New overtime-exemption rule looms: Are hotels ready?

There’s still time for hoteliers to prepare for the U.S. Department of Labor’s new overtime-exemption rule, which is set to take effect one month from now.

REPORT FROM THE U.S.—With the U.S. Department of Labor’s new overtime-exemption rule scheduled to go into effect next month, the question hotel employers should be asking is, “Are we ready?”

In May, the Department of Labor announced its plans to raise the salary threshold to $47,476 a year—up from the current $23,660—by 1 December 2016. Anyone who earns less than the new threshold after the deadline becomes eligible for overtime pay.

Since that announcement, a bill to delay the new rule was presented to United States Congress and passed 28 September by the House of Representatives. Several states also have sued the Department of Labor over the rule.

These developments might cause some employers to hold off preparations for the exemption change, said Andria Ryan, partner at law firm Fisher & Phillips, but that’s not a good idea. President Barack Obama is likely to veto any bill out of Congress to delay the rule, she said, and the lawsuits consolidated in Texas will be heard by an Obama-appointed judge.

“This is being implemented on Dec. 1,” she said. “We think it’s unlikely that is going to change. … If you haven’t already put pen to paper on this, you’re behind.”

The Department of Labor is authorized to do what it’s doing, Ryan said. However, there might be things within the new rule that can be challenged, such as the automatic increases to the threshold every three years and the 10% limit on bonuses and incentive payments, she said.

“That’s subject to some argument, so realistically, a few things you might get a little relief on, but not overall,” Ryan said.