Hotel Employees Will Be Hurt by Increase in Salary Threshold

hotel worker - image courtesy of Rodrigo Salomon Canas from Pixabay
image courtesy of Rodrigo Salomon Canas from Pixabay
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Written by Linda Hohnholz

In August, the United States Department of Labor put forward a proposal to increase the threshold for exempting salaries from overtime pay. The current threshold of $35,568 would be raised to an estimated $60,209 by 2024.

As per the department’s projections, there is an almost 70% rise, requiring all employees earning below that sum to receive overtime compensation for any hours worked beyond 40 in a week. Moreover, the DOL proposal suggests that the threshold should be automatically raised every 3 years, based on the 35th percentile of earnings for full-time salaried workers in the lowest-wage Census Region (currently the South). This proposal follows the department’s previous increase of the minimum salary threshold by 50.3% to $35,568, which occurred 4 years ago.

Jagruti Panwala, a Board Member of the American Hotel & Lodging Association and Principal of Sita Ram LLC, will present testimony tomorrow at 10:15 a.m. ET. The testimony will take place in room 2175 of the Rayburn House Office Building. Panwala will voice opposition to the Department of Labor’s (DOL) proposal to increase the overtime salary exemption threshold for executive, administrative, and professional employees as outlined in the Fair Labor Standards Act.

Ms. Panwala’s upcoming testimony before the House Committee on Education & the Workforce Subcommittee on Workforce Protections will emphasize the negative impact of implementing such a drastic change. She will address how this change would worsen the economic challenges faced by hoteliers, such as labor shortages and supply chain issues. Her statement reads as follows:

“The Department’s overtime proposed rule will have serious consequences for my business as well as my employees. It is critical to note that the proposal does not simply increase salaries for a few employees at a marginal level. Rather, an up to 70% increase will drastically impact the entire business plan well beyond compensation. The last thing small business owners want to do is lay off employees. Unfortunately, some hotels may be forced to do so because of this new rule in order to stay in business.”

American Hotel & Lodging Association President and CEO Chip Rogers stated:

“We applaud Committee Chairwoman Virginia Foxx and Subcommittee Chairman Kevin Kiley for inviting AHLA to testify on this extraordinarily harmful DOL proposal. Yet another increase to the overtime threshold would create negative economic impacts for hotel workers and employers alike. We cannot afford a massively disruptive change, particularly at a time when we’re finally starting to put the economic devastation of the pandemic behind us.”

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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