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What the Proposed Overtime Rule Might Mean for Senior Living Providers

According to, the average caregiver’s salary is about $26,000. If caregivers work full-time and are paid hourly, they enjoy the perks of overtime pay. But salaried caregivers can work many hours of overtime a week and not see any difference in their paychecks.

Last month, President Obama proposed an overtime rule that could change all of that by qualifying more people for overtime pay.

Overview of the Proposed Overtime Rule

Currently, the threshold for overtime pay is $23,660. This means that only salaried workers who are at or below this threshold qualify for overtime pay. The proposed rule expands that number to $50,440, which would affect nearly 5 million full-time workers, including most senior caregivers. This is a long overdue attempt to adjust for inflation — it’s only the second time the threshold has changed since the 1970s.

What the Overtime Rule Might Mean for the Senior Living Providers

The goal of the new overtime rule is to grow the middle class. The current threshold is below poverty level for a family of four, but the new rule would help hard-working people in the lower and lower-middle class have more of a chance at financial success.

As far as senior living providers are concerned, it’s no secret that healthcare workers work long and hectic hours. Under the new rule, most, if not all caregivers who work full-time would qualify for overtime pay.

As McKnight’s editorial director John O’Connor points out, the rule would “leave many operators with two difficult options”:

  • They could pay more overtime. This would dramatically increase senior living providers’ labor costs, which in some cases already account for 75 percent of a facility’s operating budget. This could have serious consequences for seniors and their families: long-term care is already beyond the means of many.
  • They could replace full-time staff with part-time workers. This could also have consequences. High turnover is already one of the biggest problems facing senior living providers, and cutbacks would likely not help the situation. O’Connor writes: “You don’t have to be a labor expert to see what that kind of adjustment is likely to do to morale, care quality, and staffing woes.”

The rule is not yet law, but it likely will be by early next year — the administration does not need congressional approval for it. What will this rule mean for your community and what are you doing to prepare for it?