Travel agencies can now utilize an exemption to avoid paying overtime to employees who meet certain criteria, a victory that ASTA believes came as a result of four years of advocacy work.

Last week, the Department of Labor said it was eliminating a so-called blacklist of industries that could not avail themselves of the exemption designed for retailers because they had “no retail concept.” 

For agencies, ASTA general counsel Peter Lobasso said, the change means employees who meet the department’s criteria can now be labeled as exempt from being paid overtime. 

There are three prongs to satisfy: 75% of the business’ sales must be retail, and not for resale; the employee needs to receive more than half of their earnings from commissions; and the employee must earn at least one-and-a-half times the applicable minimum wage.

The change will likely help agencies manage their payrolls more effectively, Lobasso said. 

It could also eliminate another problem. While some ASTA member agencies do pay overtime, others instruct employees to keep a strict 40-hour workweek, meaning client service could suffer if problems arise after work hours. A 2019 ASTA survey found that 44% of respondents who were agency owners or who were heavily involved in decisions about the allocation of staff time said their obligation to pay overtime has inhibited their ability to serve clients.

“It gives the agencies the ability to maximize their service to their clients without breaking the bank,” Lobasso said.

While travel agencies were joined on the blacklist by a number of other industries, ASTA said it believes the agency community was the only one advocating for its removal. 

The Society’s advocacy work on this issue began in 2016, when the Obama administration’s Department of Labor announced it would raise the salary threshold for workers eligible for overtime from $23,660 to $47,476, Lobasso said. It was alarming, he said, “because we know that the profit margins in our industry are quite thin,” and that large of a payroll increase could potentially shut down agencies.

ASTA began looking for a solution. There is an exemption for retail businesses that meet certain criteria, which appeared to be a good solution, but then ASTA discovered the blacklist. It dates to 1961 and, according to Lobasso, was introduced without formal notice or a comment period, which is considered odd for federal regulation. “It sounds crazy to say, but it’s almost like it’s shrouded in mystery,” he said.

Most recently, ASTA met with the White House’s Domestic Policy Council last July about the issue and got a receptive response. When the seriousness of the coronavirus crisis became apparent in March, ASTA again got in touch with the White House asking for a number of considerations to help agencies survive. That included removal from the blacklist.

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