Federal Overtime Rule Changes & More in D.C. This Week
May 19, 2016
Dear WH&LA Lodging Member:
Yesterday, WH&LA's 2016 Chairman Dan Schetter, Chair-Elect Amy Simchak, and President CEO Trisha Pugal joined with three other WH&LA member attendees (Mike Patel, Brandon Springer, and Violet Tellez) at the AH&LA/AAHOA Legislative Action Summit in Washington D.C. to lobby Wisconsin's congressional delegation on five key federal issues impacting the lodging industry in Wisconsin:
- The Just-Unveiled new Department of Labor Overtime Rules (more information below)
- Preventing "Drive-By" ADA Lawsuits by supporting House Bill H.R.3765 which creates a 60-day compliance period before lawsuits can be filed following a report on a purported ADA violation, and other measures deterring unscrupulous attorneys from blanket contacts and settlements.
- Preventing Online Booking Scams by fraudulent online booking services - supporting House Bill H.R. 4526 that helps protect travelers from booking scams.
- Short-Term Rentals Transparency - asking the Federal Trade Commission (FTC) to objectively complete and make public a study on the widespread impact of Airbnb and other platforms enabling illegal rentals, to assist state and local governments in setting corrective policies.
- Federal Level Joint Employer Protection to further enhance recent state legislation protecting the franchisor/franchisee relationship so important to small business owners and operators
In addition to meeting directly on these issues with Wisconsin Congressmen Ron Kind, Jim Sensenbrenner, and Glenn Grothman, the group also discussed our concerns with key staff in the offices of Senators Ron Johnson and Tammy Baldwin, House Speaker Paul Ryan, and Congressman Mark Pocan. As the timing of the new DOL Overtime Rules released the night before took on a primary focus, which has already been dominating the media, we will share an overview below.
DEPARTMENT OF LABOR OVERTIME RULES
In what has evolved into a very volatile issue with strong political opinions expressed by both sides, the Obama Administration's Department of Labor on Tuesday evening unveiled their long-awaited Final Rules on Overtime that will have a major impact on small and large businesses alike when it goes into effect. Already, very vocal opposition is coming out from a multitude of industries, and also more prevalently from non-profit organizations, state and local governments, and universities - all of whom will have to determine a new course of action to making choices between unbudgeted pay increases, providing less services, increasing prices, adding unbudgeted part-time help, converting salaried exempt professional employees to hourly employees, and other possible options.
The following are a few key points of the new DOL Rule:
- The Rule goes into effect Dec. 1, 2016
- The minimum salary threshold for employees to be exempt from overtime more than doubles, from $23,660 to $47,456. This is a small reduction from the originally proposed $50,440 level. This means that no employee who has a guaranteed salary of less than $47,476 can qualify as "exempt" under the executive, administrative, or professional exemptions.
- This Rule will not directly affect hourly or other non-exempt employees, however the impact of changes to other employees may impact them in other ways.
- Every 3 years a mechanism is built in to automatically update the salary threshold. This means that the next increase would be Jan. 1, 2020, with the new level announced 150 days in advance. The change would be set based on the 40th percentile of wages of full-time salaried employees in the lowest wage Census region (currently the South).
- The Rule does not include any changes to the "duties test", part of the three-pronged test for establishing exemption from overtime eligibility. The DOL has a Fact Sheet that does not yet include the new threshold, but it does provide a refresher on other criteria for exemption that will continue.
While Congress has a bill introduced in both houses (S. 2707 and H.R. 4773) that would nullify DOL's overtime rule and instead require an extensive economic impact study, President Obama has made it clear that he would veto this and similar efforts passed by Congress.
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