(June 18, 2015) Ocean Pines, using a loophole in the Fair Labor Standards Act (FLSA) established by the U.S. Department of Labor, plans to exempt a portion of its staff from overtime pay.
Specifically, the community will use the FLSA Exemption for Seasonal Amusement or Recreational Establishments to exclude lifeguards from receiving time and a half wages.
Ocean Pines General Manager Bob Thompson confirmed the news on Tuesday.
“We’re going to extend the opportunity for our lifeguards at our pools, if they’d like to work more than 40 hours, we’re going to extend that opportunity to them,” Thompson said. “We typically wouldn’t pay overtime so we’d limit them to 40 hours, but when we found out the exemption is there, for those that want to work the additional hours to pick up some more pay, this gives them the opportunity to do so.”
The alternative, Thompson said, was hiring additional staff to cover the needed hours.
“Instead of hiring additional staff for those straight hours I’m giving those who are there an opportunity to work a few extra hours if they want to,” he said.
According to the federal labor laws, most employees in the U.S. must be paid at least the federal minimum wage and overtime pay at one-half the regular rate of pay after 40 hours in a workweek.
The labor act provides an exemption from the overtime rule for “any employee employed by an establishment which is an amusement or recreational establishment, if it does not operate for more than seven months in any calendar year, or during the preceding calendar year, its average receipts for any six months of such year were not more than 33-1/3 per centum of its average receipts for the other six months of such year.”
Aquatics does operate year-round, but, according to monthly financial reports from 2014 the amenity averaged $89,592 in revenue between April and September. During the other six months the department took in an average of $18,741, roughly 21 percent of its busy season revenues, putting it within the limits of the exemption.
“It’s very rare that anyone goes into overtime and it’s not that they won’t get paid if they do, because obviously we pay everyone,” Aquatics Director Colby Phillips said. “We can’t make anyone work if they don’t want to, and we pretty much keep everyone under 40 [hours] regardless.”
Phillips estimated the community staffs between 35-40 lifeguards.
“We haven’t really been that worried about it because no one has gone over 40 and we don’t really keep anyone there anyway,” she said. “But if they’re an 18-year-old that’s trying to save money and they want to work and we say, ‘hey, you can’t work over 40 hours because we can’t pay you overtime,’ and all of the sudden we’re like, ‘hey, you actually can, but it’s straight time’ a lot of them want it because they want the money.”
In a May 28 email sent to several people connected with aquatics, Kathleen Cook, supervisor of lifeguards, said Phillips “had [Payroll Director] Beverly [Meadows] check the Amusement and Recreational Exemption Law. Ocean Pines aquatics, summer staff, fall into this exemption. Due to this exemption, we can work over 40 hours and not be paid overtime. This is good news for those of you that would like to work more than 40 hours in the summer.”
A source, which provided the original email, said they were unaware if any of the lifeguarding staff was upset by the news.
“It’s not a matter of being upset, but is it ethical and in line with [state] and federal labor laws,” the source said. “The claim that Ocean Pines pools fall into the recreational establishment exemption was the matter in question. When I approached the finance person they couldn’t address the matter and referred it to the manager for clarification. They have since responded that they have made a decision, but would not share it with me [saying] they would notify the lifeguards via the supervisor.”
The source said they had not heard anything further on the matter.
“There is no problem if the state sees this as appropriate, however I’m not sure how Ocean Pines Aquatics qualifies as a recreational establishment and is not considered an amenity of Ocean Pines when the residents cover the shortages on finances,” the source said, adding that aquatics lost $783,196 during the last five years and projects a budgeted loss of $121,966 during the current fiscal year.
“You might ask, then, why would you be questioning overtime when it would cost the community more? Because it’s important to do what’s right [and] when there are young folks involved it’s necessary the laws are followed,” the source said. “As well, if OP is not exempt we could face charges by the Department of Labor if it’s found to be not exempt and some were to file a claim.”
Specifically, the community will use the FLSA Exemption for Seasonal Amusement or Recreational Establishments to exclude lifeguards from receiving time and a half wages.
Ocean Pines General Manager Bob Thompson confirmed the news on Tuesday.
“We’re going to extend the opportunity for our lifeguards at our pools, if they’d like to work more than 40 hours, we’re going to extend that opportunity to them,” Thompson said. “We typically wouldn’t pay overtime so we’d limit them to 40 hours, but when we found out the exemption is there, for those that want to work the additional hours to pick up some more pay, this gives them the opportunity to do so.”
The alternative, Thompson said, was hiring additional staff to cover the needed hours.
“Instead of hiring additional staff for those straight hours I’m giving those who are there an opportunity to work a few extra hours if they want to,” he said.
According to the federal labor laws, most employees in the U.S. must be paid at least the federal minimum wage and overtime pay at one-half the regular rate of pay after 40 hours in a workweek.
The labor act provides an exemption from the overtime rule for “any employee employed by an establishment which is an amusement or recreational establishment, if it does not operate for more than seven months in any calendar year, or during the preceding calendar year, its average receipts for any six months of such year were not more than 33-1/3 per centum of its average receipts for the other six months of such year.”
Aquatics does operate year-round, but, according to monthly financial reports from 2014 the amenity averaged $89,592 in revenue between April and September. During the other six months the department took in an average of $18,741, roughly 21 percent of its busy season revenues, putting it within the limits of the exemption.
“It’s very rare that anyone goes into overtime and it’s not that they won’t get paid if they do, because obviously we pay everyone,” Aquatics Director Colby Phillips said. “We can’t make anyone work if they don’t want to, and we pretty much keep everyone under 40 [hours] regardless.”
Phillips estimated the community staffs between 35-40 lifeguards.
“We haven’t really been that worried about it because no one has gone over 40 and we don’t really keep anyone there anyway,” she said. “But if they’re an 18-year-old that’s trying to save money and they want to work and we say, ‘hey, you can’t work over 40 hours because we can’t pay you overtime,’ and all of the sudden we’re like, ‘hey, you actually can, but it’s straight time’ a lot of them want it because they want the money.”
In a May 28 email sent to several people connected with aquatics, Kathleen Cook, supervisor of lifeguards, said Phillips “had [Payroll Director] Beverly [Meadows] check the Amusement and Recreational Exemption Law. Ocean Pines aquatics, summer staff, fall into this exemption. Due to this exemption, we can work over 40 hours and not be paid overtime. This is good news for those of you that would like to work more than 40 hours in the summer.”
A source, which provided the original email, said they were unaware if any of the lifeguarding staff was upset by the news.
“It’s not a matter of being upset, but is it ethical and in line with [state] and federal labor laws,” the source said. “The claim that Ocean Pines pools fall into the recreational establishment exemption was the matter in question. When I approached the finance person they couldn’t address the matter and referred it to the manager for clarification. They have since responded that they have made a decision, but would not share it with me [saying] they would notify the lifeguards via the supervisor.”
The source said they had not heard anything further on the matter.
“There is no problem if the state sees this as appropriate, however I’m not sure how Ocean Pines Aquatics qualifies as a recreational establishment and is not considered an amenity of Ocean Pines when the residents cover the shortages on finances,” the source said, adding that aquatics lost $783,196 during the last five years and projects a budgeted loss of $121,966 during the current fiscal year.
“You might ask, then, why would you be questioning overtime when it would cost the community more? Because it’s important to do what’s right [and] when there are young folks involved it’s necessary the laws are followed,” the source said. “As well, if OP is not exempt we could face charges by the Department of Labor if it’s found to be not exempt and some were to file a claim.”