The U.S. Department of Labor's (DOL) final rule expands the number of employees eligible for overtime pay.
While ASTA anticipates legal challenges to the rule, which could result in a delay in its July 1 effective date, there are steps travel companies can take now to ensure compliance.
DOL regulations increase the pay threshold for guaranteed overtime. It is currently $35,568 and will rise to $43,888 on July 1st and $58,656 on January 1st.
The first adjustment in July is based on the 20th percentile of weekly earnings for full-time salaried workers in the lowest-paying census regions. Starting in January, adjustments will be based on the 35th percentile. The DOL also includes a provision to update the threshold every three years using current wage data.
Peter Lobasso, ASTA's general counsel, said small agencies will “bear the brunt” of the new regulations because they generally tend to have lower starting salaries.
Robasso said the new overtime rules are similar to those issued by the DOL in 2016 under the Obama administration. The difference: The 2016 rule was based on his 40th percentile of salaried workers, while the 2024 rule was based on his 35th percentile. The 2016 rule was blocked by a federal judge.
Robasso said the Trump administration was not in favor of the regulation, and at that point it effectively died.
Given that the 2016 rules sparked legal challenges, Robasso believes the 2024 rules are likely to do the same. And if that happens, an injunction will likely be issued.
In the meantime, Robasso recommended that government agencies take steps to comply with the new regulations.
First, he said, agency owners should review their employee classifications to ensure salaried employees are not performing duties that qualify for overtime pay.
“It is very important to note that just because you pay someone above the threshold does not mean you can treat them as exempt,” he said.
Next, owners should look at employee pay. Companies with employees near the $43,888 threshold may consider giving them raises. Robasso called it “the path of least resistance.”
But if employee salaries fall significantly below the new standards, owners may consider restructuring, Robasso said.
“There are certainly ways to make creative adjustments without significantly impacting the bottom line,” he says.
For example, you can stipulate that certain employees are not allowed to work overtime. However, Robasso noted that it could impact customer service. It's a matter of “balance,” he said.
Agencies may also consider being able to apply for an exemption from overtime rules, as long as they meet the retail definition and other criteria. ASTA lobbied for a waiver for years and won one in 2020.
“Essentially, this means that regardless of someone's job title, i.e., even if they do not qualify for so-called white-collar exemptions, we pay them at least 1.5 times the applicable minimum wage. This is interpreted to mean the state's minimum wage, which in many states is above the federal minimum wage and makes the person exempt because more than 50% of their total compensation is paid in the form of commissions. “It's possible,” Robasso said.
He said this could be a “very useful workaround.”
