Page 12 - Summer 2014

HUMAN RESOURCES Huge Minimum Wage Hike to Impact Ski Resorts by DAVE byRD, DIRECTOR OF RISK & REGULATORY AFFAIRS n February, President Obama announced he is imposing a massive minimum wage hike upon federal con- tractors to take effect on January 1, 2015, raising the minimum wage from $7.25 to $10.10 an hour—a 40 Ipercent increase in just a matter of months. Many companies passed this off as an election-year gambit, largely affecting defense industry contractors working under lucrative contracts with the government. However, the ski industry and other rec- NSAA will argue that such a sweeping across all ski area departments. Under reational businesses were stunned when jump in the minimum wage, extended such a wage hike, suddenly wages for the Department of Labor (DOL) released to so many different entities well beyond employees who have been working at a proposed regulations in June seeking federal contractors, effectively amounts resort for a few years and are earning well to implement this wage hike beyond to a significant amendment to the Fair above the previous minimum wage are “federal contractors” to anything that Labor Standards Act—the main federal now looking at their wages being com- remotely approaches a relationship with minimum wage legislation—without pressed in comparison. And as wages a federal agency. This effectively extends Congressional approval. increase significantly, it will also have a the reach of the minimum wage hike to There is some good news, though, sizeable impact on skyrocketing work- any business that has a contract, license, albeit tempered. The wage hike would ers’ compensation premiums, which are permit, verbal agreement, or any “con- only apply to “new contracts” entered directly tied to underlying wage rates. tract-like agreement” with the federal into after January 1, 2015. In other For mid-size and smaller ski areas, government. Under the DOL’s proposed words, it is not an automatic increase as the impacts on budgets could be enor- regulations, ski areas with a new permit initially feared, but would go into effect mous. Anecdotally, some areas are look- from the U.S. Forest Service could, argu- if a ski area obtained a new permit after ing at increased labor costs well into ably, be subject to this wage hike begin- January 1, 2015. Accordingly, ski areas seven figures—with little wiggle room to ning in 2015. are being encouraged to update any per- pass on these costs to the guest. In the past, USFS (under the mitting issues before the end of 2014 NSAA will be focusing on this Department of Agriculture) has not to avoid the potential impact of a size- challenge over the coming months and deemed ski areas operating under spe- able wage hike in January or thereafter. will highlight these issues at NSAA cial use permits on Forest Service land to Moreover, NSAA will ask the DOL not to conferences. We will also be promoting be “government contractors.” This non- extend this wage hike to simple amend- risk mitigation techniques—including federal contractor status is crucial to ski ments or mere tweaks to an underlying key exemptions under the Fair Labor areas on USFS land, as the designation as special use permit. Standards Act—that could offset some a federal “contractor” could subject them Even with this clarification for “con- of the impact of these wage hikes for to countless additional federal require- tracts” after January 1, 2015, this rule is smaller to mid-size ski areas. ments (e.g., affirmative action rules, vet- nonetheless hugely problematic both for Lastly, there is a distinct possibil- eran preferences, and EEOC rules), ski areas on USFS land as well as those ity that when DOL finalizes these reg- resulting in significantly higher opera- nearby on private land. If one area raises ulations on October 1, 2014, there will tional costs. wages to $10.10 an hour, that places be an immediate legal challenge seeking NSAA will be filing comments incredible pressure on nearby resorts that a restraining order blocking Obama’s on this proposed minimum wage rule, may not be subject to the wage hike to authority to raise the minimum wage opposing the DOL’s reach to extend to match these wage levels. Labor compe- in such a sweeping fashion. This would any remote relationship between a busi- tition in rural areas where ski areas are buy some time to allow the litigation ness and a federal agency. Such action by located is already at a premium. to move forward, and delay the imple- the DOL is unprecedented, and likely Equally important, the ripple effects mentation possibly well into 2015 or without apparent legal authority. Indeed, of such a dramatic hike would reverberate beyond. n 10 | NSAA Journal | SUMMER 2014 w w w. n s a a . o rg NSAA Summer 2014 prepressed v7a.indd 10 7/9/14 1:32 PM