register, will become effective December 1, 2016. 
This document announces 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. From December 1, 2016 to March 17, 2019, the 
Department will not enforce the updated salary threshold of $913 per 
week for the subset of employers covered by this non-enforcement 
policy. 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. 
This non-enforcement policy does not apply to providers of Medicaid- 
funded services for individuals with intellectual or developmental 
disabilities in residential care facilities with 16 or more beds.

DATES: May 23, 2016.

FOR FURTHER INFORMATION CONTACT: Director, Division of Regulations, 
Legislation and Interpretation, U.S. Department of Labor, Wage and Hour 
Division, Room S-3502, 200 Constitution Avenue NW., Washington, DC 
20210; telephone: (202) 693-0406 (this is not a toll-free number). 
Copies of this docuemnt may be obtained in alternative formats (Large 
Print, Braille, Audio Tape or Disc), upon request, by calling (202) 
693-0675 (this is not a toll-free number). TTY/TDD callers may dial 
toll-free 1-877-889-5627 to obtain information or request materials in 
alternative formats.

SUPPLEMENTARY INFORMATION: 

I. Non-Enforcement Policy

    Today, the Department's Wage and Hour Division issued Defining and 
Delimiting the Exemptions for Executive, Administrative, Professional, 
Outside Sales and Computer Employees; Final Rule (``Overtime Final 
Rule'' or ``Final Rule''). This Final Rule revised the regulations 
under the FLSA implementing the exemption from minimum wage and 
overtime pay for executive, administrative, professional, outside 
sales, and computer employees. These exemptions are frequently referred 
to as the ``white collar'' exemptions and are contained in 29 CFR part 
541. To be considered exempt under Part 541, employees must meet 
certain minimum requirements related to their primary job duties and, 
in most instances, must be paid on a salary basis at not less than the 
minimum amounts specified in the regulations. Among other changes, the 
Final Rule updated the salary level above which certain white collar 
workers may be exempt from overtime pay requirements from the previous 
level of $455 per week (the equivalent of $23,660 per year) to a new 
level of $913 per week (the equivalent of $47,476 per year). The 
Department set an effective date of December 1, 2016 for the Final 
Rule, explaining that this will provide employers sufficient time--more 
than 180 days--to make any changes that are necessary to comply with 
the final regulations.
    The Department and the U.S. Department of Health and Human Services 
(``HHS'') have engaged in appropriate interagency discussions regarding 
the interaction between 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 voiced concern that the 
December 1, 2016 effective date could affect the federal government's 
efforts to encourage the use of such community-based providers, and 
stated 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.
    HHS conveyed that the Final Rule coincides with implementation of 
certain provisions of its rule affecting states' provision of Medicaid 
home and community-based services (``HCBS''). See 79 FR 2948 (Jan. 16, 
2014). Among its provisions, this HHS rule requires that all settings 
for HCBS be integrated in and support the beneficiary's full access to 
the greater community and requires States and the provider 
infrastructure on which these services rely to implement necessary 
enhancements to their Medicaid home and community based systems to 
comply with these new requirements. States have until March 17, 2019 to 
implement approved transition plans under which providers must be in 
full compliance with the rule, and HHS expressed concern that the 
timing of the Overtime Final Rule could undermine compliance efforts of 
HCBS providers.
    The Department is committed to working with HHS to ensure that 
implementation of the Overtime Final Rule does not compromise its 
agency priorities or regulations. Based on these discussions with HHS, 
the Department has determined that DOL enforcement of the new salary 
threshold in the Overtime Final Rule in the period immediately 
following the December 1, 2016 effective date could have an impact on 
the use of these types of community-based facilities. Providing this 
subset of providers of Medicaid-funded services additional time to 
transition and seek technical assistance from the Department without 
being subject to DOL enforcement of the new salary threshold may 
mitigate some potential budgeting and implementation concerns.
    Providers in this subset of Medicaid-funded residential homes and 
facilities face a unique combination of challenges in balancing the 
goal of shifting care of individuals with intellectual or developmental 
disabilities to small community-based settings and meeting the timeline 
for implementing the HHS rule impacting HCBS providers, with the fact 
that these facilities are small, dependent on Medicaid funding in state 
budgets, and serve vulnerable populations. The non-enforcement policy 
will allow the Department to devote its time and resources to providing 
assistance to these providers of services at small community-based 
facilities, and will allow these employers time, if needed, to work 
with their state legislatures and HHS on implementation of the Overtime 
Final Rule.
    Accordingly, after carefully considering appropriate interagency 
discussions with HHS, the Department has decided to enact a time-
limited non-enforcement policy for providers of Medicaid-funded 
services for

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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 (the effective date 
of the Overtime Final Rule) until March 17, 2019. During this period of 
non-enforcement, the Department will not enforce the updated salary 
threshold of $913 per week for the subset of employers covered by this 
non-enforcement policy. However, the Department will continue to 
enforce all other provisions of the Overtime Final Rule as to this 
subset of employers, including in instances involving employees who 
meet the salary basis and duties tests but who earn less than the 
previous salary threshold of $455 per week. The non-enforcement policy 
does not apply to providers of Medicaid- funded services for 
individuals with intellectual or developmental disabilities in 
residential care facilities with 16 or more beds.

Regulatory Requirements

    This document is non-binding guidance articulating considerations 
relevant to the Department's exercise of its enforcement authority 
under the FLSA. It is therefore exempt from the notice-and-comment 
rulemaking requirements under the Administrative Procedure Act pursuant 
to 5 U.S.C. 553(b).
    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). The 
Department has determined that this guidance does not impose any new or 
revise any existing recordkeeping, reporting, or disclosure 
requirements on covered entities or members of the public that would be 
collections of information requiring OMB approval under the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq.

    Authority: 29 U.S.C. 216(c); Secretary's Order No. 01-2014.

Mary Ziegler,
Assistant Administrator for Policy, Wage and Hour Division.
[FR Doc. 2016-11753 Filed 5-18-16; 8:45 am]
 BILLING CODE 4510-27-P