American Hotel & Lodging Association (AHLA) President & CEO Chip Rogers is speaking out today after the Department of Labor (DOL) issued a proposal to increase the minimum salary threshold for employees to qualify as salaried executive, administrative, and professional employees (and therefore exempt from overtime pay requirements) under the Fair Labor Standards Act (FLSA). The proposal also would automatically update the threshold every three years. This would be the second increase imposed by DOL in less than 5 years. Employees who fail to qualify for the FLSA’s “white collar” exemption must be paid overtime for any hours worked over 40 in a given workweek, which can limit managerial and worker development opportunities, such as remote work, travel, and career development.
“Hotels support millions of jobs and drive billions of dollars to state and local economies every year. The Labor Department’s proposal to implement yet another overtime salary threshold increase is a massively disruptive change that would create negative economic impacts for both hotel workers and employers,” said American Hotel & Lodging Association President & CEO Chip Rogers. “Small business owners continue to grapple with the rising costs of conducting business and inflationary pressures. If implemented, DOL’s proposal would result not only in crushing increases in labor costs for employers, but also significant tax hikes and administrative costs as well. This type of one-size-fits-all mandate from the federal government does not account at all for flexible work arrangements and new opportunities that have become common in the industry. It would also reduce career growth opportunities for employees by forcing businesses to reclassify many workers from salaried to hourly, eliminate middle management positions, and/or cut workers’ hours, consolidate jobs, and create considerable upward pressure across the entire party scale that small businesses will find difficult to absorb. Moreover, the proposed rule's dramatically abrupt implementation timeline adds additional and unnecessary burdens to small businesses struggling to manage the new regulations. We look forward to sharing the concerns and Main Street implications of these new rules with the Labor Department during the comment period."
BACKGROUND
Four years ago, DOL increased the minimum salary threshold by 50.3% to $35,568, meaning that all employees making under that amount must be paid overtime for any hours worked over 40 in one week.
The proposal DOL issued today would increase the salary threshold by nearly 55%, to $55,068. It also would automatically increase the threshold every three years by tying it to the 35th percentile of earnings for full-time salaried workers in the lowest-wage Census Region (currently the South).
AHLA plans to file comments with the agency to highlight the impact the rulemaking could have on the hospitality industry.