Third, an Oxford House must, in essence be a good member of the community by obeying the laws and paying its bills. The only members who will ever be asked to leave an Oxford House are those who return to drinking, using drugs, or have disruptive behavior, including the nonpayment of rent. No Oxford House oxford house traditions can tolerate the use of alcohol or drugs by one of its members because that threatens the sobriety of all of the members. Many of the issues raised by small businesses in the public comments received on the proposed rule are described in the preamble and RIA above, which are incorporated herein.

Table 19—Annual Transfers by Region, Year 1

The fixed-wage model assumes that the standard hourly wage is independent of the statutory overtime premium. Under the fixed-wage model, a transition of workers from overtime exempt to overtime nonexempt would cause a reduction in overtime hours for affected workers, an increase in the prevalence of a 40-hour workweek among affected workers, and an increase in the earnings of affected workers who continue to work overtime. Most of the comments objecting to or otherwise criticizing the pause mechanism seem to assume the only way the Department can alter a scheduled update or change any other aspect of the rule is through the updating mechanism’s pause provision. Nothing in the proposed updating mechanism limits the Department’s ability to engage in future rulemaking to change any aspect of the part 541 regulations at any time. The pause mechanism offers the Department added flexibility—in addition to its ability to engage in rulemaking at any time to change the rule—by allowing it the ability to delay a scheduled update as it engages in rulemaking. As the Department noted in the NPRM, the pause mechanism offers the Department 270 days—150 days before, and 120 days after, the effective date for the scheduled update—to complete the rulemaking process.

C. Overview of Existing Regulatory Requirements

• Since the updating mechanism will change the thresholds regularly and incrementally, and based on actual earnings of salaried workers, the Department predicts that employers will be in a better position to be able to adjust to the changes resulting from triennial updates.
• Such employees were excluded from the EAP exemption under every rule prior to 2019, either by the long test salary level itself, or under the 2004 rule standard salary level, which was set equivalent to the long test salary level.
• The Department believes that the pause provision will provide additional flexibility in the context of the triennial updates and will not impact the Department’s normal rulemaking powers.
• Selecting a standard salary level in a one-test system inevitably affects the impact of providing overtime protection to employees paid between the long and short test salary levels.
• In this situation, the employer may within one month after the end of the year make a payment of at least $2,164 to the employee.

Moreover, affected EAP workers who routinely work overtime and earn less than the minimum wage will be most likely to experience significant changes. The HCE test allows certain highly paid employees to qualify for exemption if they customarily and regularly perform one or more exempt job duties (the HCE duties test). The current HCE annual compensation level is $107,432, including at least $684 per week paid on a salary or fee basis. In addition, the Department excluded another 22,700 workers who qualify for one or more other FLSA minimum wage and overtime exemptions (and are not either blue-collar or hourly). The FLSA also does not cover employees of firms that have annual revenue of less than $500,000 and who are not engaged in interstate commerce. The Department does not exclude them from the analysis, however, because there is no data set that would adequately inform an estimate of the size of this worker population, although the Department believes it is a small percentage of workers.

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

The Department’s response to commenter feedback on the specific proposals included in the NPRM is provided in section V. This section explains the need for the Department to update the part 541 earnings thresholds and addresses commenter feedback on whether the earnings thresholds established in the 2019 rule should be increased. In its NPRM, the Department proposed to update the salary level by setting it equal to the 35th percentile of earnings of full-time salaried workers in the lowest-wage Census Region (the South), resulting in a proposed salary level of $1,059 per week ($55,068 for a full-year worker). The proposed salary level methodology built on lessons learned in the Department’s most recent rulemakings to more effectively define and delimit employees employed in a bona fide EAP capacity. Specifically, the Department’s intent in the NPRM was to fully restore the salary level’s screening function and account for the switch in the 2004 rule from a two-test system to a one-test system for defining the EAP exemption, while also updating the standard salary level for earnings growth since the 2019 rule. The Department of Labor (Department) is updating and revising the regulations issued under the Fair Labor Standards Act implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees.

The Department conducted a literature review to evaluate studies of how labor markets adjust to a change in the requirement to pay overtime. These studies are generally supportive of the fixed-job model of labor market adjustment, in that wages adjust to offset the requirement to pay an overtime premium as predicted by the fixed-job model, but do not adjust enough to completely offset the overtime premium as predicted by the model. Lastly, the Department proposed that the first automatic update to the new compensation levels be effective 3 years after the proposed 60-day effective date. The Department sought comments on whether the date for the first automatic update should be adjusted if it were to make an initial adjustment to any of the compensation levels. (ii) No later than the effective date of the updated earnings requirements, the Wage and Hour Division will publish on its website the updated amounts for employees paid pursuant to this part.

• The Department estimated the rule will affect 4.3 million workers (Table 13), of which 3.0 million are Type 1 workers (68.7 percent of all affected EAP workers), 704,000 were estimated to be Type 2 workers (16.2 percent), 558,800 were Type 3 workers (12.9 percent), and 94,100 were estimated to be Type 4 workers (2.2 percent).
• 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.
• As explained earlier, the Department is setting the standard salary level above the long test level to account for the shift to a one-test system in a manner that reasonably distributes the impact of this switch.
• Would increase the salary of full-time exempt workers to meet the projected threshold,” “49 percent .

business hours

The Department is finalizing the proposed standard salary level methodology and applying it to the most recent available earnings data, resulting in a salary level of $1,128 per week ($58,656 for a full-year worker). Setting the standard salary level at the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region will, in combination with the standard duties test, better define and delimit which employees are employed in a bona fide EAP capacity in a one-test system. At the same time, by setting the salary level well below the equivalent of the short test salary level, the final rule will address potential concerns that the salary level test should not be determinative of EAP exemption status for too many white-collar employees. The final salary level will also reasonably distribute between employees and their employers what the Department now understands to be the impact of the 2004 shift from a two-test to a one-test system on employees earning between the long and short test salary levels.

Figure 6—Projected Future Standard Salary Levels, Nominal and Real (Constant 2023 Dollars)

• For example, courts have sustained the position that insurance companies cannot charge landlords more for comprehensive insurance when the landlord is renting property to handicapped individuals.
• The final salary level will also reasonably distribute between employees and their employers what the Department now understands to be the impact of the 2004 shift from a two-test to a one-test system on employees earning between the long and short test salary levels.
• In Oxford House, each member equally shares the responsibility for the running of the House and upholding the Oxford House tradition.

Industry associations also typically become familiar with rulemakings such as this one and often provide compliance assistance to association members. As to inflationary concerns, as previously discussed, the Department does not expect its rule to lead to increased inflation on a national level. The goal of this rulemaking is to set effective earnings thresholds to help define and delimit the FLSA’s EAP exemption. Specifically, the Department is adjusting the salary level by setting it equal to the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South), based on the most recent year (2023) of Current Population Survey (CPS) data at the time of drafting. Using BLS 2023 data on percentiles of usual weekly earnings of nonhourly full-time workers, the standard salary level will be set at $1,128 per week.

• The Department therefore expects that most businesses will not require significant time to become familiar with these regulations, or that they will require significant time from outside consultants.
• For this analysis, the Department assumed all Type 2 and Type 3 workers were converted to hourly status to generate a realistic upper bound of the magnitude of any possible ratcheting effect.
• While some employers might have to pay the overtime premium, when combined with the 85 percent of affected employees who will receive little or no overtime pay premium because they work little or no overtime, the average pay raise over all affected employees and their employers will be much smaller than the examples presented in SBA Advocacy’s comment.
• The YMCA stated that the Department failed to explain the need for, or appropriateness of, the proposed severability provision, and RILA asserted that the Department failed to explain how the proposed rule would function if any of its provisions were declared invalid.
• The Department expects that employers will most likely need to spend little to no time making adjustments for many affected workers, such as the almost 70 percent of the employees who do not work overtime (Type 1 employees) and those whose salaries are well below the new standard salary level or only occasionally work overtime.

Figure 5—Projected Future Salary and Compensation Levels, Nominal Dollars