From the Desk of the AAHOA President & CEO: The DOL Final Rule: Restoring and Extending Overtime Protections

Dear AAHOA Members,

AAHOA leadership understands the significant impact the Department of Labor (DOL) Overtime Rule will have on its members and the broader industry.

In response, we wanted to inform you about the recent developments and outline the extensive efforts AAHOA has undertaken to prevent its implementation.

Background on the Recent Ruling

On Friday, June 28, 2024, Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas issued a temporary restraining order specifically for the State of Texas as an employer. The State asserted that the Rule would increase payroll costs and destroy its budget, which would mean fewer jobs for State employees and reductions for other services.

While this means the State of Texas is temporarily exempt from the Rule's implementation, the first phase of the DOL Overtime Rule will still go into effect nationwide as scheduled today, on Monday, July 1, 2024. However, other businesses in Texas and across the country must comply with this Rule.

What This Means for AAHOA Members

Effective today, July 1, 2024, the DOL Overtime Rule will immediately raise the exemption threshold annual salary to $43,888, followed by a second increase to $58,656 on January 1, 2025, with further updates every three years.

We know this Rule will significantly impact our members. Between July 1, 2024, and January 1, 2025, it is estimated to cost up to $18,000 to each member's bottom line. If estimates are correct, the new ruling will negatively impact AAHOA’s 20,000 members to the astonishing tune of $360 million in just six months’ time.

AAHOA and Industry Advocacy Efforts

From the outset, AAHOA and its members have been vocal in opposing this Rule.

In early November 2023, AAHOA submitted strong comments to the DOL, stating unequivocally that we could "not support or recommend" the then-proposed increased salary threshold.

Later in November, with a special invite from the American Hotel & Lodging Association (AHLA), AAHOA Past Chairwoman (2019-2020) Jagruti Panwala testified before Congress on the proposal. Panwala, a board member of AHLA, argued that the proposed change would limit opportunities for hotel employees and that economic differences between regions of the country must be considered.

Despite these efforts across the industry, the Final Rule was released by the DOL on April 23, 2024.

Lawsuit Over DOL Overtime Expansion

The DOL, being a Federal Agency appointed by the Biden Administration, operates differently than lobbying Congress. As soon as the DOL Final Rule was announced in late April, AAHOA engaged with a law firm to discuss filing a lawsuit to stop the Rule from moving forward.

In parallel, on May 21, business groups – including the Associated Builders and Contractors, the National Retail Federation, and the American Hotel & Lodging Association – sued the DOL in a federal district court in Texas over the Overtime Rule. The lawsuit claimed the department went beyond its authority under the Fair Labor Standards Act (FLSA) and violated the Administrative Procedure Act (APA).

AAHOA leadership immediately supported these efforts, recognizing the strong representation already in place. In fact, we issued a Member Alert stating that we “commend the filing of the lawsuit to vacate and set aside the Rule, and enjoin the DOL from implementing it.” Therefore, AAHOA did not file a separate lawsuit.

AAHOA has spoken to AHLA about these efforts and has offered our support accordingly because, together, with strength and unity, we can strive to make a difference and protect our members' hotels.

As previously stated, a federal judge ruled in favor of an exemption for the State of Texas, but not for other employers across the country. We are actively supporting efforts to expand this exemption nationwide and will continue to issue member alerts to keep our members informed.

Recent Legislative Actions and News Updates

On a congressional level, AAHOA has also supported the Overtime Pay Flexibility Act (H.R. 7367) in both the House and Senate, aimed at halting the Final Rule. This was a part of our advocacy efforts in March for the 2024 AAHOA Spring National Advocacy Conference (SNAC), where our members brought it to the attention of their respective Members of Congress.

In addition, in early June, AAHOA issued an AAHOA Advocacy Action Alert urging our members to contact their federal representatives to voice their opposition and concerns. To date, nearly 500 letters have been sent on behalf of AAHOA Members. This alert was in response to Rep. Tim Walberg's (MI-05) introduction of H.J. Res. 166 on June 5, to block the Rule, with Senator Mike Braun (R-IN) introducing S.J. Res. 97 on June 13.

Further, AAHOA is a member of the Partnership to Protect Workplace Opportunity, which has opposed the Rule.

Finally, AAHOA recently released its new In Your Corner advocacy newsletter, and highlighted this issue in its inaugural edition. We will continue to provide updates moving forward.

Where We Go from Here

We are in a challenging situation where the DOL, as a federal agency, can release these rules, and only the courts or Congress can stop them from moving forward. AAHOA will continue to lobby and push for both judicial and legislative actions to prevent this Rule from further impacting our industry.

Thank you for your support of AAHOA. We are here for you.

We will keep strategizing and advocating for the best possible outcomes. We are all in this together, and our Members’ support is invaluable.