Certain types of employees, who are classified as exempt employees, are not entitled to overtime pay as guaranteed by the FLSA.  It follows that non-exempt employee are entitled overtime if they work more than 40 hours per week.  A recent settlement highlights some of the issues that can arise when employees are misclassified as exempt, and how employers should take extra caution when classifying their employees.

In a class action suit brought against a national teen tour company, the suit alleged that the trip leaders were less than $2,000 for trips lasting from two weeks to 90 days.  The leaders claimed they were not paid overtime or given duty-free meal and rest breaks during their 16 to 18 hour days.  More than 85 percent of class members opted into the settlement and will receive payments from the $500,000 settlement.

An interesting note about this case, is that it highlights a misapplication of the “Camp Exception.”

Section 13(a)(3) provides a complete exemption from the minimum wage and overtime requirements of the FLSA “for any employee employed by an establishment which is an amusement or recreational establishment, organized camp, or religious or non-profit education conference center, if (A) it is not open for more than seven months in any calendar year, or (B) 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.”

The case above clarifies that the “camp” exemption for overtime is limited to those organizations centered around an actual site or facilities that provide something like the traditional summer camp experience, and not for any organization principally offering excursions.

Unfortunately the error was massive to the employers in this case, but a reminder to employers operating businesses to carefully asses the classification of their employees, as well as their overall payroll practices.