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Medicaid-Funded Providers Beware! The DOL’s Time Limited Non-Enforcement Policy Does Not Apply to Private Causes of Action

In conjunction with unveiling its Final Overtime Rule, the DOL announced a Time Limited Non-Enforcement Policy (“Policy”) for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds. Under the Policy, from December 1, 2016, to March 17, 2019, the DOL will not enforce the updated salary threshold of $913 per week for this subset of employers.

The Policy applies only to DOL enforcement actions. The FLSA, however, provides employees with the right to bring a private cause of action.  The Policy, which does not change the effective date of the rule for Medicaid-funded employers, provides no protection from such lawsuits (including class actions) by employees who have been paid less than the updated salary threshold.

Thus, Medicaid-funded employers “protected” by the Policy, will have the same legal obligation to comply with the new salary threshold as of December 1 as every other employer and back pay liability will begin accruing as of that date.

The statute of limitations for FLSA violations is 2 years, unless the violation is willful, in which case the statute of limitation is 3 years.  Keep in mind that the FLSA provides double damages for private litigants and also attorneys’ fees and costs.  Accordingly, employees whose employers misclassify and underpay them in reliance on the Policy, may be incentivized to wait to file suit until after March 17, 2019 – when their potential recovery will be the greatest.

As such,  the Policy does virtually nothing to provide relief to Medicaid-funded employers, who will remain between a rock (the DOL’s higher salary threshold) and a hard place (Medicaid contracts that contain no mechanism for additional funding to meet new salary obligations) – and arguably, will lull employers into a false sense of security that could prove quite expensive.

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About this Author

Maxine Neuhauser, EpsteinBeckerGreen, Life Science, Employment, Health Care
Member

MAXINE NEUHAUSER is a Member of the Firm in the Labor and Employment and Health Care and Life Sciences practices, in the Newark office of Epstein Becker Green. Her practice focuses on litigation and providing strategic advice and counsel to regional, national, and international corporations, in multiple areas of law, including labor and employment, intellectual property and non-competes, and health. Ms. Neuhauser has represented clients in numerous, diverse industries, including financial services, aviation, managed care, life sciences, and retail. She also represents...

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