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Seasonal Businesses May Be Able to Claim Overtime Exemption

  • February 01, 2019

It’s only February, but employers that do the majority of their business in the summer months, such as camps and amusement parks, are already making hiring plans for 2019. When determining overtime pay requirements for seasonal employees, these employers should explore the availability of a special statutory pay exemption. Section 13(a)(3) of the Fair Labor Standards Act provides an exemption for both overtime and minimum wage requirements for amusement and recreational establishments if they either (1) do not operate for more than seven months in a calendar year, or (2) during the preceding calendar year, their average receipts for any six months of such year were not more than 33.3 percent of their average receipts for the other six months of such year.

The exemption applies to all employees, whether paid on a salaried or hourly basis. The receipts test is measured on a cash accounting and not an accrual basis. In other words, the employer must calculate the income when received, and it cannot apply revenue at other times to try to meet the exemption test. While this exemption applies to a relatively small number of businesses, it provides a degree of pay flexibility not enjoyed by most employers. Employers eligible for the federal seasonal employer exemption should also check state law to make sure it does not impose additional pay requirements.