Former AAHOA Chairwoman Jagruti Panwala (2019-2020) testified recently before Congress on the Department of Labor’s proposal to raise the overtime salary exemption threshold for executive, administrative, and professional employees under the Fair Labor Standards Act. Panwala, now a board member of the American Hotel & Lodging Association, argued that the proposed change would limit hotel employees’ opportunities and does not consider economic differences between regions of the country.

“I’m here today to explain my perspective as a small business owner and a hotel operator and to describe how the Department of Labor’s proposed changes to the overtime rule will have devastating effects on my business, my employees, and the lodging industry,” Panwala said.

 “It is critical to note that the proposal does not simply increase salaries for a few employees at a marginal level, rather than up to 70 percent increase will drastically impact the entire business plan. Beyond compensation, we expect not only a significant jump in direct staffing costs but also substantial increases in associated labor costs, including payroll taxes, federal and state unemployment, taxes, insurance, and none of which seems to be included in much of the discussion.”

Panwala said the new overtime rules may force employers, including hoteliers, to “take actions that we do not want to take, including actions that could set workers back in their careers.”

“The last thing a small business owner wants to do is to lay off their employees,” Panwala said. “Unfortunately, some hotels may be forced to do so because of this new rule in order to stay in business.”

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