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Human Resources
September (depending on when your area has its big season But there are ways to influence these calculations. For
pass promotion), and the remaining months might be your example, a ski area could move its season pass promotions
six lowest receipts months. into one of the six “highest” months of receipts (April, for
Average those six lowest months and you will have your example), so that the receipts for such promotions do not fall
monthly average for the low six-month period. Compare this into a “low” receipts month, like May or June. Moreover, you
monthly average against the monthly average of the six high- could structure the season pass promotion so that there is a
est or largest months. It’s a simple mathematical division small down payment in a “low” receipts month, with the bulk No resort is quite like yours
calculation: the monthly average of the six lowest months of pass sale price paid during a “high” receipts month. Also,
divided by the monthly average of the six highest months. If some ski areas schedule annual HOA fees during a certain a
you are below 33.3 percent, then you satisfy this test. Again, month—you could arrange to have HOA fees paid by home
you need to be comparing the monthly average for these two owners in a “high” receipts month, like December or January,
six-month periods of time. To be clear, you do not com- to lump more receipts into one of the higher months. Simply
pare against the total for the calendar year; it’s a comparison put, the goal is to have as much of your “receipts” as possible
between these two six-month periods. received in one of the six higher months.
By way of example, the DOL explains that if a seasonal
recreation business has total receipts of its six lowest months How would a ski area document that it
of $75,000, then the monthly average is $12,500. For its six satisfies these exemptions?
highest months of receipts, in DOL’s example, it amounts to Your ski area should be performing these tests annually, and
$260,000, for a monthly average of $43,333. When you divide documenting your conclusions by including some sort of
$12,500 by $43,333, the result is 28 percent, which is below the simple paper-work in a file controlled by your HR director or
33.3 percent required to satisfy this test. In short, to comply, the CFO. In fact, the results of these tests should go back three
average revenues from the six lowest months cannot be more years, which is the statute of limitations under the FLSA.
than 33.3 percent of the average of the six highest months. For the two-thirds receipts test, this could be as easy as
running a simple Excel spreadsheet with “receipts” broken
Is there a difference between “receipts” down by month, showing the mathematical results of the
and “revenues”? comparison between the monthly average of the highest and
Yes, the statute specifically uses the word “receipts” as opposed lowest six months. Similarly, a ski area seeking to claim the
to “revenues,” and this is an important distinction. Most busi- seven-months operating exemption could simply maintain a
nesses employ the accrual method of accounting, whereby document that shows, from the previous calendar year, the
they record the revenue income at the time of delivery, not months the ski area was “in operation” (i.e., open to the public
payment. Courts construing this exemption test have specif- for admission, and generating revenues). Unless it is a particu-
ically rejected the use of monthly revenues for this test, and larly close call on satisfying either of these tests, past experience No financial services company delivers solutions quite like ours. We recognize that your business faces a unique set of
required businesses to compare based on receipts. In other from state and federal auditors in the ski industry indicates that risks every day. Our team can help you assess and minimize those risks so you can focus on running your business.
words, for purposes of this test, ski areas would have to log the most auditors will likely be satisfied with such documentation. Let us show you why many of the largest resorts in North America have looked to us for solutions to protect their
revenue as a “receipt” at the time a guest pays the money. business now and for the long term.
For example, if you have a season pass promotion in It is important to emphasize that some aspects of these two
April or May, your area may not record that money as “rev- exemptions will apply based on the unique circumstances Team up with us today.
enue” until the following November or December, when of a ski area’s business operations. There are likely numer-
guests pick up their pass. Under the receipts test, however, ous other considerations that are not addressed here, but Scott Myers, Sacramento, CA Bill Curtis, Lakewood, CO
916-558-4033 | scott.a.myers@wellsfargo.com
720-963-6546 | william.curtis@safehold.com
that money would be deemed “received” in the month of is always smart to contact your local employment or labor
April or May when the guest pays it. counsel with additional questions, especially as they relate to Gardiner de Back, Sacramento, CA Ryan Patrick, Portsmouth, NH
603-559-1380 | ryan.patrick@safehold.com
916-558-4027 | debackpg@wellsfargo.com
the myriad intricacies of state employment laws and regula-
Can a ski area satisfy this test one year, tions on minimum wage and overtime. Rob Andrews, Seattle, WA
but possibly not the next? NSAA will continue to report in our monthly NSAA 206-470-3284 | robert.e.andrews@safehold.com
Absolutely—these tests are based on the preceding calendar Capital Watch on how President Obama’s executive orders
year, so they must be analyzed each year to determine if your on minimum wage and overtime will fare under the new
area is exempt. For example, depending on business opera- Republcan-controlled Congress, and whether (and how) the
tions, it’s possible to satisfy this test based on 2015 calendar new Trump administration plans to undo some of Obama’s
year receipts, but in 2016 you may not satisfy this test. actions on these key labor initiatives.
Products and services are offered through Safehold Special Risk, Inc., dba Safehold Special Risk & Insurance Services Inc. in California, a non-bank insurance agency affiliate of Wells Fargo & Company. Coverage
is provided by unaffiliated insurance companies with the exception of crop and flood insurance which may be underwritten by Safehold Special Risk, Inc.’s affiliate, Rural Community Insurance Company.
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10 | NSAA JOURNAL | WINTER 2017