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Proposed Overtime Rule Could Threaten Nonprofit Providers of Disability Services

The Department of Labor will soon unveil new changes to federal overtime rules, and people across the country are raising concerns. Leaders at non-profit organizations are among those sounding the alarm on a rule that will raise costs, make it harder for workers to advance, and limit their ability to provide important services in their communities. In fact, at a field hearing in Lansing, Michigan, members of the Subcommittee on Workforce Protections heard many of these same concerns. Now, in an op-ed appearing in the MinnPost, Julie Manworren and Jon Pratt of Living Well Disability Services urge the department to pursue a more balanced approach that won’t hurt their workers or the vulnerable people they serve:

The U.S. Department of Labor is preparing to release a rule, likely in the next 90 days, that would more than double the salary threshold at which workers are exempt from overtime requirements. In addition, the salary level would increase or decrease automatically over time. This would qualify an estimated additional 20 million workers nationwide for overtime pay. On the surface it’s hard to see why this proposed rule could be a bad thing.

As longtime advocates for human rights here in Minnesota, we applaud the intention of this rule. We also have serious concerns about its potential impact on already underfunded nonprofit and publicly funded agencies and organizations. Contrary to popular misconception, many nonprofits will not be exempt from this rule, and instead will be held to the same standard as large for-profit corporations. Unlike most businesses, we cannot adjust our pricing in order to cover these new expenses.

While we support raising wages for workers, it is important that the government recognizes the devastating impact that implementing this rule will have on nonprofits like Living Well Disability Services and all Minnesota providers of community-based services for people with disabilities. Living Well Disability Services provides essential services in people’s own home, their family’s home, or in group homes to allow people to live as independently as possible. These services by definition are to be less costly than institutional alternatives and are funded almost entirely by state and federal Medicaid dollars.

This public funding is essential and it creates unique constraints. Unlike many businesses, complying with this rule will not be as simple as adjusting the price of goods sold to cover increased staffing costs. The state establishes the rate that is paid for each unit of Home and Community Based Services and, with the county, determines how many hours of care will be provided. In Minnesota these service reimbursement rates have failed to keep up with inflation and there is no plan to increase funding commensurate with the costs created by this new rule.

If the salary threshold of this rule is implemented as proposed, Living Well Disability Services’ salary expense would increase by approximately 10 percent. This investment in wages would not address our priority to maximize the compensation of our lowest wage workers who provide exceptional direct services. These employees currently struggle to meet their basic needs on the wage supported by the reimbursement rate. In order to comply with the new rule and with no additional reimbursements, providers will be forced to make significant changes that would negatively impact our ability to effectively manage our workforce and provide quality services to the people we serve.

We urge Congress and the Department of Labor to balance the equally important priorities of ensuring adequate compensation for all workers with adequate funding necessary to comply with any revision to the overtime rule. If they do not, the rule will have significant unintended consequences and it will be the most vulnerable populations who may pay the price.

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