ASTA Petitions Labor To Remove Agencies From “Blacklist”
by Richard D’Ambrosio /Photo: deuxconsulting
The American Society of Travel Agents (ASTA) Friday formally petitioned the U.S. Department of Labor (DoL) for removal of travel agencies from a regulatory “blacklist” that blocks agencies from utilizing an exemption from federal overtime rules.
On May 19, the president signed an update to a DoL rule that increased the salary threshold at which a business needs to pay overtime, from $23,660 to $47,476 per year, with automatic increases in future years. Industry estimates place the average travel agent salary at about $38,000, so agency owners could see more of their employees eligible for overtime under the rule, which goes into effect Dec. 1, 2016.
Many business categories with a valid “retail concept” are exempt from paying overtime. Travel agencies and other businesses that the DoL considers not eligible for this “retail or service establishment exemption (RSE),” are listed on what ASTA calls a “blacklist.”
“Travel agencies are the very picture of a retail business, so we think it’s indefensible that agencies have been held to ‘lack a retail concept’ since 1970 and thus are denied use of the retail exemption from overtime rules,” said Zane Kerby, ASTA president and CEO, in a statement.
To qualify for this exemption, a business must be “recognized as retail…in the particular industry” and have at least 75% of annual sales “not for resale.” Further, employees must be paid at least 1.5 times the applicable minimum wage and more than half of the employee’s earnings must consist of commissions.
In 1997, a federal court found in favor of a travel agency in Reich v. Cruises Only, Inc., stating that DoL’s regulations “excluding a travel agency from those establishments possessing a retail concept appear to be arbitrary and without any rational basis.”
In a 41-page petition submitted Friday, ASTA said “relief sought by ASTA for travel agencies is warranted because the blacklisting was unjustified when adopted, is unjustified now, has been rejected in the courts and is easy to correct.” In addition to making changes to the regulation itself, ASTA is asking Labor to issue a formal “Administrator Interpretation” stating that it will follow the decision in Reich v. Cruises Only, Inc. and make changes to Labor’s Field Operations Handbook, to bring local Labor employees in alignment with any changes.
Kerby noted that if ASTA is successful, agencies on an individual basis would still need to demonstrate that they meet the RSE requirements to avoid paying overtime under these rules. “It will provide some relief from the new rules for some agencies,” said Kerby. “But travel agencies are clearly ‘retail’ and should have an opportunity to claim the RSE exemption if they qualify for it.”