New England Biz Law Update
As we approach summer, and employers begin their seasonal hiring processes, identification of how wage and hour laws apply to seasonal employees can significantly mitigate employer liability. As a rule, both federal and state laws require employers to pay nonexempt employees at least minimum wage for all hours worked and overtime compensation for any hours that exceed 40 hours in a workweek.
However, both state and federal laws contain exemptions to this general requirement for certain seasonal employees. Employers should carefully review the applicable criteria before determining whether their seasonal employees qualify as exempt under either one law or both.
Under the Fair Labor Standards Act (FLSA), employers operating an amusement or recreational establishment, an organized camp, or a religious or nonprofit educational conference center may hire seasonal employees who are exempt from federal minimum wage and overtime laws, provided that at least one seasonality test is met.
Notably, the FLSA has two separate tests for determining whether employees meet the definition of a seasonal employee. Both tests look to the nature of the business rather than the work performed by employees, and only one of the tests must be met to qualify for the exemption.
The calendar test focuses solely on the general dates of operation for the business. If the business “does not operate for more than seven months in any calendar year,” any employees hired by the business are considered seasonal employees for purposes of this exemption. This assessment is usually based on both the current calendar year (defined as the period between Jan. 1 and Dec. 31) and previous one. Importantly, the term “operates” under the statute is specific to when the establishment is used specifically for amusement or recreational purposes. The test is still met if an establishment is used for amusement or recreation for seven months or fewer in the calendar year, even if the establishment remains open for the remainder of the calendar year but for different purposes.
The receipts test focuses instead on the receipts and income generated by the business. An establishment satisfies this test if, during the preceding calendar year, its average receipts for any six months of that year did not exceed 33.3 percent of its average receipts for the other six months of that year. In essence, this test is met if the business’ average receipts during its slowest six months are 33.3 percent or less of its average receipts during the other six months of the calendar year.
Takeaways
Employers hiring seasonal employees to perform work at certain camps or recreational establishments this summer should carefully consider whether their seasonal employees are exempt from state and federal minimum wage and overtime laws prior to treating the employees as exempt. Notably, an employer may qualify for this exemption under one set of laws, while remaining subject to the other (e.g., qualifying as exempt from state overtime and minimum wage requirements, while remaining subject to the FLSA’s requirements).
To qualify as exempt under federal law, the business must be an amusement or recreational establishment, an organized camp, or a religious or nonprofit educational conference center as well as satisfy at least one of the seasonality tests.
Even if seasonal employees are otherwise exempt from overtime and minimum wage requirements, other wage and hour laws may still apply, including meal and rest break requirements and workweek hour restrictions for minor employees. Thus, employers that hire potentially exempt seasonal employees should still carefully track and document the applicable laws and requirements.
Ashley Korkeakoski-Sears is an attorney with Barran Liebman. She advises and represents employers on a wide range of workplace issues. Contact her at 503-276-2132 or [email protected].
