Dear THLA Members,
Today, the Federal Department of Labor (DOL)
announced its final regulations mandating the minimum salary basis for most workers to qualify as exempt from overtime.
The new regulation increases the minimum salary threshold for overtime exemptions from $23,660 annually to $47,476 annually.
This means that for a lodging property to lawfully characterize an employee as exempt from overtime, that employee will likely have to earn an annual salary of at least $47,476. This increase is about $3,000 less than what DOL originally announced in mid-2015, but the change still amounts to 98% increase to the minimum salary basis requirement.
Effective Date and Annual Adjustments
Based on the DOL's announcement,
the NEW overtime rules become effective on December 1, 2016.
Additionally, the minimum salary threshold will be reviewed annually by the DOL, and will likely be increased further in future years.
Review Payroll, Job Descriptions, and Make Changes for Exempt Positions
We are advising our members to review what changes to your overtime policies for overtime-exempt employees might be necessary in order to comply with this new increase in the base salary requirement.
- For example, if any of your overtime-exempt employees' current annual salary is just below the new minimum threshold of $47,476, you may want to consider increasing that employee's base pay to at least the new minimum threshold. Keep in mind however, that this employee's duties must also continue to meet the other threshold requirements for an exempt employee. THLA legal department staff can help you with this analysis.
- If it makes more financial and organizational sense, you can consider converting employees who are currently overtime-exempt to an hourly wage, and pay those employees time and one-half for all hours worked in excess of 40 hours in any work week. Again, THLA legal department staff can assist on how to legally transition these employees to a different pay format.
- Another option is to hire additional employees and reduce hours for all employees to minimize the impact of any potential overtime compensation requirements.
Advocacy and THLA Legal Support
THLA continues to support the American Hotel & Lodging Association (AH&LA) and the Partnership to Protect Workplace Opportunity on this issue. We will provide you with updates should they develop, but in the meantime, please do not hesitate to contact THLA's legal department if you have any questions. You may reach us at 512-474-2996.
