Labor & Employment Law Daily Wrap Up, WAGE-HOUR—EXEMPTIONS—E.D. Va.: H-2B amusement ride workers survive employer argument it was exempt from FLSA wage claim, (Mar 18, 2025)

By Ronald Miller, J.D.

The employer’s 2021 receipts showed its average income for the “on-season” was at least three times the average income for the “off-season” months but the employees were neither aware of the receipts nor had an opportunity to discover them so as to rebut the employer’s argument.

An employer in the carnival business was denied its motion for partial summary judgment against the claims of employees for alleged violations of the FLSA and the Virginia Overtime Wage Act, as well as contract claims. The plaintiffs, Honduran nationals, were hired as amusement ride attendants under the H-2B visa program. They alleged that the employer imposed illegal and substandard working conditions on them. The employer alleged that it was exempt from the FLSA as an exempt recreational establishment. However, the federal district court in Virginia concluded that undiscovered receipts were essential to determining whether the employer is exempt, such that it denied the employer’s motion for summary judgment as to the employees’ wage claims. With respect to the breach of contract claim, the court concluded that the employer failed to provide any evidence to support its position (Lopez v. Cole Shows Amusement Co., Inc., No. 3:24CV399 (RCY) (E.D. Va. Mar. 17. 2025)).

H-2B visa program. The plaintiffs in this action are 30 foreign workers employed as amusement and recreation attendants. They are Honduran citizens who were hired by the employer via the H-2B nonimmigrant visa program. To participate in the H-2B program, prospective employers must agree to (1) comply with relevant employment laws, (2) pay the immigrant-employees occupational or minimum wage, whichever is higher, and (3) not retaliate against workers for asserting their rights as H-2B workers.

The application and job order stated that the employer would schedule the workers for 40 hours per week, pay between $8.94 to $12.73 per hour, and provide housing at no charge. The DOL granted the employer’s application and issued a certification.

Substandard working conditions. The employees alleged that, upon commencing their employment, the employer imposed illegal and substandard working conditions upon them, which violated both the terms and conditions guaranteed to them, as well as governing labor laws. They alleged that they worked seven days per week, often for 12 hours a day, sometimes for more than 24-consecutive hours with only two 15-minute breaks. The employer allegedly paid them only $10 per hour for 40 hours per week, with no pay for overtime. Finally, they alleged that when they confronted the employer about their insufficient pay, it threatened to deport them.

Wage claims. The employees asserted that the employment conditions allegedly imposed by the employer violated the FLSA, as well as the Virginia Overtime Wage Act (VOWA). They also alleged that they had employment contracts with the employer, which incorporated the terms and conditions of the DOL certification as well as the “law and regulations applicable to the H-2B program,” such that the employer’s failure to abide by the obligations of the DOL certification constituted breaches of the parties’ contracts.

The employer conceded that it hired the employees via the H-2B visa program but argued that it was exempt from certain federal and state labor regulations as a recreational establishment and that the H2-B program could not constitute the basis for a contract between the parties.

Exemption. As an initial matter, the employer argued that its 2021 receipts established that it was exempt from the relevant regulatory scheme. Here, the employees contended that the employer sought summary judgment based on undiscovered evidence that they had not had the opportunity to investigate. As such, they contended that summary judgment was inappropriate at this stage of litigation. The court agreed with the employees.

Relevant here, “any employee employed by an establishment which is a[]... recreational establishment” is categorically exempt from the FLSA’s wage and hour limitations. The employer argued that the time of the employees’ employment, it was an FLSA-exempt recreational establishment.

For an employer to qualify as a recreational establishment within the meaning of the FLSA, it must satisfy two elements. First, the employer must demonstrate that its business is within the character of the exemption, i.e., it is a seasonal establishment offering recreation or amusement activities. Second, the employer must demonstrate that it satisfies the “receipts test,” i.e., that is has an “off-season” and an “on-season.”

The parties did not dispute that the employer is a carnival, and courts have “consistently noted that the exemption’s purpose is to cover... seasonal recreational and amusement activities [such as]... carnivals.” Thus, the dispositive question was whether the employer satisfies the “receipts test.”

“Receipts test.” An employer satisfies the receipts test if it can show for the year preceding the year of the alleged FLSA violations it was able to categorize six months as “off season” months and six months as “on-season months.” To fall within the exemption, the total average income for the “on-season” months must be at least three times the average income for the “off-season” months.

Although the employer presented 2021 receipts showing that its average income for the “on-season” was at least three times the average income for the “off-season” months, this did not end the analysis. The plaintiffs’ counsel pointed out that the employees were neither aware of the receipts, nor had an opportunity to discover them. Further, because the employer did not include the actual receipts in its affidavit, the employees had no possibility of rebutting the employer’s argument.

Here, the undiscovered receipts were essential since their veracity will determine whether the employer is exempt from the FLSA and VOWA. Accordingly, the court denied the employer’s motion for summary judgment as to the employees’ wage claims.

Breach of contract. As to the employees’ breach of contract claim, the employer argued that the H-2B program regulations cannot serve as the basis for the formation of a contract. The employees alleged that the employer had entered into employment contracts with them, each incorporating the “terms and conditions provided in the [DOL] certification, its accompanying attestations, and the law and regulations applicable to the H-2B program.”

In support of its contention that the federal government’s H-2B regulations cannot form such a contract, the employer relied entirely on (Bojorquez-Moreno v. Shores & Ruark Seafood Co. 2015). The court declined to follow Bojorquez-Moreno, due in large part to intervening law.

After the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), district courts are no longer at liberty to merely enforce an agency’s interpretation of its regulations, particularly where the interpretation does not “implicate [the agency’s] substantive expertise.” The DOL has no substantive expertise regarding the existence of a contract between these particular parties. Thus, the employer failed to provide any evidence to support its position.

Accordingly, the court denied the employer’s partial motion for summary judgment.

The case is No. 3:24CV399 (RCY).

Judge: Young, R.

Attorneys: Zev Hillel Antell (Butler Curwood) for Jairo Mauricio Canales Lopez. Monique Antonia Miles (Old Towne Associates) for Cole Shows Amusement Co. Inc.

Companies: Cole Shows Amusement Co., Inc.

Cases: WageHour Exemptions Overtime ClassActions Immigration ContractClaims Retaliation EvidenceDiscovery VirginiaNews