The U.S. Department of Labor has announced a new rule under the Fair Labor Standards Act that will qualify 1.3 million U.S. workers for overtime pay. AAHOA released a statement welcoming the decision and the method in which it was implemented.
Under the new rule, which will be effective on Jan. 1, raises the “standard salary level” from $455 to $684 per week, equal to $35,568 per year for a full-year worker. It raises the total annual compensation level for “highly compensated employees” from $100,000 to $107,432 annually, and allows employers to include nondiscretionary bonuses and incentive payments, such as commissions, that are paid at least annually to satisfy up to 10 percent of the standard salary level.
“This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers,” Acting U.S. Secretary of Labor Patrick Pizzella said.
The USDL estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level and an additional 101,800 workers will be entitled to overtime as a result of the increase to the HCE compensation level. The new rule is meant to compensate for wage and salary growth since 2004.
USDL has been enforcing overtime rules based on 2004 levels for the past 15 due in part to a 2016 decision by the U.S. District Court for the Eastern District of Texas that invalidated a final rule change proposed that year.
The new rule will benefit small businesses and create clarity and consistency, said AAHOA Interim President and CEO Rachel Humphrey.
“By raising the overtime eligibility annual salary cap to a reasonable level, the administration expands the number of eligible workers while providing small business owners with an appropriate amount of time to plan for its implementation,” Humphrey said.
In April, a study from the HFTP Americas Research Center showed that labor is the overall most significant pre-opening cost for hotel developers.