Do Overtime Rules Apply to Seasonal Employees?

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With summer break just around the corner, many business owners are already looking to hire seasonal employees.

If you’re one of them, you might be wondering…

Does the Fair Labor Standards Act apply to seasonal employees?

The answer is, well, yes and no.

Section 13(a)(3) of the FLSA provides an exemption from the minimum wage and overtime provisions of the FLSA for “any employee employed by an establishment which is an amusement or recreational establishment, if (A) it does not operate for more than seven months in any calendar year…”

In layman’s terms, if your business is open less than seven months a year, you might not have to pay your employees minimum wage or overtime.

But, in a recent interview with TSheets, Parsons Behle and Latimer attorney Maria O. Hart warned, “Don’t let the fact that this exemption exists mislead you into believing you’ve a get-out-of-jail-free card when it comes to complying with the FLSA. It’s a tricky and complex statute filled with strict requirements and complicated loopholes.”

Loopholes like this one: “Some state wage laws may not recognize or permit the application of this exemption, and since an employer must comply with the most stringent of the state or federal provisions, it is strongly recommended that state laws be reviewed prior to applying this exemption.”

In other words, not so fast! While the Department of Labor (DOL) might consider your seasonal employees exempt from the minimum wage and overtime rules of the FLSA, your state laws probably don’t.

“State law usually mandates payment of minimum wage, with very few exceptions,” explained Hart.

So, yes, seasonal employees can be exempt from minimum wage and overtime rules — but also, no, they can’t.

Confused yet? Hart has some advice.

 

1. Check with your employment counsel first.

“If your business qualifies as a seasonal employer and you want to take advantage of this exemption, you’re certainly entitled to,” Hart said. “You just need to make sure you meet every single one of the requirements first.”

The best way to do this?

“Involve your employment counsel from the onset,” she said, “and continue to keep them involved in the critical decisions you make regarding your employees.” Not only can your counsel advise you on the best course of action, but they can also make sure that you and your business are meeting all your obligations and complying with the FLSA — this year and beyond.

 

2. Familiarize yourself with the FLSA and exemption rules.

No one expects you to do this entirely on your own. After all, not even the DOL, the very department charged with enforcing the FLSA, gets it right 100 percent of the time. And, “if the DOL can’t get this right,Jackson Lewis attorney Paul DeCamp said, “what chance do other employers have?”

However, that’s not to say you shouldn’t try. As a business owner, you should have a basic understanding of what’s required from you and your employees when it comes to this complex statute. Ignorance of the law is not an alibi if you get hit with a wage and hour lawsuit.

“The DOL’s website is the best place to start,” Hart said. The DOL publishes many fact sheets and other general guidance documents meant to assist business owners. Daniel Abrahams, an attorney with Brown Rudnick LLP, told TSheets that business owners should “enlist legal counsel to help you stay abreast of changes that may impact you.”

 

3. Always abide by state laws.

In a recent quiz conducted by TSheets, it was found that more than 58 percent of quiz takers believe the FLSA (a.k.a. Federal law) trumps state law — but it’s simply not true. “The federal law is merely one legal framework,” Hart said, “but it’s structured to set a minimum standard. Each state is well within their authority to create a more robust or stronger law.” As a rule, employers are required to follow whichever law is more stringent.

On top of that, “In general, state laws apply to whatever state the employee is working in,” said Hart — even if your business is headquartered across state lines or you have employees working in multiple states.

“Again,” she cautioned, “it’s always a good idea to check in with your legal counsel, someone who is familiar with the different state laws and can help you comply with them.”

 

4. Track employee time — even if they’re paid by the season.

In some cases, seasonal employees live and work on site. These employees are often expected to be “on” nearly 24/7, but does that mean they’re always on the clock?

“In many states, minimum wage rules still apply to these employees … even if overtime rules do not,” said Hart. “So it’s always a good idea to track employee time.” In these cases, even if your employees are paid by the season, their total compensation divided by the total number of hours worked must still equal the state’s minimum wage. If not, you’ve got a problem.

“Find a way to divide tracked time into categories like ‘on the clock’ and ‘on call,'” Hart said — things like “on-call” time, meals, and employee housing should be built into your compensation structure. When in doubt, “Your legal counsel can help you figure it out,” she added. “Don’t make the mistake of thinking you’re on your own when it comes to FLSA compliance.”

Automated time tracking makes it fast and easy for employees to clock in and out anytime, anywhere. And because time data is stored securely in the cloud, it’s there whenever you need it. “In the event you are hit with a wage and hour lawsuit,” said Hart, “accurate and organized time records can serve as your No. 1 defense!”

 

Learn more about FLSA compliance at www.tsheets.com/flsa

3 Comments

  1. […] Myranda is a writer and researcher at the employee time tracking app TSheets where she runs a daily blog dedicated to helping small business owners succeed. Topics she likes to write about include recruitment, company cultures, how to take the pain out of payroll, and, of course, how to track and schedule your time.  First published on the TSheets Time Tracking Blog […]

  2. […] “State law usually mandates payment of minimum wage, with very few exceptions,” Maria O. Hart, an attorney at NexTitle, told TSheets. […]

  3. […] An exemption from the minimum wage and overtime provisions of the FLSA is provided to those who are employed by an amusement or recreational establishment that doesn’t operate for more than seven months in a calendar year. […]

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