Running head: FAIR LABOR STANDARD ACT 1

Fair Labor Standard Act

Student’s Name

University
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The hotel industry is subjected to several laws and regulations ranging from those that

affect the building itself or the services provided, to tourism laws and even local decrees.

International hotels should incorporate the local regulations of every nation which normally vary

substantially within the European Union and more when nations across the globe are considered,

with regulations that are precise to every location. The industry managers must acknowledge

these regulations to increase worker welfare, ensure proper service provision to guests, and keep

total compliance with state and federal laws. The paper will discuss the Fair Labor Standard Act,

which highlights issues of minimum wages within the hospitality industry, its purpose, and

effects and how it applies to the industry.

Fair Labor Standard Act and Its Purpose

Every organization has different laws and regulations that control every operation,

including the workers and other stakeholders. The hospitality industry is not exempted to such

regulations because it is one of the largest income providers within different nations globally. In

the United States, hotels contribute about $670 billion to its GDP (Wax, 2019). Under this law,

controlled by the employment administration’s wage and division within the division of labor, all

hospitality enterprise with yearly gross sales of above $500,000 should follow the existing

federal minimum wage and the payment to non-exempt workers of the needed overtime

compensation. If the business is within the $500,000 test, it is still subjected to the law even if

the operations engage interstate trade or an occupation linked to such trade (Reynolds, n.d.). For

instance, when a certain organization earns $250,000 gross yearly sales, the workers are involved

in the distribution of commodities between states; fines will apply for infractions engaging the

compensation of overtime or the state child labor statue presented by this act.

How it applies to the Hospitality Industry

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The hospitality industry seems to have been a major target of this rule; for instance, a

food restaurant assistant executive earning $455 a week could spend approximately 60 to 70

hours a week on the career. Still, any worker getting less than $913 in the hospitality industry per

week are regarded as non-exempt from the overtime law; however, individuals receiving this

amount and who are categorized within the DOL can be grouped as exempt. All the covered

nonexempt employees should receive a minimum wage of $7.25 per hour, which are due on the

regular payday for the period covered (Anne, 2018). Any deductions made from wages for

products, including uniforms, are illegal. Tips can be incorporated as part of the wages for

workers who constantly earn more than $30 a month in tips. However, the manager ought to pay

about $2.14 an hour in direct wages to the tipped workers and maintain that the amount of tips

received by tipped workers meets the remainder of the minimum wage.

Effects of the Law on the Industry

The increase in the federal minimum wage would highly impact workers in the

hospitality industry with one positive effect engaging the increase in the standard of living.

Several advocates for increasing the minimum wage agree that an increase would decrease not

only poverty but also curb income inequalities. Income inequality is a major issue which can lead

to corruption and weak democracies (Power, 2015). Another advantage associated with this law

is the increase in the level of training as well as boosting employees’ morale. An increase in the

minimum wage normally pushes for training efforts which in turn improves the quality of service

provision within the hospitality industry. On the other hand, the law might also have negative

effects on the employees, including the higher labor costs, which would prompt employers to lay

off workers. The employees who might be highly affected are those inexperienced who take

minimum wage careers. This is a significant reduction in jobs, and several people would be
FAIR LABOR STANDARD ACT 4

affected not only in the hospitality industry but in others as well. Another effect of the federal

minimum wage increase is the perception that low skilled workers might be replaced with

technology to assist with the increasing labor costs. Diverse restaurants chains across the United

States have begun incorporating tablets that guests can use to order their food and pay bills. The

mechanism can replace wait staff or decrease the number of waiters and waitress restaurants will

need at one time.

Controversies Surrounding the Fair Labor Standard Act

The regulation allows employers to pay a minimum wage and overtime rates and also has

a saving clause which enables the state to implement detailed wage-and-hour regulations thus

forming situations in which both federal law and state may apply. Also, the act has enforcement

provisions highlighting how workers may bring different claims to recover their unpaid wages

plus the remedies they may want (Alexander, Haley-Lock, & Ruan, 2015). These enforcements

allow for a private right of action and the division of labor to implement public enforcement

actions. However, the law fails to specify whether different states may evaluate their own

enforcement schemes for wage-and-hour law violations. The Fair Labor Standard Act has its fair

share of both positive and negative effects on the hospitality industry, and the federal

government must address the existing controversies for clear guidance of the rule.

Conclusion

The law covers a diverse range of issues which are of great advantage to the business’s

operations and other vital service delivery actions. Workers are significant to the hospitality

sector and their well-being and priorities must be considered and protected by the employers and

the federal government. With lifelong careers and upward mobility, hospitality still has the

unique ability to provide its workers with an opportunity to accomplish the American Dream.
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References

Alexander, C., Haley-Lock, A., & Ruan, N. (2015). Stabilizing low-wage work. Harv. CR-CLL

Rev., 50, 1.

Anne, L. (2018). National minimum wage to hit the tourism and hospitality industry hard.

Retrieved from www.bizcommunity.com/Article/196/373/185352.html#:~:text=Currently

%2C%20and%20originally%20effective%20until,with%20more%20than

%2010%20employees.

Power, T. J. (2015). Fast Food Sweatshops: Franchisors as Employers Under the Fair Labor

Standards Act. CUNY L. Rev., 19, 337.

Reynolds, M. Hospitality Labor Laws. Retrieved from smallbusiness.chron.com/hospitality-

labor-laws-65813.html

Wax, M. L. (Ed.). (2019). Federal regulations: Ethical issues and social research. Routledge.