Government Affairs and Advocacy

May 6 Federal Update: Expanding Overtime Protections, Significant Updates to Federal Wage Regulations

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May 6, 2024

The U.S. Department of Labor has announced pivotal updates to the Fair Labor Standards Act regulations, marking a substantial shift in federal overtime pay requirements for salaried employees classified under executive, administrative, and professional (EAP) exemptions. Scheduled to take effect on July 1, these revisions aim to extend overtime protections by raising the salary thresholds necessary to classify workers as exempt from overtime.

The newly established regulations will initially increase the standard salary level to $43,888 annually, an adjustment based on the previous methodology from the 2019 update. This threshold is set to rise to $58,656 beginning Jan. 1, 2025. These changes reflect the department’s commitment to ensuring the salary level continues to serve its function of effectively differentiating between exempt and nonexempt employees. Moreover, the rule introduces adjustments to the compensation threshold for highly compensated employees, with scheduled updates occurring every three years starting July 1, 2027, to respond to ongoing changes in wage data.

Acting Secretary Julie Su emphasized the rule’s intent to uphold the principle that employees who work 40 hours per week should receive appropriate compensation for overtime. The adjustments seek to correct imbalances in which lower-paid salaried workers performing similar tasks to their hourly counterparts receive no additional pay for extra work hours.

This revision came after extensive consultations with various stakeholders, including employers, unions, and workers, and considered over 33,000 public comments. The updates aim to provide better pay equity and more quality time with families for those affected.

Wage and Hour Administrator Jessica Looman highlighted the rule’s benefits, stating it will bring more predictability and economic security to millions working long hours without corresponding overtime pay. By clearly defining EAP employees, the department ensures those deserving of overtime receive it, while others gain more time with their families.

The Department of Labor projects these updates will initially enhance the livelihoods of approximately one million employees, with millions more benefiting from the full implementation of the new salary thresholds. This regulatory change underscores a significant advancement in labor standards, aiming to reinforce numerous American workers’ earning potential and work-life balance.

Biden-Harris Administration Allocates $3 Billion to Eradicate Toxic Lead Pipes

In a significant move to secure clean drinking water for all Americans, President Joe Biden’s Investing in America agenda is dedicating $3 billion to replace toxic lead pipes nationwide. Announced in North Carolina, this funding is part of the president’s broader commitment, per his Bipartisan Infrastructure Deal, to eliminate all lead pipes in the U.S. within the next decade.

Lead exposure, known for its severe impact on health—particularly in children, where it can damage brain development—is prevalent in over nine million homes, schools, and other establishments that still rely on lead piping. This issue disproportionately affects low-income and minority communities, compounded by historic underinvestment in infrastructure.

The $3 billion investment is administered by the Environmental Protection Agency (EPA) as part of an unprecedented $15 billion explicitly allocated for lead pipe replacement. The initiative aims to rectify legacy health hazards and generate numerous high-quality jobs, many of which are unionized positions. This initiative aligns with the Justice40 Initiative, ensuring that 40% of the benefits from such federal investments are directed towards disadvantaged communities.

Furthermore, the Department of Housing and Urban Development (HUD) is bolstering these efforts with nearly $90 million to mitigate health hazards in public housing, encompassing threats from lead-based paint and other environmental risks.

The funding has spurred action across the states, with North Carolina alone investing nearly $2 billion in over 800 water-related projects. Additionally, significant funds are being used to test for and eliminate lead hazards in schools and child care centers throughout the state, setting a precedent for nationwide educational safety standards.

This comprehensive approach not only addresses immediate health concerns but contributes to the workforce development in the water infrastructure sector. Unions like the Laborers’ International Union of North America and the United Association of Plumbers and Pipefitters are actively training workers to replace lead pipes, highlighting the administration’s dual focus on public health and economic growth.

By fostering collaboration among federal, state, and local entities and directly engaging with communities most affected by lead exposure, the Biden-Harris administration is making a historic push toward a safer, healthier future for all Americans. This initiative promises to dramatically accelerate efforts to replace hazardous lead pipes, ensuring cleaner water and healthier communities nationwide.

Senate Finance Committee Hearing Addresses the Fallout of the Change Healthcare Cyberattack

On May 1, the U.S. Senate Finance Committee convened a crucial hearing titled “Hacking America’s Health Care: Assessing the Change Healthcare Cyber Attack and What’s Next,” with testimony from key stakeholders, including Andrew Witty, CEO of UnitedHealth Group, which owns Change Healthcare. This hearing aimed to dissect the impacts and future implications of the February cyberattack on Change Healthcare—a significant incident that starkly compromised the U.S. health care system.

Overview of the Cyberattack Impact
The cyberattack, identified as a nation-state-associated threat, led Change Healthcare to disconnect its systems to thwart further data breaches. This move, however, severely disrupted health care operations across the country. Providers could not process insurance verifications, claims, or payments, significantly straining the health care delivery system. According to an American Hospital Association survey, over 90% of hospitals reported financial repercussions, with more than 70% noting direct impacts on patient care.

Statements from Senate Members
Senator Mike Crapo emphasized the extensive disruption caused by the attack, highlighting the federal government’s delayed response, which exacerbated the situation. He stressed the importance of learning from this incident to bolster cybersecurity measures across the health care sector.

Senator Ron Wyden criticized UnitedHealth Group for its inadequate cybersecurity measures as well as the lack of transparency and accountability in the aftermath of the attack. He pointed out the broader implications of such cybersecurity vulnerabilities, emphasizing the necessity for stringent cybersecurity standards and enforcement within the health care industry.

Testimony from UnitedHealth Group’s CEO
Andrew Witty expressed profound regret over the incident, detailing UnitedHealth’s immediate and extensive measures to mitigate the impact, including severing connections to affected systems and collaborating with law enforcement. Witty outlined the proactive steps taken to secure systems, ensure continuity of care, and support financial operations within the health care sector. He acknowledged the ongoing challenges but reassured the committee of the company’s commitment to restoring trust and security in its operations.

Committee’s Response and Future Directions
The hearing underscored the critical need for enhanced cybersecurity protocols and preparedness across the health care sector to prevent future incidents. Discussions focused on establishing mandatory security standards and the potential for more rigorous federal oversight and support for cybersecurity in health care.

The Senate Finance Committee’s hearing marks a pivotal moment in addressing cybersecurity in health care, highlighting the urgent need for comprehensive strategies to safeguard patient information and ensure the resilience of health systems against cyber threats. The testimonies and discussions from this hearing will likely influence future legislative and regulatory actions to strengthen the nation’s defense against cyberattacks in health care.

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