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

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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

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Short Form Business Plan

Nisswa Lake Retreat Center

24761 Hazelwood Drive

Nisswa, MN 56468

Contact:

Steve Carr, steve_w_carr@yahoo.com

Kim Luchsinger, kimberly.luchsinger@gmail.com

Beth Mammenga, bethany.mammenga@gmail.com

Dontrell Young, dontrellyoung@yahoo.com

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.

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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,

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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.

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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

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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

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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.

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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

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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)

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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

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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.

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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:

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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

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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

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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

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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

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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

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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.

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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).

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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

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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

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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

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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