On September 15, 2020, the United States Department of Labor assured existing, seasonal-based establishments they could engage in alternative activities to cope with the financial fallout from COVID-19, without losing their minimum wage and overtime exemption.  The Wage and Hour Division (WHD) issued a Field Assistance Bulletin (FAB) stating it would not enforce actions against seasonal establishments for engaging in activities that would otherwise cause them to lose their exemption under §213(a)(3) of the Fair Labor Standards Act (FLSA).

One exemption to the FLSA’s mandate that employers pay employees at least the federal minimum wage and overtime for all hours worked over 40 hours in a week is for those employed by “an amusement or recreation establishment, organized camp, or religious or non-profit educational conference center.”¹  The establishment must operate, however, on a seasonable basis.²  An establishment operates on a seasonable basis if it (1) operates for seven months or less in any calendar year; or (2) during the preceding calendar year, its average receipts for any six months were not more than 33% of its average receipts for the other six months of the same year.³  

Many seasonal establishments, particularly those that operate during the spring and summer months, canceled or substantially limited their amusement or recreational programs because of COVID-19.  As a creative remedy to cope with the devastating financial impact of the pandemic, many seasonal establishments have offered alternative services or otherwise used their facilities in related ways within the COVID-19’s restrictions.  These alternatives have allowed seasonal establishments to recover critical income to retain employees and cover fixed costs.

The alternatives may also have the adverse effect of prohibiting the establishment from satisfying the requirements of §213(a)(3).  For example, a camp that operated exclusively during the spring and summer months and scaled back its 2020 programming decides to partner with a high school that needs more personnel, fields, facilitates, and equipment to comply with CDC guidelines for the upcoming football season.  This alternative, however, may conflict with the FLSA’s requirement that camps must only operate for seven months or less to qualify for the minimum wage and overtime exemption.

Because of the tension between the efforts to generate critical income to make up for the economic loss from COVID-19, and the requirements of §213(a)(3), the WHD, via its FAB, has stated that it will not bring enforcement actions against the seasonal establishments subject to the section.  Thus, to qualify, the establishment must have operated as an amusement or recreational establishment, an organized camp, or a religious or non-profit educational conference center, and met the requirements of §213(a)(3) before 2020.  The FAB also requires the seasonal establishment to meet four additional criteria.  The establishments must have:

1. canceled or limited their regular seasonal programming or operations for reasons related to COVID-19;

2. adopted related alternative programing or operations solely for 2020;

3. paid employees at least the same wage levels and rates they received when the establishment was operating as an amusement or recreational establishment, organized camp, or religious or non-profit conference center; and

4. have taken steps to abandon those alternatives and return to their normal operations in 2021.

The FAB recognizes the potential of COVID-19 affecting seasonal establishments through 2021, in which case, the non-enforcement positions of the WHD will continue through 2021. 

Although the DOL is exercising its discretion not to enforce, the FAB does not prevent employees and plaintiffs’ lawyers from bringing private lawsuits against seasonal amusement or recreation establishments, organized camps, or religious or non-profit educational conference centers.