HR Management & Compliance

DOL Takes Critical View of Santa’s Workshop

After a long day, an employment lawyer has just settled his brain for a brief winter’s nap. Suddenly, he hears from his waiting room such a clatter that he rose from his adjustable ergonomic office chair to see what was the matter. As he throws open the door, he sees a plump old elf, who he instantly knows is Santa Claus himself.

Source: Valeria.V / shutterstock

Santa didn’t look all that jolly, however, as he handed the attorney an official-looking document from the U.S. Department of Labor (DOL). It was a notice informing Santa he was to be investigated for a variety of wage and hour violations.

The attorney immediately assured Santa there had to be a mistake since his workshop was located at the North Pole, obviously outside the DOL’s jurisdiction. Santa sighed, explaining that while he had moved his operations there many years ago, he was incorporated in the state of Delaware and maintained an offseason headquarters in Santa’s Village, New Hampshire.

The attorney agreed the DOL may have jurisdiction and suggested they review the specifics of the claim.

Not So Merry

Santa asked if there might be some mistake because the elves are independent contractors, not employees. The attorney reminded Santa the test for employment status generally revolves around who controls the manner and means of performance. “Who assigns the elves their work and tells them how to do it?” the lawyer asked. “Who supplies the tools and equipment? Who provides the uniforms and those funny, curled-up work shoes?” Santa responded he was in charge of all that.

As the attorney explained the DOL would probably consider the elves to be employees, Santa interjected, “Would it help to know that I make them buy their own uniforms and shoes?” The lawyer suggested he should probably keep that information to himself during the investigation.

The attorney then noted the elves always look pretty happy, so they must be paid well. Santa agreed, explaining he always makes sure they get their agreed-upon allotment of candy canes and sugar plums every pay day. The lawyer sighed, asked Santa how many elves he employed, and began making calculations on possible minimum wage liability.

“How many hours do the elves work each week?” the attorney inquired. Santa replied there are approximately two billion children in the world and that even if you subtract those who are on the naughty list, it still requires many weeks of around-the-clock work. “Don’t worry,” Santa assured the attorney. “I give them extra candy canes and sugar plums during those long sessions.” The lawyer tapped out more numbers on the calculator.

“Where do you recruit your elves—where do they come from?” the lawyer asked. Santa replied he never asks those sorts of questions and just assumes that Christmas magic brings them to the North Pole. When Santa looked puzzled in response to a question about I-9 forms, the lawyer again reached for the calculator.

The attorney then asked, “How old are these elves? Some of them look pretty young?” Santa replied he wasn’t certain because elves age differently than people. They could be anywhere between 12 and 120. More calculations.

A Little Christmas Cheer?

“At least there is no problem in regard to you, Santa,” the attorney continued. “You manage the enterprise and supervise two or more employees, so you’re an exempt executive as long as you receive a salary of at least $684 per week.” Santa just roared “ho ho ho” and replied, “I don’t need money when there is so much Christmas spirit to keep me happy.” Calculations.

The lawyer leaned over and began to explain Santa’s potential minimum wage and overtime liability when all of a sudden, laying his finger aside of his nose and giving a nod, up the chimney Santa arose. As the attorney watched him fly off, he heard Santa exclaim, “This is all bureaucratic poppycock, I’m not settling this claim!”

The attorney returned to his chair and began to doze off, thinking dreamily, “I never even talked to him about smoking that pipe and the Clean Indoor Air Act.”

Dennis J. Merley is an attorney with Felhaber Larson in Minneapolis, Minnesota. You can reach him at dmerley@felhaber.com.