A controversial regulation that would increase overtime pay for an estimated 4.2 million American workers starting Dec. 1 will be pushed back indefinitely as a result of a Texas federal judge’s ruling this week.
U.S. District Judge Amos Mazzant, in the Eastern District of Texas, granted a preliminary injunction stopping implementation of a Department of Labor (DoL) rule that would have raised the annual salary threshold at which a worker becomes eligible for overtime to $47,476 from $23,660.
Key business organizations and 21 states had challenged the overtime rule expansion, arguing that the Labor Department was stepping outside of its federal agency role in implementing the rules.
The American Society of Travel Agents has been preparing for the implementation of the rule, while simultaneously trying to exempt travel agencies from it. DoL has included travel agencies on a “blacklist” of industries that are deemed to “lack a retail concept” and thus can’t qualify for the Retail or Service Establishment rule “under any circumstances.” On Aug. 9, ASTA formally petitioned DoL for removal of travel agencies from the blacklist.
The long-standing Retail or Service Establishment (RSE) exemption in current law could help some travel agencies avoid the costs and complexities that will come from complying with the new overtime rules. To qualify, the employee must work at an establishment “recognized as retail…in the particular industry” and where at least 75% of annual sales are “not for resale,” and must be paid at least 1.5 times the applicable minimum wage, more than half of it in commissions.
“This is a victory for small business owners and should give them some breathing room until the case can be properly adjudicated,” said Juanita Duggan, CEO of the National Federation of Independent Business (NFIB), in a press statement. According to NFIB research, 44% of all U.S. small businesses employ at least one person who would be eligible under the rule.
NFIB and a number of other business groups filed suit in the U.S. District Court for the Eastern District of Texas in September, seeking to block implementation of the rule. A coalition of 21 state attorneys general filed a separate action in the same jurisdiction. The court combined the cases. NFIB has made a motion for summary judgement, to state if the rule is even legal.
In recent months, travel agents, restaurants and retailers have been preparing for the regulation by raising salaries, altering roles and schedules. ASTA has held numerous webinars, posted helpful information on its website, and hosted a discussion on the subject at its Global Conference in Reno this September.