Legislative Update: Minimum Wage — Probably Going Up!

by Marge Scanlin, ACA Staff

Camp salaries are subject to many factors! You juggle your budget, the reality of what it takes to attract quality staff, the increased challenge in finding good staff, and the reality of federal and state guidelines affecting minimum wage.

As of October 2000, legislation increasing the minimum wage is still very much in play in Congress. The House, the Senate and the White House all have different ideas on how to reach consensus. The issue is one hobbled by election-year politics. Negotiations are so fluid there is no base bill. There is no timetable for action. It is possible, however, that a compromise will be reached in the closing hours of the Congress and legislation will pass. There is no indication of change in current exemptions and definitions.

Current and Proposed Minimum Wage

The current minimum wage of $5.15 per hour has been in effect since 1996. The most popular proposals call for an increase to $5.65 per hour on Jan. 1, 2001 and $6.15 per hour by Jan. 1, 2002.

Republicans who are supportive of an increase are insisting on tax breaks for the businesses that would have to absorb the increase. Originally those tax provisions included changes in pensions and repeal of the estate tax. They were eventually dropped. Still included in some proposals are tax credits for reforestation expenses, expense qualifying property costs up to $35,000, accelerated deduction for meals and entertainment expenses, repeal of the installment method accounting requirement, repeal of the FUCA surtax, deductibility of health care costs for self-employed and accelerated deductibility for those not in employer-sponsored programs, repeal of excise taxes on producers and marketers of liquor, beer and wine and income averaging for commercial fishermen. It is not known whether any of these provisions will ultimately survive.

What is the prudent camp director to do?

  • First, assume that the minimum wage will be going up, and adjust your budget accordingly.
  • Determine whether the Fair Labor Standards Act (FLSA) and its minimum wage provisions apply to you. (See below.)
  • Discuss with a local labor attorney whether there is a (Your State) Labor Standards Act whose requirements differ from those of the FLSA.
  • Discuss with your local labor attorney the job classifications you have and which of them are exempt (those with more than 50 percent of their work time spent in supervisory or administrative functions). Such classifications may be exempt from the minimum wage and overtime provisions. Check this with counsel. For instance, in your state, would camp counselors be considered "exempt employees?" How about unit leaders and head cooks?
  • Determine a fair value for the room and board you provide, the cost (not the value to a camper, but the reasonable cost to you) of which may be counted as part of the employee’s wage.
  • Determine record keeping requirements that must be met to claim room and board as part of the compensation package.

When does the FLSA apply to your camp?

  • If you gross more than $500K in a twelve-month period, OR
  • If you have two or more employees involved in interstate commerce (such as taking out of state registrations, phone calls, shipments, mail; OR
  • If your camp is part of a sponsoring body such as a scout council or church denomination whose budget meets the budget criteria.

Note that an individual employee of a camp that is not a covered enterprise (budgets less than $500K) are subject to the FLSA when they are engaged in interstate commerce. This includes staff who make interstate phone calls, write interstate letters, solicit campers from other states, or who order food that comes from other states, etc.

In addition, employees of government-owned and operated camps are considered part of a governmental covered enterprise regardless of interstate commerce or budget requirements.

What about "seasonal" exemptions?

Even if you meet the above requirements to be a "covered enterprise," the minimum wage and overtime requirements do not apply to SEASONAL operations. However, many camps no longer meet the seasonal operation criteria. This seasonal exemption applies only if:

  • The camp operates for seven months or less in a year; OR
  • During the preceding calendar year, the camp’s average receipts for any six months of the year were not more than one-third of its average receipts for the other six months. This rule requires careful calculation. If the camp had income in the first six months of $600K, and income in the second six months of $300K, you can see that $300K is NOT 1/3 of $600K! Therefore, this camp does not qualify for a seasonal exemption.

What does the FLSA require?

  • Employees must be paid at least the federal minimum wage — now $5.15 per hour, but likely to increase soon. This amount may be higher in your state. By federal law it cannot be lower unless the employee qualifies for a training wage or is a full-time student for whom you received a certificate from the DOL to pay at not less than 85 percent of minimum wage.
  • That the employee receive time and one-half of the employee’s hourly rate (including the room and board calculation) for all hours over forty worked in each work week.
  • That the employer retain stipulated payroll records.

What is the training wage?

A Training Wage Exception was created in 1996 and allows an employer to pay NEW employees under the age of twenty a training wage of not less than 85 percent of the going minimum wage for the first ninety consecutive calendar days of initial employment. Employment of persons under the training wage exception cannot result in the reduction or elimination of hours or benefits for other workers.

Note that there must be a bona fide training plan in place for these workers to receive a training wage exception.

It is also possible to apply for certificates to employ "full-time students" at not less than 85 percent of the prevailing minimum wage. There are simplified application procedures in place if you employ fewer than six such students. Contact the Wage and Hour Division, U.S. Department of Labor in your area for further information. It is our understanding that such certificates must be on file for your camp to qualify to pay at this rate.

Are there more labor requirements?

In addition to requirements for minimum wage, there are also requirements affecting child labor. These requirements impact camps employing persons under the age of eighteen. These requirements will be updated in an upcoming CampLine article. They were last addressed in the May 1999 issue of CampLine (see www.ACAcamps.org/campline.)

Resources

The Department of Labor Web site can be found at www.dol.gov. Check there or with your local department of labor office for publications such as:

Handy Reference Guide to the FLSA (Wage and Hour Pub. 1282)

Hours Worked Under the FLSA (WH Pub. 1297)

Executive, Administrative, Professional and Outside Sales Exemptions (Pub 1363)

Overtime Compensation Under the FLSA (Pub. 1325)

Records to be Kept by Employers (Pub. 1261)

Child Labor Requirements in Nonagricultural Occupations (Pub. 1330)

Application of the FLSA to Employees of State and Local Governments (26 CFR, Part 553)

 

Originally published in the 2000 Fall issue of The CampLine.
 

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