Proposed Overtime Rules and the Impact on Hotels

Employing nearly 2 million people in communities across America and contributing billions of dollars in business travel revenue, the hotel and lodging industry remains a force to be reckoned with as our economy continues its recovery from the Great Recession.

Our story is about people; the small business owners who run B&Bs and independent inns, the people who provide jobs and benefits in local communities in small towns and big cities across America. Our story is about those who came to the United States to start new lives, risking defeat, failure, and uncertainty—not to mention their life savings—to own and operate their own hotels. The hotel industry is the story of the American Dream: The dishwashers, room attendants, and bellhops who work hard and seize the opportunities before them to become hospitality managers, GMs, CEOs, and executives.

Our industry is about growth, opportunity, and ownership. Unfortunately, many in our industry, including members of the American Hotel & Lodging Association, remain deeply concerned that the Department of Labor’s proposed overtime rule will get in the way of the American Dream for hundreds of thousands of Americans—far beyond the scope of the hotel industry.     

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The agency’s rule would raise the threshold of overtime pay for salaried employees working more than 40 hours per week from $23,660 to $50,440. While the lodging industry supports a fair and equitable working environment for both employees and employers, we do caution the agency regarding the unintended consequences of raising that threshold too high, too fast.

The majority of jobs offered in our industry already have starting wages above the minimum wage, and employers currently have the flexibility to set salary parameters that foster a strong team environment, which allows for good benefits, higher pay, and workable schedules. Meddling in this employer-employee balance will surely cost business and stability.

This rule will significantly impact 92 percent of our small business owners, the backbone of the lodging industry. The economic impact on their businesses will in turn hamper the pace of job growth, investment, competition, and prosperity that have been so vital during our economic recovery.

In addition, this proposed rule will likely hurt the very employees that it purports to help. Since many hotels—especially smaller, local hotels or hotels in more rural areas—operate within narrow budget margins, management will not be able to offset the substantial increase in labor costs these overtime rules will create. In turn, it is the employees who will suffer.

According to a recent study published by the National Retail Federation, the proposal could result in “reduced hours and benefits, more part-time work, fewer advancement opportunities for impacted workers, and in some cases, could lead to impacted workers having their job duties replaced by automated systems.”

This rule will also likely deter the aspirations of many people hoping to create and expand their business model while creating good-paying jobs for hardworking people, not to mention threatening the success of current small businesses.

Chairman of the Senate Committee on Health, Education, Labor, and Pensions Lamar Alexander says, “Just imagine how discouraging this rule will be to the working mother who can no longer negotiate her schedule to, say, work from home when she needs to, or to the young restaurant assistant manager who loses his title and is returned to an hourly job with no more pay, or to the job seeker who discovers that the only available jobs are part-time. What Washington owes these workers is policies that create better opportunities, more flexibility and enable them to have more control over their work lives.”

Numerous official comments have been filed since the proposed rule was published in the Federal Register in July, many of which have expressed grave concerns from not only members of the lodging industry, but also across a vast spectrum of the business sector. As the open comment period comes to a close this month, we truly hope that the Department of Labor seriously considers the immense burdens that the overtime rule will pose on businesses large and small nationwide.

As the proud representative of the hotel and lodging industry, AH&LA continues to take aggressive steps to protect hoteliers’ and employees’ interests throughout this evolving process. As we all know, the power of our industry lies in the opportunities hotels create for men and women seeking competitive pay, good benefits, and pathways to successful careers. As AH&LA continues our efforts moving forward, we will do everything in our power to ensure our industry remains a leader in championing everyone’s dreams.

Brian Crawford is vice president of government and political affairs at AH&LA.

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Brian Crawford is the executive vice president of government affairs at AHLA.

1 COMMENT

  1. Thank you for following through on this. The new/proposed regulation will surely affect the smaller/independent business as we try to negotiate through the year.

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