AH&LA supported common-sense efforts to modernize the overtime regulations covered under the Fair Labor Standards Act.

SUMMARY

The U.S. Department of Labor administers the Fair Labor Standards Act of 1938 (FLSA), which determines federal wage and hour standards. Part 541 of the FLSA governs employer and employee requirements for overtime, these are often the called the white-collar exemptions. This section determines who is and is not eligible for overtime pay and what exemptions are allowed. In 1954, DOL crafted extensive rules covering overtime exemptions, which stood for 50 years despite numerous efforts to modernize these regulations.

In 2003, DOL announced its intent to update the FLSA by creating new duties tests (last updated in 1959) and salary thresholds (last updated in 1975) that would revise the rules governing which employees may be considered exempt from overtime. In response, AH&LA filed comments in support of the overall proposal to update the FLSA, but expressed the industry's concerns over specific provisions that could be overly burdensome for hoteliers. In addition, AH&LA also met numerous times with DOL officials to discuss our industry concerns with existing overtime regulations.

In 2004, DOL issued its final regulations making substantial, necessary and common sense changes to the overtime regulations. Generally, overtime exemptions do not apply to manual laborers or other blue-collar workers who perform work involving repetitive operations with their hands, physical skill and energy.

DOL simplified the exemptions tests into three areas: 1) the Salary Basis Test: is the employee paid on a salary basis or an hourly wage?; 2) the Salary-Level Test: is the employee paid at least $455 a week in compensation (this was increased from $155 a week set in 1975)?; and 3) the Duties Test: what are the employee's duties?  DOL made substantial changes to the duties tests that generally cover executive, administrative and professional employees.

STATUS

The final overtime regulations (referred by DOL as “FairPay”) became effective August 23, 2004, and now cover the lodging industry.  Under the new overtime rules, workers earning less than $23,660 per year—or $455 per week—are guaranteed overtime protection.

Human resource officials are expected to properly implement any necessary changes. To assist in understanding these changes, please refer to DOL’s FairPay Webpage.  AH&LA is also a resource for members seeking to understand these updated overtime regulations.

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For more information, contact Kevin Maher, AH&LA senior vice president for Governmental Affairs, at (202) 289-3147, kmaher@ahla.com.

(Updated August 2008)