After the U.S. District Court for the Eastern District of Texas invalidated the entirety of the U.S. Department of Labor’s (DOL) 2024 Overtime Rule, both AHLA and AAHOA released statements applauding the decision.
This ruling restores the minimum salary threshold to $35,568 and the threshold for highly compensated employees to $107,432, striking down both the July 1 increase and the planned Jan. 1, 2025, increase. In his opinion, Judge Jordan emphasized that the 2024 Rule “effectively eliminates” the evaluation of an employee’s duties in favor of a “salary-only test” and that automatic updates to the threshold every three years violate federal rulemaking requirements.
AHLA and other business groups challenged the rule in the U.S. District Court for the Eastern District of Texas.
AHLA did not oppose the first increase that took effect in July, which was an appropriate adjustment to account for inflation. However, the organization did oppose the increase set to take place in January and the automatic updates, which it said would have dramatically increased costs and made it much more difficult for small business hoteliers to operate their properties. The increase would have forced these small businesses to eliminate management positions that have traditionally been stepping-stones for people who find lifelong careers in the hotel industry, according to the association.
“AHLA applauds the court for recognizing the potentially devastating impact the Department of Labor’s overtime rule would have had on hoteliers, employees and guests,” said Rosanna Maietta,president/CEO, AHLA. “AHLA and a broad-based coalition of business groups opposed this one-size-fits-all approach, which would have imposed an immediate cost increase at a time when small businesses are already struggling from increased costs. AHLA will continue to advocate for policies that help small business owners, encourage job creation and promote upward mobility for workers.”
AAHOA strongly opposed the rule. The association estimated that the 2024 Overtime Rule would cost each member up to $18,000 over just six months, collectively burdening its 20,000 members with a “staggering” $360 million in additional expenses.
“This decision is a major victory for small business owners in the hospitality industry,” said Miraj S. Patel, chairman, AAHOA. “The proposed changes would have placed an undue financial burden on our members, threatening the sustainability of their businesses and their ability to create jobs, which is why we filed formal opposition and advocated about the negative impacts this increase would have on our businesses during the Fall National Advocacy Conference earlier this year.”
Laura Lee Blake, president/CEO, AAHOA, added, “We welcome this ruling as a step toward fairness for America’s small business owners. Automatic updates and a salary-only approach disregard the unique operational challenges faced by hoteliers and other small business owners. AAHOA will remain vigilant, ensuring our members’ voices are heard and their interests protected in future policy discussions.”
