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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.


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