Baseball Festival Exempt From FLSA Minimum Wage Requirements
In their Second Circuit Review, Martin Flumenbaum and Brad S. Karp analyze 'Chen v. Major League Baseball Properties,' in which the court considered the definition of "establishment" as it is used under an exemption in the Fair Labor Standards Act, which exempts seasonal amusement and recreational establishments from the act's minimum wage requirements.
October 27, 2015 at 10:34 PM
10 minute read
Our first “Second Circuit Review” column ap-peared in the New York Law Journal on Nov. 20, 1985, so this year marks 30 years of monthly columns. So much has changed in the Second Circuit over the past three decades, though three judges continue to sit on the court: Amalya L. Kearse, Jon O. Newman and Ralph K. Winter. We look forward to our fourth decade of covering developments in the U.S. Court of Appeals for the Second Circuit.
This month, we discuss Chen v. Major League Baseball Properties,1 in which the Second Circuit considered the definition of “establishment” as it is used under an exemption in the Fair Labor Standards Act (FLSA), which exempts seasonal amusement and recreational establishments from the act's minimum wage requirements. In its decision, written by Judge Rosemary S. Pooler and joined by Judges Susan L. Carney and John Gleeson of the U.S. District Court for the Eastern District of New York sitting by designation, the court concluded, in a matter of first impression in this circuit that Congress intended the term “establishment” for purposes of the exemption to mean “a distinct, physical place of business as opposed to an integrated multiunit business or enterprise.” In so ruling, the court affirmed the district court's judgment dismissing the complaint for failure to state a claim.
Background
Congress enacted the FLSA to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.”2 The FLSA requires employers to pay employees a specified minimum wage.3 Congress also created a litany of exemptions to the minimum wage requirements, including an exemption for employees of seasonal amusement or recreational establishments. Under Section 13(a)(3) of the FLSA, the minimum wage requirements “shall not apply with respect to…any employee employed by an establishment which is an amusement or recreational establishment…if (A) it does not operate for more than seven months in any calendar year.”4
The FLSA does not define “establishment,” and courts have generally concluded that the language of the Section 13(a)(3) exemption is ambiguous. However, the Department of Labor's currently applicable regulations define “establishment” for the purposes of the FLSA, including Section 13(a), as “a distinct physical place of business.”5 The Labor Department's regulations also distinguish establishment from a business enterprise: “The term establishment means a distinct physical place of business rather than an entire business or enterprise.”6
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