DOL Ruling Could Increase Travel Agent Costs

The U.S. Department of Labor headquarters. Photo: Ed Brown.

In a move that could increase compensation costs for travel agencies, the U.S. Department of Labor (DOL) has issued a notice that it plans to increase the salary level under which a worker would qualify automatically for time-and-a-half overtime pay.

DOL has proposed a new threshold of $50,440 per year, up from the $23,660 threshold currently in place since 2004. ASTA estimates that average agency employees earn approximately $38,000 annually.

The Retail and Services Establishment exemption would protect agencies from these overtime rules (to qualify, an employee must work at a retail establishment, be paid at least one-and-a-half times the minimum wage and be paid 50 percent or more by commission). Unfortunately, more than 45 years ago, the DOL placed travel agents on a “Blacklist” that prohibits them from falling under the exemption, when Labor determined that travel agencies “lack a retail concept.”

ASTA is considering filing a formal petition on behalf of its members to have agencies removed from the blacklist, said ASTA General Counsel Peter Lobasso. ASTA has been holding meetings with the House and Senate labor committees and researching legal cases that might support its case against the blacklist.

Lobasso pointed to a 1997 decision in a case against the blacklist, won by a travel agent in Florida. DOL didn’t appeal the district court decision.

If ASTA cannot convince DOL to remove travel agents from the blacklist, it might be willing to accept a phased in increase, Lobasso said. No date has been set for Labor to increase the threshold, Lobasso said.