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minimum wage and overtime rules, including both of paying well above federal minimum wage and paying over-
Obama’s executive orders. These FLSA provisions—known time, notwithstanding the fact that they qualify for these
as the “two-thirds receipts test,” and the “seven-months oper- exemptions. In this tight labor market, higher wages enable
ations” test—exempt seasonal recreation establishments from businesses to hire and retain valuable employees. The key,
federal minimum wage and overtime rules. however, is that these exemptions provide ski areas with
Congress passed these two exemptions in 1966, based on maximum flexibility to manage their business operations
the premise that seasonal businesses have a very short window without these federal mandates, allowing them to make deci-
of time to generate profits, and therefore should not be subject sions based on their unique operations.
to burdensome regulations on minimum wage and overtime. For example, if a ski area is exempt under one of the
As one federal appellate court explained, “[t]he logical purpose two seasonal recreation provisions, that ski area could legally
of these provisions is to exempt...amusement and recreational decide to pay only its ski patrol or snowmakers overtime
enterprises, which by their nature, have very sharp peak and under certain circumstances (e.g., time and a half after 45
slack seasons.... Their particular character may require longer hours), but perhaps not pay overtime for other departments.
hours in a shorter season, their economic status [as seasonal These exemptions provide businesses with such flexibility.
businesses] may make higher wages impractical, or they may While the FLSA regulates federal minimum wage and
offer non-monetary rewards [to their employees].” overtime laws, it is important to understand that it does not
Under the FLSA, Section 213(a)(3) provides two exemp- govern paid sick leave requirements, which is another key
tions from minimum wage and overtime requirements for “any part of Obama’s pro-labor initiatives. In 2015, President
employee employed by an establishment which is an amuse- Obama signed an executive order requiring federal con-
ment or recreational establishment . . . if (A) it does not operate tractors (including ski areas on Forest Service land) to offer
for more than seven months in a calendar year, or (B) during employees seven days of paid sick a leave a year. To be clear,
the preceding calendar year, its average receipts for any six these seasonal recreation exemptions under the FLSA would
months of such year were not more than 33 1/3 per centum of not protect ski areas from President Obama’s paid sick leave
its average receipts for the other six months of such year.” executive order applying to federal contractors, because the
Although just one sentence in the statute, these two FLSA only governs minimum wage and overtime.
FLSA exemptions, while seemingly straightforward, prompt
a number of questions. Simply put, the application of these What about state minimum wage
two exemptions is highly fact-intensive and will be judged and overtime laws?
based on the unique operations of each ski area. As most human resources professionals know, businesses must
Here are some frequently asked questions to help ski pay employees whichever minimum wage or overtime rate is
areas better understand how these statutory exemptions are higher, the federal rate or the state rate. After the November
construed under the FLSA statute, DOL opinion letters, and elections, 29 states now have higher state minimum wage rates
the case law interpreting these exemptions. above the federal government’s rate of $7.25 an hour.
There are a patchwork quilt of state laws on minimum
What does it mean to be “exempt” wage and overtime, separate and distinct from the federal
from the FLSA? rules. However, 14 states do not have separate overtime laws
If a ski area is exempt based on one of the two exemptions (a apart from the federal rules, including a number of southern
business needs only to satisfy one of the two exemptions, not and intermountain states in the West (see map). Another 18
both), then the area is not subject to federal minimum wage states have adopted the seasonal recreation exemptions at the
or overtime rules and regulations. Either of these provisions state level that essentially mirror the federal FLSA exemp-
would exempt ski areas from President Obama’s executive order tions for the seven-months operations test, and the two-
requiring federal contractors to raise their minimum wage to thirds receipts test. If your ski area is in one of these 32 states
$10.10 an hour, or his executive order raising the salary thresh- (the blue shaded states in the map) and you meet one of the
old for the white collar worker exemption from overtime. More two exemptions, you are entirely exempt from both state and
broadly, it would exempt seasonal recreation establishments federal minimum wage and overtime rules.
from all federal minimum wage and overtime rules. If you are in the remaining 18 red states on the map,
It should be stressed, however, that while the vast major- you may be exempt from the federal minimum wage and
ity of ski areas are expected to meet at least one of these two overtime rules, but you will need to check what your indi-
seasonal recreation exemptions, many areas are nevertheless vidual state requires for minimum wage or overtime. For

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