So far in 2018, the U.S. Department of Labor (“DOL”) has issued more than 20 opinion letters navigating the murky waters of the Fair Labor Standards Act (“FLSA” or “Act”). In late-August, the DOL issued several new opinion letters to which employers can refer for guidance when confronted with FLSA questions.  Recently, we reviewed two such opinion letters.  Here, we review another letter that employers may find helpful when navigating the FLSA.

3.  Applying the Motion Picture Theater Exemption to All Theater Attractions

Under the FLSA, a commercially operated business primarily engaged in showing motion pictures qualifies for the motion picture exemption and need not comply with the Act’s minimum wage and overtime requirements. Drive-in movie theaters (remember those?) may fit within the exemption; theaters with live productions generally will not.

Today’s large movie theater complexes offer diverse entertainment options, including “finer” food and dining (not simply the average popcorn, nachos and candy snack bars), as well as cocktails and arcades. The entire complex and its attractions may – or may not, in part – qualify for the motion picture exemption, depending on how closely interconnected each of these options are to each other. The resulting minimum wage and overtime requirement matrix could be cumbersome and prone to mistakes.

The DOL recently noted a three-part test should help movie businesses to assess whether the motion picture exemption applies to its entire operations at a particular venue:

• Physical separation of the theater’s parts;
• Whether the different theater parts are operated as separate units, maintaining separate records and booking; and
• Whether the different theater parts intermix and exchange employees.

The businesses subject to the opinion letter were incorporated as a single business unit, filed taxes and maintained business records jointly, ordered goods and paid invoices as a single business, and used the same bank accounts to pay business expenses. Additionally, the businesses provided services to the public under the same, single business name and considered/treated their employees as employees of the entire business unit. The DOL opined the motion picture exemption was a natural fit to the theater’s entire operations.

As with any workplace policy or procedure, questions regarding wage-hour matters should be addressed proactively by employers to maintain compliance, identify potential areas of noncompliance and chart courses to achieve compliance. Employers should consult with in-house and outside employment counsel regarding such efforts and questions.