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FLSA2009-11
January 15, 2009
Dear Name*:
This is in response to your letter regarding the application of Fair Labor
Standards Act (FLSA) section 13(a)(3)*
to your client, a concessionaire at a privately-owned
recreational establishment. It is our opinion that your client does not qualify
as a recreational establishment and therefore may not claim the section 13(a)(3)
exemption.
Your client holds an
exclusive contract with the owner of a recreational establishment to provide
various catering services to the general public and to private parties who use
the facility. All of your client’s operations are conducted at the
establishment. No other legal relationship exists between the owners of the
recreational establishment and your client. We assume that the recreational establishment
contracting for the catering services is, for purposes of this response, within
the scope of the section 13(a)(3) exemption. In addition, for the purpose of
this response, we assume that your client is an enterprise covered by the
FLSA. You inquire whether a recreational or amusement establishment and
a concessionaire that are not a “single establishment,” but are two separate
legal entities working under a mutually beneficial contract, may both claim the
section 13(a)(3) exemption.
Section 13(a)(3) of the FLSA
provides a minimum wage and overtime exemption for any employee employed by an
establishment that is an amusement or recreational establishment, organized
camp, or religious or non-profit educational conference center that either “does
not operate for more than seven months in any calendar year,” or, “during the
preceding calendar year,” has “average receipts for any six months of such year
[of] not more than 33 1/3 per centum of its average receipts for the other six
months of such year.” 29 U.S.C. § 213(a)(3)(A)-(B).
In order to claim the section
13(a)(3) exemption, the employer must be an amusement or recreational
establishment. Under 29
C.F.R. § 779.23, an establishment “refers to a ‘distinct physical
place of business’ rather than to ‘an entire business or enterprise,’” which
“may include several separate places of business.” Furthermore, the terms
“employer,” “establishment,” “business,” and “enterprise” are not synonymous. See
29
C.F.R. §§ 779.203 and 779.303.
The section 13(a)(3) exemption “depends upon the character of the establishment
in which the employee is employed. Restaurants are not generally recognized as
amusement or recreational in character. Employees of a restaurant operating on
the premises of an amusement or recreational establishment . . . may
come within the section 13(a)(3) exemption provided the operations of the
restaurant and host establishment constitute a single establishment.” Wage and
Hour Opinion Letter Feb. 1, 1982 (copy enclosed).
“The exemption in section
13(a)(3) does not extend to employees who although actually working in an
establishment are not ‘employed by’ the establishment.” Wage and Hour Opinion
Letter Jan. 17, 1968 (copy enclosed). Wage and Hour Division Fact Sheet #18
states, “an employee, to be exempt, must be ‘employed by’ the exempt
establishment. If the concessionaire and host establishment constitute a
single establishment, as is usually the case, the tests apply on the basis of
all the operations of the establishment, including those of the
concessionaire.”
Factors considered in
determining a “single establishment” “include: (a) physical separation from
other activities, (b) functional operation as a separate unit with separate
records and separate bookkeeping and (c) no interchange of employees between
units.” Wage and Hour Opinion Letter Nov. 30, 1984
(copy enclosed); see also 29
C.F.R. § 779.305. It is our understanding that your client operates
as a separate unit with separate records and bookkeeping from the recreational
establishment and there is no interchange of employees between the two
entities. Further, based on the information you provided, your client is not
itself an amusement or recreational establishment, but is a legal entity
separate from the recreational establishment where its employees work. Thus,
your client and the recreational establishment with which it contracts are not
a “single establishment.” Because your client and the recreational
establishment are separate legal entities, and because your client does not
qualify as an amusement or recreational establishment, your client is ineligible
for the section 13(a)(3) exemption.
This opinion is based
exclusively on the facts and circumstances described in your request and is
given based on your representation, express or implied, that you have provided
a full and fair description of all the facts and circumstances that would be
pertinent to our consideration of the question presented. Existence of
any other factual or historical background not contained in your letter might
require a conclusion different from the one expressed herein. You have
represented that this opinion is not sought by a party to pending private
litigation concerning the issue addressed herein. You have also
represented that this opinion is not sought in connection with an investigation
or litigation between a client or firm and the Wage and Hour Division or the
Department of Labor.
We trust that this letter is responsive to your inquiry.
Sincerely,
Alexander J. Passantino
Acting Administrator
* Note: The actual name(s)
was removed to preserve privacy in accordance with 5 U.S.C. § 552(b)(7).
Unless otherwise noted, any statutes, regulations, opinion letters, or
other interpretive material cited in this letter can be found at www.wagehour.dol.gov.
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