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ASTA today formally petitioned the U.S. Department of Labor (DOL) to remove travel agencies from a regulatory “black list” that blocks them from using an exemption from federal overtime rules.

New overtime rules, issued  in May, will raise the salary threshold, under which virtually all employees are guaranteed overtime pay, from $23,660 to $47,476 per year, with automatic increases in future years. The rules take effect Dec. 1.

The new rules will represent a tremendous burden for travel agents in terms of the cost and complexity of compliance, according to ASTA. Zane Kerby, ASTA’s president and CEO, said an existing characterization of travel agencies that  precludes them from being exempt from the new rules is “indefensible.”

That long-standing exemption in current law—the Retail or Service Establishment (RSE) exemption—could mean some travel agencies need not comply with the new rules.

However, to qualify for the exemption, an employee must work at an establishment “recognized as retail . . . in the particular industry” where at least 75 percent of annual sales are “not for resale.” The employee must also be paid a minimum of one-and-a-half  times the applicable  minimum  wage and more than half of the employees’ earnings must consist of commissions.

Since 1970,  travel agencies have been blocked from using the exemption due to a DOL regulation that includes travel agencies on a  list of industries considered to “lack a retail concept” and so cannot qualify “under any circumstances” for the RSE exemption.

ASTA noted that a federal court in 1997 ruled in favor of a travel agency in the only court case (Reich v. Cruises Only, Inc.) to directly address the inclusion of travel agents on that industry list.  The court said the DOL’s regulations excluding an agency from those establishments possessing a retail concept, “appear to be arbitrary and without any rational basis.”

“Travel agencies are the very picture of a retail business, so we think it’s indefensible that agencies have been held to ‘lack a retail concept’ since 1970 and thus are denied use of the retail exemption from overtime rules,” said ASTA President and CEO Zane Kerby.

 “With major changes to overtime regulations going into effect on Dec. 1, it is all the more critical that this issue be addressed and we will fight for our members at DOL and Congress if necessary over the coming months to make it happen.”

In its 41-page petition to DOL, ASTA argues that “the intent of the [RSE] exemption was to cover services to the general public meeting the everyday needs of the community at the very end of the stream of distribution, involving sales in small quantities and no manufacturing.

“This is the very picture of what the typical travel agency does . . . The relief sought by ASTA for travel agencies is warranted because the blacklisting was unjustified when adopted, is unjustified now, has been rejected in the courts and is easy to correct.”

In addition to making changes to the regulation itself, ASTA is asking the DOL to issue a formal “Administrator Interpretation” stating that it will follow the decision in Reich v. Cruises Only, Inc. and that changes to the DOL Field Operations Handbook be published.

Kerby noted that removing travel agencies from the blacklist is not “a cure-all,” although

“it will provide some relief from the new rules for some agencies.”

 “But travel agencies are clearly ‘retail’ and should have an opportunity to claim the RSE exemption if they qualify for it. This is a fight worth fighting.”

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