In this post, I will show you how we defended ourselves in a case where the DOL was extremely reluctant to grant us a legal exemption to the Fair Labor Standards Act (FLSA). It is highly unlikely that this exemption is relevant to you - it is narrowly directed at seasonal recreation businesses, but I think the process and what we learned from it may help you out in your own interactions with the DOL.
You do need a bit of background on the exact situation so you can understand the story. We operate campgrounds under concession contract with the US Forest Service. These campgrounds are typically seasonal, meaning they are generally only open for 4-6 months a year. We recently had an inquiry from the DOL about two people who worked for us, claiming they were underpaid, since the straight salary they were paid, when spread over the actual hours worked, put them under minimum wage. We have since corrected the process problem that led to this situation, but we quickly agreed that we did indeed underpay them for their hours.
However, in a couple of cases, they worked past 40 hours a week, for which they claimed we owed overtime pay. We responded that the FLSA exempts "seasonal recreation businesses" from the 40 hour requirement. Actually, the situation is more complicated than this, because the FLSA has an exception to the exemption for businesses in the National Forest (no kidding, that narrow!). The long and the short of it is that the FLSA overtime rules apply to seasonal recreation businesses in the National Forest, but overtime starts at 55 hours, not 40.
This is where the fun started.
OK, if you have been paying attention, you should already know what happened next. The DOL's first response to our claiming this legal exemption was, what? Anyone? There response was no. A year ago I would have been shocked and sputtering mad, but since I now had experience with this (and since getting irrationally mad never helps with the government anyway) I got to work. I prepared a detailed package of material to prove my case:
1. There are approved regulations on the DOL web site that state what tests are made to prove seasonality. Basically it involves showing monthly historical sales numbers for the particular park to show it is closed 6 months of the year or that 6 months sales dwarf the other 6. This was easy and the DOL quickly agreed we were seasonal.
2. I sent my current lease with the National Forest to prove I was in the National Forest. The DOL quickly agreed that yes, I was in the National Forest.
3. I sent them documents from the Forest Service showing that campgrounds were an important part of the Forest Service's recreation mission. The DOL disagreed, stating that in their opinion, camping was not recreation
Now this last assertion would come as a huge shock to most of our campers, who certainly consider it recreation. Heck, the US Government considers it recreation -- check out this page from Recreation.gov, run by the Feds. My next step was one I advised in part 2 of this series - I asked the DOL to show me in writing why camping was not recreation. This time, the DOL did find a written passage that (sort of) supported their position. It was from their Field Operations Manual. If you remember the hierarchy of sources we discussed in part 2, this is about the weakest possible source. Had it been necessary, it is probably the easiest source to overturn in court.
As it turns out, the manual did not actually say camping was not recreation. It said that camping may or may not be recreation, based on a test (let this be a lesson, again, to get the DOL to show you sources in writing). The test basically boils down to: If customers are using the campground mainly as lodging, staying just overnight and then moving on down the road or visiting a nearby attraction outside the campground, then it is not recreation. If, however, campers stay in the campground and then take advantage of recreation opportunities in the campground, it is recreation. Now someday, I may need to challenge this test in a higher authority, because the exact wording of the test seems to imply that a campground needs developed facilities, e.g. pools and tennis courts and golf courses, to be recreation. As I told the DOL at the time:
[Your recreation test appears to be] written by modern American city-people who cannot imagine recreating without swimming pools or miniature golf courses or organized functions. Our customer base considers camping and getting away from development and pools and golf courses and schedules to be recreation in and of itself. They enjoy being out in nature, and would consider it a worse recreation experience if there were a bunch of developed facilities there...our patrons stay in the campground and relax, socialize with other campers, hike, build and cook over campfires, tell stories, teach their kids about nature and the outdoors, bird watch, pick berries, swim in the lake or stream that is in the campground, then go home.
Anyway, I was not able to prove that our campgrounds were "recreation" by dint of their facilities. However, again I did not give up. I proposed two tests with the DOL. In test 1, we would analyze the home zip codes of all the campers at this particular campground for the last several weeks. If most of the campers came from, say, less than 100 miles away, then clearly they are not using the campground as intermediate lodging - they are there for recreation. Who would stop for the night just a few miles from their home if they are on the way somewhere else? In test 2, we actually took a 7 day survey of campers, asking our campers to choose one of these three options:
1. We will spend most of our stay at [this campground] in and around the campground.
2. We will spend most of our stay at [this campground] visiting other nearby recreation sites.
3. We are only staying at [this campground] overnight on our way someplace else.
We did not tell the campground manager why we were taking the survey so they would not bias the answers.
Well, in the end, 95% of all the campers in this campground lived less than 90 minutes away and many were from less than 30 miles away. 100% of the survey respondents chose response #1, saying that they were in the campground to spend their time in the campground itself, not to go somewhere else.
Based on this evidence, the DOL allowed me the exemption in this case. Hurray.
What I did not tell you
OK, the following will probably make you think I am nuts. The total overtime in question was about $20. Why, you rightly ask, did I not just pay the dang twenty bucks and get on with my life? The answer is, I did this once before, paying a nominal amount but under protest. However, this came back to haunt me in this situation, when the DOL, in initially denying me the exemption, implied that the previous case had "resolved" the fact that we were not allowed it. I decided that if we were going to start setting precedents, I was going to fight over everything.
The funny part is that, when it was all over, they cautioned me that this was an establishment exemption, meaning that this decision was only for this particular campground, and we would have to prove it all over again for other campgrounds if they ever came under review. So they are taking the position that being denied the exemption was precedent setting, but getting the exemption establishes no precedent. And, it is hard to overlook the irony that the DOL immediately accepted without question or documentation estimates of hours worked from my employees generated from their memory over a year after the fact -- while they required over 30 pages of data for me to prove camping is recreation.
Nevertheless, I am glad I did it. If this ever comes up again, I am ready with ammunition to win the case. Hopefully, the surveys we ran at this campground will be acceptable evidence for other similar campgrounds, but, if not, we know how to quickly run the surveys again.
As a final note, I want to add that my investigator in this case seemed honest and easy to work with. While I was frustrated with DOL the institution, I never was frustrated with her individually. And, in the end, she yielded to the evidence.