Are Your Seasonal Employees Exempt From Wage And Hour Laws? Are You Sure?

Submitted by the Labor & Employment PAC

By Gary D. Finley, Schwartz Hannum PC, Andover, Massachusetts

As summer cautiously approaches New England, countless restaurants, golf and swim clubs, and other seasonal establishments are preparing for the summertime rush. In order to meet the demands of the anticipated sun worshippers, these employers will hire an army of summer employees, many of whom will work long hours before they return to school or to seasonal jobs in other parts of the country in the fall. Many seasonal employers take a relaxed approach with respect to compensation and hours for these summer employees. It is not uncommon for workers of such establishments to be paid under the table, paid less than the minimum wage, or paid inappropriately for overtime. Employers should approach compensation of summer employees with a great deal of care.

Some employers may be relying on the so-called “seasonal exemption,” having hastily concluded that summer employees are exempt from minimum wage and overtime requirements because of the seasonal nature of their business. As described in detail in this article, however, having a seasonal business is not enough to qualify for the seasonal exemption. There are specific federal and state requirements that must both be satisfied before a summer employee will be considered exempt from wage and hour requirements. Moreover, employers who do not meet these requirements, and who fail to pay minimum wage and/or overtime to summer employees, can be subject to steep penalties including double or triple damages and mandatory attorneys’ fees.

Exemptions Under The Fair Labor Standards Act

The Fair Labor Standards Act (“FLSA”) is the federal law that governs employee wages. The FLSA requires that most employees be paid at least the federal minimum wage ($7.25/hour) and be paid overtime (at least 150% of the regular rate of pay) for all hours worked over forty (40) hours per work week.

The FLSA does contain an exemption for seasonal employees, such that employees of an “amusement or recreational establishment, organized camp, or religious or non-profit educational conference center” are exempt from the law’s requirements so long as (a) the employer does not operate for more than seven (7) months in any calendar year, or (b) during the preceding calendar year, the employer’s average receipts for any six (6) months of such year were not more than 33% of its average receipts for the other six (6) months of such year. The U.S. Department of Labor has opined that “amusement or recreational establishments” include, without limitation: beaches, golf courses, swimming pools, boardwalks, stadiums, summer camps, ice skating rinks, and zoos.

Based on these requirements, the employees of many seasonal businesses are exempt from federal minimum wage and overtime requirements as set forth in the FLSA. That does not, however, end the inquiry.

Seasonal Overtime Exemption Under Massachusetts Law

In most states, employee wages are also governed by state laws that are more stringent than the FLSA. As such, before an employer can treat a summer employee as exempt, it must confirm that the requirements of both the FLSA and the applicable state law are satisfied.

Massachusetts serves as an example of the more stringent requirements that employers in some states must follow in order to qualify for a seasonal exemption. For employees to qualify for the seasonal exemption in the Commonwealth, their employer cannot operate for a period or accumulated periods in excess of 120 days in any year, far shorter than the seven (7) month threshold of the FLSA. Moreover, even when an employer meets the requirements for the seasonal exemption, Massachusetts law offers relief only from the payment of overtime; employers must still pay seasonal employees at least the state minimum wage, which is currently $11.00 per hour.

However, the most onerous (and least recognized) requirement of Massachusetts law is that an employer must apply to and be certified by the Massachusetts Department of Labor Standards as a seasonal employer prior to the start of its season. Thus, even if the 120-day requirement is met, an employer cannot treat its seasonal employees as exempt until and unless it has been certified by the Commonwealth.

Other state laws are generally not as stringent as Massachusetts, but it is no less important for employers in those states to understand the requirements for seasonal employees, and not to assume that compliance with the FLSA will similarly satisfy their state obligations.

What Employers Need To Know

Employers need to be aware of both federal and state exemption requirements for the seasonal exemption.

In Massachusetts, an employer must operate for 120 days or less per year, and be certified by the Commonwealth, in order for its employees to be exempt from overtime requirements. The seasonal exemption in Massachusetts does not exempt employers from paying the minimum wage.

Because the penalties for violation of federal and state wage and hour laws can be draconian, employers should approach this issue with care and, if uncertain, should consult with experienced legal counsel.

Gary D. Finley is an attorney at Schwartz Hannum PC in Andover, MA and a graduate of Cornell Law School and St. Anselm College. He represents employers and educational institutions in litigation matters, contracts and other agreements, employee and student discipline, management training, and a myriad of other employment issues.