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Understanding Seasonal Exemptions
Fact Sheet #18: Section 13(a)(3) Exemption for Seasonal Amusement or Recreational
Establishments Under the Fair Labor Standards Act (FLSA)
The FLSA requires that most employees in the United States be paid at least the Federal minimum wage and overtime pay at time and one-half the regular rate of pay after 40 hours in a workweek. In addition, the law includes child labor and recordkeeping provisions. However, the Act provides some specific exemptions from these requirements for employees employed by certain establishments and in certain occupations. This fact sheet provides general information concerning the application of the Section 13(a)(3) exemption from minimum wage and overtime pay to seasonal and recreational establishments under the FLSA.
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 the State laws be reviewed prior to applying this exemption.
General Provisions of Section 13(a)(3)
Section 13(a)(3) 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, or (B) during the preceding calendar year, its average receipts for any six months of such year were not more than 33-1/3 per centum of its average receipts for the other six months of such year."
Tests for the Exemption
- An "amusement or recreational establishment" will be exempt under Section 13(a)(3) of the Act if it meets either Test (A) or Test (B) as explained in the following paragraphs.
- "Does not operate for more than seven months in any calendar year." Whether an amusement or recreational establishment "operates" during a particular month is a question of fact, and depends on whether it operates as an amusement or recreational establishment. If an establishment engages only in such activities as maintenance operations or ordering supplies during the "off season" it is not considered to be operating for purposes of the exemption.
- 33-1/3 % Test. Because the language of the statute refers to receipts for any six months (not necessarily consecutive months), the monthly average based on total receipts for the six individual months in which the receipts were smallest should be tested against the monthly average for six individual months when the receipts were largest to determine whether this test is met. To illustrate: 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.
"Employed by" an Exempt Establishment
For purposes of applying Section 13(a)(3), the general principles set forth in IB 779.307 - 779.311 apply. Thus an employee, to be exempt, must be "employed by" the exempt establishment. If the concessionaire and host establishment constitute a single establishment, as is usually the case, the tests apply on the basis of all the operations of the establishment, including those of the concessionaire. Central functions of an organization operating more than one such establishment, as in the case of employees of a central office, warehouse, garage, or commissary which serves a chain of exempt "amusement or recreational" establishments would not be within the exemption under Section 13(a)(3).
"Receipts" of a publicly operated amusement or recreational establishment. Section 13(a)(3) contains certain percentage tests for "receipts" of the establishment. As used here, receipts are fees from admissions. A publicly operated amusement or recreational establishment whose operating costs are met wholly or primarily from tax funds would fail to qualify under Section 13(a)(3)(B).
Where to Obtain Additional Information
This article is for general information and is not to be considered in the same light as official statements of position contained in the regulations. For additional information, visit www.wagehour.dol.gov and/or call the wage-hour toll-free information and helpline: 866-4USWAGE (866-487-9243).
U.S. Department of Labor, www.dol.gov.
Originally published in the 2007 Winter issue of The CampLine.