ASTA is working to inform member agencies about two Department of Labor issues that could affect their businesses: new overtime standards that go into effect at the end of the year and potential enforcement of the department’s definition of an independent contractor (IC).

The Society is fighting to have travel agents removed from a Labor Department “blacklist” that keeps agents from being exempt from the new overtime rule, finalized in May, that updated the salary level used to determine which salaried workers are eligible for overtime pay.

Previously, the maximum salary level at which full-time employees must be paid overtime was $23,660, but the incoming rule increases it to $47,476. As a result, most salaried workers making that amount or less annually must receive overtime pay if they work more than 40 hours per week. The maximum salary level will be updated every three years.

The “blacklist,” created by the department in 1970, makes agencies ineligible for an exemption from the overtime rule. The exemption applies to employees working in a retail or service establishment, said Eben Peck, the Society’s senior vice president of government and industry affairs, and ASTA believes that agents meet that definition.

Unless ASTA’s fight is successful, the rule goes into effect on Dec. 1.

“It’s happening, so our members are just going to have to figure out how to compensate employees that are currently under that [salary] floor,” Peck said.

ASTA will hold a webinar about the new overtime rules on July 27 at 2 p.m. Eastern time.

Meanwhile, it is keeping its eye on whether the department will enforce the definition of an IC that Labor announced a year ago.

“We have not heard of any enforcement against travel agencies since then,” Peck said. However, Labor could decide to enforce the rule at any time.

The interpretation from Labor addresses the misclassification of workers as ICs instead of employees under the Fair Labor Standards Act.

It states that an employee is economically dependent on an employer, while an IC is economically independent from a single employer.

The department uses an economic-realities test to determine if a worker is an IC or an employee.

Peter Lobasso, ASTA’s general counsel, has said the test “boils down to the question: ‘In light of all the circumstances, is the worker truly in business for him or herself?’”

The interpretation is not unique to the travel industry, and Peck said it likely was designed to address abuses in other industries where misclassification is common.

“The rules are sometimes quite arcane and difficult to follow, even when you have the best of intentions regarding compliance with the law,” Lobasso said.

If a worker was incorrectly classified as an IC, he said, they would be “entitled to receive whatever compensation that was due to them.”

Peck and Lobasso have advised agencies to pay ICs on commission, not salary; to have a written contract of a limited duration; to engage with them as an entity, such as a limited liability company; and to charge them for use of any facilities, software, etc.

An educational seminar on the overtime and IC issues will be held during the ASTA Global Convention in Reno, Nev., Sept. 25 to 28.


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