Santa and the FLSA

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Delivering presents to the well-behaved children all over the world in a single night is hard work. Sure, Santa Claus makes it look easy with his jolly disposition, magical sleigh and team of nine flying reindeer. But does that mean he is any less entitled to compensation? Of course not! Let's just assume that Santa's employer—the North Pole, obviously—is covered by the Fair Labor Standards Act (FLSA). To comply with the law, the North Pole, like any other employer, has to ask itself certain questions.

First, is Santa's position exempt or nonexempt? There's no doubt that Santa works more than 40 hours per week during the holiday season. Think of all the letters pouring in from kids across the globe. Think of how much time it takes to figure out who's been naughty and who's been nice. The guy sees you when you're sleeping. If Santa's nonexempt, the North Pole owes him some serious overtime.

Santa may qualify for one of the FLSA's white-collar exemptions. For instance, Santa likely meets the duties test of the executive exemption if his primary duty is managing the North Pole enterprise: He customarily and regularly directs the work of at least two or more full-time elves, and he has the authority to make employment decisions, such as when to promote someone to lead reindeer. But if it's really Mrs. Claus and the head elf who perform these duties, then Santa likely does not qualify for the executive exemption.

Santa may, however, qualify for the administrative exemption. He probably meets the duties test for this exemption if his primary duty is the performance of office or non-manual work that is directly related to the management of the North Pole or its general business operations and if his work involves the exercise of discretion and independent judgment with respect to matters of significance.

Who goes on what list (naughty or nice) is certainly a matter of significance for the North Pole. But how clean must a child's bedroom be to earn her a spot on the nice list? How often must she share her toys with her siblings? And what if she tells the truth most, but not all, of the time? Santa necessarily uses his discretion and independent judgment when making these determinations.

That said, to qualify for the exemption, Santa's primary duty must be the performance of office or non-manual work. Traveling from house to house, sliding down chimneys and placing presents under Christmas trees would surely be considered nonexempt, manual work. But Santa does that only one night per year. Responding to letters from children could qualify as office work, but is that Santa's primary duty and is it directly related to the running or servicing of the North Pole's business? If either answer is "No," Santa may not qualify for the administrative exemption.

The reality is that even though the North Pole may pay Santa on a salary rather than an hourly basis, that doesn't mean Santa qualifies as exempt from the FLSA. If he doesn't meet the duties test for one of the FLSA exemptions, Santa is nonexempt and must be paid overtime compensation for every hour he works over 40 hours per week.

If Santa's position is nonexempt, then his Christmas Eve responsibilities present a number of additional compensation issues, such as whether the North Pole has to provide and/or pay Santa for his milk-and-cookie breaks; whether Santa is "on the clock" when he's using his iPhone to check in with the head elf; and whether his travel time to and from the North Pole and from house to house is compensable.

In some cases, the law of the North Pole may be more restrictive than the FLSA, and Santa's employer will be required to comply with whichever law is more beneficial to employees. The same is true with state law. For example, if a certain state requires employers to provide meal breaks, an employer is required to comply with the state law even though federal law does not impose such a requirement.

It doesn't take three wise men to figure out that an underpaid Santa Claus could put a real damper on the holiday season. Even if you're not the North Pole, you don’t want to be on the wage-and-hour naughty list. Much like Santa, costly wage-and-hour lawsuits keep coming to town, so you may want to consider checking with counsel on how best to review and, if necessary, correct your pay practices. Happy holidays!