ANCOR | National Issues

ANCOR Comments on DOL Overtime and Exemption Proposed Rule (June 2003)

June 30, 2003

Ms. Tammy D. McCutchen, Administrator
Wage and Hour Division
Employment Standards Administration
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, NW
Washington, DC 20210

Re: 29 CFR Part 541

Dear Ms. McCutchen:

The American Network of Community Options and Resources (ANCOR) has a thirty-year history of working with the U.S. Department of Labor's Wage and Hour Division to better understand federal wage and hour law as it applies to private agencies that provide community supports to people with disabilities. ANCOR is the national association representing more than 700 private providers of supports and services to more than 360,000 individuals with mental retardation and other disabilities. ANCOR members provide both community-living and employment supports and services that allow children and adults with mental retardation and other significant disabilities to live and work as independently as possible in the community.

We congratulate the Wage and Hour Division on this effort to minimize confusion that currently exists concerning rules governing the white collar exemptions. We are encouraged by the research that was undertaken before the proposed rules were published and hope that the final rules will enable both employers and employees to better determine when these exemptions can be used as the Division intends. We submit the following comments in an effort to further the goal to clarify the Division's intention in regard to the limited use of the exemptions.

Overall Comments

Elimination of distinction between "regulations" and "interpretations:" ANCOR agrees that dropping the distinction between "regulations" in Subpart A and the "interpretations" in Subpart B will consolidate and streamline the regulatory text, reducing redundancies and also eliminating confusion among those who believe that the interpretations are less important and carry less weight than the regulations.

Reorganization and consolidation: The overall reorganization and consolidation appears to be helpful, but much of the language is still subjective. We doubt that these can ever be totally objective regulations.

Elimination of long and short tests and 20 percent test: Elimination of the long and short tests makes sense; as does elimination of the 20 percent limitation on nonexempt work. ANCOR agrees that continuation of the 20 percent test could result in excessive paperwork. In addition, it is difficult to determine exactly what tasks fall within the definition of nonexempt work. There are many duties, like development of reports on a computer, photocopying, faxing, and reading and responding to e-mail, that are not clearly exempt in nature, yet are directly related to the responsibilities of a majority of exempt employees. The "primary duty" language is far more appropriate and easier to administer. "Chief among many" is another phrase that might be added to §541.700, which defines primary duty.

Subpart B - Executive Employees

The Division has asked for comments regarding the continued appropriateness of requiring an exempt executive to direct the work of two or more other employees. Recommendation: ANCOR strongly supports maintaining the requirement that two or more be supervised, and that this number not be increased or decreased. We further suggest that the phrases from §541.105 requiring that this be two or more full-time employees, or the equivalent, be stated within §541.100, and that examples be added to §541.105 that will identify the businesses such as banking where fewer hours are acceptable.

There is another related issue, and that is the fact that some employers erroneously believe that the simple supervision of two or more employees is enough to establish exempt status. Recommendation: It would be helpful if a statement is incorporated in the final rule that this is a misinterpretation of the rules and that the supervision of two employees by itself is an inadequate test of exempt status.

ANCOR supports the addition of language in §541.104 (cited in the March 31st summary of the proposal) that would permit "the customary or regular leadership, alone or in combination with others, of two or more other employees." There are often multiple management levels in an organization and it is increasingly normal for a given employee to have to report to more than one supervisor, both of whom are exempt. Recommendation: While somewhat lengthy, the examples in current language in §541.105 that have been deleted in the proposed rule are also helpful and should be maintained.

The Division has also asked for comments about continuing use of the phrase: "discretion and independent judgment." Recommendation: ANCOR supports the retention of this phrase as a third alternative for meeting the "position of responsibility" language. Both of these phrases are quite subjective, but perhaps inclusion of both will somewhat reduce confusion and misinterpretation.

Sole charge executive: ANCOR strongly supports continuation of this exemption. The salary rate of $425 per week used for other exempt categories is reasonable for this exemption as well in light of the responsibility and potential longer hours of work performed by these employees. Managers of many larger group homes who supervise two or more other full-time employees or their equivalent, and who perform functions similar to those outlined in the rules at §§541.102 and 541.103 meet this exemption as it is discussed in several legal decisions. Recommendation: The examples of work expected of a sole charge executive might be expanded to include management of the budget at that location and participation in the development of the annual budget, even if this employee does not personally pay bills or have final authority for approving the budget. We believe that these duties provide a good example of the kinds of activities expected of an employee who is in charge of a physically separate branch of an enterprise.

Subpart C - Administrative Employees

As the Division has acknowledged, this is the most difficult exemption to define. We hope that the "position of responsibility" language will help. It is much stronger than "assistant to a proprietor or to an executive" and implies a higher level of responsibility, as we believe the Division intends. The examples of work listed in proposed §541.201(b) provide good guidance.

Recommendation: ANCOR requests that language be added to §§541.200 and 541.201(a) (currently in §541.2(a)(1)) that will be directed more clearly toward the human service field. Using slightly different phraseology (and we believe that the current language is stronger, so we will use that) current and proposed rules discuss an employee whose work is "directly related to management policies or general business operations of the employer or the employer's customers." ANCOR believes that the phrase: "or individuals who receive services" should be added to the end of the statement so that it would read: "directly related to management policies or general business operations of the employer, or the employer's customers or individuals who receive services." The focus in human services is on the people who receive services and supports, and with increasing frequency these individuals are described as "customers." The suggested additional language would clarify that employees whose work is directly related to the general business operations concerning individuals who receive services and supports have the same degree of responsibility as those whose work relates to "customers" as that phrase is traditionally used in other types of businesses.

Subpart D - Professional Employees

ANCOR applauds the Division for adding language that will permit employees to be considered as professionals if their advanced knowledge "may be acquired by alternative means such as an equivalent combination of intellectual instruction and work experience." There are people who work in the field of human services who fall into this category of professional.

Recommendation: ANCOR would like to see two categories of employees added to the listing of professionals in §541.301(e). These are Qualified Mental Retardation Professionals (QMRPs) and case managers. These are professionals whose duties, we believe, generally meet the primary duty requirement for learned professionals and their roles are critical to the management and general business operations related to the employer's clients who receive services. Since this latter language is from §541.200, it is possible that case managers, in particular, should instead be considered a "combination exemption" under §541.707, in which case we would like to see these employees listed in that section.

Qualified Mental Retardation Professional is a term found in the Medicaid rules that govern services provided in intermediate care facilities for people with mental retardation (ICFs/MR). It is one of those newer professions, like those in the computer and other growing industries, that has arisen in the last few decades. A college degree and experience in the field are essential to be certified in this position, which has been defined in federal rules since the mid 1970s. The rules found at 42 CFR §483.430 describe a QMRP as an individual: "who (1) Has at least one year of experience working directly with persons with mental retardation or other developmental disabilities; AND (emphasis ours) (2) is one of the following: (i) A doctor of medicine or osteopathy; (ii) A registered nurse, (iii) An individual who holds at least a bachelor's degree in a professional category specified in paragraph (b)(5) of this section. Paragraph (b)(5) lists the following degrees: occupational therapist; physical therapist; master of social work; speech-language pathologist; audiologist; recreation therapist (with a bachelor's degree in recreation or in a specialty area such as art, dance, music, or physical education); professional dietician; or a human services professional (with at least a bachelor's degree in a human services field, including, but not limited to: sociology, special education, rehabilitation counseling, and psychology). To be designated a QMRP, these professionals further "must be licensed, certified or registered, as applicable, to provide professional services by the State in which he or she practices." The rule goes on to state that: "Those professional program staff who do not fall under this jurisdiction of State licensure, certification or registration requirements must meet the qualifications [established by the recognized national association in the respective profession]."

The ICF/MR rule at §483.410(a) requires that: "Each client's active treatment program must be integrated, coordinated and monitored by a qualified mental retardation professional." The Interpretive Guidelines under this section require that each QMRP engages in the following duties:

Observes individuals [served], reviews data and progress, and revises programs based on individual need and performance;
Ensures consistency among external and internal programs and disciplines;
Ensures service design and delivery which provides each individual with an appropriate active treatment program;
Ensures that any discrepancies or conflicts between programmatic, medical, dietary and vocational aspects of the individual's assessment and program are resolved;
Ensures a follow-up to recommendations for services, equipment or programs; and
Ensures that adequate environmental supports and assistive devices are present to promote independence.

The Interpretive Guidelines specifically state that ICF/MR surveyors must: "View the person serving in the QMRP role as pivotal to the adequacy of the program the individual receives, since it is this role that is intended to ensure that the individual receives those services and interventions necessary by competent persons capable of delivering them. The paramount importance of having persons competent to judge and supervise active treatment issues cannot be overstated."

Recommendation: ANCOR believes that it is clear from this federal regulatory language that the Department of Health and Human Services considers these individuals bona fide professional personnel, conveying upon them major responsibility for directing the supports provided to people served in an ICF/MR. It is up to them to coordinate the work of other professionals, which is often a difficult task for some other professionals, like physicians who are not used to having their orders and recommendations challenged, as is sometimes required of the QMRP. Their role is more overarching than that of physical or occupational therapists, or even registered nurses, and has significant professional status in the field of developmental disabilities. QMRPs should be formally recognized as professionals by the Wage and Hour Division as well.

Case managers also play a pivotal role in the delivery of services to people supported by human service organizations. Many of their duties are not very different from those cited by DHHS for QMRPs in ICFs/MR. In almost all cases, a degree in social work or a related field is the basic requirement; in some agencies this must be a masters level degree. It is possible that some individuals may be employed as case managers who have a degree in another related area and who, through experience and/or additional education, have attained the level of knowledge required to perform case management duties. This is consistent with proposed Wage and Hour Division language which indicates that the advanced knowledge "may be acquired by alternative means."

Case managers are not the employees who provide direct support, but instead evaluate assessments of the needs of the people who are supported by their agency; assure that the appropriate supports are provided to address those needs; contact and arrange for services from professionals where required; coordinate services; provide follow-up to assure that the recommended services, equipment or programs are provided; and review progress to identify necessary changes in the services provided.

Recommendation: ANCOR believes that case managers with degrees have the level of advanced knowledge necessary for, and reach the level of responsibility required of exempt learned professionals. If it is determined that they do not qualify for the professional exemption, surely they qualify for a combination exemption under both the professional and administrative categories. Their work clearly relates to the "management and general business operations of the employer" and the employer's clients, is "of substantial importance" to the agency for which they work, and requires a "high level of skill and training." Many human service organizations could not exist without the participation of these highly qualified employees. Their work clearly "affects the employer's general business operations to a significant degree." We hope that these employees will be considered bona fide exempt employees.

Subpart G. Compensation Requirements

Highly compensated employee salary level: The proposed special rule for highly compensated employees establishing a salary of $65,000 or more annually will not be of much use in the field of human services where salaries of most exempt employees are much lower. However, ANCOR appreciates the Department's reliance on data and its reasonable decision to set this level at the 80th percentile of current exempt salaried employees.

Salary basis test: ANCOR supports the rules established for the salary basis test. It is important that when employers expect exempt employees to work more than 40 hours a week when required by demands of the job, that there be some quid pro quo consideration that will benefit employees when duties do not require 40 hours of work.

ANCOR supports the provision that permits deductions for any hours taken as unpaid FMLA leave without affecting the exempt status of the employee.

ANCOR also strongly supports the new provision that would permit an exception to the no pay-docking rule for deductions from pay for full-day disciplinary suspensions for reasons such as sexual harassment or workplace violence. These are particularly important in the human service field where harassment and violence, including verbal and psychological forms, are generally directed toward the people receiving services, rather than other employees. These situations generally do not reach the level of "serious danger" required under current rules, but are equally as important and represent violations that necessitate disciplinary action in the human service field. Recommendation: ANCOR believes that it would be useful to add the term "abuse" between "sexual harassment" and "violence," and include the types of behavior mentioned above as examples of those for which disciplinary suspension of pay in full-day increments will be permitted.

Maintaining records of hours worked: There is an area not addressed in the proposed rule but which is often cited as a prohibition for exempt employees, and that is maintaining records of hours worked. This is particularly troublesome in the human service field. It is not unusual for state and local funding sources to require substantiation of staff support to maintain funding levels. As a result, agencies must often submit records of hours worked not only by nonexempt, but for exempt employees as well. We would like to point out that exempt employees who receive extra compensation for working excessive hours (new §541.604, §541.118(b) in current rules) must also keep a record of hours worked, and such payments are permissible without defeating an employee's exempt status. Recommendation: ANCOR would appreciate acknowledgement in the final rules that requiring exempt employees to keep records of actual hours of work does not result in loss of the employee's exempt status, as long as it does not result in partial-day or other inappropriate reductions in salary when an employee works fewer than 40 hours a week.

Substitution of personal or sick leave payments: Another area that is not addressed in current rules is permission to substitute personal or sick leave payments in lieu of the salary, whether for a full day or partial day off. Recommendation: ANCOR understands that the Division has taken the position that the substitution of personal leave or sick leave payments within the salary is acceptable, and it would be useful to have language to that affect appear in the rule or its preamble.

We hope you will give our recommendations serious consideration in the preparation of the final rule. If you have any question, please feel freed to contact me at 703-535-7850, or via e-mail at sgalbraith@ancor.org.

Sincerely,

Suellen R. Galbraith

Suellen R. Galbraith
Director of Public Policy