By Beth O’Neal, Esq.
I run a small, seasonal business on Cape Cod that does about 80 percent of its business in late June, July and August. During this same time, our payroll expands from around 12 to over 100 employees. I know minimum wage went up as of January 1, 2017, to $11 an hour, but this new rate, plus overtime, is going to be very difficult for us this summer. Is there anything we can do to not have to pay minimum wage or overtime rates of pay?
The short answer is “yes” to both questions, but the devil, as usual, will be in the specific details applicable to your business. There are a number of occupations for which an employer is exempt from paying the $11 an hour minimum rate of pay, and many more occupations for which a worker in that occupation is exempt from overtime (which is time and a half for all hours in excess of 40 in a workweek, actually worked).
Exempt occupations/minimum wage
Seasonal camp counselors and counselor trainees: There is a complete exemption from the minimum wage for seasonal camp counselors and counselor trainees. In Massachusetts, a business may be considered seasonal if it operates for 120 days or fewer in a year. Seasonal camps must annually obtain a Seasonal Camp Counselor Minimum Wage Waiver from the Massachusetts Department of Labor Standards (“DLS”) (19 Staniford Street, 2nd Floor, Boston, MA 02114, (617) 626-6952), which if granted, will permit the employer to not have to pay the state minimum wage. In order to receive a waiver, a camp must provide to DLS information regarding the seasonal nature of the business, the sub-minimum wage sought, whether the camp will provide food and lodging to the employees, the number of counselors and trainees for whom the waiver is sought and their duties and responsibilities, and the number of counselors for whom no waiver is sought and the wage(s) they will be paid.
A waiver of the basic minimum wage shall not apply to employees who work as dish washers, kitchen workers, maintenance workers, life guards or other jobs that do not entail the direct supervision of campers.
Ushers, ticket sellers and ticket takers: These employees do not have to be paid $11 an hour, but their minimum fair wage rate shall not be below $1.25 an hour.
Tipped employees: The minimum wage for tipped employees (service employees who receive at least $20 per month in tips) is $3.75 per hour effective January 1, 2017. If a tipped employee’s weekly earnings, including service rate and tips, do not add up to at least the basic minimum wage ($11 per hour, for each hour worked), the employer must pay the difference.
“Tipped employees” who also engage in non-tipped work, such as kitchen work or cleaning before or after shifts, must be paid at least minimum wage for those hours worked. Amounts received for “tipped” work do not count towards the minimum wage obligation for non-tipped work. Newly hired employees who do not receive tips during their initial training period are not “tipped employees,” i.e., they do not customarily and regularly receive more than $20 per month in tips. Therefore, these employees must be paid at least the basic minimum wage ($11 an hour) during their training and any subsequent time in which they are not regularly and customarily receiving more than $20 per month in tips. If tipped employees are wait staff employees, meaning employees who (1) serve beverages or prepared food directly to patrons, or clear tables; (2) work in a restaurant, banquet facility or other place where prepared food or beverages are served; and (3) have no managerial responsibility, the employer may not require such wait staff, service employees, or service bartenders to share or pool tips with employees who do not perform such work.
In order to be considered “wait staff” that may pool tips, the employee must have no managerial responsibility. Thus, shift supervisors are not “wait staff” as defined by the law and may not share in the tip pool. This is so even where the shift supervisor is waiting on customers, for example, during crunch time.
If tipped employees are either service employees, meaning employees who work in an occupation in which employees customarily receive tips or gratuities, and who provide service directly to customers or consumers, but who work in an occupation other than in food or beverage service, and who have no managerial responsibility; or service bartenders, meaning employees who prepare alcoholic or nonalcoholic beverages for patrons to be served by another employee, such as a wait staff employee, the employer may not require such service employees or service bartenders to share or pool tips with employees who do not perform such work.
Janitors and caretakers of residential property: Such employees, when furnished with living quarters, shall be paid a wage of not less than $36 per week.
Golf caddies: There is no minimum wage payable to golf caddies.
Agriculture and farming workers: Such employees may be paid less than $11 an hour but not less than $8 an hour.
Agriculture and farming workers: Such workers are exempts from overtime.
Delivery drivers: There is a Massachusetts overtime exemption for “a driver or helper on a truck” that applies only to such employees to whom the Federal Secretary of Transportation has the power to establish qualifications and maximum hours of service, regardless of whether or not the Secretary has exercised that power.
Loading dock workers: Dock workers and loaders are not exempt from overtime under Massachusetts overtime law. However, a loader whose job duties require them to ride on a truck and assess the load for safety purposes may fall under the definition of a “driver’s helper” (see above), regardless of the proportion of his job devoted to “safety-affecting” driver’s helper activities. Thus, an employee required to ride on the motor vehicle when it is being operated in interstate or foreign commerce within the meaning of the Federal Motor Carrier Act may be exempt from overtime.
Fishermen: Workers employed as fishermen or as persons employed in the catching or taking of any kind of fish, shellfish or other aquatic forms of animal and vegetable life are exempt from overtime.
Restaurant workers: Restaurant workers are exempt from overtime under Massachusetts law, but may be covered under the federal Fair Labor Standards Act, which does not provide an exemption.
Seamen: Deckhands and captains and engineers who work on and aboard vessels are exempt under both Massachusetts law and the federal FLSA. Employees who work at a snack bar on a vessel may also be exempt, if they are part of the deckhand crew and responsible for safety functions in the event of an emergency.
Golf caddies: These employees are exempt from overtime under Massachusetts law.
Summer camp workers: Summer camps operated by nonprofit charitable corporations are not required to pay overtime compensation to their employees. No waiver application is necessary.
For-profit summer camps must pay overtime compensation for hours worked in excess of 40 hours in a given work week unless they obtain a waiver by means of a seasonal business determination (described below). Such waivers are given by DLS to for-profit camps that operate during a period or accumulated periods of not more than 120 days per year.
Hotel workers: The Massachusetts hotel exemption (which includes hotels, motels and motor courts) includes all workers who work in some aspect of hotel operations, including banquet services, within the physical confines of a hotel property. It does not extend to banquet services performed on other property, such as banquets on a rented boat. The federal FLSA may require payment of overtime for hotel workers.
Gas station workers: Employees who work in gas stations are exempt.
Amusement park workers: Workers who work in an amusement park which must contain a permanent aggregation of amusement devices, games, shows, and other attractions operated during a period or accumulated periods not in excess of one hundred and fifty days in any one year, are exempt.
Seasonal business workers: Massachusetts law permits an employer to apply for a seasonal business waiver which, if granted, exempts workers in the seasonal business from overtime. This is a step that seasonal businesses should look into carefully and take advantage of, if applicable. It applies to a business or specified operation of a business which is carried on during a period or accumulated periods not in excess of one hundred and twenty days in any year, and determined by DLS to be seasonal in nature.
For the purposes of the seasonal business exemption from overtime, the phrase “carried on” means open for business (for 120 days or less). Once a business has been granted a seasonal overtime waiver, that waiver will cover those employees who perform work that is a routine, normal incident to the seasonal operation.
The waiver must be applied for annually. The application and the filing fee ($200) should be submitted 30 days before the requested date of applicability. The application form can be found at mass.gov/lwd/docs/dos/mw/mwseasonalapp.pdf.
Massachusetts overtime law does not prohibit a single business from having portions of its operations or workforce subject to different, applicable overtime exemptions. For example, a retail nursery that operates year round, or at least more than 120 days a year, may apply for a seasonal business overtime waiver for its winter holiday attractions. Likewise, a manufacturer of ice cream can apply for a waiver for its summer ice cream stand or facility.
Other tips for employment of both regular and seasonal workers
Where an employee is entitled to overtime, an employer may not offer the employee “comp” time in lieu of paying overtime. Doing so is specifically prohibited under Massachusetts law. Even if an employee agrees to waive his/her overtime pay, where, as an example the employee wishes to work as many hours over the summer as he/she can, under circumstances where the employer views that it cannot pay the overtime rate of pay, such an agreement is contrary to Massachusetts law and is void.
Remember that wage and hour violations can be pursued by the employee against the employer, its officers and those who managed the employee, and if the employee prevails, he/she is entitled to treble the amount of unpaid minimum wages or overtime wages, and mandatory attorney’s fees. This is not a risk any employer should take.
Every employee is covered under the sick leave law provided by Massachusetts law. An employee accrues paid sick leave where the employer employs 11 or more employees and unpaid sick leave where the employer employs fewer than 11 employees. Employees accrue sick time at the rate of 1 hour for every 30 hours actually worked, up to a maximum of 40 hours in a year. A newly hired employee begins to earn or accrue sick time from day one, but is not entitled to use his/her accrued sick time until the employee has been employed for 90 days. Certainly, seasonal workers will likely be entitled to use accrued sick time during their seasonal employment. When an employee’s employment ends, they are not entitled to a payout of accrued but unused sick time.
Beth O’Neal, Esq., is a partner in the Boston law firm of Conn, Kavanaugh, Rosenthal, Peisch & Ford LLP. Send questions to firstname.lastname@example.org.
THIS COLUMN, WHICH MAY BE CONSIDERED ADVERTISING UNDER THE ETHICAL RULES OF CERTAIN JURISDICTIONS, IS INTENDED AS A GENERAL DISCUSSION OF THE TOPICS COVERED, AND DOES NOT CONSTITUTE THE RENDERING OF LEGAL ADVICE OR OTHER PROFESSIONAL ADVICE BY CONN, KAVANAUGH, ROSENTHAL, PEISCH & FORD LLP OR ITS ATTORNEYS. IN COMPLIANCE WITH U.S. TREASURY REGULATIONS GOVERNING TAX PRACTICE, ANY U.S. FEDERAL TAX ADVICE CONTAINED IN THIS PUBLICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR PURPOSES OF AVOIDING TAX PENALTIES OR IN CONNECTION WITH THE PROMOTING, MARKETING OR RECOMMENDING TO ANY INDIVIDUAL OF ANY TRANSACTION OR MATTERS ADDRESSED THEREIN.
This article was published in the April 2017 issue of Cape & Plymouth Business.
The Law at Work: Minimum wage and overtime rates of pay for seasonal workers
By Beth O’Neal, Esq.