The FLSA sets minimum wage, overtime pay, and recordkeeping requirements for employment subject to its provisions. Unless exempt, covered employees must be paid at least the minimum wage and not less than one and one-half times their regular rates of pay for overtime hours worked. Predicted changes in implicit wage rates are outlined in Table 14, changes in hours in Table 15, and changes in weekly earnings in Table 16.

F. Steps the Agency Has Taken To Minimize the Significant Economic Impact on Small Entities

Additionally, the estimated 1 hour for regulatory familiarization represents an assumption about the average for all entities in the U.S., even those without any affected or exempt workers, which are unlikely to spend much time reviewing the rulemaking. As previously discussed, the Department’s affected worker, cost, and transfer estimates for Year 1 have accounted for the initial update and the new standard salary and annual compensation thresholds that become applicable 6 months after the initial update. Just looking at the initial update, the Department estimated the initial update to the standard salary level will affect workers who earn between $684 and $844 per week.

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Table 29—Number of Affected Workers Employed by Small Entities, by Industry and Employer Type

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Level four is the most structured model and this includes having clinical services at the home that are required for the resident to participate in. The owner or paid staff may be involved in such a way that they check on the house and administer the drug tests. They may be involved in all admissions and discharges, collect the rent/program fee, do the shopping for household items and ensure the residents are fulfilling their requirements of 12-step and self-help meetings. Oxford House follows a rule of law in making certain that its time-tested system of operation works well.

A. Updating the Standard Salary Level and Total Annual Compensation Threshold

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Average annualized direct costs will be $802.9 million with updating and $615.6 million without updating. Transfers are also a function of the number of affected workers and hence are lower without updating. Average annualized transfers with a 7 percent real discount rate will be $1.5 billion with updating and $990 million without updating. In terms of its findings, concerning employment, the author found that expansions in overtime coverage actually had little effect on employment. He also found that average weekly earnings rose by about 1.4% for salaried workers, and found no evidence that firms reduced base pays in response to changes in the overtime threshold. Concerning salary status, he found that approximately 2.6% of affected workers are re-classified from salaried to hourly status.

C. Significant Issues Raised by Public Comments in Response to the Initial Regulatory Flexibility Analysis

In a two-test system, there are four variables (two salary levels and two duties tests) that can be adjusted to define and delimit the exemption. In a one-test system, there are only two variables (one salary level and one duties test) that can be adjusted, necessarily yielding less nuanced results. Instead, the Department’s experience shows that the shift from a two-test system to a one-test system impacts employees earning between the long and short test salary levels and, in turn, employers’ ability to use the exemption for these employees.

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Table 10—Total Annual Change in Earnings for Affected EAP Workers by Provision, Year 1 (Millions)

The Department shows in Table 34 that with the exception of the accommodation and the food services and drinking places industries, if all employees at an entity are affected by the rule, compliance cost and increased wages comprise less than 1.5 percent of payroll and substantially less than 1 percent of revenues per affected small entity. Although compliance costs and increased wages might comprise 3.55 percent of payroll in the food services and drinking places industry, that is about 1.10 percent of revenues. Therefore, the Department evaluated a range of potential impacts from lowest to highest depending on whether one or all employees are affected. Furthermore, the Department evaluated the impact of regulatory compliance costs plus increased wages as a percent of payroll. Payroll is largely proportionate to the number of employees at the firm; if one entity has 10 times as many employees as another, its payroll is likely to be 10 times larger.

If, for example, an employer simply pays each affected employee the overtime premium for each hour worked in excess of 40 hours per week, without making any adjustments to wages, hours, or duties, such an approach would maximize transfers from employers to employees. However, as discussed above, the Department believes that employers will respond to the final rule by adjusting wages, hours, and duties to minimize the cost of the rule. Accordingly, the actual amount of transfers will fall well short of the transfers that would result if employers simply paid each affected employee overtime premiums without adjusting wages, hours, or duties. Supportive commenters often also emphasized that the salary level test has an important and longstanding role in helping define which employees are employed in a bona fide executive, administrative, or professional capacity. It is possible that the costs of the rule may be disproportionately large for small entities, especially because small entities often have limited human resources personnel on staff. However, the Department expects that small entities would rely on compliance assistance materials provided by the Department or industry associations to become familiar with the final rule.

  • That many commenters used the figures in footnote 3 in their comments, and the final salary level based on calendar year 2023 data is between the proposed salary level and the two estimates in the footnote, reinforces that footnote 3 in no way deprived commenters of the opportunity to meaningfully comment on the NPRM.
  • A majority of the commenters opposing the updating mechanism challenged the Department’s authority to adopt such a provision.
  • In addition to the costs discussed above, commenters raised other potential costs that could not be quantified.
  • The Department also estimates that of the remaining 45.4 million salaried white-collar workers, about 12.7 million earn below the Department’s new standard salary level of $1,128 per week and about 32.7 million earn above the Department’s new salary level.
  • In 2016, the Department conducted a similar analysis, using what the Department believes are more realistic assumptions, and found a significantly smaller potential impact.

Table 11—Minimum Wage Only: Mean Hourly Wages, Usual Weekly Hours and Weekly Earnings for Affected EAP Workers, Year 1

For example, in Pennsylvania, someone will leave a treatment center and move into a Recovery Residence. They will begin to build their life by attending some clinical services (such as IOP or therapy with a counselor). They will seek employment and gain some stability by following simple house rules and attending 12-step or self-help meetings. A few days after September 11, 2001 Oxford House officials and their attorneys had to drive to Waterbury, Connecticut for a trial to determine if seven men could continue to live in an Oxford House in West Haven, Connecticut without the instillation of a sprinkler system. The case involved Oxford House, the City of West Haven and the State of Connecticut and the issue was whether or not the particular house had to install a fire safety sprinkler system even though there was no requirement placed on families living in similar houses.

The salary level methodology adopted in this final rule ($1,128 per week; $58,656 annually) produces a salary level that is lower than the two salary level estimates provided in footnote 3 of the NPRM ($59,284 and $60,209), which were based on a quarter of data. The Department disagrees with commenters that criticized the Department for providing projected salary level figures in its NPRM. These comments overlook that the NPRM proposed a methodology for updating the salary level test, not just a salary level figure.

At the same time Oxford House follows laws in the community at large including those that prohibit others from discriminating against the existence of the individual Oxford House. Following national expansion of Oxford House™ in 1989, a number of cases or controversies have arisen as some communities or companies have attempt to treat an Oxford House™ different than an ordinary family would have been treated. Oxford House, Inc. took the lead in defending the right of any Oxford House™ to establish a house in a good neighborhood – particularly in light of the 1988 oxford house traditions Amendments to the Federal Fair Housing Act adding “handicapped” as a protected class. A watershed in those efforts was the decision by the United States Supreme Court in May 1995 in the case City of Edmonds, WA v. Oxford House, Inc. et. In that case, the Supreme Court ruled in a 6-3 decision that recovering alcoholics and drug addicts were a protected class under the handicapped provisions of the Federal Fair Housing Act Amendments of 1988. The opportunity for a house to democratically function requires periodic meetings within the house — at least once a week.

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