Overtime rule's ambiguous ending leaves hoteliers in the lurch

In May 2016, the United States Labor Department passed a (so far) ill-fated overtime rule set to go into effect Dec. 1. The rule would raise the threshold of eligibility for overtime pay to employees earning $47,476, more than double the previous threshold of $23,660. But just one week before the rule was scheduled to go into effect, it was blocked by U.S. District Judge Amos Mazzant of the Eastern District of Texas, who stated that it was his belief that by setting an automatic salary increase for the entire country the Department of Labor “exceeds its delegated authority and ignores Congress’ intent.”

Tiffany Cahill

Mazzant’s action may have spared U.S. businesses millions in labor costs, but it has also opened a number of logistical concerns during the period in which the rule is debated. Tiffany Cahill, corporate director of human resources at Driftwood Hospitality Management, said the biggest task facing employers in the lead-up to the new overtime rule was ensuring all the company's associates were classified correctly.

“Some positions are trickier than others when determining exemptions,” Cahill said. “Sales managers are big, and making sure they were qualified for exemptions was important as 60 percent of the time they are out on the road. Changing them to nonexempt, and telling someone who has a career 20-plus years in the making that they have to go back to earning hourly, especially if they have an ego, was difficult but it had to be done.”

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Cahill said it would be easier for operators to manage payroll if employees were exempt from the overtime rulings, but she also said preparing for compliance with the rule has been thorough throughout the past year. Employees had questions and concerns then, and now with the new rule stalled (and its future very much unknown), the questions are going to come back. “The Department of Labor has checked into the overtime issue before, and some hotels have owed thousands of dollars in back pay,” she said. “Keep up with the Fair Labor Standards Act and other labor laws, come to these conversations ready to talk, be there if employees have any concerns and, most of all, listen.”

The biggest challenge the industry faces this year is turnover and recruiting because of the number of line-level positions, Cahill said. “Properties located in some secondary and tertiary markets have employee pools that aren’t very large, so thinking outside of the box to make ourselves more attractive is our challenge,” she said.

Cahill said at this point employees should be notified whether they have been brought up to nonexempt pay levels or forced into hourly positions for the sake of timekeeping. Most of all, hotels should maintain a human approach to the process.

“Give employees the tools to understand what is happening to their positions,” she said. “Make them aware of existing legislation, and let them know why they have to begin swiping in and out if they are not exempt.”

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