As I've written before, the Fair Labor Standards Act requires employers to pay minimum wage and overtime to employees who work more than 40 hours per week, unless an exemption applies. Some camps rely on the exemption for executive, administrative, and professional ("Executive") employees, while many other camps rely on the separate "Organized Camp" exemption. Based on a recent federal court decision coming out of Texas, there's been a shakeup to the current salary threshold for the Executive exemption.
The Executive Exemption
Under the Section 13(a)(1) exemption, certain executive, administrative, and professional employees are exempt from the minimum wage and overtime rule if they meet a three-part test:
they earn a fixed salary, regardless of hours worked;
their salary meets certain minimum weekly pay requirements; and
they perform primarily executive, administrative, or professional duties.
Prior to July 1, 2024, the minimum salary that an employee needed to earn to qualify for the Executive exemption was $684 per week or $35,568 annualized. Based on the recently struck-down US Department of Labor rule, this minimum weekly salary was scheduled to increase in two phases: after July 1, 2024, the minimum salary threshold became $844 per week or $43,888 annualized; and after January 1, 2025, the minimum salary threshold was set to become $1,128 per week or $58,656 annualized.
However, as the ACA recently reported, a federal court in Texas struck down the forthcoming threshold increase and also struck down the July increase. So, as a matter of federal law, this brings the current minimum wage threshold back to $684 per week (i.e., what it was before July 1, 2024).
In theory, this means that camps that adjusted their Executive salaries upwards in July of 2024 can put them back down to $684 per week. As a practical matter, making that adjustment would have significant employee relations implications, so most camps will likely keep any increases in place, even though they're no longer a legal mandate. In any event, absent a successful challenge to this decision, there's no longer a requirement to increase salaries to $1,128 per week in 2025 to meet the Executive exemption.
The "Organized Camp" Exemption
Many camps rely on a different exemption from overtime and minimum wage requirements. Section 13(a)(3) of the Fair Labor Standards Act provides an exemption for an "amusement or recreational establishment, organized camp, or religious or non-profit education conference center" if it meets one of two tests: “(A) it does not operate 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 Organized Camp exemption operates independently of the Executive exemption. If your camp does not pay minimum wage and overtime because it's exempt under the Organized Camp exemption, then the increased salary thresholds under the Executive exemption don't affect you.
Importantly, State Law Might Have Stricter Rules
While many camps are exempt from minimum wage and overtime requirements under federal law (whether under the Organized Camp or Executive exemptions), some states have stricter exemption standards.
For example, the current threshold for the New York version of the Executive exemption is $1,124.20 per week. It's even higher in certain parts of New York (such as Westchester County, Long Island, and New York City). The New York threshold is scheduled to increase again in 2025.
If state overtime and minimum wage rules differ from federal law, employers must meet the stricter of the two requirements. For camps in states like New York, which have high thresholds independent of federal law, the Texas decision has little practical significance.
Conclusion
For the moment, the federal threshold for the Executive exemption is back to $684 per week. None of this impacts the separate exemption for Organized Camps that meet one of the seasonality tests. Camps that meet one of the seasonality tests remain exempt from paying minimum wage and overtime, regardless of whether their employees meet the salary threshold for the Executive exemption. Camps also need to check state law for any stricter rules and higher thresholds.