Paying for Sleep? A California Wage and Hour Issue

Camp operators know the summer season runs on long days, nighttime duties, and a lot of counselor dedication. The law, however, doesn’t always keep up with the realities of camp life.

The Fair Labor Standards Act (FLSA), which sets national rules for minimum wage and overtime, includes a special carve-out that exempts many camps from these obligations. But federal law is only part of the story. If your state doesn’t provide a similar exemption, then you may still have to pay minimum wage and overtime under state law.

Some states take a flexible approach, allowing organized camps to decide how to compensate their staff without worrying about minimum wage and overtime obligations. Others take a much stricter view. And in California, there's even an opinion letter saying that counselors must be paid for sleep time. Let's explore this landscape.

The federal exemption

Section 13(a)(3) of the FLSA 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.”

Under federal law, many camps rely on this exemption and are thereby exempt from minimum wage. The next question becomes whether they are exempt under state law.

State law

Some states, like Pennsylvania, simply mirror the federal law. "Organized camps" are exempt from minimum wage and overtime, and can pay their staff as they see fit. Camps in many states would love that kind of simplicity.

In other states, like New York, "staff counselors" are exempt from minimum wage and overtime, but maintenance staff, kitchen staff, and others in non-counselor roles are not. Simple enough.

And then there's California...

California law exempts "student employees, camp counselors, and program counselors" from minimum wage if they receive a weekly salary of "at least 85 percent of the minimum wage for a 40-hour week," regardless of the number of hours they actually work (as long as that number is 54 hours or below -- more on this shortly).

Note that other camp staff, like maintenance staff and kitchen staff, aren't exempt and still need to be paid minimum wage and overtime. The California exemption only applies to student employees and counselors.

The California math

The current minimum wage in California is $16.50 per hour. The numbers look like this:

• $16.50 minimum wage x 40 hours = $660 weekly salary for a 40-hour week

• 85% of $660 = $561

Put otherwise, camps need to pay counselors at least $561 per week, regardless of how many hours those counselors actually work. Camps can also deduct certain amounts for meals and lodging, so they can end up paying even less than $561 per week.

But all of this is subject to an important footnote based on Order 5 of the Industrial Welfare Commission: Counselors must be paid overtime if they work more than 54 hours or more than six days in a workweek.

So, if you're a California camp, it would make good sense to limit your counselors to working 54 hours or less per week. As long as they work 54 hours or less, you can pay them 85% of minimum wage for a 40-hour workweek ($561), minus certain costs for food and lodging. Perhaps that's on the high end of industry compensation bands for counselors, but it's a manageable number.

A Curious 2002 Opinion Letter

But here's where things get tricky for California overnight camps. There's a 2002 Division of Labor Standards opinion letter saying that sleep time should be included in the calculation of hours worked.

"Must camp counselors be paid for sleep time . . . ?" As you know, the IWC Orders contain a definition of "Hours Worked" which, for most purposes, includes "the time during which an employee is subject to the control of an employer, and includes all the time the employee is suffered or permitted to work, whether or not required to do so." . . . We can discern no exception from the definition of "hours worked" for those hours when the organized camp counselors are required by the employer to remain on the premises, nor do we see any exception for meal or sleep time while the employee is required to remain on the premises.

This creates a significant problem. If sleep time must be included in hours worked, then there's no way a camp can limit counselors to a 54 hour week. If counselors work eight or nine hours per day for six days a week, and are required to sleep at camp every night, then the camp is looking at 50+ overtime hours each week. What camp can afford that?

Is the opinion letter binding?

This 2002 opinion letter does not, in itself, have the force of law. It reflects a regulatory opinion that may or may not be accepted by a court. The letter is more than 20 years old, runs counter to the realities of camp management, and is misaligned with the approach of many other states.

It's not entirely clear if current regulators would enforce the opinion letter's approach -- but, to be sure, they certainly might. In a 2015 California Supreme Court case, Mendiola v. CPS Security Solutions Inc., the court ruled that security guards were entitled to compensation for "on-call" time, including sleep time. One law firm's summary of the case is available here.

Importantly, however, that opinion is based on Order 4 of the Industrial Welfare Commission, whereas camp counselors are subject Order 5, which specifically addresses sleep time in the context of "employees with direct responsibility for children . . . who are receiving 24 hour residential care."

Regarding these employees, Order 5 explicitly says: "Time sleeping shall not be included as hours worked." The Mendiola court observes that Order 4, on which its opinion was based, doesn't carve out sleep time, unlike Order 5: "Wage Order 4 contains no [language carving out sleep time]. By contrast, the IWC has adopted [language carving out sleep time] in other wage orders. For example, Wage Order 5 provides that, for '[e]mployees with direct responsibility for children who are receiving 24 hour residential care,' '[t]ime spent sleeping shall not be included as hours worked.'"

Let's consider the language of Section A(2) of Order 5 in more detail:

(2) Employees with direct responsibility for children who are under 18 years of age . . . [and] are receiving 24 hour residential care, may, without violating any provision of this section, be compensated as follows: (a) An employee who works in excess of 40 hours in a workweek shall be compensated at one and one-half (1-1/2) times the employee's regular rate of pay for all hours over 40 hours in the workweek. (b) An employee shall be compensated at two (2) times the employee's regular rate of pay for all hours in excess of 48 hours in the workweek. (c) An employee shall be compensated at two (2) times the employee's regular rate of pay for all hours in excess of 16 in a workday. (d) No employee shall work more than 24 consecutive hours until said employee receives not less than eight (8) consecutive hours off-duty immediately following the 24 consecutive hours of work. Time spent sleeping shall not be included as hours worked.

The issue is that this language in Order 5 was added in 2001 -- a year before the 2002 Division of Labor Standards Opinion Letter. This begs the question: Why didn't the 2002 Division of Labor Standards letter mention it? I don't know the answer, but as a practical matter, many California camps will likely take the position that this carve-out for sleeping time applies to their staff -- even though the language doesn't explicitly contemplate camps.

Closing Thoughts

California’s regulatory patchwork leaves camps in a gray area when it comes to counselor pay. The 2002 opinion letter says that all time subject to the employer's control, including sleep, must be paid, but it fails to account for the language in Order 5 that specifically excludes sleep time for employees responsible for children in 24-hour care. That carve-out is stronger authority and has the force of law (unlike an opinion letter). And many California camps will likely choose to reasonably rely on it.

The practical takeaway is this: California camps should: (1) ensure counselors work no more than 54 hours per week, (2) pay at least 85% of minimum wage for a 40-hour week, and (3) treat sleep time as non-compensable under Order 5 unless future guidance says otherwise. As to sleep time, it’s not a perfect answer, but it’s the one that aligns with both the text of the law and the operational reality of running a camp.