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Think Your CVB Won’t Be Affected?

Thursday, July 21, 2016

This will be a first…a Z-News commentary from someone other than me. That’s because we’ve been really busy assisting clients this spring and summer and haven’t taken the time to pay attention to what the US Department of Labor has cooked up…but clearly should have.

Luckily, we have friends in DMO land that have been paying attention...and one (who wishes to remain anonymous) recently penned this take on the challenges we all face in the coming months:

Think your Destination Marketing Organization is exempt from the new federal overtime law?  Think again.

On December 1st of this year, be ready for the single biggest challenge to the way DMOs have been doing business in my 30 years as a DMO director. And, while it is about money, it’s more about our ability to get our jobs done in 40 hours or less each week.  
The US Department of Labor has issued new rulings on who and what qualifies for “exempt” status, based upon the amount of salary for all employees, non-profits included. Not only must you pay your full-time exempt staff $47,476 annually (no geographic consideration for employers in rural Ohio versus the city of Los Angeles), each of those employees will have to be reevaluated to make sure they pass the federal qualification for the “duties” test.

In other words, unless each one of your staff (and you as the director) have the authority to hire/fire other staff and make decisions of a substantial nature for your organization, it won’t matter what job title you or your staff have. They will not pass the duties test and cannot be called “salaried-exempt.” If they do not pass both the duties test and the salary test, you then MUST pay them time and a half for every hour over 40 they work each week. Not pay period. Each week. And, time worked includes time in the office, time answering emails or text messages at home and, in some cases, time traveling for work. And no, you cannot offer comp time to make up for extra hours worked. That’s illegal under the new law. And no, you cannot consider any benefits you give staff as payment towards the $47,476 (or $913 per week). The salary is based on salary. Period.

So, let’s say I send my tourism manager to the National Tour Association Conference next year in St. Louis. The show starts on Sunday and runs until Thursday. Each and every hour of travel to and from St. Louis must be paid for, including delays and/or cancellations of flights. No difference if she drives; driving is treated the same and includes delays for traffic or emergencies. And, we’ve all been to these travel shows. They do not start at 9 and end at 5.  They are typically 10 hour days (if you are lucky). So, for the week of NTA, your staff person could potentially work 60-70 hours. Can your budget absorb the pay required for their hourly wage for 40 hours and time and a half for the remaining 20-30 hours?  

I could raise my staff person’s salary to the $47,476 threshold, but unless she truly has hire/fire authority in the DMO (and many don’t), she is still going to be paid overtime for hours worked past 40. Imagine the bookkeeping and timecard nightmare. And, imagine telling your tourism partners/members: “I’m sorry. No one is available to attend your planning meeting, we’ve all worked our federally mandated 40 hours this week.”  Yipes!

You don’t think your DMO will be a “covered enterprise” under this law? You don’t have “business done” of more than $500,000?  What about our mantra of economic impact to our community by marketing our destination to the world? The Feds have defined “interstate commerce” (for the purpose of your organization being called a covered enterprise and falling under these rules) as an organization whose primary work involves or relates to the movement of persons or things across state lines. The Feds also offer the following list of activities under this definition: Making out of state phone calls; Receiving/sending interstate mail or electronic communications; Ordering or receiving goods from an out of state supplier; and handling credit card transactions or performing the accounting or bookkeeping for such activities.  

Hmmm….Kinda sounds like a DMO, don’t it?
But wait, there’s more. Do you allow your staff to attend/volunteer at your county events? Do they get to call that time “work?” Not anymore, unless you pay them for the overtime. Do they volunteer for any event that participates in a defined commercial activity,  like a gift shop or a 5K run that sells t-shirts? They can’t volunteer any longer. And, paid employees of your non-profit organization may no longer volunteer to provide the same type of services to the non-profit organization that they are otherwise typically employed to provide.

So, if your mid-size museum that offers fall train excursions and sells over $500,000 in ticket sales, your staff can no longer volunteer to work for them. And, what about my staff member who desperately wants a new arts organization to grow and offer quality tourism products?  Only if her effort keeps her at 40 hours per week can she lend that helping hand.  She literally cannot volunteer towards these efforts in her “free” time if she would have been paid to do the work as part of her job.  Read that again and think about the implications.  

How will you have these conversations with partners and your Board? Or, more importantly, when?

Begin with an honest assessment of current staff duties and responsibilities. Each staff member should evaluate their potential for overtime and what those costs would be to your DMO. If they meet the duties test, and overtime would be cost prohibitive, you may have to increase their salary to $47,476. If they do not pass the duties test but overtime would still be prohibitive, I can only offer this: change their duties to fit the test. Give them more substantial responsibilities. Overtime payments to staff during a DMO’s busiest time (while those events occur in the dead of winter), will put even the best DMO director’s cash flow expertise to the test.  

Do your homework on this issue. Advise your museums and tourism partners to do the same.  Oh, and if you want to have conversations with your federal representatives about pending HR4774 (or the concurrent S2707) effectively stopping the new law…good luck. Both have been stalled since their introduction on March 17.

But that’s no reason not to try…

The author is not a Labor Attorney. She has been the director of a Convention and Visitor’s Bureau for more than 20 years and holds two associate degrees in marketing, a bachelor’s degree in business and will complete her master’s degree in communication and PR next month.

I’m not a Labor Attorney, either. But, I trust that our friends have uncovered a concern that DMO pros need to consider carefully. We urge you to contact your organization's attorney to review your situation sooner than later. And then, report back.

1 comments on article "Think Your CVB Won't Be Affected?"

Bill Geist

10/3/2016 8:32 AM

The House has delayed (but not killed) the implementation of this directive:

Be on your toes on this one...

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