Page 65 - Early Winter 2014

In explaining the agency’s final rule, Moreover, the USFS has no exper- subcontractors unless the prime contract the DOL stated: “To the extent that tise in construing and applying these fact- under which the subcontract is awarded an entity providing services or facilities specific exemptions under the FLSA, so results from a solicitation issued on or directly related to skiing satisfied the cri- NSAA will be working with the indus- after January 1, 2015.” teria for this specific exemption from the try to develop protocols and proce- Ski areas facing this higher wage rate FLSA’s minimum wage requirements, and dures to help the USFS understand that should also bear in mind that the $10.10 to the extent that the wages of the entity’s the industry plans to fully avail itself of rate will go up each year, based on the workers are also not governed by the Service these exemptions under the FLSA. At national Consumer Price Index, which Contract Act or the Davis-Bacon Act, both of the NSAA winter conferences has averaged about 2 percent over the Executive Order 13658 would not apply (at Killington, January 20–21, and at last five years. Moreover, even if ski areas in this specific context because the con- Snowbird, February 10–12, 2015) there are exempt from the federal minimum tractor would not have any workers on will be in-depth educational seminars wage, they will still be subject to their the contract whose wages were governed to help ski areas better understand these own state’s minimum wage. More than a by the FLSA, the Service Contract Act, or exemptions and how the USFS and the dozen states have raised their state mini- Davis-Bacon Act.” DOL will be interpreting them. mum wage in the last few years, and most This was both surprising and cryptic. states do not have exemptions similar to In another part of the DOL’s 338-page Other Key elements those under the Fair Labor Standard Act. explanation of the final rule, the DOL Of the final rule And the higher minimum wage rate noted that it has, in the past, interpreted Beyond what constitutes a “new contract” will raise the minimum wage for tipped Forest Service SUPs as being governed by for the wage clause, and how the FLSA employees as well. Over the next few the Service Contract Act. But the USFS exemptions may apply, there were other years, tipped employees’ minimum wage has never held ski areas on Forest Service key aspects of the DOL’s final rule imple- will rise to about $7.07 an hour (apart land to the prevailing wage rules governed menting President Obama’s wage hike. from whatever tips they receive). NSAA by the Service Contract Act. In fact, the Most notably is the DOL’s conclusion asked the DOL to phase in the over- Service Contract Act is not mentioned that the wage hike will extend to a con- all minimum wage increase over several at all in standard ski area permit lan- tract holder’s subcontractors and, impor- years, but the DOL refused, and only guage. Moreover, the ski area exemptions tantly, that the prime contractor is liable allows a phased-in approach for tipped under the FLSA are firmly entrenched for the subcontractor’s failure to pay this employees. within the congressionally-passed FLSA higher minimum wage. Lastly, and perhaps of most impor- statute. It is unclear if the DOL mistak- “The term contractor refers to both a tance, is the DOL’s conclusion that the enly believes that a presidential executive prime contractor and all of its subcontrac- failure to properly pay this higher min- order—which has not gone through the tors,” the DOL explained, and “the term imum wage may lead to contract or legislative process in Congress—can undo contractor includes lessors and lessees.” permit suspension, or possibly total these statutorily-protected exemptions The DOL’s final rule explicitly states that debarment from federal contracts, includ- enacted under the FLSA and passed by this rule extends to lease agreements, ing the revocation of a ski area’s spe- Congress. Indeed, this would raise serious licenses, permits, service agreements, and cial use permit. While this would be a and troubling constitutional questions. similar provider agreements. harsh result and require several rounds To be sure, NSAA will be educating If a ski area operating under an SUP of administrative hearings and appeals, the USFS on these FLSA exemptions for hires subcontractors, then the ski area will it nonetheless merits serious attention to ski areas, and pushing both the USFS and be ultimately responsible to ensure that these difficult and confusing rules. the DOL to recognize that these exemp- its subcontractors are paying the higher, The DOL’s final rule only came out tions cannot be nullified by a presiden- $10.10 minimum wage rate. However, if on October 1, so many of these ques- tial executive order. NSAA believes these a ski area’s existing SUP is not subject to tions and interpretations have yet to be FLSA exemptions should exempt most the new minimum wage (e.g., the per- explored or fleshed out by NSAA, the ski areas from President Obama’s wage mit is not up for modification or renewal Forest Service, and even the DOL. Given hike, notwithstanding the DOL’s dubi- for many years) then that area’s subcon- the high stakes involved, these issues will ous attempt to “back-door” this wage tractors are also not subject to this higher be high on NSAA’s radar, and we will be hike into Forest Service SUPs through the minimum wage. The DOL explained keep the industry informed throughout Service Contract Act. that this wage rate “does not apply to this process. n w w w. n s a a . o rg EARLY WINTER 2014 | NSAA Journal | 63 NSAA Early Winter 2014 prepressed v5b.indd 63 10/29/14 6:09 PM