Dive Brief:

• The U.S. Department of Labor has proposed an increase of the minimum salary threshold for overtime eligibility under the Fair Labor Standards Act. 
• The proposed rule would guarantee overtime pay (pay for any hours worked over 40 in one week) for the roughly 3.6 million salaried workers earning less than $1,059 per week, or about $55,000 per year. 
• The proposed rule comes as thousands of hotel union workers picket in Southern California’s largest multihotel strike in history, asking for better pay. In contrast to their demands for wage increases, AHLA President and CEO Chip Rogers said the DOL’s proposed overtime pay rule would hurt workers — in addition to harming the hotels that employ them.

Dive Insight:

Four years ago, the DOL increased the minimum salary threshold to $35,568. Now, the department is proposing to increase that threshold by nearly 55%, to $55,068. 

The DOL’s proposal to implement another overtime salary threshold increase is a “massively disruptive change that would create negative economic impacts for both hotel workers and employers,” especially as small business owners “continue to grapple with the rising costs of conducting business and inflationary pressures,” Rogers said in a statement. 

If implemented, Rogers added, the rule would reduce career growth opportunities for employees because businesses would be forced to reclassify many workers from salaried to hourly, eliminate middle management positions or cut workers’ hours or consolidate jobs. 

“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,” Rogers said. 

However, according to Acting Secretary of Labor Julie Su, the rule would benefit workers, who work long hours “for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifices.” 

In recent months, hotel workers from New York to Los Angeles have demanded higher wages to keep up with expanding job duties and the growing cost of living. Many hotels, though, have been slow to meet workers’ demands. 

According to Rogers, hotels, especially those operated by small business owners, have something to lose if the DOL proposal is implemented. The rule would result in “crushing increases in labor costs” for hotels as well as “significant tax hikes and administrative costs,” he said.