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Nisswa Lake Retreat Center
24761 Hazelwood Drive
Nisswa, MN 56468
Legal Audit of Nisswa Lake Retreat Center
Submitted to:
Paul Floyd
BUSN656 – Legal, Regulatory, and Compliance
June 6, 2011
Submitted by:
Steve Carr, #01010807
Kim Luchsinger, #535881
Beth Mammenga, #01038572
Dontrell Young, #01039997
MBB
2
Table of Contents
Short Form Business Plan 4
Exhibit 1: NLRC Organizational Chart 8
Ten Primary Legal Issues 10
Executive Memorandum 15
Contracts 15
Fair Labor Standards Act (FLSA) 17
Worker’s Compensation 20
Environmental Protection Agency (EPA) Regulations 23
Food Safety Regulations 24
Policy Scenario 27
Dispute Scenario 28
References 30
Appendix 32
3
Short Form Business Plan
Nisswa Lake Retreat Center
24761 Hazelwood Drive
Nisswa, MN 56468
Contact:
Steve Carr, [email protected]
Kim Luchsinger, [email protected]
Beth Mammenga, [email protected]
Dontrell Young, [email protected]
Nisswa Lake Retreat Center (NLRC) is an all-inclusive, LEED certified retreat center,
named for the location at the southern end of Nisswa Lake in northern Minnesota.
The mission of NLRC is to create an environment to escape your hectic lifestyle and
learn new skills and hobbies.
4
Products and Services
NLRC provides a unique, all-inclusive retreat center, where adults can learn new
hobbies and skills. The center includes four general categories of activities: Crafting,
Culinary, Sports and Woodworking. Visitors pay a flat fee to stay at the retreat
center, which includes all room and board accommodations, as well as all class fees.
Visitors also have the opportunity to purchase supplies on-site, in order to continue
building their skills at home.
Industry
In Minnesota, tourism is an $11 billion industry. “The leisure and hospitality
industry employs more than 238,000 Minnesotans” (Explore Minnesota, 2011).
“Travelers in Minnesota spend more than $33 million a day. The leisure and
hospitality industry accounts for 17% of Minnesota’s state sales tax revenues.
Tourism is comparable to agriculture in its contributions to the gross state product.
Sales at leisure and hospitality businesses grew 36% from 2000 to 2009. Demand
for rooms at Minnesota lodging properties bounced back substantially in 2010,
reflecting an increase in business and leisure travel.” (Tourism, 2010)
Competition
There are other resorts in the Nisswa Lakes area of Minnesota, but none have the
specific training and classes that NLRC offers, or LEED certification. These potential
competitors are Lost Lake Lodge, Grand View Lodge, Samara Point Resort on Gull
Lake, Fritz's Resort & Campground, Galles' Upper Cullen Resort & Campground,
5
Quarterdeck Resort & Boathouse Eatery, Good Ol' Days Family Resort, Gull Bay
Cabins, Lykins Pinehurst Resort (Nisswa Chamber of Commerce, 2011).
Management Team
NLRC is an LLC, and the owners are Steve Carr, Kim Luchsinger, Beth Mammenga,
and Dontrell Young. Each owner has extensive experience in his/her hobby division
(see Exhibit 1: NLRC Organizational Chart). Besides the owners, the company
employs one full-time Food Manager and two part-time staff members to assist with
maintenance, cooking and general hospitality at the retreat center. Each division
employs a trainer as an independent contractor.
Stakeholders
The primary vendors of NLRC supply food, cleaning products, outdoor equipment,
crafting materials and woodworking products. NLRC’s customers are adults
interested in learning new skills in a relaxing environment on Nisswa Lake in
northern Minnesota. The target markets include young adults (singles and couples),
senior citizens and corporate retreat groups.
Marketing
NLRC will reach potential customer through targeted direct marketing to
corporations in Minnesota, Wisconsin, North Dakota and South Dakota, as well as
religious, nonprofit and civic groups. NLRC will also reach customers through
advertisements with Minnesota travel and tourism websites and magazines.
6
Financial Projections
NLRC projects sales and profits as follows. Further details and underlying
assumptions are available upon request.
2012 2013
Revenue $100,000 $150,000
Cost of Sales $50,000 $75,000
Gross Profit $50,000 $75,000
Operating Expenses $50,000 $60,000
Net Income (Loss) Before Taxes $0 $15,000
7
Exhibit 1: NLRC Organizational Chart
Job Responsibilities
CEO, Culinary Department Manager
Provides leadership and oversight of mission, vision and values of the business. Oversees culinary classes and contractor
trainers.
CFO, Woodworking Department Manager
8
Beth Mammenga - CEO & Culinary Dept. Manager
Hospitality staff (1 FT, 2 PT)
Culinary Trainer
Kim Luchsinger - Human Resources Director & Crafting
Dept. Manager
Crafting Trainer
Steve Carr - CFO & Woodworking Dept.
Manager
Woodworking Trainer
Dontrell Young - COO & Sports Dept.
Manager
Sports Trainer
Provides oversight of financial operations, accounting and auditing. Oversees woodworking classes and contractor trainers.
COO, Sports Department Manager
Provides oversight of service operations and grounds maintenance. Oversees sports classes and contractor trainers.
Human Resources Director, Crafting Department Manager
Provides oversight of human resources and employee relations. Oversees crafting classes and contractor trainers.
9
Ten Primary Legal Issues
1. Contracts
a. Contracts are a primary legal issue because of the need for contracts with vendors,
customers and other key stakeholders. The business must protect against
unfulfilled promises. “The failure to honor a promise is more than just a breach of
contract; economic ripple effects occur when businesses cannot rely on contractual
promises” (Jennings, 2010, p. 223). The area of law this relates to is contracts.
2. Fair Labor Standards Act
a. The Fair Labor Standards Act (FLSA) governs how employers pay employees in
regards to overtime and minimum wage. As an employer, we will need to ensure
that we are complying with this law. The liability we face under the Fair Labor
Standards Act is an accusation that we are not paying our employee(s) fairly for
their hours worked and/or overtime. Some of our employees will likely live at the
retreat center. We would have to be very aware of the rules around what
constitutes “working hours” and how to calculate room and board as part of
someone’s pay. If it is found that we are not in compliance with this law, we could
be forced to pay back wages and restitution in addition to penalties. The area of
law this falls under is statutes in employer-employee relations, because we will be
subject to both Minnesota and federal labor laws.
3. Worker’s Compensation:
a. All Minnesota employers are required to have worker’s compensation insurance to
protect their employees in the case of an accident or injury caused by a work
process. While this is a primary legal issue for all employers, it is of especial
10
concern, as our facility will have equipment and activities that are inherently
dangerous. The risks we need to protect against are the possibility of injury, which
would increase our Experience Modification (MOD) rating and be more expensive.
We need to have a proactive safety plan in place. This area of law falls under laws
relating to government regulations, as we would be subject to state worker’s
compensation laws, as well as federal Occupational Safety and Health
Administration (OSHA) regulations.
4. Title VII Equal Employment Practices
a. Equal employment practices are critical because they affect every business. As an
employer, our employment practices such as hiring, firing, layoffs, and discipline,
must not discriminate against any protected class, such as race, gender, ethnic
group, or sexual orientation. The main liability we face is the “perception of
fairness” from employees. If they perceive that we are being unfair in our business
practices, they may complain to one of the various government agencies about our
practices. We would then be subject to an investigation, review, and if there is
probable cause of discrimination found, we could pay fines or be forced to make
restitution. If an employee sues for discrimination, we could face a court battle. As
a small business, it is far preferable to proactively treat our employees well, rather
than have to defend ourselves in court. This area of law falls under laws relating to
employment discrimination.
5. EPA, MPCA, and Local Lakeshore Ordinances
a. Motorized boats, kitchens, septic tanks, the wood shop, and other areas could
present problems that relate to the Environmental Protection Agency (EPA).
Along with the EPA, Minnesota has a Minnesota Pollution Control Agency (MPCA)
11
and each local government has regulations relating to lake homes and businesses.
It will be important for the resort to understand the federal and state pollution
laws that affect them and create operating procedures to abide by and limit
exposure to the laws. Also, understanding the way the EPA has ruled on past issues
in the area would help prevent EPA violations. This is the agency the resort must
comply with legally for everything that affects the environment. The EPA is an
administrative agency within the executive branch of the federal government that
can make, interpret and enforce laws (Jennings, 2010, p. 111).
6. OSHA
a. The Occupational Safety and Health Administration (OSHA) will affect several
areas of the resort and is heavily regulated by the federal government. OSHA
regulations will need to be followed in the wood shop to keep guests safe,
thereby avoiding injury and legal action. Other areas or the resort that relate
to employees, such as cooking, maintenance, and the remodeling of the
property will all the affected by OSHA rules.
7. Waivers
a. Waivers will need to be signed by all participants in an attempt to limit legal
actions taken against the resort. The waiver will be a contract between the
participant and the resort and governed by contract law. Although the waiver will
help limit some legal action, it will not clear the resort of negligence. The waiver
should spell out what activity the guest will be involved in and specifically spell out
the risks of injury of that each activity possesses. Having a signed document that
the participant understands the risks and agrees not to sue for non-negligent
related injuries would help the resort avoid legal issues.
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8. Nuisance Ordinances
a. Each community has different regulations regarding nuisances. Noise, lines of
sight, and even smells can constitute as a nuisance. Basically, according to
Shattered Peace (2011), anything that interferes with the enjoyment of one’s
property is considered a nuisance by local government regulations. NLRC will
likely have neighbors, which the resort needs to be cognizant of in order to avoid
legal actions and a bad reputation in the community. By understanding the
neighbors, community, lake associations, and local government ordinances and
abiding by them, the NLRC will be able to avoid complications.
9. Liquor Licensing
a. Nisswa Lake Retreat Center has a liability in regard to its liquor license, since the
camp will serve alcoholic beverages to its customers. Per Minnesota Statute
340A.40, the company will need to obtain a license in order to serve alcoholic
beverages (Minnesota Office of the Revisor of Statutes, 2010). To ensure
compliance, the company will need to ensure that the required licenses are
obtained from the state of Minnesota to both serve alcohol, and create and bottle
beverages, such as beer and wine. The company will also need to create policies to
ensure that none of its guests become overly intoxicated. Nisswa Lake Retreat
Center could be held legally liable if a patron drinks too much alcohol and either:
gets into a physical altercation injuring another person, drives from the resort and
injures another driver in an accident, or get into the lake and drowns. This
financial impact of this liability can be mitigated by obtaining liquor liability
insurance, which is a form of commercial insurance that protects the business
13
from legal action on behalf of the consumers who harm or injure themselves or
others from consuming alcoholic beverages (Business Insurance, 2009).
10. Food Safety
a. Food Safety is a liability issue that management at Nisswa Lake Retreat Center has
to be concerned about. The company will need to obtain a license from the State of
Minnesota to be able to serve food to customers. In addition, the company will
have to ensure that it is in compliance with regulations set by the Minnesota
Department of Health (MDH). The company will also need to create policies to
ensure that food is prepared and stored in a safe manner. Nisswa Lake Retreat
Center could be held liable if a customer becomes ill after consuming a meal at one
of our facilities. Conducting internal inspections and audits can mitigate this
financial impact of this liability. This will not only ensure compliance with MDH
regulations, but to ensure that food served to customers is suitable for human
consumption.
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Executive Memorandum
To: Board of Directors
From: Steve Carr, Kim Luchsinger, Beth Mammenga, and Dontrell Young
Date: June 6, 2011
Re: Legal Audit of Nisswa Lake Retreat Center
In response to your request, our team has conducted a legal audit of five legal concerns likely to
confront the Nisswa Lake Retreat Center (NLRC). These concerns are listed below, followed by
further detail, as well as the policy and dispute scenarios requested:
1. Contracts
2. Fair Labor Standards Act (FLSA)
3. Worker’s Compensation
4. Environmental Protection Agency (EPA) Regulations
5. Food Safety Regulations
Contracts
The primary legal principles involved in resolving contracts are the formation of a contract,
which includes offer, acceptance, consideration, capacity, and optional writing requirement.
15
Contract offers must contain the following items: parties involved, subject matter of the contract,
price, payment terms, delivery terms, and performance times. (Jennings, 2010, p. 230)
The source of contracts principles are “common law, the Uniform Commercial Code, and the new
sources of law evolving in response to e-commerce – the Uniform Electronic Transactions Act,
the Uniform Computer Information Transactions Act, and the Electronic Signatures in Global and
National Commerce Act of 2000” (Jennings, 2010, p. 223).
A legal audit of contracts is appropriate because the business must protect against unfulfilled
promises. “The failure to honor a promise is more than just a breach of contract; economic ripple
effects occur when businesses cannot rely on contractual promises” (Jennings, 2010, p. 223).
This issue may arise in the following ways:
Uniform Electronic Transactions Act (UETA), Electronic Signatures in Global and National
Commerce Act of 2000 (ESIGN):
o In accepting reservations online to stay at NLRC, these acts recognize electronic
signatures as valid contracts between NLRC and the customer.
Uniform Commercial Code (UCC):
o Because products may be purchase from vendors across state lines, and
customers may travel from outside of Minnesota to stay at NLRC, the UCC will
cover these interstate contracts. “Some factors used to determine which are UCC
contracts and which are common law contracts are: the cost of the goods versus
the cost of service in the contract, the parties’ intent, and even some public policy
issues” (Jennings, 2010, p. 224).
Cancellation of Contracts:
16
o If a customer cancels their stay at NLRC 30 days or more before stay date, they
will be refunded in full. Cancellations less than 30 days before stay date will
receive 50% refund.
The CEO, COO, CFO and Human Resources Director may all need to be involved in resolving the
legal issues as part of the legal audit because each have expertise in specific areas, and will have
more involvement in resolving specific issues. For example, a contractual issue with an employee
would need to involve the Human Resources Director, but a contractual issue regarding an HVAC
system would need to involve the COO.
A contract policy would be helpful in preventing or resolving the contractual legal issue due to
issues that may arise in the offer, acceptance, consideration, capacity and writing sections of the
contract agreement process. Contracts aid in determining the intent of parties involved.
Fair Labor Standards Act
The Fair Labor Standards Act was first passed in 1938. The purpose of the FLSA is to provide fair
working conditions for employees. The FLSA establishes a minimum wage for employees, which
has risen slowly over time as inflation increases. The FLSA establishes that a workweek is 40
hours, and that any work done over 40 hours will be paid at “time and a half.” Another landmark
piece of the FLSA was protection for child laborers. Some employees are exempt from the FLSA,
but the U.S. Department of Labor has strict guidelines on what types of positions are exempt.
Prior to the FLSA, low-wage workers, especially factory workers faced brutal working conditions.
They were paid very little for long hours, and young children were permitted to work in
extremely hazardous conditions (Samuel, 2000). After the passage of the FLSA, a special
17
enforcement “Wage and Hour” division was created in the U.S. Department of Labor. The source
of law for the FLSA, therefore, comes from statutory law, and agency regulations. Companies can
submit questions to the Department of Labor, and the Department of Labor publishes opinions
on the legality of the issue.
Minnesota also has its own minimum wage laws. Prior to the most recent increase in Federal
minimum wage to $7.25/hour, Minnesota’s minimum wage prevailed, at $6.15/hour. Minnesota
Department of Labor also has a “Wage and Hour” division in charge of enforcement.
First and foremost, Nisswa Lake Retreat Center is responsible to pay all employees at least the
minimum wage. There is no question that we would pay our employees minimum wage, and
likely higher, in order to match the surrounding market. However, when employees may be
living on the premises temporarily to cook and clean for the week, the issue that arises is
distinguishing work time and non-work time. For our non-exempt employees, if they work more
than 40 hours in a one-week period, they would be eligible for overtime. We would seek to
ensure that employees do not work more than 40 hours, by monitoring and setting guidelines
about when employees are working and when they have free time. During non-work time, we
can’t expect them to engage in work activities.
We must have a consistent beginning and end to the workweek for the purposes of calculating
overtime. The U.S. Department of Labor defines the workweek as “a fixed and regularly recurring
period of 168 hours, or seven consecutive 24-hour periods. The workweek does not have to
coincide with the calendar week, but instead it may begin on any day of the week and at any hour
of the day. The workweek is the basis on which determinations of employee coverage, the
application of most exemptions, and compliance with the wage payment requirements of the
FLSA are made. Once the beginning time of an employee’s workweek is established, it remains
18
fixed regardless of the hours the employee is scheduled to work (United States Department of
Labor, 2011).
For exempt employees, we must ensure they meet the legal requirements to be exempt from the
Fair Labor Standards Act. If we misclassify an employee as exempt, the employee can sue for
back wages and damages. As a small business, it could be enough to put us out of business.
A legal audit of FLSA issues at Nisswa Lake Retreat Center will ensure we are in compliance with
the law and prevent issues down the road. We are hiring employees who will be subject to the
Fair Labor Standards Act, so it is crucial that we understand what the law requires. For
employees who are not subject to the Fair Labor Standards Act, we need to make sure we are
following the Department of Labor guidelines.
Ensuring we are in compliance with the law will also help us retain employees. Turnover is
expensive, and a good relationship with employees is the key to them wanting to stay. By
ensuring we are fair and legal, we stand a better chance of retaining employees.
All of the company owners will need to be aware of FLSA issues, because all will have input on
the policies we put into place for the company. The Human Resources Director will be
responsible, at least while the company is smaller, to hire and schedule employees. The Human
Resources Director will need to communicate policies to employees and monitor for compliance
with the FLSA. If there are complaints about Nisswa Lake Retreat Center’s compliance with the
Fair Labor Standards Act, the Human Resources Director or CEO will need to investigate.
A policy will help us know how we are going to ensure we are following the law. There are
numerous regulations surrounding FLSA, and we need to narrow down to which laws we are
actually subject to. It gives us procedures. According to the U.S. Department of Labor, “if an
19
employer (1) has a clearly communicated policy prohibiting improper deductions and including
a complaint mechanism, (2) reimburses employees for any improper deductions, and (3) makes
a good faith commitment to comply in the future, the employer will not lose the exemption for
any employees unless the employer willfully violates the policy by continuing the improper
deductions after receiving employee complaints” (United States Department of Labor, 2008). In
other words, a clearly worded policy will lower our exposure to legal issues arising from a FLSA
complaint.
Worker’s Compensation
The primary legal issue involved in workers’ compensation is the directive to assist employees
who are injured due to work-related processes to get back to their pre-injury state. When an
employee is injured on the job, they are eligible for payment of lost wages, payment for medical
care, and costs for rehabilitation. If the employee is permanently disabled or temporarily
disabled, they are eligible for payments based on how much functioning they have lost.
Common law views employer-employee relationship as master-servant, and so prior to the
introduction of workers’ compensation laws, the only way for employees to collect any kind of
compensation was to sue their employer. In Minnesota, employers must follow statutory law
from the Minnesota Department of Labor and Industry. Minnesota law requires all employers to
have workers’ compensation insurance. Employers are defined as “those that hire another to
perform services” (Minnesota Department of Labor, 2011).
We have a number of activities and equipment at the retreat center that are inherently
dangerous. An employee could easily be injured by any of the activities or equipment. Prior to an
20
accident occurring, we need to ensure we have appropriate workers’ compensation insurance
available. If an employee is injured, we would need to alert the insurance company via the First
Report of Injury to let them know that an injury occurred. We would need to work with the
employee to help them get back to full duty if they have restrictions.
Furthermore, we will be hiring independent contractors to lead some of the trainings. As an
independent contractor, they are not eligible to be covered by our workers’ compensation
insurance. However, they must meet the nine-factor test, as defined by the IRS to determine that
they are indeed an independent contractor. If we classify someone who works at Nisswa Lake
Retreat Center as an independent contractor, but in reality they don’t meet all factors of the test,
they could be considered our employee and be eligible for workers’ compensation (Internal
Revenue Service, 2011). This would be an unwanted and unnecessary expense for the company.
We need to make sure that we are following the IRS guidelines in determining who is an
employee and who is an independent contractor.
If an employee is injured, we need to make sure we have the appropriate insurance purchased.
Failure to do this would mean fines and legal fees, as we would still have to pay the employee’s
expenses. We also need to plan ahead to make sure we have the correct procedures in place. The
workers’ compensation system is complicated and has many legal requirements. Each insurer
also has requirements, because they want to reduce their costs. For example, some insurers
require that an employer offer light duty, regardless of restrictions. This means that if an
employee goes to the doctor and receives restrictions, we as the employer have to work with the
employee to modify their job or find a different job for them to do until they no longer need
restrictions. Our goals is to quickly and efficiently help the employee get back to full duty. When
an employee is injured, if they feel they are being treated unfairly by the employer, they are more
21
likely to not want to come back to work, or “forget” doctor’s notes, or fight the insurance
company. By having a fair, neutral process and treating the employee well, we can help them
want to get back to work.
All employees who work for the company would need to be involved in workers’ compensation.
Everyone has to know the safety rules. Anyone in a supervisory position would have to know
procedures for an injured employee, and the safety rules to enforce. The owners of the company
would have to be aware of how injuries affect our MOD rating. Each workers’ compensation
injury stays on our record for three years and impacts the MOD rating. The MOD rating is a
multiplier factor that determines in part our insurance costs. Any rating over 1.0 means we have
to pay higher than the standard insurance rate. Unfortunately, one unusually expensive claim can
throw off our MOD rating for a long period of time, so it is an incentive to Nisswa Lake Retreat
Center to keep employees safe. The owners would also need to be aware of the difference
between an independent contractor and an employee so that we don’t get held responsible for an
injured independent contractor.
A policy is extremely important for Nisswa Lake Retreat Center. Since an injury can be traumatic
for an employee, we don’t want to wait until an employee is injured to know what needs to
happen. Having a clear plan in place will make it much easier for the employee to know what to
expect. A policy will make it clear who is responsible to do what when there is an accident or
injury and designate responsibility.
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Environmental Protection Agency (EPA) Regulations
The EPA is a government agency whose goal is to “go after pollution problems that make a
difference in communities. Vigorous civil and criminal enforcement that targets the most serious
water, air and chemical hazards; advance environmental justice by protecting vulnerable
communities” (EPA, 2011). This is the agency the resort must comply with legally for everything
that affects the environment. The EPA is an administrative agency within the executive branch of
the federal government that can make, interpret and enforce laws (Jennings, 2010, p. 111).
The MPCA works closely with the EPA. The EPA provides an approval for the MPCA to go ahead
with environmental initiatives. Local governments work to protect the community’s lakefront
and regulations vary from lake to lake. All three effect resort operations, by making sure waste,
rainwater runoff, and any emissions from the kitchen, woodshop, and guest facilities complies
with their regulations.
First, solid waste should be separated into compostable items, recyclables, and landfill trash. Not
only will this fit into the resorts “green” value system, it will make it easier to comply with future
environmental laws dealing with recycling.
Rainwater runoff on lakefront property affects the water quality of the lake and it typically highly
regulated by local ordinance. MPCA also provides guidance and a state level authority for
municipalities to go for advice and issues.
Lastly, the EPA and MPCA regulate the resort emissions. The heat sources, kitchen exhaust, and
woodshop dust and fume collections all fall under the EPA/MPCA and need to be addressed prior
to opening. All machinery and equipment at the resort will meet the EPA/MPCA guidelines for
emissions.
23
A legal audit of this area is important because of the environmental principles of the resort. It is
also highly regulated sector of business that would be expensive to comply with after the fact. By
performing an audit on the legal issues that are affected by the EPA, MPCA, and local ordinances
prior to opening the resort, or even remodeling the resort to fit the company’s needs, will help
ensure compliance is achieved and future costs minimized.
Many parties will be involved in the legal audit of the resort as it related to environmental
agencies and ordinances. The remodeling contractor will need to ensure all equipment and
machinery meets EPA standards. The staff and employees will need to have policies and
procedures in place to follow. A pre-employment training on solid waste will be performed
because these are the people who will be in charge of compliance to the policies.
The policies established by the business will be important in establishing and maintaining the
environmental principles of the resort. The policies will also ensure we are in compliance with
the EPA by providing guidelines for the employees and guests to follow. The resorts
environmental policies will help prevent legal issues by keeping the resort in line with the
environmental agencies and ensuring the resort staff understands the implications of non-
compliance.
Food Safety Regulations
In regard to the legal liability arising from the company’s food handling and storage practices,
the company faces increased regulation and continued inspections by the Minnesota Department
of Health (MDH).
24
There is the possibility that Nisswa Lake Retreat Center could be found liable if employees were
negligent in the handling of food. As a result, the company could be found liable for any damages
that our customers may incur. In addition, it is possible that management at Nisswa Lake Retreat
Center can be held criminally liable for repeat food handling infractions of its employees. Per the
case of FDA v. Park, the United States Supreme Court found that mangers could be held liable for
acts committed by employees if they authorized the conduct, knew about the conduct but did
nothing, or failed to act reasonably as managers (Jennings, 2010, p. 155). Therefore, it is
imperative that management is aware of all state safety requirements. Management must also be
notified of any disciplinary action taken by a state or federal agency, so that appropriate action
can be taken immediately.
This regulation is due to the nature of our business. Per Minnesota Food Code, Chapter 4626,
Nisswa Lake Resort Center meets the State of Minnesota’s definition of food establishment.
Because of this, a license is required by the State of Minnesota in order to maintain operations.
Per the State of Minnesota statute 157.16, “A license is required annually for every person, firm,
or corporation engaged in the business of conducting a food and beverage service establishment,
youth camp, hotel, motel, lodging establishment, public pool, or resort” (Minnesota Office of the
Revisor of Statutes, 2010). In Minnesota, these activities are monitored by the MDH.
As part of the code, the company will be required to hire at least one full-time food manager. The
manager must be working the majority of the hours that the business is in operation. In addition,
the food manager must become certified by taking a food safety course, pass an exam approved
by the state of Minnesota, and submit required materials including a completed application,
proof of exam and appropriate fees. In addition to hiring a certified food manager, the company
25
will be required to have commercial kitchen equipment in all food preparation and serving areas
(Minnesota Office of the Revisor of Statutes, 2010).
In order to maintain a license with the state, we will need to make our facilities available for
inspection by state officials. Nisswa Lake Retreat Center has been identified as a high-risk
establishment by the State of Minnesota, meaning of facilities will be inspected at least once a
year. Per State of Minnesota Statute 157.20, a high-risk establishment is defined as any public
pool, or any food and beverage service establishment, hotel, motel, lodging establishment, or
resort that:
1. Serves potentially hazardous foods that require extensive processing on the premises,
including manual handling, cooling, reheating, or holding for service;
2. Prepares foods several hours or days before service;
3. Serves menu items that epidemiologic experience has demonstrated to be common
vehicles of food-borne illness;
4. Has a public swimming pool; or
5. Draws its drinking water from a surface water supply. (Minnesota Office of the Revisor of
Statutes, 2010).
Because of this designation, we must be vigilant in maintaining all areas that are used to serve,
prepare or store food.
Liability from negligent food handling may arise in a number of forms. First, the company may
fail on-site inspections. This may lead to increasing fines for each infraction and closure of the
food facilities if the offense is severe enough. In addition, customers may develop an illness such
as E. coli or salmonella food poisoning. At best, this could cause the company to develop a bad
26
reputation and subsequent loss of business because of it. In addition, this could also lead to
disciplinary action by the MDH. Furthermore, this could lead to lawsuit from disgruntled
customers who became ill. Any legal action against the company would be costly in terms of both
legal costs, as well as business lost due to the bad publicity the company may receive as a result.
A legal audit of our food preparation will be necessary in order to limit of liability in this area. It
will be important to conduct frequent internal inspections of all areas used for storing and
preparing food. This will ensure that the company is in compliance with MDH regulations.
Preventing and resolving legal liability resulting from food handling has to be a team effort from
everyone in the company. In addition, it is important to train employees so they will be able to
alert us to any potential issues before they become major problems. Additionally, there should be
a contingency plan in place in the event that either happens. Not only do we need to prevent
these events from occurring, but should also be prepared to address and resolve any issues that
may occur in this area.
Policy Scenario
Many of the EPA laws and regulations make tasks more difficult and expensive. An employee
may chose to disregard the separation of solid waste polices of the company because it is easier
to just lump all the trash together and not separate it. Landscaping and lakeshore can be affected
if an employee or manager wishes to change the lakefront.
Each of policies needs to be to written in a way that limits interpretation. The environmental
policies include the consultation of legal prior to any changes to the resort and prior to
remodeling for operations.
27
The main area where there could be issues with how the policy is applied would be the waste
handling. Ensuring the employees know how to separate the trash will help with the application
of the policy.
The loopholes in the language of the policy would be the interpretation of various words and
definitions. Another potential loophole would be the handling of solid waste and the
interpretation of compostable vs. recyclable vs. trash. Making sure legal, the agencies, and local
governments are consulted will help limit exposure to the loopholes.
The environmental policy was written in a way that encourages legal consultation and fits with
the resorts environmental policies. It also meshes with the direction the agencies are going with
recycling and composting policies.
Training on the policy will supplement and encourage compliance. The emphasis of legal
consultation prior to changes will help address the employees concerns about how the policy is
written. If there is any doubt as to the interpretation of the policy, legal should be consulted.
Dispute Scenario
The complainant is one of several customers, who were dissatisfied with the quality of the food
that was prepared for them on our premises. The complainant filed a complaint with the food
manager that was on duty at the time, the meal prepared for him was overcooked and it took an
unusually long amount of time for him to receive his meal. Because of his bad experience, he has
stated that he will not visit our resort again in the future. In addition, this customer threatened to
inform his friends and colleagues not to patronize Nisswa Lake Retreat Center. This situation has
28
the potential to be a disaster, because of a possible lawsuit by the customer and poor reputation
of the resort.
This dispute can be resolved using a revised contract item, which states that our liability is
limited to a refund of the cost of product and/or service purchased. For customer service
reasons, managers are able to, at their discretion, offer additional compensation up to the value
of the product and/or service that was purchased.
Please contact our team at the contact information listed at the beginning with any questions or
concerns.
Steve Carr
Kim Luchsinger
Beth Mammenga
Dontrell Young
29
References
Business Insurance. (2009). Liquor liability insurance coverage. Retrieved May 25, 2011 via
http://www.bestbusinessinsurance.info/liquor-liability-insurance-coverage.html
EPA. Laws & Regulations. Retrieved June 2, 2011 via http://www.epa.gov/lawsregs/.
Explore Minnesota. Retrieved June 2, 2011 via http://industry.exploreminnesota.com.
Internal Revenue Service. Employee vs. Independent Contractor – Seven Tips for Business Owners.
Retrieved June 2, 2011 via http://www.irs.gov/newsroom/article/0,,id=173423,00.html
Jennings, M. M. (2010). Foundations of the Legal Environment of Business. Mason, OH: South-
Western Cengage Learning.
Minnesota Department of Labor. About Workers’ Compensation Coverage. Retrieved June 1, 2011
via http://www.doli.state.mn.us/WC/AboutCov.asp .
Minnesota Office of the Revisor of Statutes. (2010). 340A.401 License Required. Retrieved May 25,
2011 via https://www.revisor.mn.gov/statutes/?id=340A.401
Nisswa Chamber of Commerce website. Retrieved June 2, 2011 via
http://business.nisswa.com/list/category/lodging-resorts.
Samuel, H. (December, 2000). Troubled passage: the labor movement and the Fair Labor
Standards Act. Monthly Labor Review. Retrieved June 1, 2011 via
http://www.bls.gov/opub/mlr/2000/12/art3full.pdf
Shattered Peace. Law of Nuisance. Retrieved June 2, 2011 via
http://shatteredpeace.com/law_of_nuisance.htm.
30
Tourism and Minnesota’s Economic Recovery. Retrieved June 2, 2011 via
http://industry.exploreminnesota.com/wp-content/uploads/2011/01/Tourism_and_Eco
nomy_2011_edition_2-7-11.pdf.
United States Department of Agriculture. (April 25, 2007). Fact Sheets: Safe Food Handling.
Retrieved May 25, 2011 via
http://www.fsis.usda.gov/factsheets/Keep_Food_Safe_Food_Safety_Basics/index.asp
United States Department of Labor. (July 2008). Fact Sheet #17G: Salary Basis Requirement and
the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA). Retrieved June 1,
2011 from http://www.dol.gov/whd/regs/compliance/fairpay/fs17g_salary.htm
United States Department of Labor. Workweek. Retrieved June 1, 2011 via
http://www.dol.gov/elaws/esa/flsa/otcalc/glossary.asp?p=workweek
Appendix31
Nisswa Lake Retreat Center Policies and Procedures
Exempt/Non-Exempt Employee Status
1) Non-Exempt Employee
a) Non-exempt employees are generally considered non-supervisory or those that do not
require an advanced degree in a specialized area of study.
b) Non-exempt employees are subject to the Federal and State minimum wage
requirements. Non-exempt employees will be paid at least the current State or Federal
minimum wage standard (whichever is greater) per hour for all hours worked.
c) Non-exempt employees are eligible for overtime pay, and will be paid one and a half times
his/her established hourly wage for all overtime hours worked. If the employee has more
than one position and one rate of pay, the overtime premium will be weighted based on
actual hours worked in each pay category for the applicable week.
d) Non-exempt employees will be paid overtime only when my worked hours exceed 40
hours in a one-week period, defined as Sunday through Saturday.
e) Paid time off (PTO) and paid or worked holiday hours will not be counted as work time
for the purposes of overtime computation.
2) Exempt Employee
a) Determining exempt status
i) An Exemption Test will be completed on employees that the Human Resources
Director deems possibly exempt from the FLSA. Those who meet all of the
requirements on the Exemption Test will be considered exempt from the Fair Labor
Standards Act and will be subject to the guidelines below.
b) Salary Basis Rule
32
i) Exempt employees normally must receive their full salary for any week in which they
perform any work, without regard to the number of days or hours worked. However,
exempt employees need not be paid for any workweek in which they perform NO
work at all for the organization. A Paid Time Off (PTO) deduction will be made
instead, if the employee is eligible for PTO. Refer to the ‘Unpaid/Paid Time Off’ policy.
ii) Deductions from pay cannot be made as a result of absences due to the circumstances
listed below, although PTO deductions can be made if the employee is eligible for PTO.
Such improper pay deductions are therefore specifically prohibited by Nisswa Lake
Retreat Center regardless of the circumstances. Managers or supervisors violating
this policy will be subject to investigation of their pay practices and appropriate
corrective action.
(1) Jury Duty
(2) Court attendance as a witness
(3) Temporary military leave
(4) Absences caused by the employer.
(5) Absences caused by the operating requirements of the business.
(6) Partial day amounts other than those mentioned below.
c) The following are the exemptions when a deduction may be made from an employee’s
salary.
i) Personal Absences. A deduction may be made from the employee’s salary if the
employee is absent for one full day for personal reasons other than sickness or
disability. If an employee has Paid Time Off (PTO), a PTO deduction will be made
instead of a salary deduction, in accordance with the ‘Unpaid/Paid Time Off’ policy. If
an employee does not have PTO, either because they have exhausted their PTO or they
33
are not eligible for it, it will be noted on their timecard to deduct their pay for the full
day absence(s). It is very important to note however, that if an employee who does
not have PTO works at all during this day, a salary deduction may not be made and an
employee will receive their full salary.
ii) Absences due to illness . (1). An exempt employee who is eligible for PTO will have a
PTO deduction made for absences due to sickness or disability. If this employee
exhausts their PTO, a deduction from their pay may be made for full-day absences due
to sickness or disability. (2). If an exempt employee who is not eligible for PTO is
absent due to sickness or disability, a deduction may not be made from their pay.
However, if the employee is absent for a full week due to sickness or disability, a
deduction may be made from their pay. (3). If an exempt employee (either eligible or
ineligible for PTO) has a full-day absence due to sickness or disability and there will be
a salary replacement benefit provided, such as through short-term disability benefits
or worker’s compensation benefits, their pay may be deducted.
iii) Jury Duty / Witness Duty / Military Leave. The amount(s) of compensation received
by the employee for jury duty or witness duty or military leave may be applied to
offset the pay otherwise due to the employee for the week. However, no deductions
can be made for failure to work for these reasons.
iv) Safety Infractions. A penalty may be imposed upon an employee for infractions of
safety rules of major significance. Safety rules of major significance include those
relating to the prevention of serious danger in the workplace or to other employees.
v) Suspensions . A deduction may be made from an employee’s salary for unpaid
disciplinary suspensions of one or more full days under Nisswa Lake Retreat Center.
‘Discipline’ policy.
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vi) Beginning and end of employment. Deductions may be made from an employee’s
salary for the first and last week of employment, when the employee works only part
of the week.
vii)Family and Medical Leave Act . Deductions may be made from an employee’s salary for
unpaid leave taken in accordance with a legitimate absence under the Family and
Medical Leave Act. Nisswa Lake Retreat Center will pay a proportionate part of the
full salary for the hours actually worked.
d) Complaint Procedure
i) Employees who believe their pay has been improperly reduced should contact the
Director of Human Resources or the CEO immediately to request an investigation.
ii) The employee will be asked to specify in writing, using the guidance above, the
circumstances of the pay deduction and whether it has occurred on other occasions.
iii) Nisswa Lake Retreat Center will review pay records and interview the supervisor or
manager, and the payroll personnel handling the employee’s pay, to determine if the
allegation is correct.
iv) If the deduction is found to be improper, Nisswa Lake Retreat Center will immediately
correct the error no longer than two pay periods from the identification of the
problem.
v) The actions of the person(s) responsible for the error will be investigated further to
determine if this was an isolated incident or a pattern of conduct that requires further
action on the part of Nisswa Lake Retreat Center. If warranted, the responsible
person(s) will be held personally accountable for the error(s) consistent with the
‘Discipline’ policy.
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vi) The resolution of the situation will be fully documented (including confirmation on
the part of the employee that the situation has been resolved) and placed with the
employee’s pay records.
vii)Nisswa Lake Retreat Center will establish a practice to regularly audit employee pay
records to ensure no further issues arise.
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Workers’ Compensation
1) All employees are covered under the Minnesota Worker’s Compensation
Law.
2) The following procedures will be followed for all worker’s compensation
issues:
a) Prevention of Injuries/Exposure to Bloodborne Pathogens
i) All employees are expected to follow the Safety Plan at all times.
b) Personal Injury/ Exposure to Bloodborne Pathogens
i) Employees must immediately notify their supervisor of a personal injury
and/or exposure to blood-borne pathogens occurring during work time,
no matter how slight
ii) The immediate supervisor of the injured employee will complete the First
Report of Injury. The First Report of Injury is to be submitted to the
Human Resources Director within 24 hours of the injury.
iii) The Human Resources Director will forward all necessary paperwork to
the insurance company.
c) Procedures when Medical Treatment is required
i) If an employee requires medical attention due to work-related injury, the
supervisor will assist the employee in finding a clinic. Nisswa Lake
Retreat Center has specific clinics that they refer employees to, which are
listed at the end of this policy.
ii) If an employee chooses to receive medical treatment through a different
doctor, then a ‘Work Ability Report’ form (or an equivalent) must be
37
completed by the doctor and submitted to his/her immediate supervisor.
An employee should bring a ‘Work Ability Report’ form with them and
ask the doctor to complete it.
iii) If an employee receives medical attention due to a work-related injury,
then they must submit a ‘Work Ability Report’ or equivalent to their
immediate supervisor prior to returning to work. The immediate
supervisor will forward the report to the Human Resources Director, who
will forward it to the insurance company.
d) Return to Work Procedures:
i) When an employee with a work-related injury is required by their
physician to be off work for any period of time, the following procedures
will apply:
ii) When an employee is off of work, he/she will ensure that the Human
Resources Director receives a ‘Work Ability Report’ form or equivalent
report from their physician with the dates that they may not work.
iii) Prior to returning to work, the employee must have a written release
from the physician for return to work.
e) Work Restrictions Procedures
i) Returning injured employees to work as soon as medically possible is
very important. Nisswa Lake Retreat Center will accommodate all work
restrictions by offering light duty work, modifying hours, job tasks, or
finding a different job on a temporary basis.
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ii) Prior to an employee working with restricted duties, the employee will
ensure that a ‘Work Ability Report’ form or equivalent report from their
physician with the restrictions and dates of restricted duty is received by
the Human Resources Director.
iii) All changes to work restrictions must be reported to the Human
Resources Director as soon as possible.
iv) Accommodating restricted duties is coordinated with the immediate
supervisor and the Human Resources Director.
f) Permanent Alternate Work Solution:
i) If a permanent alternative work solution is needed, the Human Resources
Director will work with the employee in securing a position that is similar
in hours and pay if available.
ii) A permanent alternative job offer would be put in writing and reviewed
with the employee. The employee will sign and receive a copy of the job
offer.
iii) When changes occur with the employee’s restrictions, a new job offer will
be presented to the employee.
iv) This procedure will continue until the employee has reached maximum
medical improvement, or the date after which no further significant
recovery from or significant lasting improvement to a personal injury can
reasonably be anticipated based on reasonable medical probability.
39
Contracts and General Policies
1) Vendors
a) All vendor contracts must be signed by the CEO and another member of the
Executive Group (CFO, COO, Human Resources Director).
b) Contracts must contain the following items:
i) parties involved,
ii) subject matter of the contract,
iii) price,
iv) payment terms,
v) delivery terms, and
vi) performance times.
2) Customers
a) Cancellation Policy: Cancellations: Please notify us immediately if it is
necessary to cancel. Cancellations made 30 days or more before stay date
will be refunded in full. Cancellations less than 30 days before stay date will
receive 50% refund.
b) Extra People Policy: We reserve the right to limit the number of people in
each unit. Please notify us when making your reservation of the approximate
number of additional guests or visitors you may have. You are responsible
for all guest/visitor charges.
c) Non-Smoking Cabins: All of our cabins are non-smoking. Smoking is allowed
outside only.
d) Pet policy: No pets allowed.
40
Food Safety
1) Hygiene
a) Employees must wash hands:
i) After using the bathroom
ii) After coughing, sneezing, etc
iii) After handling waste
b) All cuts must be covered
c) No loose or hanging jewelry is permitted.
d) A hair net must be worn at all times when preparing food.
e) Any illness must be reported immediately. Employees may not handle food
while ill.
2) Storage
a) Check the temperature of refrigerator and freezer. The refrigerator should be
at 40 °F or below and the freezer at 0 °F or below.
b) Cook or freeze fresh poultry, fish, ground meats, and variety meats within 2
days; other beef, veal, lamb, or pork, within 3 to 5 days.
c) Perishable food such as meat and poultry should be wrapped securely to
maintain quality and to prevent meat juices from getting onto other food.
d) High-acid canned food such as tomatoes, grapefruit, and pineapple can be
stored unopened on the shelf for 12 to 18 months. Low-acid canned food
such as meat, poultry, fish, and most vegetables will keep 2 to 5 years-if the
unopened can remains in good condition and has been stored in a cool, clean,
41
and dry place. Cans that are dented, leaking, bulging, or rusted must
discarded immediately.
3) Preparation
a) Employees are to wash hands with soap and warm water for 20 seconds
before and after handling food.
b) Employees are to avoid cross-contamination. Keep raw meat, poultry, fish,
and their juices away from other food. After cutting raw meats, wash cutting
board, knife, and counter tops with hot, soapy water.
c) Marinate meat and poultry in a covered dish in the refrigerator.
d) Sanitize cutting boards by using a solution of 1 tablespoon of unscented,
liquid chlorine bleach in 1 gallon of water.
4) Cooking
a) All foods to must be cooked to the safe minimum internal temperatures
recommended by the USDA (see chart below). Check temperatures with a
food thermometer.
Product Type
Internal
Temperature
(°F)
Beef & Veal
Ground 160
Steak and roasts medium 160
Steak and roasts medium rare 145
42
Chicken &
Turkey
Breasts 165
Ground, stuffing, and casseroles 165
Whole bird, legs, thighs, and wings 165
Eggs Any type 160
Fish &
ShellfishAny type 145
Lamb
Ground 160
Steak and roasts medium 160
Steaks and roasts medium rare 145
Leftovers Any type 165
Pork
Chops, fresh (raw) ham ground,
ribs, and roasts160
Fully cooked ham (to reheat) 140
(United States Department of Agriculture, 2007)
43
Environmental Stewardship
1) Recycling Procedures
a) Kitchen waste is to be separated into three separate bins: compostable
items, recyclables, and landfill waste.
b) Paper, plastic, and glass recycling bins will be available in the main room
and in each guest house to encourage recycling among guests.
2) Rainwater runoff
a) Rainwater will be diverted away from the lake and into the landscaping
or rain-barrels to be used for ground maintenance.
3) Lake front maintenance and changes
a) Local ordinances and officials will be consulted prior to any changes
affecting the waterfront, including but not limited to: Dock changes,
plant clearing, beach additions, and boat slips)
4) Resort emissions
a) When making any updates to mechanical systems that affect the overall
emissions of the resort, EPA/MPCA guides and the legal counsel will be
consulted. Any new system will meet or exceed the EPA standards for
the device.
44