Travel agents are assessing a new Department of Labor (DOL) proposed rule that would make more than a million more American workers eligible for overtime.
Under the proposed law, employers would be obligated to pay overtime to anyone below a standard salary level of $679 per week (equivalent to $35,308 per year) when they work more than 40 hours per week, up from the current law where the salary threshold is $455 per week ($23,660 annually).
Depending on their job duties, some employees below that threshold may not have the right to earn overtime. The current salary level was set in 2004.
The Department estimates average transfers to employees to be approximately $429.4 million per year over the first ten years under the new rules. It also estimates that direct costs to employers to comply will total approximately $120.5 million per year over the first ten years, including regulatory familiarization costs, adjustment costs, and managerial costs.
The rule, DOL believes, also would prevent approximately 211 lawsuits against employers by the government every year, saving a total of $138.2 million per year in litigation costs.
The proposed regulation has been submitted to the Office of the Federal Register (OFR) for publication, and is currently pending placement on public inspection at the OFR and publication in the Federal Register. The public has 60 days to comment on the proposed regulation from the date of publication.
“Our economy has more job openings than job seekers and more Americans are joining the labor force,” said Secretary Alexander Acosta. “At my confirmation hearings, I committed to an update of the 2004 overtime threshold, and today’s proposal would bring common sense, consistency, and higher wages to working Americans.”
The American Society of Travel Advisors (ASTA) is awaiting publication to comment on it. ASTA vigorously lobbied against a much higher threshold ($47,476 per year) set by the DOL under the Obama Administration in 2016, a rule that eventually was struck down in a Texas court.
In an announcement, the DOL said it had “received extensive public input from six in-person listening sessions held around the nation and more than 200,000 comments that were received as part of a 2017 Request for Information (RFI).
“Commenters on the RFI and in-person sessions overwhelmingly agreed that the 2004 levels need to be updated,” said Keith Sonderling, acting administrator for the Department’s Wage and Hour Division.
The rulemaking proposal also includes “a commitment to periodic review to update the salary threshold,” as well as allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level. The rule also proposes no changes to the job duties test.
Travel advisor “blacklist” issue still unsettled
The proposed rule also raises again the issue of travel agencies being included on the retail establishment “blacklist,” a list of industries that must pay overtime.
ASTA maintains that existing DOL rules release agencies from having to pay overtime under any rule because they already meet DOL and Internal Revenue Service exemptions. For years, ASTA has been lobbying Congress and the DOL to reexamine why the government includes travel agents on the blacklist.
In 2017, Representative Francis Rooney (R-FL 19th) introduced The Travel Agent Retail Fairness Act to remove travel agencies from the blacklist. While many other members of Congress joined Rooney in co-signing the bill, it hasn’t progressed through the necessary committees, a difficult challenge ASTA has always acknowledged it would face.
Last year, ASTA had hoped that a Republican administration and Congress would be more amenable to helping them take agents off that list. It included the issue as one of their key measures addressed during its 2018 Legislative Day. Since then, there have been only minor movements on Capitol Hill to address the issue.
In the current rule, the DOL does not appear to address the blacklist exemption. To qualify for overtime, an employee generally must be salaried, meaning that he or she is paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”); be paid at least a specified weekly salary threshold (the “salary level test”) of $679 per week; and primarily perform executive, administrative, or professional duties, as provided in the Department’s regulations (the “duties test”).
The Department estimates that an additional 201,100 workers who earn at least $100,000 but less than $147,414 per year, and who meet the minimal duties test but not the standard duties test, would, “without some intervening action by their employers,” become eligible for overtime due to the proposed increase.
Individual ASTA members can also submit comments about the proposed rule electronically at www.regulations.gov, in the rulemaking docket RIN 1235-AA20. Comments must be submitted by 11:59 p.m. 60 days from the Federal Register publication in order to be considered.