Special Report — Complying with Wage and Hour Regulations

The SESCO Report July/August, 2022 (Part 2 of 3*)

Common Misconceptions and Compliance Issues

SESCO is available through a Professional Service Agreement or through a per diem fee to conduct a thorough Wage and Hour as well as HR and employment law audit. Contact SESCO to learn more about our Professional Service Agreement and services provided to clients in all industries across the country — [email protected] or 423-764-4127.

Calculating Overtime

Misconception 1: If an employee is taking more breaks than we allot by policy, we can deduct those additional breaks from their pay. An employer cannot make deductions from an employee's pay who take short breaks or who take more breaks than what policy allows if the breaks are less than 20 minutes. If an employee takes any break during the day regardless of policy that is less than 20 minutes, the employer is required to compensate the employee. Please note that the Fair Labor Standards Act does not require employers to provide break or meal periods.

Misconception 2: We must pay an employee based on their clocked hours even though they may clock in early or clock out late. An employer is not required to pay an employee should they arrive early, clock in and not perform any work until it is time. SESCO recommends to utilize the 7/8 rounding method as well as implement policy stating that employees who clock in early or late and do not perform any work will not be compensated. As labor costs are your largest controllable costs, it is critical that department heads/managers/HR professionals review all time records before processing payroll. Time records can be changed/altered to reflect actual time worked and SESCO recommends that both the manager/HR Director and employee sign off stating that true and accurate hours have been recorded.

Misconception 3: If a timecard states that the employee has been paid for 48 hours, we must ensure that overtime is paid based on their regular rate for these eight (8) hours of overtime. An employer must only pay overtime for actual hours worked in excess of 40 hours per week. For example, if an employee works 40 hours in a given workweek and is paid an additional eight (8) hours for a vacation day, no overtime is required to be paid on the eight (8) hours of non-working time, re: vacation day.

Misconception 4: We have to pay overtime for break times if an employee is at work over 40 hours in a workweek. Break times will not be considered hours worked if they satisfy the following:

  • The break is more than 20 minutes if it is a rest break or more than 30 minutes if it is a meal break.
  • The employee is completely relieved from duty; for example, a meal break is not spent answering phones, working at their desk, working at the computer, watching over a machine.
  • The employee is free to leave his or her work station.

Misconception 5: We do not have to pay an employee who works overtime, because it was not pre-approved. No, you must pay for all hours worked even if not pre-approved. The Wage-Hour Investigator will deem that the business benefited from the employee's work and that you knew or should have known that they were performing work. However, SESCO suggests a very strong, direct policy in the employee handbook discussing overtime and not working overtime unless approved. Further, disciplinary action is the most efficient way to address these types of issues.

Misconception 6: We have an exempt employee who works less than 40 hours per week; however, because they are exempt, we must guarantee the salary basis of $684 per week. The only requirement for compensation, even if the exempt employee works less than 40 hours, is to pay at least minimum wage. You do not have to pay the position the $684 per week. However, if the position works more than 40 hours per week, to avoid non-compliance, you must guarantee them the $684 per week to avoid overtime payments.

Misconception 7: Some of our employees work 24-hour shifts. They may not work all 24 hours as we do give them time to sleep and eat. However, because we require them to be at our place of business, we must pay them for 24 hours. Sleep time and meal periods will not be considered hours worked if they satisfy the following:

  • The employee is on duty 24 hours or more
  • The employee and the employer agree to exclude from work hours bona fide meal periods and a bona fide, regularly scheduled sleeping period of not more than eight (8) hours.
  • The employer provides adequate sleeping facilities and employees usually can enjoy uninterrupted sleep period.
  • Should a sleep period be interrupted and the employee is awakened and asked to perform work, that time is counted as work. If the employee gets five (5) hours of sleep, the entire sleep period of eight (8) hours can go unpaid.

*Tune-in next week for Part 3 of 3 
 

Whole Person Health: What You Need to Know

What is whole person health?

Whole person health involves looking at the whole person—not just separate organs or body systems—and considering multiple factors that promote either health or disease. It means helping and empowering individuals, families, communities, and populations to improve their health in multiple interconnected biological, behavioral, social, and environmental areas. Instead of treating a specific disease, whole person health focuses on restoring health, promoting resilience, and preventing diseases across a lifespan.

Why is whole person health important?

Health and disease are not separate, disconnected states but instead occur on a path that can move in two different directions, either toward health or toward disease.

On this path, many factors, including one’s biological makeup; some unhealthy behaviors, such as poor diet, sedentary lifestyle, chronic stress, and poor sleep; as well as social aspects of life—the conditions in which people are born, grow, live, work, and age—can lead to chronic diseases of more than one organ system. On the other hand, self-care, lifestyle, and behavioral interventions may help with the return to health.

Chronic diseases, such as diabetes, cardiovascular disease, obesity, and degenerative joint disease, can also occur with chronic pain, depression, and opioid misuse—all conditions exacerbated by chronic stress. Some chronic diseases increase the immediate and long-term risks with COVID-19 infection. Understanding the condition in which a person has lived, addressing behaviors at an early stage, and managing stress can not only prevent multiple diseases but also help restore health and stop the progression to disease across a person’s lifespan.

Is whole person health being used now in health care? . . .

Read Full Article
 

Health Prices Rising Much Faster in the Private Sector than Medicare

Axios | By Caitlin Owens

Health care prices overall may be lagging inflation, but there's a widening divergence between what's being paid in Medicare and the private sector, according to a new Altarum analysis.

Why it matters: Privately-insured Americans are about to pay more for their health care, if they aren't already.

The big picture: Economy-wide inflation has outpaced health care inflation over the last year — an anomaly, since medical prices typically rise faster.

  • Last month, overall prices were 8.5% higher than in July 2021, but prices for medical care were only 4.8% higher, per KFF.
  • Medical prices have risen by 110.3% since 2000, whereas economy-wide prices have risen by 71%.

Yes, but: July also saw a substantial divergence in what Medicare and the private sector pay for goods and services, which essentially cancelled each other out in the aggregate, according to the Altarum analysis.

  • Medicare prices fell by almost an entire percentage point last month, which dropped them below where they were in January 2021.
  • The drop was due to low or no increases in the reimbursement rates for hospitals and physician services, which are decided by the federal government, and mandatory cuts for Medicare provider payments kicking in this year.

In the private sector, the opposite happened: prices rose last month and reached 5.4% above what they were in January 2021.

  • "We believe many of these increases are occurring as new contracts or updated rates are slowly taking effect, and further expect there may be a noticeable discrete jump in private prices beginning in 2023," the authors write.
  • Hospital rates have risen the most and are 7.2% higher than January 2021. They've risen by nearly a full percentage point in each of the past three months alone.
  • Faster increases within the hospital sector may be a result of greater negotiating power with insurers amid ongoing consolidation, the authors note.

The bottom line: There's already a huge difference between what Medicare and private insurers pay for health services, and that disparity is on track to only grow.
 

COVID-19 PHE Expected to Extend to End of 2022

Partnership for Medicaid Home-Based Care

The COVID-19 public health emergency (PHE) is expected to be renewed for another 90 days beyond October 13 as the Biden administration did not issue a 60-day notice that it will terminate the PHE in August. However, we speculate that absent a COVID-19 surge this fall or winter that the PHE will likely end in January [2023].
 

CMS: ACOs Saved Medicare $1.6B Overall in 2021 as Big Changes on the Horizon

Fierce Healthcare | By Robert King
 
Accountable care organizations saved Medicare $1.66 billion last year as value-based care providers brace for potential major changes to the program like new health equity measures.
 
The Centers for Medicare & Medicaid Services (CMS) announced [last] Tuesday that 2021 was the fifth year in a row that ACOs generated overall savings for Medicare and met quality targets. The announcement comes roughly a month after the agency proposed several changes to entice smaller ACOs to enter the program and prevent an erosion of participation. 
 
“Accountable Care Organizations are a true Affordable Care Act (ACA) success story, and it is inspiring to see the results year after year,” said CMS Administrator Chiquita Brooks-LaSure in a statement.
 
CMS reported that 99% of all ACOs in the Medicare Shared Savings Program (MSSP) met quality standards, and approximately 58% earned shared savings for abiding by spending targets. An ACO agrees to take on a certain degree of financial risk and to meet spending and quality benchmarks.
 
The ACO gets a share of any savings if Medicare spending is below the benchmark and must repay the federal government if it spends too much. 
 
“The type of ACOs that saw more net savings tended to be low-revenue, meaning they were mainly made up of physicians, included a small hospital, or served rural areas,” according to a CMS release on the findings. 
 
A low-revenue ACO generated $237 in savings per capita while higher-revenue programs got $124 in net savings per capita. 
 
CMS also found that physician-led ACOs generated particularly high savings. ACOs that are comprised of 75% primary care physicians or more saw $281 in net savings compared with $149 in net savings for ACOs that had fewer physicians.
 
“These results underscore how important primary care is to the success of the Shared Savings Program and demonstrate how the program supports primary care providers,” CMS said.
 
CMS told Fierce Healthcare that ACOs overall generated $3.6 billion in gross savings for Medicare when not accounting for shared savings payments.
 
In 2020, ACOs generated $4.5 billion in gross savings for Medicare and nearly $2 billion after factoring in the shared savings payments. 
 
The additional savings were notable since ACOs were still facing the financial impact of the COVID-19 pandemic, advocates say. 

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