New DOL and FTC Regulations Impacting Travel Advisors: Key Changes Ahead

Advisors should be aware of two developments related to (1) Department of Labor (DOL) regulation of the overtime/minimum wage exemption for employees who are employed in a bona fide executive, administrative, or professional (EAP) capacity as those terms are defined in the Department of Labor’s regulations at 29 CFR part 541, and (2) Federal Trade Commission (FTC) regulations recently adopted to ban most non-compete clauses in employment relationships.

The DOL rule updates the wage levels that exempt certain employees from the overtime/minimum wage rules that normally apply to workers. The new rule is scheduled to take effect on July 1, 2024. It would increase the threshold salary from $684 per week to $844 per week (equivalent to $43,888 per year) to qualify a worker as an exempt EAP worker. For highly compensated employees, the annual compensation level to be exempt will increase from $107,432 to $132,964. DOL estimated that the new thresholds would affect about one million workers.

Additional increases are provided for January 1, 2025, when the salary threshold will be $1,128 per week (equivalent to $58,656 per year). For highly compensated employees, the compensation level will be set at the annualized weekly earnings of the 85th percentile of full-time salaried workers nationally, resulting in a compensation level of $151,164.

The next three-year update will take place on July 1, 2027.

A lawsuit challenging the rule was filed in a federal court in Texas and seeks to enjoin the new rule. With little time left before the rule becomes effective, the decision, if there is one, will be last minute. The history of DOL’s rules on the salary threshold is troubled, although the threshold has been increased many times over the years since it was first established. In 2016, a similar rule was enjoined by a federal judge in Texas, but in 2019, another judge upheld an updated rule. The 2019 decision was appealed and is pending.

We wrote about the FTC rule on non-competes in “The FTC Adopts Rule Banning Most Non-Compete Clauses for Workers” on May 13, 2024. If not delayed by legal action, the ban will take effect on September 4, 2024. The U.S. Chamber of Commerce and others argue that the FTC lacks legal authority to issue a rule like this one.

The uncertainty created by these challenges is unfortunate but unavoidable. The outcome of these cases is unpredictable. Travel advisors, therefore, should prepare for the rules to be upheld so that if they are, you will be in compliance. If the rules are enjoined, you can just carry on as before.