May 17, 2017
With graduation season upon us and temperatures warming up, it is only a matter of time before amusement and theme parks, beaches, and pools see an influx of visitors as families begin their summer vacations. Many of these facilities employ more employees during the summer due to the need for additional help during vacation months, and under the Fair Labor Standards Act (“FLSA”), these employers may be exempt from paying employees minimum wage and overtime if they meet certain requirements to be considered an “amusement or recreational establishment.”
In order to be exempt from the FLSA requirements for overtime pay and minimum wage as an “amusement or recreational establishment,” the facility must meet one of two tests—the seasonal operations test or the seasonal receipts test:
(1) The facility must not operate for more than seven months in any calendar year,
(2) The facility must pass the 33-1/3% Test—during the preceding calendar year,
“the average receipts for any six months were not more than 33 1/3
per centum of its average receipts for the six months of such year.”
As to the first test, whether an amusement or recreational establishment operates for less than seven months in any calendar year is a question of fact which depends on whether the facility is actually operating as an amusement or recreational establishment for the seven-month period. For example, if an establishment is only engaged in maintenance activities in the off season, this is not considered “operating” according to this exemption.
As to the second test, the statute only refers to “receipts” for six months and does not require that the six months be consecutive to meet this test. To meet this test, the monthly average for the six individual months with the smallest receipts should be reviewed against the monthly average for the six individual months with the largest receipts. The Department of Labor has provided an example to help understand this test:
An amusement or recreational establishment operated for nine months in the
preceding calendar year. The establishment was closed during December, January and
February. The total receipts for May, June, July, August, September and October (the six
months in which the receipts were largest) totaled $260,000, a monthly average of
$43,333; the total receipts for the other six months totaled $75,000, a monthly average of
$12,500. Because the average receipts of the latter six months were not more than
33-1/3% of the average receipts for the other six months of the year, the Section 13(a)(3)
exemption would apply.
As many states have their own laws governing payment of wages, employers should take caution and first review their local state laws before applying the amusement or recreational establishment exemption.
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