They have different structures and benefits, and the choice between them often depends on the nature of the hotel job, the employer’s preferences. and legal regulations.
Salary is a fixed amount of money paid to an employee on a regular basis, typically monthly or bi-weekly, regardless of the number of hours worked. This can provide financial stability and predictability. Many higher-level and professional positions are paid on a salary basis. This can include managers, executives, and professionals like doctors, lawyers, and engineers. Salaried employees might receive additional benefits such as health insurance, retirement plans, and paid time off. Salaried employees might have more flexibility in terms of work hours and schedule. They’re generally expected to complete their job responsibilities regardless of the time taken.
Salaried positions are often categorized as exempt or non-exempt. Exempt employees are typically professional, managerial, or administrative roles that are exempt from overtime pay and certain labor law protections. Non-exempt employees are eligible for overtime pay.
Hourly pay is based on the number of hours an employee works. They are paid a set hourly rate and may receive overtime pay for hours worked beyond a certain threshold (usually 40 hours per week in the United States). Hourly positions are often considered non-exempt under labor laws, making them eligible for overtime pay when they work more than the stipulated hours. Hourly employees’ income can vary depending on the number of hours worked. This can make it harder to predict their income from one pay period to the next.
Many part-time and temporary positions are paid on an hourly basis. This includes jobs like retail associates, food service workers, and some administrative roles. Hourly employees might have access to fewer benefits compared to salaried employees, though this can vary by employer.
Choosing between salary and hourly pay depends on factors like the nature of the job, the employee’s preferences, the employer’s needs, and legal considerations. Both methods have their advantages and disadvantages, and it’s important to consider the specific circumstances and priorities involved. It’s also important to note that labor laws and regulations can differ between countries and regions, impacting how salary and hourly pay are defined and managed.
Will Proposed DOL Overtime Changes Harm Hotels and Hurt Hotel Workers?
The Department of Labor (DOL) issued a proposal to increase the minimum salary threshold for employees to qualify as salaried executive, administrative, and professional employees (and therefore exempt from overtime pay requirements) under the Fair Labor Standards Act (FLSA). The proposal also would automatically update the threshold every three years. This would be the second increase imposed by DOL in less than 5 years. Employees who fail to qualify for the FLSA’s “white collar” exemption must be paid overtime for any hours worked over 40 in a given workweek, which can limit managerial and worker development opportunities, such as remote work, travel, and career development.
According to the American Hotel & Lodging Association (AHLA) President & CEO, Chip Rogers: “Hotels support millions of jobs and drive billions of dollars to state and local economies every year. The Labor Department’s proposal to implement yet another overtime salary threshold increase is a massively disruptive change that would create negative economic impacts for both hotel workers and employers.”
“Small business owners continue to grapple with the rising costs of conducting business and inflationary pressures. If implemented, DOL’s proposal would result not only in crushing increases in labor costs for employers, but also significant tax hikes and administrative costs as well.”
“This type of one-size-fits-all mandate from the federal government does not account at all for flexible work arrangements and new opportunities that have become common in the industry.”
“It would also reduce career growth opportunities for employees by forcing businesses to reclassify many workers from salaried to hourly, eliminate middle management positions, and/or cut workers’ hours, consolidate jobs, and create considerable upward pressure across the entire party scale that small businesses will find difficult to absorb. Moreover, the proposed rule’s dramatically abrupt implementation timeline adds additional and unnecessary burdens to small businesses struggling to manage the new regulations. We look forward to sharing the concerns and Main Street implications of these new rules with the Labor Department during the comment period,” Rogers added.
AHLA Plans to Complain
Four years ago, DOL increased the minimum salary threshold by 50.3% to $35,568, meaning that all hotel employees making under that amount must be paid overtime for any hours worked over 40 in one week.
The proposal DOL issued today would increase the salary threshold by nearly 55%, to $55,068. It also would automatically increase the threshold every 3 years by tying it to the 35th percentile of earnings for full-time salaried workers in the lowest-wage Census Region (currently the South).
AHLA plans to file comments with the agency to highlight the impact the rulemaking could have on the hospitality industry.