DOL Eases Pay Rules For Seasonal Businesses Amid Virus

By Tim Ryan
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Law360 (September 16, 2020, 2:37 PM EDT) -- The U.S. Department of Labor will not bring minimum wage and overtime enforcement actions against certain seasonal businesses forced to change their operations due to the COVID-19 pandemic, the agency has said in a new directive.

The Field Assistance Bulletin that Wage and Hour Division Administrator Cheryl Stanton issued Tuesday covers businesses like amusement parks, golf courses, stadiums and camps, which typically qualify for a Fair Labor Standards Act exemption for seasonal amusement or recreational operations.

Under the guidance, the Department of Labor will give a temporary reprieve to those and similar types of businesses on minimum wage and overtime violations if they had to change how they operate due to the pandemic in a way that might make them ineligible for the seasonal exemption under normal circumstances.

"To make ends meet in 2020, some of these establishments creatively adapted to withstand the devastating impact of the COVID-19 pandemic on the financial health of their organizations," Stanton said in the bulletin.

While the document focused on alleged FLSA violations that occurred in 2020 at seasonal amusement and recreational businesses that have overhauled their operations, a footnote acknowledged the nonenforcement might continue into next year if the pandemic persists and keeps them from returning to normal.

Stanton said the agency is taking the action to help ease the burden and hasten recovery for seasonal businesses that have particularly struggled during the economic downturn that the COVID-19 pandemic has ushered in.

The exemption to the FLSA covers businesses that are only open for seven months a year or less or whose income fluctuates dramatically at different points in the year. In addition to businesses like amusement parks that often close during the winter or ice rinks that shutter in the warmer months, the exemption covers camps and educational centers run by religious organizations or nonprofit groups.

The nonenforcement position will apply to seasonal businesses that cut back or canceled their normal operations due to COVID-19 and replaced them with a temporary alternative. As an example of a company that would benefit from the nonenforcement guidance, the bulletin pointed to a sports camp that canceled its programs over the summer and instead rented its fields to a school or local groups.

While such moves might be necessary for some businesses to stay afloat during the pandemic, the bulletin noted such changes might also mean businesses that normally fall into the exemption's carveout for "amusement or recreational establishments" would no longer fit that definition.

To qualify, the businesses will also need to keep wages steady with what they paid before the pandemic and make plans to pick up their regular business next year, according to the document.

The bulletin will not cover businesses that were not an exempt seasonal operation before 2020, or those that already planned to make changes before January 2020, Stanton wrote.

In addition to not bringing enforcement actions, the bulletin also mentioned the Wage and Hour Division will use income from either 2019 or 2020 next year when testing if a business qualifies for the seasonal exemption.

A Department of Labor spokesperson said the nonenforcement position will have no impact on workers who bring their own lawsuit against their employer. 

The pandemic has spurred a wave of regulation and guidance from the Department of Labor as businesses grapple with changes to their operations due to state-ordered closures and limitations.

The new bulletin comes days after the agency clarified a regulation detailing who can qualify for emergency sick leave under the Families First Coronavirus Response Act. It is a revision of a prior version that a federal judge in New York invalidated in August.

In June, the agency scaled back its practice of pursuing heightened damages in overtime and minimum wage lawsuits for violations of the FLSA, and in August clarified what companies must do to track work that employees do outside of normal work hours.

--Additional reporting by Vin Gurrieri, Dorothy Atkins and Jon Steingart. Editing by Abbie Sarfo.

Update: This story has been updated to include comment from the Department of Labor.

For a reprint of this article, please contact reprints@law360.com.

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