Contract analysis

I. Executive Summary This memorandum analyzes whether Verimark Hospitality Group Inc.'s ("VHG" or the "Company") classification of certain "lead" and "senior" hourly-designated roles as exempt under the Fair Labor Standards Act ("FLSA") administrative exemption, 29 U.S.C. § 213(a)(1), and the implementing regulations at 29 C.F.R. § 541.200 et seq., is legally defensible. This analysis has been prompted by the demand

II. Background and Factual Context A. The Demand Letter Allegations On January 14, 2026, the law firm of Garza, Linden & Okafor LLP transmitted a detailed demand letter to VHG, authored by attorneys Marco A. Garza and Priya N. Chandrasekaran. The letter was received by VHG General Counsel Devin K. Arroyo on January 16, 2026, and was promptly forwarded to this firm on January 17, 2026. The demand letter identifies fiv

1. Verimark Regency Tampa — Tampa, Florida

2. Verimark Grand Orlando — Orlando, Florida

3. Verimark Shores Clearwater — Clearwater, Florida (owned by Palomar Realty Partners LLC; managed by VHG under Hotel Management Agreement HMA-2021-0601-PC)

4. Verimark Bayfront St. Petersburg — St. Petersburg, Florida

5. Verimark Resort & Spa Boca Raton — Boca Raton, Florida

6. Verimark Oceanview Fort Lauderdale — Fort Lauderdale, Florida

7. Verimark Key West Collection — Key West, Florida The total employee headcount at these seven properties is approximately 2,620, of whom approximately 1,895 are hourly employees. It is worth noting that the Verimark Shores Clearwater property is not owned by VHG but is managed by VHG under a hotel management agreement with Palomar Realty Partners LLC, which may give rise to joint-employer issues that are beyond the

1. Lead Front-Desk Associate — present at all seven properties

2. Senior Concierge — present at five of the seven properties (not present at Verimark Key West Collection or Verimark Shores Clearwater)

3. Lead Housekeeping Coordinator — present at all seven properties

4. Senior Banquet Captain — present at four properties (Verimark Regency Tampa, Verimark Grand Orlando, Verimark Resort & Spa Boca Raton, and Verimark Oceanview Fort Lauderdale)

5. Lead Food & Beverage Attendant — present at six of the seven properties

6. Senior Maintenance Technician — present at all seven properties The estimated total number of employees currently occupying these lead/senior classifications across the seven at-issue properties is approximately 85 to 110 individuals. This range reflects uncertainty regarding the precise headcount at certain properties where we have not yet received complete organizational charts. It is critically important to not

III. Legal Framework — FLSA Administrative Exemption A. Statutory and Regulatory Basis

Section 13(a)(1) of the Fair Labor Standards Act, 29 U.S.C. § 213(a)(1), exempts from the Act's minimum wage and overtime requirements "any employee employed in a bona fide executive, administrative, or professional capacity . . . as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor]." The Department of Labor ("DOL") has promulgated detailed regulations implementing this

1. Salary-Basis Test (29 C.F.R. § 541.200(a)(1) and § 541.602): The employee must be compensated on a salary or fee basis at not less than the applicable minimum threshold amount per week.

2. Salary-Level Test (29 C.F.R. § 541.200(a)(1)): The employee's salary must meet or exceed the minimum salary threshold established by DOL regulation.

3. Duties Test (29 C.F.R. § 541.200(a)(2) and (a)(3)): The employee's "primary duty" must be (a) the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers, and (b) must include the exercise of discretion and independent judgment with respect to matters of significance. Failure to satisfy any one of these three elements is

IV. Application to VHG Lead/Senior Role Classifications In this section, I apply the legal framework set forth above to each of the six lead/senior role categories at issue. For each role, I analyze the compensation structure (salary-basis and salary-level tests) and the duties (both prongs of the duties test), and provide a preliminary risk assessment. A. Lead Front-Desk Associate Compensation structure. Preliminary

V. Cross-Cutting Concerns Several issues cut across all six role categories and warrant separate discussion. A. Salary-Basis Deficiency — Hourly-Origin Pay Structures As noted throughout Section IV, several of the lead/senior roles at issue were converted from hourly non-exempt classifications to salaried exempt classifications in or around January 2023, in connection with a VHG-wide job-code restructuring. Informati