[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2011 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

            Title 29

              Labor


________________________

          Parts 500 to 899

                         Revised as of July 1, 2011

          Containing a codification of documents of general 
          applicability and future effect

          As of July 1, 2011
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 29:
    SUBTITLE B--Regulations Relating to Labor (Continued)
          Chapter V--Wage and Hour Division, Department of 
          Labor                                                      5
  Finding Aids:
      Table of CFR Titles and Chapters........................     877
      Alphabetical List of Agencies Appearing in the CFR......     895
      List of CFR Sections Affected...........................     905

[[Page iv]]





                     ----------------------------

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 29 CFR 500.0 refers 
                       to title 29, part 500, 
                       section 0.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
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    To determine whether a Code volume has been amended since its 
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Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
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EFFECTIVE AND EXPIRATION DATES

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OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
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OBSOLETE PROVISIONS

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``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
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INCORPORATION BY REFERENCE

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This material, like any other properly issued regulation, has the force 
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    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
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    (b) The matter incorporated is in fact available to the extent 
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    (c) The incorporating document is drafted and submitted for 
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    An index to the text of ``Title 3--The President'' is carried within 
that volume.

[[Page vii]]

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    Raymond A. Mosley,
    Director,
    Office of the Federal Register.
    July 1, 2011.







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                               THIS TITLE

    Title 29--Labor is composed of nine volumes. The parts in these 
volumes are arranged in the following order: Parts 0-99, parts 100-499, 
parts 500-899, parts 900-1899, part 1900-Sec.  1910.999, part 1910.1000-
end of part 1910, parts 1911-1925, part 1926, and part 1927 to end. The 
contents of these volumes represent all current regulations codified 
under this title as of July 1, 2011.

    The OMB control numbers for title 29 CFR part 1910 appear in Sec.  
1910.8. For the convenience of the user, Sec.  1910.8 appears in the 
Finding Aids section of the volume containing Sec.  1910.1000 to the 
end.

    Subject indexes appear following the occupational safety and health 
standards (part 1910), and following the safety and health regulations 
for: Longshoring (part 1918), Gear Certification (part 1919), and 
Construction (part 1926).

    For this volume, Bonnie Fritts was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of Michael L. 
White, assisted by Ann Worley.

[[Page 1]]



                             TITLE 29--LABOR




                  (This book contains parts 500 to 899)

  --------------------------------------------------------------------

          SUBTITLE B--Regulations Relating to Labor (Continued)

                                                                    Part

chapter v--Wage and Hour Division, Department of Labor......         500

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          Subtitle B--Regulations Relating to Labor (Continued)

[[Page 5]]



         CHAPTER V--WAGE AND HOUR DIVISION, DEPARTMENT OF LABOR




  --------------------------------------------------------------------

                        SUBCHAPTER A--REGULATIONS
Part                                                                Page
500             Migrant and seasonal agricultural worker 
                    protection..............................           9
501             Enforcement of contractual obligations for 
                    temporary alien agricultural workers 
                    admitted under section 218 of the 
                    Immigration and Nationality Act.........          53
502             Enforcement of contractual obligations for 
                    temporary alien agricultural workers 
                    admitted under section 218 of the 
                    Immigration and Nationality Act 
                    (suspended 6-29-2009)...................          68
504             Attestations by facilities using 
                    nonimmigrant aliens as registered nurses          84
505             Labor standards on projects or productions 
                    assisted by grants from the National 
                    Endowments for the Arts and Humanities..          84
506             Attestations by employers using alien 
                    crewmembers for longshore activities in 
                    U.S. ports..............................          89
507             Labor condition applications and 
                    requirements for employers using 
                    nonimmigrants on H-1B specialty visas in 
                    specialty occupations and as fashion 
                    models..................................          89
508             Attestations filed by employers utilizing F-
                    1 students for off-campus work..........          89
510             Implementation of the minimum wage 
                    provisions of the 1989 amendments to the 
                    Fair Labor Standards Act in Puerto Rico.          89
511             Wage order procedure for American Samoa.....         111
515             Utilization of State agencies for 
                    investigations and inspections..........         118
516             Records to be kept by employers.............         120
519             Employment of full-time students at 
                    subminimum wages........................         133

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520             Employment under special certificate of 
                    messengers, learners (including student-
                    learners), and apprentices..............         144
521-523         [Reserved]

525             Employment of workers with disabilities 
                    under special certificates..............         156
527             [Reserved]

528             Annulment or withdrawal of certificates for 
                    the employment of student-learners, 
                    apprentices, learners, messengers, 
                    handicapped persons, student-workers, 
                    and full-time students in agriculture or 
                    in retail or service establishments at 
                    special minimum wage rates..............         167
530             Employment of homeworkers in certain 
                    industries..............................         169
531             Wage payments under the Fair Labor Standards 
                    Act of 1938.............................         181
536             Area of production..........................         194
541             Defining and delimiting the exemptions for 
                    executive, administrative, professional, 
                    computer and outside sales employees....         195
547             Requirements of a ``Bona fide thrift or 
                    savings plan''..........................         220
548             Authorization of established basic rates for 
                    computing overtime pay..................         221
549             Requirements of a ``bona fide profit-sharing 
                    plan or trust''.........................         236
550             Defining and delimiting the term ``talent 
                    fees''..................................         238
551             Local delivery drivers and helpers; wage 
                    payment plans...........................         239
552             Application of the Fair Labor Standards Act 
                    to domestic service.....................         243
553             Application of the Fair Labor Standards Act 
                    to employees of State and local 
                    governments.............................         248
570             Child labor regulations, orders and 
                    statements of interpretation............         271
575             Waiver of child labor provisions for 
                    agricultural employment of 10 and 11 
                    year old minors in hand harvesting of 
                    short season crops......................         324
578             Minimum wage and overtime violations--civil 
                    money penalties.........................         329
579             Child labor violations--civil money 
                    penalties...............................         331
580             Civil money penalties--procedures for 
                    assessing and contesting penalties......         336

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697             Industries in American Samoa................         340
    SUBCHAPTER B--STATEMENTS OF GENERAL POLICY OR INTERPRETATION NOT 
                     DIRECTLY RELATED TO REGULATIONS
775             General.....................................         344
776             Interpretative bulletin on the general 
                    coverage of the wage and hours 
                    provisions of the Fair Labor Standards 
                    Act of 1938.............................         344
778             Overtime compensation.......................         383
779             The Fair Labor Standards Act as applied to 
                    retailers of goods or services..........         439
780             Exemptions applicable to agriculture, 
                    processing of agricultural commodities, 
                    and related subjects under the Fair 
                    Labor Standards Act.....................         540
782             Exemption from maximum hours provisions for 
                    certain employees of motor carriers.....         615
783             Application of the Fair Labor Standards Act 
                    to employees employed as seamen.........         631
784             Provisions of the Fair Labor Standards Act 
                    applicable to fishing and operations on 
                    aquatic products........................         647
785             Hours worked................................         673
786             Miscellaneous exemptions and exclusions from 
                    coverage................................         685
788             Forestry or logging operations in which not 
                    more than eight employees are employed..         687
789             General statement on the provisions of 
                    section 12(a) and section 15(a)(1) of 
                    the Fair Labor Standards Act of 1938, 
                    relating to written assurances..........         691
790             General statement as to the effect of the 
                    Portal-to-Portal Act of 1947 on the Fair 
                    Labor Standards Act of 1938.............         695
791             Joint employment relationship under Fair 
                    Labor Standards Act of 1938.............         721
793             Exemption of certain radio and television 
                    station employees from overtime pay 
                    requirements under section 13(b)(9) of 
                    the Fair Labor Standards Act............         722
794             Partial overtime exemption for employees of 
                    wholesale or bulk petroleum distributors 
                    under section 7(b)(3) of the Fair Labor 
                    Standards Act...........................         728
                        SUBCHAPTER C--OTHER LAWS
801             Application of the Employee Polygraph 
                    Protection Act of 1988..................         748

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825             The Family and Medical Leave Act of 1993....         777
                  SUBCHAPTER D--GARNISHMENT OF EARNINGS
870             Restriction on garnishment..................         869
871-899         [Reserved]

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                        SUBCHAPTER A_REGULATIONS





PART 500_MIGRANT AND SEASONAL AGRICULTURAL WORKER PROTECTION--
Table of Contents



                      Subpart A_General Provisions

Sec.
500.0 Introduction.
500.1 Purpose and scope.
500.2 Compliance with State laws and regulations.
500.3 Effective date of the Act; transition period; repeal of the Farm 
          Labor Contractor Registration Act.
500.4 Effect of prior judgments and final orders obtained under the Farm 
          Labor Contractor Registration Act.
500.5 Filing of applications, notices and documents.
500.6 Accuracy of information, statements and data.
500.7 Investigation authority of the Secretary.
500.8 Prohibition on interference with Department of Labor officials.
500.9 Discrimination prohibited.
500.10 Waiver of rights prohibited.
500.20 Definitions.

                  Applicability of the Act: Exemptions

500.30 Persons not subject to the Act.

 Subpart B_Registration of Farm Labor Contractors and Employees of Farm 
     Labor Contractors Engaged in Farm Labor Contracting Activities

                   Registration Requirements: General

500.40 Registration in general.
500.41 Farm labor contractor is responsible for actions of his farm 
          labor contractor employee.
500.42 Certificate of Registration to be carried and exhibited.
500.43 Effect of failure to produce certificate.

    Applications and Renewal of Farm Labor Contractor and Farm Labor 
                    Contractor Employee Certificates

500.44 Form of application.
500.45 Contents of application.
500.46 Filing an application.
500.47 Place for filing application.

                          Action on Application

500.48 Issuance of certificate.
500.50 Duration of certificate.
500.51 Refusal to issue or to renew, or suspension or revocation of 
          certificate.
500.52 Right to hearing.
500.53 Nontransfer of certificate.
500.54 Change of address.
500.55 Changes to or amendments of certificate authority.
500.56 Replacement of Certificate of Registration or Farm Labor 
          Contractor Employee Certificate.

    Additional Obligations of Farm Labor Contractors and Farm Labor 
                          Contractor Employees

500.60 Farm labor contractors' recruitment, contractual and general 
          obligations.
500.61 Farm Labor contractors must comply with all worker protections 
          and all other statutory provisions.
500.62 Obligations of a person holding a valid Farm Labor Contractor 
          Employee Certificate of Registration.

                      Subpart C_Worker Protections

                                 General

500.70 Scope of worker protections.
500.71 Utilization of only registered farm labor contractors.
500.72 Agreements with workers.
500.73 Required purchase of goods or services solely from any person 
          prohibited.

  Recruiting, Hiring and Providing Information to Migrant Agricultural 
                                 Workers

500.75 Disclosure of information.

    Hiring and Providing Information to Seasonal Agricultural Workers

500.76 Disclosure of information.

                    Employment Information Furnished

500.77 Accuracy of information furnished.
500.78 Information in foreign language.

                       Wages and Payroll Standards

500.80 Payroll records required.
500.81 Payment of wages when due.

   Subpart D_Motor Vehicle Safety and Insurance for Transportation of 
Migrant and Seasonal Agricultural Workers, Housing Safety and Health for 
                             Migrant Workers

                          Motor Vehicle Safety

500.100 Vehicle safety obligations.
500.101 Promulgation and adoption of vehicle standards.
500.102 Applicability of vehicle safety standards.
500.103 Activities not subject to vehicle safety standards.

[[Page 10]]

500.104 Department of Labor standards for passenger automobiles and 
          station wagons and transportation of seventy-five miles or 
          less.
500.105 DOT standards adopted by the Secretary.

                                Insurance

500.120 Insurance policy or liability bond is required for each vehicle 
          used to transport any migrant or seasonal agricultural worker.
500.121 Coverage and level of insurance required.
500.122 Adjustments in insurance requirements when workers' compensation 
          coverage is provided under State law.
500.123 Property damage insurance required.
500.124 Liability bond in lieu of insurance policy.
500.125 Qualifications and eligibility of insurance carrier or surety.
500.126 Duration of insurance or liability bond.
500.127 Limitations on cancellation of insurance or liability bond of 
          registered farm labor contractors.
500.128 Cancellation of insurance policy or liability bond not relief 
          from insurance requirements.

                        Housing Safety and Health

500.130 Application and scope of safety and health requirement.
500.131 Exclusion from housing safety and health requirement.
500.132 Applicable Federal standards: ETA and OSHA housing standards.
500.133 Substantive Federal and State safety and health standards 
          defined.
500.134 Compliance with State standards.
500.135 Certificate of housing inspection.

                          Subpart E_Enforcement

500.140 General.
500.141 Concurrent actions.
500.142 Representation of the Secretary.
500.143 Civil money penalty assessment.
500.144 Civil money penalties--payment and collection.
500.145 Registration determinations.
500.146 Continuation of matters involving violations of FLCRA.
500.147 Continuation of matters involving violations of section 106 of 
          MSPA.

               Agreements With Federal and State Agencies

500.155 Authority.
500.156 Scope of agreements with Federal agencies.
500.157 Scope of agreements with State agencies.
500.158 Functions delegatable.
500.159 Submission of plan.
500.160 Approved State plans.
500.161 Audits.
500.162 Reports.

                         Central Public Registry

500.170 Establishment of registry.

                  Subpart F_Administrative Proceedings

                                 General

500.200 Establishment of procedures and rules of practice.
500.201 Applicability of procedures and rules.

                     Procedures Relating to Hearing

500.210 Written notice of determination required.
500.211 Contents of notice.
500.212 Request for hearing.

               Procedures Relating to Substituted Service

500.215 Change of address.
500.216 Substituted service.
500.217 Responsibility of Secretary for service.

                            Rules of Practice

500.219 General.
500.220 Service of determinations and computation of time.
500.221 Commencement of proceeding.
500.222 Designation of record.
500.223 Caption of proceeding.

                          Referral for Hearing

500.224 Referral to Administrative Law Judge.
500.225 Notice of docketing.
500.226 Service upon attorneys for the Department of Labor--number of 
          copies.

               Procedures Before Administrative Law Judge

500.231 Appearances; representation of the Department of Labor.
500.232 Consent findings and order.

                         Post-Hearing Procedures

500.262 Decision and order of Administrative Law Judge.

      Modification or Vacation of Order of Administrative Law Judge

500.263 Authority of the Secretary.
500.264 Procedures for initiating review.
500.265 Implementation by the Secretary.
500.266 Responsibility of the Office of Administrative Law Judges.
500.267 Filing and Service.
500.268 Final decision of the Secretary.
500.269 Stay pending decision of the Secretary.

[[Page 11]]

                                 Record

500.270 Retention of official record.
500.271 Certification of official record.

    Authority: Pub. L. 97-470, 96 Stat. 2583 (29 U.S.C. 1801-1872); 
Secretary's Order No. 4-2001, 66 FR 29656.

    Source: 48 FR 36741, Aug. 12, 1983, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 500.0  Introduction.

    (a) The Migrant and Seasonal Agricultural Worker Protection Act 
(MSPA), hereinafter referred to as MSPA or the Act, repeals and replaces 
the Farm Labor Contractor Registration Act of 1963, as amended, 
hereinafter referred to as FLCRA or the Farm Labor Contractor 
Registration Act. Prior judgments and final orders obtained under FLCRA 
continue in effect as stated in Sec. 500.4.
    (b) These regulations include provisions necessitated by the 
Immigration Reform and Control Act's (IRCA) amendment to the Immigration 
and Nationality Act (INA). IRCA amended MSPA to remove section 106 
thereof prohibiting the employment of illegal aliens. Matters concerning 
certificate actions or the assessment of civil money penalties, for a 
violation of section 106 of MSPA which occurred prior to June 1, 1987, 
continue through final administrative determination as stated in Sec. 
500.147.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13328, Mar. 31, 1989]



Sec. 500.1  Purpose and scope.

    (a) Congress stated, in enacting the Migrant and Seasonal 
Agricultural Worker Protection Act that ``[I]t is the purpose of this 
Act to remove the restraints on commerce caused by activities 
detrimental to migrant and seasonal agricultural workers; to require 
farm labor contractors to register under this Act; and to assure 
necessary protections for migrant and seasonal agricultural workers, 
agricultural associations, and agricultural employers.'' It authorized 
the Secretary to issue such rules and regulations as are necessary to 
carry out the Act consistent with the requirements of chapter 5 of title 
5, United States Code.
    (b) These regulations implement this purpose and policy. The 
regulations contained in this part are issued in accordance with section 
511 of the Act and establish the rules and regulations necessary to 
carry out the Act.
    (c) Any farm labor contractor, as defined in the Act, is required to 
obtain a Certificate of Registration issued pursuant to the Act from the 
Department of Labor or from a State agency authorized to issue such 
certificates on behalf of the Department of Labor. Such a farm labor 
contractor must ensure that any individual whom he employs to perform 
any farm labor contracting activities also obtains a Certificate of 
Registration. The farm labor contractor is responsible, as well, for any 
violation of the Act or these regulations by any such employee whether 
or not the employee obtains a certificate. In addition to registering, 
farm labor contractors must comply with all other applicable provisions 
of the Act when they recruit, solicit, hire, employ, furnish or 
transport or, in the case of migrant agricultural workers, provide 
housing.
    (d) Agricultural employers and agricultural associations which are 
subject to the Act must comply with all of the worker protections which 
are applicable under the Act to migrant or seasonal agricultural workers 
whom they recruit, solicit, hire, employ, furnish, or transport or, in 
the case of migrant agricultural workers, provide housing. The 
obligations will vary, depending on the types of activities affecting 
migrant or seasonal agricultural workers. Agricultural employers and 
agricultural associations and their employees need not obtain 
Certificates of Registration in order to engage in these activities, 
even if the workers they obtain are utilized by other persons or on the 
premises of another.
    (e) The Act empowers the Secretary of Labor to enforce the Act, 
conduct investigations, issue subpenas and, in the case of designated 
violations of the Act, impose sanctions. As provided in the Act, the 
Secretary is empowered, among other things, to impose an assessment and 
to collect a civil money penalty of not more than $1,000 for each 
violation, to seek a temporary or permanent restraining order in a U.S.

[[Page 12]]

District Court, and to seek the imposition of criminal penalties on 
persons who willfully and knowingly violate the Act or any regulation 
under the Act. In accordance with the Act and with these regulations, 
the Secretary may refuse to issue or to renew, or may suspend or revoke 
a certificate of registration issued to a farm labor contractor or to a 
person who engages in farm labor contracting as an employee of a farm 
labor contractor.
    (f) The facilities and services of the U.S. Employment Service, 
including State agencies, authorized by the Wagner-Peyser Act may be 
denied to any person found by a final determination by an appropriate 
enforcement agency to have violated any employment-related laws 
including MSPA when notification of this final determination has been 
provided to the Job Service by that enforcement agency. See 20 CFR 
658.501(a)(4). The facilities and services of the U.S. Employment 
Service shall be restored immediately upon compliance with 20 CFR 
658.502(a)(4).
    (g) Subparts A through E set forth the substantive regulations 
relating to farm labor contractors, agricultural employers and 
agricultural associations. These subparts cover the applicability of the 
Act, registration requirements applicable to farm labor contractors, the 
obligations of persons who hold Certificates of Registration, the worker 
protections which must be complied with by all who are subject to the 
Act, and the enforcement authority of the Secretary.
    (h) Subpart F sets forth the rules of practice for administrative 
hearings relating to actions involving Certificates of Registration. It 
also outlines the procedure to be followed for filing a challenge to a 
proposed administrative action relating to violations and summarizes the 
methods provided for collection and recovery of a civil money penalty.
    (i)(1) The Act requires that farm labor contractors obtain a 
certificate of registration from the Department of Labor prior to 
engaging in farm labor contracting activities. The Act also requires 
registration by individuals who will perform farm labor contracting 
activities for a farm labor contractor. Form WH-510 and WH-512 are the 
applications used to obtain Farm Labor Contractor and Farm Labor 
Contractor Employee Certificates of Registration. These forms have been 
approved by the Office of Management and Budget (OMB) under control 
numbers 1215-0038 (WH-510) and 1215-0037 (WH-512). Forms WH-514 and WH-
514a are used when applying for transportation authorization to furnish 
proof of compliance with vehicle safety requirements. These forms have 
been jointly cleared by OMB under control number 1215-0036.
    (2) The Act further requires disclosure to migrant and seasonal 
agricultural workers regarding wages, hours and other working conditions 
and housing when provided to migrant workers. The Department of Labor 
has developed optional forms for use in making the required disclosure. 
OMB has approved the following: Worker Information (WH-516) 1215-0145 
and Housing Terms and Conditions (WH-521) 1215-0146.
    (3) The Act also requires that farm labor contractors, agricultural 
employers and agricultural associations make, keep, preserve and 
disclose certain payroll records. Forms WH-501 and WH-501a (Spanish 
version) are provided to assist in carrying out this requirement. In 
addition, farm labor contractors who are applying for housing 
authorization must submit information which identifies the housing to be 
used along with proof of compliance with housing safety and health 
requirements. There has been no form developed for this purpose. The Act 
further requires disclosure by the insurance industry of certain 
information pertaining to cancellation of vehicle liability insurance 
policies. The requirements concerning recordkeeping, housing and 
insurance have been cleared by OMB under control number 1215-0148.
    (4) The Act provides that no farm labor contractor shall knowingly 
employ or utilize the services of aliens not lawfully admitted for 
permanent residence or who have not been authorized by the Attorney 
General to accept employment. Form WH-509 is an optional form which may 
be used to self-certify that the applicant is a citizen of the U.S. This 
form has been cleared by

[[Page 13]]

OMB under control number 1215-0091. (See Sec. 500.59(a)(11)).

[48 FR 36741, Aug. 12, 1983; 48 FR 38380, Aug. 23, 1983]



Sec. 500.2  Compliance with State laws and regulations.

    The Act and these regulations are intended to supplement State law; 
compliance with the Act or these regulations shall not excuse any

individual from compliance with appropriate State law or regulation.



Sec. 500.3  Effective date of the Act; transition period; repeal of 
the Farm Labor Contractor Registration Act.

    (a) The provisions of the Migrant and Seasonal Agricultural Worker 
Protection Act are effective on April 14, 1983, and are codified in 29 
U.S.C. 1801 et seq.
    (b) The Migrant and Seasonal Agricultural Worker Protection Act 
repeals the Farm Labor Contractor Registration Act of 1963, as amended, 
(7 U.S.C. 2041, et seq.), effective April 14, 1983.
    (c) Violations of the Farm Labor Contractor Registration Act 
occurring prior to April 14, 1983, may be pursued by the Department of 
Labor after that date.



Sec. 500.4  Effect of prior judgments and final orders obtained under
the Farm Labor Contractor Registration Act.

    The Secretary may refuse to issue or to renew, or may suspend or 
revoke, a Certificate of Registration under the Act, if the applicant or 
holder has failed to pay any court judgment obtained by the Secretary or 
any other person under the Farm Labor Contractor Registration Act, or 
has failed to comply with any final order issued by the Secretary under 
the Farm Labor Contractor Registration Act. The Secretary may deny a 
Certificate of Registration under the Act to any farm labor contractor 
who has a judgment outstanding against him, or is subject to a final 
order assessing a civil money penalty which has not been paid.



Sec. 500.5  Filing of applications, notices and documents.

    Unless otherwise prescribed herein, all applications, notices and 
other documents required or permitted to be filed by these regulations 
shall be filed in accordance with the provisions of subpart F of the 
regulations.



Sec. 500.6  Accuracy of information, statements and data.

    Information, statements and data submitted in compliance with 
provisions of the Act or these regulations are subject to title 18, 
section 1001, of the United States Code, which provides:

             Section 1001. Statements or entries generally.

    Whoever, in any matter within the jurisdiction of any department or 
agency of the United States knowingly and willfully falsifies, conceals 
or covers up by any trick, scheme, or device a material fact, or makes 
any false, fictitious or fraudulent statements or representations, or 
makes or uses any false writing or document knowing the same to contain 
any false, fictitious or fraudulent statement or entry, shall be fined 
not more than $10,000 or imprisoned not more than five years, or both.



Sec. 500.7  Investigation authority of the Secretary.

    (a) The Secretary, either pursuant to a complaint or otherwise, 
shall, as may be appropriate, investigate and, in connection therewith, 
enter and inspect such places (including housing and vehicles) and such 
records (and make transcriptions thereof), question such persons and 
gather such information as he deems necessary to determine compliance 
with the Act, or these regulations.
    (b) The Secretary may issue subpenas requiring the attendance and 
testimony of witnesses or the production of any evidence in connection 
with such investigations. The Secretary may administer oaths, examine 
witnesses, and receive evidence. For the purpose of any hearing or 
investigation provided for in the Act, the Authority contained in 
sections 9 and 10 of the Federal Trade Commission Act (15 U.S.C. 49, 
50), relating to the attendance of witnesses and the production of 
books, papers, and documents, shall be available to the Secretary. The 
Secretary shall conduct investigations in a manner which protects the 
confidentiality of any complainant or other party who provides 
information to the Secretary in good faith.

[[Page 14]]

    (c) Any person may report a violation of the Act or these 
regulations to the Secretary by advising any local office of the 
Employment Service of the various States, or any office of the Wage and 
Hour Division, Employment Standards Administration, U.S. Department of 
Labor, or any other authorized representative of the Administrator. The 
office or person receiving such a report shall refer it to the 
appropriate office of the Wage and Hour Division, Employment Standards 
Administration for the region or area in which the reported violation is 
alleged to have occurred.
    (d) In case of disobedience to a subpena, the Secretary may invoke 
the aid of a United States District Court which is authorized to issue 
an order requiring the person to obey such subpena.



Sec. 500.8  Prohibition on interference with Department of Labor officials.

    It is a violation of section 512(c) of the Act for any person to 
unlawfully resist, oppose, impede, intimidate, or interfere with any 
official of the Department of Labor assigned to perform an 
investigation, inspection, or law enforcement function pursuant to the 
Act during the performance of such

duties. (Other Federal statutes which prohibit persons from interfering 
with a Federal officer in the course of official duties are found at 18 
U.S.C. 111 and 18 U.S.C. 1114.)



Sec. 500.9  Discrimination prohibited.

    (a) It is a violation of the Act for any person to intimidate, 
threaten, restrain, coerce, blacklist, discharge, or in any manner 
discriminate against any migrant or seasonal agricultural worker because 
such worker has, with just cause:
    (1) Filed a complaint with reference to the Act with the Secretary 
of Labor; or
    (2) Instituted or caused to be instituted any proceeding under or 
related to the Act; or
    (3) Testified or is about to testify in any proceeding under or 
related to the Act; or
    (4) Exercised or asserted on behalf of himself or others any right 
or protection afforded by the Act.
    (b) A migrant or seasonal agricultural worker who believes, with 
just cause, that he has been discriminated against by any person in 
violation of this section may, no later than 180 days after such 
violation occurs, file a complaint with the Secretary alleging such 
discrimination.



Sec. 500.10  Waiver of rights prohibited.

    Any agreement by an employee purporting to waive or modify any 
rights inuring to said person under the Act or these regulations shall 
be void as contrary to public policy, except that a waiver or 
modification of rights or obligations hereunder in favor of the 
Secretary shall be valid for purposes of enforcement of the provisions 
of the Act or these regulations. This does not prevent agreements to 
settle private litigation.



Sec. 500.20  Definitions.

    For purposes of this part:
    (a) Administrator means the Administrator of the Wage and Hour 
Division, Employment Standards Administration, United States Department 
of Labor, and such authorized representatives as may be designated by 
the Administrator to perform any of the functions of the Administrator 
under this part.
    (b) Administrative Law Judge means a person appointed as provided in 
title 5 U.S.C. and qualified to preside at hearings under 5 U.S.C. 557. 
Chief Administrative Law Judge means the Chief Administrative Law Judge, 
United States Department of Labor, 800 K Street, NW., Suite 400, 
Washington, DC 20001-8002.
    (c) Agricultural association means any nonprofit or cooperative 
association of farmers, growers, or ranchers, incorporated or qualified 
under applicable State law, which recruits, solicits, hires, employs, 
furnishes, or transports any migrant or seasonal agricultural worker.
    (d) Agricultural employer means any person who owns or operates a 
farm, ranch, processing establishment, cannery, gin, packing shed or 
nursery, or who produces or conditions seed, and who either recruits, 
solicits, hires, employs, furnishes, or transports any migrant or 
seasonal agricultural worker.

[[Page 15]]

Produces seed means the planting, cultivation, growing and harvesting of 
seeds of agricultural or horticultural commodities. Conditions seed 
means the in-plant work done after seed production including the drying 
and aerating of seed.
    (e) Agricultural employment means employment in any service or 
activity included within the provisions of section 3(f) of the Fair 
Labor Standards Act of 1938 (29 U.S.C. 203(f)), or section 3121(g) of 
the Internal Revenue Code of 1954 (26 U.S.C. 3121(g)) and the handling, 
planting, drying, packing, packaging, processing, freezing, or grading 
prior to delivery for storage of any agricultural or horticultural 
commodity in its unmanufactured state.
    (f) Convicted means that a final judgment of guilty has been 
rendered by a court of competent jurisdiction from which no opportunity 
for appeal remains.
    (g) Day-haul operation means the assembly of workers at a pick-up 
point waiting to be hired and employed, transportation of such workers 
to agricultural employment, and the return of such workers to a drop-off 
point on the same day. This term does not include transportation 
provided by an employer for individuals who are already employees at the 
time they are picked up nor does it include carpooling arrangements by 
such employees which are not specifically directed or requested by the 
employer, farm labor contractor or agent thereof.
    (h)(1) The term employ has the meaning given such term under section 
3(g) of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(g)) for the 
purposes of implementing the requirements of that Act. As so defined, 
employ includes to suffer or permit to work.
    (2) The term employer is given its meaning as found in the Fair 
Labor Standards Act. Employer under section 3(d) of that Act includes 
any person acting directly or indirectly in the interest of an employer 
in relation to an employee.
    (3) The term employee is also given its meaning as found in the Fair 
Labor Standards Act. Employee under section 3(e) of that Act means any 
individual employed by an employer.
    (4) The definition of the term employ may include consideration of 
whether or not an independent contractor or employment relationship 
exists under the Fair Labor Standards Act. Under MSPA, questions will 
arise whether or not a farm labor contractor engaged by an agricultural 
employer/association is a bona fide independent contractor or an 
employee. Questions also arise whether or not the worker is a bona fide 
independent contractor or an employee of the farm labor contractor and/
or the agricultural employer/association. These questions should be 
resolved in accordance with the factors set out below and the principles 
articulated by the federal courts in Rutherford Food Corp. v. McComb, 
331 U.S. 722 (1947), Real v. Driscoll Strawberry Associates, Inc., 603 
F.2d 748 (9th Cir. 1979), Sec'y of Labor, U.S. Dept. of Labor v. 
Lauritzen, 835 F.2d 1529 (7th Cir. 1987), cert. denied, 488 U.S. 898 
(1988); Beliz v. McLeod, 765 F.2d 1317 (5th Cir. 1985), and Castillo v. 
Givens, 704 F.2d 181 (5th Cir.), cert. denied, 464 U.S. 850 (1983). If 
it is determined that the farm labor contractor is an employee of the 
agricultural employer/association, the agricultural workers in the farm 
labor contractor's crew who perform work for the agricultural employer/
association are deemed to be employees of the agricultural employer/
association and an inquiry into joint employment is not necessary or 
appropriate. In determining if the farm labor contractor or worker is an 
employee or an independent contractor, the ultimate question is the 
economic reality of the relationship--whether there is economic 
dependence upon the agricultural employer/association or farm labor 
contractor, as appropriate. Lauritzen at 1538; Beliz at 1329; Castillo 
at 192; Real at 756. This determination is based upon an evaluation of 
all of the circumstances, including the following:
    (i) The nature and degree of the putative employer's control as to 
the manner in which the work is performed;
    (ii) The putative employee's opportunity for profit or loss 
depending upon his/her managerial skill;
    (iii) The putative employee's investment in equipment or materials 
required for the task, or the putative employee's employment of other 
workers;

[[Page 16]]

    (iv) Whether the services rendered by the putative employee require 
special skill;
    (v) The degree of permanency and duration of the working 
relationship;
    (vi) The extent to which the services rendered by the putative 
employee are an integral part of the putative employer's business.
    (5) The definition of the term employ includes the joint employment 
principles applicable under the Fair Labor Standards Act. The term joint 
employment means a condition in which a single individual stands in the 
relation of an employee to two or more persons at the same time. A 
determination of whether the employment is to be considered joint 
employment depends upon all the facts in the particular case. If the 
facts establish that two or more persons are completely disassociated 
with respect to the employment of a particular employee, a joint 
employment situation does not exist. When the putative employers share 
responsibility for activities set out in the following factors or in 
other relevant facts, this is an indication that the putative employers 
are not completely disassociated with respect to the employment and that 
the agricultural worker may be economically dependent on both persons:
    (i) If it is determined that a farm labor contractor is an 
independent contractor, it still must be determined whether or not the 
employees of the farm labor contractor are also jointly employed by the 
agricultural employer/association. Joint employment under the Fair Labor 
Standards Act is joint employment under the MSPA. Such joint employment 
relationships, which are common in agriculture, have been addressed both 
in the legislative history and by the courts.
    (ii) The legislative history of the Act (H. Rep. No. 97-885, 97th 
Cong., 2d Sess., 1982) states that the legislative purpose in enacting 
MSPA was ``to reverse the historical pattern of abuse and exploitation 
of migrant and seasonal farm workers * * *,'' which would only be 
accomplished by ``advanc[ing] * * * a completely new approach'' (Rept. 
at 3). Congress's incorporation of the FLSA term employ was undertaken 
with the deliberate intent of adopting the FLSA joint employer doctrine 
as the ``central foundation'' of MSPA and ``the best means by which to 
insure that the purposes of this MSPA would be fulfilled'' (Rept. at 6). 
Further, Congress intended that the joint employer test under MSPA be 
the formulation as set forth in Hodgson v. Griffin & Brand of McAllen, 
Inc. 471 F.2d 235 (5th Cir.), cert. denied, 414 U.S. 819 (1973) (Rept. 
at 7). In endorsing Griffin & Brand, Congress stated that this 
formulation should be controlling in situations ``where an agricultural 
employer * * * asserts that the agricultural workers in question are the 
sole employees of an independent contractor/crewleader,'' and that the 
``decision makes clear that even if a farm labor contractor is found to 
be a bona fide independent contractor, * * * this status does not as a 
matter of law negate the possibility that an agricultural employer may 
be a joint employer * * * of the harvest workers'' together with the 
farm labor contractor. Further, regarding the joint employer doctrine 
and the Griffin & Brand formulation, Congress stated that ``the absence 
of evidence on any of the criteria listed does not preclude a finding 
that an agricultural association or agricultural employer was a joint 
employer along with the crewleader'', and that ``it is expected that the 
special aspects of agricultural employment be kept in mind'' when 
applying the tests and criteria set forth in the case law and 
legislative history (Rept. at 8).
    (iii) In determining whether or not an employment relationship 
exists between the agricultural employer/association and the 
agricultural worker, the ultimate question to be determined is the 
economic reality--whether the worker is so economically dependent upon 
the agricultural employer/association as to be considered its employee.
    (iv) The factors set forth in paragraphs (h)(5)(iv)(A) through (G) 
of this section are analytical tools to be used in determining the 
ultimate question of economic dependency. The consideration of each 
factor, as well as the determination of the ultimate question of 
economic dependency, is a qualitative rather than quantitative analysis. 
The factors are not to be applied as a

[[Page 17]]

checklist. No one factor will be dispositive of the ultimate question; 
nor must a majority or particular combination of factors be found for an 
employment relationship to exist. The analysis as to the existence of an 
employment relationship is not a strict liability or per se 
determination under which any agricultural employer/association would be 
found to be an employer merely by retaining or benefiting from the 
services of a farm labor contractor. The factors set forth in paragraphs 
(h)(5)(iv)(A) through (G) of this section are illustrative only and are 
not intended to be exhaustive; other factors may be significant and, if 
so, should be considered, depending upon the specific circumstances of 
the relationship among the parties. How the factors are weighed depends 
upon all of the facts and circumstances. Among the factors to be 
considered in determining whether or not an employment relationship 
exists are:
    (A) Whether the agricultural employer/association has the power, 
either alone or through control of the farm labor contractor to direct, 
control, or supervise the worker(s) or the work performed (such control 
may be either direct or indirect, taking into account the nature of the 
work performed and a reasonable degree of contract performance oversight 
and coordination with third parties);
    (B) Whether the agricultural employer/association has the power, 
either alone or in addition to another employer, directly or indirectly, 
to hire or fire, modify the employment conditions, or determine the pay 
rates or the methods of wage payment for the worker(s);
    (C) The degree of permanency and duration of the relationship of the 
parties, in the context of the agricultural activity at issue;
    (D) The extent to which the services rendered by the worker(s) are 
repetitive, rote tasks requiring skills which are acquired with 
relatively little training;
    (E) Whether the activities performed by the worker(s) are an 
integral part of the overall business operation of the agricultural 
employer/association;
    (F) Whether the work is performed on the agricultural employer/
association's premises, rather than on premises owned or controlled by 
another business entity; and
    (G) Whether the agricultural employer/association undertakes 
responsibilities in relation to the worker(s) which are commonly 
performed by employers, such as preparing and/or making payroll records, 
preparing and/or issuing pay checks, paying FICA taxes, providing 
workers' compensation insurance, providing field sanitation facilities, 
housing or transportation, or providing tools and equipment or materials 
required for the job (taking into account the amount of the investment).
    (i) Farm labor contracting activity means recruiting, soliciting, 
hiring, employing, furnishing, or transporting any migrant or seasonal 
agricultural worker.
    (j) Farm labor contractor means any person--other than an 
agricultural employer, an agricultural association, or an employee of an 
agricultural employer or agricultural association--who, for any money or 
other valuable consideration paid or promised to be paid, performs any 
farm labor contracting activity.
    (k) Farm Labor Contractor Certificate of Registration or Certificate 
of Registration means the certificate issued by the Administrator which 
permits a farm labor contractor to engage in farm labor contracting 
activities.
    (l) Farm labor contractor employee who is required to obtain a 
Certificate of Registration as an employee of a farm labor contractor 
means a person who performs farm labor contracting activity solely on 
behalf of a farm labor contractor holding a valid Certificate of 
Registration and is not an independent farm labor contractor who would 
be required to register under the Act in his own right.
    (m) Farm Labor Contractor Employee Certificate or Farm Labor 
Contractor Employee Certificate of Registration or Employee Certificate 
means the certificate issued by the Administrator to an employee of a 
farm labor contractor authorizing the performance of farm labor 
contracting activities solely on behalf of such farm labor contractor 
and not as an independent farm labor

[[Page 18]]

contractor who would be required to register in his own right.
    (n) Illegal alien means any person who is not lawfully admitted for 
permanent residence in the United States or who has not been authorized 
by the Attorney General to accept employment in the United States.
    (o) Immediate family includes only:
    (1) A spouse;
    (2) Children, stepchildren, and foster children;
    (3) Parents, stepparents, and foster parents; and
    (4) Brothers and sisters.
    (p) Migrant agricultural worker means an individual who is employed 
in agricultural employment of a seasonal or other temporary nature, and 
who is required to be absent overnight from his permanent place of 
residence.
    (1) Migrant agricultural worker does not include:
    (i) Any immediate family member of an agricultural employer or a 
farm labor contractor; or
    (ii) Any temporary nonimmigrant alien who is authorized to work in 
agricultural employment in the United States under sections 
101(a)(15)(H)(ii)(a) and 214(c) of the Immigration and Nationality Act.
    (2) Permanent place of residence, with respect to an individual, 
means a domicile or permanent home. Permanent place of residence does 
not include seasonal or temporary housing such as a labor camp. The term 
permanent place of residence for any nonimmigrant alien is that 
individual's country of origin.
    (q) Person means any individual, partnership, association, joint 
stock company, trust, cooperative, or corporation.
    (r) Seasonal agricultural worker means an individual who is employed 
in agricultural employment of a seasonal or other temporary nature and 
is not required to be absent overnight from his permanent place of 
residence:
    (1) When employed on a farm or ranch performing field work related 
to planting, cultivating, or harvesting operations; or
    (2) When employed in canning, packing, ginning, seed conditioning or 
related research, or processing operations, and transported, or caused 
to be transported, to or from the place of employment by means of a day-
haul operation.
    (i) Seasonal agricultural worker does not include:
    (A) Any migrant agricultural worker;
    (B) Any immediate family member of an agricultural employer or a 
farm labor contractor; or
    (C) Any temporary nonimmigrant alien who is authorized to work in 
agricultural employment in the United States under sections 
101(a)(15)(H)(ii)(a) and 214(c) of the Immigration and Nationality Act.
    (ii) Field work related to planting, cultivating or harvesting 
operations includes all farming operations on a farm or ranch which are 
normally required to plant, harvest or produce agricultural or 
horticultural commodities, including the production of a commodity which 
normally occurs in the fields of a farm or ranch as opposed to those 
activities which generally occur in a processing plant or packing shed. 
A worker engaged in the placing of commodities in a container in the 
field and on-field loading of trucks and similar transports is included. 
Nursery, mushroom and similar workers engaged in activities in 
connection with planting, cultivating or harvesting operations are 
intended to be covered. An individual operating a machine, such as a 
picker, or tractor is not included when performing such activity.
    (s) On a seasonal or other temporary basis means:
    (1) Labor is performed on a seasonal basis where, ordinarily, the 
employment pertains to or is of the kind exclusively performed at 
certain seasons or periods of the year and which, from its nature, may 
not be continuous or carried on throughout the year. A worker who moves 
from one seasonal activity to another, while employed in agriculture or 
performing agricultural labor, is employed on a seasonal basis even 
though he may continue to be employed during a major portion of the 
year.
    (2) A worker is employed on other temporary basis where he is 
employed for a limited time only or his performance is contemplated for 
a particular piece of work, usually of short duration. Generally, 
employment, which is

[[Page 19]]

contemplated to continue indefinitely, is not temporary.
    (3) On a seasonal or other temporary basis does not include the 
employment of any foreman or other supervisory employee who is employed 
by a specific agricultural employer or agricultural association 
essentially on a year round basis.
    (4) On a seasonal or other temporary basis does not include the 
employment of any worker who is living at his permanent place of 
residence, when that worker is employed by a specific agricultural 
employer or agricultural association on essentially a year round basis 
to perform a variety of tasks for his employer and is not primarily 
employed to do field work.
    (t) Secretary means the Secretary of Labor or the Secretary's 
authorized representative.
    (u)(1) Solicitor of Labor means the Solicitor, United States 
Department of Labor, and includes attorneys designated by the Solicitor 
to perform functions of the Solicitor under these regulations.
    (2) Associate Solicitor for Fair Labor Standards means the Associate 
Solicitor, who, among other duties, is in charge of litigation for the 
Migrant and Seasonal Agricultural Worker Protection Act (MSPA), Office 
of the Solicitor, U.S. Department of Labor, Washington, DC 20210.
    (3) Regional Solicitors means the attorneys in charge of the various 
regional offices of the Office of the Solicitor.
    (v) State means any of the States of the United States, the District 
of Columbia, the Virgin Islands, the Commonwealth of Puerto Rico, and 
Guam. State agency means a State agency vested with all powers necessary 
to cooperate with the U.S.

Department of Labor for purposes of entering into agreements to carry 
out the Act as provided in section 513 thereof.
    (w) Temporary nonimmigrant alien means a person who has a residence 
in a foreign country which he does not intend to abandon and who comes 
temporarily to the United States, with approval of the Attorney General, 
to perform temporary service or labor.
    (x) The Wagner-Peyser Act is the Act of June 6, 1933 (48 Stat. 113; 
codified in 29 U.S.C. 49 et seq.), providing, inter alia, for the 
establishment of the U.S. Employment Service. Employment Service of the 
various States means a State agency vested with all powers necessary to 
cooperate with the U.S. Employment Service under the Wagner-Peyser Act.
    (y) The Immigration and Nationality Act (INA) as amended by the 
Immigration Reform and Control Act of 1986 (IRCA) to effectively control 
unauthorized immigration to the United States and for other purposes, is 
set out in 8 U.S.C. 1101 et seq.

[48 FR 36741, Aug. 12, 1983; 48 FR 38374, Aug. 23, 1983, as amended at 
54 FR 13329, Mar. 31, 1989; 56 FR 54708, Oct. 22, 1991; 62 FR 11747, 
Mar. 12, 1997]

                  Applicability of the Act: Exemptions



Sec. 500.30  Persons not subject to the Act.

    (a) Family business exemption. Any individual who engages in a farm 
labor contracting activity on behalf of a farm, processing 
establishment, seed conditioning establishment, cannery, gin, packing 
shed, or nursery, which is owned or operated exclusively by such 
individual or an immediate family member of such individual, if such 
activities are performed only for such operation and exclusively by such 
individual or an immediate family member, but without regard to whether 
such individual has incorporated or otherwise organized for business 
purposes.
    (b) Small business exemption. Any person, other than a farm labor 
contractor, for whom the man-days exemption for agricultural labor 
provided under section 13(a)(6)(A) of the Fair Labor Standards Act of 
1938 (29 U.S.C. 213(a)(6)(A)) is applicable. That exemption applies to 
an agricultural employer who did not, during any calendar quarter of the 
preceding calendar year, use more man-days of agricultural labor than 
the limit specified under that statute.
    (1) Currently the limit for exemption is 500 man-days.
    (2) A man-day means any day during which an employee performs 
agricultural labor for not less than one (1)

[[Page 20]]

hour. Agricultural labor performed by an employer's parent, spouse, 
child, or other member of his immediate family, i.e., step-children, 
foster children, step-parents and foster parents, brothers, and sisters 
is not counted as man-days.
    (3) The man-days of agricultural labor rendered in a joint 
employment relationship are counted toward the man-days of such labor of 
each employer for purposes of the man-day test of this exemption.
    (c) Common carriers. Any common carrier which would be a farm labor 
contractor solely because the carrier is engaged in the farm labor 
contracting activity of transporting any migrant or seasonal 
agricultural worker. A ``common carrier'' by motor vehicle is one which 
holds itself out to the general public to engage in transportation of 
passengers for hire, whether over regular or irregular routes, and which 
holds a valid certificate of authorization for such purposes from an 
appropriate local, State or Federal agency.
    (d) Labor organizations. Any labor organization, as defined in 
section 2(5) of the Labor Management Relations Act (29 U.S.C. 152(5)) 
(without regard to the exclusion of agricultural employees in that Act) 
or as defined under applicable State labor relations law.
    (e) Nonprofit charitable organizations. Any nonprofit charitable 
organization or public or private nonprofit educational institution.
    (f) Local short-term contracting activity. Any person who engages in 
any farm labor contracting activity solely within a twenty-five mile 
intrastate radius of such person's permanent place of residence and for 
not more than thirteen weeks per year.
    (1) Twenty-five mile intrastate radius as used in section 4(a)(3)(D) 
of the Act means that engagement in a farm labor contracting activity 
may not go beyond a twenty-five mile intrastate geographical radius. 
Once this limit is transcended, the exemption no longer applies and the 
person becomes subject to the requirements of the Act. If, for example, 
a person or his employee solicits workers from a distance greater than 
twenty-five miles from his permanent residence or from across a State 
line, then the person has engaged in a named activity outside of the 
permitted scope of the exemption, and is subject to the requirements of 
the Act. A person who uses lines of communication (such as U.S. Mail, 
telephone, or advertising) to recruit, solicit, hire, or furnish workers 
over a distance greater than twenty-five miles from his permanent 
residence or from across a State line for agricultural employment is 
also engaged in a named activity beyond the specified limit of the 
exemption and is subject to the Act. In the case of a corporation its 
permanent place of residence for these purposes shall be a single 
designated location.
    (2) For not more than thirteen weeks per year as used in section 
4(a)(3)(D) of the Act means that farm labor contracting activities may 
not be engaged in for more than thirteen weeks in a year. This does not 
mean, however,

that persons who engage in intrastate and short-range farm labor 
contracting activities are exempt for the first thirteen weeks of their 
farm labor contracting activities each year. The number of weeks of 
contracting activity during the prior year is also a factor. When the 
limit of weeks for the exemption is exceeded in a calendar year, the 
person is subject immediately to the Act and is also presumed subject to 
the Act in the next calendar year, unless it can be shown that the tests 
of section 4(a)(3)(D) are met.
    (g) Custom combine. Any custom combine, hay harvesting, or sheep 
shearing operation. Custom combine, hay harvesting, and sheep shearing 
operation means the agricultural services and activities involved in 
combining grain, harvesting hay and shearing sheep which are provided to 
a farmer on a contract basis by a person who provides the necessary 
equipment and labor and who specializes on providing such services and 
activities.
    (h) Custom poultry operations. Any custom poultry harvesting, 
breeding, debeaking, desexing, or health service operation, provided the 
employees of the operation are not regularly required to be away from 
their permanent place of residence other than during their normal 
working hours.
    (i) Seed production exemption. (1) Any person whose principal 
occupation or

[[Page 21]]

business is not agricultural employment, when supplying full-time 
students or other individuals whose principal occupation is not 
agricultural employment to detassel, rogue, or otherwise engage in the 
production of seed and to engage in related and incidental agricultural 
employment, unless such full-time students or other individuals are 
required to be away from their permanent place of residence overnight or 
there are individuals under eighteen years of age who are providing 
transportation on behalf of such person.
    (2) Any person to the extent he is supplied with students or other 
individuals for agricultural employment in accordance with paragraph 
(i)(1) of this section by a person who is exempt thereunder.
    (j) Shade grown tobacco. (1) Any person whose principal occupation 
or business is not agricultural employment, when supplying full-time 
students or other individuals whose principal occupation is not 
agricultural employment to string or harvest shade grown tobacco and to 
engage in related and incidental agricultural employment, unless there 
are individuals under eighteen years of age who are providing 
transportation on behalf of such person.
    (2) Any person to the extent he is supplied with students or other 
individuals for agricultural employment is accordance with paragraph 
(j)(1) of this section by a person who is exempt thereunder.
    (k) Employees of exempt employers. Any employee of any person 
described in paragraphs (c) through (j) of this section when performing 
farm labor contracting activities within the scope of such exemptions 
and exclusively for such person.



 Subpart B_Registration of Farm Labor Contractors and Employees of Farm 
     Labor Contractors Engaged in Farm Labor Contracting Activities

                   Registration Requirements; General



Sec. 500.40  Registration in general.

    Any person who desires to engage in any activity as a farm labor 
contractor, as defined in the Act and these regulations, and is not 
exempt, is required first to obtain a Certificate of Registration 
authorizing each such activity. Any employee of a registered farm labor 
contractor who performs farm labor contracting activities solely on 
behalf of such contractor, and who is not an independent contractor, 
must obtain a Farm Labor Contractor Employee Certificate of Registration 
authorizing each such activity. The employee's certificate must show the 
name of the farm labor contractor for whom the activities are to be 
performed. The contractor whose name appears on the employee's 
certificate must hold a valid Certificate of Registration covering the 
entire period shown on the employee's certificate.



Sec. 500.41  Farm labor contractor is responsible for actions of his
farm labor contractor employee.

    (a) A farm labor contractor is responsible for assuring that every 
employee who is performing farm labor contracting activities on behalf 
of such contractor has obtained either a Farm Labor Contractor Employee 
Certificate of Registration or a Certificate of Registration as an 
independent farm labor contractor, as required by the Act and these 
regulations, prior to such employee's engagement in any activity 
enumerated in section 3(6) of the Act. A farm labor contractor who 
utilizes the services of another farm labor contractor who is not his 
employee must also comply with the provisions of Sec. 500.71. The farm 
labor contractor is responsible for any violations of the Act or these 
regulations committed by his employee, whether or not the employee has 
registered as required by the Act.
    (b) A Farm Labor Contractor Employee Certificate of Registration is 
valid only during the period in which the holder is an employee of the 
registered farm labor contractor named on the Farm Labor Contractor 
Employee Certificate. If prior to the expiration of the Employee 
Certificate, the holder, through a change in employment, should become 
an employee of a different registered farm labor contractor, a 
replacement Employee Certificate which names the new employer may be 
obtained by submitting to the

[[Page 22]]

regional office that issued the original employee certificate or to any 
regional office of the Wage and Hour Division, Employment Standards 
Administration, a written statement that includes the date of the change 
in employment status and the name, the permanent place of residence and 
certificate registration number of the new employer. Any such change 
should be reported immediately.



Sec. 500.42  Certificate of Registration to be carried and exhibited.

    Each registered farm labor contractor and registered farm labor 
contractor employee shall carry at all times while engaging in farm 
labor contracting activities, a Certificate of Registration or a Farm 
Labor Contractor Employee Certificate as appropriate and, upon request, 
shall exhibit that certificate to representatives of the U.S. Department 
of Labor and State Employment Service Agencies and to all persons with 
whom he intends to deal as a farm labor contractor or farm labor 
contractor employee.



Sec. 500.43  Effect of failure to produce certificate.

    The facilities and the services authorized by the Wagner-Peyser Act 
shall be denied to any farm labor contractor upon refusal or failure to 
produce, when asked, a Certificate of Registration. Services shall be 
provided upon presentation of a valid Certificate of Registration.

    Applications and Renewal of Farm Labor Contractor and Farm Labor 
                    Contractor Employee Certificates



Sec. 500.44  Form of application.

    An application for issuance or renewal of a Farm Labor Contractor 
Certificate of Registration or Farm Labor Contractor Employee 
Certificate shall be made on forms designated by the Secretary.



Sec. 500.45  Contents of application.

    The application shall set forth the information required thereon 
which shall include the following:
    (a) A declaration, subscribed and sworn to by the applicant, stating 
the applicant's permanent place of residence, the farm labor contracting 
activities for which the certificate is requested, and the address to 
which official documents should be mailed;
    (b) A statement identifying each vehicle to be used to transport any 
migrant or seasonal agricultural worker and, if the vehicle is or will 
be owned or controlled by the applicant, documentation showing that the 
applicant for a Farm Labor Contractor Certificate of Registration is in 
compliance with the requirements of section 401 of the Act with respect 
to each such vehicle;
    (c) A statement identifying each facility or real property to be 
used to house any migrant agricultural worker and, if the facility or 
real property is or will be owned or controlled by the applicant, 
documentation showing that the applicant for a Farm Labor Contractor 
Certificate of Registration is in compliance with section 203 of the Act 
with respect to each such facility or real property;
    (d) A set of fingerprints of the applicant on Form FD 258 as 
prescribed by the U.S. Department of Justice;
    (e) A declaration, subscribed and sworn to by the applicant, 
consenting to the designation by a court of the Secretary as an agent 
available to accept service of summons in any action against the 
applicant, if the applicant has left the jurisdiction in which the 
action is commenced or otherwise has become unavailable to accept 
service; and
    (f) Such other relevant information as the Secretary may require.



Sec. 500.46  Filing an application.

    Registration under the Act is required whether or not licensing or 
registration is required under State law.



Sec. 500.47  Place for filing application.

    Application forms may be filed in any State Employment Service 
Office or in any office of the Wage and Hour Division, U.S. Department 
of Labor.

                          Action on Application



Sec. 500.48  Issuance of certificate.

    The Administrator or authorized representative shall:

[[Page 23]]

    (a) Review each application received and determine whether such 
application is complete and properly executed;
    (b) When appropriate, notify the applicant in writing of any 
incompleteness or error in the application and return the application 
for correction and completion;
    (c) Determine, after appropriate investigation, whether the 
applicant has complied with the requirements of the Act and these 
regulations, and if appropriate, issue a Certificate of

Registration or a Farm Labor Contractor Employee Certificate of 
Registration authorizing the performance of one or more activities 
permitted under the Act;
    (d) Authorize the activity of transporting a migrant or seasonal 
agricultural worker, subject to the maximum number of workers authorized 
to be transported under the vehicle liability policy and as indicated on 
the face of the Certificate of Registration, only upon receipt of:
    (1) A statement in the manner prescribed by the Secretary 
identifying each vehicle to be used, or caused to be used, by the 
applicant for the transportation of any migrant or seasonal agricultural 
worker during the period for which registration is sought;
    (2) Written proof that every such vehicle which is under the 
applicant's ownership or control, is in compliance with the vehicle 
safety requirements of the Act and these regulations; and
    (3) Written proof that every such vehicle is in compliance with the 
insurance requirements of the Act and these regulations;
    (e) Authorize the activity of driving a vehicle to transport a 
migrant or seasonal agricultural worker only upon receipt of (1) A 
doctor's certificate on the prescribed form, with an initial application 
for a Certificate of Registration or a Farm Labor Contractor Employee 
Certificate, and, when applying for a renewal, a new completed doctor's 
certificate if the previous doctor's certificate is more than three 
years old; and (2) evidence of a valid and appropriate license, as 
provided by State law, to operate the vehicle; and
    (f) Authorize the activity of housing a migrant agricultural worker 
only upon receipt of (1) A statement identifying each facility or real 
property to be used for housing a migrant agricultural worker during the 
period for which registration is sought; and (2) if the facility or real 
property is or will be owned or controlled by the applicant, written 
proof that the facility or real property complies with the applicable 
Federal and State standards of health and safety. Such written proof may 
be either a certification issued by a State or local health authority or 
other appropriate agency, or a copy of a written request for the 
inspection of a facility or real property made to the appropriate State 
or local agency at least forty-five days prior to the date on which the 
facility or real property is to be occupied by migrant agricultural 
workers, dated and signed by the applicant or other person who owns or 
controls the facility or real property. If housing authorization is 
issued based on a written request for inspection and the housing 
facility or real property is subsequently inspected and does not meet 
the appropriate standards, the housing authorization is null and void. 
Should the required written proof for housing authorization be 
unavailable at the time of filing an application, the applicant must 
attest in writing that the applicant will not house any migrant 
agricultural worker in any facility or real property owned or controlled 
by the applicant, until such applicant shall have submitted all 
necessary written proof and obtained a Farm Labor Contractor Certificate 
of Registration showing that housing in the facility or real property is 
authorized by the Secretary of Labor. In such event, if otherwise 
eligible, the applicant will be issued a Certificate of Registration 
without a housing authorization. This certificate may be amended to 
include an authorization to house at such time as the required proof is 
forthcoming.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24865, May 16, 1996]



Sec. 500.50  Duration of certificate.

    (a) Initial certificates of farm labor contractors and farm labor 
contractor employees. (1) An initial certificate issued under the Act 
and these regulations shall expire twelve months from the

[[Page 24]]

date of issuance unless earlier suspended or revoked.
    (2) Certificates applied for during the period beginning April 14, 
1983, and ending November 30, 1983, may be issued for a period of up to 
twenty-four months for the purpose of an orderly transition to 
registration under the Act.
    (3) Certificates issued to employees of farm labor contractors shall 
expire at the suspension, revocation or expiration of the farm labor 
contractor's Certificate of Registration under which such employee was 
authorized.
    (b) Certificate renewal of farm labor contractors and farm labor 
contractor employees. (1) A certificate issued under the Act and these 
regulations may be temporarily extended by the filing of a properly 
completed and signed application with the Secretary at least thirty days 
prior to the expiration date. ``Filing'' may be accomplished by hand 
delivery, certified mail, or regular mail.
    (i) If the application for renewal is filed by regular mail or if it 
is delivered in person by the applicant, it must be received by the 
Department of Labor or an authorized representative of the Department of 
Labor at least 30 days prior to the expiration date shown on the current 
certificate.
    (ii) If the application for renewal is filed by certified mail, it 
must be mailed at least 30 days prior to the expiration date shown on 
the current certificate.

Where timely application for renewal has been filed, the authority to 
operate pursuant to a valid certificate under the Act and these 
regulations shall continue until the renewal application has been 
finally determined by the Secretary.
    (2) A certificate issued under the Act and these regulations may be 
renewed by the Secretary for additional twelve-month periods or for 
periods in excess of twelve months but not in excess of twenty-four 
months.
    (3) Eligibility for renewals of certificates for more than twelve 
months under the Act and these regulations shall be limited to those 
farm labor contractors and farm labor contractor employees who have not 
been cited during the preceding five years for a violation of the Act or 
any regulation under the Act, or the Farm Labor Contractor Registration 
Act or any regulation under such Act.
    (c) Continuation of certain FLCRA certificates. (1) Certificates 
issued under FLCRA, and in effect on April 14, 1983, that are valid for 
the services performed under FLCRA, will be continued in effect and be 
accepted as authorization to perform like services under the Act and 
these regulations for the remainder of calendar year 1983. Such 
certificates will be subject to the Act and these regulations with 
respect to determinations to suspend, revoke or refuse renewal.
    (2) Actions pending related to the suspension, revocation, or 
refusal to issue or renew FLCRA certificates shall continue through to a 
final determination. Any such certificate which is considered to be in 
effect under title 29 CFR 40.21 pending a final determination, will be 
considered valid under MSPA, provided application for a certificate 
under MSPA is made no later than November 30, 1983.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13329, Mar. 31, 1989]



Sec. 500.51  Refusal to issue or to renew, or suspension or revocation
of certificate.

    The Secretary may suspend or revoke or refuse to issue or to renew a 
Certificate of Registration (including a Farm Labor Contractor Employee 
Certificate) if the applicant or holder:
    (a) Has knowingly made any misrepresentation in the application for 
such certificate;
    (b) Is not the real party in interest in the application or 
Certificate of Registration and the real party in interest is a person 
who has been refused issuance or renewal of a certificate, has had a 
certificate suspended or revoked, or does not qualify under this section 
for a certificate;
    (c) Has failed to comply with the Act or these regulations;
    (d) Has failed to pay any court judgment obtained by the Secretary 
or any other person under the Act or these regulations or under the Farm 
Labor Contractor Registration Act of 1963 or any regulation under such 
Act;
    (e) Has failed to comply with any final order issued by the 
Secretary as a

[[Page 25]]

result of a violation of the Act or these regulations or a violation of 
the Farm Labor Contractor Registration Act of 1963 or any regulation 
under such Act;
    (f) Has been convicted within the preceding five years:
    (1) Of any crime under State or Federal law relating to gambling, or 
to the sale, distribution or possession of alcoholic beverages, in 
connection with or incident to any farm labor contracting activities, or
    (2) Of any felony under State or Federal law involving robbery, 
bribery, extortion, embezzlement, grand larceny, burglary, arson, 
violation of narcotics laws, murder, rape, assault with intent to kill, 
assault which inflicts grievous bodily injury, prostitution, peonage, or 
smuggling or harboring individuals who have entered the United States 
illegally.
    (g) Has been found to have violated paragraph (1) or (2) of section 
274A(a) of the Immigration and Nationality Act (INA) by hiring, 
recruiting, or referring for a fee, for employment in the United States, 
(1) An alien knowing the alien is an unauthorized alien as defined in 
section 274A(h)(3) of INA with respect to such employment, or (2) an 
individual without complying with the requirements concerning 
verification of the person's identity and employment authorization as 
stated in section 274A(b) of INA.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13329, Mar. 31, 1989]



Sec. 500.52  Right to hearing.

    Any applicant or holder who desires an administrative hearing on the 
determination to refuse to issue or to renew, or to suspend or to 
revoke, a Certificate of Registration or a Farm Labor Contractor 
Employee Certificate of Registration, shall make a request in accordance 
with Sec. 500.212, no later than thirty (30) days after service of the 
notice referred to in Sec. 500.210.



Sec. 500.53  Nontransfer of certificate.

    A Certificate of Registration may not be transferred or assigned.



Sec. 500.54  Change of address.

    During the period for which the Certificate of Registration or 
Employee Certificate is in effect, each farm labor contractor or farm 
labor contractor employee shall provide to the Secretary, within thirty 
(30) days, a notice of each change of permanent place of residence in 
accordance with Sec. 500.215.



Sec. 500.55  Changes to or amendments of certificate authority.

    (a) During the period for which the Certificate of Registration is 
in effect, a farm labor contractor must apply to the Secretary to amend 
the Certificate of Registration whenever he intends to:
    (1) Engage in another farm labor contracting activity;
    (2) Use, or cause to be used, another vehicle than that covered by 
the certificate to transport any migrant or seasonal agricultural 
worker; or
    (3) Use, or cause to be used, another real property or facility to 
house any migrant agricultural worker than that covered by the 
certificate.
    (b) Whenever another vehicle or housing facility or real property is 
or will be owned, operated, or controlled by the farm labor contractor, 
the farm labor contractor must submit the appropriate information to 
obtain transportation, driving or housing authorization, as applicable, 
as described in Sec. 500.48, within 10 days after the contractor 
obtains or learns of the intended use of such vehicle or housing 
facility or real property.
    (c) Notwithstanding submission of the appropriate information, the 
farm labor contractor must comply with all

applicable motor safety, insurance, and housing safety and health 
provisions of the Act and these regulations. With regard to housing, the 
farm labor contractor must submit the appropriate housing documentation 
as well as comply with the housing safety and health provisions of the 
Act and these regulations, prior to occupancy by a migrant agricultural 
worker.



Sec. 500.56  Replacement of Certificate of Registration or Farm Labor 
Contractor Employee Certificate.

    If a Certificate of Registration or a Farm Labor Contractor Employee 
Certificate is lost or destroyed, a duplicate certificate may be 
obtained by the submission to the regional office that issued it or to 
any regional office of the Wage and Hour Division, Employment

[[Page 26]]

Standards Administration, of a written statement explaining its loss or 
destruction, indicating where the original application was filed and 
requesting that a duplicate be issued.

    Additional Obligations of Farm Labor Contractors and Farm Labor 
                          Contractor Employees



Sec. 500.60  Farm labor contractors' recruitment, contractual and
general obligations.

    The Act imposes certain specific recruitment, contractual and 
general obligations on farm labor contractors and farm labor contractor 
employees. The contractor is responsible for any violations under the 
Act committed by his employee. Each of the following obligations applies 
to both farm labor contractors and farm labor contractor employees.
    (a) Each farm labor contractor shall provide to any other farm labor 
contractor and to any agricultural employer and agricultural association 
to which such farm labor contractor has furnished any migrant or 
seasonal agricultural worker, copies of all records for that place of 
employment which such farm labor contractor is required to retain for 
each worker furnished or supplied. The recipient of these records shall 
keep them for a period of three years.
    (b) Each farm labor contractor, without regard to any other 
provisions of this Act, shall obtain at each place of employment and 
make available for inspection to every worker he furnishes for 
employment, a written statement of the conditions of such employment as 
described in sections 201(b) and 301(b) of the Act and Sec. Sec. 500.75 
and 500.76 of these regulations. As with the written disclosure 
statements under Sec. Sec. 500.76 and 500.77, these statements must be 
provided to the workers in English or, as necessary and reasonable, in 
Spanish or another language common to migrant or seasonal agricultural 
workers who are not fluent in English.
    (c)(1) No farm labor contractor shall violate, without 
justification, the terms of any written agreements made with an 
agricultural employer or an agricultural association pertaining to any 
contracting activity or worker protection under the Act. Normally, 
``without justification'' would not include situations in which failure 
to comply with the terms of any written agreements was directly 
attributable to Acts of God, due to conditions beyond the control of the 
person or to conditions which he could not reasonably foresee.
    (2) Written agreements do not relieve a farm labor contractor of any 
responsibility that such contractor would otherwise have under the Act 
and these regulations.
    (d) All payroll records made by the farm labor contractor must be 
retained by him for a period of three years.



Sec. 500.61  Farm labor contractors must comply with all worker 
protections and all other statutory provisions.

    Every farm labor contractor must comply with all of the provisions 
of titles I through V of the Act and all of the subparts of these 
regulations, unless subject to a specific statutory exemption. In 
addition to complying with all of the standards stated in subparts A and 
B of these regulations, every farm labor contractor must comply with 
each provision stated in subpart C and the motor vehicle safety and 
insurance and housing standards stated in subpart D.



Sec. 500.62  Obligations of a person holding a valid Farm Labor 
Contractor Employee Certificate of Registration.

    Any person holding a valid Farm Labor Contractor Employee 
Certificate of Registration in accordance with the Act and these 
regulations is required to comply with the Act and these regulations to 
the same extent as if said person had been required to obtain a 
Certificate of Registration in such person's own name as a farm labor 
contractor.



                      Subpart C_Worker Protections

                                 General



Sec. 500.70  Scope of worker protections.

    (a) General. The Act provides protections for migrant and seasonal 
agricultural workers irrespective of whether

[[Page 27]]

they are employed by a farm labor contractor, an agricultural employer 
or an agricultural association, or, in the case where there is joint 
responsibility, by more than one of these persons. The Act's provisions 
include standards relating to vehicle safety, housing safety and health, 
disclosure of wages, hours and other conditions of employment, and 
recordkeeping. When any person not otherwise exempt from the Act 
recruits, solicits, hires, employs, furnishes or transports workers, 
that person is required to comply with the applicable protective 
provisions of the Act. In addition, any person not specifically exempt 
from coverage of the Act (irrespective of whether that person is an 
agricultural employer, an agricultural association or farm labor 
contractor) who owns or controls a facility or real property which is 
used as housing for any migrant agricultural workers must ensure that 
the facility or real property complies with all substantive Federal and 
State safety and health standards made applicable to that type of 
housing. (See Sec. 500.132)
    (b) Wage related protections. Joint employment under the Fair Labor 
Standards Act, which establishes responsibility for the maintenance of 
payroll records, payment of wages and posting of notices under that law, 
is joint employment under MSPA for establishing responsibility for the 
maintenance of records, payment of wages and the posting of required 
posters under MSPA. In such joint employment situations the 
responsibility for assuring these MSPA protections may be carried out by 
one of the joint employers. While under a joint employment relationship 
all joint employers are equally responsible for assuring that the 
appropriate protections are provided, the creation of such a joint 
employment relationship does not also require unnecessary duplication of 
effort as, for example, in relation to the posting of posters (see 
Sec. Sec. 500.75(e) and 500.76(e)) or the provision of an itemized 
written statement of the worker's pay (see Sec. 500.80(d)). Failure to 
provide protections coming within the joint employment relationship, 
however, will result in all joint employers being responsible for that 
failure.
    (c) Transportation related protections. Responsibility for 
compliance with the motor vehicle safety and insurance provisions of 
section 401 of the Act and Sec. Sec. 500.100 through 500.128 of these 
regulations is imposed upon the person or persons using or causing to be 
used, any vehicle for transportation of migrant or seasonal agricultural 
workers. As stated in these regulations, the transportation safety 
provisions do not include certain car pooling arrangements. 
Additionally, these regulations do not impose responsibility on an 
agricultural employer or agricultural association for a farm labor 
contractor's failure to adhere to the safety provisions provided in 
these regulations when the farm labor contractor is providing the 
vehicles and directing their use. However, when an agricultural employer 
or agricultural association specifically directs or requests a farm 
labor contractor to use the contractor's vehicle to carry out a task for 
the agricultural employer or agricultural association, such direction 
constitutes causing the vehicle to be used and the agricultural employer 
or agricultural association is jointly responsible with the farm labor 
contractor for assuring that the vehicle meets the insurance, and safety 
and health provisions of these regulations. In all cases a person using 
a farm labor contractor is required to take reasonable steps to 
determine that the vehicle used by the farm labor contractor is 
authorized to be used for transportation as prescribed in section 402 of 
the Act and Sec. 500.71 of these regulations.
    (d) Housing related protections. Responsibility for compliance with 
the housing safety and health provisions of section 203 of the Act and 
Sec. Sec. 500.130 through 500.135 of these regulations is imposed upon 
the person (or persons) who owns or controls a facility or real property 
used as housing for migrant agricultural workers. Any agricultural 
employer or agricultural association which has a farm labor contractor 
operate housing which it owns or controls is responsible, as well as the 
farm labor contractor, for insuring compliance with the housing safety 
and health provisions of these regulations. When the owner or operator 
of the housing is not an agricultural employer, agricultural

[[Page 28]]

association or farm labor contractor, the owner is responsible for that 
housing meeting the safety and health provisions under the Act and these 
regulations. This is subject to the exclusion stated in Sec. 500.131 of 
these regulations which provides that the housing safety and health 
requirements do not apply to any person who, in the ordinary course of 
that person's business, regularly provides housing on a commercial basis 
to the general public and who provides housing to any migrant 
agricultural worker of the same character and on the same or comparable 
terms and conditions as provided to the general public.



Sec. 500.71  Utilization of only registered farm labor contractors.

    The Act prohibits any person from utilizing the services of a farm 
labor contractor to supply migrant or seasonal agricultural workers 
without first taking reasonable steps to determine that the farm labor 
contractor possesses a valid Certificate of Registration, issued 
pursuant to the Act, which authorizes the activity for which the 
contractor is to be utilized. This prohibition also applies to a farm 
labor contractor who wishes to utilize the services of another farm 
labor contractor (see Sec. 500.41). In making the determination about a 
contractor's registration status, a person may rely upon the 
contractor's possession of a Certificate of Registration which on its 
face is valid and which authorizes the activity for which the contractor 
is utilized. A person has the alternative to confirm the contractor's 
registration through the central registry maintained by the United 
States Department of Labor.



Sec. 500.72  Agreements with workers.

    (a) The Act prohibits farm labor contractors, agricultural employers 
and agricultural associations from violating, without justification, the 
terms of any working arrangements they have made with migrant or 
seasonal agricultural workers. Normally, ``without justification'' would 
not include situations in which failure to comply with the terms of any 
working arrangements was directly attributable to acts of God, due to 
conditions beyond the control of the person or to conditions which he 
could not reasonably foresee.
    (b) Written agreements do not relieve any person of any 
responsibility that the person would otherwise have under the Act or 
these regulations.



Sec. 500.73  Required purchase of goods or services solely from any
person prohibited.

    The Act prohibits a farm labor contractor, agricultural employer or 
agricultural association from requiring a migrant or seasonal 
agricultural worker to purchase goods or services solely from such farm 
labor contractor, agricultural employer, or agricultural association, or 
any other person acting as an agent for any person subject to this 
prohibition.

  Recruiting, Hiring and Providing Information to Migrant Agricultural 
                                 Workers



Sec. 500.75  Disclosure of information.

    (a) Where disclosure is required, Department of Labor optional forms 
may be used to satisfy the requirements of disclosure under the Act.
    (b) Each farm labor contractor, agricultural employer, and 
agricultural association which recruits any migrant agricultural worker 
shall ascertain to the best of his ability and disclose, in writing to 
the extent that he has obtained such information, to such worker at the 
time of recruitment, the following information:
    (1) The place of employment (with as much specificity as practical, 
such as the name and address of the employer or the association);
    (2) The wage rates (including piece rates) to be paid;
    (3) The crops and kinds of activities on which the worker may be 
employed;
    (4) The period of employment;
    (5) The transportation, housing, and any other employee benefits to 
be provided, if any, and any costs to be charged for each of them;
    (6) Whether state workers' compensation or state unemployment 
insurance is provided:
    (i) If workers' compensation is provided, the required disclosure 
must include the name of the workers' compensation insurance carrier, 
the

[[Page 29]]

name(s) of the policyholder(s), the name and telephone number of each 
person who must be notified of an injury or death, and the time period 
within which such notice must be given.
    (ii) The information requirement in paragraph (b)(6)(i) of this 
section may be satisfied by giving the worker a photocopy of any 
workers' compensation notice required by State law;.
    (7) The existence of any strike or other concerted work stoppage, 
slowdown, or interruption of operations by employees at the place of 
employment; and
    (8) The existence of any arrangements with any owner or agent of any 
establishment in the area of employment under which the farm labor 
contractor, the agricultural employer, or the agricultural association 
is to receive a commission or any other benefit resulting from any sales 
by such establishment to the workers.
    (c) Each farm labor contractor, agricultural employer and 
agricultural association which employs any migrant agricultural worker 
shall post (and maintain) in a conspicuous place at the place of 
employment a poster provided by the Secretary of Labor, which sets out 
the rights and protections for workers required under the Act.
    (d) The employer (other than a farm labor contractor) of any migrant 
agricultural worker, shall provide at the place of employment on request 
of the worker, a written statement of the conditions of employment. A 
farm labor contractor shall provide such information in accordance with 
Sec. 500.60(b) of these regulations.
    (e) In a joint employment situation, each employer is equally 
responsible for displaying and maintaining the poster and for responding 
to worker requests for written statements of the conditions of 
employment which are made during the course of employment. This joint 
responsibility, however, does not require needless duplication, such as 
would occur if each employer posted the same poster or provided the same 
written statement with respect to the same employment conditions. 
Failure to provide the information required by a joint employment 
relationship, however, will result in all joint employers being 
responsible for that failure.
    (f) Each farm labor contractor, agricultural employer and 
agricultural association which provides housing for any migrant 
agricultural worker shall post in a conspicuous place (at the site of 
the housing) or present in the form of a written statement to the worker 
the following information on the terms and conditions of occupancy of 
such housing, if any:
    (1) The name and address of the farm labor contractor, agricultural 
employer

or agricultural association providing the housing;
    (2) The name and address of the individual in charge of the housing;
    (3) The mailing address and phone number where persons living in the 
housing facility may be reached;
    (4) Who may live at the housing facility;
    (5) The charges to be made for housing;
    (6) The meals to be provided and the charges to be made for them;
    (7) The charges for utilities; and
    (8) Any other charges or conditions of occupancy.
    (g) If the terms and conditions of occupancy are posted, the poster 
shall be displayed and maintained during the entire period of occupancy. 
If the terms and conditions of occupancy are disclosed to the worker 
through a statement (rather than through a posting), such statement 
shall be provided to the worker prior to occupancy. Department of Labor 
optional forms may be used to satisfy this requirement.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]

    Hiring and Providing Information to Seasonal Agricultural Workers



Sec. 500.76  Disclosure of information.

    (a) Where disclosure is required, Department of Labor optional forms 
may be used to satisfy the requirements of disclosure under the Act.
    (b) Each farm labor contractor, agricultural employer and 
agricultural association, which recruits any seasonal agricultural 
worker for employment on a farm or ranch to perform field work

[[Page 30]]

related to planting, cultivating or harvesting operations, shall 
ascertain and, upon request, disclose in writing the following 
information to such worker when an offer of employment is made:
    (1) The place of employment (with as much specificity as practical, 
such as the name and address of the employer or the association);
    (2) The wage rates (including piece rates) to be paid;
    (3) The crops and kinds of activities on which the worker may be 
employed;
    (4) The period of employment;
    (5) The transportation and any other employee benefits to be 
provided, if any, and any costs to be charged for each of them;
    (6) Whether state workers' compensation or state unemployment 
insurance is provided:
    (i) If workers' compensation is provided, the required disclosure 
must include the name of the workers' compensation insurance carrier, 
the name(s) of the policyholder(s), the name and telephone number of 
each person who must be notified of an injury or death, and the time 
period within which such notice must be given.
    (ii) The information requirement in paragraph (b)(6)(i) of this 
section may satisfied giving the worker a photocopy of any workers' 
compensation notice required by State law;
    (7) The existence of any strike or other concerted work stoppage, 
slowdown, or interruption of operations by employees at the place of 
employment; and
    (8) The existence of any arrangements with any owner or agent of any 
establishment in the area of employment under which the farm labor 
contractor, the agricultural employer, or the agricultural association 
is to receive a commission or any other benefit resulting from any sales 
by such establishment to the workers.
    (c) Each farm labor contractor, agricultural employer and 
agricultural association which recruits any seasonal agricultural worker 
for employment through the use of day-haul operation in canning, 
packing, ginning, seed conditioning or related research, or processing 
operations, shall ascertain and disclose in writing to the worker at the 
time of recruitment the information on employment conditions set out in 
paragraph (b) of this section.
    (d)(1) Each farm labor contractor, agricultural employer and 
agricultural association which employs any seasonal agricultural worker 
shall post (and maintain) at the place of employment in a conspicuous 
place readily accessible to the worker a poster provided by the 
Secretary of Labor which sets out the rights and protections for such 
worker required under the Act.
    (2) Such employer shall provide, on request of the worker, a written 
statement of the information described in paragraph (b) of this section.
    (e) In a joint employment situation, each employer is equally 
responsible for displaying and maintaining the poster and for responding 
to worker requests for written statements of the conditions of 
employment which are made during the course of employment. This joint 
responsibility, however, does not require needless duplication, such as 
would occur if each employer posted the same poster or provided the same 
written statement with respect to the same employment conditions.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]

                    Employment Information Furnished



Sec. 500.77  Accuracy of information furnished.

    No farm labor contractor, agricultural employer or agricultural 
association shall knowingly provide false or misleading information on 
the terms, conditions or existence of agricultural employment and 
housing required to be disclosed by the Act and these regulations to any 
migrant or seasonal agricultural worker.



Sec. 500.78  Information in foreign language.

    Each farm labor contractor, agricultural employer and agricultural 
association shall make all required written disclosures to the worker, 
including the written disclosures of the terms and conditions of 
occupancy of housing to be provided to any migrant worker, in English 
or, as necessary and reasonable, in Spanish or another language

[[Page 31]]

common to migrant or seasonal agricultural workers who are not fluent or 
literate in English. The Department of Labor shall make forms available 
in English, Spanish, Haitian-Creole and other languages, as necessary, 
which may be used in providing workers with such information.

                       Wages and Payroll Standards



Sec. 500.80  Payroll records required.

    (a) Each farm labor contractor, agricultural employer and 
agricultural association which employs any migrant or seasonal 
agricultural worker shall make and keep the following records with 
respect to each worker including the name, permanent address, and Social 
Security number:
    (1) The basis on which wages, are paid;
    (2) The number of piecework units earned, if paid on a piecework 
basis;
    (3) The number of hours worked;
    (4) The total pay period earnings;
    (5) The specific sums withheld and the purpose of each sum withheld; 
and
    (6) The net pay.
    (b) Each farm labor contractor, agricultural employer and 
agricultural association which employs any migrant or seasonal 
agricultural worker shall preserve all payroll records with respect to 
each such worker for a period of three years.
    (c) When a farm labor contractor furnishes any migrant or seasonal 
agricultural worker, and the farm labor contractor is the employer, the 
farm labor contractor must furnish the agricultural employer, 
agricultural association or other farm labor contractor to whom the 
workers are furnished, a copy of all payroll records required under 
paragraph (a) of this section which the farm labor contractor has made 
regarding such worker for that place of employment. The person receiving 
such records shall maintain them for a period of three years.
    (d) In addition to making records of this payroll information, the 
farm labor contractor, agricultural employer and agricultural 
association shall provide each migrant or seasonal agricultural worker 
employed with an itemized written statement of this information at the 
time of payment for each pay period which must be no less often than 
every two weeks (or semi-monthly). Such statement shall also include the 
employer's name, address, and employer identification number assigned by 
the Internal Revenue Service. This responsibility does not require 
needless duplication such as would occur if each provided the worker 
with a written itemized statement for the same work.



Sec. 500.81  Payment of wages when due.

    Each farm labor contractor, agricultural employer and agricultural 
association which employs any migrant or seasonal agricultural worker 
must pay the wages owed such worker when due. In meeting this 
responsibility, the farm labor contractor, agricultural employer and 
agricultural association shall pay the worker no less often than every 
two weeks (or semi-monthly).



   Subpart D_Motor Vehicle Safety and Insurance for Transportation of 
Migrant and Seasonal Agricultural Workers, Housing Safety and Health for 
                             Migrant Workers

                          Motor Vehicle Safety



Sec. 500.100  Vehicle safety obligations.

    (a) General obligations. Each farm labor contractor, agricultural 
employer and agricultural association which uses, or causes to be used, 
any vehicle to transport a migrant or seasonal agricultural worker shall 
ensure that such vehicle conforms to vehicle safety standards prescribed 
by the Secretary of Labor under the Act and with other applicable 
Federal and State safety standards. Each farm labor contractor, 
agricultural employer and agricultural association shall also ensure 
that each driver of any such vehicle has a currently valid motor vehicle 
operator's permit or license, as provided by applicable State law, to 
operate the vehicle.
    (b) Proof of compliance with vehicle safety standards. Prima facie 
evidence that safety standards have been met will be shown by the 
presence of a current State vehicle inspection sticker. Such sticker 
will not, however, relieve

[[Page 32]]

the farm labor contractor, agricultural employer or agricultural 
association from responsibility for maintaining the vehicle in 
accordance with Sec. 500.104 or Sec. 500.105, as applicable.
    (c) Uses or causes to be used. The term ``uses or causes to be 
used'' as set forth in paragraph (a) of this section does not include 
carpooling arrangements made by the workers themselves, using one of the 
workers' own vehicles. However, carpooling does not include any 
transportation arrangement in which a farm labor contractor participates 
or which is specifically directed or requested by an agricultural 
employer or an agricultural association.



Sec. 500.101  Promulgation and adoption of vehicle standards.

    (a) General. All transportation of migrant and seasonal agricultural 
workers, whether on the farm or on the road, shall be subject to the 
vehicle safety standards of the Act, except for activities under the 
circumstances set out in Sec. 500.103.
    (b) Compliance required. Any violation of the standards promulgated 
by the Secretary in Sec. 500.104 or adopted by the Secretary in Sec. 
500.105 shall be a violation of the Act and these regulations.
    (c) Development of Department of Labor Standards. In developing the 
regulations in Sec. 500.104, the Secretary has considered among other 
factors: (1) The type of vehicle used, (2) the passenger capacity of the 
vehicle, (3) the distance which such workers will be carried in the 
vehicle, (4) the type of roads and highways on which such workers will 
be carried in the vehicle, and (5) the extent to which a proposed 
standard would cause an undue burden on agricultural employers, 
agricultural associations, or farm labor contractors.
    (d) Adoption of Department of Transportation (DOT) Standards. In 
accordance with section 401(b)(2)(C) of the Act, the Secretary has 
adopted in Sec. 500.105 of these regulations, the DOT standards, 
without regard to the mileage and boundary limitations established in 49 
U.S.C. 3102(c).



Sec. 500.102  Applicability of vehicle safety standards.

    (a) Any passenger automobile or station wagon used or caused to be 
used by any farm labor contractor, agricultural employer or agricultural 
association to transport any migrant or seasonal agricultural worker 
shall meet the vehicle safety standards prescribed in Sec. 500.104.
    (b) Any vehicle, other than a passenger automobile or station wagon, 
used or caused to be used by any farm labor contractor, agricultural 
employer or agricultural association to transport any migrant or 
seasonal agricultural worker pursuant to a day-haul operation shall be 
subject to the safety standards prescribed under Sec. 500.105.
    (c) Any vehicle, other than a passenger automobile or station wagon, 
which has been or is being used or caused to be used for any trip of a 
distance greater than 75 miles by a farm labor contractor, agricultural 
employer or agricultural association to transport any migrant or 
seasonal agricultural worker, shall be subject to the safety standards 
prescribed under Sec. 500.105. One trip may have numerous intermediate 
stops.
    (d) Any vehicle, other than a passenger automobile or station wagon, 
used or caused to be used by any farm labor contractor, agricultural 
employer or agricultural association to transport any migrant or 
seasonal agricultural worker in any manner not addressed by paragraphs 
(a), (b), or (c) of this section shall meet the vehicle safety standards 
prescribed in Sec. 500.104.
    (e) The use or intended use of a vehicle, other than a passenger 
automobile or station wagon, for transportation of the type identified 
in Sec. 500.102(b) or Sec. 500.102(c) will make the vehicle subject to 
the standards prescribed under Sec. 500.105, so long as the vehicle is 
used for transportation subject to the Act and these regulations.
    (f) Any pickup truck used only for transportation subject to Sec. 
500.104 when transporting passengers only within the cab shall be 
treated as a station wagon.
    (g) Pursuant to section 401(b)(2)(C) of the Act, standards 
prescribed by the Secretary shall be in addition to, and shall not 
supersede nor modify, any standards prescribed under part II of the 
Interstate Commerce Act and any successor provision of subtitle IV of

[[Page 33]]

title 49, U.S. Code or the regulations issued thereunder which is 
independently applicable to transportation to which this section 
applies. A violation of any such standard shall also constitute a 
violation of the Act and these regulations.

[48 FR 36741, Aug. 12, 1983; 48 FR 38380, Aug. 23, 1983]



Sec. 500.103  Activities not subject to vehicle safety standards.

    (a) Agricultural machinery and equipment excluded. Vehicle safety 
standards or insurance requirements issued under the Act and these 
regulations do not apply to the transportation of any seasonal or 
migrant agricultural worker on a tractor, combine, harvester, picker, 
other similar machinery and equipment while such worker is actually 
engaged in the planting, cultivating, or harvesting of any agricultural 
commodity or the care of livestock or poultry. This exclusion applies 
only to workers carrying out these activities on such machinery and 
equipment or being engaged in transportation incidental thereto. The 
exclusion does not include the use of such machinery for the 
transportation of any worker under any other circumstances.
    (b) Exclusion for immediate family transporting family members. The 
standards of this subpart do not apply to an individual migrant or 
seasonal agricultural worker when the only other occupants of that 
individual's vehicle consist of his immediate family members as defined 
in Sec. 500.20(o).
    (c) Carpooling. Vehicle safety standards or insurance requirements 
of the Act and these regulations do not apply to carpooling arrangements 
made by the workers themselves, using one of the workers' own vehicles 
and not specifically directed or requested by an agricultural employer 
or agricultural association. Carpooling, however, does not include any 
transportation arrangement in which a farm labor contractor 
participates.

(See also Sec. 500.120)



Sec. 500.104  Department of Labor standards for passenger automobiles
and station wagons and transportation of seventy-five miles or less.

    Any farm labor contractor, agricultural employer or agricultural 
association providing transportation in passenger automobiles and 
station wagons and other vehicles used only for transportation as 
provided in Sec. 500.102(a) and (d) shall comply with the following 
vehicle safety standards:
    (a) External lights. Head lights, tail lights, stop lights, back-up 
lights, turn signals and hazard warning lights shall be operable.
    (b) Brakes. Every vehicle shall be equipped with operable brakes for 
stopping and holding on an incline. Brake systems shall be free of 
leaks.
    (c) Tires. Tires shall have at least

2/32 inch tread depth, and have no cracks/defects in the sidewall.
    (d) Steering. The steering wheel and associated mechanism shall be 
maintained so as to safely and accurately turn the vehicles.
    (e) Horn. Vehicles shall have an operable air or electric horn.
    (f) Mirrors. Mirrors shall provide the driver full vision of the 
sides and to the rear of the vehicle.
    (g) Windshields/windshield wipers. Windshields and windows may not 
have cracks or opaque obstructions which obscure vision. Vehicles shall 
be equipped with windshield wipers that are operational to allow the 
operator full frontal vision in all weather conditions.
    (h) Fuel system. Fuel lines and the fuel tank shall be free of 
leaks. The tank shall be fitted with a cap to securely cover the filling 
opening.
    (i) Exhaust system. The exhaust system shall discharge carbon 
monoxide away from the passenger compartment and be free of leaks 
beneath the passenger compartment.
    (j) Ventilation. Windows will be operational to allow fresh air to 
the occupants of the vehicle.
    (k) Safe loading. Vehicles will not be driven when loaded beyond the 
manufacturer's gross vehicle weight rating.
    (l) Seats. A seat securely fastened to the vehicle will be provided 
for each occupant or rider in, or on, any vehicle, except that 
transportation which is

[[Page 34]]

primarily on private farm roads will be excused from this requirement 
provided the total distance traveled does not exceed ten (10) miles, and 
so long as the trip begins and ends on a farm owned or operated by the 
same employer.
    (m) Handles and latches. Door handles and latches shall be provided 
and maintained to allow exiting capability for vehicle occupants.
    (n) Passenger compartment. Floor and sides of any part of the 
vehicle to be occupied by passengers must be free of openings, rusted 
areas or other defects which are likely to result in injury to 
passengers.



Sec. 500.105  DOT standards adopted by the Secretary.

    (a) Any farm labor contractor, agricultural employer or agricultural 
association providing transportation in vehicles other than passenger 
automobiles and station wagons used for transportation as provided in 
Sec. 500.102 (b), (c), and (e) shall comply with the motor carrier 
safety standards listed in paragraph (b) of this section.
    (b) The Secretary for the purposes of this section has adopted from 
49 CFR part 398 the following pertinent standards. (In adopting these 
standards, editorial changes necessitated by the Act and these 
regulations have been made to conform the language to these 
regulations):
    (1) Qualification of drivers or operators (Source: 49 CFR 398.3)--
(i) Compliance required. Every person subject to this Act who drives a 
motor vehicle or is responsible for the hiring, supervision, training, 
assignment or dispatching of drivers shall comply and be conversant with 
the requirements of this section.
    (ii) Minimum physical requirements. No such person shall drive, nor 
shall any such person require or permit any person to drive, any motor 
vehicle unless such person possesses the following minimum 
qualifications:
    (A) No loss of foot, leg, hand or arm,
    (B) No mental, nervous, organic, or functional disease, likely to 
interfere with safe driving.
    (C) No loss of fingers, impairment of use of foot, leg, fingers, 
hand or arm, or other structural defect or limitation, likely to 
interfere with safe driving.
    (D) Eyesight. Visual acuity of at least 20/40 (Snellen) in each eye 
either without glasses or by correction with glasses; form field of 
vision in the horizontal meridian shall not be less than a total of 140 
degrees; ability to distinguish colors red, green and yellow; drivers 
requiring correction by glasses shall wear properly prescribed glasses 
at all times when driving.
    (E) Hearing. Hearing shall not be less than 10/20 in the better ear, 
for conversational tones, without a hearing aid.
    (F) Liquor, narcotics and drugs. Shall not be addicted to the use of 
narcotics or habit forming drugs, or the excessive use of alcoholic 
beverages or liquors.
    (G) Initial and periodic physical examination of drivers. No such 
person shall drive nor shall any such person require or permit any 
person to drive any motor vehicle unless within the immediately 
preceding 36-month period such person shall have been physically 
examined and shall have been certified in accordance with the provisions 
of paragraph (b)(1)(ii)(H) of this section by a licensed doctor of 
medicine or osteopathy as meeting the requirements of this subsection.
    (H) Certificate of physical examination. Every person shall have in 
his files at his principal place of business for every driver employed 
or used by him a legible certificate of a licensed doctor of medicine or 
osteopathy based on a physical examination as required by paragraph 
(b)(1)(ii)(G) of this section or a legible photographically reproduced 
copy thereof, and every driver shall have in his possession while 
driving, such a certificate or a photographically reproduced copy 
thereof covering himself.
    (I) Doctor's certificate. The doctor's certificate shall certify as 
follows:

                          Doctor's Certificate

                       (Driver of Migrant Workers)

    This is to certify that I have this day examined ------------ in 
accordance with Sec. 398.3(b) of the Federal Motor Carrier Safety 
Regulations of the Federal Highway Administration and that I find him
    Qualified under said rules [squ]
    Qualified only when wearing glasses [squ]

[[Page 35]]

    I have kept on file in my office a completed examination.
(Date)__________________________________________________________________

(Place)_________________________________________________________________

________________________________________________________________________
 (Signature of examining doctor)

________________________________________________________________________
 (Address of doctor)
________________________________________________________________________
 (Signature of driver)

________________________________________________________________________
 (Address of driver)

    (iii) Minimum age and experience requirements. No person shall 
drive, nor shall any person require or permit any person to drive, any 
motor vehicle unless such person possesses the following minimum 
qualifications:
    (A) Age. Minimum age shall be 21 years.
    (B) Driving skill. Experience in driving some type of motor vehicle 
(including private automobiles) for not less than one year, including 
experience throughout the four seasons.
    (C) Knowledge of regulations. Familiarity with the rules and 
regulations prescribed in this part pertaining to the driving of motor 
vehicles.
    (D) Knowledge of English. Every driver shall be able to read and 
speak the English language sufficiently to understand highway traffic 
signs and signals and directions given in English and to respond to 
official inquiries.
    (E) Driver's permit. Possession of a valid permit qualifying the 
driver to operate the type of vehicle driven by him in the jurisdiction 
by which the permit is issued.
    (2) Driving of motor vehicles (Source: 49 CFR 398.4)--(i) Compliance 
required. Every person shall comply with the requirements of this 
section, shall instruct its officers, agents, representatives and 
drivers with respect thereto, and shall take such measures as are 
necessary to insure compliance therewith by such persons. All officers, 
agents, representatives, drivers, and employees of persons subject to 
this Act directly concerned with the management, maintenance, operation, 
or driving of motor vehicles, shall comply with and be conversant with 
the requirements of this section.
    (ii) Driving rules to be obeyed. Every motor vehicle shall be driven 
in accordance with the laws, ordinances, and regulations of the 
jurisdiction in which it is being operated, unless such laws, ordinances 
and regulations are at variance with specific regulations of the Federal 
Highway Administration, which impose a greater affirmative obligation or 
restraint.
    (iii) [Reserved]
    (iv) Alcoholic beverages. No driver shall drive or be required or 
permitted to drive a motor vehicle, be in active control of any such 
vehicle, or go on duty or remain on duty, when under the influence of 
any alcoholic beverage or liquor, regardless of its alcoholic content, 
nor shall any driver drink any such beverage or liquor while on duty.
    (v) Schedules to conform with speed limits. No person shall permit 
nor require the operation of any motor vehicle between points in such 
period of time as would necessitate the vehicle being operated at speeds 
greater than those prescribed by the jurisdictions in or through which 
the vehicle is being operated.
    (vi) Equipment and emergency devices. No motor vehicle shall be 
driven unless the driver thereof shall have satisfied himself that the 
following parts, accessories, and emergency devices are in good working 
order; nor shall any driver fail to use or make use of such parts, 
accessories, and devices when and as needed:

Service brakes, including trailer brake connections.
Parking (hand) brake.
Steering mechanism.
Lighting devices and reflectors.
Tires.
Horn.
Windshield wiper or wipers.
Rear-vision mirror or mirrors.
Coupling devices.
Fire extinguisher, at least one properly mounted.
Road warning devices, at least one red burning fusee and at least three 
flares (oil burning pot torches), red electric lanterns, or red 
emergency reflectors.

    (vii) Safe loading--(A) Distribution and securing of load. No motor 
vehicle shall be driven nor shall any motor carrier permit or require 
any motor vehicle to be driven if it is so loaded, or if the load 
thereon is so improperly distributed or so inadequately secured, as to 
prevent its safe operation.

[[Page 36]]

    (B) Doors, tarpaulins, tailgates and other equipment. No motor 
vehicle shall be driven unless the tailgate, tailboard, tarpaulins, 
doors, all equipment and rigging used in the operation of said vehicle, 
and all means of fastening the load, are securely in place.
    (C) Interference with driver. No motor vehicle shall be driven when 
any object obscures his view ahead, or to the right or left sides, or to 
the rear, or interferes with the free movement of his arms or legs, or 
prevents his free and ready access to the accessories required for 
emergencies, or prevents the free and ready exit of any person from the 
cab or driver's compartment.
    (D) Property on motor vehicles. No vehicle transporting persons and 
property shall be driven unless such property is stowed in a manner 
which will assure: (1) Unrestricted freedom of motion to the driver for 
proper operation of the vehicle; (2) unobstructed passage to all exits 
by any person; and (3) adequate protection to passengers and others from 
injury as a result of the displacement or falling of such articles.
    (E) Maximum passengers on motor vehicles. No motor vehicle shall be 
driven if the total number of passengers exceeds the seating capacity 
which will be permitted on seats prescribed in Sec. 500.105(b)(3)(vi). 
All passengers carried on such vehicle shall remain seated while the 
motor vehicle is in motion.
    (viii) Rest and meal stops. Every person shall provide for 
reasonable rest stops at least once between meal stops. Meal stops shall 
be made at intervals not to exceed six hours and shall be for a period 
of not less than 30 minutes duration.
    (ix) Kinds of motor vehicles in which workers may be transported. 
Workers may be transported in or on only the following types of motor 
vehicles: A bus, a truck with no trailer attached, or a semitrailer 
attached to a truck-tractor provided that no other trailer is attached 
to the semitrailer. Closed vans without windows or means to assure 
ventilation shall not be used.
    (x) Limitation on distance of travel in trucks. Any truck when used 
for the transportation of migrant or seasonal agricultural workers, if 
such workers are being transported in excess of 600 miles, shall be 
stopped for a period of not less than eight consecutive hours either 
before or upon completion of 600 miles travel, and either before or upon 
completion of any subsequent 600 miles travel to provide rest for 
drivers and passengers.
    (xi) Lighting devices and reflectors. No motor vehicle shall be 
driven when any of the required lamps or reflectors are obscured by the 
tailboard, by any and all lighting devices required pursuant to 49 
U.S.C. 3102(c) shall be lighted during darkness or at any other time 
when there is not sufficient light to render vehicles and persons 
visible upon the highway at a distance of 500 feet.
    (xii) Ignition of fuel; prevention. No driver or other person shall: 
(A) Fuel a motor vehicle with the engine running, except when it is 
necessary to run the engine to fuel the vehicle; (B) smoke or expose any 
open flame in the vicinity of a vehicle being fueled; (C) fuel a motor 
vehicle unless the nozzle of the fuel hose is continuously in contact 
with the intake pipe of the fuel tank; (D) permit any other person to 
engage in such activities as would be likely to result in fire or 
explosion.
    (xiii) Reserve fuel. No supply of fuel for the propulsion of any 
motor vehicle or for the operation of any accessory thereof shall be 
carried on the motor vehicle except in a properly mounted fuel tank or 
tanks.
    (xiv) Driving by unauthorized person. Except in case of emergency, 
no driver shall permit a motor vehicle to which he is assigned to be 
driven by any person not authorized to drive such vehicle.
    (xv) Protection of passengers from weather. No motor vehicle shall 
be driven while transporting passengers unless the passengers therein 
are protected from inclement weather conditions such as rain, snow, or 
sleet, by use of the top or protective devices required by Sec. 
500.105(b)(3)(vi)(E).
    (xvi) Unattended vehicles; precautions. No motor vehicle shall be 
left unattended by the driver until the parking brake has been securely 
set, the wheels chocked, and all reasonable precautions have been taken 
to prevent the movement of such vehicle.
    (xvii) Railroad grade crossings; stopping required; sign on rear of 
vehicle.

[[Page 37]]

Every motor vehicle shall, upon approaching any railroad grade crossing, 
make a full stop not more than 50 feet, nor less than 15 feet from the 
nearest rail of such railroad grade crossing, and shall not proceed 
until due caution has been taken to ascertain that the course is clear; 
except that a full stop need not be made at:
    (A) A street car crossing within a business or residence district of 
a municipality;
    (B) A railroad grade crossing where a police officer or a traffic-
control signal (not a railroad flashing signal) directs traffic to 
proceed:
    (C) An abandoned or exempted grade crossing which is clearly marked 
as such by or with the consent of the proper state authority, when such 
marking can be read from the driver's position.

All such motor vehicles shall display a sign on the rear reading, ``This 
Vehicle Stops at Railroad Crossings.''
    (3) Parts and accessories necessary (Source: 49 CFR 398.5)--(i) 
Compliance. Every person and its officers, agents, drivers, 
representatives and employees directly concerned with the installation 
and maintenance of equipment and accessories shall comply and be 
conversant with the requirements and specifications of this part, and no 
person shall operate any motor vehicle, or cause or permit it to be 
operated, unless it is equipped in accordance with said requirements and 
specifications.
    (ii) Lighting devices. Every motor vehicle shall be equipped with 
the lighting devices and reflectors required pursuant to 49 U.S.C. 3102 
(c).
    (iii) Brakes. Every motor vehicle shall be equipped with brakes as 
required pursuant to 49 U.S.C. 3102 (c).
    (iv) Coupling devices; fifth wheel mounting and locking. The lower 
half of every fifth wheel mounted on any truck-tractor or dolly shall be 
securely affixed to the frame thereof by U-bolts of adequate size, 
securely tightened, or by other means providing at least equivalent 
security. Such U-bolts shall not be of welded construction. The 
installation shall be such as not to cause cracking, warping, or 
deformation of the frame. Adequate means shall be provided positively to 
prevent the shifting of the lower half of a fifth wheel on the frame to 
which it is attached. The upper half of every fifth wheel shall be 
fastened to the motor vehicle with at least the security required for 
the securing of the lower half to a truck-tractor or dolly. Locking 
means shall be provided in every fifth wheel mechanism including 
adapters when used, so that the upper and lower halves may not be 
separated without the operation of a positive manual release. A release 
mechanism operated by the driver from the cab shall be deemed to meet 
this requirement. On fifth wheels designed and constructed so as to be 
readily separable, the fifth wheel locking devices shall apply 
automatically on coupling for any motor vehicle the date of manufacture 
of which is subsequent to December 31, 1952.
    (v) Tires. Every motor vehicle shall be equipped with tires of 
adequate capacity to support its gross weight. No motor vehicle shall be 
operated on tires which have been worn so smooth as to expose any tread 
fabric or which have any other defect likely to cause failure. No 
vehicle shall be operated while transporting passengers while using any 
tire which does not have tread configurations on that part of the tire 
which is in contact with the road surface. No vehicle transporting 
passengers shall be operated with regrooved, re-capped, or re-treaded 
tires on front wheels.
    (vi) Passenger compartment. Every motor vehicle transporting 
passengers, other than a bus, shall have a passenger compartment meeting 
the following requirements:
    (A) Floors. A substantially smooth floor, without protruding 
obstructions more than two inches high, except as are necessary for 
securing seats or other devices to the floor, and without cracks or 
holes.
    (B) Sides. Side walls and ends above the floor at least 60 inches 
high, by attachment of sideboards to the permanent body construction if 
necessary. Stake body construction shall be construed to comply with 
this requirement only if all six-inch or larger spaces between stakes 
are suitably closed to prevent passengers from falling off the vehicle.

[[Page 38]]

    (C) Nails, screws, splinters. The floor and the interior of the 
sides and ends of the passenger-carrying space shall be free of inwardly 
protruding nails, screws, splinters, or other projecting objects likely 
to be injurious to passengers or their apparel.
    (D) Seats. A seat shall be provided for each worker transported. The 
seats shall be: Securely attached to the vehicle during the course of 
transportation; not less than 16 inches nor more than 19 inches above 
the floor; at least 13 inches deep; equipped with backrests extending to 
a height of at least 36 inches above the floor, with at least 24 inches 
of space between the backrests or between the edges of the opposite 
seats when face to face; designed to provide at least 18 inches of seat 
for each passenger; without cracks more than two inches wide, and the 
exposed surfaces, if made of wood, planed or sanded smooth and free of 
splinters.
    (E) Protection from weather. Whenever necessary to protect the 
passengers from inclement weather conditions, be equipped with a top at 
least 80 inches high above the floor and facilities for closing the 
sides and ends of the passenger-carrying compartment. Tarpaulins or 
other such removable devices for protection from the weather shall be 
secured in place.
    (F) Exit. Adequate means of ingress and egress to and from the 
passenger space shall be provided on the rear or at the right side. Such 
means of ingress and egress shall be at least 18 inches wide. The top 
and the clear opening shall be at least 60 inches high, or as high as 
the side wall of the passenger space if less than 60 inches. The bottom 
shall be at the floor of the passenger space.
    (G) Gates and doors. Gates or doors shall be provided to close the 
means of ingress and egress and each such gate or door shall be equipped 
with at least one latch or other fastening device of such construction 
as to keep the gate or door securely closed during the course of 
transportation; and readily operative without the use of tools.
    (H) Ladders or steps. Ladders or steps for the purpose of ingress or 
egress shall be used when necessary. The maximum vertical spacing of 
footholds shall not exceed 12 inches, except that the lowest step may be 
not more than 18 inches above the ground when the vehicle is empty.
    (I) Hand holds. Hand holds or devices for similar purpose shall be 
provided to permit ingress and egress without hazard to passengers.
    (J) Emergency exit. Vehicles with permanently affixed roofs shall be 
equipped with at least one emergency exit having a gate or door, latch 
and hand hold as prescribed in paragraphs (b)(3)(vi) (G) and (I) of this 
section and located on a side or rear not equipped with the exit 
prescribed in paragraph (b)(3)(vi)(F) of this section.
    (K) Communication with driver. Means shall be provided to enable the 
passengers to communicate with the driver. Such means may include 
telephone, speaker tubes, buzzers, pull cords, or other mechanical or 
electrical means.
    (vii) Protection from cold. Every motor vehicle shall be provided 
with a safe means of protecting passengers from cold or undue exposure, 
but in no event shall heaters of the following types be used:
    (A) Exhaust heaters. Any type of exhaust heater in which the engine 
exhaust gases are conducted into or through any space occupied by 
persons or any heater which conducts engine compartment air into any 
such space.
    (B) Unenclosed flame heaters. Any type of heater employing a flame 
which is not fully enclosed.
    (C) Heaters permitting fuel leakage. Any type of heater from the 
burner of which there could be spillage or leakage of fuel upon the 
tilting or overturning of the vehicle in which it is mounted.
    (D) Heaters permitting air contamination. Any heater taking air, 
heated or to be heated, from the engine compartment or from direct 
contact with any portion of the exhaust system; or any heater taking air 
in ducts from the outside atmosphere to be conveyed through the engine 
compartment, unless said ducts are so constructed and installed as to 
prevent contamination of the air so conveyed by exhaust or engine 
compartment gases.
    (E) Any heater not securely fastened to the vehicle.
    (4) Hours of service of drivers; maximum driving time (Source: 49 
CFR 398.6). No

[[Page 39]]

person shall drive nor shall any person permit or require a driver 
employed or used by it to drive or operate for more than 10 hours in the 
aggregate (excluding rest stops and stops for meals) in any period of 24 
consecutive hours, unless such driver be afforded eight consecutive 
hours rest immediately following the 10 hours aggregate driving. The 
term ``24 consecutive hours'' as used in this part means any such period 
starting at the time the driver reports for duty.
    (5) Inspection and maintenance of motor vehicles (Source: 49 CFR 
398.7). Every person shall systematically inspect and maintain or cause 
to be systematically maintained, all motor vehicles and their 
accessories subject to its control, to insure that such motor vehicles 
and accessories are in safe and proper operating condition.

[48 FR 36741, Aug. 12, 1983; 48 FR 38380, Aug. 23, 1983]

                                Insurance



Sec. 500.120  Insurance policy or liability bond is required for
each vehicle used to transport any migrant or seasonal 

agricultural worker.

    A farm labor contractor, agricultural employer or agricultural 
association shall not transport any migrant or seasonal agricultural 
worker or his property in any vehicle such contractor, employer or 
association owns, operates, controls, or causes to be operated unless he 
has an insurance policy or liability bond in effect which insures 
against liability for damage to persons or property arising from the 
ownership, operation, or causing to be operated of such vehicle. 
Generally, the owner or lessor of the vehicle will be responsible for 
providing the required insurance. The insurance requirements do not 
apply to vehicles involved in carpooling arrangements made by the 
workers themselves, using one of the workers' own vehicles and not 
specifically directed or requested by an agricultural employer or 
agricultural association. However, carpooling does not include any 
transportation arrangement in which a farm labor contractor 
participates. Activities exempt from transportation safety standards are 
also exempt from insurance requirements. (See also Sec. 500.103.)



Sec. 500.121  Coverage and level of insurance required.

    (a) Except where a liability bond pursuant to Sec. 500.124 of this 
part has been approved by the Secretary, a farm labor contractor, 
agricultural employer or agricultural association shall, in order to 
meet the insurance requirements in Sec. 500.120, obtain a policy of 
vehicle liability insurance.
    (b) The amount of vehicle liability insurance shall not be less than 
$100,000 for each seat in the vehicle, but in no event is the total 
insurance required to be more than $5,000,000 for any one vehicle. The 
number of seats in the vehicle shall be determined by reference to Sec. 
500.105(b)(3)(vi). See Sec. 500.122 regarding insurance requirements 
where State workers' compensation coverage is provided.
    (c) The insurance to be obtained under paragraph (a) of this section 
shall be issued by an insurance carrier licensed or otherwise authorized 
to do business in the State in which the insurance is obtained.
    (d) The vehicle liability insurance to be obtained under paragraph 
(a) of this section shall be endorsed to insure against liability for 
personal injury to employees whose transportation is not covered by 
workers' compensation insurance, and to persons who are not employees; 
and for property damage as specified in (b) of this section.
    (e) An agricultural employer or agricultural association may 
evidence the purchase of liability insurance which covers the workers 
while being transported, as required under paragraph (a) by obtaining 
and making available upon request to the Department of Labor a completed 
liability certificate of insurance showing that insurance conforming to 
the limits required by paragraph (b) and the coverage required by 
paragraph (d) of this section is in effect. A farm labor contractor must 
obtain such a certificate and provide a copy to the Administrator when 
applying for authorization to transport migrant or seasonal agricultural 
workers.
    (f) With respect to an agricultural employer or agricultural 
association,

[[Page 40]]

in the absence of the insurance certificate referred to under paragraph 
(e) of this section, the Department of Labor will look to the actual 
policy of insurance in determining compliance with the insurance 
requirements.

[48 FR 36741, Aug. 12, 1983, as amended at 57 FR 3905, Jan. 31, 1992; 61 
FR 24866, May 16, 1996]



Sec. 500.122  Adjustments in insurance requirements when workers' 
compensation coverage is provided under State law.

    (a) If a farm labor contractor, agricultural employer or 
agricultural association referred to in Sec. 500.120 is the employer of 
a migrant or seasonal agricultural worker for purposes of a State 
workers' compensation law and such employer provides workers' 
compensation coverage for such worker in the case of bodily injury or 
death as provided by such State law, the following adjustments in the 
insurance requirements relating to having an insurance policy or 
liability bond apply:
    (1) Except as provided in Sec. 500.123, no vehicle liability 
insurance policy or liability bond shall be required of the employer, if 
such worker is transported only under circumstances for which there is 
coverage under such State law.
    (2) A liability insurance policy or liability bond shall be required 
of the employer for circumstances under which coverage for the 
transportation of such worker is not provided under such State law.
    (b) [Reserved]
    (c) A farm labor contractor, agricultural employer or agricultural 
association who is the employer of a migrant or seasonal agricultural 
worker may evidence the issuance of workers' compensation insurance and 
passenger insurance under paragraph (a) of this section by obtaining and 
making available upon request to the Department of Labor:
    (1) A workers' compensation coverage policy of insurance; and
    (2) A certificate of liability insurance covering transportation of 
all passengers who are not employees and of workers whose transportation 
by the employer is not covered by workers' compensation insurance. See 
Sec. 500.121.
    (d) In the absence of the insurance certificate referred to under 
paragraph (c)(2) of this section, the Department of Labor will look to 
the actual policy of insurance or liability bond in determining 
compliance with the Act and these regulations.

[48 FR 36741, Aug. 12, 1983, as amended at 56 FR 30327, July 2, 1991; 61 
FR 24866, May 16, 1996]



Sec. 500.123  Property damage insurance required.

    (a) When a person who is an employer of a migrant or seasonal 
agricultural worker provides workers' compensation insurance which 
protects such worker in the event of bodily injury or death while the 
worker is being transported, such person must also obtain insurance 
providing a minimum of $50,000 for loss or damage in any one accident to 
the property of others (excluding cargo), or evidence of a general 
liability insurance policy that provides the same protection.
    (b) Such person may evidence the purchase of motor carrier insurance 
or other appropriate insurance providing such property damage protection 
by obtaining and making available upon request to the Department of 
Labor a vehicle or other liability certificate of insurance showing that 
such person has obtained the property damage insurance required under 
paragraph (a) of this section.
    (c) In the absence of the insurance certificate referred to in 
paragraph (b) of this section, the Department of Labor will look to the 
actual policy of insurance in determining compliance with paragraph (a) 
of this section.



Sec. 500.124  Liability bond in lieu of insurance policy.

    Financial responsibility in lieu of insurance may be evidenced by a 
liability bond executed as the ``principal'' by the person who will be 
transporting a migrant or seasonal agricultural worker, together with a 
third party identified in the instrument as the ``surety'', to assure 
payment of any liability up to $500,000 for damages to persons or 
property arising out of such person's ownership of, operation of, or 
causing to be operated any vehicle for the

[[Page 41]]

transportation of such worker in connection with the person's business, 
activities, or operations. The ``surety'' shall be one which appears on 
the list contained in Treasury Department Circular 570, or which has 
been approved by the Secretary under the Employee Retirement Income 
Security Act of 1974 (Pub. L. 93-406). Treasury Department Circular 570 
may be obtained from the U.S. Treasury Department, Audit Staff, Bureau 
of Government Financial Operations, Washington, DC 20226.



Sec. 500.125  Qualifications and eligibility of insurance carrier 
or surety.

    A policy of insurance or liability bond does not satisfy the 
financial responsibility of requirements of the Act and these 
regulations unless the insurer or surety furnishing the policy or bond 
to any farm labor contractor, agricultural employer or agricultural 
association is:
    (a) Legally authorized to issue such policies or bonds in the State 
in which the transportation occurs; or
    (b) Legally authorized to issue such policies or bonds in the State 
in which the farm labor contractor, agricultural employer or 
agricultural association has its principal place of business or 
permanent residence and is willing to designate a person upon whom 
process, issued by or under the authority of any court having 
jurisdiction of the subject matter, may be served in any proceeding at 
law or equity brought in any State in which the transportation occurs; 
or
    (c) Legally authorized to issue such policies or bonds in any State 
of the United States and eligible as an excess or surplus lines insurer 
in any State in which business is written and is willing to designate a 
person upon whom process, issued by or under the authority of any court 
having jurisdiction of the subject matter, may be served in any 
proceeding at law or equity brought in any State in which the 
transportation occurs.



Sec. 500.126  Duration of insurance or liability bond.

    Any insurance policy or liability bond which is obtained pursuant to 
the Act shall provide the required coverage for the full period during 
which the person shall be engaged in transporting any migrant or 
seasonal agricultural worker within the meaning of the Act.



Sec. 500.127  Limitations on cancellation of insurance or liability 
bond of registered farm labor contractors.

    Any insurance policy or liability bond obtained by a farm labor 
contractor who is required to register with the Department of Labor 
shall provide that it shall not be cancelled, rescinded, or suspended, 
nor become void for any reason whatsoever during such period in which 
the insurance or liability bond is required by the Act to be effective, 
except upon the expiration of the term for which it is written; or 
unless the parties desiring to cancel shall have first given thirty (30) 
days notice to the Administrator. The notice will include a statement 
setting forth the reason for cancellation, rescission, suspension, or 
any other termination of such policy or bond. The notice shall be in 
writing and forwarded via certified or registered mail, addressed to the 
Administrator of the Wage and Hour Division, U.S. Department of Labor, 
Washington, DC 20210. Said thirty (30) days notice shall commence to run 
from the date notice is actually received by the Administrator.



Sec. 500.128  Cancellation of insurance policy or liability bond not
relief from insurance requirements.

    Cancellation, rescission, suspension, or any other termination of 
any insurance policy or liability bond required by the Act does not 
relieve a person who transports or causes to be transported any migrant 
or seasonal agricultural worker in any vehicle under

his ownership or control of the responsibility to comply with the 
insurance requirements specified in Sec. Sec. 500.121, 500.122 and 
500.123.

                        Housing Safety and Health



Sec. 500.130  Application and scope of safety and health requirement.

    (a) Each person who owns or controls a facility or real property 
which is used as housing for any migrant agricultural worker must ensure 
that the facility or real property complies with

[[Page 42]]

all substantive Federal and State safety and health standards applicable 
to such housing. If more than one person is involved in providing the 
housing for any migrant agricultural worker (for example, when an 
agricultural employer owns it and a farm labor contractor or any other 
person operates it), both persons are responsible for ensuring that the 
facility or real property meets the applicable Federal and State housing 
standards.
    (b) A farm labor contractor, agricultural employer, agricultural 
association or any other person is deemed an ``owner'' of a housing 
facility or real property if said person has a legal or equitable 
interest in such facility or real property.
    (c) A farm labor contractor, agricultural employer, agricultural 
association or any other person is in ``control'' of a housing facility 
or real property, regardless of the location of such facility, if said 
person is in charge of or has the power or authority to oversee, manage, 
superintend or administer the housing facility or real property either 
personally or through an authorized agent or employee, irrespective of 
whether compensation is paid for engaging in any of the aforesaid 
capacities.
    (d) The Occupational Safety and Health Administration (OSHA) is the 
agency of the U.S. Department of Labor which administers the 
Occupational Safety and Health Act (29 U.S.C. 651 et seq.) which 
provides for the establishment of safety and health standards generally.
    (e) The Employment and Training Administration (ETA) is the agency 
of the U.S. Department of Labor which administers the U.S. Employment 
Service pursuant to the Wagner-Peyser Act (29 U.S.C. 49 et seq.) 
including the interstate clearance order system.



Sec. 500.131  Exclusion from housing safety and health requirement.

    The housing safety and health requirements do not apply to any 
person who, in the ordinary course of that person's business, regularly 
provides housing on a commercial basis to the general public and who 
provides housing to any migrant agricultural worker of the same 
character and on the same or comparable terms and conditions as provided 
to the general public. Migrant labor housing shall not be brought within 
this exception simply by offering lodging to the general public.



Sec. 500.132  Applicable Federal standards: ETA and OSHA housing standards.

    (a) The Secretary has determined that the applicable Federal housing 
standards are the standards promulgated by the Employment and Training 
Administration, at 20 CFR 654.404 et seq. and the standards promulgated 
by the Occupational Safety and Health Administration, at 29 CFR 
1910.142. Except as provided in Sec. 500.131, all migrant housing is 
subject to either the ETA standards or the OSHA standards, as follows:
    (1) A person who owns or controls a facility or real property to be 
used for housing any migrant agricultural worker, the construction of 
which was begun on or after April 3, 1980, and which was not under a 
contract for construction as of March 4, 1980, shall comply with the 
substantive Federal safety and health standards promulgated by OSHA at 
29 CFR 1910.142. These OSHA standards are enforceable under MSPA, 
irrespective of whether housing is, at any particular point in time, 
subject to inspection under the Occupational Safety and Health Act.
    (2) A person who owns or controls a facility or real property to be 
used for housing any migrant agricultural worker which was completed or 
under construction prior to April 3, 1980, or which was under a contract 
for construction prior to March 4, 1980, may elect to comply with either 
the substantive Federal safety and health standards promulgated by OSHA 
at 29 CFR 1910.142 or the standards promulgated by ETA at 20 CFR 654.404 
et seq. The ETA standards were established to provide housing 
requirements for migrant housing used by an employer obtaining migrant 
workers through the U.S. Employment Service. The owner or operator of 
such housing may continue to rely on those standards, rather than OSHA 
standards, even if the housing is not currently being provided pursuant 
to a USES job placement program.

[[Page 43]]



Sec. 500.133  Substantive Federal and State safety and health standards
defined.

    Substantive safety and health standards include, but are not limited 
to, those that provide fire prevention, an adequate and sanitary supply 
of water,

plumbing maintenance, structurally sound construction of buildings, 
effective maintenance of those buildings, provision of adequate heat as 
weather conditions require, and reasonable protections for inhabitants 
from insects and rodents. Substantive housing standards do not include 
technical or procedural violations of safety and health standards.



Sec. 500.134  Compliance with State standards.

    Compliance with the substantive Federal housing safety and health 
standards shall not excuse noncompliance with applicable substantive 
State housing safety and health standards.



Sec. 500.135  Certificate of housing inspection.

    (a) Except as provided in paragraph (c) of this section, a facility 
or real property to be used for housing a migrant agricultural worker 
shall not be occupied by any migrant agricultural worker unless either a 
State or local health authority or other appropriate agency, including a 
Federal agency, has certified that the facility or real property meets 
applicable safety and health standards.
    (b) Except as provided in paragraph (c) of this section, the person 
who owns or controls a facility or real property shall not permit it to 
be occupied by any migrant agricultural worker unless a copy of a 
certificate of occupancy from the State, local or Federal agency which 
conducted the housing safety and health inspection is posted at the site 
of the facility or real property. The original of such certificate of 
occupancy shall be retained by such person for three years and made 
available for inspection in accordance with section 512 of the Act.
    (c) If a request for an inspection of a facility or real property is 
made to the appropriate State, local or Federal agency at least forty-
five (45) days prior to the date on which it is to be occupied by a 
migrant agricultural worker but the agency has not conducted an 
inspection by such date, the facility or property may be occupied by 
migrant agricultural workers unless prohibited by State law.
    (d) Receipt and posting of a certificate of occupancy as provided 
under paragraph (b) of this section, or the failure of an agency to 
inspect a facility or property within the forty-five (45) day time 
period, shall not relieve the person who owns or controls a facility or 
property from the responsibility of ensuring that such facility or 
property meets the applicable State and Federal safety and health 
standards. Once such facility or property is occupied, such person shall 
supervise and continually maintain such facility or property so as to 
ensure that it remains in compliance with the applicable safety and 
health standards.



                          Subpart E_Enforcement



Sec. 500.140  General.

    Whenever the Secretary believes that the Act or these regulations 
have been violated he shall take such action and institute such 
proceedings as he deems appropriate, including (but not limited to) the 
following:
    (a) Recommend to the Attorney General the institution of criminal 
proceedings against any person who willfully and knowingly violates the 
Act or these regulations;
    (b) Recommend to the Attorney General the institution of criminal 
proceedings against any farm labor contractor who recruits, hires, 
employs, or uses, with knowledge, the services of any illegal alien, as 
defined in Sec. 500.20(n) of these regulations, if such farm labor 
contractor has:
    (1) Been refused issuance or renewal of, or has failed to obtain, a 
Certificate of Registration, or
    (2) Is a farm labor contractor whose certificate has been suspended 
or revoked;
    (c) Petition any appropriate District Court of the United States for 
temporary or permanent injunctive relief to prohibit violation of the 
Act or these regulations by any person;

[[Page 44]]

    (d) Assess a civil money penalty against any person for any 
violation of the Act or these regulations;
    (e) Refer any unpaid civil money penalty which has become a final 
and unappealable order of the Secretary or a final judgment of a court 
in favor of the Secretary to the Attorney General for recovery;
    (f) Revoke or suspend or refuse to issue or renew any Certificate of 
Registration authorized by the Act or these regulations;
    (g) Deny the facilities and services afforded by the Wagner-Peyser 
Act to any farm labor contractor who refuses or fails to produce, when 
asked, a valid Certificate of Registration;
    (h) Institute action in any appropriate United States District Court 
against any person who, contrary to the provisions of section 505(a) of 
the Act, discriminates against any migrant or seasonal agricultural 
worker.



Sec. 500.141  Concurrent actions.

    The taking of any one of the actions referred to in Sec. 500.140 
shall not be a bar to the concurrent taking of any other action 
authorized by the Act and these regulations.



Sec. 500.142  Representation of the Secretary.

    (a) Except as provided in section 518(a) of title 28, U.S. Code, 
relating to litigation before the Supreme Court, the Solicitor of Labor 
may appear for and represent the Secretary in any civil litigation 
brought under the Act; but all such litigation shall be subject to the 
direction and control of the Attorney General.
    (b) The Solicitor of Labor, through the authorized representatives 
identified in Sec. 500.231, shall represent the Secretary in all 
administrative hearings under the Act and these regulations.



Sec. 500.143  Civil money penalty assessment.

    (a) A civil money penalty may be assessed for each violation of the 
Act or these regulations.
    (b) In determining the amount of penalty to be assessed for any 
violation of the Act or these regulations the Secretary shall consider 
the type of violation committed and other relevant factors, including 
but not limited to the following:
    (1) Previous history of violation or violations of this Act and the 
Farm Labor Contractor Registration Act;
    (2) The number of workers affected by the violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made in good faith to comply with the Act (such as when 
a joint employer agricultural employer/association provides employment-
related benefits which comply with applicable law to agricultural 
workers, or takes reasonable measures to ensure farm labor contractor 
compliance with legal obligations);
    (5) Explanation of person charged with the violation or violations;
    (6) Commitment to future compliance, taking into account the public 
health, interest or safety, and whether the person has previously 
violated the Act;
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury to 
the workers.

[48 FR 36741, Aug. 12, 1983, as amended at 62 FR 11748, Mar. 12, 1997]



Sec. 500.144  Civil money penalties--payment and collection.

    Where the assessment is directed in a final order by the Secretary 
or in a final judgment issued by a United States District Court, the 
amount of the penalty is immediately due and payable to the United 
States Department of Labor. The person assessed such penalty shall remit 
promptly the amount thereof, as finally determined, to the Secretary by 
certified check or by money order, made payable to the order of ``Wage 
and Hour Division, Labor.'' The remittance shall be delivered or mailed 
either to the Administrator, in Washington, DC, or to the Wage and Hour 
Division Regional Office for the area in which the violations occurred.



Sec. 500.145  Registration determinations.

    Section 500.51 set forth the standards under which the Secretary may 
refuse to issue or to renew, or may suspend or revoke, a Certificate of 
Registration

[[Page 45]]

(including a Farm Labor Contractor Employee Certificate of 
Registration).



Sec. 500.146  Continuation of matters involving violations of FLCRA.

    (a) Any matter involving the revocation, suspension, or refusal to 
renew a Certification of Registration issued under FLCRA and any matter 
involving the refusal to issue a certificate authorized under FLCRA 
shall continue through final administrative determination in accordance 
with the provisions of FLCRA and the regulations issued thereunder.
    (b) Any matter involving the assessment of a civil money penalty for 
a violation of FLCRA will continue through final administrative 
determination in accordance with the provisions of FLCRA and the 
regulations issued thereunder.
    (c) The rules of practice for implementation of administrative 
enforcement for violations of FLCRA referred to the Office of the Chief 
Administrative Law Judge on or after April 14, 1983, shall be the rules 
of practice provided in Sec. Sec. 500.220 through 500.262 and the 
official record shall be maintained in accordance with Sec. Sec. 
500.270 and 500.271 of these regulations.
    (d) The rules of practice for implementation of administrative 
enforcement for violations of FLCRA referred to the Office of the Chief 
Administrative Law Judge prior to April 14, 1983 shall be the rules of 
practice provided in 29 CFR 40.201 through 40.262.



Sec. 500.147  Continuation of matters involving violations of section
106 of MSPA.

    Any matter involving the revocation, suspension, refusal to issue or 
to renew a certificate of registration or any matter involving the 
assessment of a civil money penalty, for a violation of section 106 of 
MSPA, which occurred prior to June 1, 1987, shall continue through final 
administrative determination in accordance with the provisions of MSPA 
and these regulations.

[54 FR 13329, Mar. 31, 1989]

               Agreements With Federal and State Agencies



Sec. 500.155  Authority.

    Section 513 of the Act authorizes the Secretary to enter into 
agreements with Federal and State agencies (a) to use their facilities 
and services, (b) to delegate (subject to subsection 513(b) of the Act) 
to Federal and State agencies such authority (other than rulemaking) as 
he determines may be useful in carrying out the purposes of the Act, and 
(c) to allocate or transfer funds to, or otherwise pay or reimburse, 
such agencies for expenses incurred pursuant to paragraphs (a) or (b) of 
this section.



Sec. 500.156  Scope of agreements with Federal agencies.

    Every agreement between the Secretary and any other Federal agency 
under the authority referred to in Sec. 500.155 of this part shall 
contain terms and conditions mutually agreeable to both parties, and 
shall contain such delegation of authority as the Secretary deems 
useful.



Sec. 500.157  Scope of agreements with State agencies.

    (a) Every agreement between the Secretary and any State agency under 
the authority referred to in Sec. 500.155 of this part shall be in 
writing.
    (b) Any delegation to a State agency by the Secretary under such 
authority shall be made pursuant to approval of a written State plan 
submitted in accordance with Sec. 500.159 which shall: (1) Include a 
description of each function to be performed, the method of performing 
each such function, and the resources to be devoted to the performance 
of each such function, (2) provide assurances satisfactory to the 
Secretary that the State agency will comply with its description under 
paragraph (b)(1) of this section and that the State agency's performance 
of the delegated functions will be at least comparable to the 
performance of such functions by the Department of Labor; and (3) 
contain a certification of the Attorney General of such State, or, if 
the Attorney General is not authorized to make such a statement, the 
State official who is so authorized, that an

[[Page 46]]

agreement pursuant to such State plan is valid under the laws of that 
State.



Sec. 500.158  Functions delegatable.

    The Secretary may delegate to the State such functions as he deems 
useful including the
    (a) Receipt, handling and processing of applications for 
certificates of registration;
    (b) Issuance of certificates of registration;
    (c) Conduct of various investigations; and
    (d) Enforcement of the Act.



Sec. 500.159  Submission of plan.

    (a) Any State agency desiring to enter into an agreement pursuant to 
section 513 of the Act shall submit a State plan in such form and in 
such detail as the Secretary shall direct.
    (b) Each such plan shall include, at least, the following:
    (1) The delegation sought;
    (2) The State authority for performing such delegated functions;
    (3) A description of the manner in which the State intends to carry 
out such functions; and
    (4) The estimated cost of carrying out such functions.



Sec. 500.160  Approved State plans.

    (a) The Secretary, in accordance with the authority referred to in 
Sec. 500.155 of this part, has delegated the following functions to the 
States listed herein below:

------------------------------------------------------------------------
                State                              Function
------------------------------------------------------------------------
Florida.............................  Receive, handle, process
                                       applications and issue
                                       certificates of registration.
New Jersey..........................  Receive, handle, process
                                       applications and issue
                                       certificates of registration.
Virginia............................  Receive, handle, process
                                       applications and issue
                                       certificates of registration.
------------------------------------------------------------------------

    (b) Every State agreement entered into pursuant to the authority 
referred to in Sec. 500.155 of this part shall be available for public 
inspection and copying in accordance with 29 CFR part 70.
    (c) Every enumerated delegated function shall be valid in all 
states.

[48 FR 36741, Aug. 12, 1983, as amended at 49 FR 5112, Feb. 10, 1984; 50 
FR 42163, Oct. 18, 1985]



Sec. 500.161  Audits.

    The Secretary shall conduct audits as he deems necessary of the 
State plans, but on not less than an annual basis.



Sec. 500.162  Reports.

    The Secretary shall require such reports as he deems necessary of 
activities conducted pursuant to State plans, but on not less than an 
annual basis.

                         Central Public Registry



Sec. 500.170  Establishment of registry.

    The Administrator shall establish a central public registry of all 
persons issued a Certificate of Registration or a Farm Labor Contractor 
Employee Certificate. The central public registry shall be available at 
the Regional Offices of the Wage and Hour Division and its National 
Office in Washington, DC. Information filed therein shall be made 
available upon request. Requests for information contained in the 
registry may also be directed by mail to the Administrator, Wage and 
Hour Division. Attn: MSPA, U.S. Department of Labor, Washington, DC 
20210. Alternatively, requests for registry information may be made by 
telephone by calling 1-866-4US-WAGE (1-866-487-9243), a toll-free 
number, during the hours of 8 a.m. to 5 p.m., in your time zone, Monday 
through Friday.

[67 FR 76986, Dec. 16, 2002]



                  Subpart F_Administrative Proceedings

                                 General



Sec. 500.200  Establishment of procedures and rules of practice.

    This subpart codifies and establishes the procedures and rules of 
practice necessary for the administrative enforcement of the Act.



Sec. 500.201  Applicability of procedures and rules.

    (a) The procedures and rules contained herein prescribe the 
administrative process necessary for a determination:

[[Page 47]]

    (1) To suspend or revoke, or to refuse to issue or renew, a 
Certificate of Registration authorized under the Act and these 
regulations; and
    (2) To impose an assessment of civil money penalties for violations 
of the Act or of these regulations.
    (b) The procedures and rules contained herein also specify the 
administrative responsibility under section 102(5) of the Act with 
regard to a designation by a court of the Secretary as an agent of an 
applicant for a certificate of registration in any action against such 
applicant, if said applicant has left the jurisdiction in which the 
action is commenced or otherwise has become unavailable to accept 
service.

                     Procedures Relating to Hearing



Sec. 500.210  Written notice of determination required.

    (a) Whenever the Secretary determines to suspend or revoke, or to 
refuse to issue or renew, a Certificate of Registration, the applicant 
for or the holder of such certificate shall be notified in writing of 
such determination.
    (1) In cases involving a determination relating to a Certificate of 
Registration applied for by, or issued to, a farm labor contractor, 
written notice shall also be given to every applicant for or holder of a 
Certificate of Registration as an employee of such contractor.
    (2) In cases involving a determination relating to a Farm Labor 
Contractor Employee Certificate of Registration, written notice shall 
also be given to the farm labor contractor of such applicant or 
certificate holder.
    (b) Whenever the Secretary determines to assess a civil money 
penalty for a violation of the Act or these regulations, the person 
against whom such penalty is assessed shall be notified in writing of 
such determination.



Sec. 500.211  Contents of notice.

    The notice required by Sec. 500.210 shall:
    (a) Set forth the determination of the Secretary and the reason or 
reasons therefor.
    (b) Set forth, in the case of a civil money penalty assessment:
    (1) A description of each violation; and
    (2) The amount assessed for each violation.
    (c) Set forth the right to request a hearing on such determination.
    (d) Inform any affected person or persons that in the absence of a 
timely request for a hearing, the determination of the Secretary shall 
become final and unappealable.
    (e) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 500.212.



Sec. 500.212  Request for hearing.

    (a) Any person desiring to request an administrative hearing on a 
determination referred to in Sec. 500.210 shall make such request in 
writing to the official who issued the determination, at the Wage and 
Hour Division address appearing on the determination notice. Such 
request must be made no later than thirty (30) days after the date of 
issuance of the notice referred to in Sec. 500.210.
    (b) The request for such hearing shall be delivered in person or by 
mail to the Wage and Hour Division office at the address appearing on 
the determination notice upon which the request for a hearing is based, 
within the time set forth in paragraph (a) of this section. For the 
affected person's protection, if the request is by mail, it should be by 
certified mail.
    (c) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be typewritten or legibly written on size 8\1/
2\x11 paper;
    (2) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (3) State the specific reason or reasons why the person requesting 
the hearing believes such determination is in error;
    (4) Be signed by the person making the request or by an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.

[[Page 48]]

    (d) Civil money penalties under FLCRA shall be treated as follows:
    (1) Determinations to assess civil money penalties for violations of 
FLCRA made prior to April 14, 1983 shall continue until a final 
administrative determination shall have been made in accordance with 29 
CFR part 40.
    (2) Determinations to assess civil money penalties for violations of 
FLCRA arising prior to April 14, 1983, made on or after April 14, 1983, 
shall continue until a final administrative determination shall have 
been made in accordance with these regulations.

[48 FR 36741, Aug. 12, 1983, as amended at 54 FR 13329, Mar. 31, 1989; 
57 FR 5942, Feb. 18, 1992; 71 FR 16665, Apr. 3, 2006]

               Procedures Relating to Substituted Service



Sec. 500.215  Change of address.

    (a) Pursuant to section 105(1) of the Act, every holder of a 
Certificate of Registration shall notify the Secretary within thirty 
(30) days of each change of permanent place of residence. Said persons 
may also furnish additional mailing addresses.
    (b) The notification required in paragraph (a) of this section shall 
be in writing, by certified mail and addressed to the Administrator, 
Wage and Hour Division, Employment Standards Administration, 200 
Constitution Avenue, NW., Washington, DC 20210.
    (c) Such change of address shall be deemed effective upon receipt by 
the Administrator, unless a later date is specified in the notice.



Sec. 500.216  Substituted service.

    (a) Pursuant to section 102(5) of the Act, the Secretary, when so 
designated by a court, shall accept service of summons in any action 
arising under the Act or these regulations against any applicant for or 
any holder of a Certificate of Registration who has left the 
jurisdiction in which such action is commenced or otherwise has become 
unavailable to accept such service.
    (b) Acceptance of service of summons referred to in paragraph (a) of 
this section shall be under such terms and conditions as are set by the 
court in its designation of the Secretary for the purpose of section 
102(5) of the Act.
    (c) To be effective, such service shall be made by delivery 
personally or by certified mail, either to the Administrator of the Wage 
and Hour Division in Washington, DC, or to the Administrator's 
authorized representative located in the area in which the action has 
been commenced.



Sec. 500.217  Responsibility of Secretary for service.

    Upon receipt of any substituted service, as described in Sec. 
500.216, the same shall be forwarded by certified mail to the permanent 
address furnished by the person for whom service is accepted and to such 
other address as may be determined appropriate by the Secretary. Such 
mailing shall complete the Secretary's responsibility in connection with 
the substituted service requirement of the Act.

                            Rules of Practice



Sec. 500.219  General.

    Except as specifically provided in these regulations, the ``Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges'' established by the Secretary at 29 CFR part 
18 shall apply to administrative proceedings under MSPA.

[48 FR 36741, Aug. 21, 1983. Redesignated at 54 FR 13329, Mar. 31, 1989]



Sec. 500.220  Service of determinations and computation of time.

    (a) Service of determinations to suspend, revoke, refuse to issue, 
or refuse to renew a certificate of registration or to assess a civil 
money penalty shall be made by personal service to the individual, 
officer of a corporation, or attorney of record or by mailing the 
determination to the last known address of the individual, officer, or 
attorney. If done by certified mail, service is complete upon mailing. 
If done by regular mail or in person, service is complete upon receipt 
by the addressee or the addressee's representative;
    (b) Time will be computed beginning with the day following the 
action and

[[Page 49]]

includes the last day of the period unless it is a Saturday, Sunday, or 
Federally observed holiday, in which case the time period includes the 
next business day; and
    (c) When a request for hearing is filed by mail, five (5) days shall 
be added to the prescribed period during which the party has the right 
to request a hearing on the determination.

[54 FR 13329, Mar. 31, 1989]



Sec. 500.221  Commencement of proceeding.

    Each administrative proceeding permitted under the Act and these 
regulations shall be commenced upon receipt of a timely request for 
hearing filed in accordance with Sec. 500.212.



Sec. 500.222  Designation of record.

    Except as provided in paragraph (c) of this section:
    (a) Each administrative proceeding instituted under the Act and 
these regulations shall be identified of record by a number preceded by 
the year and the letters ``MSPA'' and followed by one or more of the 
following designations:
    (1) Proceedings involving the ``refusal to issue or to renew, or to 
suspend or to revoke Certificate of Registration'' shall be designated 
as ``R''.
    (2) Proceedings involving the ``assessment of civil money 
penalties'' shall be designated as ``P''.
    (3) Proceedings involving both Certificate of Registration and 
assessment of civil money penalties shall be designated as ``R and P''.
    (b) The number, letter(s), and designation assigned to each such 
proceeding shall be clearly displayed on each pleading, motion, brief, 
or other formal document filed and docketed of record.
    (c) Each administrative proceeding involving violations of FLCRA 
prior to April 14, 1983 and filed with the Office of the Chief 
Administrative Law Judge on or after April 14, 1983, shall be identified 
of record by a number preceded by the year and the letters ``FLCRA-
MSPA'' and followed by one or more of the letter designations provided 
in paragraphs (a)(1) through (a)(3) of this section, i.e., (year) -
FLCRA-MSPA-()-(R and/or P).



Sec. 500.223  Caption of proceeding.

    (a) Each administrative proceeding instituted under the Act and 
these regulations shall be captioned in the name of the person 
requesting such hearing, and shall be styled as follows:

In The Matter of ----, Respondent.

    (b) For the purposes of such administrative proceeding the 
``Secretary of Labor'' shall be identified as plaintiff and the person 
requesting such hearing shall be named as respondent.

                          Referral for Hearing



Sec. 500.224  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 500.212, the Secretary, by the Associate 
Solicitor for the Division of Fair Labor Standards or by the Regional 
Solicitor for the Region in which the action arose, shall, by Order of 
Reference, promptly refer an authenticated copy of the notice of 
administrative determination complained of, and the original or a 
duplicate copy of the request for hearing signed by the person 
requesting such hearing or by the authorized representative of such 
person, to the Chief Administrative Law Judge, for a determination in an 
administrative proceeding as provided herein. The notice of 
administrative determination and request for hearing shall be filed of 
record in the Office of the Chief Administrative Law Judge and shall, 
respectively, be given the effect of a complaint and answer thereto for 
purposes of the administrative proceeding, subject to any amendment that 
may be permitted under these regulations.
    (b) In cases involving a denial, suspension, or revocation of a 
Certificate of Registration (Farm Labor Contractor Certificate; Farm 
Labor Contractor Employee Certificate) or ``certificate action,'' 
including those cases where the farm labor contractor has requested a 
hearing on civil money penalty(ies) as well as on the certificate 
action, the date of the hearing shall be not more than sixty (60) days 
from the date on which the Order of Reference is filed. No request for 
postponement

[[Page 50]]

shall be granted except for compelling reasons.
    (c) A copy of the Order of Reference, together with a copy of these 
regulations, shall be served by counsel for the Secretary upon the 
person requesting the hearing, in the manner provided in 29 CFR 18.3.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]



Sec. 500.225  Notice of docketing.

    The Chief Administrative Law Judge shall promptly notify the parties 
of the docketing of each matter.



Sec. 500.226  Service upon attorneys for the Department of Labor--
number of copies.

    Two copies of all pleadings and other documents required for any 
administrative proceeding provided herein shall be served on the 
attorneys for the Department of Labor. One copy shall be served on the 
Associate Solicitor, Division of Fair Labor Standards, Office of the 
Solicitor, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, and one copy on the Attorney representing the 
Department in the proceeding.

               Procedures Before Administrative Law Judge



Sec. 500.231  Appearances; representation of the Department of Labor.

    The Associate Solicitor, Division of Fair Labor Standards, and such 
other counsel, as designated, shall represent the Secretary in any 
proceeding under these regulations.



Sec. 500.232  Consent findings and order.

    (a) General. At any time after the commencement of a proceeding 
under this part, but prior to the reception of evidence in any such 
proceeding, a party may move to defer the receipt of any evidence for a 
reasonable time to permit negotiation of an agreement containing consent 
findings and an order disposing of the whole or any part of the 
proceeding. The allowance of such deferment and the duration thereof 
shall be at the discretion of the Administrative Law Judge, after 
consideration of the nature of the proceeding, the requirements of the 
public interest, the representations of the parties, and the probability 
of an agreement being reached which will result in a just disposition of 
the issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice of administrative determination (or amended 
notice, if one is filed), and the agreement;
    (3) A waiver of any further procedural steps before the 
Administrative Law Judge; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives or their 
counsel may:
    (1) Submit the proposed agreement for consideration by the 
Administrative Law Judge; or
    (2) Inform the Administrative Law Judge that agreement cannot be 
reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
Administrative Law Judge, within thirty (30) days thereafter, shall, if 
satisfied with its form and substance, accept such agreement by issuing 
a decision based upon the agreed findings.

                         Post-Hearing Procedures



Sec. 500.262  Decision and order of Administrative Law Judge.

    (a) The Administrative Law Judge shall prepare, as promptly as 
practicable after the expiration of the time set for filing proposed 
findings and related papers a decision on the issues referred by the 
Secretary.
    (b) In cases involving certificate actions as described in Sec. 
500.224(b), the Administrative Law Judge shall issue a decision within 
ninety (90) calendar days after the close of the hearing.

[[Page 51]]

    (c) The decision of the Administrative Law Judge shall be limited to 
a determination whether the respondent has violated the Act or these 
regulations, and the appropriateness of the remedy or remedies imposed 
by the Secretary. The Administrative Law Judge shall not render 
determinations on the legality of a regulatory provision or the 
constitutionality of a statutory provision.
    (d) The decision of the Administrative Law Judge, for purposes of 
the Equal Access to Justice Act (5 U.S.C. 504), shall be limited to 
determinations of attorney fees and/or other litigation expenses in 
adversary proceedings requested pursuant to Sec. 500.212 which involve 
the modification, suspension or revocation of a Certificate of 
Registration issued under the Act and these Regulations, and/or the 
imposition of a civil money penalty assessed for a violation of the Act 
or these Regulations. The Administrative Law Judge shall have no power 
or authority to award attorney fees and/or other litigation expenses 
pursuant to the provisions of the Equal Access to Justice Act or 
Regulations issued thereunder in any proceeding under MSPA or these 
Regulations involving the refusal to issue or renew a Certificate of 
Registration.
    (e) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may be to affirm, deny, reverse, 
or modify, in whole or in part, the determination of the Secretary. The 
reason or reasons for such order shall be stated in the decision.
    (f) The Administrative Law Judge shall transmit to the Chief 
Administrative Law Judge the entire record including the decision. The 
Chief Administrative Law Judge shall serve copies of the decision on 
each of the parties.
    (g) The decision when served shall constitute the final order of the 
Secretary unless the Secretary, pursuant to section 103(b)(2) or section 
503(b)(2) of the Act, modifies or vacates the decision and order of the 
Administrative Law Judge.
    (h) Except as provided in Sec. Sec. 500.263 through 500.268, the 
administrative remedies available to the parties under the Act will be 
exhausted upon service of the decision of the Administrative Law Judge.

[48 FR 36741, Aug. 12, 1983, as amended at 61 FR 24866, May 16, 1996]

      Modification or Vacation of Order of Administrative Law Judge



Sec. 500.263  Authority of the Secretary.

    The Secretary may modify or vacate the Decision and Order of the 
Administrative Law Judge whenever he concludes that the Decision and 
Order:
    (a) Is inconsistent with a policy or precedent established by the 
Department of Labor,
    (b) Encompasses determinations not within the scope of the authority 
of the Administrative Law Judge,
    (c) Awards attorney fees and/or other litigation expenses pursuant 
to the Equal Access to Justice Act which are unjustified or excessive, 
or
    (d) Otherwise warrants modifying or vacating.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.264  Procedures for initiating review.

    (a) Within twenty (20) days after the date of the decision of the 
Administrative Law Judge, the respondent, the Administrator, or any 
other party desiring review thereof, may file with the Secretary an 
original and two copies of a petition for issuance of a Notice of Intent 
as described under Sec. 500.265. The petition shall be in writing and 
shall contain a concise and plain statement specifying the grounds on 
which review is sought. A copy of the Decision and Order of the 
Administrative Law Judge shall be attached to the petition.
    (b) Copies of the petition shall be served upon all parties to the 
proceeding and on the Chief Administrative Law Judge.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.265  Implementation by the Secretary.

    (a) Whenever, on the Secretary's own motion or upon acceptance of a 
party's petition, the Secretary believes that a

[[Page 52]]

Decision and Order may warrant modifying or vacating, the Secretary 
shall issue a Notice of Intent to modify or vacate.
    (b) The Notice of Intent to Modify or Vacate a Decision and Order 
shall specify the issue or issues to be considered, the form in which 
submission shall be made (i.e., briefs, oral argument, etc.), and the 
time within which such presentation shall be submitted. The Secretary 
shall closely limit the time within which the briefs must be filed or 
oral presentations made, so as to avoid unreasonable delay.
    (c) The Notice of Intent shall be issued within thirty (30) days 
after the date of the Decision and Order in question.
    (d) Service of the Notice of Intent shall be made upon each party to 
the proceeding, and upon the Chief Administrative Law Judge, in person 
or by certified mail.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.266  Responsibility of the Office of Administrative Law Judges.

    Upon receipt of the Secretary's Notice of Intent to Modify or Vacate 
a Decision and Order of an Administrative Law Judge, the Chief 
Administrative Law Judge shall, within fifteen (15) days, index, certify 
and forward a copy of the complete hearing record to the Secretary.

[48 FR 36741, Aug. 21, 1983. Redesignated at 54 FR 13330, Mar. 31, 1989]



Sec. 500.267  Filing and service.

    (a) Filing. All documents submitted to the Secretary shall be filed 
with the Secretary of Labor, U.S. Department of Labor, Washington, DC 
20210.
    (b) Number of copies. An original and two copies of all documents 
shall be filed.
    (c) Computation of time for delivery by mail. Documents are not 
deemed filed with the Secretary until actually received by that office. 
All documents, including documents filed by mail, must be received by 
the Secretary either on or before the due date.
    (d) Manner and proof of service. A copy of all documents filed with 
the Secretary shall be served upon all other parties involved in the 
proceeding. Service under this section shall be by personal delivery or 
by mail. Service by mail is deemed effected at the time of mailing to 
the last known address.

[54 FR 13330, Mar. 31, 1989]



Sec. 500.268  Final decision of the Secretary.

    (a) The Secretary's final Decision and Order shall be issued within 
120 days from the notice of intent granting the petition, except that in 
cases involving the review of an Administrative Law Judge decision in a 
certificate action as described in Sec. 500.224(b), the Secretary's 
final decision shall be issued within ninety (90) days from the date 
such notice. The Secretary's Decision and Order shall be served upon all 
parties and the Chief Administrative Law Judge, in person or by 
certified mail.
    (b) Upon receipt of an Order of the Secretary modifying or vacating 
the Decision and Order of an Administrative Law Judge, the Chief 
Administrative Law Judge shall substitute such Order for the Decision 
and Order of the Administrative Law Judge.

[54 FR 13330, Mar. 31, 1989, as amended at 61 FR 24866, May 16, 1996]



Sec. 500.269  Stay pending decision of the Secretary.

    (a) The filing of a petition seeking review by the Secretary of a 
Decision and Order of an Administrative Law Judge, pursuant to Sec. 
500.264, does not stop the running of the thirty-day time limit in which 
respondent may file an appeal to obtain a review in the United States 
District Court of an administrative order, as provided in section 
103(b)(2) or section 503(b)(2) of the Act, unless the Secretary issues a 
Notice of Intent pursuant to Sec. 500.265.
    (b) In the event a respondent has filed a notice of appeal of the 
Administrative Law Judge's Decision and Order in a United States 
District Court and the Secretary issues a Notice of Intent, the 
Secretary will seek a stay of proceedings in the Court until such time 
as the Secretary issues the final decision, as provided in Sec. 
500.268.
    (c) Where the Secretary has issued a Notice of Intent, the time for 
filing an appeal under sections 103(b)(2) or 503(b)(2) of the Act shall 
commence

[[Page 53]]

from the date of the issuance of the Secretary's final decision, as 
provided in Sec. 500.268.

[54 FR 13330, Mar. 31, 1989]

                                 Record



Sec. 500.270  Retention of official record.

    The official record of every completed administrative hearing 
provided by these regulations shall be maintained and filed under the 
custody and control of the Chief Administrative Law Judge.



Sec. 500.271  Certification of official record.

    Upon receipt of timely notice of appeal to a United States District 
Court pursuant to section 103(c) or 503(c) of the Act, the Chief 
Administrative Law Judge shall promptly certify and file with the 
appropriate United States District Court, a full, true, and correct copy 
of the entire record, including the transcript of proceedings.



PART 501_ENFORCEMENT OF CONTRACTUAL OBLIGATIONS FOR TEMPORARY ALIEN
AGRICULTURAL WORKERS ADMITTED UNDER SECTION 218 OF THE IMMIGRATION 

AND NATIONALITY ACT--Table of Contents



                      Subpart A_General Provisions

Sec.
501.0 Introduction.
501.1 Purpose and scope.
501.2 Coordination between Federal agencies.
501.3 Definitions.
501.4 Discrimination prohibited.
501.5 Waiver of rights prohibited.
501.6 Investigation authority of Secretary.
501.7 Cooperation with Federal officials.
501.8 Accuracy of information, statements, data.
501.9 Surety bond.

                          Subpart B_Enforcement

501.15 Enforcement.
501.16 Sanctions and remedies--general.
501.17 Concurrent actions.
501.18 Representation of the Secretary.
501.19 Civil money penalty assessment.
501.20 Debarment and revocation.
501.21 Failure to cooperate with investigations.
501.22 Civil money penalties--payment and collection.

                  Subpart C_Administrative Proceedings

501.30 Applicability of procedures and rules.

                     Procedures Relating To Hearing

501.31 Written notice of determination required.
501.32 Contents of notice.
501.33 Request for hearing.

                            Rules of Practice

501.34 General.
501.35 Commencement of proceeding.
501.36 Caption of proceeding.

                          Referral for Hearing

501.37 Referral to Administrative Law Judge.
501.38 Notice of docketing.
501.39 Service upon attorneys for the Department of Labor--number of 
          copies.

               Procedures Before Administrative Law Judge

501.40 Consent findings and order.

                         Post-Hearing Procedures

501.41 Decision and order of Administrative Law Judge.

              Review of Administrative Law Judge's Decision

501.42 Procedures for initiating and undertaking review.
501.43 Responsibility of the Office of Administrative Law Judges (OALJ).
501.44 Additional information, if required.
501.45 Final decision of the Administrative Review Board.

                                 Record

501.46 Retention of official record.
501.47 Certification.

    Authority: 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c), and 1188.

    Source: 75 FR 6978, Feb. 12, 2010, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 501.0  Introduction.

    The regulations in this part cover the enforcement of all 
contractual obligations, including requirements under 8 U.S.C. 1188 and 
20 CFR part 655, subpart B applicable to the employment of H-

[[Page 54]]

2A workers and workers in corresponding employment, including 
obligations to offer employment to eligible United States (U.S.) workers 
and to not lay off or displace U.S. workers in a manner prohibited by 
the regulations in this part or 20 CFR part 655, subpart B.



Sec. 501.1  Purpose and scope.

    (a) Statutory standards. 8 U.S.C. 1188 provides that:
    (1) A petition to import an alien as an H-2A worker (as defined at 8 
U.S.C. 1188) may not be approved by the Secretary of the Department of 
Homeland Security (DHS) unless the petitioner has applied for and 
received a temporary labor certification from the U.S. Secretary of 
Labor (Secretary). The temporary labor certification establishes that:
    (i) There are not sufficient workers who are able, willing, and 
qualified, and who will be available at the time and place needed, to 
perform the labor or services involved in the petition, and
    (ii) The employment of the alien in such labor or services will not 
adversely affect the wages and working conditions of workers in the U.S. 
similarly employed.
    (2) The Secretary is authorized to take actions that assure 
compliance with the terms and conditions of employment under 8 U.S.C. 
1188, the regulations at 20 CFR part 655, subpart B, or the regulations 
in this part, including imposing appropriate penalties, and seeking 
injunctive relief and specific performance of contractual obligations. 
See 8 U.S.C. 1188(g)(2).
    (b) Role of the Employment and Training Administration (ETA). The 
issuance and denial of labor certification under 8 U.S.C. 1188 has been 
delegated by the Secretary to ETA, an agency within the U.S. Department 
of Labor (the Department or DOL), who in turn has delegated that 
authority to the Office of Foreign Labor Certification (OFLC). In 
general, matters concerning the obligations of an employer of H-2A 
workers related to the labor certification process are administered by 
OFLC, including obligations and assurances made by employers, overseeing 
employer recruitment and assuring program integrity. The regulations 
pertaining to the issuance, denial, and revocation of labor 
certification for temporary foreign workers by the OFLC are found in 20 
CFR part 655, subpart B.
    (c) Role of the Wage and Hour Division (WHD). Certain investigatory, 
inspection, and law enforcement functions to carry out the provisions 
under 8 U.S.C. 1188 have been delegated by the Secretary to the WHD. In 
general, matters concerning the obligations under a work contract 
between an employer of H-2A workers and the H-2A workers and workers in 
corresponding employment are enforced by WHD, including whether 
employment was offered to U.S. workers as required under 8 U.S.C. 1188 
or 20 CFR part 655, subpart B, or whether U.S. workers were laid off or 
displaced in violation of program requirements. Included within the 
enforcement responsibility of WHD are such matters as the payment of 
required wages, transportation, meals, and housing provided during the 
employment. The WHD has the responsibility to carry out investigations, 
inspections, and law enforcement functions and in appropriate instances 
to impose penalties, to debar from future certifications, to recommend 
revocation of existing certification(s), and to seek injunctive relief 
and specific performance of contractual obligations, including recovery 
of unpaid wages and reinstatement of laid off or displaced U.S. workers.
    (d) Effect of regulations. The enforcement functions carried out by 
the WHD under 8 U.S.C. 1188, 20 CFR part 655, subpart B, and the 
regulations in this part apply to the employment of any H-2A worker and 
any other worker in corresponding employment as the result of any 
Application for Temporary Employment Certification filed with the 
Department on and after March 15, 2010.



Sec. 501.2  Coordination between Federal agencies.

    (a) Complaints received by ETA or any State Workforce Agency (SWA) 
regarding contractual H-2A labor standards between the employer and the 
employee will be immediately forwarded

[[Page 55]]

to the appropriate WHD office for appropriate action under the 
regulations in this part.
    (b) Information received in the course of processing applications, 
program integrity measures, or enforcement actions may be shared between 
OFLC and WHD or, where applicable to employer enforcement under the H-2A 
program, other agencies as appropriate, including the Department of 
State (DOS) and DHS.
    (c) A specific violation for which debarment is imposed will be 
cited in a single debarment proceeding. OFLC and the WHD may coordinate 
their activities to achieve this result. Copies of final debarment 
decisions will be forwarded to the DHS promptly.



Sec. 501.3  Definitions.

    (a) Definitions of terms used in this part.
    Administrative Law Judge (ALJ). A person within the Department's 
Office of Administrative Law Judges appointed pursuant to 5 U.S.C. 3105.
    Adverse effect wage rate (AEWR). The annual weighted average hourly 
wage for field and livestock workers (combined) in the States or regions 
as published annually by the U.S. Department of Agriculture (USDA) based 
on its quarterly wage survey.
    Agent. A legal entity or person, such as an association of 
agricultural employers, or an attorney for an association, that:
    (1) Is authorized to act on behalf of the employer for temporary 
agricultural labor certification purposes;
    (2) Is not itself an employer, or a joint employer, as defined in 
this section with respect to a specific Application for Temporary 
Employment Certification; and
    (3) Is not under suspension, debarment, expulsion, or disbarment 
from practice before any court, the Department, the Executive Office for 
Immigration Review, or DHS under 8 CFR 292.3 or 1003.101.
    Agricultural association. Any nonprofit or cooperative association 
of farmers, growers, or ranchers (including but not limited to 
processing establishments, canneries, gins, packing sheds, nurseries, or 
other similar fixed-site agricultural employers), incorporated or 
qualified under applicable State law, that recruits, solicits, hires, 
employs, furnishes, houses, or transports any worker that is subject to 
8 U.S.C. 1188, 20 CFR part 655, subpart B, or this part. An agricultural 
association may act as the agent of an employer, or may act as the sole 
or joint employer of any worker subject to 8 U.S.C. 1188.
    Area of intended employment. The geographic area within normal 
commuting distance of the place of the job opportunity for which the 
certification is sought. There is no rigid measure of distance that 
constitutes a normal commuting distance or normal commuting area, 
because there may be widely varying factual circumstances among 
different areas (e.g., average commuting times, barriers to reaching the 
worksite, or quality of the regional transportation network). If the 
place of intended employment is within a Metropolitan Statistical Area 
(MSA), including a multistate MSA, any place within the MSA is deemed to 
be within normal commuting distance of the place of intended employment. 
The borders of MSAs are not controlling in the identification of the 
normal commuting area; a location outside of an MSA may be within normal 
commuting distance of a location that is inside (e.g., near the border 
of) the MSA.
    Corresponding employment. The employment of workers who are not H-2A 
workers by an employer who has an approved H-2A Application for 
Temporary Employment Certification in any work included in the job 
order, or in any agricultural work performed by the H-2A workers. To 
qualify as corresponding employment the work must be performed during 
the validity period of the job order, including any approved extension 
thereof.
    Date of need. The first date the employer requires the services of 
H-2A workers as indicated in the Application for Temporary Employment 
Certification.
    Employee. A person who is engaged to perform work for an employer, 
as defined under the general common law of agency. Some of the factors 
relevant to the determination of employee status include: The hiring 
party's right to control the manner and means by which the work is 
accomplished; the

[[Page 56]]

skill required to perform the work; the source of the instrumentalities 
and tools for accomplishing the work; the location of the work; the 
hiring party's discretion over when and how long to work; and whether 
the work is part of the regular business of the hiring party. Other 
applicable factors may be considered and no one factor is dispositive.
    Employer. A person (including any individual, partnership, 
association, corporation, cooperative, firm, joint stock company, trust, 
or other organization with legal rights and duties) that:
    (1) Has a place of business (physical location) in the U.S. and a 
means by which it may be contacted for employment;
    (2) Has an employer relationship (such as the ability to hire, pay, 
fire, supervise or otherwise control the work of employee) with respect 
to an H-2A worker or a worker in corresponding employment; and
    (3) Possesses, for purposes of filing an Application for Temporary 
Employment Certification, a valid Federal Employer Identification Number 
(FEIN).
    Federal holiday. Legal public holiday as defined at 5 U.S.C. 6103.
    Fixed-site employer. Any person engaged in agriculture who meets the 
definition of an employer, as those terms are defined in this part, who 
owns or operates a farm, ranch, processing establishment, cannery, gin, 
packing shed, nursery, or other similar fixed-site location where 
agricultural activities are performed and who recruits, solicits, hires, 
employs, houses, or transports any worker subject to 8 U.S.C. 1188, 20 
CFR part 655, subpart B or this part, as incident to or in conjunction 
with the owner's or operator's own agricultural operation.
    H-2A Labor Contractor (H-2ALC). Any person who meets the definition 
of employer under this part and is not a fixed-site employer, an 
agricultural association, or an employee of a fixed-site employer or 
agricultural association, as those terms are used in this part, who 
recruits, solicits, hires, employs, furnishes, houses, or transports any 
worker subject to 8 U.S.C. 1188, 20 CFR part 655, subpart B or this 
part.
    H-2A worker. Any temporary foreign worker who is lawfully present in 
the U.S. and authorized by DHS to perform agricultural labor or services 
of a temporary or seasonal nature pursuant to 8 U.S.C. 
1101(a)(15)(H)(ii)(a).
    Job offer. The offer made by an employer or potential employer of H-
2A workers to both U.S. and H-2A workers describing all the material 
terms and conditions of employment, including those relating to wages, 
working conditions, and other benefits.
    Job opportunity. Full-time employment at a place in the U.S. to 
which U.S. workers can be referred.
    Job order. The document containing the material terms and conditions 
of employment that is posted by the SWA on its inter- and intra-state 
job clearance systems based on the employer's Form ETA-790, as submitted 
to the SWA.
    Joint employment. Where two or more employers each have sufficient 
definitional indicia of an employer to be considered the employer of a 
worker, those employers will be considered to jointly employ that 
worker. Each employer in a joint employment relationship to a worker is 
considered a joint employer of that worker.
    Prevailing wage. Wage established pursuant to 20 CFR 653.501(d)(4).
    State Workforce Agency (SWA). State government agency that receives 
funds pursuant to the Wagner-Peyser Act (29 U.S.C. 49 et seq.) to 
administer the State's public labor exchange activities.
    Successor in interest. Where an employer has violated 8 U.S.C. 1188, 
20 CFR part 655, subpart B, or the regulations in this part, and has 
ceased doing business or cannot be located for purposes of enforcement, 
a successor in interest to that employer may be held liable for the 
duties and obligations of the violating employer in certain 
circumstances. The following factors, as used under Title VII of the 
Civil Rights Act and the Vietnam Era Veterans' Readjustment Assistance 
Act, may be considered in determining whether an employer is a successor 
in interest; no one factor is dispositive, but all of the circumstances 
will be considered as a whole:
    (1) Substantial continuity of the same business operations;
    (2) Use of the same facilities;

[[Page 57]]

    (3) Continuity of the work force;
    (4) Similarity of jobs and working conditions;
    (5) Similarity of supervisory personnel;
    (6) Whether the former management or owner retains a direct or 
indirect interest in the new enterprise;
    (7) Similarity in machinery, equipment, and production methods;
    (8) Similarity of products and services; and
    (9) The ability of the predecessor to provide relief.
    For purposes of debarment only, the primary consideration will be 
the personal involvement of the firm's ownership, management, 
supervisors, and others associated with the firm in the violations at 
issue.
    Temporary agricultural labor certification. Certification made by 
the OFLC Administrator with respect to an employer seeking to file with 
DHS a visa petition to employ one or more foreign nationals as an H-2A 
worker, pursuant to 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(a) and (c), and 
1188.
    United States (U.S.). The continental U.S., Alaska, Hawaii, the 
Commonwealth of Puerto Rico, and the territories of Guam, the Virgin 
Islands, and the Commonwealth of the Northern Mariana Islands (CNMI).
    United States worker (U.S. worker). A worker who is:
    (1) A citizen or national of the U.S.; or
    (2) An alien who is lawfully admitted for permanent residence in the 
U.S., is admitted as a refugee under 8 U.S.C. 1157, is granted asylum 
under 8 U.S.C. 1158, or is an immigrant otherwise authorized (by the 
Immigration and Nationality Act (INA) or by DHS) to be employed in the 
U.S.; or
    (3) An individual who is not an unauthorized alien (as defined in 8 
U.S.C. 1324a(h)(3)) with respect to the employment in which the worker 
is engaging.
    Wages. All forms of cash remuneration to a worker by an employer in 
payment for personal services.
    WHD Administrator. The Administrator of the Wage and Hour Division 
(WHD), and such authorized representatives as may be designated to 
perform any of the functions of the WHD Administrator under this part.
    Work contract. All the material terms and conditions of employment 
relating to wages, hours, working conditions, and other benefits, 
including those required by 8 U.S.C. 1188, 20 CFR part 655, subpart B, 
or this part. The contract between the employer and the worker may be in 
the form of a separate written document. In the absence of a separate 
written work contract incorporating the required terms and conditions of 
employment, agreed to by both the employer and the worker, the work 
contract at a minimum will be the terms of the job order and any 
obligations required under 8 U.S.C. 1188, 20 CFR part 655, subpart B or 
this part.
    (b) Definition of agricultural labor or services. For the purposes 
of this part, agricultural labor or services, pursuant to 8 U.S.C. 
1101(a)(15)(H)(ii)(a), is defined as: agricultural labor as defined and 
applied in sec. 3121(g) of the Internal Revenue Code of 1986 at 26 
U.S.C. 3121(g); agriculture as defined and applied in sec. 3(f) of the 
Fair Labor Standards Act of 1938 (FLSA) at 29 U.S.C. 203(f); the 
pressing of apples for cider on a farm; or logging employment. An 
occupation included in either statutory definition shall be agricultural 
labor or services, notwithstanding the exclusion of that occupation from 
the other statutory definition. For informational purposes, the 
statutory provisions are listed below.
    (1) (i) Agricultural labor for the purpose of paragraph (b) of this 
section means all service performed:
    (A) On a farm, in the employ of any person, in connection with 
cultivating the soil, or in connection with raising or harvesting any 
agricultural or horticultural commodity, including the raising, 
shearing, feeding, caring for, training, and management of livestock, 
bees, poultry, and fur-bearing animals and wildlife;
    (B) In the employ of the owner or tenant or other operator of a 
farm, in connection with the operation, management, conservation, 
improvement, or maintenance of such farm and its tools and equipment, or 
in salvaging timber or clearing land of brush and other debris left by a 
hurricane, if the major part of such service is performed on a farm;

[[Page 58]]

    (C) In connection with the production or harvesting of any commodity 
defined as an agricultural commodity in section 15(g) of the 
Agricultural Marketing Act, as amended (12 U.S.C. 1141j), or in 
connection with the ginning of cotton, or in connection with the 
operation or maintenance of ditches, canals, reservoirs, or waterways, 
not owned or operated for profit, used exclusively for supplying and 
storing water for farming purposes;
    (D) In the employ of the operator of a farm in handling, planting, 
drying, packing, packaging, processing, freezing, grading, storing, or 
delivering to storage or to market or to a carrier for transportation to 
market, in its unmanufactured state, any agricultural or horticultural 
commodity; but only if such operator produced more than one-half of the 
commodity with respect to which such service is performed;
    (E) In the employ of a group of operators of farms (other than a 
cooperative organization) in the performance of service described in 
paragraph (b)(1)(iv) but only if such operators produced all of the 
commodity with respect to which such service is performed. For purposes 
of this paragraph, any unincorporated group of operators shall be deemed 
a cooperative organization if the number of operators comprising such 
group is more than 20 at any time during the calendar year in which such 
service is performed;
    (F) The provisions of paragraphs (b)(1)(iv) and (b)(1)(v) of this 
section shall not be deemed to be applicable with respect to service 
performed in connection with commercial canning or commercial freezing 
or in connection with any agricultural or horticultural commodity after 
its delivery to a terminal market for distribution for consumption; or
    (G) On a farm operated for profit if such service is not in the 
course of the employer's trade or business or is domestic service in a 
private home of the employer.
    (ii) As used in this section, the term farm includes stock, dairy, 
poultry, fruit, fur-bearing animal, and truck farms, plantations, 
ranches, nurseries, ranges, greenhouses or other similar structures used 
primarily for the raising of agricultural or horticultural commodities, 
and orchards.
    (2) Agriculture. For purposes of paragraph (b) of this section, 
agriculture means farming in all its branches and among other things 
includes the cultivation and tillage of the soil, dairying, the 
production, cultivation, growing, and harvesting of any agricultural or 
horticultural commodities (including commodities defined as agricultural 
commodities in 1141j(g) of title 12, the raising of livestock, bees, 
fur-bearing animals, or poultry, and any practices (including any 
forestry or lumbering operations) performed by a farmer or on a farm as 
an incident to or in conjunction with such farming operations, including 
preparation for market, delivery to storage or to market or to carriers 
for transportation to market. See sec. 29 U.S.C. 203(f), as amended 
(sec. 3(f) of the FLSA, as codified). Under 12 U.S.C. 1141j(g) 
agricultural commodities include, in addition to other agricultural 
commodities, crude gum (oleoresin) from a living tree, and the following 
products as processed by the original producer of the crude gum 
(oleoresin) from which derived: Gum spirits of turpentine and gum rosin. 
In addition as defined in 7 U.S.C. 92, gum spirits of turpentine means 
spirits of turpentine made from gum (oleoresin) from a living tree and 
gum rosin means rosin remaining after the distillation of gum spirits of 
turpentine.
    (3) Apple pressing for cider. The pressing of apples for cider on a 
farm, as the term farm is defined and applied in sec. 3121(g) of the 
Internal Revenue Code at 26 U.S.C. 3121(g) or as applied in sec. 3(f) of 
FLSA at 29 U.S.C. 203(f), pursuant to 29 CFR part 780.
    (4) Logging employment. Operations associated with felling and 
moving trees and logs from the stump to the point of delivery, such as, 
but not limited to, marking danger trees and trees/logs to be cut to 
length, felling, limbing, bucking, debarking, chipping, yarding, 
loading, unloading, storing, and transporting machines, equipment and 
personnel to, from and between logging sites.
    (c) Definition of a temporary or seasonal nature. For the purposes 
of this

[[Page 59]]

part, employment is of a seasonal nature where it is tied to a certain 
time of year by an event or pattern, such as a short annual growing 
cycle or a specific aspect of a longer cycle, and requires labor levels 
far above those necessary for ongoing operations. Employment is of a 
temporary nature where the employer's need to fill the position with a 
temporary worker will, except in extraordinary circumstances, last no 
longer than 1 year.



Sec. 501.4  Discrimination prohibited.

    (a) A person may not intimidate, threaten, restrain, coerce, 
blacklist, discharge, or in any manner discriminate against any person 
who has:
    (1) Filed a complaint under or related to 8 U.S.C. 1188 or the 
regulations in this part;
    (2) Instituted or caused to be instituted any proceedings related to 
8 U.S.C. 1188 or the regulations in this part;
    (3) Testified or is about to testify in any proceeding under or 
related to 8 U.S.C. 1188 or the regulations in this part;
    (4) Consulted with an employee of a legal assistance program or an 
attorney on matters related to 8 U.S.C. 1188, or to this subpart or any 
other Department regulation promulgated pursuant to 8 U.S.C. 1188; or
    (5) Exercised or asserted on behalf of himself or others any right 
or protection afforded by 8 U.S.C. 1188 or the regulations in this part.
    (b) Allegations of discrimination against any person under paragraph 
(a) of this section will be investigated by the WHD. Where the WHD has 
determined through investigation that such allegations have been 
substantiated, appropriate remedies may be sought. The WHD may assess 
civil money penalties, seek injunctive relief, and/or seek additional 
remedies necessary to make the employee whole as a result of the 
discrimination, as appropriate, initiate debarment proceedings, and 
recommend to OFLC revocation of any such violator's current labor 
certification. Complaints alleging discrimination against workers or 
immigrants based on citizenship or immigration status may also be 
forwarded by the WHD to the Department of Justice, Civil Rights 
Division, Office of Special Counsel for Immigration-Related Unfair 
Employment Practices.



Sec. 501.5  Waiver of rights prohibited.

    A person may not seek to have an H-2A worker, a worker in 
corresponding employment, or a U.S. worker improperly rejected for 
employment or improperly laid off or displaced waive any rights 
conferred under 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in these parts. Any agreement by an employee purporting to 
waive or modify any rights given to said person under these provisions 
shall be void as contrary to public policy except as follows:
    (a) Waivers or modifications of rights or obligations hereunder in 
favor of the Secretary shall be valid for purposes of enforcement; and
    (b) Agreements in settlement of private litigation are permitted.



Sec. 501.6  Investigation authority of Secretary.

    (a) General. The Secretary, through the WHD, may investigate to 
determine compliance with obligations under 8 U.S.C. 1188, 20 CFR part 
655, subpart B, or the regulations in this part, either pursuant to a 
complaint or otherwise, as may be appropriate. In connection with such 
an investigation, WHD may enter and inspect any premises, land, 
property, housing, vehicles, and records (and make transcriptions 
thereof), question any person and gather any information as may be 
appropriate.
    (b) Confidential investigation. The WHD shall conduct investigations 
in a manner that protects the confidentiality of any complainant or 
other person who provides information to the Secretary in good faith.
    (c) Report of violations. Any person may report a violation of the 
obligations imposed by 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part to the Secretary by advising any local office 
of the SWA, ETA, WHD or any other authorized representative of the 
Secretary. The office or person receiving such a report shall refer it 
to the appropriate office of WHD for the geographic area in which

[[Page 60]]

the reported violation is alleged to have occurred.



Sec. 501.7  Cooperation with Federal officials.

    All persons must cooperate with any Federal officials assigned to 
perform an investigation, inspection, or law enforcement function 
pursuant to 8 U.S.C. 1188 and the regulations in this part during the 
performance of such duties. The WHD will take such action as it deems 
appropriate, including initiating debarment proceedings, seeking an 
injunction to bar any failure to cooperate with an investigation and/or 
assessing a civil money penalty therefor. In addition, the WHD will 
report the matter to OFLC, and may recommend to OFLC that the person's 
existing labor certification be revoked. In addition, Federal statutes 
prohibiting persons from interfering with a Federal officer in the 
course of official duties are found at 18 U.S.C. 111 and 18 U.S.C. 114.



Sec. 501.8  Accuracy of information, statements, data.

    Information, statements and data submitted in compliance with 8 
U.S.C. 1188 or the regulations in this part are subject to 18 U.S.C. 
1001, which provides, with regard to statements or entries generally, 
that whoever, in any matter within the jurisdiction of any department or 
agency of the U.S., knowingly and willfully falsifies, conceals, or 
covers up a material fact by any trick, scheme, or device, or makes any 
false, fictitious, or fraudulent statements or representations, or makes 
or uses any false writing or document knowing the same to contain any 
false, fictitious, or fraudulent statement or entry, shall be fined not 
more than $10,000 or imprisoned not more than 5 years, or both.



Sec. 501.9  Surety bond.

    (a) Every H-2ALC must obtain a surety bond demonstrating its ability 
to discharge financial obligations under the H-2A program. The original 
bond instrument issued by the surety must be submitted with the 
Application for Temporary Employment Certification. At a minimum, the 
bond instrument must identify the name, address, phone number, and 
contact person for the surety, and specify the amount of the bond (as 
required in paragraph (c) of this section), the date of issuance and 
expiration and any identifying designation used by the surety for the 
bond.
    (b) The bond must be payable to the Administrator, Wage and Hour 
Division, United States Department of Labor, 200 Constitution Avenue, 
NW., Room S-3502, Washington, DC 20210. The bond must obligate the 
surety to pay any sums to the WHD Administrator for wages and benefits 
owed to an H-2A worker or to a worker engaged in corresponding 
employment, or to a U.S. worker improperly rejected or improperly laid 
off or displaced, based on a final decision finding a violation or 
violations of this part or 20 CFR part 655, subpart B relating to the 
labor certification the bond is intended to cover. The aggregate 
liability of the surety shall not exceed the face amount of the bond. 
The bond must be written to cover liability incurred during the term of 
the period listed in the Application for Temporary Employment 
Certification for labor certification made by an H-2ALC, and shall be 
amended to cover any extensions of the labor certification requested by 
an H-2ALC.
    (c) The bond must be in the amount of $5,000 for a labor 
certification for which an H-2ALC will employ fewer than 25 workers; 
$10,000 for a labor certification for which an H-2ALC will employ 25 to 
49 workers; $20,000 for a labor certification for which an H-2ALC will 
employ 50 to 74 workers; $50,000 for a labor certification for which an 
H-2ALC will employ 75 to 99 workers; and $75,000 for a labor 
certification for which an H-2ALC will employ 100 or more workers. The 
WHD Administrator may require that an H-2ALC obtain a bond with a higher 
face value amount after notice and opportunity for hearing when it is 
shown based on objective criteria that the amount of the bond is 
insufficient to meet potential liabilities.
    (d) The bond must remain in force for a period of no less than 2 
years from the date on which the labor certification expires. If the WHD 
has commenced any enforcement action under the regulations in this part 
against an

[[Page 61]]

H-2ALC employer or any successor in interest by that date, the bond 
shall remain in force until the conclusion of such action and any 
related appeal or related litigation. Surety bonds may not be canceled 
or terminated unless 45 days' notice is provided by the surety in 
writing to the WHD Administrator at the address set forth in paragraph 
(b) of this section.



                          Subpart B_Enforcement



Sec. 501.15  Enforcement.

    The investigation, inspection, and law enforcement functions to 
carry out the provisions of 8 U.S.C. 1188, 20 CFR part 655, subpart B, 
or the regulations in this part, as provided in the regulations in this 
part for enforcement by the WHD, pertain to the employment of any H-2A 
worker, any worker in corresponding employment, or any U.S. worker 
improperly rejected for employment or improperly laid off or displaced. 
Such enforcement includes the work contract provisions as defined in 
Sec. 501.3(a).



Sec. 501.16  Sanctions and remedies--general.

    Whenever the WHD Administrator believes that 8 U.S.C. 1188, 20 CFR 
part 655, subpart B, or the regulations in this part have been violated, 
such action shall be taken and such proceedings instituted as deemed 
appropriate, including (but not limited to) the following:
    (a)(1) Institute appropriate administrative proceedings, including: 
the recovery of unpaid wages (including recovery of recruitment fees 
paid in the absence of required contract clauses (see 20 CFR 
655.135(k)); the enforcement of provisions of the work contract, 8 
U.S.C. 1188, 20 CFR part 655, subpart B, or the regulations in this 
part; the assessment of a civil money penalty; make whole relief for any 
person who has been discriminated against; reinstatement and make whole 
relief for any U.S. worker who has been improperly rejected for 
employment, laid off or displaced; or debarment for up to 3 years.
    (2) The remedies referenced in paragraph (a)(1) of this section will 
be sought either directly from the employer, or from its successor in 
interest, as appropriate. In the case of an H-2ALC, the remedies will be 
sought from the H-2ALC directly and/or monetary relief (other than civil 
money penalties) from the insurer who issued the surety bond to the H-
2ALC, as required by 20 CFR part 655, subpart B and Sec. 501.9 of this 
part.
    (b) Petition any appropriate District Court of the U.S. for 
temporary or permanent injunctive relief, including to prohibit the 
withholding of unpaid wages and/or for reinstatement, or to restrain 
violation of 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part, by any person.
    (c) Petition any appropriate District Court of the U.S. for an order 
directing specific performance of covered contractual obligations.



Sec. 501.17  Concurrent actions.

    OFLC has primary responsibility to make all determinations regarding 
the issuance, denial, or revocation of a labor certification as 
described in Sec. 501.1(b) of this part and in 20 CFR part 655, subpart 
B. The WHD has primary responsibility to make all determinations 
regarding the enforcement functions as described in Sec. 501.1(c) of 
this part. The taking of any one of the actions referred to above shall 
not be a bar to the concurrent taking of any other action authorized by 
8 U.S.C. 1188, 20 CFR part 655, subpart B, or the regulations in this 
part. OFLC and the WHD have concurrent jurisdiction to impose a 
debarment remedy under 20 CFR 655.182 or under Sec. 501.20 of the 
regulations in this part.



Sec. 501.18  Representation of the Secretary.

    The Solicitor of Labor, through authorized representatives, shall 
represent the WHD Administrator and the Secretary in all administrative 
hearings under 8 U.S.C. 1188 and the regulations in this part.



Sec. 501.19  Civil money penalty assessment.

    (a) A civil money penalty may be assessed by the WHD Administrator 
for each violation of the work contract, or the obligations imposed by 8 
U.S.C. 1188, 20 CFR part 655, subpart B, or the

[[Page 62]]

regulations in this part. Each failure to pay an individual worker 
properly or to honor the terms or conditions of a worker's employment 
required by 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part constitutes a separate violation.
    (b) In determining the amount of penalty to be assessed for each 
violation, the WHD Administrator shall consider the type of violation 
committed and other relevant factors. The factors that may be considered 
include, but are not limited to, the following:
    (1) Previous history of violation(s) of 8 U.S.C. 1188, 20 CFR part 
655, subpart B, or the regulations in this part;
    (2) The number of H-2A workers, workers in corresponding employment, 
or U.S. workers who were and/or are affected by the violation(s);
    (3) The gravity of the violation(s);
    (4) Efforts made in good faith to comply with 8 U.S.C. 1188, 20 CFR 
part 655, subpart B, and the regulations in this part;
    (5) Explanation from the person charged with the violation(s);
    (6) Commitment to future compliance, taking into account the public 
health, interest or safety, and whether the person has previously 
violated 8 U.S.C. 1188;
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury to 
the workers.
    (c) A civil money penalty for each violation of the work contract or 
a requirement of 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part will not exceed $1,500 per violation, with the 
following exceptions:
    (1) A civil money penalty for each willful violation of the work 
contract, or of 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part, or for each act of discrimination prohibited 
by Sec. 501.4 shall not exceed $5,000;
    (2) A civil money penalty for a violation of a housing or 
transportation safety and health provision of the work contract, or any 
obligation under 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part, that proximately causes the death or serious 
injury of any worker shall not exceed $50,000 per worker;
    (3) For purposes of this section, the term serious injury includes, 
but is not limited to:
    (i) Permanent loss or substantial impairment of one of the senses 
(sight, hearing, taste, smell, tactile sensation);
    (ii) Permanent loss or substantial impairment of the function of a 
bodily member, organ or mental faculty, including the loss of all or 
part of an arm, leg, foot, hand or other body part; or
    (iii) Permanent paralysis or substantial impairment that causes loss 
of movement or mobility of an arm, leg, foot, hand or other body part.
    (4) A civil money penalty for a repeat or willful violation of a 
housing or transportation safety and health provision of the work 
contract, or any obligation under 8 U.S.C. 1188, 20 CFR part 655, 
subpart B, or the regulations in this part, that proximately causes the 
death or serious injury of any worker, shall not exceed $100,000 per 
worker.
    (d) A civil money penalty for failure to cooperate with a WHD 
investigation shall not exceed $5,000 per investigation.
    (e) A civil money penalty for laying off or displacing any U.S. 
worker employed in work or activities that are encompassed by the 
approved Application for Temporary Employment Certification for H-2A 
workers in the area of intended employment either within 60 days 
preceding the date of need or during the validity period of the job 
order, including any approved extension thereof, other than for a 
lawful, job-related reason, shall not exceed $15,000 per violation per 
worker.
    (f) A civil money penalty for improperly rejecting a U.S. worker who 
is an applicant for employment, in violation of 8 U.S.C. 1188, 20 CFR 
part 655, subpart B, or the regulations in this part, shall not exceed 
$15,000 per violation per worker.



Sec. 501.20  Debarment and revocation.

    (a) Debarment of an employer. The WHD Administrator may debar an 
employer or any successor in interest to that employer from receiving 
future labor certifications under 20 CFR part 655, subpart B, subject to 
the time limits set forth in paragraph (c) of this

[[Page 63]]

section, if: the WHD Administrator finds that the employer substantially 
violated a material term or condition of its temporary labor 
certification, with respect to H-2A workers, workers in corresponding 
employment, or U.S. workers improperly rejected for employment, or 
improperly laid off or displaced, by issuing a Notice of Debarment.
    (b) Debarment of an agent or an attorney. The WHD Administrator may 
debar an agent or attorney from participating in any action under 8 
U.S.C. 1188, 20 CFR part 655, subpart B or 29 CFR part 501, if the WHD 
Administrator finds that the agent or attorney participated in an 
employer's substantial violation, by issuing a Notice of Debarment. The 
OFLC Administrator may not issue future labor certifications to any 
employer represented by a debarred agent or attorney, subject to the 
time limits set forth in paragraph (c) of this section.
    (c) Statute of Limitations and Period of Debarment.
    (1) The WHD Administrator must issue any Notice of Debarment no 
later than 2 years after the occurrence of the violation.
    (2) No employer, attorney, or agent may be debarred under this 
subpart for more than 3 years from the date of the final agency 
decision.
    (d) Definition of violation. For the purposes of this section, a 
violation includes:
    (1) One or more acts of commission or omission on the part of the 
employer or the employer's agent which involve:
    (i) Failure to pay or provide the required wages, benefits or 
working conditions to the employer's H-2A workers and/or workers in 
corresponding employment;
    (ii) Failure, except for lawful, job-related reasons, to offer 
employment to qualified U.S. workers who applied for the job opportunity 
for which certification was sought;
    (iii) Failure to comply with the employer's obligations to recruit 
U.S. workers;
    (iv) Improper layoff or displacement of U.S. workers or workers in 
corresponding employment;
    (v) Failure to comply with one or more sanctions or remedies imposed 
by the WHD Administrator for violation(s) of contractual or other H-2A 
obligations, or with one or more decisions or orders of the Secretary or 
a court under 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the 
regulations in this part;
    (vi) Impeding an investigation of an employer under 8 U.S.C. 1188, 
20 CFR part 655, subpart B, or the regulations in this part;
    (vii) Employing an H-2A worker outside the area of intended 
employment, or in an activity/activities not listed in the job order or 
outside the validity period of employment of the job order, including 
any approved extension thereof;
    (viii) A violation of the requirements of 20 CFR 655.135(j) or (k);
    (ix) A violation of any of the provisions listed in Sec. 501.4(a) 
of this subpart; or
    (x) A single heinous act showing such flagrant disregard for the law 
that future compliance with program requirements cannot reasonably be 
expected.
    (2) In determining whether a violation is so substantial as to merit 
debarment, the factors set forth in Sec. 501.19(b) shall be considered.
    (e) Procedural Requirements. The Notice of Debarment must be in 
writing, must state the reason for the debarment finding, including a 
detailed explanation of the grounds for and the duration of the 
debarment, must identify appeal opportunities under Sec. 501.33 and a 
timeframe under which such rights must be exercised and must comply with 
Sec. 501.32. The debarment will take effect 30 days from the date the 
Notice of Debarment is issued, unless a request for review is properly 
filed within 30 days from the issuance of the Notice of Debarment. The 
timely filing of an administrative appeal stays the debarment pending 
the outcome of the appeal as provided in Sec. 501.33(d).
    (f) Debarment involving members of associations. If, after 
investigation, the WHD Administrator determines that an individual 
employer-member of a joint employer association has committed a 
substantial violation, the debarment determination will apply only to 
that member unless the WHD Administrator determines that the association 
or another association member

[[Page 64]]

participated in the violation, in which case the debarment will be 
invoked against the association or other complicit association member(s) 
as well.
    (g) Debarment involving associations acting as sole employers. If, 
after investigation, the WHD Administrator determines that an 
association acting as a sole employer has committed a substantial 
violation, the debarment determination will apply only to the 
association and any successor in interest to the debarred association.
    (h) Debarment involving associations acting as joint employers. If, 
after investigation, the WHD Administrator determines that an 
association acting as a joint employer with its members has committed a 
substantial violation, the debarment determination will apply only to 
the association, and will not be applied to any individual employer-
member of the association. However, if the WHD Administrator determines 
that the member participated in, had knowledge of, or had reason to know 
of the violation, the debarment may be invoked against the complicit 
association member as well. An association debarred from the H-2A 
temporary labor certification program will not be permitted to continue 
to file as a joint employer with its members during the period of the 
debarment.
    (i) Revocation. The WHD may recommend to the OFLC Administrator the 
revocation of a temporary agricultural labor certification if the WHD 
finds that the employer:
    (1) Substantially violated a material term or condition of the 
approved temporary labor certification.
    (2) Failed to cooperate with a DOL investigation or with a DOL 
official performing an investigation, inspection, or law enforcement 
function under 8 U.S.C. 1188, 20 CFR part 655, subpart B, or this part; 
or
    (3) Failed to comply with one or more sanctions or remedies imposed 
by the WHD, or with one or more decisions or orders of the Secretary or 
a court order secured by the Secretary under 8 U.S.C. 1188, 20 CFR part 
655, subpart B, or this part.



Sec. 501.21  Failure to cooperate with investigations.

    (a) No person shall refuse to cooperate with any employee of the 
Secretary who is exercising or attempting to exercise this investigative 
or enforcement authority.
    (b) Where an employer (or employer's agent or attorney) does not 
cooperate with an investigation concerning the employment of an H-2A 
worker, a worker in corresponding employment, or a U.S. worker who has 
been improperly rejected for employment or improperly laid off or 
displaced, WHD may make such information available to OFLC and may 
recommend that OFLC revoke the existing certification that is the basis 
for the employment of the H-2A workers giving rise to the investigation. 
In addition, WHD may take such action as appropriate, including 
initiating proceedings for the debarment of the employer from future 
certification for up to 3 years, seeking an injunction, and/or assessing 
civil money penalties against any person who has failed to cooperate 
with a WHD investigation. The taking of any one action shall not bar the 
taking of any additional action.



Sec. 501.22  Civil money penalties--payment and collection.

    Where a civil money penalty is assessed in a final order by the WHD 
Administrator, by an ALJ, or by the Administrative Review Board (ARB), 
the amount of the penalty must be received by the WHD Administrator 
within 30 days of the date of the final order. The person assessed such 
penalty shall remit the amount ordered to the WHD Administrator by 
certified check or by money order, made payable to the Wage and Hour 
Division, United States Department of Labor. The remittance shall be 
delivered or mailed to the WHD Regional Office for the area in which the 
violations occurred.



                  Subpart C_Administrative Proceedings



Sec. 501.30  Applicability of procedures and rules.

    The procedures and rules contained herein prescribe the 
administrative

[[Page 65]]

process that will be applied with respect to a determination to assess 
civil money penalties, to debar, or to increase the amount of a surety 
bond and which may be applied to the enforcement of provisions of the 
work contract, or obligations under 8 U.S.C. 1188, 20 CFR part 655, 
subpart B, or the regulations in this part, or to the collection of 
monetary relief due as a result of any violation. Except with respect to 
the imposition of civil money penalties, debarment, or an increase in 
the amount of a surety bond, the Secretary may, in the Secretary's 
discretion, seek enforcement action in Federal court without resort to 
any administrative proceedings.

                     Procedures Relating To Hearing



Sec. 501.31  Written notice of determination required.

    Whenever the WHD Administrator decides to assess a civil money 
penalty, to debar, to increase a surety bond, or to proceed 
administratively to enforce contractual obligations, or obligations 
under 8 U.S.C. 1188, 20 CFR part 655, subpart B, or the regulations in 
this part, including for the recovery of the monetary relief, the person 
against whom such action is taken shall be notified in writing of such 
determination.



Sec. 501.32  Contents of notice.

    The notice required by Sec. 501.31 shall:
    (a) Set forth the determination of the WHD Administrator including 
the amount of any monetary relief due or actions necessary to fulfill a 
contractual obligation or obligations under 8 U.S.C. 1188, 20 CFR part 
655, subpart B, or the regulations in this part, the amount of any civil 
money penalty assessment, whether debarment is sought and the term, and 
any change in the amount of the surety bond, and the reason or reasons 
therefor.
    (b) Set forth the right to request a hearing on such determination.
    (c) Inform any affected person or persons that in the absence of a 
timely request for a hearing, the determination of the WHD Administrator 
shall become final and unappealable.
    (d) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 501.33.



Sec. 501.33  Request for hearing.

    (a) Any person desiring review of a determination referred to in 
Sec. 501.32, including judicial review, shall make a written request 
for an administrative hearing to the official who issued the 
determination at the WHD address appearing on the determination notice, 
no later than 30 days after the date of issuance of the notice referred 
to in Sec. 501.32.
    (b) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be typewritten or legibly written;
    (2) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (3) State the specific reason or reasons why the person requesting 
the hearing believes such determination is in error;
    (4) Be signed by the person making the request or by an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.
    (c) The request for such hearing must be received by the official 
who issued the determination, at the WHD address appearing on the 
determination notice, within the time set forth in paragraph (a) of this 
section. Requests may be made by certified mail or by means normally 
assuring overnight delivery.
    (d) The determination shall take effect on the start date identified 
in the written notice of determination, unless an administrative appeal 
is properly filed. The timely filing of an administrative appeal stays 
the determination pending the outcome of the appeal proceedings, 
provided that any surety bond remains in effect until the conclusion of 
any such proceedings.

                            Rules of Practice



Sec. 501.34  General.

    (a) Except as specifically provided in the regulations in this part, 
the Rules of Practice and Procedure for Administrative Hearings Before 
the Office of

[[Page 66]]

Administrative Law Judges established by the Secretary at 29 CFR part 18 
shall apply to administrative proceedings described in this part.
    (b) As provided in the Administrative Procedure Act, 5 U.S.C. 556, 
any oral or documentary evidence may be received in proceedings under 
this part. The Federal Rules of Evidence and subpart B of the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges (29 CFR part 18, subpart B) will not apply, 
but principles designed to ensure production of relevant and probative 
evidence shall guide the admission of evidence. The ALJ may exclude 
evidence which is immaterial, irrelevant, or unduly repetitive.



Sec. 501.35  Commencement of proceeding.

    Each administrative proceeding permitted under 8 U.S.C. 1188 and the 
regulations in this part shall be commenced upon receipt of a timely 
request for hearing filed in accordance with Sec. 501.33.



Sec. 501.36  Caption of proceeding.

    (a) Each administrative proceeding instituted under 8 U.S.C. 1188 
and the regulations in this part shall be captioned in the name of the 
person requesting such hearing, and shall be styled as follows:
    In the Matter of ------------, Respondent.
    (b) For the purposes of such administrative proceedings the WHD 
Administrator shall be identified as plaintiff and the person requesting 
such hearing shall be named as respondent.

                          Referral for Hearing



Sec. 501.37  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 501.33, the WHD Administrator, by the 
Associate Solicitor for the Division of Fair Labor Standards or by the 
Regional Solicitor for the Region in which the action arose, will, by 
Order of Reference, promptly refer a copy of the notice of 
administrative determination complained of, and the original or a 
duplicate copy of the request for hearing signed by the person 
requesting such hearing or by the authorized representative of such 
person, to the Chief ALJ, for a determination in an administrative 
proceeding as provided herein. The notice of administrative 
determination and request for hearing shall be filed of record in the 
Office of the Chief Administrative Law Judge and shall, respectively, be 
given the effect of a complaint and answer thereto for purposes of the 
administrative proceeding, subject to any amendment that may be 
permitted under the regulations in this part or 29 CFR part 18.
    (b) A copy of the Order of Reference, together with a copy of the 
regulations in this part, shall be served by counsel for the WHD 
Administrator upon the person requesting the hearing, in the manner 
provided in 29 CFR 18.3.



Sec. 501.38  Notice of docketing.

    Upon receipt of an Order of Reference, the Chief ALJ shall appoint 
an ALJ to hear the case. The ALJ shall promptly notify all interested 
parties of the docketing of the matter and shall set the time and place 
of the hearing. The date of the hearing shall be not more than 60 days 
from the date on which the Order of Reference was filed.



Sec. 501.39  Service upon attorneys for the Department of Labor--
number of copies.

    Two copies of all pleadings and other documents required for any 
administrative proceeding provided herein shall be served on the 
attorneys for the DOL. One copy shall be served on the Associate 
Solicitor, Division of Fair Labor Standards, Office of the Solicitor, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210, and one copy on the Attorney representing the Department in the 
proceeding.

               Procedures Before Administrative Law Judge



Sec. 501.40  Consent findings and order.

    (a) General. At any time after the commencement of a proceeding 
under this part, but prior to the reception of evidence in any such 
proceeding, a party may move to defer the receipt of

[[Page 67]]

any evidence for a reasonable time to permit negotiation of an agreement 
containing consent findings and an order disposing of the whole or any 
part of the proceeding. The allowance of such deferment and the duration 
thereof shall be at the discretion of the ALJ, after consideration of 
the nature of the proceeding, the requirements of the public interest, 
the representations of the parties, and the probability of an agreement 
being reached which will result in a just disposition of the issues 
involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice of administrative determination (or amended 
notice, if one is filed), and the agreement;
    (3) A waiver of any further procedural steps before the ALJ; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives or their 
counsel may:
    (1) Submit the proposed agreement for consideration by the ALJ; or
    (2) Inform the ALJ that agreement cannot be reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
ALJ, within 30 days thereafter, shall, if satisfied with its form and 
substance, accept such agreement by issuing a decision based upon the 
agreed findings.

                         Post-Hearing Procedures



Sec. 501.41  Decision and order of Administrative Law Judge.

    (a) The ALJ shall prepare, within 60 days after completion of the 
hearing and closing of the record, a decision on the issues referred by 
the WHD Administrator.
    (b) The decision of the ALJ shall include a statement of the 
findings and conclusions, with reasons and basis therefor, upon each 
material issue presented on the record. The decision shall also include 
an appropriate order which may affirm, deny, reverse, or modify, in 
whole or in part, the determination of the WHD Administrator. The reason 
or reasons for such order shall be stated in the decision.
    (c) The decision shall be served on all parties and the ARB.
    (d) The decision concerning civil money penalties, debarment, 
monetary relief, and/or enforcement of other contractual obligations 
under 8 U.S.C. 1188, 20 CFR part 655, subpart B, and/or this part, when 
served by the ALJ shall constitute the final agency order unless the 
ARB, as provided for in Sec. 501.42, determines to review the decision.

              Review of Administrative Law Judge's Decision



Sec. 501.42  Procedures for initiating and undertaking review.

    (a) A respondent, the WHD, or any other party wishing review, 
including judicial review, of the decision of an ALJ shall, within 30 
days of the decision of the ALJ, petition the ARB to review the 
decision. Copies of the petition shall be served on all parties and on 
the ALJ. If the ARB does not issue a notice accepting a petition for 
review of the decision within 30 days after receipt of a timely filing 
of the petition, or within 30 days of the date of the decision if no 
petition has been received, the decision of the ALJ shall be deemed the 
final agency action.
    (b) Whenever the ARB, either on the ARB's own motion or by 
acceptance of a party's petition, determines to review the decision of 
an ALJ, a notice of the same shall be served upon the ALJ and upon all 
parties to the proceeding.



Sec. 501.43  Responsibility of the Office of Administrative Law Judges (OALJ).

    Upon receipt of the ARB's Notice pursuant to Sec. 501.42, the OALJ 
shall promptly forward a copy of the complete hearing record to the ARB.

[[Page 68]]



Sec. 501.44  Additional information, if required.

    Where the ARB has determined to review such decision and order, the 
ARB shall notify the parties of:
    (a) The issue or issues raised;
    (b) The form in which submissions shall be made (i.e., briefs, oral 
argument, etc.); and
    (c) The time within which such presentation shall be submitted.



Sec. 501.45  Final decision of the Administrative Review Board.

    The ARB's final decision shall be issued within 90 days from the 
notice granting the petition and served upon all parties and the ALJ.

                                 Record



Sec. 501.46  Retention of official record.

    The official record of every completed administrative hearing 
provided by the regulations in this part shall be maintained and filed 
under the custody and control of the Chief ALJ, or, where the case has 
been the subject of administrative review, the ARB.



Sec. 501.47  Certification.

    Upon receipt of a complaint seeking review of a decision issued 
pursuant to this part filed in a U.S. District Court, after the 
administrative remedies have been exhausted, the Chief ALJ or, where the 
case has been the subject of administrative review, the ARB shall 
promptly index, certify and file with the appropriate U.S. District 
Court, a full, true, and correct copy of the entire record, including 
the transcript of proceedings.



   PART 502_ENFORCEMENT OF CONTRACTUAL OBLIGATIONS FOR TEMPORARY ALIEN
   AGRICULTURAL WORKERS ADMITTED UNDER SECTION 218 OF THE IMMIGRATION
   
   AND NATIONALITY ACT 
(SUSPENDED 6-29-2009)--Table of Contents



                      Subpart A_General Provisions

Sec.
502.0 Introduction.
502.1 Purpose and scope.
502.2 Coordination of intake between DOL agencies.
502.3 Discrimination prohibited.
502.4 Waiver of rights prohibited.
502.5 Investigation authority of Secretary.
502.6 Cooperation with DOL officials.
502.7 Accuracy of information, statements, data.
502.8 Surety bond.
502.10 Definitions.

                 Subpart B_Enforcement of Work Contracts

502.15 Enforcement.
502.16 Sanctions and Remedies--General.
502.17 Concurrent actions.
502.18 Representation of the Secretary.
502.19 Civil money penalty assessment.
502.20 Debarment and revocation.
502.21 Failure to cooperate with investigations.
502.22 Civil money penalties--payment and collection.

                   Subpart C_Administrative Proceedings

502.30 Applicability of procedures and rules.

                     Procedures Relating to Hearing

502.31 Written notice of determination required.
502.32 Contents of notice.
502.33 Request for hearing.

                            Rules of Practice

502.34 General.
502.35 Commencement of proceeding.
502.36 Caption of proceeding.

                          Referral for Hearing

502.37 Referral to Administrative Law Judge.
502.38 Notice of docketing.
502.39 Service upon attorneys for the Department of Labor--number of 
          copies.

               Procedures Before Administrative Law Judge

502.40 Consent findings and order.

                         Post-Hearing Procedures

502.41 Decision and order of Administrative Law Judge.

              Review of Administrative Law Judge's Decision

502.42 Procedures for initiating and undertaking review.
502.43 Responsibility of the Office of Administrative Law Judges.
502.44 Additional information, if required.
502.45 Final decision of the Administrative Review Board.

                                 Record

502.46 Retention of official record.
502.47 Certification.


[[Page 69]]


    Authority: 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c), and 1188.

    Source: 73 FR 77229, Dec. 18, 2008, unless otherwise noted.

    Effective Date Note: At 74 FR 26008, May 29, 2009, part 501 was 
redesignated as part 502, and newly designated part 502 was suspended, 
effective June 29, 2009.



                      Subpart A_General Provisions



Sec. 502.0  Introduction.

    These regulations cover the enforcement of all contractual 
obligation provisions applicable to the employment of H-2A workers under 
sec. 218 of the Immigration and Nationality Act (INA), as amended by the 
Immigration Reform and Control Act of 1986 (IRCA). These regulations are 
also applicable to the employment of United States (U.S.) workers newly 
hired by employers of H-2A workers in the same occupations as the H-2A 
workers during the period of time set forth in the labor certification 
approved by ETA as a condition for granting H-2A certification, 
including any extension thereof. Such U.S. workers hired by H-2A 
employers are hereafter referred to as engaged in corresponding 
employment.



Sec. 502.1  Purpose and scope.

    (a) Statutory standard. Section 218(a) of the INA provides that:
    (1) A petition to import an alien as an H-2A worker (as defined in 
the INA) may not be approved by the Secretary of the Department of 
Homeland Security (DHS) unless the petitioner has applied to the 
Secretary of the United States Department of Labor (Secretary) for a 
certification that:
    (i) There are not sufficient workers who are able, willing, and 
qualified, and who will be available at the time and place needed, to 
perform the labor or services involved in the petition, and
    (ii) The employment of the alien in such labor or services will not 
adversely affect the wages and working conditions of workers in the U.S. 
similarly employed.
    (2) [Reserved]
    (b) Role of the Employment and Training Administration (ETA). The 
issuance and denial of labor certification under sec. 218 of the INA has 
been delegated by the Secretary to ETA, an agency within the U.S. 
Department of Labor (the Department or DOL). In general, matters 
concerning the obligations of an employer of H-2A workers related to the 
labor certification process are administered and enforced by ETA. 
Included within ETA's jurisdiction are issues such as whether U.S. 
workers are available, whether adequate recruitment has been conducted, 
whether there is a strike or lockout, the methodology for establishing 
AEWR, whether workers' compensation insurance has been provided, whether 
employment was offered to U.S. workers as required by sec. 218 of the 
INA and regulations at 20 CFR part 655, subpart B, and other similar 
matters. The regulations pertaining to the issuance and denial of labor 
certification for temporary alien workers by the ETA are found in 20 CFR 
part 655, subpart B.
    (c) Role of the Employment Standards Administration (ESA), Wage and 
Hour Division (WHD). (1) The Secretary is authorized to take actions 
that assure compliance with the terms and conditions of employment under 
sec. 218 of the INA, the regulations at 20 CFR part 655, subpart B, or 
these regulations, including the assessment of civil money penalties and 
seeking injunctive relief and specific performance of contractual 
obligations. See 8 U.S.C. 1188(g)(2).
    (2) Certain investigatory, inspection, and law enforcement functions 
to carry out the provisions of sec. 218 of the INA have been delegated 
by the Secretary to the ESA, WHD. In general, matters concerning the 
obligations under a work contract between an employer of H-2A workers 
and the H-2A workers and U.S. workers hired in corresponding employment 
by H-2A employers are enforced by ESA, including whether employment was 
offered to U.S. workers as required under sec. 218 of the INA or 20 CFR 
part 655, subpart B, or whether U.S. workers were laid off or displaced 
in violation of program requirements. Included within the enforcement 
responsibility of WHD are such matters as the payment of required wages, 
transportation, meals,

[[Page 70]]

and housing provided during the employment. The WHD has the 
responsibility to carry out investigations, inspections, and law 
enforcement functions and in appropriate instances impose penalties, 
recommend revocation of existing certification(s) or debarment from 
future certifications, and seek injunctive relief and specific 
performance of contractual obligations, including recovery of unpaid 
wages (either directly from the employer or in the case of an H-2A Labor 
Contractors (H-2ALC), from the H-2ALC directly and/or from the insurer 
who issued the surety bond to the H-2ALC as required by 20 CFR part 655, 
subpart B and 29 CFR 501.8).
    (d) Effect of regulations. The amendments to the INA made by Title 
III of the IRCA apply to petitions and applications filed on and after 
June 1, 1987. Accordingly, the enforcement functions carried out by the 
WHD under the INA and these regulations apply to the employment of any 
H-2A worker and any other U.S. workers hired by H-2A employers in 
corresponding employment as the result of any application filed with the 
Department on and after June 1, 1987.



Sec. 502.2  Coordination of intake between DOL agencies.

    Complaints received by ETA or any State Workforce Agency (SWA) 
regarding contractual H-2A labor standards between the employer and the 
employee will be immediately forwarded to the appropriate WHD office for 
appropriate action under these regulations.



Sec. 502.3  Discrimination prohibited.

    (a) No person shall intimidate, threaten, restrain, coerce, 
blacklist, discharge, or in any manner discriminate against any person 
who has:
    (1) Filed a complaint under or related to sec. 218 of the INA or 
these regulations;
    (2) Instituted or caused to be instituted any proceedings related to 
sec. 218 of the INA or these regulations;
    (3) Testified or is about to testify in any proceeding under or 
related to sec. 218 of the INA or these regulations;
    (4) Exercised or asserted on behalf of himself or others any right 
or protection afforded by sec. 218 of the INA or these regulations; or
    (5) Consulted with an employee of a legal assistance program or an 
attorney on matters related to sec. 218 of the INA, or to this subpart 
or any other Department regulation promulgated pursuant to sec. 218 of 
the INA.
    (b) Allegations of discrimination against any person under paragraph 
(a) of this section will be investigated by the WHD. Where the WHD has 
determined through investigation that such allegations have been 
substantiated, appropriate remedies may be sought. The WHD may assess 
civil money penalties, seek injunctive relief, and/or seek additional 
remedies necessary to make the employee whole as a result of the 
discrimination, as appropriate, and may recommend to ETA debarment of 
any such violator from future labor certification. Complaints alleging 
discrimination against U.S. workers and immigrants based on citizenship 
or immigration status may also be forwarded by the WHD to the Department 
of Justice, Civil Rights Division, Office of Special Counsel for 
Immigration-Related Unfair Employment Practices.



Sec. 502.4  Waiver of rights prohibited.

    No person shall seek to have an H-2A worker, or other U.S. worker 
hired in corresponding employment by an H-2A employer, waive any rights 
conferred under sec. 218 of the INA, the regulations at 20 CFR part 655, 
Subpart B, or under these regulations. Any agreement by an employee 
purporting to waive or modify any rights inuring to said person under 
the INA or these regulations shall be void as contrary to public policy, 
except that a waiver or modification of rights or obligations hereunder 
in favor of the Secretary shall be valid for purposes of enforcement of 
the provisions of the INA or these regulations. This does not prevent 
agreements to settle private litigation.



Sec. 502.5  Investigation authority of Secretary.

    (a) General. The Secretary, either pursuant to a complaint or 
otherwise, shall, as may be appropriate, investigate and, in connection 
therewith,

[[Page 71]]

enter and inspect such places (including housing) and such vehicles, and 
such records (and make transcriptions thereof), question such persons 
and gather such information as deemed necessary by the Secretary to 
determine compliance with contractual obligations under sec. 218 of the 
INA or these regulations.
    (b) Failure to cooperate with an investigation. Where any employer 
(or employer's agent or attorney) using the services of an H-2A worker 
does not cooperate with an investigation concerning the employment of H-
2A workers or U.S. workers hired in corresponding employment, the WHD 
shall report such occurrence to ETA and may recommend that ETA revoke 
the existing certification that is the basis for the employment of the 
H-2A workers giving rise to the investigation, and the WHD may recommend 
to ETA the debarment of the employer from future certification for up to 
3 years. In addition, the WHD may take such action as may be 
appropriate, including the seeking of an injunction and/or assessing 
civil money penalties, against any person who has failed to permit the 
WHD to make an investigation.
    (c) Confidential investigation. The Secretary shall conduct 
investigations in a manner that protects the confidentiality of any 
complainant or other person who provides information to the Secretary in 
good faith.
    (d) Report of violations. Any person may report a violation of the 
work contract obligations of sec. 218 of the INA or these regulations to 
the Secretary by advising any local office of the SWA, ETA, WHD, or any 
other authorized representative of the Secretary. The office or person 
receiving such a report shall refer it to the appropriate office of DOL, 
WHD for the geographic area in which the reported violation is alleged 
to have occurred.



Sec. 502.6  Cooperation with DOL officials.

    All persons must cooperate with any official of the DOL assigned to 
perform an investigation, inspection, or law enforcement function 
pursuant to the INA and these regulations during the performance of such 
duties. The WHD will take such action as it deems appropriate, including 
seeking an injunction to bar any failure to cooperate with an 
investigation and/or assessing a civil money penalty therefore. In 
addition, the WHD will report the matter to ETA, and the WHD may 
recommend to ETA the debarment of the employer from future certification 
and/or recommend that the person's existing labor certification be 
revoked. In addition, Federal statutes prohibiting persons from 
interfering with a Federal officer in the course of official duties are 
found at 18 U.S.C. 111 and 18 U.S.C. 1114.



Sec. 502.7  Accuracy of information, statements, data.

    Information, statements and data submitted in compliance with 
provisions of the Act or these regulations are subject to 18 U.S.C. 
1001, which provides, with regard to statements or entries generally, 
that whoever, in any matter within the jurisdiction of any department or 
agency of the U.S. knowingly and willfully falsifies, conceals or covers 
up by any trick, scheme, or device a material fact, or makes any false, 
fictitious or fraudulent statements or representations, or makes or uses 
any false writing or document knowing the same to contain any false, 
fictitious or fraudulent statement or entry, shall be fined not more 
than $10,000 or imprisoned not more than 5 years, or both.



Sec. 502.8  Surety bond.

    (a) H-2ALCs shall obtain a surety bond to assure compliance with the 
provisions of this part and 20 CFR part 655, subpart B for each labor 
certification being sought. The H-2ALC shall attest on the application 
for labor certification that such a bond meeting all the requirements of 
this section has been obtained and shall provide on the labor 
certification application form information that fully identifies the 
surety, including the name, address and phone number of the surety, and 
which identifies the bond by number or other identifying designation.
    (b) The bond shall be payable to the Administrator, Wage and Hour 
Division, United States Department of Labor. It shall obligate the 
surety to pay any sums to the Administrator, WHD, for wages and benefits 
owed to

[[Page 72]]

H-2A and U.S. workers, based on a final decision finding a violation or 
violations of this part or 20 CFR part 655, subpart B relating to the 
labor certification the bond is intended to cover. The aggregate 
liability of the surety shall not exceed the face amount of the bond. 
The bond shall be written to cover liability incurred during the term of 
the period listed in the application for labor certification made by the 
H-2ALC, and shall be amended to cover any extensions of the labor 
certification requested by the H-2ALC. Surety bonds may not be canceled 
or terminated unless 30 days' notice is provided by the surety to the 
Administrator, WHD.
    (c) The bond shall be in the amount of $5,000 for a labor 
certification for which a H-2ALC will employ fewer than 25 employees, 
$10,000 for a labor certification for which a H-2ALC will employ 25 to 
49 employees, and $20,000 for a labor certification for which a H-2ALC 
will employ 50 or more employees. The amount of the bond may be 
increased by the Administrator, WHD after notice and an opportunity for 
hearing when it is shown based on objective criteria that the amount of 
the bond is insufficient to meet potential liabilities.



Sec. 502.10  Definitions.

    (a) Definitions of terms used in this part. For the purpose of this 
part:
    Administrative Law Judge (ALJ) means a person within the 
Department's Office of Administrative Law Judges appointed pursuant to 5 
U.S.C. 3105, or a panel of such persons designated by the Chief 
Administrative Law Judge from the Board of Alien Labor Certification 
Appeals (BALCA) established by part 656 of this chapter, which will hear 
and decide appeals as set forth at 20 CFR 655.115.
    Administrator, WHD means the Administrator of the Wage and Hour 
Division (WHD), ESA and such authorized representatives as may be 
designated to perform any of the functions of the Administrator, WHD 
under this part.
    Adverse effect wage rate (AEWR) means the minimum wage rate that the 
Administrator of the Office of Foreign Labor Certification (OFLC) has 
determined must be offered and paid to every H-2A worker employed under 
the DOL-approved Application for Temporary Employment Certification in a 
particular occupation and/or area, as well as to U.S. workers hired by 
employers into corresponding employment during the H-2A recruitment 
period, to ensure that the wages of similarly employed U.S. workers will 
not be adversely affected.
    Agent means a legal entity or person, such as an association of 
agricultural employers, or an attorney for an association, that--
    (1) Is authorized to act on behalf of the employer for temporary 
agricultural labor certification purposes;
    (2) Is not itself an employer, or a joint employer, as defined in 
this section, with respect to a specific application; and
    (3) Is not under suspension, debarment, expulsion, or disbarment 
from practice before any court or the Department, the Board of 
Immigration Appeals, the immigration judges, or DHS under 8 CFR 292.3, 
1003.101.
    Agricultural association means any nonprofit or cooperative 
association of farmers, growers, or ranchers (including but not limited 
to processing establishments, canneries, gins, packing sheds, nurseries, 
or other fixed-site agricultural employers), incorporated or qualified 
under applicable State law, that recruits, solicits, hires, employs, 
furnishes, houses or transports any worker that is subject to sec. 218 
of the INA. An agricultural association may act as the agent of an 
employer for purposes of filing an H-2A Application for Temporary 
Employment Certification, and may also act as the sole or joint employer 
of H-2A workers.
    Application for Temporary Employment Certification means the Office 
of Management and Budget (OMB)-approved form submitted by an employer to 
secure a temporary agricultural labor certification determination from 
DOL. A complete submission of the Application for Temporary Employment 
Certification includes the form and the initial recruitment report.
    Area of intended employment means the geographic area within normal 
commuting distance of the place (worksite address) of the job 
opportunity for which the certification is

[[Page 73]]

sought. There is no rigid measure of distance which constitutes a normal 
commuting area, because there may be widely varying factual 
circumstances among different areas (e.g., average commuting times, 
barriers to reaching the worksite, quality of the regional 
transportation network, etc.). If the place of intended employment is 
within a Metropolitan Statistical Area (MSA), including a multistate 
MSA, any place within the MSA is deemed to be within normal commuting 
distance of the place of intended employment. The borders of MSAs are 
not controlling in the identification of the normal commuting area; a 
location outside of an MSA may be within normal commuting distance of a 
location that is inside (e.g., near the border of) the MSA.
    Department of Homeland Security (DHS) means the Federal agency 
having control over certain immigration functions that, through its sub-
agency, United States Citizenship and Immigration Services (USCIS), 
makes the determination under the INA on whether to grant visa petitions 
filed by employers seeking H-2A workers to perform temporary 
agricultural work in the U.S.
    DOL or Department means the United States Department of Labor.
    Eligible worker means an individual who is not an unauthorized alien 
(as defined in sec. 274A(h)(3) of the INA, 8 U.S.C. 1324a(h)(3)) with 
respect to the employment in which the worker is engaging.
    Employee means employee as defined under the general common law of 
agency. Some of the factors relevant to the determination of employee 
status include: the hiring party's right to control the manner and means 
by which the work is accomplished; the skill required to perform the 
work; the source of the instrumentalities and tools for accomplishing 
the work; the location of the work; the hiring party's discretion over 
when and how long to work; and whether the work is part of the regular 
business of the hiring party. Other applicable factors may be considered 
and no one factor is dispositive.
    Employer means a person, firm, corporation or other association or 
organization that:
    (1) Has a place of business (physical location) in the U.S. and a 
means by which it may be contacted for employment;
    (2) Has an employer relationship with respect to H-2A employees or 
related U.S. workers under this part; and
    (3) Possesses, for purposes of filing an Application for Temporary 
Employment Certification, a valid Federal Employer Identification Number 
(FEIN).
    Employment Service (ES) refers to the system of Federal and state 
entities responsible for administration of the labor certification 
process for temporary and seasonal agricultural employment of 
nonimmigrant foreign workers. This includes the SWAs and OFLC, including 
the National Processing Centers (NPCs).
    Employment Standards Administration (ESA) means the agency within 
DOL that includes the WHD, and which is charged with carrying out 
certain investigative and enforcement functions of the Secretary under 
the INA.
    Employment and Training Administration (ETA) means the agency within 
the DOL that includes OFLC.
    Federal holiday means a legal public holiday as defined at 5 U.S.C. 
6103.
    Fixed-site employer means any person engaged in agriculture who 
meets the definition of an employer as those terms are defined in this 
part who owns or operates a farm, ranch, processing establishment, 
cannery, gin, packing shed, nursery, or other similar fixed-site 
location where agricultural activities are performed and who recruits, 
solicits, hires, employs, houses, or transports any worker subject to 
sec. 218 of the INA or these regulations as incident to or in 
conjunction with the owner's or operator's own agricultural operation. 
For purposes of this part, person includes any individual, partnership, 
association, corporation, cooperative, joint stock company, trust, or 
other organization with legal rights and duties.
    H-2A Labor Contractor (H-2ALC) means any person who meets the 
definition of employer in this section and is not a fixed-site employer, 
an agricultural association, or an employee of a fixed-site employer or 
agricultural association, as those terms are used in this part, who 
recruits, solicits, hires,

[[Page 74]]

employs, furnishes, houses, or transports any worker subject to sec. 218 
of the INA or these regulations.
    H-2A worker means any temporary foreign worker who is lawfully 
present in the U.S. to perform agricultural labor or services of a 
temporary or seasonal nature pursuant to sec. 101(a)(15)(H)(ii)(a) of 
the INA, as amended.
    INA/Act means the Immigration and Nationality Act, as amended, 8 
U.S.C. 1101 et seq.
    Job offer means the offer made by an employer or potential employer 
of H-2A workers to eligible workers describing all the material terms 
and conditions of employment, including those relating to wages, working 
conditions, and other benefits.
    Job opportunity means a job opening for temporary, full-time 
employment at a place in the U.S. to which a U.S. worker can be 
referred.
    Joint employment means that where two or more employers each have 
sufficient definitional indicia of employment to be considered the 
employer of an employee, those employers will be considered to jointly 
employ that employee. Each employer in a joint employment relationship 
to an employee is considered a ``joint employer'' of that employee.
    Office of Foreign Labor Certification (OFLC) means the 
organizational component of the ETA that provides national leadership 
and policy guidance and develops regulations and procedures to carry out 
the responsibilities of the Secretary under the INA concerning the 
admission of foreign workers to the U.S. to perform work described in 
sec. 101(a)(15)(H)(ii)(a) of the INA, as amended.
    Positive recruitment means the active participation of an employer 
or its authorized hiring agent in recruiting and interviewing qualified 
and eligible individuals in the area where the employer's job 
opportunity is located and any other State designated by the Secretary 
as an area of traditional or expected labor supply with respect to the 
area where the employer's job opportunity is located, in an effort to 
fill specific job openings with U.S. workers.
    Prevailing means with respect to practices engaged in by employers 
and benefits other than wages provided by employers, that:
    (1) Fifty percent or more of employers in an area and for an 
occupation engage in the practice or offer the benefit; but only if
    (2) This 50 percent or more of employers also employs in aggregate 
50 percent or more of U.S. workers in the occupation and area (including 
H-2A and non-H-2A employers for purposes of determinations concerning 
the provision of family housing, frequency of wage payments, and workers 
supplying their own bedding, but non-H-2A employers only for 
determinations concerning the provision of advance transportation and 
the utilization of H-2ALCs).
    Prevailing hourly wage means the hourly wage determined by the SWA 
to be prevailing in the area in accordance with State-based wage 
surveys.
    Prevailing piece rate means that amount that is typically paid to an 
agricultural worker per piece (which includes, but is not limited to, a 
load, bin, pallet, bag, bushel, etc.) to be determined by the SWA 
according to a methodology published by the Department. As is currently 
the case, the unit of production will be required to be clearly 
described; e.g., a field box of oranges (1\1/2\ bushels), a bushel of 
potatoes, and Eastern apple box (1\1/2\ metric bushels), a flat of 
strawberries (twelve quarts), etc.
    Representative means a person or entity employed by, or duly 
authorized to act on behalf of, the employer with respect to activities 
entered into for, and/or attestations made with respect to, the 
Application for Temporary Employment Certification.
    Secretary means the Secretary of the United States Department of 
Labor or the Secretary's designee.
    State Workforce Agency (SWA) means the State government agency that 
receives funds pursuant to the Wagner-Peyser Act to administer the 
public labor exchange delivered through the State's One-Stop delivery 
system in accordance with the Wagner-Peyser Act, 29 U.S.C. 49, et seq. 
Separately, SWAs receive ETA grants, administered by OFLC, to assist 
them in performing certain activities related to foreign

[[Page 75]]

labor certification, including conducting housing inspections.
    Successor in interest means that, in determining whether an employer 
is a successor in interest, the factors used under Title VII of the 
Civil Rights Act and the Vietnam Era Veterans' Readjustment Assistance 
Act will be considered. When considering whether an employer is a 
successor for purposes of this part, the primary consideration will be 
the personal involvement of the firm's ownership, management, 
supervisors, and others associated with the firm in the violations 
resulting in a debarment recommendation. Normally, wholly new management 
or ownership of the same business operation, one in which the former 
management or owner does not retain a direct or indirect interest, will 
not be deemed to be a successor in interest for purposes of debarment. A 
determination of whether or not a successor in interest exists is based 
on the entire circumstances viewed in their totality. The factors to be 
considered include:
    (1) Substantial continuity of the same business operations;
    (2) Use of the same facilities;
    (3) Continuity of the work force;
    (4) Similarity of jobs and working conditions;
    (5) Similarity of supervisory personnel;
    (6) Similarity in machinery, equipment, and production methods;
    (7) Similarity of products and services; and
    (8) The ability of the predecessor to provide relief.
    Temporary agricultural labor certification means the certification 
made by the Secretary with respect to an employer seeking to file with 
DHS a visa petition to employ one or more foreign nationals as an H-2A 
worker, pursuant to secs. 101(a)(15)(H)(ii)(a), 214(a) and (c), and 218 
of the INA that:
    (1) There are not sufficient workers who are able, willing, and 
qualified, and who will be available at the time and place needed, to 
perform the agricultural labor or services involved in the petition, and
    (2) The employment of the foreign worker in such agricultural labor 
or services will not adversely affect the wages and working conditions 
of workers in the U.S. similarly employed as stated at 8 U.S.C. 
1101(a)(15)(H)(ii)(a), 1184(a) and (c), and 1188.
    United States (U.S.), when used in a geographic sense, means the 
continental United States, Alaska, Hawaii, the Commonwealth of Puerto 
Rico, and the territories of Guam, the Virgin Islands, and, as of the 
transition program effective date, as defined in the Consolidated 
Natural Resources Act of 2008, Public Law 110-229, Title VII, the 
Commonwealth of the Northern Mariana Islands.
    U.S. worker means a worker who is:
    (1) A citizen or national of the U.S., or;
    (2) An alien who is lawfully admitted for permanent residence in the 
U.S., is admitted as a refugee under sec. 207 of the INA, is granted 
asylum under sec. 208 of the INA, or is an immigrant otherwise 
authorized (by the INA or by DHS) to be employed in the U.S.
    Wages means all forms of cash remuneration to a worker by an 
employer in payment for personal services.
    Work contract means all the material terms and conditions of 
employment relating to wages, hours, working conditions, and other 
benefits, required by the applicable regulations in subpart B of 20 CFR 
part 655, Labor Certification for Temporary Agricultural Employment of 
H-2A Aliens in the U.S. (H-2A Workers), or these regulations, including 
those terms and conditions attested to by the H-2A employer, which 
contract between the employer and the worker may be in the form of a 
separate written document. In the absence of a separate written work 
contract incorporating the required terms and conditions of employment, 
agreed to by both the employer and the worker, the work contract at a 
minimum shall be the terms of the job order, as provided in 20 CFR part 
653, subpart F, and covered provisions of the work contract shall be 
enforced in accordance with these regulations.
    (b) Definition of agricultural labor or services of a temporary or 
seasonal nature. For the purposes of this part, agricultural labor or 
services of a temporary or seasonal nature means the following:
    (1) Agricultural labor or services, pursuant to sec. 
101(a)(15)(H)(ii)(a) of the INA

[[Page 76]]

(8 U.S.C. 1101(a)(15)(H)(ii)(a)), is defined as:
    (i) Agricultural labor as defined and applied in sec. 3121(g) of the 
Internal Revenue Code of 1954 at 26 U.S.C. 3121(g);
    (ii) Agriculture as defined and applied in sec. 3(f) of the Fair 
Labor Standards Act of 1938 (FLSA) at 29 U.S.C. 203(f) (Work performed 
by H-2A workers, or workers in corresponding employment, that is not 
defined as agriculture in sec. 3(f) is subject to the provisions of the 
FLSA as provided therein, including the overtime provisions in sec. 7(a) 
at 29 U.S.C. 207(a));
    (iii) The pressing of apples for cider on a farm;
    (iv) Logging employment; or
    (v) Handling, planting, drying, packing, packaging, processing, 
freezing, grading, storing, or delivering to storage or to market or to 
a carrier for transportation to market, in its unmanufactured state, any 
agricultural or horticultural commodity while in the employ of the 
operator of a farm where no H-2B workers are employed to perform the 
same work at the same establishment; or
    (vi) Other work typically performed on a farm that is not 
specifically listed on the Application for Temporary Employment 
Certification and is minor (i.e., less than 20 percent of the total time 
worked on the job duties and activities that are listed on the 
Application for Temporary Employment Certification) and incidental to 
the agricultural labor or services for which the H-2A worker was sought.
    (2) An occupation included in either of the statutory definitions 
cited in paragraphs (b)(1)(i) and (ii) of this section is agricultural 
labor or services, notwithstanding the exclusion of that occupation from 
the other statutory definition.
    (i) Agricultural labor for purposes of paragraph (b)(1)(i) of this 
section means all services performed:
    (A) On a farm, in the employ of any person, in connection with 
cultivating the soil, or in connection with raising or harvesting any 
agricultural or horticultural commodity, including the raising, 
shearing, feeding, caring for, training, and management of livestock, 
bees, poultry, and furbearing animals and wildlife;
    (B) In the employ of the owner or tenant or other operator of a 
farm, in connection with the operation or maintenance of such farm and 
its tools and equipment, or in salvaging timber or clearing land of 
brush and other debris left by a hurricane, if the major part of such 
service is performed on a farm;
    (C) In connection with the production or harvesting of any commodity 
defined as an agricultural commodity in sec. 15(g) of the Agricultural 
Marketing Act, as amended at 12 U.S.C. 1141j, or in connection with the 
ginning of cotton, or in connection with the operation or maintenance of 
ditches, canals, reservoirs, or waterways, not owned or operated for 
profit, used exclusively for supplying and storing water for farming 
purposes;
    (D)(1) In the employ of the operator of a farm in handling, 
planting, drying, packing, packaging, processing, freezing, grading, 
storing, or delivering to storage or to market or to a carrier for 
transportation to market, in its unmanufactured state, any agricultural 
or horticultural commodity, but only if such operator produced more than 
one-half of the commodity with respect to which such service is 
performed;
    (2) In the employ of a group of operators of farms (other than a 
cooperative organization) in the performance of service described in 
paragraph (b)(2)(i)(A) of this section, but only if such operators 
produced all of the commodity with respect to which such service is 
performed. For purposes of this paragraph, any unincorporated group of 
operators will be deemed a cooperative organization if the number of 
operators comprising such group is more than 20 at any time during the 
calendar quarter in which such service is performed;
    (3) The provisions of paragraphs (b)(2)(i)(D)(1) and (2) of this 
section do not apply to services performed in connection with commercial 
canning or commercial freezing or in connection with any agricultural or 
horticultural commodity after its delivery to a terminal market for 
distribution for consumption; or
    (4) On a farm operated for profit if such service is not in the 
course of the

[[Page 77]]

employer's trade or business and is not domestic service in a private 
home of the employer.
    (E) For the purposes of this section, the term farm includes stock, 
dairy, poultry, fruit, fur-bearing animals, and truck farms, 
plantations, ranches, nurseries, ranges, greenhouses or other similar 
structures used primarily for the raising of agricultural or 
horticultural commodities, and orchards. See sec. 3121(g) of the 
Internal Revenue Code of 1986 (26 U.S.C. 3121(g)).
    (ii) Agriculture. For purposes of paragraph (b)(1)(ii) of this 
section agriculture means farming in all its branches and among other 
things includes the cultivation and tillage of the soil, dairying, the 
production, cultivation, growing, and harvesting of any agricultural or 
horticultural commodities (including commodities as defined as 
agricultural commodities in 12 U.S.C. 1141j(g)), the raising of 
livestock, bees, fur-bearing animals, or poultry, and any practices 
(including any forestry or lumbering operations) performed by a farmer 
or on a farm as an incident to or in conjunction with such farming 
operations, including preparation for market, delivery to storage or to 
market or to carriers for transportation to market. See sec. 29 U.S.C. 
203(f), as amended.
    (iii) Agricultural commodity. For purposes of paragraph (b)(1)(ii) 
of this section, agricultural commodity includes, in addition to other 
agricultural commodities, crude gum (oleoresin) from a living tree, and 
gum spirits of turpentine and gum rosin as processed by the original 
producer of the crude gum (oleoresin) from which derived. Gum spirits of 
turpentine means spirits of turpentine made from gum (oleoresin) from a 
living tree and gum rosin means rosin remaining after the distillation 
of gum spirits of turpentine. See 12 U.S.C. 1141j(g) (sec. 15(g) of the 
Agricultural Marketing Act, as amended), and 7 U.S.C. 92.
    (3) Of a temporary or seasonal nature-- (i) On a seasonal or other 
temporary basis. For the purposes of this part, of a temporary or 
seasonal nature means on a seasonal or other temporary basis, as defined 
in the WHD's regulation at 29 CFR 500.20 under the Migrant and Seasonal 
Agricultural Worker Protection Act (MSPA).
    (ii) MSPA definition. The definition of on a seasonal or other 
temporary basis found in MSPA is summarized as follows:
    (A) Labor is performed on a seasonal basis where, ordinarily, the 
employment pertains to or is of the kind exclusively performed at 
certain seasons or periods of the year and which, from its nature, may 
not be continuous or carried on throughout the year. A worker who moves 
from one seasonal activity to another, while employed in agriculture or 
performing agricultural labor, is employed on a seasonal basis even 
though the worker may continue to be employed during a major portion of 
the year.
    (B) A worker is employed on other temporary basis where the worker 
is employed for a limited time only or the worker's performance is 
contemplated for a particular piece of work, usually of short duration. 
Generally, employment which is contemplated to continue indefinitely is 
not temporary.
    (C) On a seasonal or other temporary basis does not include
    (1) The employment of any foreman or other supervisory employee who 
is employed by a specific agricultural employer or agricultural 
association essentially on a year round basis; or
    (2) The employment of any worker who is living at his or her 
permanent place of residence, when that worker is employed by a specific 
agricultural employer or agricultural association on essentially a year 
round basis to perform a variety of tasks for his or her employer and is 
not primarily employed to do field work.
    (iii) Temporary. For the purposes of this part, the definition of 
temporary in paragraph (b)(3) of this section refers to any job 
opportunity covered by this part where the employer needs a worker for a 
position for a limited period of time, including, but not limited, to a 
peakload need, which is generally less than 1 year, unless the original 
temporary agricultural labor certification is extended pursuant to 20 
CFR 655.110.

[[Page 78]]



                 Subpart B_Enforcement of Work Contracts



Sec. 502.15  Enforcement.

    The investigation, inspections and law enforcement functions to 
carry out the provisions of sec. 218 of the INA, as provided in these 
regulations for enforcement by the WHD, pertain to the employment of any 
H-2A worker and any other U.S. worker hired in corresponding employment 
by an H-2A employer. Such enforcement includes work contract provisions 
as defined in Sec. 501.10(a). The work contract also includes those 
employment benefits which are required to be stated in the job offer, as 
prescribed in 20 CFR 655.104.



Sec. 502.16  Sanctions and remedies--General.

    Whenever the Secretary believes that the H-2A provisions of the INA 
or these regulations have been violated such action shall be taken and 
such proceedings instituted as deemed appropriate, including (but not 
limited to) the following:
    (a) Institute appropriate administrative proceedings, including: The 
recovery of unpaid wages, including wages owed to U.S. workers as a 
result of a layoff or displacement prohibited by these rules (either 
directly from the employer, a successor in interest, or in the case of 
an H-2ALC also by claim against any surety who issued a bond to the H-
2ALC); the enforcement of covered provisions of the work contract as set 
forth in 29 CFR 501.10(a); the assessment of a civil money penalty; 
reinstatement; or the recommendation of debarment for up to 3 years.
    (b) Petition any appropriate District Court of the U.S. for 
temporary or permanent injunctive relief, including the withholding of 
unpaid wages and/or reinstatement, to restrain violation of the H-2A 
provisions of the INA, 20 CFR part 655, Subpart B, or these regulations 
by any person.
    (c) Petition any appropriate District Court of the U.S. for specific 
performance of covered contractual obligations.



Sec. 502.17  Concurrent actions.

    The taking of any one of the actions referred to above shall not be 
a bar to the concurrent taking of any other action authorized by the H-
2A provisions of the Act and these regulations, or the regulations of 20 
CFR part 655.



Sec. 502.18  Representation of the Secretary.

    (a) Except as provided in 28 U.S.C. 518(a) relating to litigation 
before the Supreme Court, the Solicitor of Labor may appear for and 
represent the Secretary in any civil litigation brought under the Act.
    (b) The Solicitor of Labor, through authorized representatives, 
shall represent the Administrator, WHD and the Secretary in all 
administrative hearings under the H-2A provisions of the Act and these 
regulations.



Sec. 502.19  Civil money penalty assessment.

    (a) A civil money penalty may be assessed by the Administrator, WHD 
for each violation of the work contract as set forth in Sec. 501.10(a) 
of these regulations.
    (b) In determining the amount of penalty to be assessed for any 
violation of the work contract as provided in the H-2A provisions of the 
Act or these regulations the Administrator, WHD shall consider the type 
of violation committed and other relevant factors. The matters which may 
be considered include, but are not limited to, the following:
    (1) Previous history of violation or violations of the H-2A 
provisions of the Act and these regulations;
    (2) The number of H-2A employees, corresponding U.S. employees or 
those U.S. workers individually rejected for employment affected by the 
violation or violations;
    (3) The gravity of the violation or violations;
    (4) Efforts made in good faith to comply with the H-2A provisions of 
the Act and these regulations;
    (5) Explanation of person charged with the violation or violations;
    (6) Commitment to future compliance, taking into account the public 
health, interest or safety, and whether

[[Page 79]]

the person has previously violated the H-2A provisions of the Act;
    (7) The extent to which the violator achieved a financial gain due 
to the violation, or the potential financial loss or potential injury to 
the workers.
    (c) A civil money penalty for violation of the work contract will 
not exceed $1,000 for each violation committed (with each failure to pay 
a worker properly or to honor the terms or conditions of a worker's 
employment that is required by sec. 218 of the INA, 20 CFR 655, subpart 
B, or these regulations constituting a separate violation), with the 
following exceptions:
    (1) For a willful failure to meet a covered condition of the work 
contract, or for willful discrimination, the civil money penalty shall 
not exceed $5,000 for each such violation committed (with each willful 
failure to honor the terms or conditions of a worker's employment that 
are required by sec. 218 of the INA, 20 CFR 655, subpart B, or these 
regulations constituting a separate violation);
    (2) For a violation of a housing or transportation safety and health 
provision of the work contract that proximately causes the death or 
serious injury of any worker, the civil money penalty shall not exceed 
$25,000 per worker, unless the violation is a repeat or willful 
violation, in which case the penalty shall not exceed $50,000 per 
worker, or unless the employer failed, after notification, to cure the 
specific violation, in which case the penalty shall not exceed $100,000 
per worker.
    (3) For purposes of paragraph (c)(2) of this section, the term 
serious injury means:
    (i) Permanent loss or substantial impairment of one of the senses 
(sight, hearing, taste, smell, tactile sensation);
    (ii) Permanent loss or substantial impairment of the function of a 
bodily member, organ, or mental faculty, including the loss of all or 
part of an arm, leg, foot, hand or other body part; or
    (iii) Permanent paralysis or substantial impairment that causes loss 
of movement or mobility of an arm, leg, foot, hand or other body part.
    (d) A civil money penalty for failure to cooperate with a WHD 
investigation shall not exceed $5,000 per investigation;
    (e) For a willful layoff or displacement of any similarly employed 
U.S. worker in the occupation that is the subject of the Application for 
Temporary Employment Certification in the area of intended employment 
within 60 days of the date of need other than for a lawful, job-related 
reason, except that such layoff shall be permitted where all H-2A 
workers were laid off first, the civil penalty shall not exceed $10,000 
per violation per worker.



Sec. 502.20  Debarment and revocation.

    (a) The WHD shall recommend to the Administrator, OFLC the debarment 
of any employer and any successor in interest to that employer (or the 
employer's attorney or agent if they are a responsible party) if the WHD 
finds that the employer substantially violated a material term or 
condition of its temporary labor certification for the employment of 
domestic or nonimmigrant workers.
    (b) For purposes of this section, a substantial violation includes:
    (1) A pattern or practice of acts of commission or omission on the 
part of the employer or the employer's agent which:
    (i) Are significantly injurious to the wages, benefits required to 
be offered under the H-2A program, or working conditions of a 
significant number of the employer's U.S. or H-2A workers;
    (ii) Reflect a significant failure to offer employment to all 
qualified domestic workers who applied for the job opportunity for which 
certification was being sought, except for lawful job-related reasons;
    (iii) Reflect a willful failure to comply with the employer's 
obligations to recruit U.S. workers as set forth in this subpart; or
    (iv) Reflect the employment of an H-2A worker outside the area of 
intended employment, or in an activity/activities, not listed in the job 
order (other than an activity minor and incidental to the activity/
activities listed in the job order), or after the period of employment 
specified in the job order and any approved extension;

[[Page 80]]

    (2) A significant failure to cooperate with a DOL investigation or 
with a DOL official performing an investigation, inspection, or law 
enforcement function under sec. 218 of the INA, 8 U.S.C. 1188, this 
subpart, or 29 CFR part 501 (ESA enforcement of contractual 
obligations); or
    (3) A significant failure to comply with one or more sanctions or 
remedies imposed by the ESA for violation(s) of obligations found by 
that agency (if applicable), or with one or more decisions or orders of 
the Secretary or a court order secured by the Secretary under sec. 218 
of the INA, 8 U.S.C. 1188, this subpart, or 29 CFR part 501 (ESA 
enforcement of contractual obligations); or
    (4) A single heinous act showing such flagrant disregard for the law 
that future compliance with program requirements cannot reasonably be 
expected.
    (c) Procedures for Debarment Recommendation. The WHD will send to 
the employer a Notice of Recommended Debarment. The Notice of 
Recommended Debarment must be in writing, must state the reason for the 
debarment recommendation, including a detailed explanation of the 
grounds for and the duration of the recommended debarment. The debarment 
recommendation will be forwarded to the Administrator, OFLC. The Notice 
of Recommended Debarment shall be issued no later than 2 years after the 
occurrence of the violation.
    (d) The WHD may recommend to the Administrator, OFLC the revocation 
of a temporary agricultural labor certification if the WHD finds that 
the employer:
    (1) Willfully violated a material term or condition of the approved 
temporary agricultural labor certification, work contract, or this part, 
unless otherwise provided under paragraphs (d)(2) through (4) of this 
section.
    (2) Failed, after notification, to cure a substantial violation of 
the applicable housing standards set out in 20 CFR 655.104(d);
    (3) Failed to cooperate with a DOL investigation or with a DOL 
official performing an investigation, inspection, or law enforcement 
function under sec. 218 of the INA, 8 U.S.C. 1188, this subpart, or 29 
CFR part 501 (ESA enforcement of contractual obligations); or
    (4) Failed to comply with one or more sanctions or remedies imposed 
by the ESA for violation(s) of obligations found by that agency (if 
applicable), or with one or more decisions or orders of the Secretary or 
a court order Secured by the Secretary under sec. 218 of the INA, 8 
U.S.C. 1188, this subpart, or 29 CFR part 501 (ESA enforcement of 
contractual obligations).
    (e) In considering a recommendation made by the WHD to debar an 
employer or to revoke a temporary agricultural labor certification, the 
Administrator, OFLC shall treat final agency determinations that the 
employer has committed a violation as res judicata and shall not 
reconsider those determinations.



Sec. 502.21  Failure to cooperate with investigations.

    No person shall refuse to cooperate with any employee of the 
Secretary who is exercising or attempting to exercise this investigative 
or enforcement authority. As stated in Sec. Sec. 501.6 and 501.19 of 
this part, a civil money penalty may be assessed for each failure to 
cooperate with an investigation, and other appropriate relief may be 
sought. In addition, the WHD shall report each such occurrence to ETA, 
and ETA may debar the employer from future certification. The WHD may 
also recommend to ETA that an existing certification be revoked. The 
taking of any one action shall not bar the taking of any additional 
action.



Sec. 502.22  Civil money penalties--payment and collection.

    Where the assessment is directed in a final order by the 
Administrator, WHD, by an ALJ, or by the ARB, the amount of the penalty 
is due within 30 days and payable to the United States Department of 
Labor. The person assessed such penalty shall remit promptly the amount 
thereof as finally determined, to the Administrator, WHD by certified 
check or by money order, made payable to the order of Wage and Hour 
Division, United States Department of Labor. The remittance shall be 
delivered or mailed to the WHD Regional Office for the area in which the 
violations occurred.

[[Page 81]]



                  Subpart C_Administrative Proceedings



Sec. 502.30  Applicability of procedures and rules.

    The procedures and rules contained herein prescribe the 
administrative process that will be applied with respect to a 
determination to impose an assessment of civil money penalties, and 
which may be applied to the enforcement of covered provisions of the 
work contract as set forth in Sec. 501.10(a), including the collection 
of unpaid wages due as a result of any violation of the H-2A provisions 
of the Act or of these regulations. Except with respect to the 
imposition of civil money penalties, the Secretary may, in the 
Secretary's discretion, seek enforcement action in Federal court without 
resort to any administrative proceedings.

                     Procedures Relating to Hearing



Sec. 502.31  Written notice of determination required.

    Whenever the Administrator, WHD decides to assess a civil money 
penalty or to proceed administratively to enforce covered contractual 
obligations, including the recovery of unpaid wages, the person against 
whom such action is taken shall be notified in writing of such 
determination.



Sec. 502.32  Contents of notice.

    The notice required by Sec. 501.31 shall:
    (a) Set forth the determination of the Administrator, WHD including 
the amount of any unpaid wages due or actions necessary to fulfill a 
covered contractual obligation, the amount of any civil money penalty 
assessment and the reason or reasons therefore.
    (b) Set forth the right to request a hearing on such determination.
    (c) Inform any affected person or persons that in the absence of a 
timely request for a hearing, the determination of the Administrator, 
WHD shall become final and unappealable.
    (d) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 501.33.



Sec. 502.33  Request for hearing.

    (a) Any person desiring review of a determination referred to in 
Sec. 501.32, including judicial review, shall make a written request 
for an administrative hearing to the official who issued the 
determination at the WHD address appearing on the determination notice, 
no later than 30 days after issuance of the notice referred to in Sec. 
501.32.
    (b) No particular form is prescribed for any request for hearing 
permitted by this part. However, any such request shall:
    (1) Be typewritten or legibly written;
    (2) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (3) State the specific reason or reasons why the person requesting 
the hearing believes such determination is in error;
    (4) Be signed by the person making the request or by an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.
    (c) The request for such hearing must be received by the official 
who issued the determination, at the WHD address appearing on the 
determination notice, within the time set forth in paragraph (a) of this 
section. For the affected person's protection, if the request is by 
mail, it should be by certified mail.
    (d) The determination shall take effect on the start date identified 
in the determination, unless an administrative appeal is properly filed. 
The timely filing of an administrative appeal stays the determination 
pending the outcome of the appeal proceedings.

                            Rules of Practice



Sec. 502.34  General.

    Except as specifically provided in these regulations, the Rules of 
Practice and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges established by the Secretary at 29 CFR part 18 
shall apply to administrative proceedings described in this part.

[[Page 82]]



Sec. 502.35  Commencement of proceeding.

    Each administrative proceeding permitted under the Act and these 
regulations shall be commenced upon receipt of a timely request for 
hearing filed in accordance with Sec. 501.33.



Sec. 502.36  Caption of proceeding.

    (a) Each administrative proceeding instituted under the Act and 
these regulations shall be captioned in the name of the person 
requesting such hearing, and shall be styled as follows:

                   In the Matter of ----, Respondent.

    (b) For the purposes of such administrative proceedings the 
Administrator, WHD shall be identified as plaintiff and the person 
requesting such hearing shall be named as respondent.

                          Referral for Hearing



Sec. 502.37  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 501.33, the Administrator, WHD, by the 
Associate Solicitor for the Division of Fair Labor Standards or by the 
Regional Solicitor for the Region in which the action arose, shall, by 
Order of Reference, promptly refer a copy of the notice of 
administrative determination complained of, and the original or a 
duplicate copy of the request for hearing signed by the person 
requesting such hearing or by the authorized representative of such 
person, to the Chief Administrative Law Judge, for a determination in an 
administrative proceeding as provided herein. The notice of 
administrative determination and request for hearing shall be filed of 
record in the Office of the Chief Administrative Law Judge and shall, 
respectively, be given the effect of a complaint and answer thereto for 
purposes of the administrative proceeding, subject to any amendment that 
may be permitted under these regulations or 29 CFR part 18.
    (b) A copy of the Order of Reference, together with a copy of these 
regulations, shall be served by counsel for the Administrator, WHD upon 
the person requesting the hearing, in the manner provided in 29 CFR 
18.3.



Sec. 502.38  Notice of docketing.

    Upon receipt of an Order of Reference, the Chief Administrative Law 
Judge shall appoint an ALJ to hear the case. The ALJ shall promptly 
notify all interested parties of the docketing of the matter and shall 
set the time and place of the hearing. The date of the hearing shall be 
not more than 60 days from the date on which the Order of Reference was 
filed.



Sec. 502.39  Service upon attorneys for the Department of Labor--
number of copies.

    Two copies of all pleadings and other documents required for any 
administrative proceeding provided herein shall be served on the 
attorneys for the DOL. One copy shall be served on the Associate 
Solicitor, Division of Fair Labor Standards, Office of the Solicitor, 
U.S. Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210, and one copy on the Attorney representing the Department in the 
proceeding.

               Procedures Before Administrative Law Judge



Sec. 502.40  Consent findings and order.

    (a) General. At any time after the commencement of a proceeding 
under this part, but prior to the reception of evidence in any such 
proceeding, a party may move to defer the receipt of any evidence for a 
reasonable time to permit negotiation of an agreement containing consent 
findings and an order disposing of the whole or any part of the 
proceeding. The allowance of such deferment and the duration thereof 
shall be at the discretion of the ALJ, after consideration of the nature 
of the proceeding, the requirements of the public interest, the 
representations of the parties, and the probability of an agreement 
being reached which will result in a just disposition of the issues 
involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;

[[Page 83]]

    (2) That the entire record on which any order may be based shall 
consist solely of the notice of administrative determination (or amended 
notice, if one is filed), and the agreement;
    (3) A waiver of any further procedural steps before the ALJ; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives or their 
counsel may:
    (1) Submit the proposed agreement for consideration by the ALJ; or
    (2) Inform the ALJ that agreement cannot be reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
ALJ, within 30 days thereafter, shall, if satisfied with its form and 
substance, accept such agreement by issuing a decision based upon the 
agreed findings.

                         Post-Hearing Procedures



Sec. 502.41  Decision and order of Administrative Law Judge.

    (a) The ALJ shall prepare, within 60 days after completion of the 
hearing and closing of the record, a decision on the issues referred by 
the Administrator, WHD.
    (b) The decision of the ALJ shall include a statement of findings 
and conclusions, with reasons and basis therefor, upon each material 
issue presented on the record. The decision shall also include an 
appropriate order which may affirm, deny, reverse, or modify, in whole 
or in part, the determination of the Administrator, WHD. The reason or 
reasons for such order shall be stated in the decision.
    (c) The decision shall be served on all parties and the 
Administrative Review Board (ARB) in person or by certified mail.
    (d) The decision concerning civil money penalties and/or back wages 
when served by the ALJ shall constitute the final agency order unless 
the ARB, as provided for in Sec. 501.42, determines to review the 
decision.

              Review of Administrative Law Judge's Decision



Sec. 502.42  Procedures for initiating and undertaking review.

    (a) A respondent, the WHD, or any other party wishing review, 
including judicial review, of the decision of an ALJ shall, within 30 
days of the decision of the ALJ, petition the ARB to review the 
decision. Copies of the petition shall be served on all parties and on 
the ALJ. If the ARB does not issue a notice accepting a petition for 
review of the decision concerning civil money penalties and/or back 
wages within 30 days after receipt of a timely filing of the petition, 
or within 30 days of the date of the decision if no petition has been 
received, the decision of the ALJ shall be deemed the final agency 
action. If the ARB does not issue a notice accepting a petition for 
review of the decision concerning the debarment recommendation within 30 
days after the receipt of a timely filing of the petition, or if no 
petition has been received by the ARB within 30 days of the date of the 
decision, the decision of the ALJ shall be deemed the final agency 
action. If a petition for review is accepted, the decision of the ALJ 
shall be inoperative unless and until the ARB issues an order affirming 
the decision.
    (b) Whenever the ARB, either on the ARB's own motion or by 
acceptance of a party's petition, determines to review the decision of 
an ALJ, a notice of the same shall be served upon the ALJ and upon all 
parties to the proceeding in person or by certified mail.



Sec. 502.43  Responsibility of the Office of Administrative Law Judges.

    Upon receipt of the ARB's Notice pursuant to Sec. 501.42 of these 
regulations, the Office of ALJ shall promptly forward a copy of the 
complete hearing record to the ARB.



Sec. 502.44  Additional information, if required.

    Where the ARB has determined to review such decision and order, the 
ARB shall notify each party of:
    (a) The issue or issues raised;
    (b) The form in which submissions shall be made (i.e., briefs, oral 
argument, etc.); and

[[Page 84]]

    (c) The time within which such presentation shall be submitted.



Sec. 502.45  Final decision of the Administrative Review Board.

    The ARB's final decision shall be issued within 90 days from the 
notice granting the petition and served upon all parties and the ALJ, in 
person or by certified mail.

                                 Record



Sec. 502.46  Retention of official record.

    The official record of every completed administrative hearing 
provided by these regulations shall be maintained and filed under the 
custody and control of the Chief Administrative Law Judge, or, where the 
case has been the subject of administrative review, the ARB.



Sec. 502.47  Certification.

    Upon receipt of a complaint seeking review of a decision issued 
pursuant to this part filed in a U.S. District Court, after the 
administrative remedies have been exhausted, the Chief Administrative 
Law Judge or, where the case has been the subject of administrative 
review, the ARB shall promptly index, certify and file with the 
appropriate U.S. District Court, a full, true, and correct copy of the 
entire record, including the transcript of proceedings.



PART 504_ATTESTATIONS BY FACILITIES USING NONIMMIGRANT ALIENS AS
REGISTERED NURSES--Table of Contents



    Authority: 8 U.S.C. 1101(a)(15)(H)(i)(a) and 1182(m); sec. 3(c)(1), 
Pub. L. 101-238, 103 Stat. 2099, 2103; and sec. 341 (a) and (b), Pub. L. 
103-182, 107 Stat. 2057.

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 504.1  Cross-reference.

    Regulations governing labor condition attestations by facilities 
using nonimmigrant aliens as registered nurses are found at 20 CFR part 
655, subparts D and E.



PART 505_LABOR STANDARDS ON PROJECTS OR PRODUCTIONS ASSISTED BY GRANTS
FROM THE NATIONAL ENDOWMENTS FOR THE ARTS AND HUMANITIES--

Table of Contents



Sec.
505.1 Purpose and scope.
505.2 Definitions.
505.3 Prevailing minimum compensation.
505.4 Receipt of grant funds.
505.5 Adequate assurances.
505.6 Safety and health standards.
505.7 Failure to comply.

    Authority: Sec. 5(j), Pub. L. 89-209, 79 Stat. 848 (20 U.S.C. 
954(i)); sec. 7(g), Pub. L. 94-462, 90 Stat. 1971, as amended by sec. 
107(4), Pub. L. 99-194, 99 Stat. 1337 (20 U.S.C. 956(g)); Secretary's 
Order 9-83 (48 FR 35736) and Secretary's Order 6-84 (49 FR 32473).

    Source: 53 FR 23541, June 22, 1988, unless otherwise noted.



Sec. 505.1  Purpose and scope.

    (a) The regulations contained in this part set forth the procedures 
which are deemed necessary and appropriate to carry out the provisions 
of section 5(i) and section 7(g) of the National Foundation on the Arts 
and Humanities Act of 1965, as amended, 20 U.S.C. 954(i), 20 U.S.C. 
956(g). As a condition to the receipt of any grant, the grantees must 
give adequate assurances that all professional performers and related or 
supporting professional personnel employed on projects or productions 
assisted by grants from the National Endowment for the Arts and the 
National Endowment for the Humanities shall receive not less than the 
prevailing minimum compensation as determined by the Secretary of Labor.
    (b) Regulations and procedures relating to wages on construction 
projects as provided in section 5(j) and section 7(j) of the National 
Foundation on the Arts and Humanities Act of 1965, as amended, may be 
found in parts 3 and 5 of this title.
    (c) Standards of overtime compensation for laborers or mechanics may 
be found in the Contract Work Hours and Safety Standards Act, 76 Stat. 
357, 40 U.S.C. 327 et seq. and part 5 of this title.

[[Page 85]]



Sec. 505.2  Definitions.

    (a) The term Act means the National Foundation on the Arts and the 
Humanities Act of 1965, as amended, 79 Stat 848, as amended, 20 U.S.C. 
951 et seq.
    (b) The term Secretary means the Secretary of Labor.
    (c) The term Administrator means the Administrator of the Wage and 
Hour Division, Employment Standards Administration, U.S. Department of 
Labor, or authorized representative, to whom is assigned the performance 
of functions of the Secretary pertaining to wages under the National 
Foundation on the Arts and the Humanities Act of 1965, as amended.
    (d) The term Assistant Secretary means the Assistant Secretary for 
Occupational Safety and Health, U.S. Department of Labor, or authorized 
representative, to whom is assigned the performance of functions of the 
Secretary pertaining to safety and health under the National Foundation 
on the Arts and the Humanities Act of 1965, as amended.
    (e) Professional in the phrase professional performer and related or 
supporting professional personnel shall include all those who work for 
compensation on a project or production which is assisted by a grant 
from the National Endowment for the Arts or the National Endowment for 
the Humanities regardless of whether paid out of grant funds. It shall 
not include those whose status is amateur because their engagement for 
performance or supporting work contemplates no compensation. 
Compensation does not include reimbursement of expenses (i.e., meals, 
costumes, make-up etc.). The words related or supporting . . . personnel 
in the same phrase shall include all those whose work is related to the 
particular project or production such as musicians, stage hands, scenery 
designers, technicians, electricians and moving picture machine 
operators, as distinguished from those who operate a place for receiving 
an audience without reference to the particular project or production 
being exhibited, such as ushers, janitors, and those who sell and 
collect tickets. The phrase does not include laborers and mechanics 
employed by contractors or subcontractors on construction projects, 
whose compensation is regulated under section 5(j) and section 7(j) of 
the Act. The phrase professional performers and related or supporting 
professional personnel shall not include persons employed as regular 
faculty or staff of an educational institution primarily performing 
duties commonly associated with the teaching profession. It shall 
include persons employed by educational institutions primarily to engage 
in activities customarily performed by performing artists or by those 
who assist in the presentation of performances assisted by grants from 
the National Endowment for the Arts or the National Endowment for the 
Humanities.



Sec. 505.3  Prevailing minimum compensation.

    (a)(1) In the absence of an alternative determination made by the 
Administrator under paragraph (b) of this section, and except as 
provided in paragraph (a)(2) of this section, the prevailing minimum 
compensation required to be paid under the Act to the various 
professional performers and related or supporting professional personnel 
employed on projects or productions assisted by grants from the National 
Endowment for the Arts and the National Endowment for the Humanities 
shall be the compensation (including fringe benefits) contained in 
collective bargaining agreements negotiated by the following national or 
international labor organizations or their local affiliates:

Actors' Equity Association.
Screen Actors Guild, Inc.
Screen Extras Guild, Inc.
American Guild of Musical Artists, Inc.
International Alliance of Theatrical Stage Employees and Moving Picture 
Machine Operators.
American Federation of Musicians.
National Association of Broadcast Employees and Technicians.
American Federation of Television and Radio Artists.
International Brotherhood of Electrical Workers.
American Guild of Variety Artists.
Writers Guild.

    (2) Professional performers and related or supporting professional 
personnel who are to perform activities

[[Page 86]]

which do not come within the jurisdiction of any collective bargaining 
agreement negotiated by the labor organizations named in paragraph 
(a)(1) of this section shall be paid minimum compensation as determined 
by agreement of the grant applicant or grantee and the personnel who 
will perform such activities or their representatives. Evidence of the 
agreement reached by the parties shall be submitted by the grant 
applicant to the grant agency, together with evidence of the prevailing 
minimum compensation for similar activities. If the parties do not agree 
on the minimum compensation to be paid to such personnel, the matter 
shall be referred to the Administrator of the Wage and Hour Division for 
final determination.
    (b)(1) Interested parties, including grant applicants, grantees, 
professional performers or related or supporting professional personnel 
and their representatives, may at any time submit to the Administrator a 
request for a determination of prevailing minimum compensation. The 
Administrator will make a determination concerning each such request in 
accordance with paragraph (b)(4) of this section.
    (2) Any request for a determination of prevailing minimum 
compensation shall include or be accompanied by information as to the 
locality or localities, the class or classes of professional performers 
or related or supporting professional personnel for the project or 
production in question, the names and addresses (to the extent known) of 
interested parties, and all available information relating to prevailing 
minimum compensation currently being paid to such persons or to persons 
employed in similar activities. No particular form is prescribed for 
submission of information under this section.
    (3) If the information specified in paragraph (b)(2) of this section 
is not submitted with a request for an alternative determination of 
prevailing minimum compensation or is insufficient to permit a 
determination, the Administrator may deny the request or request 
additional information, at the Administrator's discretion. Pertinent 
information from any source may be considered by the Administrator in 
connection with any request.
    (4) The Administrator will respond to a request for determination 
under this section within 30 days of receipt, by issuing a determination 
of alternative prevailing minimum compensation or denying the request or 
advising that additional time is necessary for a decision. If the 
Administrator determines from a preponderance of all relevant evidence 
obtained in connection with the request that the compensation provided 
for in the agreements negotiated by the labor organizations set forth in 
paragraph (a) of this section does not prevail for any professional 
performer or related or supporting professional personnel employed on 
similar activities in the locality, the Administrator will issue a 
determination of the prevailing minimum compensation required to be paid 
under the Act to such persons. If the Administrator finds that the 
compensation provided for in the agreements negotiated by the labor 
organizations set forth in paragraph (a) of this section does prevail 
for the professional performers or related or supporting professional 
personnel in question, the requesting party will be so notified.
    (c) All professional performers and related or supporting 
professional personnel (other than laborers or mechanics with respect to 
whom labor standards are prescribed in section 5(j) and 7(j) of the Act) 
employed on projects or productions which are financed in whole or in 
part under section 5 or section 7 of the Act will be paid, without 
subsequent deduction or rebate on any account, not less than the 
prevailing minimum compensation determined in accordance with paragraph 
(a) of this section, unless an alternative determination is made under 
paragraph (b) of this section. Pending the decision of the Administrator 
on a request for determination under paragraph (b) of this section, the 
grantee may be required to set aside in a separate escrow account 
sufficient funds to satisfy the difference between the compensation 
(including fringe benefits) actually paid to the employee(s) in 
question, and the

[[Page 87]]

compensation (including fringe benefits) required under the applicable 
collective bargaining agreement negotiated by the labor organization 
named in paragraph (a) of this section, or furnish a bond with a surety 
or sureties satisfactory to the Administrator for the protection of the 
compensation of the affected employees.



Sec. 505.4  Receipt of grant funds.

    (a) The grantee shall not receive funds authorized by section 5 or 
section 7 of the Act until adequate initial assurances have been filed 
with the Chairperson of the National Endowment for the Arts or the 
Chairperson of the National Endowment for the Humanities, pursuant to 
sections 5(i) (1) and (2) and sections 7(g) (1) and (2) of the Act as 
provided in Sec. 505.5(a), that all professional performers and related 
or supporting professional personnel will be paid not less than the 
prevailing minimum compensation and that the safety and health 
requirements will be complied with. Neither shall the grantee receive 
any such funds if and after the Chairperson of the National Endowment 
for the Arts or Chairperson of the National Endowment for the Humanities 
is advised by the Secretary that continuing assurances as provided in 
Sec. 505.5(b) are inadequate or that labor standards contemplated by 
sections 5(i) (1) and (2) or sections 7(g) (1) and (2) of the Act have 
not been observed.
    (b) In order to facilitate such assurances so that the grantee may 
receive the grant funds promptly, the Chairpersons of the National 
Endowment for the Arts and the National Endowment for the Humanities 
will transmit with the grant letter, to each grantee of a grant that 
will provide assistance to projects or productions employing 
professional performers or related or supporting professional personnel 
under section 5 or section 7 of the Act, a copy of these regulations 
together with two copies of the assurance form (Form No. ESA-38). The 
Chairperson will advise the grantee that before the grant may be 
received, the grantee must give assurances that all professional 
performers and related or supporting professional personnel (other than 
laborers or mechanics with respect to whom labor standards are 
prescribed in section 5(j) and section 7(j) of the Act), will be paid, 
without subsequent deduction or rebate on any account not less than the 
minimum compensation determined in accordance with Sec. 505.3 (a) or 
(b) and that the safety and health requirements under Sec. 505.6 will 
be met. The Chairpersons will maintain on file in Washington, DC, for a 
period of three (3) years and make available upon request of the 
Secretary the original signed Form ESA-38 and a copy of the grant letter 
together with any supplementary documents needed to give a description 
of the project or production to be financed in whole or in part under 
the grant.



Sec. 505.5  Adequate assurances.

    (a) Initial assurances. The grantee shall give adequate initial 
assurances that not less than the prevailing minimum compensation 
determined in accordance with Sec. 505.3 will be paid to all 
professional performers and related or supporting professional 
personnel, and that no part of the project or production will be 
performed under working conditions which are unsanitary or hazardous or 
dangerous to the health and safety of the employees, by executing and 
filing with the Chairperson of the National Endowment for the Arts or 
the Chairperson of the National Endowment for the Humanities, as 
appropriate, Form ESA-38.
    (b) Continuing assurances. (1) The grantee shall maintain and 
preserve sufficient records as an assurance of compliance with section 
5(i) (1) and (2) and section 7(g) (1) and (2) of the Act and shall make 
such reports therefrom to the Secretary as necessary or appropriate to 
assure the adequacy of the assurances given. Such records shall be kept 
for a period of three (3) years after the end of the grant period to 
which they pertain. These records shall include the following 
information relating to each performer and related or supporting 
professional personnel to whom a prevailing minimum compensation 
determination applies pursuant to Sec. 505.3. In addition the record 
required in paragraph (b)(1)(vii) of this section shall be kept for all 
employees engaged in the project or production assisted by the grant.

[[Page 88]]

    (i) Name.
    (ii) Home address.
    (iii) Occupation.
    (iv) Basic unit of compensation (such as the amount of a weekly or 
monthly salary, talent or performance fee, hourly rate or other basis on 
which compensation is computed), including fringe benefits or amounts 
paid in lieu thereof.
    (v) Work performed for each pay period expressed in terms of the 
total units of compensation fully and partially completed.
    (vi) Total compensation paid each pay period, deductions made, and 
date of payment, including amounts paid for fringe benefits and the 
person to whom they were paid, and
    (vii) Brief description of any injury incurred while performing 
under the grant and the dates and duration of disability.
    (2) The grantee shall permit the Administrator and the Assistant 
Secretary or their representatives to investigate and gather data 
regarding the wages, hours, safety, health, and other conditions and 
practices of employment related to the project or production, and to 
enter and inspect such project or production and such records (and make 
such transcriptions thereof), interview such employees during normal 
working hours, and investigate such facts, conditions, practices, or 
matters as may be deemed necessary or appropriate to determine whether 
the grantee has violated the labor standards contemplated by section 
5(i) and section 7(g) of the Act.
    (c) Determination of adequacy. The Administrator and Assistant 
Secretary shall determine the adequacy of assurances given pursuant to 
paragraphs (a) and (b) of this section within each of their respective 
areas of responsibilities, and may revise any such determination at any 
time.

(The requirements in paragraph (b) were approved by the Office of 
Management and Budget under control number 1215-0017)

[53 FR 23541, June 22, 1988; 53 FR 24171, June 27, 1988]



Sec. 505.6  Safety and health standards.

    (a) Standards. Section 5(i)(2) and section 7(g)(2) of the Act 
provide that ``no part of any project or production which is financed in 
whole or in part under this section will be performed or engaged in 
under working conditions which are unsanitary or hazardous or dangerous 
to the health and safety of the employees engaged in such project or 
production. Compliance with the safety and sanitary laws in the State in 
which the performance or part thereof is to take place shall be prima 
facie evidence of compliance. * * *'' The applicable safety and health 
standards shall be those set forth in 29 CFR parts 1910 and 1926, 
including matters incorporated by reference therein. Evidence of 
compliance with State laws relating to health and sanitation will be 
considered prime facie evidence of compliance with the safety and health 
requirements of the Act, and it shall be sufficient unless rebutted or 
overcome by a preponderance of evidence of a failure to comply with any 
applicable safety and health standards set forth in 29 CFR parts 1910 
and 1926, including matters incorporated by reference therein.
    (b) Variances. (1) Variances from standards applied under paragraph 
(a) of this section may be granted under the same circumstances in which 
variances may be granted under section 6(b)(6)(A) or 6(d) of the 
Williams-Steiger Occupational Safety and Health Act of 1970 (29 U.S.C. 
655). The procedures for the granting of variances and for related 
relief are those published in part 1905 of this title.
    (2) Any requests for variances shall also be considered requests for 
variances under the Williams-Steiger Occupational Safety and Health Act 
of 1970, and any variance from a standard applied under paragraph (a) of 
this section and in part 1910 of this title shall be deemed a variance 
from the standards under both the National Foundation on the Arts and 
Humanities Act of 1965 and the Williams-Steiger Occupational Safety and 
Health Act of 1970.



Sec. 505.7  Failure to comply.

    The Secretary's representatives shall maintain a list of those 
grantees who are considered to be responsible for instances of failure 
to comply with the obligation of the grantees specified in section 5(i) 
(1) and (2) and section 7(g)

[[Page 89]]

(1) and (2) of the Act, which are considered to have been willful or of 
such nature as to cast doubt on the reliability of formal assurances 
subsequently given and there shall be maintained a similar list where 
adjustment of the violations satisfactory to the Secretary was not 
properly made. Assurances from persons or organizations placed on either 
such list or any organization in which they have a substantial interest 
shall be considered inadequate for purposes of receiving further grants 
for a period not to exceed three (3) years from the date of notification 
by the Secretary that they have been placed on the lists unless, by 
appropriate application to the Secretary, they demonstrate a current 
responsibility to comply with section 5(i) (1) and (2) and section 7(g) 
(1) and (2) of the Act, and demonstrate that correction of the 
violations has been made.



PART 506_ATTESTATIONS BY EMPLOYERS USING ALIEN CREWMEMBERS FOR 
LONGSHORE ACTIVITIES IN U.S. PORTS--Table of Contents



    Authority: 8 U.S.C. 1288 (c) and (d).

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 506.1  Cross-reference.

    Regulations governing attestations by employers using alien 
crewmembers for longshore activities in U.S. ports are found at 20 CFR 
part 655, subparts F and G.



PART 507_LABOR CONDITION APPLICATIONS AND REQUIREMENTS FOR EMPLOYERS
USING NONIMMIGRANTS ON H	1B SPECIALTY VISAS IN SPECIALTY 

OCCUPATIONS AND AS FASHION MODELS--Table of Contents



    Authority: 8 U.S.C. 1101(a)(15)(H)(i)(b), 1182(n), and 1184; 29 
U.S.C. 49 et seq.; Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1182 
note); and sec. 341 (a) and (b), Pub. L. 103-182, 107 Stat. 2057.

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 507.1  Cross-reference.

    Regulations governing labor condition applications requirements for 
employers using nonimmigrants on H-1B specialty visas in specialty 
occupations and as fashion models are found at 20 CFR part 655, subparts 
H and I.



PART 508_ATTESTATIONS FILED BY EMPLOYERS UTILIZING F-1 STUDENTS FOR 
OFF-CAMPUS WORK--Table of Contents



    Authority: 29 U.S.C. 49 et seq.; and sec. 221(a), Pub. L. 101-649, 
104 Stat. 4978, 5027 (8 U.S.C. 1184 note).

    Source: 61 FR 51014, Sept. 30, 1996, unless otherwise noted.



Sec. 508.1  Cross-reference.

    Regulations governing attestations by employers using F-1 students 
in off-campus work are found at 20 CFR part 655, subparts J and K.



PART 510_IMPLEMENTATION OF THE MINIMUM WAGE PROVISIONS OF THE 1989 
AMENDMENTS TO THE FAIR LABOR STANDARDS ACT IN PUERTO RICO--

Table of Contents



                            Subpart A_General

Sec.
510.1 Summary.
510.2 Purpose and scope of regulations.
510.3 Definitions.

   Subpart B_Schedule of Minimum Wage Rates Applicable in Puerto Rico

510.10 Table of Wage Rates and Effective dates.

                 Subpart C_Classification of Industries

510.20 Wage surveys in Puerto Rico.
510.21 SIC codes.
510.22 Industries eligible for minimum wage phase-in.
510.23 Agricultural activities eligible for minimum wage phase-in.
510.24 Governmental entities eligible for minimum wage phase-in.
510.25 Traditional functions of government.

Appendix A to Part 510--Manufacturing Industries Eligible for Minimum 
          Wage Phase-in
Appendix B to Part 510--Nonmanufacturing Industries Eligible for Minimum 
          Wage Phase-in

[[Page 90]]

Appendix C to Part 510--Government Corporations Eligible for Minimum 
          Wage Phase-in
Appendix D to Part 510--Municipalities Eligible for Minimum Wage Phase-
          in

    Authority: Sec. 4, Pub. L. 101-157, 103 Stat. 938; 29 U.S.C. 201 et 
seq.

    Source: 55 FR 12120, Mar. 30, 1990, unless otherwise noted.



                            Subpart A_General



Sec. 510.1  Summary.

    (a) The Fair Labor Standards Amendments of 1989 (Pub. L. 101-157) 
were enacted into law on November 17, 1989. Among other provisions, 
these amendments to the Fair Labor Standards Act (FLSA) increased the 
minimum wage in section 6(a)(1) of the Act to $3.80 an hour effective 
April 1, 1990, and to $4.25 an hour effective April 1, 1991. With 
respect to certain industries and governmental entities in the 
Commonwealth of Puerto Rico, the Amendments provided that these 
increases would be phased in over extended periods of time.
    (b) Section 6(c) of the FLSA provides for four separate categories 
or tiers for implementing the minimum wage rate increases in Puerto 
Rico.
    (1) For Tier 1, which includes employees of the United States, 
employees of hotels, motels, or restaurants, retail or service 
establishments that employ such employees primarily in connection with 
the preparation or offering of food or beverages for human consumption, 
and industries in which the average hourly wage is greater than $4.64, 
there shall be no phase-in. The wage rates and effective dates shall be 
those specified in section 6(a)(1) of FLSA, i.e., $3.80 per hour 
beginning April 1, 1990 and $4.25 per hour beginning April 1, 1991.
    (2) For Tier 2, which includes industries in which the average 
hourly wage is not less than $4.00 but not more than $4.64, the 
increases in the minimum wage rates shall be phased-in in five annual 
increments (rounded to the nearest 5 cents) beginning April 1, 1990, and 
ending April 1, 1994.
    (3) For Tier 3, which includes industries in which the average 
hourly wage is less than $4.00, the increases in the minimum wage shall 
be phased-in in six annual increments (rounded to the nearest 5 cents) 
beginning April 1, 1990, and ending April 1, 1995.
    (4) For Tier 4, which includes certain employees of the Commonwealth 
of Puerto Rico, municipalities, and other governmental entities of the 
Commonwealth in which the average hourly wage is less than $4.00, the 
increases shall be phased-in in seven annual increments (rounded to the 
nearest 5 cents) beginning April 1, 1990 and ending April 1, 1996.
    (c) The Amendments also eliminated reference to Puerto Rico in those 
sections of FLSA relating to the establishment and conduct of special 
industry committees which recommend minimum wage rates in certain 
territories. These sections now apply only to American Samoa. (Industry 
committee regulations pertaining to American Samoa are found in 29 CFR 
parts 511 and 697).



Sec. 510.2  Purpose and scope of regulations.

    (a) The purpose of these regulations is to implement the 1989 
Amendments to the FLSA with respect to minimum wage increases in Puerto 
Rico. These regulations establish the applicable wage rates and 
effective dates in the four statutory tiers and categorize industries 
and governmental entities in Puerto Rico in those tiers according to 
average hourly wage rates. In addition, these regulations explain the 
methodology used to determine appropriate tiers, including the use of 
standard industrial classification (SIC) codes to categorize industries.
    (b) Subpart A of this part summarizes the provisions of the 
Amendments as applicable to Puerto Rico and defines the terms used 
herein. Subpart B of this part states the specific minimum wage rates 
for each tier and the effective dates of those rates. Subpart C of this 
part explains how industry and governmental categories were determined, 
the general methodology used to conduct the surveys which provided the 
data used to determine average hourly wage rates, and special issues in 
the classification of governmental entities. Appendix A of this

[[Page 91]]

part contains a listing of manufacturing industries by Standard 
Industrial Classification (SIC) code and indicates the tier to which 
each industry is subject. Appendix B of this part contains a listing of 
nonmanufacturing industries by SIC code and indicates the tier to which 
each industry is subject. Appendix C of this part contains a listing of 
government corporations and indicates the tier to which each such 
corporation is subject. Appendix D of this part contains a listing of 
municipalities and indicates the tier to which each municipality is 
subject.
    (c) Nothing contained in this part should be construed as precluding 
the Puerto Rico Minimum Wage Board, which has been granted authority to 
promulgate minimum wage rates above the Federal statutory minimum, from 
providing for increases in any industry which would exceed the rates 
provided for in these regulations or in section 6(a)(1) of the Act.



Sec. 510.3  Definitions.

    (a) Act or FLSA means the Fair Labor Standards Act of 1938, as 
amended (29 U.S.C. 201, et seq.).
    (b) Amendments or 1989 Amendments means the Fair Labor Standards 
Amendments of 1989 (Pub. L. 101-157).
    (c) Secretary means the Secretary of Labor, or a duly authorized 
representative of the Secretary.
    (d) Administrator means the Administrator of the Wage and Hour 
Division of the Employment Standards Administration, U.S. Department of 
Labor, or a duly authorized representative of the Administrator.
    (e) Department means the U.S. Department of Labor.
    (f) Tier means one of the four categories established for an 
extended phase-in of the statutory increases in the minimum wage under 
section 6(c) of the Act as amended.
    (g) Standard Industrial Classification (SIC) refers to the 
classifications established in the Standard Industrial Classification 
Manual, 1987, published by the Office of Management and Budget, 
Executive Office of the President.



   Subpart B_Schedule of Minimum Wage Rates Applicable in Puerto Rico



Sec. 510.10  Table of wage rates and effective dates.

    (a) The following table provides effective dates of minimum wage 
increases for the four statutory tiers. Appendices A and B to these 
regulations contain listings of manufacturing and non-manufacturing 
industries in Puerto Rico by SIC code, and indicate which tier is 
applicable. Appendices C and D contain listings of government 
corporations and municipalities and indicate which tier is applicable.

                                                 Effective Dates
----------------------------------------------------------------------------------------------------------------
                Tier                   4/1/90     4/1/91     4/1/92     4/1/93     4/1/94     4/1/95     4/1/96
----------------------------------------------------------------------------------------------------------------
One................................      $3.80      $4.25      $4.25      $4.25      $4.25      $4.25      $4.25
Two................................       3.55       3.70       3.90       4.05       4.25       4.25       4.25
Three..............................       3.50       3.65       3.80       3.95       4.10       4.25       4.25
Four...............................       3.50       3.60       3.75       3.85       4.00       4.10       4.25
----------------------------------------------------------------------------------------------------------------

    (b) Tier 1 applies to employees of the United States, employees of 
hotels, motels, or restaurants, retail or service establishments that 
employ such employees primarily in connection with the preparation or 
offering of food or beverages for human consumption, and industries in 
which the average hourly wage is greater than $4.64.
    (c) Tier 2 applies to industries in which the average hourly wage is 
not less than $4.00 but not more than $4.64.
    (d) Tier 3 applies to industries in which the average hourly wage is 
less than $4.00.
    (e) Tier 4 applies to certain employees of the Commonwealth of 
Puerto Rico, municipalities, and other governmental entities of the 
Commonwealth in which the average hourly wage is less than $4.00.

[[Page 92]]



                 Subpart C_Classification of Industries



Sec. 510.20  Wage surveys in Puerto Rico.

    (a) The legislative history to the 1989 Amendments (Conference 
Report 101-47 on H.R. 2, May 8, 1989) stated that for any industry to 
qualify for an extended minimum wage phase-in, the government of Puerto 
Rico would be required to furnish official survey data substantiating 
that an industry's average hourly wage is below either the $4.65 or 
$4.00 threshold level. Such data were to be compiled and submitted for 
review to the Department.
    (b) Manufacturing industries. For purposes of implementing section 
6(c) of the Act, as amended, Puerto Rico has submitted its Census of 
Manufacturing Industries. The Bureau of Labor Statistics of Puerto Rico 
regularly gathers data from manufacturing establishments regarding 
employment, hours and earnings. The data include hourly earnings for 
production and related workers and are generally specific to the four-
digit SIC code level.
    (c) Non-manufacturing industries. The Bureau of Labor Statistics of 
Puerto Rico designed and executed a survey to supplement data regularly 
gathered for the U.S. Bureau of Labor Statistics (i.e., that included in 
the payroll establishment survey published in Employment and Earnings). 
The supplemental survey was carried out to determine average hourly 
earnings for production workers or non-supervisory employees in the 
private non-agricultural, non-manufacturing sector. Employment and 
payroll information was collected for the payroll period which included 
April 12, 1989. The data provided to the Department were generally 
specific to the four-digit SIC code level.
    (d) Agriculture. At the request of the Department, the Bureau of 
Labor Statistics of Puerto Rico conducted a survey of wages paid to 
agricultural workers which included employment and earnings from at 
least a specified number of sugarcane farms, coffee farms, ornamental 
farms, vegetable farms, and other farms, following standard statistical 
random sampling techniques. The survey included information on earnings, 
employment, and hourly wage rates paid to workers for the workweek 
including March 11 through March 17, 1990. In addition, applicable 
collective bargaining agreements were reviewed for sugarcane farms.
    (e) Commonwealth government. In the case of the Commonwealth 
Government of Puerto Rico, a census of hourly earnings was undertaken of 
all government departments, commissions and other agencies. A separate 
survey was conducted of government corporations. Managers, officials and 
employees in positions which require a college degree were excluded from 
the surveys.
    (f) Municipalities. In the case of the municipalities of Puerto 
Rico, a census of hourly earnings was conducted. Managers, officials and 
employees in positions which require a college degree were excluded from 
the survey.

[55 FR 12120, Mar. 30, 1990, as amended at 55 FR 53247, Dec. 27, 1990]



Sec. 510.21  SIC codes.

    (a) The Conference Report specifically cites Puerto Rico's annual 
Census of Manufacturing Industries as a source of average hourly wage 
data by industry. Industries in that census are organized by Standard 
Industrial Classification (SIC), the statistical classification system 
used for a variety of governmental and statistical purposes. With 
respect to non-manufacturing industries, or other industries not 
included in the Census of Manufacturing, the Conference Report stated 
that data ``should be at a level of specificity comparable to the four 
digit Standard Industry Code (SIC) code level.''
    (b) The Standard Industrial Classification (SIC) codes listed in 
appendix A and B herein are designated in accordance with the Standard 
Industrial Classification (SIC) Manual, 1987, published by the Executive 
Office of the President, Office of Management and Budget. This 
incorporation by reference was approved by the Director of the Federal 
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
may be obtained from the National Technical Information Service, 5285 
Port Royal Road, Springfield, VA 22161. Copies may be inspected at all

[[Page 93]]

federal depository libraries in the Commonwealth of Puerto Rico; at the 
district office of the Wage and Hour Division, U.S. Department of Labor, 
New San Juan Office Building, 159 Chardon St., room 102, Hato Rey, PR 
00918; at the Commonwealth of Puerto Rico Department of Labor and Human 
Resources, Prudencio Rivera Building, Munoz Rivera Avenue 505, Mato Rey, 
PR 00918; or at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call 202-
741-6030, or go to: http://www.archives.gov/federal--register/code--of--
federal--regulations/ibr--locations.html. Establishments are classified 
according to their primary activity. The classification structure 
classifies industries by:
    (1) Two-digit major group,
    (2) Three digit industry group, or
    (3) Four-digit industry code, according to the level of industrial 
detail which may be required.

Each operating establishment is assigned an industry code on the basis 
of its primary activity, which is determined by its principal product or 
group of products produced or distributed, or services rendered.

[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990, as amended at 69 
FR 18803, Apr. 9, 2004]



Sec. 510.22  Industries eligible for minimum wage phase-in.

    (a) Appendix A contains a listing of all industries included in the 
Census of Manufacturing. Appendix B contains a listing of non-
manufacturing industries. These listing are organized by SIC numbers, 
presented by:
    (1) Major group (two-digit classification),
    (2) Industry group (three-digit classification), and (3) industry 
(four-digit classification). In each instance the phase-in tier which 
applies to that industry or group is indicated.
    (b) Employers are required to utilize the most detailed 
classification which applies to their industry. Where an employer's 
four-digit SIC code is listed, the tier applicable to that code 
determines the minimum wage phase-in schedule for that employer. (See 
Sec. 510.10, above).
    (c) Where an industry is not listed by four-digit SIC code, 
employers shall utilize the three-digit which applies to their industry. 
If a three-digit code is not listed, employers shall use the applicable 
two-digit code.

[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990]



Sec. 510.23  Agricultural activities eligible for minimum wage phase-in.

    Agriculture activities eligible for an extended phase-in of the 
minimum wage in Major groups 01, 02, and 07 have been incorporated into 
Appendix B--Nonmanufacturing Industries Eligible for Minimum Wage Phase-
In. Applicable wage rates are effective retroactive to April 1, 1990. 
Employers in the sugarcane farming industry (SIC Number 0133) who are 
subject to Tier 3 wage rates but who have paid wage rates based on Tier 
2 wage rates may not take any action to recoup such payments where those 
actions would have the effect of reducing the wage rate being paid at 
the time of such recoupment to below that required under Tier 3.

[55 FR 53247, Dec. 27, 1990]



Sec. 510.24  Governmental entities eligible for minimum wage phase-in.

    (a) The Commonwealth government of Puerto Rico has been determined 
to be eligible for treatment under Tier 2, on the basis of wage data 
supplied to the Department.
    (b) Appendix C of this part contains a listing of Commonwealth 
government corporations, indicating the phase-in tier which applies. 
Entities which do not appear on the list are those for which no wage 
data were supplied. These entities are therefore categorized under Tier 
1, and are ineligible for an extended phase-in.
    (c) Appendix D of the part contains a listing of municipalities, 
indicating the phase-in tier which applies. Municipalities categorized 
under Tier 1 are those which failed to supply wage data.
    (d) Employees of municipalities who have reason to believe that the 
municipality by which they are employed has been incorrectly 
categorized, e.g., categorized under Tier 3 instead of Tier 2, may no 
later than June 1, 1990, file

[[Page 94]]

with the Administrator a petition for review. The petition shall be 
accompanied by any information the employee may have to support a 
determination that the municipality is incorrectly categorized. In the 
event the Administrator determines that a tier other than that listed in 
appendix D of this part applies, the affected municipality shall be 
liable for retroactive payment of any back wages found to be due.
    (e) Certain employees of municipalities or government corporations 
in which the average wage is less than $4.00 per hour are eligible to be 
paid under Tier 4, rather than Tier 3. Tier 4 applies only to those 
employees employed by municipalities or government corporations who are 
principally engaged in one or more of the ``traditional'' functions 
listed in Sec. 510.24 (a) or (b). All other employees of such entities 
must be paid in accordance with Tier 3.

[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990]



Sec. 510.25  Traditional functions of government.

    (a) Section 6(c)(4) of the Act, as amended, limits the six-year 
phase-in of the statutory minimum wage (``Tier 4'') to those employees 
with an average wage of less than $4.00 per hour who were brought under 
minimum wage coverage ``pursuant to an amendment made by the Fair Labor 
Standards Amendments of 1985.'' The Department has interpreted this 
language as referring to section 2(c) of the 1985 FLSA Amendments, which 
provided for deferred liability for minimum wage violations (until April 
15, 1986) ``with respect to any employee who would not have been covered 
under the Secretary's special enforcement policy'' published in 29 CFR 
775.2 and 775.4. The latter subsection listed those functions of State 
or local government which were determined by the Supreme Court's ruling 
in National League of Cities v. Usery, 426 U.S. 833 (1976) (subsequently 
overruled by Garcia v. San Antonio Metropolitan Transit Authority, 469 
U.S. 528 (1985)) to be integral operations of the governments in areas 
of traditional governmental functions. The listed ``traditional'' 
functions included the following:
    (1) Schools.
    (2) Hospitals.
    (3) Fire prevention.
    (4) Police protection.
    (5) Sanitation.
    (6) Public health.
    (7) Parks and recreation.
    (8) Libraries.
    (9) Museums.
    (b) The Supreme Court in National League of Cities clearly did not 
limit ``traditional'' functions of government to those set out in 
paragraph (a) of this section. The Court included within this concept 
all those governmental services which the States and their political 
subdivisions have traditionally afforded their citizens, which the 
States have regarded as integral parts of their governmental activities, 
and which State and local governments are created to provide. The 
Department interprets the Court's analysis of ``traditional'' functions 
as turning in large part upon whether the States or local governments 
had, prior to initial enactment of federal regulatory legislation 
applicable to a particular field of service or activity (such as FLSA), 
generally established themselves as providers of the services. The 
Department therefore views the following government functions as falling 
within the ``traditional'' category:
    (1) Finance (including Auditor, Budget and Comptroller).
    (2) Elections.
    (3) Personnel.
    (4) Public works.
    (5) Office of the Mayor.
    (6) Legal Affairs.
    (7) Planning.
    (8) Waterworks.
    (9) Social services.
    (10) Street and highway construction and maintenance.
    (11) Automobile licensing.
    (12) Sewage treatment.
    (c) Employees whose primary function falls within one or more of the 
activities listed in paragraph (a) or (b) of this section, are therefore 
considered to be engaged in ``traditional'' functions of government. 
This would include employees who provide support functions for such 
activities, such as

[[Page 95]]

clerical, secretarial, supply and janitorial.
    (d) No employees of a municipality or government corporation may be 
paid in accordance with the Tier 4 phase-in schedule unless the 
employee:
    (1) Is engaged in one of the specific activities listed in 
paragraphs (a) and (b) of this section, and
    (2) Is employed by a municipality or government corporation in which 
the average wage is less than $4.00 per hour.



   Sec. Appendix A to Part 510--Manufacturing Industries Eligible for 
                          Minimum Wage Phase-In

    This appendix contains a listing of all manufacturing industries for 
which data were collected and compiled by the Commonwealth of Puerto 
Rico for purposes of implementing the 1989 Amendments to FLSA. This 
listing follows the order and classifications used in the SIC Manual, 
1987, which is incorporated by reference in these regulations (Sec. 
510.21).
    The data in this appendix are presented by major industry group 
(two-digit classification), industry group number (three-digit 
classification), and industry number (four-digit classification). Tiers 
will not be listed for industry categories in which there were fewer 
than three employers, in conformance with standard procedures used by 
the Commonwealth of Puerto Rico in collecting and publishing these data 
until such time as Puerto Rico receives appropriate waivers of 
confidentiality from all employers in such categories. These categories 
are noted with an ``a'' on the following table. In addition, no tier 
will be listed where an industry was not included in the original 
survey, because it was not in existence, because the industry was too 
small to be included, or for other reasons.
    Employers who do not find the four-digit classification for their 
industry shall refer to the appropriate three-digit classification under 
which their establishment falls. If the appropriate three-digit 
classification is not listed, employers shall refer to the appropriate 
two-digit classification. For example, no tier is listed for industry 
number 2034, dried and dehydrated fruits, vegetables, and soup mixes. 
Thus, an employer in industry 2034 must use the tier listed for industry 
group 203, i.e. Tier 2.
    Further, employers who find the appropriate four-digit designation 
in this appendix must use that designation and cannot refer to a two- or 
three-digit classification. For example, an employer in industry number 
2033, canned fruits, vegetables, preserves, jams, and jellies, which has 
a Tier 1 designation, cannot use the Tier 2 designation of industry 
group 203, canned, frozen, and preserved fruits, vegetables, and food 
specialties.
    If no four-digit, three-digit, or two-digit classification is listed 
for an industry, employees in that group must pay the Tier 1 rates.
    Important: In referring to this appendix to determine appropriate 
tier designations, please note that certain categories of employees are 
subject to treatment under Tier 1 regardless of the average hourly wage 
rate for the industry and the tier designation contained herein. These 
employees, as listed in the 1989 Amendments, are those employed by:
    (a) The United States
    (b) An establishment that is a hotel, motel, or restaurant, or
    (c) Any other retail or service establishment that employs such 
employee in connection with the preparation or offering of food or 
beverages for human consumption, either on the premises, or by such 
services as catering, banquet, box lunch, or curb or counter service, to 
the public, to employees, or to members or guests of clubs.
    Please note that these named categories may not correspond exactly 
to categories established by the SIC manual.

                        Manufacturing Industries
------------------------------------------------------------------------
                 Industry
 Major group      group       Industry    Tier           Industry
                  number       number
------------------------------------------------------------------------
20...........  ...........  ...........       1  Food and kindred
                                                  products.
                       201  ...........       2  Meat products.
               ...........         2011       2  Meat packing plants.
               ...........         2013       1  Sausages and other
                                                  prepared meat
                                                  products.
               ...........         2015       2  Poultry slaughtering
                                                  and processing.
                       202  ...........       1  Dairy products.
               ...........         2022       a  Natural, processed, and
                                                  imitation cheese.
               ...........         2023       1  Dry, condensed, and
                                                  evaporated dairy
                                                  products.
               ...........         2024       1  Ice cream and frozen
                                                  desserts.
               ...........         2026       1  Fluid milk.
                       203  ...........       2  Canned, frozen, and
                                                  preserved fruits,
                                                  vegetables, and food
                                                  specialties.
               ...........         2032       a  Canned specialties.
               ...........         2033       1  Canned fruits,
                                                  vegetables, preserves,
                                                  jams, and jellies.

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               ...........         2035       3  Pickled fruits and
                                                  vegetables, vegetable
                                                  sauces and seasonings,
                                                  and salad dressings.
               ...........         2037       2  Frozen fruits, fruit
                                                  juices, and
                                                  vegetables.
               ...........         2038       3  Frozen specialties, not
                                                  elsewhere classified.
                       204  ...........       1  Grain mill products.
               ...........         2041       a  Flour and other grain
                                                  mill products.
               ...........         2043       a  Cereal breakfast foods.
               ...........         2044       1  Rice milling.
               ...........         2045       1  Prepared flour mixes
                                                  and doughs.
               ...........         2046       1  Wet corn milling.
               ...........         2048       1  Prepared feeds and feed
                                                  ingredients for
                                                  animals and fowls,
                                                  except dogs and cats.
                       205  ...........       1  Bakery products.
               ...........         2051       1  Bread and other bakery
                                                  products, except
                                                  cookies and crackers.
               ...........         2052       1  Cookies and crackers.
               ...........         2053       a  Frozen bakery products,
                                                  except bread.
                       206  ...........       1  Sugar and confectionery
                                                  products.
               ...........         2061       1  Cane sugar, except
                                                  refining.
               ...........         2062       a  Cane sugar refining.
               ...........         2064       1  Candy and other
                                                  confectionery
                                                  products.
               ...........         2066       3  Chocolate and cocoa
                                                  products.
               ...........         2067       a  Chewing gum.
                       208  ...........       1  Beverages.
               ...........         2082       1  Malt beverages.
               ...........         2084       3  Wines, brandy, and
                                                  brandy spirits.
               ...........         2085       1  Distilled and blended
                                                  liquors.
               ...........         2086       1  Bottled and canned soft
                                                  drinks and carbonated
                                                  waters.
               ...........         2087       1  Flavoring extracts and
                                                  flavoring syrups, not
                                                  elsewhere classified.
                       209  ...........       1  Miscellaneous food
                                                  preparations and
                                                  kindred products.
               ...........         2091       1  Canned and cured fish
                                                  and seafoods.
               ...........         2095       2  Roasted coffee.
               ...........         2096       1  Potato chips, corn
                                                  chips, and similar
                                                  snacks.
               ...........         2097       3  Manufactured ice.
               ...........         2098       a  Macaroni, spaghetti,
                                                  vermicelli, and
                                                  noodles.
               ...........         2099       2  Food preparations, not
                                                  elsewhere classified.
21...........  ...........  ...........       1  Tobacco products.
                       211  ...........       a  Cigarettes.
               ...........         2111       a  Cigarettes.
                       212  ...........       1  Cigars.
               ...........         2121       1  Cigars.
                       213  ...........       1  Chewing and smoking
                                                  tobacco and snuff.
               ...........         2131       1  Chewing and smoking
                                                  tobacco and snuff.
                       214  ...........       a  Tobacco stemming and
                                                  redrying.
               ...........         2141       a  Tobacco stemming and
                                                  redrying.
22...........  ...........  ...........       1  Textile mill products.
                       221  ...........       1  Broadwoven fabric
                                                  mills, cotton.
               ...........         2211       1  Broadwoven fabric
                                                  mills, cotton.
                       224  ...........       1  Narrow fabric and other
                                                  smallwares mills:
                                                  cotton, wool, silk,
                                                  and manmade fiber.
               ...........         2241       1  Narrow fabric and other
                                                  smallwares mills:
                                                  cotton, wool, silk,
                                                  and manmade fiber.
                       225  ...........       2  Knitting mills.
               ...........         2251       1  Women's full-length and
                                                  knee-length hosiery,
                                                  except socks.
               ...........         2253       2  Knit outerwear mills.
               ...........         2254       3  Knit underwear and
                                                  nightwear mills.
                       226  ...........       1  Dyeing and finishing
                                                  textiles, except wool
                                                  fabrics and knit
                                                  goods.
               ...........         2261       3  Finishers of broadwoven
                                                  fabrics of cotton.
               ...........         2262       1  Finishers of broadwoven
                                                  fabrics of manmade
                                                  fiber and silk.
                       227  ...........       1  Carpets and rugs.
               ...........         2273       1  Carpets and rugs.
                       228  ...........       3  Yarn and thread mills.
               ...........         2281       3  Yarn spinning mills.
23...........  ...........  ...........       2  Apparel and other
                                                  finished products made
                                                  from fabrics and
                                                  similar materials.
                       231  ...........       3  Men's and boys' suits,
                                                  coats, and overcoats.
               ...........         2311       3  Men's and boys' suits,
                                                  coats, and overcoats.
                       232  ...........       2  Men's and boys'
                                                  furnishings, work
                                                  clothing, and allied
                                                  garments.
               ...........         2321       2  Men's and boys' shirts
                                                  except work shirts.
               ...........         2322       1  Men's and boys'
                                                  underwear and
                                                  nightwear.
               ...........         2323       2  Men's and boys'
                                                  neckwear.
               ...........         2325       2  Men's and boys'
                                                  separate trousers and
                                                  slacks.

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               ...........         2326       3  Men's and boys' work
                                                  clothing.
               ...........         2329       3  Men's and boys'
                                                  clothing, not
                                                  elsewhere classified.
                       233  ...........       3  Women's, misses', and
                                                  juniors' outerwear.
               ...........         2331       3  Women's, misses', and
                                                  juniors' blouses and
                                                  shirts.
               ...........         2335       3  Women's, misses', and
                                                  juniors dresses.
               ...........         2337       3  Women's, misses, and
                                                  juniors' suits,
                                                  skirts, and coats.
               ...........         2339       2  Women's, misses', and
                                                  juniors' outerwear,
                                                  not elsewhere
                                                  classified.
                       234  ...........       2  Women's, misses',
                                                  children's, and
                                                  infants'
                                                  undergarments.
               ...........         2341       2  Women's, misses',
                                                  children's, and
                                                  infants' underwear and
                                                  nightwear.
               ...........         2342       2  Brassieres, girdles,
                                                  and allied garments.
                       235  ...........       3  Hats, caps, and
                                                  millinery
               ...........         2353       3  Hats, caps, and
                                                  millinery
                       236  ...........       3  Girls', children's, and
                                                  infants' outerwear.
               ...........         2361       3  Girls', children's, and
                                                  infants' dresses,
                                                  blouses, and shirts.
               ...........         2369       3  Girls', children's, and
                                                  infants' outerwear,
                                                  not elsewhere
                                                  classified.
                       238  ...........       3  Miscellaneous apparel
                                                  and accessories.
               ...........         2385       3  Waterproof outerwear.
               ...........         2387       3  Apparel belts.
               ...........         2389       3  Apparel and
                                                  accessories, not
                                                  elsewhere classified.
                       239  ...........       3  Miscellaneous
                                                  fabricated textile
                                                  products.
               ...........         2391       2  Curtains and draperies.
               ...........         2392       3  Housefurnishings,
                                                  except curtains and
                                                  draperies.
               ...........         2393       3  Textile bags.
               ...........         2395       2  Pleating, decorative
                                                  and novelty stitching,
                                                  and tucking for the
                                                  trade.
               ...........         2396       2  Automotive trimmings,
                                                  apparel findings, and
                                                  related products.
               ...........         2399       3  Fabricated textile
                                                  products, not
                                                  elsewhere classified.
24...........  ...........  ...........       2  Lumber and wood
                                                  products, except
                                                  furniture.
                       242  ...........       3  Sawmills and planing
                                                  mills.
               ...........         2421       3  Sawmills and planing
                                                  mills, general.
                       243  ...........       2  Millwork, veneer,
                                                  plywood, and
                                                  structural wood
                                                  members.
               ...........         2431       2  Millwork.
               ...........         2434       2  Wood kitchen cabinets.
               ...........         2435       a  Hardwood veneer and
                                                  plywood.
                       244  ...........       3  Wood containers.
               ...........         2448       3  Wood pallets and skids.
                       245  ...........       3  Wood buildings and
                                                  mobile homes.
               ...........         2451       3  Mobile homes.
                       249  ...........       2  Miscellaneous wood
                                                  products.
               ...........         2491       2  Wood preserving.
               ...........         2499       2  Wood products, not
                                                  elsewhere classified.
25...........  ...........  ...........       2  Furniture and fixtures.
                       251  ...........       3  Household furniture.
               ...........         2511       3  Wood household
                                                  furniture, except
                                                  upholstered.
               ...........         2512       3  Wood household
                                                  furniture,
                                                  upholstered.
               ...........         2514       3  Metal household
                                                  furniture.
               ...........         2515       2  Mattresses,
                                                  foundations, and
                                                  convertible beds.
               ...........         2517       3  Wood television, radio,
                                                  phonograph, and sewing
                                                  machine cabinets.
               ...........         2519       3  Household furniture,
                                                  not elsewhere
                                                  classified.
                       252  ...........       2  Office furniture.
               ...........         2521       a  Wood office furniture.
               ...........         2522       2  Office furniture,
                                                  except wood.
                       253  ...........       3  Public building and
                                                  related furniture.
               ...........         2531       3  Public building and
                                                  related furniture.
                       254  ...........       1  Partitions, shelving,
                                                  lockers, and office
                                                  and store fixtures.
               ...........         2541       2  Wood office and store
                                                  fixtures, partitions,
                                                  shelving, and lockers.
               ...........         2542       1  Office and store
                                                  fixtures, partitions,
                                                  shelving, and lockers,
                                                  except wood.
                       259  ...........       2  Miscellaneous furniture
                                                  and fixtures.
               ...........         2591       3  Drapery hardware and
                                                  window blinds and
                                                  shades.
               ...........         2599       a  Furniture and fixtures,
                                                  not elsewhere
                                                  classified.
26...........  ...........  ...........       1  Paper and allied
                                                  products.
                       261  ...........       1  Pulp mills.
               ...........         2611       1  Pulp mills.
                       262  ...........       2  Paper mills.
               ...........         2621       2  Paper mills.
                       263  ...........       a  Paperboard mills.
               ...........         2631       a  Paperboard mills.
                       265  ...........       1  Paperboard containers
                                                  and boxes.
               ...........         2652       1  Setup paperboard boxes.
               ...........         2653       1  Corrugated and solid
                                                  fiber boxes.
               ...........         2655       1  Fiber cans, tubes,
                                                  drums, and similar
                                                  products.

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               ...........         2657       1  Folding paperboard
                                                  boxes, including
                                                  sanitary.
                       267  ...........       1  Converted paper and
                                                  paperboard products,
                                                  except containers and
                                                  boxes.
               ...........         2671       2  Packaging paper and
                                                  plastics film, coated
                                                  and laminated.
               ...........         2672       a  Coated and laminated
                                                  paper, not elsewhere
                                                  classified.
               ...........         2673       2  Plastics, foil, and
                                                  coated paper bags.
               ...........         2674       1  Uncoated paper and
                                                  multiwall bags.
               ...........         2676       1  Sanitary paper
                                                  products.
               ...........         2677       1  Envelopes.
               ...........         2678       3  Stationery, tablets,
                                                  and related products.
               ...........         2679       a  Converted paper and
                                                  paperboard products,
                                                  not elsewhere
                                                  classified.
27...........  ...........  ...........       1  Printing, publishing,
                                                  and allied industries.
                       271  ...........       1  Newspapers: publishing,
                                                  or publishing and
                                                  printing.
               ...........         2711       1  Newspapers: publishing,
                                                  or publishing and
                                                  printing.
                       273  ...........       a  Books.
               ...........         2731       a  Books: publishing, or
                                                  publishing and
                                                  printing.
               ...........         2732       3  Book printing.
                       274  ...........       1  Miscellaneous
                                                  publishing.
               ...........         2741       1  Miscellaneous
                                                  publishing.
                       275  ...........       1  Commercial printing.
               ...........         2752       1  Commercial printing,
                                                  lithographic.
               ...........         2754       1  Commercial printing,
                                                  gravure.
               ...........         2759       1  Commercial printing,
                                                  not elsewhere
                                                  classified.
                       276  ...........       1  Manifold business
                                                  forms.
               ...........         2761       1  Manifold business
                                                  forms.
                       278  ...........       1  Blankbooks, looseleaf
                                                  binders, and
                                                  bookbinding and
                                                  related work.
               ...........         2782       1  Blankbooks, looseleaf
                                                  binders and devices.
                       279  ...........       1  Service industries for
                                                  the printing trade.
               ...........         2796       1  Platemaking and related
                                                  services.
28...........  ...........  ...........       1  Chemicals and allied
                                                  products.
                       281  ...........       1  Industrial inorganic
                                                  chemicals.
               ...........         2813       1  Industrial gases.
               ...........         2819       1  Industrial inorganic
                                                  chemicals, not
                                                  elsewhere classified.
                       282  ...........       1  Plastics materials and
                                                  synthetic resins,
                                                  synthetic rubber,
                                                  cellulosic and other
                                                  manmade fibers, except
                                                  glass.
               ...........         2821       a  Plastics materials,
                                                  synthetic resins, and
                                                  nonvulcanizable
                                                  elastomers.
               ...........         2822       2  Synthetic rubber
                                                  (vulcanizable
                                                  elastomers).
                       283  ...........       1  Drugs.
               ...........         2833       1  Medicinal chemicals and
                                                  botanical products.
               ...........         2834       1  Pharmaceutical
                                                  preparations.
               ...........         2835       1  In vitro and in vivo
                                                  diagnostic substances.
               ...........         2836       1  Biological products,
                                                  except diagnostic
                                                  substances.
                       284  ...........       1  Soap, detergents, and
                                                  cleaning preparations;
                                                  perfumes, cosmetics,
                                                  and other toilet
                                                  preparations.
               ...........         2841       1  Soap and other
                                                  detergents, except
                                                  specialty cleaners.
               ...........         2842       1  Specialty cleaning,
                                                  polishing, and
                                                  sanitation
                                                  preparations.
               ...........         2844       1  Perfumes, cosmetics,
                                                  and other toilet
                                                  preparations.
                       285  ...........       1  Paints, varnishes,
                                                  lacquers, enamels, and
                                                  allied products.
               ...........         2851       1  Paints, varnishes,
                                                  lacquers, enamels, and
                                                  allied products.
                       286  ...........       1  Industrial organic
                                                  chemicals.
               ...........         2865       1  Cyclic organic crudes
                                                  and intermediates, and
                                                  organic dyes and
                                                  pigments.
               ...........         2869       a  Industrial organic
                                                  chemicals, not
                                                  elsewhere classified.
                       287  ...........       1  Agricultural chemicals.
               ...........         2873       1  Nitrogenous
                                                  fertilizers.
               ...........         2879       1  Pesticides and
                                                  agricultural
                                                  chemicals, not
                                                  elsewhere classified.
                       289  ...........       1  Miscellaneous chemical
                                                  products.
               ...........         2891       1  Adhesives and sealants.
               ...........         2899       1  Chemicals and chemical
                                                  preparations, not
                                                  elsewhere classified.
29...........  ...........  ...........       1  Petroleum refining and
                                                  related industries.
                       291  ...........       1  Petroleum refining.
               ...........         2911       1  Petroleum refining.
                       295  ...........       1  Asphalt paving and
                                                  roofing materials.
               ...........         2951       1  Asphalt paving mixtures
                                                  and blocks.
               ...........         2952       1  Asphalt felts and
                                                  coatings.
                       299  ...........       a  Miscellaneous products
                                                  of petroleum and coal.
               ...........         2992       a  Lubricating oils and
                                                  greases.
30...........  ...........  ...........       1  Rubber and
                                                  miscellaneous plastics
                                                  products.
                       302  ...........       1  Rubber and plastics
                                                  footwear.
               ...........         3021       1  Rubber and plastics
                                                  footwear.
                       305  ...........       2  Gaskets, packing, and
                                                  sealing devices and
                                                  rubber and plastics
                                                  hose and belting.

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               ...........         3052       2  Rubber and plastics
                                                  hose and belting.
                       306  ...........       2  Fabricated rubber
                                                  products, not
                                                  elsewhere classified.
               ...........         3069       2  Fabricated rubber
                                                  products, not
                                                  elsewhere classified.
                       308  ...........       1  Miscellaneous plastics
                                                  products.
               ...........         3081       a  Unsupported plastics
                                                  film and sheet.
               ...........         3082       3  Unsupported plastics
                                                  profile shapes.
               ...........         3083       1  Laminated plastics
                                                  plate, sheet, and
                                                  profile shapes.
               ...........         3084       a  Plastics pipe.
               ...........         3085       1  Plastics bottles.
               ...........         3086       2  Plastics foam products.
               ...........         3087       3  Custom compounding of
                                                  purchased plastics
                                                  resin.
               ...........         3088       1  Plastics plumbing
                                                  fixtures.
               ...........         3089       1  Plastics products, not
                                                  elsewhere classified.
31...........  ...........  ...........       2  Leather and leather
                                                  products.
                       313  ...........       2  Boot and shoe cut stock
                                                  and findings.
               ...........         3131       2  Boot and shoe cut stock
                                                  and findings.
                       314  ...........       2  Footwear, except
                                                  rubber.
               ...........         3142       b  House slippers.
               ...........         3143       2  Men's footwear, except
                                                  athletic.
               ...........         3144       1  Women's footwear,
                                                  except athletic.
               ...........         3149       2  Footwear, except
                                                  rubber, not elsewhere
                                                  classified.
                       315  ...........       3  Leather gloves and
                                                  mittens.
               ...........         3151       3  Leather gloves and
                                                  mittens.
                       316  ...........       3  Luggage.
               ...........         3161       3  Luggage.
                       317  ...........       2  Handbags and other
                                                  personal leather
                                                  goods.
               ...........         3171       3  Women's handbags and
                                                  purses.
               ...........         3172       1  Personal leather goods,
                                                  except women's
                                                  handbags and purses.
32...........  ...........  ...........       1  Stone, clay, glass, and
                                                  concrete products.
                       321  ...........       2  Flat glass.
               ...........         3211       2  Flat glass.
                       322  ...........       1  Glass and glassware,
                                                  pressed or blown.
               ...........         3221       1  Glass containers.
                       323  ...........       1  Glass products, made of
                                                  purchased glass.
               ...........         3231       1  Glass products, made of
                                                  purchased glass.
                       324  ...........       1  Cement, hydraulic.
               ...........         3241       1  Cement, hydraulic.
                       326  ...........       3  Pottery and related
                                                  products.
               ...........         3261       3  Vitreous china plumbing
                                                  fixtures and china and
                                                  earthenware fittings
                                                  and bathroom
                                                  accessories.
               ...........         3269       3  Pottery products, not
                                                  elsewhere classified.
                       327  ...........       1  Concrete, gypsum, and
                                                  plaster products.
               ...........         3271       2  Concrete block and
                                                  brick.
               ...........         3272       1  Concrete products,
                                                  except block and
                                                  brick.
               ...........         3273       1  Ready-mixed concrete.
               ...........         3274       1  Lime.
               ...........         3275       a  Gypsum products.
                       328  ...........       1  Cut stone and stone
                                                  products.
               ...........         3281       1  Cut stone and stone
                                                  products.
                       329  ...........       1  Abrasive, asbestos, and
                                                  miscellaneous
                                                  nonmetallic mineral
                                                  products.
               ...........         3295       a  Minerals and earths,
                                                  ground or otherwise
                                                  treated.
               ...........         3296       1  Mineral wool.
33...........  ...........  ...........       1  Primary metal
                                                  industries.
                       331  ...........       1  Steel works, blast
                                                  furnaces, and rolling
                                                  and finishing mills.
               ...........         3312       1  Steel works, blast
                                                  furnaces (including
                                                  coke ovens), and
                                                  rolling mills.
               ...........         3317       1  Steel pipe and tubes.
                       334  ...........       1  Secondary smelting and
                                                  refining of nonferrous
                                                  metals.
               ...........         3341       1  Secondary smelting and
                                                  refining of nonferrous
                                                  metals.
                       335  ...........       1  Rolling, drawing, and
                                                  extruding of
                                                  nonferrous metals.
               ...........         3351       1  Rolling, drawing, and
                                                  extruding of copper.
               ...........         3353       a  Aluminum sheet, plate,
                                                  and foil.
               ...........         3354       1  Aluminum extruded
                                                  products.
                       336  ...........       a  Nonferrous foundries
                                                  (castings).
               ...........         3365       a  Aluminum foundries.
                       339  ...........       1  Miscellaneous primary
                                                  metal products.
               ...........         3398       a  Metal heat treating.
               ...........         3399       1  Primary metal products,
                                                  not elsewhere
                                                  classified.
34...........  ...........  ...........       1  Fabricated metal
                                                  products, except
                                                  machinery and
                                                  transportation
                                                  equipment.
                       341  ...........       1  Metal cans and shipping
                                                  containers.
               ...........         3411       1  Metal cans.

[[Page 100]]

 
               ...........         3412       1  Metal shipping barrels,
                                                  drums, kegs, and
                                                  pails.
                       342  ...........       1  Cutlery, handtools, and
                                                  general hardware.
               ...........         3421       3  Cutlery.
               ...........         3423       a  Hand and edge tools,
                                                  except machine tools
                                                  and handsaws.
               ...........         3429       a  Hardware, not elsewhere
                                                  classified.
                       343  ...........       2  Heating equipment,
                                                  except electric and
                                                  warm air; and plumbing
                                                  fixtures.
               ...........         3433       2  Heating equipment,
                                                  except electric and
                                                  warm air furnaces.
                       344  ...........       2  Fabricated structural
                                                  metal products.
               ...........         3441       1  Fabricated structural
                                                  metal.
               ...........         3442       2  Metal doors, sash,
                                                  frames, molding, and
                                                  trim.
               ...........         3443       1  Fabricated plate work
                                                  (boiler shops).
               ...........         3444       2  Sheet metal work.
               ...........         3446       3  Architectural and
                                                  ornamental metal work.
               ...........         3449       2  Miscellaneous
                                                  structural metal work.
                       345  ...........       1  Screw machine products,
                                                  and bolts, nuts,
                                                  screws, rivets, and
                                                  washers.
               ...........         3452       1  Bolts, nuts, screws,
                                                  rivets, and washers.
                       346  ...........       1  Metal forgings and
                                                  stampings.
               ...........         3469       1  Metal stampings, not
                                                  elsewhere classified.
                       347  ...........       2  Coating, engraving, and
                                                  allied services.
               ...........         3471       2  Electroplating,
                                                  plating, polishing,
                                                  anodizing and
                                                  coloring.
                       349  ...........       2  Miscellaneous
                                                  fabricated metal
                                                  products.
               ...........         3494       1  Valves and pipe
                                                  fittings, not
                                                  elsewhere classified.
               ...........         3495       2  Wire springs.
               ...........         3496       1  Miscellaneous
                                                  fabricated wire
                                                  products.
               ...........         3498       a  Fabricated pipe and
                                                  pipe fittings.
               ...........         3499       2  Fabricated metal
                                                  products, not
                                                  elsewhere classified.
35...........  ...........  ...........       1  Industrial and
                                                  commercial machinery
                                                  and computer
                                                  equipment.
                       353  ...........       a  Construction, mining,
                                                  and materials handling
                                                  machinery and
                                                  equipment.
               ...........         3535       a  Conveyors and conveying
                                                  equipment.
                       354  ...........       1  Metalworking machinery
                                                  and equipment.
               ...........         3541       a  Machine tools, metal
                                                  cutting types.
               ...........         3544       1  Special dies and tools,
                                                  die sets, jigs and
                                                  fixtures, and
                                                  industrial molds.
               ...........         3545       1  Cutting tools, machine
                                                  tool accessories, and
                                                  machinists' precision
                                                  measuring devices.
                       355  ...........       1  Special industry
                                                  machinery, except
                                                  metalworking
                                                  machinery.
               ...........         3555       1  Printing trades
                                                  machinery and
                                                  equipment.
                       356  ...........       1  General industrial
                                                  machinery and
                                                  equipment.
               ...........         3562       a  Ball and roller
                                                  bearings.
               ...........         3563       1  Air and gas
                                                  compressors.
               ...........         3564       a  Industrial and
                                                  commercial fans and
                                                  blowers and air
                                                  purification
                                                  equipment.
               ...........         3568       1  Mechanical power
                                                  transmission
                                                  equipment, not
                                                  elsewhere classified.
               ...........         3569       1  General industrial
                                                  machinery and
                                                  equipment, not
                                                  elsewhere classified.
                       357  ...........       1  Computer and office
                                                  equipment.
               ...........         3571       3  Electronic computers.
               ...........         3572       1  Computer storage
                                                  devices.
               ...........         3577       1  Computer peripheral
                                                  equipment, not
                                                  elsewhere classified.
               ...........         3579       1  Office machines, not
                                                  elsewhere classified.
                       358  ...........       1  Refrigeration and
                                                  service industry
                                                  machinery.
               ...........         3585       1  Air-conditioning and
                                                  warm air heating
                                                  equipment and
                                                  commercial and
                                                  industrial
                                                  refrigeration
                                                  equipment.
               ...........         3589       b  Service industry
                                                  machinery, not
                                                  elsewhere classified.
                       359  ...........       2  Miscellaneous
                                                  industrial and
                                                  commercial machinery
                                                  and equipment.
               ...........         3592       2  Carburetors, pistons,
                                                  piston rings, and
                                                  valves.
               ...........         3596       a  Scales and balances,
                                                  except laboratory.
               ...........         3599       1  Industrial and
                                                  commercial machinery
                                                  and equipment, not
                                                  elsewhere classified.
36...........  ...........  ...........       1  Electronic and other
                                                  electrical equipment
                                                  and components, except
                                                  computer equipment.
                       361  ...........       1  Electronic transmission
                                                  and distribution
                                                  equipment.
               ...........         3612       1  Power, distribution,
                                                  and specialty
                                                  transformers.
               ...........         3613       1  Switchgear and
                                                  switchboard apparatus.
                       362  ...........       1  Electrical industrial
                                                  apparatus.
               ...........         3621       1  Motors and generators.
               ...........         3624       1  Carbon and graphite
                                                  products.
               ...........         3625       1  Relays and industrial
                                                  controls.
               ...........         3629       1  Electrical industrial
                                                  apparatus, not
                                                  elsewhere classified.
                       363  ...........       a  Household appliances.
               ...........         3639       a  Household appliances,
                                                  not elsewhere
                                                  classified.
                       364  ...........       1  Electric lighting and
                                                  wiring equipment.
               ...........         3641       1  Electric lamp bulbs and
                                                  tubes.

[[Page 101]]

 
               ...........         3643       1  Current-carrying wiring
                                                  devices.
               ...........         3644       1  Noncurrent-carrying
                                                  wiring devices.
               ...........         3645       a  Residential electric
                                                  lighting fixtures.
               ...........         3646       2  Commercial, industrial,
                                                  and institutional
                                                  electric lighting
                                                  fixtures.
               ...........         3648       2  Lighting equipment, not
                                                  elsewhere classified.
                       365  ...........       1  Household audio and
                                                  video equipment, and
                                                  audio recordings.
               ...........         3651       1  Household audio and
                                                  video equipment.
               ...........         3652       a  Phonograph records and
                                                  pre-recorded audio
                                                  tapes and disks.
                       366  ...........       1  Communications
                                                  equipment.
               ...........         3661       1  Telephone and telegraph
                                                  apparatus.
               ...........         3663       1  Radio and television
                                                  broadcasting and
                                                  communications
                                                  equipment.
               ...........         3669       1  Communications
                                                  equipment, not
                                                  elsewhere classified.
                       367  ...........       1  Electronic components
                                                  and accessories.
               ...........         3672       2  Printed circuit boards.
               ...........         3674       1  Semiconductors and
                                                  related devices.
               ...........         3677       2  Electronic coils,
                                                  transformers and other
                                                  inductors.
               ...........         3678       1  Electronic connectors.
               ...........         3679       1  Electronic components,
                                                  not elsewhere
                                                  classified.
                       369  ...........       1  Miscellaneous
                                                  electrical machinery,
                                                  equipment, and
                                                  supplies.
               ...........         3692       1  Primary batteries, dry
                                                  and wet.
               ...........         3694       1  Electrical equipment
                                                  for internal
                                                  combustion engines.
37...........  ...........  ...........       1  Transportation
                                                  Equipment.
                       371  ...........       1  Motor vehicles and
                                                  motor vehicle
                                                  equipment.
               ...........         3713       1  Truck and bus bodies.
               ...........         3714       1  Motor vehicle parts and
                                                  accessories.
                       372  ...........       1  Aircraft and parts.
               ...........         3721       a  Aircraft.
               ...........         3728       1  Aircraft parts and
                                                  auxiliary equipment,
                                                  not elsewhere
                                                  classified.
                       373  ...........       1  Ship and boat building
                                                  and repairing.
               ...........         3731       a  Ship building and
                                                  repairing.
               ...........         3732       2  Boat building and
                                                  repairing.
                       379  ...........       a  Miscellaneous
                                                  transportation
                                                  equipment.
               ...........         3792       a  Travel trailers and
                                                  campers.
38...........  ...........  ...........       1  Measuring, analyzing,
                                                  and controlling
                                                  instruments;
                                                  photographic, medical,
                                                  and optical goods,
                                                  watches and clocks.
                       381  ...........       1  Search, detection,
                                                  navigation, guidance,
                                                  aeronautical, and
                                                  nautical systems,
                                                  instruments, and
                                                  equipment.
               ...........         3812       1  Search, detection,
                                                  navigation, guidance,
                                                  aeronautical, and
                                                  nautical systems,
                                                  instruments, and
                                                  equipment.
                       382  ...........       1  Laboratory apparatus
                                                  and analytical,
                                                  optical, measuring,
                                                  and controlling
                                                  instrument.
               ...........         3821       1  Laboratory apparatus
                                                  and furniture.
               ...........         3822       1  Automatic controls for
                                                  regulating residential
                                                  and commercial
                                                  environments and
                                                  appliances.
               ...........         3823       1  Industrial instruments
                                                  for measurement,
                                                  display, and control
                                                  of process variables;
                                                  and related products.
               ...........         3824       a  Totalizing fluid meters
                                                  and counting devices.
               ...........         3825       1  Instruments for
                                                  measuring and testing
                                                  of electricity and
                                                  electrical signals.
               ...........         3829       2  Measuring and
                                                  controlling devices,
                                                  not elsewhere
                                                  classified.
                       384  ...........       1  Surgical, medical, and
                                                  dental instruments and
                                                  supplies.
               ...........         3841       1  Surgical and medical
                                                  instruments and
                                                  apparatus.
               ...........         3842       1  Orthopedic, prosthetic,
                                                  and surgical
                                                  appliances and
                                                  supplies.
               ...........         3843       1  Dental equipment and
                                                  supplies.
               ...........         3844       a  X-ray apparatus and
                                                  tubes and related
                                                  irradiation apparatus.
               ...........         3845       1  Electromedical and
                                                  electrotherapeutic
                                                  apparatus.
                       385  ...........       1  Ophthalmic goods.
               ...........         3851       1  Ophthalmic goods.
                       386  ...........       a  Photographic equipment
                                                  and supplies.
               ...........         3861       a  Photographic equipment
                                                  and supplies.
                       387  ...........       1  Watches, clocks,
                                                  clockwork operated
                                                  devices, and parts.
               ...........         3873       1  Watches, clocks,
                                                  clockwork operated
                                                  devices, and parts.
39...........  ...........  ...........       1  Miscellaneous
                                                  manufacturing
                                                  industries.
                       391  ...........       1  Jewelry, silverware,
                                                  and plated ware.
               ...........         3911       1  Jewelry, precious
                                                  metal.
               ...........         3914       a  Silverware, plated
                                                  ware, and stainless
                                                  steel ware.
               ...........         3915       1  Jewelers' findings and
                                                  materials, and
                                                  lapidary work.
                       394  ...........       2  Dolls, toys, games, and
                                                  sporting and athletic
                                                  goods.
               ...........         3942       2  Dolls and stuffed toys.
               ...........         3949       2  Sporting and athletic
                                                  goods, not elsewhere
                                                  classified.
                       395  ...........       2  Pens, pencils, and
                                                  other artists'
                                                  materials.

[[Page 102]]

 
               ...........         3951       3  Pens, mechanical
                                                  pencils, and parts.
               ...........         3952       a  Lead pencils, crayons,
                                                  and artists'
                                                  materials.
               ...........         3953       1  Marking devices.
                       396  ...........       1  Costume jewelry,
                                                  costume novelties,
                                                  buttons, and
                                                  miscellaneous notions,
                                                  except precious metal.
               ...........         3961       1  Costume jewelry and
                                                  costume novelties,
                                                  except precious metal.
               ...........         3965       a  Fasteners, buttons,
                                                  needles, and pins.
                       399  ...........       1  Miscellaneous
                                                  manufacturing
                                                  industries.
               ...........         3991       a  Brooms and brushes.
               ...........         3993       2  Signs and advertising
                                                  specialties.
               ...........         3995       2  Burial caskets.
               ...........         3999       2  Manufacturing
                                                  industries, not
                                                  elsewhere classified.
------------------------------------------------------------------------
 a=Category contained less than three employers.


[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990, as amended at 55 
FR 39575, Sept. 27, 1990; 57 FR 1103, Jan. 10, 1992]



 Sec. Appendix B to Part 510--Nonmanufacturing Industries Eligible for 
                          Minimum Wage Phase-In

    This appendix contains a listing of all non-manufacturing industries 
(except those in major groups 01, 02, 08, and 09, pertaining to 
agriculture) for which data were collected and compiled by the 
Commonwealth of Puerto Rico for purposes of implementing the 1989 
Amendments to FLSA. This listing follows the order and classifications 
used in the SIC Manual, 1987, which is incorporated by reference in 
these regulations (Sec. 510.21).
    The data in this appendix are presented by major industry group 
(two-digit classification), industry group number (three-digit 
classification), and industry number (four-digit classification).
    Tiers will not be listed for industry categories in which there were 
fewer than three responding employers, or one responding employer had 
more than 80 percent of the employment in the category, in conformance 
with practices of the U.S. Bureau of Labor Statistics in collecting and 
publishing similar data, until such time as Puerto Rico receives 
appropriate waivers of confidentiality from all employers in such 
categories. These categories are noted with an ``a'' on the following 
table. In situations where one or more employers declined to furnish a 
waiver, categories are noted with a ``b'' on the following table.
    In addition, no tier will be listed where an industry was not 
included in the original survey because it was not in existence, because 
the industry was too small to be included, or for other reasons.
    Employers who do not find the four-digit classification for their 
industry shall refer to the appropriate three-digit classification under 
which their establishment falls. If the appropriate three-digit 
classification is not listed, employers shall refer to the appropriate 
two-digit classification.
    For example, no tier is listed for industry number 1423, crushed and 
broken granite. However, a tier is listed for industry group 142, 
crushed and broken stone, including riprap. Thus, an employer in 
industry 1423 must use the tier listed for industry group 142, i.e., 
Tier 1. Furthermore, employers who find the appropriate four-digit 
designation in this appendix must use that designation and cannot refer 
to a two- or three-digit classification. For example, an employer with 
industry number 5719, miscellaneous homefurnishings stores, which has a 
Tier 1 designation, cannot refer to industry group number 571, home 
furniture and furnishings stores, which has a Tier 2 designation.
    Important: In referring to this appendix to determine appropriate 
tier designations, please note that certain categories of employees are 
subject to treatment under Tier 1 regardless of the average hourly wage 
rate for the industry and the tier designation contained herein. These 
employees, as listed in the 1989 Amendments, are those employed by:
    (a) The United States,
    (b) An establishment that is a hotel, motel, or restaurant, or
    (c) Any other retail or service establishment that employs such 
employee in connection with the preparation or offering of food or 
beverages for human consumption, either on the premises, or by such 
services as catering, banquet, box lunch, or curb or counter service, to 
the public, to employees, or to members or guests of clubs.
    Please note that these named categories may not correspond exactly 
to categories established by the SIC manual.

[[Page 103]]

    If no four-digit, three-digit, or two-digit classification is listed 
for an industry, employers in that group must pay the Tier 1 rates.

                       Nonmanufacturing Industries
------------------------------------------------------------------------
                 Industry
 Major group      group       Industry    Tier           Industry
                  number       number
------------------------------------------------------------------------
01...........  ...........  ...........       3  Agricultural
                                                  production--crops.
                       011  ...........       3  Cash grains.
               ...........         0119       3  Cash grains, not
                                                  elsewhere classified.
                       013  ...........       3  Field crops, except
                                                  cash grains.
               ...........         0133       3  Sugarcane and sugar
                                                  beets.
               ...........         0139       3  Field crops, except
                                                  cash grains, not
                                                  elsewhere classified.
                       016  ...........       3  Vegetables and melons.
               ...........         0161       3  Vegetables and melons.
                       017  ...........       3  Fruits and tree nuts.
               ...........         0174       3  Citrus fruits.
               ...........         0179       3  Fruits and tree nuts,
                                                  not elsewhere
                                                  classified.
                       018  ...........       3  Horticultural
                                                  specialties.
               ...........         0181       3  Ornamental floriculture
                                                  and nursery products.
                       019  ...........       3  General farms,
                                                  primarily crop.
               ...........         0191       3  General farms,
                                                  primarily crop.
02...........  ...........  ...........       3  Agricultural
                                                  production--livestock
                                                  and animal
                                                  specialties.
                       021  ...........       3  Livestock, except dairy
                                                  and poultry.
               ...........         0211       3  Beef cattle feedlots.
               ...........         0213       3  Hogs.
                       024  ...........       3  Dairy farms.
               ...........         0241       3  Dairy farms.
                       025  ...........       3  Poultry and eggs.
               ...........         0251       3  Broiler, fryer, and
                                                  roaster chickens.
               ...........         0252       3  Chicken eggs.
               ...........         0254       2  Poultry hatcheries.
                       027  ...........       3  Animal specialties.
               ...........         0271       3  Fur-bearing animals and
                                                  rabbits.
               ...........         0272       2  Horse and other
                                                  equines.
               ...........         0273       3  Animal aquaculture.
               ...........         0279       3  Animal specialties, not
                                                  else where classified.
07...........  ...........  ...........       3  Agricultural services.
                       072  ...........       3  Crop services.
               ...........         0723       3  Crop preparation
                                                  services for market,
                                                  except cotton ginning.
                       074  ...........       2  Veterinary services.
                       075  ...........       a  Animal services except
                                                  veterinary.
               ...........         0751       a  Livestock services,
                                                  except veterinary.
                       078  ...........       3  Landscape and
                                                  horticultural
                                                  services.
14...........  ...........  ...........       1  Mining and quarrying of
                                                  nonmetallic minerals,
                                                  except fuels.
               ...........         1422       2  Crushed and broken
                                                  limestone.
               ...........         1429       1  Crushed and broken
                                                  stone, not elsewhere
                                                  classified.
                       144  ...........       1  Sand and gravel.
               ...........         1442       1  Construction sand and
                                                  gravel.
15...........  ...........  ...........       1  Building construction-
                                                  general contractors
                                                  and operative
                                                  builders.
                       152  ...........       1  General building
                                                  contractors-
                                                  residential buildings.
                       154  ...........       1  General building
                                                  contractors-
                                                  nonresidential
                                                  buildings.
16...........  ...........  ...........       1  Heavy construction
                                                  other than building
                                                  construction-
                                                  contractors.
                       161  ...........       1  Highway and street
                                                  construction, except
                                                  elevated highways.
               ...........         1611       1  Highway and street
                                                  construction, except
                                                  elevated highways.
                       162  ...........       1  Heavy construction,
                                                  except highway and
                                                  street construction.
               ...........         1622       1  Bridge, tunnel, and
                                                  elevated highway
                                                  construction.
               ...........         1623       1  Water, sewer, pipeline,
                                                  and communications and
                                                  power line
                                                  construction.
               ...........         1629       a  Heavy construction, not
                                                  elsewhere classified.
17...........  ...........  ...........       1  Construction-special
                                                  trade contractors.
                       171  ...........       1  Plumbing, heating and
                                                  air-conditioning.
               ...........         1711       1  Plumbing, heating and
                                                  air-conditioning.
                       172  ...........       2  Painting and paper
                                                  hanging.
               ...........         1721       2  Painting and paper
                                                  hanging.
                       173  ...........       1  Electrical work.
               ...........         1731       1  Electrical work.
                       174  ...........       1  Masonry, stonework,
                                                  tile setting, and
                                                  plastering.
               ...........         1741       1  Masonry, stone setting,
                                                  and other stone work.
               ...........         1742       1  Plastering, drywall,
                                                  acoustical, and
                                                  insulation work.
               ...........         1743       1  Terrazzo, tile, marble,
                                                  and mosaic work.
                       175  ...........       a  Carpentry and floor
                                                  work.
               ...........         1751       a  Carpentry work.
                       176  ...........       2  Roofing, siding, and
                                                  sheet metal work.
               ...........         1761       2  Roofing, siding, and
                                                  sheet metal work.

[[Page 104]]

 
                       179  ...........       1  Miscellaneous special
                                                  trade contractors.
               ...........         1791       1  Structural steel
                                                  erection.
               ...........         1793       2  Glass and glazing work.
               ...........         1794       a  Excavation work.
               ...........         1795       a  Wrecking and demolition
                                                  work.
               ...........         1796       1  Installation or
                                                  erection of building
                                                  equipment, not
                                                  elsewhere classified.
               ...........         1799       1  Special trade
                                                  contractors, not
                                                  elsewhere classified.
41...........  ...........  ...........       3  Local and suburban
                                                  transit and interurban
                                                  highway passenger
                                                  transportation.
                       411  ...........       2  Local and suburban
                                                  passenger
                                                  transportation.
               ...........         4111       2  Local and suburban
                                                  transit.
                       412  ...........       3  Taxicabs.
               ...........         4121       3  Taxicabs.
                       413  ...........       3  Intercity and rural bus
                                                  transportation.
               ...........         4131       3  Intercity and rural bus
                                                  transportation.
                       415  ...........       a  School buses.
               ...........         4151       a  School buses.
42...........  ...........  ...........       1  Motor freight
                                                  transportation and
                                                  warehousing.
                       421  ...........       1  Trucking and courier
                                                  services, except air.
                       422  ...........       1  Public warehousing and
                                                  storage.
               ...........         4221       1  Farm product
                                                  warehousing and
                                                  storage.
               ...........         4222       a  Refrigerated
                                                  warehousing and
                                                  storage.
               ...........         4225       1  General warehousing and
                                                  storage.
               ...........         4226       1  Special warehousing and
                                                  storage, not elsewhere
                                                  classified.
44...........  ...........  ...........       1  Water transportation.
                       442  ...........       a  Deep sea domestic
                                                  transportation of
                                                  freight.
               ...........         4424       a  Deep sea domestic
                                                  transportation of
                                                  freight.
                       444  ...........       1  Water transportation of
                                                  freight, not elsewhere
                                                  classified.
               ...........         4449       1  Water transportation of
                                                  freight, not elsewhere
                                                  classified.
                       449  ...........       1  Services incidental to
                                                  water transportation.
               ...........         4491       1  Marine cargo handling.
               ...........         4492       a  Towing and tugboat
                                                  services.
               ...........         4499       1  Water transportation
                                                  services, not
                                                  elsewhere classified.
45...........  ...........  ...........       1  Transportation by air.
                       451  ...........       1  Air transportation,
                                                  scheduled, and air
                                                  courier services.
               ...........         4512       1  Air transportation,
                                                  scheduled.
                       452  ...........       a  Air transportation,
                                                  nonscheduled.
               ...........         4522       a  Air transportation,
                                                  nonscheduled.
                       458  ...........       a  Airports, flying
                                                  fields, and airport
                                                  terminal services.
               ...........         4581       a  Airports, flying
                                                  fields, and airport
                                                  terminal services.
46...........  ...........  ...........       a  Pipelines, except
                                                  natural gas.
                       461  ...........       1  Pipelines, except
                                                  natural gas.
               ...........         4613       1  Refined petroleum
                                                  pipelines.
47...........  ...........  ...........       1  Transportation
                                                  services.
                       472  ...........       1  Arrangement of
                                                  passenger
                                                  transportation.
               ...........         4729       1  Arrangement of
                                                  passenger
                                                  transportation, not
                                                  elsewhere classified.
                       473  ...........       1  Arrangement of
                                                  transportation of
                                                  freight and cargo.
               ...........         4731       1  Arrangement of
                                                  transportation of
                                                  freight and cargo.
                       478  ...........       1  Miscellaneous services
                                                  incidental to
                                                  transportation.
               ...........         4785       1  Fixed facilities and
                                                  inspection and
                                                  weighing services for
                                                  motor vehicle
                                                  transportation.
48...........  ...........  ...........       1  Communications.
                       482  ...........       b  Telegraph and other
                                                  message
                                                  communications.
               ...........         4822       b  Telegraph and other
                                                  message
                                                  communications.
                       483  ...........       1  Radio and television
                                                  broadcasting stations.
               ...........         4832       1  Radio broadcasting
                                                  stations.
               ...........         4833       1  Television broadcasting
                                                  stations.
                       489  ...........       3  Communications
                                                  services, not
                                                  elsewhere classified.
               ...........         4899       3  Communications
                                                  services, not
                                                  elsewhere classified.
49...........  ...........  ...........       1  Electric, gas and
                                                  sanitary services.
                       492  ...........       1  Gas production and
                                                  distribution.
               ...........         4923       1  Natural gas
                                                  transmission and
                                                  distribution.
               ...........         4925       1  Mixed, manufactured, or
                                                  liquefied petroleum
                                                  gas production and/or
                                                  distribution.
                       495  ...........       1  Sanitary services.
               ...........         4953       1  Refuse systems.
                       497  ...........       a  Irrigation systems.
               ...........         4971       a  Irrigation systems.
50...........  ...........  ...........       1  Wholesale trade-durable
                                                  goods.
                       501  ...........       1  Motor vehicles and
                                                  motor vehicle parts
                                                  and supplies.

[[Page 105]]

 
               ...........         5012       a  Automobiles and other
                                                  motor vehicles.
               ...........         5013       1  Motor vehicle supplies
                                                  and new parts.
               ...........         5014       1  Tires and tubes.
                       502  ...........       1  Furniture and
                                                  homefurnishings.
               ...........         5021       2  Furniture.
               ...........         5023       1  Homefurnishings.
                       503  ...........       2  Lumber and other
                                                  construction
                                                  materials.
               ...........         5031       2  Lumber, plywood,
                                                  millwork, and wood
                                                  panels.
               ...........         5039       1  Construction materials,
                                                  not elsewhere
                                                  classified.
                       504  ...........       1  Professional and
                                                  commercial equipment
                                                  and supplies.
               ...........         5043       1  Photographic equipment
                                                  and supplies.
               ...........         5046       1  Commercial equipment,
                                                  not elsewhere
                                                  classified.
               ...........         5049       1  Professional equipment
                                                  and supplies, not
                                                  elsewhere classified.
                       505  ...........       1  Metals and minerals,
                                                  except petroleum.
               ...........         5051       1  Metals service centers
                                                  and offices.
                       506  ...........       1  Electrical goods.
               ...........         5063       1  Electrical apparatus
                                                  and equipment, wiring
                                                  supplies and
                                                  construction
                                                  materials.
               ...........         5064       1  Electrical appliances,
                                                  television and radio
                                                  sets.
               ...........         5065       1  Electronic parts and
                                                  equipment, not
                                                  elsewhere classified.
                       507  ...........       1  Hardware, and plumbing
                                                  and heating equipment
                                                  and supplies.
               ...........         5072       1  Hardware.
               ...........         5074       1  Plumbing and heating
                                                  equipment and supplies
                                                  (hydronics).
               ...........         5075       a  Warm air heating and
                                                  air-conditioning
                                                  equipment and
                                                  supplies.
               ...........         5078       a  Refrigeration equipment
                                                  and supplies.
                       508  ...........       1  Machinery, equipment,
                                                  and supplies.
               ...........         5082       1  Construction and mining
                                                  (except petroleum)
                                                  machinery and
                                                  equipment.
               ...........         5083       a  Farm and garden
                                                  machinery and
                                                  equipment.
               ...........         5084       1  Industrial machinery
                                                  and equipment.
               ...........         5085       1  Industrial supplies.
               ...........         5087       2  Service establishment
                                                  equipment and
                                                  supplies.
                       509  ...........       1  Miscellaneous durable
                                                  goods.
               ...........         5091       a  Sporting and
                                                  recreational goods and
                                                  supplies.
               ...........         5092       1  Toys and hobby goods
                                                  and supplies.
               ...........         5093       1  Scrap and waste
                                                  materials.
               ...........         5094       1  Jewelry, watches,
                                                  precious stones, and
                                                  precious metals.
               ...........         5099       1  Durable goods, not
                                                  elsewhere classified.
51...........  ...........  ...........       1  Wholesale trade--
                                                  nondurable goods.
                       511  ...........       1  Paper and paper
                                                  products.
               ...........         5111       1  Printing and writing
                                                  paper.
               ...........         5112       3  Stationery and office
                                                  supplies.
               ...........         5113       1  Industrial and personal
                                                  service paper.
                       512  ...........       1  Drugs, drug
                                                  proprietaries, and
                                                  druggists' sundries.
               ...........         5122       1  Drugs, drug
                                                  proprietaries, and
                                                  druggists' sundries.
                       513  ...........       2  Apparel, piece goods,
                                                  and notions.
               ...........         5131       2  Piece goods, notions,
                                                  and other dry goods.
               ...........         5136       1  Men's and boys'
                                                  clothing and
                                                  furnishings.
               ...........         5137       3  Women's, children's,
                                                  and infants' clothing
                                                  and accessories.
               ...........         5139       2  Footwear.
                       514  ...........       1  Groceries and related
                                                  products.
               ...........         5141       1  Groceries, general
                                                  line.
               ...........         5142       1  Packaged frozen foods.
               ...........         5143       a  Dairy products, except
                                                  dried or canned.
               ...........         5144       3  Poultry and poultry
                                                  products.
               ...........         5145       a  Confectionery.
               ...........         5146       a  Fish and seafoods.
               ...........         5147       a  Meats and meat
                                                  products.
               ...........         5148       1  Fresh fruits and
                                                  vegetables.
               ...........         5149       1  Groceries and related
                                                  products, not
                                                  elsewhere classified.
                       515  ...........       a  Farm-product raw
                                                  materials.
               ...........         5154       a  Livestock.
                       516  ...........       1  Chemicals and allied
                                                  products.
               ...........         5169       1  Chemicals and allied
                                                  products, not
                                                  elsewhere classified.
                       517  ...........       1  Petroleum and petroleum
                                                  products.
               ...........         5171       1  Petroleum bulk stations
                                                  and terminals.
               ...........         5172       1  Petroleum and petroleum
                                                  products wholesalers,
                                                  except bulk stations
                                                  and terminals.
                       518  ...........       1  Beer, wine and
                                                  distilled alcoholic
                                                  beverages.
               ...........         5181       1  Beer and ale.
                       519  ...........       1  Miscellaneous
                                                  nondurable goods.

[[Page 106]]

 
               ...........         5191       3  Farm supplies.
               ...........         5194       3  Tobacco and tobacco
                                                  products.
               ...........         5198       b  Paints, varnishes, and
                                                  supplies.
               ...........         5199       1  Nondurable goods, not
                                                  elsewhere classified.
52...........  ...........  ...........       2  Building materials,
                                                  hardware, garden
                                                  supply, and mobile
                                                  home dealers.
                       521  ...........       3  Lumber and other
                                                  building materials
                                                  dealers.
               ...........         5211       3  Lumber and other
                                                  building materials
                                                  dealers.
                       523  ...........       1  Paint, glass, and
                                                  wallpaper stores.
               ...........         5231       1  Paint, glass, and
                                                  wallpaper stores.
                       525  ...........       2  Hardware stores.
               ...........         5251       2  Hardware stores.
                       526  ...........       3  Retail nurseries, lawn
                                                  and garden supply
                                                  stores.
               ...........         5261       3  Retail nurseries, lawn
                                                  and garden supply
                                                  stores.
53...........  ...........  ...........       1  General merchandise
                                                  stores.
                       531  ...........       1  Department stores.
               ...........         5311       1  Department stores.
                       533  ...........       2  Variety stores.
               ...........         5331       2  Variety stores.
                       539  ...........       3  Miscellaneous general
                                                  merchandise stores.
               ...........         5399       3  Miscellaneous general
                                                  merchandise stores.
54...........  ...........  ...........       2  Food stores.
                       541  ...........       2  Grocery stores.
               ...........         5411       2  Grocery stores.
                       542  ...........       1  Meat and fish (seafood)
                                                  markets, including
                                                  freezer provisioners.
               ...........         5421       1  Meat and fish (seafood)
                                                  markets, including
                                                  freezer provisioners.
               ...........         5421       a  Meat and fish (seafood)
                                                  markets, including
                                                  freezer provisioners.
                       543  ...........       3  Fruit and vegetable
                                                  markets.
               ...........         5431       3  Fruit and vegetable
                                                  markets.
                       546  ...........       3  Retail bakeries.
               ...........         5461       3  Retail bakeries.
                       549  ...........       3  Miscellaneous food
                                                  stores.
               ...........         5499       3  Miscellaneous food
                                                  stores.
55...........  ...........  ...........       1  Automotive dealers and
                                                  gasoline service
                                                  stations.
                       551  ...........       1  Motor vehicle dealers
                                                  (new and used).
               ...........         5511       1  Motor vehicle dealers
                                                  (new and used).
                       552  ...........       2  Motor vehicle dealers
                                                  (used only).
               ...........         5521       2  Motor vehicle dealers
                                                  (used only).
                       553  ...........       1  Auto and home supply
                                                  stores.
               ...........         5531       1  Auto and home supply
                                                  stores.
                       554  ...........       3  Gasoline service
                                                  stations.
               ...........         5541       3  Gasoline service
                                                  stations.
56...........  ...........  ...........       3  Apparel and accessory
                                                  stores.
                       561  ...........       3  Men's and boys'
                                                  clothing and accessory
                                                  stores.
               ...........         5611       3  Men's and boys'
                                                  clothing and accessory
                                                  stores.
                       562  ...........       3  Women's clothing
                                                  stores.
               ...........         5621       3  Women's clothing
                                                  stores.
                       563  ...........       3  Women's accessory and
                                                  specialty stores.
               ...........         5632       3  Women's accessory and
                                                  specialty stores.
                       564  ...........       3  Children's and infants'
                                                  wear stores.
               ...........         5641       3  Children's and infants'
                                                  wear stores.
                       565  ...........       3  Family clothing stores.
               ...........         5651       3  Family clothing stores.
                       566  ...........       2  Shoe stores.
               ...........         5661       2  Shoe stores.
                       569  ...........       3  Miscellaneous apparel
                                                  and accessory stores.
               ...........         5699       3  Miscellaneous apparel
                                                  and accessory stores.
57...........  ...........  ...........       2  Home furniture,
                                                  furnishings, and
                                                  equipment stores.
                       571  ...........       2  Home furniture and
                                                  furnishings stores.
               ...........         5712       2  Furniture stores.
               ...........         5713       a  Floor covering stores.
               ...........         5714       3  Drapery, curtain, and
                                                  upholstery stores.
               ...........         5719       1  Miscellaneous
                                                  homefurnishings
                                                  stores.
                       572  ...........       1  Household appliance
                                                  stores.
               ...........         5722       1  Household appliance
                                                  stores.
                       573  ...........       2  Radio, television,
                                                  consumer electronics,
                                                  and music stores.
               ...........         5731       a  Radio, television, and
                                                  consumer electronics
                                                  stores.
               ...........         5735       1  Record and prerecorded
                                                  tape stores.
58...........  ...........  ...........       1  Eating and drinking
                                                  places.
                   \1\ 581  ...........       1  Eating and drinking
                                                  places.
59...........  ...........  ...........       1  Miscellaneous retail.

[[Page 107]]

 
                       591  ...........       1  Drug stores and
                                                  proprietary stores.
               ...........         5912       1  Drug stores and
                                                  proprietary stores.
                       592  ...........       a  Liquor stores.
               ...........         5921       a  Liquor stores.
                       593  ...........       3  Used merchandise
                                                  stores.
               ...........         5932       3  Used merchandise
                                                  stores.
                       594  ...........       1  Miscellaneous shopping
                                                  goods stores.
               ...........         5941       1  Sporting goods stores
                                                  and bicycle shops.
               ...........         5942       1  Book stores.
               ...........         5943       2  Stationery stores.
               ...........         5944       1  Jewelry stores.
               ...........         5945       3  Hobby, toy, and game
                                                  shops.
               ...........         5946       2  Camera and photographic
                                                  supply stores.
               ...........         5947       3  Gift, novelty, and
                                                  souvenir shops.
               ...........         5949       3  Sewing, needlework, and
                                                  piece goods stores.
                       596  ...........       a  Nonstore retailers.
               ...........         5962       a  Automatic merchandising
                                                  machine operators.
               ...........         5963       a  Direct selling
                                                  establishments.
                       598  ...........       2  Fuel dealers.
               ...........         5984       2  Liquefied petroleum gas
                                                  (bottled gas) dealers.
                       599  ...........       1  Retail stores, not
                                                  elsewhere classified.
               ...........         5992       3  Florists.
               ...........         5999       1  Miscellaneous retail
                                                  stores, not elsewhere
                                                  classified.
60...........  ...........  ...........       1  Depository
                                                  institutions.
                       602  ...........       1  Commercial banks.
               ...........         6021       1  National commercial
                                                  banks.
               ...........         6022       1  State commercial banks.
               ...........         6029       1  Commercial banks, not
                                                  elsewhere classified.
                       603  ...........       1  Savings institutions.
               ...........         6035       1  Savings institutions,
                                                  Federally chartered.
               ...........         6036       1  Savings institutions,
                                                  not Federally
                                                  chartered.
                       606  ...........       1  Credit unions.
               ...........         6061       1  Credit unions,
                                                  Federally chartered.
               ...........         6062       1  Credit unions, not
                                                  Federally chartered.
                       609  ...........       2  Functions related to
                                                  depository banking.
               ...........         6099       2  Functions related to
                                                  depository banking,
                                                  not elsewhere
                                                  classified.
61...........  ...........  ...........       1  Nondepository credit
                                                  institutions.
                       614  ...........       1  Personal credit
                                                  institutions.
               ...........         6141       1  Personal credit
                                                  institutions.
                       615  ...........       1  Business credit
                                                  institutions.
               ...........         6153       b  Short-term business
                                                  credit institutions,
                                                  except agricultural.
               ...........         6159       1  Miscellaneous business
                                                  credit institutions.
                       616  ...........       1  Mortgage bankers and
                                                  brokers.
               ...........         6162       1  Mortgage bankers and
                                                  loan correspondents.
62...........  ...........  ...........       1  Security and commodity
                                                  brokers, dealers,
                                                  exchanges, and
                                                  services.
                       621  ...........       1  Security brokers,
                                                  dealers, and flotation
                                                  companies.
               ...........         6211       1  Security brokers,
                                                  dealers, and flotation
                                                  companies.
                       622  ...........       a  Commodity contracts
                                                  brokers and dealers.
               ...........         6221       a  Commodity contracts
                                                  brokers and dealers.
63...........  ...........  ...........       1  Insurance carriers.
                       631  ...........       1  Life insurance.
               ...........         6311       1  Life insurance.
                       632  ...........       1  Accidental and health
                                                  insurance and medical
                                                  service plans.
               ...........         6321       1  Accident and health
                                                  insurance.
               ...........         6324       b  Hospital and medical
                                                  service plans.
                       633  ...........       1  Fire, marine, and
                                                  casualty insurance.
               ...........         6331       1  Fire, marine, and
                                                  casualty insurance.
                       635  ...........       1  Surety insurance.
               ...........         6351       1  Surety insurance.
                       636  ...........       b  Title insurance.
               ...........         6361       b  Title insurance.
                       637  ...........       1  Pension, health, and
                                                  welfare funds.
               ...........         6371       1  Pension, health, and
                                                  welfare funds.
64...........  ...........  ...........       1  Insurance agents,
                                                  brokers, and service.
                       641  ...........       1  Insurance agents,
                                                  brokers, and service.
               ...........         6411       1  Insurance agents,
                                                  brokers, and service.
65...........  ...........  ...........       1  Real estate.
                       651  ...........       1  Real estate operators
                                                  (except developers)
                                                  and lessors.
                       653  ...........       1  Real estate agents and
                                                  managers.
               ...........         6531       1  Real estate agents and
                                                  managers.

[[Page 108]]

 
                       655  ...........       1  Land subdividers and
                                                  developers.
               ...........         6552       1  Land subdividers and
                                                  developers, except
                                                  cemeteries.
               ...........         6553       a  Cemetery subdividers
                                                  and developers.
70...........  ...........  ...........       1  Hotels, rooming houses,
                                                  camps, and other
                                                  lodging places.
                       701  ...........       1  Hotels and motels.
               ...........         7011       1  Hotels and motels.
                       702  ...........       1  Rooming and boarding
                                                  houses.
               ...........         7021       1  Rooming and boarding
                                                  houses.
72...........  ...........  ...........       1  Personal services.
                       721  ...........       2  Laundry, cleaning, and
                                                  garment services.
                       722  ...........       3  Photographic studios,
                                                  portrait.
               ...........         7221       3  Photographic studios,
                                                  portrait.
                       723  ...........       1  Beauty shops.
               ...........         7231       1  Beauty shops.
                       724  ...........       1  Barber shops
               ...........         7241       1  Barber shops.
                       725  ...........       2  Shoe repair shops and
                                                  shoeshine parlors.
               ...........         7251       2  Shoe repair shops and
                                                  shoeshine parlors.
                       726  ...........       1  Funeral service and
                                                  crematories.
               ...........         7261       1  Funeral service and
                                                  crematories.
                       729  ...........       1  Miscellaneous personal
                                                  services.
               ...........         7299       1  Miscellaneous personal
                                                  services, not
                                                  elsewhere classified.
73...........  ...........  ...........       2  Business services.
                       731  ...........       1  Advertising.
               ...........         7311       1  Advertising agencies.
               ...........         7312       1  Outdoor advertising
                                                  services.
               ...........         7319       a  Advertising, not
                                                  elsewhere classified.
                       732  ...........       b  Consumer credit
                                                  reporting agencies,
                                                  mercantile reporting
                                                  agencies, and
                                                  adjustment and
                                                  collection agencies.
               ...........         7323       b  Credit reporting
                                                  services.
                       733  ...........       2  Mailing, reproduction,
                                                  commercial art and
                                                  photography, and
                                                  stenographic services.
               ...........         7338       2  Secretarial and court
                                                  reporting services.
                       734  ...........       3  Services to dwellings
                                                  and other buildings.
               ...........         7342       3  Disinfecting and pest
                                                  control services.
               ...........         7349       3  Building cleaning and
                                                  maintenance services,
                                                  not elsewhere
                                                  classified.
                       735  ...........       1  Miscellaneous equipment
                                                  rental and leasing.
               ...........         7359       1  Equipment rental and
                                                  leasing, not elsewhere
                                                  classified.
                       736  ...........       2  Personnel supply
                                                  services.
               ...........         7361       2  Employment agencies.
               ...........         7363       2  Help supply services.
                       737  ...........       1  Computer programming,
                                                  data processing, and
                                                  other computer related
                                                  services.
               ...........         7372       1  Prepackaged software.
               ...........         7374       1  Computer processing and
                                                  data preparation and
                                                  processing services.
               ...........         7379       1  Computer related
                                                  services, not
                                                  elsewhere classified.
                       738  ...........       3  Miscellaneous business
                                                  services.
               ...........         7382       3  Security systems
                                                  services.
               ...........         7384       1  Photofinishing
                                                  laboratories.
               ...........         7389       1  Business services, not
                                                  elsewhere classified.
75...........  ...........  ...........       1  Automotive repair,
                                                  services, and parking.
                       751  ...........       1  Automotive rental and
                                                  leasing, without
                                                  drivers.
               ...........         7513       3  Truck rental and
                                                  leasing, without
                                                  drivers.
               ...........         7514       1  Passenger car rental.
                       752  ...........       3  Automobile parking.
               ...........         7521       3  Automobile parking.
                       753  ...........       1  Automotive repair
                                                  shops.
               ...........         7532       2  Top, body, and
                                                  upholstery repair
                                                  shops and paint shops.
               ...........         7534       1  Tire retreading and
                                                  repair shops.
               ...........         7538       3  General automotive
                                                  repair shops.
               ...........         7539       2  Automotive repair
                                                  shops, not elsewhere
                                                  classified.
                       754  ...........       3  Automotive services,
                                                  except repair.
               ...........         7542       3  Carwashes.
               ...........         7549       3  Automotive services,
                                                  except repair and
                                                  carwashes.
76...........  ...........  ...........       1  Miscellaneous repair
                                                  services.
                       762  ...........       1  Electrical repair
                                                  shops.
               ...........         7622       3  Radio and television
                                                  repair shops.
               ...........         7623       1  Refrigeration and air-
                                                  conditioning service
                                                  and repair shops.
               ...........         7629       1  Electrical and
                                                  electronic repair
                                                  shops, not elsewhere
                                                  classified.
                       763  ...........       2  Watch, clock, and
                                                  jewelry repair.

[[Page 109]]

 
               ...........         7631       2  Watch, clock, and
                                                  jewelry repair.
                       764  ...........       3  Reupholstery and
                                                  furniture repair.
               ...........         7641       3  Reupholstery and
                                                  furniture repair.
                       769  ...........       1  Miscellaneous repair
                                                  shops and related
                                                  services.
               ...........         7692       2  Welding repair.
               ...........         7694       1  Armature rewinding
                                                  shops.
               ...........         7699       1  Repair shops and
                                                  related services, not
                                                  elsewhere classified.
78...........  ...........  ...........       1  Motion pictures.
                       781  ...........       1  Motion picture
                                                  production and allied
                                                  services.
               ...........         7812       1  Motion picture and
                                                  video tape production.
                       782  ...........       2  Motion picture
                                                  distribution and
                                                  allied services.
               ...........         7822       2  Motion picture and
                                                  video tape
                                                  distribution.
                       783  ...........       3  Motion picture
                                                  theaters.
               ...........         7832       3  Motion picture
                                                  theaters, except drive-
                                                  in.
               ...........         7833       a  Drive-in motion picture
                                                  theaters.
79...........  ...........  ...........       1  Amusement and
                                                  recreation services.
                       791  ...........       2  Dance studios, schools,
                                                  and halls.
               ...........         7911       2  Dance studios, schools,
                                                  and halls.
                       792  ...........       a  Theatrical producers
                                                  (except motion
                                                  picture), bands,
                                                  orchestras, and
                                                  entertainers.
               ...........         7929       a  Bands, orchestras,
                                                  actors, and other
                                                  entertainers and
                                                  entertainment groups.
                       793  ...........       3  Bowling centers.
               ...........         7933       3  Bowling centers.
                       794  ...........       a  Commercial sports.
               ...........         7941       a  Professional sports
                                                  clubs and promoters.
               ...........         7948       a  Racing, including track
                                                  operation.
                       799  ...........       2  Miscellaneous amusement
                                                  and recreation
                                                  services.
               ...........         7993       2  Coin-operated amusement
                                                  devices.
               ...........         7997       1  Membership sports and
                                                  recreation clubs.
               ...........         7999       2  Amusement and
                                                  recreation services
                                                  not elsewhere
                                                  classified.
80...........  ...........  ...........       1  Health services.
                       801  ...........       1  Offices and clinics of
                                                  doctors of medicine.
               ...........         8011       1  Offices and clinics of
                                                  doctors of medicine.
                       802  ...........       1  Offices and clinics of
                                                  dentists.
               ...........         8021       1  Offices and clinics of
                                                  dentists.
                       803  ...........       a  Offices and clinics of
                                                  doctors of osteopathy.
               ...........         8031       a  Offices and clinics of
                                                  doctors of osteopathy.
                       804  ...........       1  Offices and clinics of
                                                  other health
                                                  practitioners.
               ...........         8049       1  Offices and clinics of
                                                  health practitioners,
                                                  not elsewhere
                                                  classified.
                       805  ...........       b  Nursing and personal
                                                  care facilities.
               ...........         8059       b  Nursing and personal
                                                  care facilities, not
                                                  elsewhere classified.
                       806  ...........       1  Hospitals.
               ...........         8062       1  General medical and
                                                  surgical hospitals.
               ...........         8063       1  Psychiatric hospitals.
               ...........         8069       1  Specialty hospitals,
                                                  except psychiatric.
                       807  ...........       1  Medical and dental
                                                  laboratories.
               ...........         8071       1  Medical laboratories.
               ...........         8072       a  Dental laboratories.
                       809  ...........       1  Miscellaneous health
                                                  and allied services,
                                                  not elsewhere
                                                  classified.
               ...........         8099       1  Health and allied
                                                  services, not
                                                  elsewhere classified.
81...........  ...........  ...........       1  Legal services.
                       811  ...........       1  Legal services.
               ...........         8111       1  Legal services.
82...........  ...........  ...........       1  Educational services.
                       821  ...........       2  Elementary and
                                                  secondary schools.
               ...........         8211       2  Elementary and
                                                  secondary schools.
                       822  ...........       1  Colleges, universities,
                                                  professional schools,
                                                  and junior colleges.
               ...........         8221       1  Colleges, universities,
                                                  and professional
                                                  schools.
               ...........         8222       1  Junior colleges and
                                                  technical institutes.
                       824  ...........       2  Vocational schools.
               ...........         8243       a  Data processing
                                                  schools.
               ...........         8244       2  Business and
                                                  secretarial schools.
               ...........         8249       2  Vocational schools, not
                                                  elsewhere classified.
                       829  ...........       1  Schools and educational
                                                  services, not
                                                  elsewhere classified.
               ...........         8299       1  Schools and educational
                                                  services, not
                                                  elsewhere classified.
83...........  ...........  ...........       1  Social services.
                       832  ...........       1  Individual and family
                                                  social services.
               ...........         8322       1  Individual and family
                                                  social services.
                       833  ...........       3  Job training and
                                                  vocational
                                                  rehabilitation
                                                  services.
               ...........         8331       3  Job training and
                                                  vocational
                                                  rehabilitation
                                                  services.

[[Page 110]]

 
                       835  ...........       1  Child day care
                                                  services.
               ...........         8351       1  Child day care
                                                  services.
                       836  ...........       2  Residential care.
               ...........         8361       2  Residential care.
                       839  ...........       a  Social services, not
                                                  elsewhere classified.
               ...........         8399       a  Social services, not
                                                  elsewhere classified.
84...........  ...........  ...........       3  Museums, art galleries,
                                                  and botanical and
                                                  zoological gardens.
                       841  ...........       3  Museums and art
                                                  galleries.
               ...........         8412       3  Museums and art
                                                  galleries.
86...........  ...........  ...........       1  Membership
                                                  organizations.
                       861  ...........       1  Business associations.
               ...........         8611       1  Business associations.
                       862  ...........       1  Professional membership
                                                  organizations.
               ...........         8621       1  Professional membership
                                                  organizations.
                       863  ...........       1  Labor unions and
                                                  similar labor
                                                  organizations.
               ...........         8631       1  Labor unions and
                                                  similar labor
                                                  organizations.
                       864  ...........       2  Civic, social, and
                                                  fraternal
                                                  associations.
               ...........         8641       2  Civic, social, and
                                                  fraternal
                                                  associations.
                       866  ...........       2  Religious
                                                  organizations.
               ...........         8661       2  Religious
                                                  organizations.
                       869  ...........       2  Membership
                                                  organizations, not
                                                  elsewhere classified.
               ...........         8699       2  Membership
                                                  organizations, not
                                                  elsewhere classified.
87...........  ...........  ...........       1  Engineering,
                                                  accounting, research,
                                                  management, and
                                                  related services.
                       871  ...........       1  Engineering,
                                                  architectural, and
                                                  surveying services.
               ...........         8711       1  Engineering services.
                       872  ...........       1  Accounting, auditing,
                                                  and bookkeeping
                                                  services.
               ...........         8721       1  Accounting, auditing,
                                                  and bookkeeping
                                                  services.
                       873  ...........       1  Research, development,
                                                  and testing services.
               ...........         8733       1  Noncommercial research
                                                  organizations.
88...........  ...........  ...........       3  Private households.
                       881  ...........       3  Private households.
               ...........         8811       3  Private households.
------------------------------------------------------------------------
``a''=Category contained less than three responding employers or one
  responding employer had more than 80 percent of the employment in the
  category.
``b''=Firm(s) declined to furnish waivers in these categories.
\1\ Survey data reported on the basis of SIC code 5810. Data were not
  broken down by SIC 5812, Eating places, and 5813 Drinking places
  (Alcoholic beverages).


[55 FR 12120, Mar. 30, 1990; 55 FR 12778, Apr. 5, 1990, as amended at 55 
FR 39577, Sept. 27, 1990; 55 FR 53248, Dec. 27, 1990; 57 FR 1104, Jan. 
10, 1992]



   Sec. Appendix C to Part 510--Government Corporations Eligible for 
                          Minimum Wage Phase-In

    This appendix contains a listing of the public organizations 
(corporations) in Puerto Rico for which data have been provided by the 
Commonwealth for purposes of implementing the 1989 Amendments to FLSA. 
Such Corporations are subject to Tiers 1, 2, or 3, as set forth below. 
Corporations which are listed under Tier 3 may pay rates specified under 
Tier 4 to employees engaged in traditional activities, as defined in 
Sec. 510.25 of the regulations. All other employees are subject to Tier 
3. Organizations for which no data were provided are subject to Tier 1 
treatment.

------------------------------------------------------------------------
              Tier                             Organization
------------------------------------------------------------------------
1                                 Automobile Accidents Compensation
                                   Administration.
1                                 Cardiovascular Center Corporation of
                                   Puerto Rico and the Caribbean.
2                                 Culebra Conservation and Development
                                   Authority.
3                                 Government Development Bank of Puerto
                                   Rico.
1                                 Highway Authority.
2                                 Industries for the Blind, Mentally
                                   Retarded, and other Disabled Persons
                                   of Puerto Rico.
1                                 Institute of Puerto Rican Culture.
2                                 Corporation for the Development and
                                   Administration of Marine, Lacustrine,
                                   and Fluvial Resources of Puerto Rico.
1                                 Metropolitan Bus Authority.
2                                 Puerto Rico Mineral Resource
                                   Development Corporation.
1                                 Musical Arts Corporation.
1                                 Public Building Authority.
1                                 Puerto Rico Institute of
                                   Cinematographic and Television Arts
                                   and Industries.
1                                 Puerto Rico Aqueducts and Sewer
                                   Authority.
1                                 Puerto Rico Communications Authority.
1                                 Puerto Rico Land Administration.
1                                 Puerto Rico Marine Shipping Authority.
1                                 Puerto Rico Medical Service
                                   Administration.
1                                 Puerto Rico Ports Authority.
1                                 Puerto Rico Musical Performing Arts
                                   Corporation.

[[Page 111]]

 
2                                 Puerto Rico Rural Development
                                   Corporation.
3                                 Puerto Rico Sugar Board.
1                                 Puerto Rico Telephone Company.
2                                 Puerto Rico Solid Waste Management
                                   Authority.
1                                 Puerto Rico Housing Bank.
1                                 Puerto Rico Tourism Company.
3                                 Puerto Rico Renewal and Housing
                                   Corporation.
3                                 Puerto Rico Industrial Development
                                   Bank.
3                                 Recreational Development Company.
2                                 Right to Work Administration.
------------------------------------------------------------------------



 Sec. Appendix D to Part 510--Municipalities Eligible for Minimum Wage 
                                Phase-In

    This appendix contains a listing of the municipalities in Puerto 
Rico and the tier applicable to each. Municipalities with average hourly 
earnings below $4.65 but equal to or greater than $4.00 are subject to 
Tier 2, as set forth below. Municipalities with average hourly earnings 
under $4.00 are subject to Tier 3. Municipalities which are listed under 
Tier 3 may pay the rates specified under Tier 4 to employees engaged in 
traditional activities, as defined in Sec. 510.25 of the regulations. 
All other employees are subject to Tier 3. Municipalities which did not 
submit data are subject to Tier 1. The tiers set forth below are subject 
to petitions for review by affected employees, if filed prior to June 1, 
1990. If upon review it is determined that the municipality should have 
been subject to Tier 1 or 2, back wages will have to be paid to April 1, 
1990, to make up the difference between what municipal employees were 
paid and what they should have been paid.

------------------------------------------------------------------------
              Tier                             Municipality
------------------------------------------------------------------------
3                                 Adjuntas.
3                                 Aguada.
3                                 Aguadilla.
3                                 Aguas Buenas.
3                                 Aibonito.
3                                 A[ntilde]asco.
3                                 Arecibo.
3                                 Arroyo.
3                                 Barceloneta.
3                                 Barranquitas.
3                                 Bayamon.
3                                 Cabo Rojo.
3                                 Caguas.
3                                 Camuy.
2                                 Canovanas.
3                                 Carolina.
3                                 Cata[ntilde]o.
3                                 Cayey.
2                                 Ceiba.
3                                 Ciales.
3                                 Cidra.
3                                 Coamo.
2                                 Comerio.
3                                 Corozal.
3                                 Culebra.
2                                 Dorado.
3                                 Fajardo.
3                                 Florida.
3                                 Guanica.
3                                 Guyama.
2                                 Guayanilla.
3                                 Guaynabo.
3                                 Guarbo.
3                                 Hatillo.
3                                 Hormigueros.
3                                 Humacao.
3                                 Isabela.
3                                 Jayuya.
3                                 Juana Diaz.
3                                 Juncos.
2                                 Lajas.
3                                 Lares.
3                                 Las Marias.
3                                 Las Piedras.
3                                 Loiza.
3                                 Luquillo.
1                                 Manati.
3                                 Maricao.
3                                 Maunabo.
3                                 Mayaguez.
2                                 Moca.
3                                 Morovis.
3                                 Naguabo.
2                                 Naranjito.
3                                 Orocovis.
3                                 Patillas.
3                                 Pe[ntilde]uelas.
3                                 Ponce.
3                                 Quebradillas.
3                                 Rincon.
3                                 Rio Grande.
3                                 Sabana Grande.
3                                 Salinas.
3                                 San German.
2                                 San Juan.
3                                 San Lorenzo.
3                                 San Sebastian.
3                                 Santa Isabel.
3                                 Toa Alta.
3                                 Toa Baja.
2                                 Trujillo Alto.
3                                 Utuado.
3                                 Vega Alta.
3                                 Vega Baja.
3                                 Vieques.
3                                 Villalba.
3                                 Yabucoa.
3                                 Yauco.
------------------------------------------------------------------------



PART 511_WAGE ORDER PROCEDURE FOR AMERICAN SAMOA--Table of Contents



Sec.
511.1 General method for issuance of wage orders.
511.2 Initiation of proceedings; notices of hearings.
511.3 Composition and appointment of committees.
511.4 Compensation of committee members.
511.5 Vacancies and dissolution of committees.
511.6 Investigation.
511.7 Committee staff.
511.8 Prehearing statements.
511.9 Requirements for quorum and decisions.
511.10 Subjects and issues.
511.11 Pertinent data.

[[Page 112]]

511.12 Committee and subcommittee meetings.
511.13 Evidence.
511.14 Procedure for receiving evidence.
511.15 Submittals prior to reports.
511.16 Reports.
511.17 Records.
511.18 Publication and effective date of wage order.
511.19 Petitions.

    Authority: 29 U.S.C. 205, 206, 208; 5 U.S.C. 551-559.

    Source: 21 FR 7669, Oct. 6, 1956, unless otherwise noted.



Sec. 511.1  General method for issuance of wage orders.

    Pursuant to authority delegated by the Secretary of Labor, the 
Administrator of the Wage and Hour Division publishes the orders that 
are required by statute to make the recommendations of industry 
committees effective as wage orders under section 6(a)(3) of the Fair 
Labor Standards Act. The wage orders issued by the Administrator must by 
law give effect to the recommendations of the industry committees. All 
wage order proceedings will be conducted in accordance with the 
standards provided in the Administrative Procedure Act as interpreted 
and applied in this part.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.2  Initiation of proceedings; notices of hearings.

    (a) Wage order proceedings are initiated by order of the Secretary, 
published in the Federal Register, giving notice of hearings by industry 
committees to recommend the minimum rate or rates of wages to be paid 
under section 6 of the Act to employees in American Samoa engaged in 
commerce or in the production of goods for commerce or in any enterprise 
engaged in commerce or in the production of goods for commerce. These 
orders will contain a definition of the particular industry in American 
Samoa, for which the committee is to make its recommendations, or these 
orders will direct the committee to recommend the minimum rate or rates 
of wages for all industry in American Samoa. All such orders will make 
provision for convening the committee. Any particular industry defined 
in such an order may be a trade, business, industry, or branch thereof, 
or group of industries, in which individuals are gainfully employed.
    (b) These orders will also give reasonable notice (1) of the time 
and place of the commencement of the hearing of such witnesses and 
receiving of such evidence as may be necessary or appropriate to enable 
the committee to perform its duties and functions under the Act, (2) of 
the general nature of the wage order proceedings and the authority under 
which they are proposed, (3) of the subjects and issues involved, and 
(4) that the committee will take official notice of the economic report 
(note Sec. 511.13) and the parties will have an opportunity at the 
hearing to show any contrary or additional facts.

[26 FR 6513, July 20, 1961, as amended at 55 FR 12120, Mar. 30, 1990]



Sec. 511.3  Composition and appointment of committees.

    An industry committee will be composed of residents of American 
Samoa and residents of the United States outside of American Samoa. The 
Secretary will appoint as members of each committee an equal number of 
persons representing:
    (a) The public,
    (b) Employees in the industry, and
    (c) Employers in the industry.

The public members shall be disinterested, and the Secretary will 
designate one as chairperson. For purposes of this section only, the 
definition of the industry shall be considered to include all such 
industry throughout the United States, its territories and possessions.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.4  Compensation of committee members.

    Each member of an industry committee will be allowed per diem 
compensation at the rate specified in Chapter 304 of the Department of 
Labor Supplement to the Federal Personnel Manual for each day actually 
spent in the work of the committee, and will, in addition, be reimbursed 
for necessary transportation and other expenses incident to traveling in 
accordance with Standard Government Travel Regulations then in effect. 
All travel expenses

[[Page 113]]

will be paid on travel vouchers certified by the Administrator or an 
authorized representative. Any other necessary expenses that are 
incidental to the work of the committee may be incurred by the committee 
upon approval of, and shall be paid upon, certification of the 
Administrator or an authorized representative.

[58 FR 34524, June 28, 1993]



Sec. 511.5  Vacancies and dissolution of committees.

    The Secretary will appoint persons to fill any vacancies occurring 
in industry committees. If an industry committee is unable to arrive at 
a recommendation within a reasonable time, or refuses to make a 
recommendation, it may be dissolved by the Secretary. An industry 
committee shall cease to perform further functions when it has filed 
with the Administrator its report containing its findings of fact and 
recommendations with respect to the matters referred to it, and shall 
not again perform any functions with respect to any matter reported on, 
unless and until directed by the Administrator. An industry committee 
shall be dissolved automatically when its recommendations are no longer 
subject to review under section 10 of the Act.

[27 FR 10651, Nov. 1, 1962]



Sec. 511.6  Investigation.

    The Administrator shall prepare an economic report containing such 
data as can be assembled pertinent to the matters to be referred to a 
committee. A copy of these regulations will be sent to all members of 
the committee following their appointment, and a copy of the economic 
report when completed will be furnished promptly. Before making its 
report the committee will decide whether it will conduct any further 
investigation, apart from the hearing and the review of the economic 
report, in connection with the matters referred to it.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.7  Committee staff.

    Each industry committee will be furnished a lawyer, to serve as 
committee counsel, and an economist, to serve as committee economist. 
Committee counsel shall advise the committee on the issues of law, 
including interpretations of these regulations and the legal scope of 
the committee's discretion, which arise during the committee 
proceedings. The committee counsel and economist shall be available to 
advise and assist the committee at all of its meetings. The 
Administrator shall furnish the committee with adequate stenographic, 
clerical, and other assistance.



Sec. 511.8  Prehearing statements.

    (a) Every employer, employee, trade association, trade union, or 
group of employers, employees, associations, or unions in the industry 
as defined, or in such industry elsewhere in the United States, and 
every other person who, in the judgment of the committee has an interest 
sufficient to justify the participation proposed by such party, shall be 
considered an interested person. No member of the committee may 
participate as an interested person.
    (b) Any interested person who wishes to participate on his or her 
own behalf or by counsel shall file a written prehearing statement 
within such period of time as may be prescribed in a notice of hearing, 
or other notice published in the Federal Register. The number of copies 
of such statements and the time and places for filing them will be 
specified in notices of hearings. The prehearing statement shall 
describe the person's interest in the proceeding and shall contain:
    (1) The prepared statement he or she proposes to give, if any;
    (2) A statement of the individual classifications and minimum wage 
rates, if any, he or she proposes to support;
    (3) The written data he or she proposes to introduce in evidence, 
including all tangible objective data to be submitted pursuant to Sec. 
511.13;
    (4) The names and addresses of the witnesses he or she proposes to 
call and a summary of the evidence he or she proposes to develop;
    (5) The name and address of the individual who will present his or 
her case; and
    (6) A statement of the approximate length of time his or her case 
will take.

[[Page 114]]


If the prehearing statement is in conformity with the above 
requirements, the person shall have the right to participate as a party. 
In accordance with section 6(c) of the Administrative Procedure Act, the 
industry committee shall, after considering the advice of committee 
counsel, issue subpoenas, authorized by section 9 of the Fair Labor 
Standards Act of 1938, to parties who make a request therefor 
accompanied by a clear showing of general relevance and reasonable scope 
of the evidence sought.
    (c) Prehearing statements of parties shall be made available for 
examination at the offices where they are filed. Each person who files a 
prehearing statement should, if requested, make himself or herself 
available for conference with the committee staff to make any needed 
clarification of his or her prehearing statement, and arrange details of 
presenting his or her testimony or case.
    (d) In exceptional circumstances a person who has not filed the 
prehearing statement required by this section and who does not appear on 
a witness list filed by a party may nevertheless be permitted, in the 
discretion of the committee, to offer testimony.

[25 FR 14024, Dec. 31, 1960, as amended at 55 FR 53298, Dec. 28, 1990]



Sec. 511.9  Requirements for quorum and decisions.

    Two-thirds of the members of an industry committee shall constitute 
a quorum. Approval by a majority of all of the members of an industry 
committee or subcommittee shall be required for its report. Except as 
otherwise provided in this part, the chairperson of the industry 
committee or subcommittee may make other decisions for the committee or 
subcommittee, but each such decision shall be subject to approval of a 
majority of the members present if any member objects.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.10  Subjects and issues.

    (a) The declared policy of the Act with respect to industries or 
enterprises in American Samoa engaged in commerce or in the production 
of goods for commerce is to reach as rapidly as is economically feasible 
without substantially curtailing employment the object of the minimum 
wage rate that would apply in each such industry under paragraph (1) of 
section 6(a) but for section 6(a)(3) of the Act. Each industry committee 
shall recommend to the Administrator the highest minimum wage rates for 
the industry that it determines, having due regard to economic and 
competitive conditions, will not substantially curtail employment in the 
industry and will not give any industry in American Samoa a competitive 
advantage over any industry in the United States outside of American 
Samoa; except that the committee shall recommend to the Secretary the 
minimum wage rate prescribed in section 6(a)(1), that would be 
applicable but for section 6(a)(3), unless there is evidence in the 
record that establishes that the industry, or a predominant portion 
thereof, is unable to pay that wage due to such economic and competitive 
conditions.
    (b) Whenever the industry committee finds that a higher minimum wage 
may be determined for employees engaged in certain activities or in the 
manufacture of certain products in the industry than may be determined 
for other employees in the industry, the industry committee shall 
recommend such reasonable classifications within the industry as it 
determines to be necessary for the purpose of fixing for each 
classification the highest minimum wage rate (not in excess of that 
prescribed in paragraph (1) of section 6(a) of the Act) that can be 
determined for it under the principles set out in this section that will 
not substantially curtail employment in such classification and will not 
give a competitive advantage to any group in that industry. No 
classification shall be made, however, and no minimum wage rate shall be 
fixed solely on a regional basis or on the basis of age or sex. In 
determining whether there should be classifications within an industry, 
in making such classifications, and in determining the minimum wage rate 
for each classification, the committee shall consider, among other 
relevant factors, the following:

[[Page 115]]

    (1) Competitive conditions as affected by transportation, living and 
production costs;
    (2) The wages established for work of like or comparable character 
by collective labor agreements negotiated between employers and 
employees by representatives of their own choosing; and
    (3) The wages paid for work of like or comparable character by 
employers who voluntarily maintain minimum wage standards in the 
industry.

[55 FR 53298, Dec. 28, 1990]



Sec. 511.11  Pertinent data.

    Among the types of data which may be considered pertinent to the 
subjects and issues delineated in Sec. 511.10, are those revealing:
    (a) Employment and labor conditions and trends in American Samoa, 
and on the mainland, particularly since the promulgation of the 
presently applicable wage order, including such items as present and 
past employment, present wage rates and fringe benefits, changes in 
average hourly earnings or wage structure, provisions of collective 
bargaining agreements, hours of work, labor turnover, absenteeism, 
productivity, learning periods, rejection rates, and similar factors;
    (b) Market conditions and trends in American Samoa, and on the 
mainland, including changes in the volume and value of production, 
market outlets, price changes, style factors, consumer demand, 
competitive relationships, tariff rates, and similar marketing factors;
    (c) Comparative production costs in American Samoa, on the mainland, 
and in foreign countries, together with the factors responsible for 
differences;
    (d) Financial conditions and trends since promulgation of the 
present wage order as reflected in profit and loss statements and 
balance sheets; and
    (e) Data bearing on proper definitions of classifications within an 
industry.

[55 FR 12120, Mar. 30, 1990]



Sec. 511.12  Committee and subcommittee meetings.

    (a) The full committee, or a quorum thereof, will convene at the 
time and place appointed for an initial prehearing meeting as provided 
in the Secretary's order initiating the proceedings (note Sec. 511.2). 
The full committee acting through a quorum will decide at that meeting 
whether it will preside at the reception at the hearing or will 
authorize a subcommittee to preside. Any resolution authorizing a 
subcommittee to hold the hearing shall provide a period of 30 days 
after:
    (1) The subcommittee has filed its recommended report and
    (2) A transcript of the subcommittee hearing is made available to 
the parties, for the parties to file exceptions to the recommended 
report, and the committee shall meet promptly thereafter on call of its 
chairperson or the Administrator to consider exceptions and prepare its 
final report.
    (b) A committee may adjourn its meeting or hearing, or both, from 
time to time, and meet again, at hearing or otherwise, pursuant to the 
terms of adjournment, or on call of its chairperson or the 
Administrator.

[55 FR 53299, Dec. 28, 1990]



Sec. 511.13  Evidence.

    In accordance with the notice of hearing, the committee and any 
authorized subcommittee will take official notice of the facts stated in 
the economic report to the extent they are not refuted by evidence 
received at the hearing. Other pertinent evidence available to the 
Department of Labor may be presented at the hearing. The committee 
itself may call witnesses not otherwise scheduled to testify. Oral or 
documentary evidence may be received, but the committee shall exclude 
irrelevant, immaterial, and unduly repetitious evidence. Every 
interested person who has met the requirements for participation as a 
party shall have the right to present his or her case by oral or 
documentary evidence, to submit rebuttal evidence, and to conduct such 
cross-examination of witnesses called by others as may be required for a 
full and true disclosure of the facts. Testimony on behalf of an 
employer or group of employers as to inability to pay the minimum wage 
rate specified in paragraph (1) of section 6(a) of the Act, or as to 
inability to adjust to a higher minimum wage rate than prescribed by any 
applicable wage order of the Secretary, shall be

[[Page 116]]

supported by tangible objective data filed as part of the prehearing 
statement under Sec. 511.8. Financial or other data shall include data 
for the most recent year or fraction thereof for which data are 
available. Financial statements filed in accordance with this provision, 
except those relating to a period of less than a full fiscal year or a 
fiscal year ending less than 90 days prior to the filing of the 
prehearing statement, shall be certified by an independent public 
accountant or shall be sworn to conform to and be consistent with the 
corresponding income tax returns covering the same years. Evidence of 
witnesses not present at the hearing may be submitted only by affidavits 
received with, or as a part of, a prehearing statement that meets the 
requirements of Sec. 511.8 and satisfactorily explains why each affiant 
cannot be present. Such affidavits will be received in evidence to the 
same extent that testimony from affiants would have been admitted had 
they been present. The committee will give such weight to these 
statements as it considers appropriate, and the fact that such affiants 
have not been subject to cross-examination may be considered, along with 
other relevant facts, in assessing the weight to be given such evidence.

[55 FR 53299, Dec. 28, 1990]



Sec. 511.14  Procedure for receiving evidence.

    (a) All testimony shall be given under oath or affirmation. Any 
party shall have the right to appear in person, by counsel, or by other 
specified representative. Misconduct at any hearing shall be grounds for 
summary exclusion from the hearing. The committee shall limit the 
testimony of any witness where appropriate to prevent the hearing from 
becoming unduly prolonged. The refusal of a witness to answer any 
question which has been ruled to be proper shall, in the discretion of 
the committee, be ground for striking all testimony given by the witness 
on related matters.
    (b) Unless otherwise directed by the committee, witnesses shall be 
called in the following order: The committee economist qualified to 
testify concerning the content and preparation of the economic report, 
other witnesses called by the Department of Labor, witnesses called by 
the parties, other witnesses. Unless otherwise directed by the 
committee, all witnesses other than those called by the parties shall be 
examined in the following order: By committee counsel, by committee 
economist, by committee members, by the parties or their 
representatives. Witnesses called by the parties shall be examined first 
by the party calling them or by the party's specified representative, 
and then in the order herein indicated for all other witnesses. Redirect 
examination may be permitted at the discretion of the committee. 
Rebuttal evidence may be offered in the order and manner in this section 
provided for other evidence. To the extent not specified in this 
section, the order for calling and examining witnesses shall be 
specified by the chairperson of the committee or subcommittee.

[21 FR 7669, Oct. 6, 1956, as amended at 55 FR 53299, Dec. 28, 1990]



Sec. 511.15  Submittals prior to reports.

    As soon as the receipt of evidence is concluded, a committee or 
subcommittee presiding at a hearing shall receive any proposed findings 
of fact and recommendations together with the reasons therefor submitted 
by any party. These submittals shall be oral unless otherwise directed 
by the committee or subcommittee. If, in the discretion of the committee 
or subcommittee such proposals should be in writing, it may grant such 
additional time as it deems essential.



Sec. 511.16  Reports.

    Promptly after receipt of submissions under Sec. 511.15, the 
committee or subcommittee will resolve the issues before it and prepare 
a report containing its findings of fact and recommendations. The report 
shall contain the committee's or the subcommittee's findings and 
conclusions as well as the reasons or basis therefor upon all the 
material issues of fact, law, or discretion presented on the record. 
When a committee, acting through a quorum, has presided at the reception 
of evidence, this report shall

[[Page 117]]

be its final report on the matters referred to it. Where, however, a 
subcommittee has presided at the reception of evidence, this report 
shall be an initial report, and the committee shall meet thereafter to 
review the report and rule on exceptions in its final report. Where the 
committee presides at the reception of evidence and proceeds to final 
decision, every party shall be regarded as having objected to any wage 
rate or classification at variance with any the party proposed in the 
party's prehearing statements unless the party accepted such a rate or 
classification in any submittal made pursuant to Sec. 511.15. A copy of 
the report shall be signed by each member of the committee who approves 
it, either at a meeting of the committee or by circulation of one or 
more copies among the members of the committee. At any time within 3 
days after the committee report is signed by those who approve it, 
members dissenting therefrom may collectively or individually submit 
signed reports stating the reasons for their dissent.

[55 FR 53299, Dec. 28, 1990]



Sec. 511.17  Records.

    Each industry committee shall keep a journal recording the time and 
place of all its meetings, the members present, the votes, and other 
formal proceedings, including the appointment of subcommittees. 
Subcommittees shall keep a similar journal. No report of committee or 
subcommittee discussions need be included. All hearings shall be 
recorded. The record of any hearing before any subcommittee shall be 
transcribed. All hearings before a committee shall also be transcribed 
in whole or in part whenever the Administrator so directs upon his or 
her own motion or upon the motion of any party or any person compelled 
to submit data or evidence and upon the payment of costs prescribed by 
the Administrator. Promptly after completion of the committee's final 
report, the committee chairperson shall certify the report and transmit 
it to the Administrator. As soon as practicable thereafter, the 
committee staff shall transmit to the Administrator:
    (a) All committee and subcommittee journals;
    (b) All applications for leave to participate as parties together 
with the record of action thereon; and,
    (c) The record, including any transcript of the testimony and 
exhibits, together with all papers and requests filed in the 
proceedings.

These documents shall be available for inspections and copying by 
interested persons at the Office of the Administrator during usual 
business hours.

[55 FR 53300, Dec. 28, 1990]



Sec. 511.18  Publication and effective date of wage order.

    Promptly after receipt of the committee report the Administrator 
shall publish the committee recommendations in the Federal Register and 
shall provide by order that the recommendations contained in such report 
shall take effect upon the expiration of 15 days after the date of such 
publication.



Sec. 511.19  Petitions.

    Any interested person may at any time file a petition with the 
Administrator for an amendment to the regulations contained in this part 
or for an amendment to a wage order applicable to that person. In view 
of the statutory requirement that the minimum rates of wages established 
by order under section 6 of the Act be reviewed by an industry committee 
at least biennially, substantial cause must be shown in support of any 
petition for an amendment of a wage order out of regular course. Any 
interested person may also file a petition at any time with the 
Administrator for a public hearing under section 13(e) of the Act to 
determine whether economic conditions warrant rules or regulations 
providing reasonable limitations or allowing reasonable variations, 
tolerances, or exemptions to or from any or all of the provisions of 
section 7 of the Act with respect to employees in American Samoa for 
whom the Secretary of Labor has established minimum wage rates under 
section 6(a)(3) of the Act and the regulations contained in this part. 
Whenever it appears to the Secretary of Labor, by reason of such a 
petition or otherwise, to be probable that such a hearing is likely to 
reveal that economic conditions warrant such action,

[[Page 118]]

notice of such hearing specifying the procedure to be followed will be 
published in the Federal Register.

[55 FR 53300, Dec. 28, 1990]



PART 515_UTILIZATION OF STATE AGENCIES FOR INVESTIGATIONS AND 
INSPECTIONS--Table of Contents



Sec.
515.1 Definitions.
515.2 Agreements with State agencies.
515.3 Qualifications of the State agency.
515.4 Submission of plan.
515.5 Additional requirements.
515.6 Audits.
515.7 Transmission of official mail.
515.8 Enforcement.
515.9 Agreements and approved plans.
515.10 Amendments and repeal.

    Authority: Sec. 4, 49 Stat. 2038, sec. 11(b), 52 Stat. 1066; 29 
U.S.C. 211(b), 41 U.S.C. 38.

    Source: 13 FR 2161, 2163, Apr. 22, 1948, unless otherwise noted.



Sec. 515.1  Definitions.

    As used in this part:
    (a) Acts. The term Acts means the Fair Labor Standards Act of 1938 
(Act of June 25, 1938; Chapter 676, 52 Stat. 1060, 29 U.S.C. 201) and 
the Public Contracts Act (Act of June 30, 1936; 49 Stat. 2036; 41 U.S.C. 
35-45).
    (b) Administrator. The term Administrator means the Administrator of 
the Wage and Hour Division of the United States Department of Labor.
    (c) Division. The term Division means the Wage and Hour Division of 
the United States Department of Labor.
    (d) State. The term State means any State of the United States or 
the District of Columbia or any Territory or possession of the United 
States.
    (e) State agency. The term State agency means the agency in the 
State charged with the administration of labor laws which necessitate 
inspection of places of employment for (1) enforcement of State child-
labor regulations and (2) enforcement of State maximum-hour or State 
minimum-wage regulations.
    (f) Official forms. The term official forms means forms prescribed 
by the Administrator or the Secretary of Labor.



Sec. 515.2  Agreements with State agencies.

    (a) Purpose. The Secretary and the Administrator may enter into 
agreements with State agencies for the utilization of services of State 
and local agencies and their employees in making investigations and 
inspections under the Acts and for reimbursement therefor, when such 
State agencies have submitted plans of cooperation for such purposes and 
such plans have been found to be reasonably appropriate and adequate to 
carry out the respective functions of the Secretary and the 
Administrator.
    (b) Certificates of attorneys general. No such agreement shall 
become effective and operative until a statement of the Attorney General 
of the State, or, if the Attorney General is not authorized to make such 
a statement, the State official who is so authorized, has been received 
by the Division and the Secretary of Labor certifying that the agreement 
is valid in the form as executed under the laws of the State.



Sec. 515.3  Qualifications of the State agency.

    The State agency shall have as its primary function the 
administration of State labor laws and shall be under the direction of 
an executive who gives full time to the work of the agency. The agency 
shall be engaged in inspecting places of employment for (a) enforcement 
of State child-labor laws and regulations, and (b) enforcement of State 
maximum hour or minimum-wage laws and regulations. An administrative 
division of the State agency shall be designated to make investigations 
and inspections under the Acts; qualified staff, under adequate 
supervision, shall be specifically assigned for work connected with 
State and Federal child-labor, maximum-hour and minimum-wage laws and 
regulations; and provision shall be made to inspect any establishment 
subject to the Acts.



Sec. 515.4  Submission of plan.

    The State agency shall submit a plan, in quadruplicate, which shall 
include the following:
    (a) A copy of the Act establishing the State agency, copies of the 
laws administered by the State agency, and if

[[Page 119]]

there is an act specifically authorizing the State to cooperate with the 
Division or the Secretary of Labor, or both, a copy of such Act.
    (b) A description of the organization of the State agency, 
illustrated by organization charts, showing the delegation of 
responsibility and lines of authority to be followed within the agency 
in the enforcement of the act and State labor laws.
    (c) A description: (1) Of the manner in which investigations and 
inspections under the Acts will be coordinated with the investigations 
and inspections for enforcement of State child-labor, maximum-hour and 
minimum-wage laws and regulations; (2) of the location of offices of the 
administrative division designated to make inspections under the Acts, 
with the job titles of employees located in each such office and 
employees assigned to work in connection with the Acts so designated; 
and (3) of the manner in which the work of inspectors will be 
supervised.
    (d) Provisions for the establishment and maintenance of personnel 
administration, with respect to personnel engaged in work under the Acts 
for the Division and the Secretary of Labor in accordance with the 
following standards:
    (1) Job classifications based upon an analysis of the duties and 
responsibilities of positions;
    (2) A compensation schedule adjusted to State salary schedules for 
similar positions: Provided, however, That all salaries paid by the 
State for services rendered in accordance with an agreement entered into 
pursuant to Sec. 515.2 shall be on the basis of applicable State laws 
or regulations, or in the absence of such applicable laws or 
regulations, on the approved and usual scale pair by the State for 
similar services and shall in no case exceed salaries paid for 
comparable Federal positions in the competitive classified service. 
Allowances for necessary traveling expenses shall be on the basis of 
State laws and regulations governing travel allowances;
    (3) Assignment of personnel to Federal work only when their 
qualifications conform substantially with qualifications of Federal 
employees engaged in similar work, such assignment to be made only after 
submission to and approval by the Division and the Secretary of Labor of 
a statement of the training and experience of each person who will 
engage in Federal work;
    (4) Appointment of new personnel on the basis of merit, either (i) 
from lists of eligible persons certified in the order of merit, secured 
under a merit system through State-wide competitive examinations which 
prescribe requirements of training and experience in substantial 
conformity with Federal civil service requirements for similar positions 
or (ii) from lists taken from Federal registers established through 
competitive examinations for similar positions, it being understood that 
such registers may be broken down by States;
    (5) Adequate training of staff;
    (6) Promotion on the basis of qualifications and performance;
    (7) Security of tenure assured satisfactory employees, including 
right of notice and hearing prior to demotion or dismissal;
    (8) Prohibition against employees engaging in political activities 
other than the exercise of their right to vote and to express privately 
their opinions on political questions.
    (e) A budget which shall show, in detail, estimated expenditures by 
the State agency on behalf of the Division and the Secretary of Labor 
for services to be rendered in connection with the administration of the 
Acts and a budget which shall show estimated expenditure for the 
enforcement of comparable State laws and regulations during the period 
covered by the agreement; a statement showing funds appropriated to or 
allocated for meeting the budget for estimated State expenditures; and a 
statement showing expenditures by the State agency for the enforcement 
of comparable State laws and regulations during the last fiscal year.
    (f) A statement of State requirements in regard to fiscal practices 
and to appointment of personnel, together with copies of the laws and 
regulations setting forth such requirements.
    (g) A statement from the Attorney General of the State or, if the 
Attorney General is not authorized to make such a statement, from the 
State official who is so authorized certifying that the State agency has 
authority to

[[Page 120]]

enter into an Agreement with the Division and the Secretary of Labor in 
accordance with this part.



Sec. 515.5  Additional requirements.

    (a) The State Agency shall follow the procedure set forth in the 
Inspection Manual for the enforcement of the act and such supplements to 
or provisions thereof as may be issued from time to time by the Division 
or the Secretary of Labor; use official forms for recording findings; 
make reports as required; and carry on the work connected with the 
administration of the Acts in conformity with the plans and budget 
agreed upon and with the instructions and policies of the Division and 
the Secretary of Labor.
    (b) Representatives of the Division and the Secretary of Labor may 
at any time, upon notifying the State agency, make such inspections and 
investigations and secure such information as may be necessary for the 
administration of the Acts.



Sec. 515.6  Audits.

    The accounting records and the supporting data pertaining to 
expenditures for investigations and inspections under the Acts shall be 
subject to audit by the Division and the Secretary of Labor, annually, 
or so often as the Administrator and the Secretary of Labor, may 
require.



Sec. 515.7  Transmission of official mail.

    Subject to the requirements of law and of the regulations of the 
Post Office Department, franked self-addressed envelopes may be used for 
communications from the field staff to a State official designated by 
the Division and the Secretary of Labor, and for communication from the 
State agency to the Division or the Secretary of Labor.



Sec. 515.8  Enforcement.

    All litigation relating to the enforcement of the Acts, other than 
civil actions for the recovery of wages due instituted pursuant to 
section 16(b) of the Fair Labor Standards Act of 1938 and all 
administrative proceedings instituted pursuant to section 5 of the 
Public Contracts Act shall be undertaken by and be under the direction 
and control of the Federal Government. Any State agency intending to 
institute a civil action in behalf of an employee or employees for the 
recovery of wages due, pursuant to section 16(b) of the Fair Labor 
Standards Act of 1938 shall notify the Division and the Secretary of 
Labor prior to the institution of such action.



Sec. 515.9  Agreements and approved plans.

    Agreements and approved plans incorporated therein may be amended 
upon the consent of the parties thereto.



Sec. 515.10  Amendments and repeal.

    This part may be amended or repealed by appropriate joint 
regulations issued by the Secretary of Labor and the Administrator: 
Provided, however, That no such amendment or repeal shall be effective 
as to any agreement previously entered into by a State agency without 
its consent thereto.



PART 516_RECORDS TO BE KEPT BY EMPLOYERS--Table of Contents



                              Introductory

Sec.
516.0 Display of OMB control numbers.
516.1 Form of records; scope of regulations.

                     Subpart A_General Requirements

516.2 Employees subject to minimum wage or minimum wage and overtime 
          provisions pursuant to section 6 or sections 6 and 7(a) of the 
          Act.
516.3 Bona fide executive, administrative, and professional employees 
          (including academic administrative personnel and teachers in 
          elementary or secondary schools), and outside sales employees 
          employed pursuant to section 13(a)(1) of the Act.
516.4 Posting of notices.
516.5 Records to be preserved 3 years.
516.6 Records to be preserved 2 years.
516.7 Place for keeping records and their availability for inspection.
516.8 Computations and reports.
516.9 Petitions for exceptions.

[[Page 121]]

516.10 [Reserved]

   Subpart B_Records Pertaining to Employees Subject to Miscellaneous 
          Exemptions Under the Act; Other Special Requirements

516.11 Employees exempt from both minimum wage and overtime pay 
          requirements under section 13(a) (2), (3), (4), (5), (8), 
          (10), (12) or 13(d) of the Act.
516.12 Employees exempt from overtime pay requirements pursuant to 
          section 13(b) (1), (2), (3), (5), (9), (10), (15), (16), (17), 
          (20), (21), (24), (27) or (28) of the Act.
516.13 Livestock auction employees exempt from overtime pay requirements 
          under section 13(b)(13) of the Act.
516.14 Country elevator employees exempt from overtime pay requirements 
          under section 13(b)(14) of the Act.
516.15 Local delivery employees exempt from overtime pay requirements 
          pursuant to section 13(b)(11) of the Act.
516.16 Commission employees of a retail or service establishment exempt 
          from overtime pay requirements pursuant to section 7(i) of the 
          Act.
516.17 Seamen exempt from overtime pay requirements pursuant to section 
          13(b)(6) of the Act.
516.18 Employees employed in certain tobacco, cotton, sugar cane or 
          sugar beet services, who are partially exempt from overtime 
          pay requirements pursuant to section 7(m), 13(h), 13(i) or 
          13(j) of the Act.
516.19 [Reserved]
516.20 Employees under certain collective bargaining agreements who are 
          partially exempt from overtime pay requirements as provided in 
          section 7(b)(1) or section 7(b)(2) of the Act.
516.21 Bulk petroleum employees partially exempt from overtime pay 
          requirements pursuant to section 7(b)(3) of the Act.
516.22 Employees engaged in charter activities of carriers pursuant to 
          section 7(n) of the Act.
516.23 Employees of hospitals and residential care facilities 
          compensated for overtime work on the basis of a 14-day work 
          period pursuant to section 7(j) of the Act.
516.24 Employees employed under section 7(f) ``Belo'' contracts.
516.25 Employees paid for overtime on the basis of ``applicable'' rates 
          provided in sections 7(g)(1) and 7(g)(2) of the Act.
516.26 Employees paid for overtime at premium rates computed on a 
          ``basic'' rate authorized in accordance with section 7(g)(3) 
          of the Act.
516.27 ``Board, lodging, or other facilities'' under section 3(m) of the 
          Act.
516.28 Tipped employees.
516.29 Employees employed by a private entity operating an amusement or 
          recreational establishment located in a national park or 
          national forest or on land in the National Wildlife Refuge 
          System who are partially exempt from overtime pay requirements 
          pursuant to section 13(b)(29) of the Act.
516.30 Learners, apprentices, messengers, students, or handicapped 
          workers employed under special certificates as provided in 
          section 14 of the Act.
516.31 Industrial homeworkers.
516.32 [Reserved]
516.33 Employees employed in agriculture pursuant to section 13(a)(6) or 
          13(b)(12) of the Act.
516.34 Exemption from overtime pay for time spent by certain employees 
          receiving remedial education pursuant to section 7(q) of the 
          Act.

    Authority: Sec. 11, 52 Stat. 1066, as amended, 29 U.S.C. 211. 
Section 516.28 also issued under Pub. L. 104-188, Sec. 2105(b); Pub. L. 
110-28, 121 Stat. 112. Section 516.33 also issued under 52 Stat. 1060, 
as amended; 29 U.S.C. 201 et seq. Section 516.34 also issued under Sec. 
7, 103 Stat. 944, 29 U.S.C. 207(q).

    Source: 52 FR 24896, July 1, 1987, unless otherwise noted.

                              Introductory



Sec. 516.0  Display of OMB control numbers.

------------------------------------------------------------------------
                                                              Currently
Subpart or section where information collection requirement    assigned
                         is located                          OMB control
                                                                 No.
------------------------------------------------------------------------
Subpart A (except 516.8)...................................    1215.0017
516.8......................................................    1215.0006
Subpart B (except 516.31)..................................    1215.0017
516.31.....................................................    1215.0013
516.34.....................................................    1215.0175
------------------------------------------------------------------------


[52 FR 24896, July 1, 1987, as amended at 71 FR 16665, Apr. 3, 2006]



Sec. 516.1  Form of records; scope of regulations.

    (a) Form of records. No particular order or form of records is 
prescribed by the regulations in this part. However, every employer 
subject to any provisions of the Fair Labor Standards Act of 1938, as 
amended (hereinafter referred to as the ``Act''), is required to 
maintain records containing the information and data required by the 
specific sections of this part. The records may be maintained and 
preserved on microfilm or other basic source document of an automatic 
word or data processing memory provided that adequate projection or 
viewing equipment

[[Page 122]]

is available, that the reproductions are clear and identifiable by date 
or pay period and that extensions or transcriptions of the information 
required by this part are made available upon request.
    (b) Scope of regulations. The regulations in this part are divided 
into two subparts.
    (1) Subpart A of this part contains the requirements generally 
applicable to all employers employing covered employees, including the 
requirements relating to the posting of notices, the preservation and 
location of records, and the recordkeeping requirements for employers of 
employees to whom both the minimum wage provisions of section 6 or the 
minimum wage provisions of section 6 and the overtime pay provisions of 
section 7(a) of the Act apply. In addition, Sec. 516.3 contains the 
requirements relating to executive, administrative, and professional 
employees (including academic administrative personnel or teachers in 
elementary or secondary schools), and outside sales employees.
    (2) Subpart B of this part deals with the information and data which 
must be kept for employees (other than executive, administrative, etc., 
employees) who are subject to any of the exemptions provided in the Act. 
This section also specifies the records needed for deductions from and 
additions to wages for ``board, lodging, or other facilities,'' 
industrial homeworkers and employees whose tips are credited toward 
wages. The sections in subpart B of this part require the recording of 
more, less, or different items of information or data than required 
under the generally applicable recordkeeping requirements of subpart A.
    (c) Relationship to other recordkeeping and reporting requirements. 
Nothing in 29 CFR part 516 shall excuse any party from complying with 
any recordkeeping or reporting requirement imposed by any other Federal, 
State or local law, ordinance, regulation or rule.



                     Subpart A_General Requirements



Sec. 516.2  Employees subject to minimum wage or minimum wage and
overtime provisions pursuant to section 6 or sections 6 and 7(a) of the Act.

    (a) Items required. Every employer shall maintain and preserve 
payroll or other records containing the following information and data 
with respect to each employee to whom section 6 or both sections 6 and 
7(a) of the Act apply:
    (1) Name in full, as used for Social Security recordkeeping 
purposes, and on the same record, the employee's identifying symbol or 
number if such is used in place of name on any time, work, or payroll 
records,
    (2) Home address, including zip code,
    (3) Date of birth, if under 19,
    (4) Sex and occupation in which employed (sex may be indicated by 
use of the prefixes Mr., Mrs., Miss., or Ms.) (Employee's sex 
identification is related to the equal pay provisions of the Act which 
are administered by the Equal Employment Opportunity Commission. Other 
equal pay recordkeeping requirements are contained in 29 CFR part 1620.)
    (5) Time of day and day of week on which the employee's workweek 
begins (or for employees employed under section 7(k) of the Act, the 
starting time and length of each employee's work period). If the 
employee is part of a workforce or employed in or by an establishment 
all of whose workers have a workweek beginning at the same time on the 
same day, a single notation of the time of the day and beginning day of 
the workweek for the whole workforce or establishment will suffice,
    (6)(i) Regular hourly rate of pay for any workweek in which overtime 
compensation is due under section 7(a) of the Act, (ii) explain basis of 
pay by indicating the monetary amount paid on a per hour, per day, per 
week, per piece, commission on sales, or other basis, and (iii) the 
amount and nature of each payment which, pursuant to section 7(e) of the 
Act, is excluded from the ``regular rate'' (these records may be in the 
form of vouchers or other payment data),
    (7) Hours worked each workday and total hours worked each workweek 
(for

[[Page 123]]

purposes of this section, a ``workday'' is any fixed period of 24 
consecutive hours and a ``workweek'' is any fixed and regularly 
recurring period of 7 consecutive workdays),
    (8) Total daily or weekly straight-time earnings or wages due for 
hours worked during the workday or workweek, exclusive of premium 
overtime compensation,
    (9) Total premium pay for overtime hours. This amount excludes the 
straight-time earnings for overtime hours recorded under paragraph 
(a)(8) of this section,
    (10) Total additions to or deductions from wages paid each pay 
period including employee purchase orders or wage assignments. Also, in 
individual employee records, the dates, amounts, and nature of the items 
which make up the total additions and deductions,
    (11) Total wages paid each pay period,
    (12) Date of payment and the pay period covered by payment.
    (b) Records of retroactive payment of wages. Every employer who 
makes retroactive payment of wages or compensation under the supervision 
of the Administrator of the Wage and Hour Division pursuant to section 
16(c) and/or section 17 of the Act, shall:
    (1) Record and preserve, as an entry on the pay records, the amount 
of such payment to each employee, the period covered by such payment, 
and the date of payment.
    (2) Prepare a report of each such payment on a receipt form provided 
by or authorized by the Wage and Hour Division, and (i) preserve a copy 
as part of the records, (ii) deliver a copy to the employee, and (iii) 
file the original, as evidence of payment by the employer and receipt by 
the employee, with the Administrator or an authorized representative 
within 10 days after payment is made.
    (c) Employees working on fixed schedules. With respect to employees 
working on fixed schedules, an employer may maintain records showing 
instead of the hours worked each day and each workweek as required by 
paragraph (a)(7) of this section, the schedule of daily and weekly hours 
the employee normally works. Also,
    (1) In weeks in which an employee adheres to this schedule, 
indicates by check mark, statement or other method that such hours were 
in fact actually worked by him, and
    (2) In weeks in which more or less than the scheduled hours are 
worked, shows that exact number of hours worked each day and each week.



Sec. 516.3  Bona fide executive, administrative, and professional 
employees (including academic administrative personnel and teachers

in elementary or 
          secondary schools), and outside sales employees employed 
          pursuant to section 13(a)(1) of the Act.

    With respect to each employee in a bona fide executive, 
administrative, or professional capacity (including employees employed 
in the capacity of academic administrative personnel or teachers in 
elementary or secondary schools), or in outside sales, as defined in 
part 541 of this chapter (pertaining to so-called ``white collar'' 
employee exemptions), employers shall maintain and preserve records 
containing all the information and data required by Sec. 516.2(a) 
except paragraphs (a) (6) through (10) and, in addition, the basis on 
which wages are paid in sufficient detail to permit calculation for each 
pay period of the employee's total remuneration for employment including 
fringe benefits and prerequisites. (This may be shown as the dollar 
amount of earnings per month, per week, per month plus commissions, etc. 
with appropriate addenda such as ``plus hospitalization and insurance 
plan A,'' ``benefit package B,'' ``2 weeks paid vacation,'' etc.)



Sec. 516.4  Posting of notices.

    Every employer employing any employees subject to the Act's minimum 
wage provisions shall post and keep posted a notice explaining the Act, 
as prescribed by the Wage and Hour Division, in conspicuous places in 
every establishment where such employees are employed so as to permit 
them to observe readily a copy. Any employer of employees to whom 
section 7 of the Act does not apply because of an exemption of broad 
application to an establishment may alter or modify the poster with a 
legible notation to show that the overtime provisions do not apply. For 
example:


[[Page 124]]


Overtime Provisions Not Applicable to Taxicab Drivers (section 
13(b)(17)).



Sec. 516.5  Records to be preserved 3 years.

    Each employer shall preserve for at least 3 years:
    (a) Payroll records. From the last date of entry, all payroll or 
other records containing the employee information and data required 
under any of the applicable sections of this part, and
    (b) Certificates, agreements, plans, notices, etc. From their last 
effective date, all written:
    (1) Collective bargaining agreements relied upon for the exclusion 
of certain costs under section 3(m) of the Act,
    (2) Collective bargaining agreements, under section 7(b)(1) or 
7(b)(2) of the Act, and any amendments or additions thereto,
    (3) Plans, trusts, employment contracts, and collective bargaining 
agreements under section 7(e) of the Act,
    (4) Individual contracts or collective bargaining agreements under 
section 7(f) of the Act. Where such contracts or agreements are not in 
writing, a written memorandum summarizing the terms of each such 
contract or agreement,
    (5) Written agreements or memoranda summarizing the terms of oral 
agreements or understandings under section 7(g) or 7(j) of the Act, and
    (6) Certificates and notices listed or named in any applicable 
section of this part.
    (c) Sales and purchase records. A record of (1) total dollar volume 
of sales or business, and (2) total volume of goods purchased or 
received during such periods (weekly, monthly, quarterly, etc.), in such 
form as the employer maintains records in the ordinary course of 
business.



Sec. 516.6  Records to be preserved 2 years.

    (a) Supplementary basic records: Each employer required to maintain 
records under this part shall preserve for a period of at least 2 years.
    (1) Basic employment and earnings records. From the date of last 
entry, all basic time and earning cards or sheets on which are entered 
the daily starting and stopping time of individual employees, or of 
separate work forces, or the amounts of work accomplished by individual 
employees on a daily, weekly, or pay period basis (for example, units 
produced) when those amounts determine in whole or in part the pay 
period earnings or wages of those employees.
    (2) Wage rate tables. From their last effective date, all tables or 
schedules of the employer which provide the piece rates or other rates 
used in computing straight-time earnings, wages, or salary, or overtime 
pay computation.
    (b) Order, shipping, and billing records: From the last date of 
entry, the originals or true copies of all customer orders or invoices 
received, incoming or outgoing shipping or delivery records, as well as 
all bills of lading and all billings to customers (not including 
individual sales slips, cash register tapes or the like) which the 
employer retains or makes in the usual course of business operations.
    (c) Records of additions to or deductions from wages paid:
    (1) Those records relating to individual employees referred to in 
Sec. 516.2(a)(10) and
    (2) All records used by the employer in determining the original 
cost, operating and maintenance cost, and depreciation and interest 
charges, if such costs and charges are involved in the additions to or 
deductions from wages paid.



Sec. 516.7  Place for keeping records and their availability for inspection.

    (a) Place of records. Each employer shall keep the records required 
by this part safe and accessible at the place or places of employment, 
or at one or more established central recordkeeping offices where such 
records are customarily maintained. Where the records are maintained at 
a central recordkeeping office, other than in the place or places of 
employment, such records shall be made available within 72 hours 
following notice from the Administrator or a duly authorized and 
designated representative.
    (b) Inspection of records. All records shall be available for 
inspection and transcription by the Administrator or a duly authorized 
and designated representative.

[[Page 125]]



Sec. 516.8  Computations and reports.

    Each employer required to maintain records under this part shall 
make such extension, recomputation, or transcription of the records and 
shall submit to the Wage and Hour Division such reports concerning 
persons employed and the wages, hours, and other conditions and 
practices of employment set forth in the records as the Administrator or 
a duly authorized and designated representative may request in writing.



Sec. 516.9  Petitions for exceptions.

    (a) Submission of petitions for relief. Any employer or group of 
employers who, due to peculiar conditions under which they must operate, 
desire authority to maintain records in a manner other than required in 
this part, or to be relieved of preserving certain records for the 
period specified in this part, may submit a written petition to the 
Administrator requesting such authority, setting forth the reasons 
therefor.
    (b) Action on petitions. If, after review of the petition, the 
Administrator finds that the authority requested will not hinder 
enforcement of the Act, the Administrator may grant such authority 
limited by any conditions determined necessary and subject to subsequent 
revocation. Prior to revocation of such authority because of 
noncompliance with any of the prescribed conditions, the employer will 
be notified of the reasons and given an opportunity to come into 
compliance.
    (c) Compliance after submission of petitions. The submission of a 
petition or the delay of the Administrator in acting upon such petition 
will not relieve any employer or group of employers from any obligations 
to comply with all the applicable requirements of the regulations in 
this part. However, the Administrator will provide a response to all 
petitions as soon as possible.



Sec. 516.10  [Reserved]



   Subpart B_Records Pertaining to Employees Subject to Miscellaneous 
          Exemptions Under the Act; Other Special Requirements



Sec. 516.11  Employees exempt from both minimum wage and overtime pay
requirements under section 13(a) (2), (3), (4), (5), (8), (10),

(12), or 13(d) of the 
          Act.

    With respect to each and every employee exempt from both the minimum 
wage and overtime pay requirements of the Act pursuant to the provisions 
of section 13(a) (2), (3), (4), (5), (8), (10), (12), or 13(d) of the 
Act, employers shall maintain and preserve records containing the 
information and data required by Sec. 516.2(a) (1) through (4).



Sec. 516.12  Employees exempt from overtime pay requirements pursuant
to section 13(b) (1), (2), (3), (5), (9), (10), (15), (16), (17),

(20), (21), (24), (27), 
          or (28) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to the provisions of section 13(b) (1), 
(2), (3), (5), (9), (10), (15), (16), (17), (20), (21), (24), (27), or 
(28) of the Act, shall maintain and preserve payroll or other records, 
containing all the information and data required by Sec. 516.2(a) 
except paragraphs (a) (6) and (9) and, in addition, information and data 
regarding the basis on which wages are paid (such as the monetary amount 
paid, expressed as earnings per hour, per day, per week, etc.).



Sec. 516.13  Livestock auction employees exempt from overtime pay 
requirements under section 13(b)(13) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to section 13(b)(13), the employer 
shall maintain and preserve records containing the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6) and (9) and, in 
addition, for each workweek in which the employee is employed both in 
agriculture and in connection with livestock auction operations:

[[Page 126]]

    (a) The total number of hours worked by each such employee,
    (b) The total number of hours in which the employee was employed in 
agriculture and the total number of hours employed in connection with 
livestock auction operations, and
    (c) The total straight-time earnings for employment in livestock 
auction operations.



Sec. 516.14  Country elevator employees exempt from overtime pay 
requirements under section 13(b)(14) of the Act.

    (a) With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to section 13(b)(14), the employer 
shall maintain and preserve records containing the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6) and (9) and, in 
addition, for each workweek, the names and occupations of all persons 
employed in the country elevator, whether or not covered by the Act, and
    (b) Information demonstrating that the ``area of production'' 
requirements of part 536 of this chapter are met.



Sec. 516.15  Local delivery employees exempt from overtime pay requirements 
pursuant to section 13(b)(11) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act pursuant to section 13(b)(11), the employer 
shall maintain and preserve payroll or other records, containing all the 
information and data required by Sec. 516.2(a) except paragraphs (a) 
(6) and (9) and, in addition, information and data regarding the basis 
on which wages are paid (such as the dollar amount paid per trip; the 
dollar amount of earnings per week plus 3 percent commission on all 
cases delivered). Records shall also contain the following information:
    (a) A copy of the Administrator's finding under part 551 of this 
chapter with respect to the plan under which such employees are 
compensated;
    (b) A statement or description of any changes made in the trip rate 
or other delivery payment plan of compensation for such employees since 
its submission for such finding;
    (c) Identification of each employee employed pursuant to such plan 
and the work assignments and duties; and
    (d) A computation for each quarter-year of the average weekly hours 
of full-time employees employed under the plan during the most recent 
representative annual period as described in Sec. 551.8(g) (1) and (2) 
of this chapter.



Sec. 516.16  Commission employees of a retail or service establishment
exempt from overtime pay requirements pursuant to section 7(i) of the Act.

    With respect to each employee of a retail or service establishment 
exempt from the overtime pay requirements of the Act pursuant to the 
provisions of section 7(i), employers shall maintain and preserve 
payroll and other records containing all the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6), (8), (9), and 
(11), and in addition:
    (a) A symbol, letter or other notation placed on the payroll records 
identifying each employee who is paid pursuant to section 7(i).
    (b) A copy of the agreement or understanding under which section 
7(i) is utilized or, if such agreement or understanding is not in 
writing, a memorandum summarizing its terms including the basis of 
compensation, the applicable representative period and the date the 
agreement was entered into and how long it remains in effect. Such 
agreements or understandings, or summaries may be individually or 
collectively drawn up.
    (c) Total compensation paid to each employee each pay period 
(showing separately the amount of commissions and the amount of 
noncommission straight-time earnings).



Sec. 516.17  Seamen exempt from overtime pay requirements pursuant
to section 13(b)(6) of the Act.

    With respect to each employee employed as a seaman and exempt from 
the overtime pay requirements of the Act pursuant to section 13(b)(6), 
the employer shall maintain and preserve payroll or other records, 
containing all the information required by Sec. 516.2(a) except 
paragraphs (a) (5) through (9) and, in addition, the following:

[[Page 127]]

    (a) Basis on which wages are paid (such as the dollar amount paid 
per hour, per day, per month, etc.)
    (b) Hours worked each workday and total hours worked each pay period 
(for purposes of this section, a ``workday'' shall be any fixed period 
of 24 consecutive hours; the ``pay period'' shall be the period covered 
by the wage payment, as provided in section 6(a)(4) of the Act),
    (c) Total straight-time earnings or wages for each such pay period, 
and
    (d) The name, type, and documentation, registry number, or other 
identification of the vessel or vessels upon which employed.



Sec. 516.18  Employees employed in certain tobacco, cotton, sugar cane
or sugar beet services, who are partially exempt from overtime pay 

requirements pursuant 
          to section 7(m), 13(h), 13(i) or 13(j) of the Act.

    With respect to each employee providing services in connection with 
certain types of green leaf or cigar leaf tobacco, cotton, cottonseed, 
cotton ginning, sugar cane, sugar processing or sugar beets who are 
partially exempt from the overtime pay requirements of the Act pursuant 
to 7(m), 13(h), 13(i) or 13(j), the employer shall, in addition to the 
records required in Sec. 516.2, maintain and preserve a record of the 
daily and weekly overtime compensation paid. Also, the employer shall 
note in the payroll records the beginning date of each workweek during 
which the establishment operates under the particular exemption.



Sec. 516.19  [Reserved]



Sec. 516.20  Employees under certain collective bargaining agreements
who are partially exempt from overtime pay requirements as provided

in section 7(b)(1) or 
          section 7(b)(2) of the Act.

    (a) The employer shall maintain and preserve all the information and 
data required by Sec. 516.2 and shall record daily as well as weekly 
overtime compensation for each employee employed:
    (1) Pursuant to an agreement, made as a result of collective 
bargaining by representatives of employees certified as bona fide by the 
National Labor Relations Board, which provides that no employees shall 
be employed more than 1,040 hours during any period of 26 consecutive 
weeks as provided in section 7(b)(1) of the Act, or
    (2) Pursuant to an agreement, made as a result of collective 
bargaining by representatives of employees certified as bona fide by the 
National Labor Relations Board, which provides that the employee shall 
be employed not more than 2,240 hours during a specified period of 52 
consecutive weeks and shall be guaranteed employment as provided in 
section 7(b)(2) of the Act.
    (b) The employer shall also keep copies of such collective 
bargaining agreement and such National Labor Relations Board 
certification as part of the records and shall keep a copy of each 
amendment or addition thereto.
    (c) The employer shall also make and preserve a record, either 
separately or as a part of the payroll:
    (1) Listing each employee employed pursuant to each such collective 
bargaining agreement and each amendment and addition thereto.
    (2) Indicating the period or periods during which the employee has 
been or is employed pursuant to an agreement under section 7(b)(1) or 
7(b)(2) of the Act, and
    (3) Showing the total hours worked during any period of 26 
consecutive weeks, if the employee is employed in accordance with 
section 7(b)(1) of the Act, or during the specified period of 52 
consecutive weeks, if employed in accordance with section 7(b)(2) of the 
Act.



Sec. 516.21  Bulk petroleum employees partially exempt from overtime
pay requirements pursuant to section 7(b)(3) of the Act.

    With respect to each employee partially exempt from the overtime 
provisions of the Act pursuant to section 7(b)(3), the employer shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2(a), and, in addition, shall record the daily as 
well as the weekly overtime compensation paid to the employees, the rate 
per hour and the total pay for time worked between the 40th and 56th 
hour of the workweek.

[[Page 128]]



Sec. 516.22  Employees engaged in charter activities of carriers pursuant
to section 7(n) of the Act.

    With respect to each employee employed in charter activities for a 
street, suburban or interurban electric railway or local trolley or 
motorbus carrier pursuant to section 7(n) of the Act, the employer shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2(a) and, in addition, the following:
    (a) Hours worked each workweek in charter activities; and
    (b) A copy of the employment agreement or understanding stating that 
in determining the hours of employment for overtime pay purposes, the 
hours spent by the employee in charter activities will be excluded and, 
also, the date this agreement or understanding was entered into.



Sec. 516.23  Employees of hospitals and residential care facilities 
compensated for overtime work on the basis of a 14-day work period 

pursuant to section 7(j) 
          of the Act.

    With respect to each employee of hospitals and institutions 
primarily engaged in the care of the sick, the aged, or mentally ill or 
defective who reside on the premises compensated for overtime work on 
the basis of a work period of 14 consecutive days pursuant to an 
agreement or understanding under section 7(j) of the Act, employers 
shall maintain and preserve.
    (a) The records required by Sec. 516.2 except paragraphs (a) (5) 
and (7) through (9), and in addition:
    (1) Time of day and day of week on which the employee's 14-day work 
period begins,
    (2) Hours worked each workday and total hours worked each 14-day 
work period,
    (3) Total straight-time wages paid for hours worked during the 14-
day period,
    (4) Total overtime excess compensation paid for hours worked in 
excess of 8 in a workday and 80 in the work period.
    (b) A copy of the agreement or understanding with respect to using 
the 14-day period for overtime pay computations or, if such agreement or 
understanding is not in writing, a memorandum summarizing its terms and 
showing the date it was entered into and how long it remains in effect.



Sec. 516.24  Employees employed under section 7(f) ``Belo'' contracts.

    With respect to each employee to whom both sections 6 and 7(f) of 
the Act apply, the employer shall maintain and preserve payroll or other 
records containing all the information and data required by Sec. 
516.2(a) except paragraphs (a) (8) and (9), and, in addition, the 
following:
    (a) Total weekly guaranteed earnings,
    (b) Total weekly compensation in excess of weekly guaranty,
    (c) A copy of the bona fide individual contract or the agreement 
made as a result of collective bargaining by representatives of 
employees, or where such contract or agreement is not in writing, a 
written memorandum summarizing its terms.



Sec. 516.25  Employees paid for overtime on the basis of ``applicable''
rates provided in sections 7(g)(1) and 7(g)(2) of the Act.

    With respect to each employee compensated for overtime work in 
accordance with section 7(g)(1) or 7(f)(2) of the Act, employers shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2(a) except paragraphs (a) (6) and (9) and, in 
addition, the following:
    (a)(1) Each hourly or piece rate at which the employee is employed, 
(2) basis on which wages are paid, and (3) the amount and nature of each 
payment which, pursuant to section 7(e) of the Act, is excluded from the 
``regular rate,''
    (b) The number of overtime hours worked in the workweek at each 
applicable hourly rate or the number of units of work performed in the 
work-week at each applicable piece rate during the overtime hours,
    (c) Total weekly overtime compensation at each applicable rate which 
is over and above all straight-time earnings or wages earned during 
overtime worked,
    (d) The date of the agreement or understanding to use this method of 
compensation and the period covered. If the

[[Page 129]]

employee is part of a workforce or employed in or by an establishment 
all of whose workers have agreed to use this method of compensation a 
single notation of the date of the agreement or understanding and the 
period covered will suffice.



Sec. 516.26  Employees paid for overtime at premium rates computed on
a ``basic'' rate authorized in accordance with section 7(g)(3) of the Act.

    With respect to each employee compensated for overtime hours at a 
``basic'' rate which is substantially equivalent to the employee's 
average hourly earnings, as authorized in accordance with section 
7(g)(3) of the Act and part 548 of this chapter, employers shall 
maintain and preserve records containing all the information and data 
required by Sec. 516.2 except paragraph (a)(6) thereof and, in 
addition, the following:
    (a)(1) The hourly rates, piece rates, or commission rates applicable 
to each type of work performed by the employee,
    (2) The computation establishing the basic rate at which the 
employee is compensated for overtime hours (if the employee is part of a 
workforce or employed in or by an establishment all of whose workers 
have agreed to accept this method of compensation, a single entry of 
this computation will suffice),
    (3) The amount and nature of each payment which, pursuant to section 
7(e) of the Act, is excluded from the ``regular rate.''
    (b)(1) Identity of representative period for computing the basic 
rate, (2) the period during which the established basic rate is to be 
used for computing overtime compensation, (3) information which 
establishes that there is no significant difference between the 
pertinent terms, conditions and circumstances of employment in the 
period selected for the computation of the basic rate and those in the 
period for which the basic rate is used for computing overtime 
compensation, which could affect the representative character of the 
period from which the basic rate is derived.
    (c) A copy of the written agreement or, if there is no such 
agreement, a memorandum summarizing the terms of and showing the date 
and period covered by the oral agreement or understanding to use this 
method of computation. If the employee is one of a group, all of whom 
have agreed to use this method of computation, a single memorandum will 
suffice.



Sec. 516.27  ``Board, lodging, or other facilities'' under section 
3(m) of the Act.

    (a) In addition to keeping other records required by this part, an 
employer who makes deductions from the wages of employees for ``board, 
lodging, or other facilities'' (as these terms are used in sec. 3(m) of 
the Act) furnished to them by the employer or by an affiliated person, 
or who furnishes such ``board, lodging, or other facilities'' to 
employees as an addition to wages, shall maintain and preserve records 
substantiating the cost of furnishing each class of facility except as 
noted in paragraph (c) of this section. Separate records of the cost of 
each item furnished to an employee need not be kept. The requirements 
may be met by keeping combined records of the costs incurred in 
furnishing each class of facility, such as housing, fuel, or merchandise 
furnished through a company store or commissary. Thus, in the case of an 
employer who furnishes housing, separate cost records need not be kept 
for each house. The cost of maintenance, utilities, and repairs for all 
the houses may be shown together. Original cost and depreciation records 
may be kept for groups of houses acquired at the same time. Costs 
incurred in furnishing similar or closely related facilities, moreover, 
may be shown in combined records. Where cost records are kept for a 
``class'' of facility rather than for each individual article furnished 
to employees, the records must also show the gross income derived from 
each such class of facility; e.g., gross rentals in the case of houses, 
total sales through the store or commissary, total receipts from sales 
of fuel, etc.
    (1) Such records shall include itemized accounts showing the nature 
and amount of any expenditures entering into the computation of the 
reasonable cost, as defined in part 531 of this

[[Page 130]]

chapter, and shall contain the data required to compute the amount of 
the depreciated investment in any assets allocable to the furnishing of 
the facilities, including the date of acquisition or construction, the 
original cost, the rate of depreciation and the total amount of 
accumulated depreciation on such assets. If the assets include 
merchandise held for sale to employees, the records should contain data 
from which the average net investment in inventory can be determined.
    (2) No particular degree of itemization is prescribed. However, the 
amount of detail shown in these accounts should be consistent with good 
accounting practices, and should be sufficient to enable the 
Administrator or authorized representative to verify the nature of the 
expenditure and the amount by reference to the basic records which must 
be preserved pursuant to Sec. 516.6(c)(2).
    (b) If additions to or deductions from wages paid (1) so affect the 
total cash wages due in any workweek (even though the employee actually 
is paid on other than a workweek basis) as to result in the employee 
receiving less in cash than the applicable minimum hourly wage, or (2) 
if the employee works in excess of the applicable maximum hours standard 
and (i) any additions to the wages paid are a part of wages, or (ii) any 
deductions made are claimed as allowable deductions under sec. 3(m) of 
the Act, the employer shall maintain records showing on a workweek basis 
those additions to or deductions from wages. (For legal deductions not 
claimed under sec. 3(m) and which need not be maintained on a workweek 
basis, see part 531 of this chapter.)
    (c) The records specified in this section are not required with 
respect to an employee in any workweek in which the employee is not 
subject to the overtime provisions of the Act and receives not less than 
the applicable statutory minimum wage in cash for all hours worked in 
that workweek. (The application of section 3(m) of the Act in 
nonovertime weeks is discussed in part 531 of this chapter.)



Sec. 516.28  Tipped employees.

    (a) With respect to each tipped employee whose wages are determined 
pursuant to section 3(m) of the Act, the employer shall maintain and 
preserve payroll or other records containing all the information and 
data required in Sec. 516.2(a) and, in addition, the following:
    (1) A symbol, letter or other notation placed on the pay records 
identifying each employee whose wage is determined in part by tips.
    (2) Weekly or monthly amount reported by the employee, to the 
employer, of tips received (this may consist of reports made by the 
employees to the employer on IRS Form 4070).
    (3) Amount by which the wages of each tipped employee have been 
deemed to be increased by tips as determined by the employer (not in 
excess of the difference between $2.13 and the applicable minimum wage 
specified in section 6(a)(1) of the Act). The amount per hour which the 
employer takes as a tip credit shall be reported to the employee in 
writing each time it is changed from the amount per hour taken in the 
preceding week.
    (4) Hours worked each workday in any occupation in which the 
employee does not receive tips, and total daily or weekly straight-time 
payment made by the employer for such hours.
    (5) Hours worked each workday in occupations in which the employee 
receives tips, and total daily or weekly straight-time earnings for such 
hours.
    (b) [Reserved]

[52 FR 24896, July 1, 1987, as amended at 76 FR 18854, Apr. 5, 2011]



Sec. 516.29  Employees employed by a private entity operating an 
amusement or recreational establishment located in a national park

or national forest or on 
          land in the National Wildlife Refuge System who are partially 
          exempt from overtime pay requirements pursuant to section 
          
          13(b)(29) of the Act.

    With respect to each employee who is partially exempt from the 
overtime pay requirements of the Act pursuant to section 13(b)(29), the 
employer shall maintain and preserve the records required in Sec. 
516.2, except that the record of the regular hourly rate of pay in Sec. 
516.2(a)(6) shall be required only in a workweek when overtime 
compensation is due under section 13(b)(29).

[[Page 131]]



Sec. 516.30  Learners, apprentices, messengers, students, or handicapped
workers employed under special certificates as provided in 

section 14 of the Act.

    (a) With respect to persons employed as learners, apprentices, 
messengers or full-time students employed outside of their school hours 
in any retail or service establishment in agriculture, or in 
institutions of higher education, or handicapped workers employed at 
special minimum hourly rates under Special Certificates pursuant to 
section 14 of the Act, employers shall maintain and preserve records 
containing the same information and data required with respect to other 
employees employed in the same occupations.
    (b) In addition, each employer shall segregate on the payroll or pay 
records the names and required information and data with respect to 
those learners, apprentices, messengers, handicapped workers and 
students, employed under Special Certificates. A symbol or letter may be 
placed before each such name on the payroll or pay records indicating 
that that person is a ``learner,'' ``apprentice,'' ``messenger,'' 
``student,'' or ``handicapped worker,'' employed under a Special 
Certificate.



Sec. 516.31  Industrial homeworkers.

    (a) Definitions--(1) Industrial homeworker and homeworker, as used 
in this section, mean any employee employed or suffered or permitted to 
perform industrial homework for an employer.
    (2) Industrial homework, as used in this section, means the 
production by any person in or about a home, apartment, tenement, or 
room in a residential establishment of goods for an employer who suffers 
or permits such production, regardless of the source (whether obtained 
from an employer or elsewhere) of the materials used by the homeworker 
in such production.
    (3) The meaning of the terms person, employ, employer, employee, 
goods, and production as used in this section is the same as in the Act.
    (b) Items required. In addition to all of the records required by 
Sec. 516.2, every employer of homeworkers shall maintain and preserve 
payroll or other records containing the following information and data 
with respect to each and every industrial homeworker employed (excepting 
those homeworkers to whom section 13(d) of the Act applies and those 
homeworkers in Puerto Rico to whom part 545 of this chapter applies, or 
in the Virgin Islands to whom part 695 of this chapter applies):
    (1) With respect to each lot of work:
    (i) Date on which work is given out to worker, or begun by worker, 
and amount of such work given out or begun;
    (ii) Date on which work is turned in by worker, and amount of such 
work;
    (iii) Kind of articles worked on and operations performed;
    (iv) Piece rates paid;
    (v) Hours worked on each lot of work turned in;
    (vi) Wages paid for each lot of work turned in.
    (2) With respect to any agent, distributor, or contractor: The name 
and address of each such agent, distributor, or contractor through whom 
homework is distributed or collected and the name and address of each 
homeworker to whom homework is distributed or from whom it is collected 
by each such agent, distributor, or contractor.
    (c) Homeworker handbook. In addition to the information and data 
required in paragraph (b) of this section, a separate handbook (to be 
obtained by the employer from the Wage and Hour Division and supplied by 
such employer to each worker) shall be kept for each homeworker. The 
employer is required to insure that the hours worked and other 
information required therein is entered by the homeworker when work is 
performed and/or business-related expenses are incurred. This handbook 
must remain in the possession of the homeworker except at the end of 
each pay period when it is to be submitted to the employer for 
transcription of the hours worked and other required information and for 
computation of wages to be paid. The handbooks shall include a provision 
for written verification by the employer attesting that the homeworker 
was instructed to accurately record all of the required information 
regarding such homeworker's employment, and that, to the best of his or 
her knowledge and belief, the information was recorded

[[Page 132]]

accurately. Once no space remains in the handbook for additional 
entries, or upon termination of the homeworker's employment, the 
handbook shall be returned to the employer. The employer shall then 
preserve this handbook for at least two years and make it available for 
inspection by the Wage and Hour Division on request.

[52 FR 24896, July 1, 1987, as amended at 53 FR 45726, Nov. 10, 1988]



Sec. 516.32  [Reserved]



Sec. 516.33  Employees employed in agriculture pursuant to section 
13(a)(6) or 13(b)(12) of the Act.

    (a) No records, except as required under paragraph (f) of this 
section, need be maintained by an employer who did not use more than 500 
man-days \1\ of agricultural labor in any quarter of the preceding 
calendar year, unless it can reasonably be anticipated that more than 
500 man-days of agricultural labor will be used in at least one calendar 
quarter of the current calendar year. The 500 man-day test includes the 
work of agricultural workers supplied by crew leaders, or farm labor 
contractors, if the farmer is an employer of such workers, or a joint 
employer of such workers with the crew leader or farm labor contractor. 
However, members of the employer's immediate family are not included. (A 
``man-day'' is any day during which an employee does agricultural work 
for 1 hour or more.)
---------------------------------------------------------------------------

    \1\ Sections 3(u) and 13(a)(6) of the Fair Labor Standards Act (29 
U.S.C. 201 et seq.) set forth and define the term ``man-day.''
---------------------------------------------------------------------------

    (b) If it can reasonably be anticipated that the employer will use 
more than 500 man-days of agricultural labor in at least one calendar 
quarter of the current calendar year, the employer shall maintain and 
preserve for each employee records containing all the information and 
data required by Sec. 516.2(a) (1), (2) and (4) and, in addition, the 
following:
    (1) Symbols or other identifications separately designating those 
employees who are
    (i) Members of the employer's immediate family as defined in section 
13(a)(6)(B) of the Act,
    (ii) Hand harvest laborers as defined in section 13(a)(6) (C) or 
(D), and
    (iii) Employees principally engaged in the range production of 
livestock as defined in section 13(a)(6)(E).
    (2) For each employee, other than members of the employer's 
immediate family, the number of man-days worked each week or each month.
    (c) For the entire year following a year in which the employer used 
more than 500 man-days of agricultural labor in any calendar quarter, 
the employer shall maintain, and preserve in accordance with Sec. Sec. 
516.5 and 516.6, for each covered employee (other than members of the 
employer's immediate family, hand harvest laborers and livestock range 
employees as defined in sections 13(a)(6) (B), (C), (D), and (E) of the 
Act) records containing all the information and data required by Sec. 
516.2(a) except paragraphs (a) (3) and (8).
    (d) In addition to other required items, the employer shall keep on 
file with respect to each hand harvest laborer as defined in section 
13(a)(6)(C) of the Act for whom exemption is taken, a statement from 
each such employee showing the number of weeks employed in agriculture 
during the preceding calendar year.
    (e) With respect to hand harvest laborers as defined in section 
13(a)(6)(D), for whom exemption is taken, the employer shall maintain in 
addition to paragraph (b) of this section, the minor's date of birth and 
name of the minor's parent or person standing in place of the parent.
    (f) Every employer (other than parents or guardians standing in the 
place of parents employing their own child or a child in their custody) 
who employs in agriculture any minor under 18 years of age on days when 
school is in session or on any day if the minor is employed in an 
occupation found to be hazardous by the Secretary shall maintain and 
preserve records containing the following data with respect to each and 
every such minor so employed:
    (1) Name in full,
    (2) Place where minor lives while employed. If the minor's permanent 
address is elsewhere, give both addresses,
    (3) Date of birth.
    (g) Where a farmer and a bona fide independent contractor or crew 
leader

[[Page 133]]

are joint employers of agricultural laborers, each employer is 
responsible for maintaining and preserving the records required by this 
section. Duplicate records of hours and earnings are not required. The 
requirements will be considered met if the employer who actually pays 
the employees maintains and preserves the records specified in 
paragraphs (c) and (f) of this section.



Sec. 516.34  Exemption from overtime pay for time spent by certain 
employees receiving remedial education pursuant to section 7

(q) of the Act.

    With respect to each employee exempt from the overtime pay 
requirements of the Act for time spent receiving remedial education 
pursuant to section 7(q) of the Act and Sec. 778.603 of this title, the 
employer shall maintain and preserve records containing all the 
information and data required by Sec. 516.2 and, in addition, shall 
also make and preserve a record, either separately or as a notation on 
the payroll, showing the hours spent each workday and total hours each 
workweek that the employee is engaged in receiving such remedial 
education that does not include any job-specific training but that is 
designed to provide reading and other basic skills at or below the 
eighth-grade level or to fulfill the requirements for a high school 
diploma (or General Educational Development certificate), and the 
compensation (at not less than the employee's regular rate of pay) paid 
each pay period for the time so engaged.

[56 FR 61101, Nov. 29, 1991]



PART 519_EMPLOYMENT OF FULL-TIME STUDENTS AT SUBMINIMUM WAGES--
Table of Contents



       Subpart A_Retail or Service Establishments, and Agriculture

Sec.
519.1 Applicability of the regulations in this subpart.
519.2 Definitions.
519.3 Application for a full-time student certificate.
519.4 Procedure for action upon an application.
519.5 Conditions governing issuance of full-time student certificates.
519.6 Terms and conditions of employment under full-time student 
          certificates and under temporary authorization.
519.7 Records to be kept.
519.8 Amendment or replacement of a full-time student certificate.
519.9 Reconsideration and review.

               Subpart B_Institutions of Higher Education

519.11 Applicability of the regulations in this subpart.
519.12 Definitions.
519.13 Application for a full-time student certificate.
519.14 Procedure for action upon an application.
519.15 Conditions governing issuance of full-time student certificates.
519.16 Terms and conditions of employment under full-time student 
          certificates and under temporary authorization.
519.17 Records to be kept.
519.18 Amendment or replacement of a full-time student certificate.
519.19 Reconsideration and review.

    Authority: Secs. 11 and 14, 52 Stat. 1068; sec. 11, 75 Stat. 74; 
secs. 501 and 602, 80 Stat. 843, 844 (29 U.S.C. 211, 214).

    Source: 40 FR 6329, Feb. 11, 1975, unless otherwise noted.



       Subpart A_Retail or Service Establishments, and Agriculture



Sec. 519.1  Applicability of the regulations in this subpart.

    (a) Statutory provisions. Under section 14 of the Fair Labor 
Standards Act of 1938, as amended, and the authority and responsibility 
delegated to him/her by the Secretary of Labor (36 FR 8755) and by the 
Assistant Secretary for Employment Standards (39 FR 33841) the 
Administrator of the Wage and Hour Division is authorized and directed, 
to the extent necessary in order to prevent curtailment of opportunities 
for employment, to provide by regulation or order for the employment, 
under certificates, of full-time students in retail or service 
establishments, or in agriculture. That section contains provisions 
requiring a wage rate in such certificates of not less than 85 percent 
of the minimum wage applicable under section 6 of the Act, limiting 
weekly hours of employment, stipulating compliance with the applicable 
child-labor standards, and safeguarding against the reduction of the 
full-time employment opportunities of employees other

[[Page 134]]

than full-time students employed under certificates.
    (b) Source of limitations. Some of the limitations in this subpart 
are specifically required in section 14(b) of the Act. The other 
limitations implement the provisions in that section relating to 
employment opportunities, i.e., the ``extent necessary to prevent 
curtailment of opportunities for employment'' and the avoidance of a 
``substantial probability of reducing the full-time employment 
opportunities of persons other than those to whom the minimum wage rate 
authorized'' under section 14(b) is applicable.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.2  Definitions.

    (a) Full-time students. A full-time student for the purpose of this 
subpart is defined as a student who receives primarily daytime 
instruction at the physical location of a bona fide educational 
institution, in accordance with the institution's accepted definition of 
a full-time student. A full-time student retains that status during the 
student's Christmas, summer and other vacations. An individual who was 
such a student immediately prior to vacation will be presumed not to 
have discontinued such status during vacation if local law requires his/
her attendance at the end of the vacation. In the absence of such 
requirement his/her status during vacation will be governed by his/her 
intention as last communicated to his/her employer. The phrase in 
section 14(b) of the statute ``regardless of age but in compliance with 
applicable child-labor laws,'' among other things, restricts the 
employment in a retail or service establishment to full-time students 
who are at least 14 years of age because of the application of section 
3(1) of the Act. There is a minimum age requirement of 16 years in 
agriculture for employment during school hours and in any occupation 
declared hazardous by the Secretary of Labor (subpart E-1 of part 570 of 
this title.) In addition, there is a minimum age restriction of 14 years 
generally for employment in agriculture of a full-time student outside 
school hours for the school district where such employee is living while 
so employed, except (1) Minors 12 or 13 years of age may be employed 
with written parental or guardian consent or they may work on farms 
where their parents or guardians are employed, and (2) minors under 12 
may work on farms owned or operated by their parents or with parental or 
guardian consent on farms whose employees are exempt from section 6 by 
section 13 (a)(6)(A) of the Act.
    (b) Bona fide educational institution. A bona fide educational 
institution is ordinarily an accredited institution. However, a school 
which is not accredited may be considered a bona fide educational 
institution in exceptional circumstances, such as when the school is too 
recently established to have received accreditation.
    (c) Retail or service establishment. Retail or service establishment 
means a retail or service establishment as defined in section 13(a)(2) 
of the Fair Labor Standards Act. The statutory definition is interpreted 
in part 779 of this chapter.
    (d) Agriculture. Agriculture means agriculture as defined in section 
3(f) of the Fair Labor Standards Act. The statutory definition is 
interpreted in part 780 of this chapter.
    (e) Student hours of employment. Student hours of employment means 
hours during which students are employed under full-time student 
certificates issued under this part and is distinguished from hours of 
employment of students.
    (f) Employer. Section 519.4 permits an agricultural or retail or 
service establishment employer to employ not more than six full-time 
students at subminimum wages on forwarding an application but before 
certification. For this purpose, the term employer looks to the highest 
structure of ownership or control, and hence may be more than a single 
retail or service establishment or farm, e.g., the controlling 
conglomerate or enterprise would be the employer. With respect to public 
employers who operate retail or service establishments (see 29 CFR part 
779), the employer means the highest structure of

[[Page 135]]

control such as the State, municipality, county or other political 
subdivision.

[40 FR 6329, Feb. 11, 1975, as amended at 42 FR 58745, Nov. 11, 1977; 43 
FR 29000, July 5, 1978]



Sec. 519.3  Application for a full-time student certificate.

    (a) Whenever the employment of full-time students working outside of 
school hours in agriculture or in a retail or service establishment at 
wages lower than the minimum applicable under section 6 of the Fair 
Labor Standards Act is believed to be necessary to prevent curtailment 
of opportunities for employment and employment of them will not create a 
substantial probability of reducing the full-time employment 
opportunities of the other workers, an application for a certificate may 
be filed by their employer with the appropriate Regional Office of the 
Wage and Hour Division (or the Denver, Colorado Area Office for 
Colorado, North Dakota, and South Dakota; the Salt Lake City, Utah area 
Office for Montana, Utah, and Wyoming; and the Caribbean Office for the 
area it covers). Such application shall be signed by an authorized 
representative of the employer.
    (b) The application must be filed in duplicate on official forms or 
exact copies thereof. The forms are available at the offices mentioned 
in paragraph (a) of this section. The application must contain the 
information as to the type of products sold or services rendered by the 
establishment, hours of employment during the preceding twelve-month 
period or data from previous certificates (or applications) as pertinent 
to the application, and other information for which request is made on 
the form.
    (c) Separate application must be made for each farm or establishment 
in which authority to employ full-time students at subminimum wage rates 
is sought.
    (d) Application for renewal of a certificate shall be made either on 
the same type of form as is used for a new application or on an 
alternate official form. No certificate in effect shall expire until 
action on such an application shall have been finally determined, 
provided that such application has been properly executed, and is 
received by the office specified in paragraph (a) of this section not 
less than 15 nor more than 30 days prior to the expiration date. A 
properly executed application is one which fully and accurately contains 
the information required on the form, and the required certification by 
an authorized representative of the employer.



Sec. 519.4  Procedure for action upon an application.

    (a) Under certain conditions, an agricultural or retail or service 
establishment employer may obtain temporary authorization to employ 
full-time students at subminimum wages. These conditions are: (1) 
Attestation by the employer that he/she will employ no more than six 
full-time students at subminimum wages on any workday and that the 
employment of such students will not reduce the full-time employment 
opportunities of other persons, and (2) forwarding a properly completed 
application to the Wage and Hour Division not later than the start of 
such employment, and (3) posting a notice of such filing at the place(s) 
specified in paragraph (a) of Sec. 519.6 of this subpart, and (4) 
compliance during the temporary authorization period with the 
requirements set forth in paragraphs (b) and (j) through (o) of Sec. 
519.6 of this subpart.
    (b) Temporary authorization under the conditions set forth in 
paragraph (a) of this section is effective from the date the application 
is forwarded to the Wage and Hour Division in conformance with Sec. 
519.3 of this subpart. This authorization shall continue in effect for 
one year from the date of forwarding of the application unless, within 
30 days the Administrator or his/her authorized representative denies 
the application, issues a certificate with modified terms and 
conditions, or expressly extends the 30-day period of review.
    (c) Upon receipt of an application for a certificate, the officer 
authorized to act upon such application shall issue a certificate if the 
terms and conditions specified in this subpart are satisfied.

[[Page 136]]

To the extent he/she deems appropriate, the authorized officer may 
provide an opportunity to other interested persons to present data, 
views, or argument on the application prior to granting or denying a 
certificate.
    (d) Until April 30, 1976, if a certificate is issued, there shall be 
published in the Federal Register a general statement of the terms of 
such certificate together with a notice that, pursuant to Sec. 519.9, 
for 45 days following such publication any interested person may file a 
written request for reconsideration or review. Thereafter, applications 
and certificates will be available for examination in accordance with 
applicable regulations in Washington, DC, and in the appropriate 
Regional Office of the Wage and Hour Division (or the Denver, Colorado 
Area Office for Colorado, North Dakota, and South Dakota; the Salt Lake 
City, Utah Area Office for Montana, Utah, and Wyoming; and the Caribbean 
Office for the area it covers) for establishments in its area. A period 
of 60 days will be provided after certificate issuance during which any 
interested person may file a written request for reconsideration or 
review.
    (e) If a certificate is denied, notice of such denial shall be sent 
to the employer, stating the reason or reasons for the denial. Such 
denial shall be without prejudice to the filing of any subsequent 
application.

[40 FR 6329, Feb. 11, 1975, as amended at 42 FR 58745, Nov. 11, 1977]



Sec. 519.5  Conditions governing issuance of full-time student certificates.

    Certificates authorizing the employment of full-time students at 
subminimum wage rates shall not be issued unless the following 
conditions are met:
    (a) Full-time students are available for employment at subminimum 
rates; the granting of a certificate is necessary in order to prevent 
curtailment of opportunities for employment.
    (b) The employment of more than six full-time students by an 
employer will not create a substantial probability of reducing the full-
time employment opportunities for persons other than those employed 
under such certificates.
    (c) Abnormal labor conditions such as a strike or lockout do not 
exist at the farm or establishment for which a full-time student 
certificate is requested.
    (d) The data given on the application are accurate and based on 
available records.
    (e) The farms or establishments on whose experience the applicant 
relies meet the requirements of paragraph (h) of Sec. 519.6.
    (f) There are no serious outstanding violations of the provisions of 
a full-time student certificate previously issued to the employer, nor 
have there been any serious violations of the Fair Labor Standards Act 
(including Child-Labor Regulation No. 3 and the Hazardous Occupations 
Orders published in part 570 of this chapter) which provide reasonable 
grounds to conclude that the terms of a certificate may not be compiled 
with, if issued.
    (g) The subminimum wage rate(s) proposed to be paid full-time 
students under temporary authorization or under certificate is not less 
than 85 percent of the minimum wage applicable under section 6 of the 
Act.
    (h) Certificates will not be issued where such issuance will result 
in a reduction of the wage rate paid to a current employee, including 
current student employees.

[40 FR 6329, Feb. 11, 1975, as amended at 42 FR 58745, Nov. 11, 1977]



Sec. 519.6  Terms and conditions of employment under full-time student
certificates and under temporary authorization.

    (a) A full-time student certificate will not be issued for a period 
longer than 1 year, nor will it be issued retroactively. It shall 
specify its effective and expiration dates. A copy of the certificate 
shall be posted during its effective period in a conspicuous place or 
places in the establishment or at the farm readily visable to all 
employees, for example, adjacent to the time clock or on the bulletin 
board used for notices to the employees. If temporary authorization is 
in effect under paragraph (a) of Sec. 519.4 of this subpart, a notice 
thereof shall be similarly posted during the effective period of such 
authorization.

[[Page 137]]

    (b) Full-time students may not be employed under a certificate at 
less than 85 percent of the minimum wage applicable under section 6 of 
the Act.
    (c) For retail or service establishment employers or agricultural 
employers, the allowable extent of full-time student employment under 
certificates varies depending on whether: (1) The employer proposes to 
employ no more than six full-time students at subminimum wages on any 
workday, (2) the applicant requests authority for not more than 10 
percent of the total hours of all employees during any month, or (3) the 
applicant requests authority for more than 10 percent of the total hours 
during any month. (For agricultural employers, the month of full-time 
student certificated employment may vary somewhat from the month in a 
previous year on which the certificate is based, depending on seasonal 
factors.)
    (d) Retail or service establishment employers or agricultural 
employers requesting authorization to employ not more than six full-time 
students at subminimum wages on any workday. An application from such an 
applicant provides temporary authorization for the employment of full-
time students at subminimum wages: Provided, The conditions set forth in 
paragraph (a) of Sec. 519.4 of this subpart are met. Upon review of the 
application by the Administration or his/her authorized representative, 
the extent of the temporary authority may be modified.
    (e) Applicants requesting authorization for not more than 10 percent 
of the total hours of all employees during any month. For such an 
applicant, certificates may authorize the employment of full-time 
student at subminimum wages for up to 10 percent of the total hours of 
all employees during any month, regardless of past practice of employing 
students. (Note: An establishment which has not previously held a 
certificate may be authorized 10 percent of the total hours of all 
employees during any month. Applicants requesting authority under this 
paragraph need not refer to paragraphs (f), (g), or (h) of this 
section.)
    (f) Applicants requesting authorization for more than 10 percent of 
the total monthly hours of all employees during any month with records 
of hours of employment of students and coverage by the Act prior to May 
1974. For such an applicant, certificates may not authorize full-time 
student employment at subminimum wages in excess of the highest ratio 
under any of these three formulas: (1) The proportion of student hours 
of employment (i.e., of full-time students under certificates) to total 
hours of all employees for the corresponding month of the preceding 
twelve-month period; (2) the maximum proportion of student hours of 
employment to total hours of all employees (in any corresponding month), 
applicable to the issuance of full-time student certificates before May 
1974; or (3) 10 percent of the total hours of all employees, during any 
month. (Note: An establishment which is entitled to monthly allowances 
ranging from 5 to 20 percent may be authorized 10 percent for those 
months which were less than 10 percent and retain the higher allowances 
for those months above 10 percent.)
    (g) Applicants requesting authorization for more than 10 percent of 
the total hours of all employees during any month with records of hours 
of employment of students and new coverage under the 1974 Amendments. 
For such an applicant, the highest permissible allowance under a 
certificate during any month is the highest ratio under any of these 
three formulas:
    (1) The proportion of hours of employment of full-time students to 
total hours of all employees during the corresponding month from May 
1973 through April 1974;
    (2) The proportion of student hours of employment (i.e., of hours of 
full-time students under certificates) to total hours of all employees 
during the corresponding month of the preceding twelve-month period (an 
alternative which is not applicable to all months of the year until 12 
months after May 1, 1974); or
    (3) 10 percent of the total hours of all employees, during any 
month. (See notes under paragraphs (e) and (f) of this section.)
    (h) Applicants requesting authorization for more than 10 percent of 
the total hours of all employees during any month without records of 
student hours worked. For

[[Page 138]]

such an applicant, the permissible proportion under certificate of full-
time student hours at subminimum wages to total hours of all employees 
is based on the ``practice'' during the preceding twelve-month period 
of: (1) Similar establishments of the same employer in the same general 
metropolitan areas in which such establishment is located: (2) similar 
establishments in the same or nearby communities if such establishment 
is not in a metropolitan area; or (3) other establishments of the same 
general character operating in the community or the nearest comparable 
community. (``Practice'' means either the certificate allowances or the 
proportion between the actual student hours of employment to the total 
hours of all employees.)
    (i) An overestimate of total hours of employment of all employees 
for a current month resulting in the employment of the full-time 
students in excess of the hours authorized in paragraph (e), (f), (g), 
or (h) of this section may be corrected by compensating them for the 
difference between the subminimum wages actually paid and the applicable 
minimum under section 6 of the Act for the excess hours. Similarly, if 
an agricultural employer or a retail or service establishment employer 
has authorization to employ no more than six full-time students at 
subminimum wages on any workday but exceeds that number, the excess may 
be corrected by compensating the additional full-time students for the 
difference between the subminimum wages actually paid and the applicable 
minimum under section 6 of the Act. This additional compensation shall 
be paid on the regular payday next after the end of the period.
    (j) Full-time students shall not be permitted to work at subminimum 
wages for more than 8 hours a day, nor for more than 40 hours a week 
when school is not in session, nor more than 20 hours a week when school 
is in session (apart from a full-time student's summer vacation), except 
that when a full-day school holiday occurs on a day when the 
establishment is open for business, the weekly limitation on the maximum 
number of hours which may be worked shall be increased by 8 hours for 
each such holiday but in no event shall the 40-hour limitation be 
exceeded. (Note: School is considered to be in session for a student 
attending summer school.) Whenever a full-time student is employed for 
more than 20 hours in any workweek in conformance with this paragraph, 
the employer shall note in his/her payroll records that school was not 
in session during all or part of that workweek or the student was in 
his/her summer vacation.
    (k) Neither oppressive child labor as defined in section 3(1) of the 
Act and regulations issued under the Act nor any other employment in 
violation of a Federal, State or local child labor law or ordinance 
shall come within the terms of any certificate issued under this 
subpart.
    (l) Full-time students shall be employed at subminimum wages under 
this subpart only outside of their school hours, i.e., only outside of 
the scheduled hours of instruction of the individual student, or, in the 
case of agriculture, only outside of school hours for the school 
district where the employee is living while so employed, if the employee 
is under 16 years of age.
    (m) No full-time student shall be hired under a full-time student 
certificate while abnormal labor conditions, such as a strike or 
lockout, exist at the establishment or farm.
    (n) No provision of any full-time student certificate shall excuse 
noncompliance with higher standards applicable to full-time students 
which may be established under the Walsh-Healey Public Contracts Act or 
any other Federal law, State law, local ordinance, or union or other 
agreement. Thus, certificates issued under this law have no application 
to employment under the Service Contract Act.
    (o) No full-time student certificate shall apply to any employee to 
whom a certificate issued under section 14 (a) or (c) of the Act has 
application.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975, as amended at 42 
FR 58745, Nov. 11, 1977]



Sec. 519.7  Records to be kept.

    (a) The employer shall designate each worker employed as a full-time 
student under a full-time student certificate at subminimum wages, as 
provided under part 516 of this chapter.

[[Page 139]]

    (b)(1) In addition to the records required under part 516 of this 
chapter and this subpart, the employer shall keep the records specified 
in paragraph (b) (2) and (3) of this section specifically relating to 
full-time students employed at subminimum wages.
    (2) The employer shall obtain at the time of hiring and keep in his 
records information from the school attended that the employee receives 
primarily daytime instruction at the physical location of the school in 
accordance with the school's accepted definition of a full-time student. 
During a period between attendance at different schools not longer than 
the usual summer vacation, a certificate from the school next to be 
attended that the student has been accepted as a full-time student will 
satisfy the requirements of this paragraph (b)(2).
    (3) The employer operating any farm or retail or service 
establishment shall maintain records of the monthly hours of employment 
of full-time students at subminimum wages and of the total hours of 
employment during the month of all employees in the establishment except 
for those employed in agriculture who come within one of the other 
exemptions from the minimum wage provisions of the Act.
    (c) The records required in this section, including a copy of any 
full-time student certificate issued, shall be kept for a period of 3 
years at the place and made available for inspection, both as provided 
in part 516 of this chapter.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.8  Amendment or replacement of a full-time student certificate.

    In the absence of an objection by the employer (which may be 
resolved in the manner provided in part 528 of this chapter), the 
authorized officer upon his/her own motion may amend the provisions of a 
certificate when it is necessary by reason of the amendment of these 
regulations, or may withdraw a certificate and issue a replacement 
certificate when necessary to correct omissions or apparent defects in 
the original certificate.



Sec. 519.9  Reconsideration and review.

    (a) Within 15 days after being informed of a denial of an 
application for a full-time student certificate or within 45 days after 
Federal Register publication of a statement of the terms of the 
certificate granted (subsequent to April 30, 1976, within 60 days after 
a certificate is granted), any person aggrieved by the action of an 
authorized officer in denying or granting a certificate may:
    (1) File a written request for reconsideration thereof by the 
authorized officer who made the decision in the first instance, or
    (2) File with the Administrator a written request for review.
    (b) A request for reconsideration shall be accompanied by a 
statement of the additional evidence which the applicant believes may 
materially affect the decision and a showing that there were reasonable 
grounds for failure to present such evidence in the original 
proceedings.
    (c) Any person aggrieved by the reconsideration determination of an 
authorized officer may, within 15 days after such determination, file 
with the Administrator a written request for review.
    (d) A request for review shall be granted where reasonable grounds 
for the review are set forth in the request.
    (e) If a request for reconsideration or review is granted, the 
authorized officer or the Administrator may, to the extent he/she deems 
it appropriate, afford other interested persons an opportunity to 
present data, views, or argument.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



               Subpart B_Institutions of Higher Education



Sec. 519.11  Applicability of the regulations in this subpart.

    (a) Statutory provisions. Under section 14 of the Fair Labor 
Standards Act of 1938, as amended, and the authority and responsibility 
delegated to him/her by the Secretary of Labor (36 FR 8755) and by the 
Assistant Secretary for Employment Standards (39 FR 3384l), the 
Administrator of the Wage and Hour

[[Page 140]]

Division is authorized and directed, to the extent necessary in order to 
prevent curtailment of opportunities for employment, to provide by 
regulation or order for the employment, under certificates, of full-time 
students in institutions of higher education. That section contains 
provisions requiring a wage rate in such certificates of not less than 
85 percent of the minimum wage applicable under section 6 of the Act, 
limiting weekly hours of employment, stipulating compliance with the 
applicable child-labor standards, and safeguarding against the reduction 
of the full-time employment opportunities of employees other than full-
time students employed under certificates.
    (b) Source of limitations. Some of the limitations expressed in this 
subpart are specifically required in section 14(b) of the Act. The other 
limitations implement the provisions relating to employment 
opportunities, i.e., the ``extent necessary in order to prevent 
curtailment of opportunities for employment'' and the requirement that 
the regulations shall ``prescribe standards and requirements to insure 
that this paragraph will not create a substantial probability of 
reducing the full-time employment opportunities of persons other than 
those to whom the minimum wage rate authorized by'' section 14(b) of the 
Act is applicable.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.12  Definitions.

    (a) Full-time students. A full-time student for the purpose of this 
subpart is defined as one who meets the accepted definition of a full-
time student of the institution of higher education which employs him/
her. A full-time student retains that status during the student's 
Christmas, summer and other vacations, even when a student is taking one 
or more courses during his/her summer or other vacation. The phrase in 
section 14(b) of the statute ``regardless of age but in compliance with 
applicable child labor laws'', among other things restricts the 
employment in an institution of higher education to full-time students 
who are at least 14 years of age because of the application of section 
3(1) of the Act.
    (b) Institution of higher education. An institution of higher 
education is an institution above the secondary level, such as a college 
or university, a junior college, or a professional school of 
engineering, law, library science, social work, etc. It is one that is 
recognized by a national accrediting agency or association as determined 
by the U.S. Commissioner of Education. Generally, an institution of 
higher education: (1) Admits as regular students only individuals having 
a certificate of graduation from a high school or the recognized 
equivalent of such a certificate; and (2) is legally authorized within a 
State to provide a program of education beyond high school; and (3) 
provides an educational program for which it normally awards a 
bachelor's degree, or provides not less than a two-year program which is 
acceptable for full credit toward such a degree or offers a two-year 
program in engineering, mathematics, or the physical or biological 
sciences which is designed to prepare the student to work as a 
technician and at a semi-professional level in engineering, scientific, 
or other technological fields which require the understanding and 
application of basic engineering, scientific, or mathematical principles 
of knowledge.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.13  Application for a full-time student certificate.

    (a) Whenever the employment of its full-time students working in an 
institution at wages lower than the minimum wage applicable under 
section 6 of the Fair Labor Standards Act is believed to be necessary to 
prevent curtailment of opportunities for employment and employment of 
them will not create a substantial probability of reducing the full-time 
employment opportunities of other workers, an application for a 
certificate may be filed by their employer with the appropriate Regional 
Office of the Wage and Hour Division (or the Denver, Colorado Area 
Office for Colorado, North Dakota and South Dakota; the Salt Lake City, 
Utah Area Office for Montana, Utah and Wyoming; and the Caribbean Office

[[Page 141]]

for the area it covers). Such an application shall be signed by an 
authorized representative of the employer.
    (b) The application provided for under Sec. 519.14 must be filed in 
duplicate on official forms or exact copies thereof. The forms are 
available at the offices mentioned in paragraph (a) of this section. The 
application must contain the information on numbers of full-time 
students and full-time employees (other than full-time students), 
minimum full-time student wages, and other information for which request 
is made on the form.
    (c) Separate application must be made for each campus of an 
institution of higher education for which authority to employ full-time 
students at subminimum wage rates is sought.
    (d) Application for renewal of a certificate shall be made on the 
same type of form as is used for a new application. No certificate in 
effect shall expire until action on such an application shall have been 
finally determined, provided that such application has been properly 
executed, and is received by the office specified in paragraph (a) of 
this section not less than 15 nor more than 30 days prior to the 
expiration date. A properly executed application is one which fully and 
accurately contains the information required on the form, and the 
required certification by an authorized representative of the employer.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.14  Procedure for action upon an application.

    (a) Under certain conditions, an institution of higher education has 
temporary authorization to employ full-time students at subminimum 
wages. These conditions are:
    (1) Absence of an effective finding by the Secretary that the 
institution has been employing full-time students under certificates in 
violation of the requirements of section 14(b)(3) of the Act or of these 
regulations; and
    (2) Forwarding of a properly completed application to the Wage and 
Hour Division not later than the start of employment of full-time 
students at subminimum wages; and
    (3) Posting a notice of such filing at the place(s) specified in 
paragraph (a) of Sec. 519.16 of this subpart; and
    (4) Compliance during the temporary authorization period with the 
requirements set forth in paragraphs (b) and (e) through (j) of Sec. 
519.16 of this subpart.
    (b) Temporary authorization under the conditions set forth in 
paragraph (a) of this section is effective from the date the application 
is forwarded to the Wage and Hour Division in conformance with Sec. 
519.13 of this subpart. This authorization shall continue in effect for 
one year from the date of forwarding of the application unless, within 
30 days, the Administrator or his/her authorized representative denies 
the application, issues a certificate with modified terms and 
conditions, or expressly extends the 30-day period of review.
    (c) Upon receipt of an application for a certificate, the officer 
authorized to act upon such application shall issue a certificate if the 
terms and conditions specified in this subpart are satisfied. To the 
extent he/she deems appropriate, the authorized officer may provide an 
opportunity to other interested persons to present data, views, or 
argument on the application prior to granting or denying a certificate.
    (d) Until April 30, 1976, if a certificate is issued there shall be 
published in the Federal Register a general statement of the terms of 
such certificate together with a notice that, pursuant to Sec. 519.19, 
for 45 days following such publication any interested person may file a 
written request for reconsideration or review. Thereafter, applications 
and certificates will be available for examination in accordance with 
applicable regulations in Washington, DC, and in the appropriate 
Regional Office of the Wage and Hour Division (or the Denver, Colorado 
Area Office for Colorado, North Dakota, and South Dakota; the Salt Lake 
City, Utah Area Office for Montana, Utah, and Wyoming; and the Caribbean 
Office for the area it covers) for institutions of higher education in 
its area. A period of 60 days will be provided after certificate 
issuance during which any interested person may file a written request 
for reconsideration or review.

[[Page 142]]

    (e) If a certificate is denied, notice of such denial shall be sent 
to the employer, stating the reason or reasons for the denial. Such 
denial shall be without prejudice to the filing of any subsequent 
application.



Sec. 519.15  Conditions governing issuance of full-time student certificates.

    Certificates authorizing the employment of full-time students at 
subminimum wage rates shall not be issued unless the following 
conditions are met:
    (a) Full-time students are available for employment at subminimum 
rates; the granting of a certificate is necessary in order to prevent 
curtailment of opportunities for employment.
    (b) The employment of full-time students will not create a 
substantial probability of reducing the full-time employment 
opportunities for persons other than those employed under such 
certificates.
    (c) Abnormal labor conditions such as a strike or lockout do not 
exist in the units of the campus for which a full-time student 
certificate is requested.
    (d) The data given on the application are accurate and based on 
available records.
    (e) There are no serious outstanding violations of the provisions of 
a full-time student certificate previously issued to the employer, nor 
have there been any serious violations of the Fair Labor Standards Act 
(including Child-Labor Regulation No. 3 and the Hazardous Occupations 
Orders published in part 570 of this chapter) which provide reasonable 
grounds to conclude that the terms of a certificate may not be complied 
with, if issued.
    (f) The subminimum wage rate(s) proposed to be paid full-time 
students under temporary authorization or under certificate is not less 
than 85 percent of the minimum wage applicable under section 6 of the 
Act.
    (g) Full-time students are not to be employed by an institution of 
higher education at subminimum wages under this subpart in unrelated 
trades or businesses as defined and applied under sections 511 through 
515 of the Internal Revenue Code, such as apartment houses, stores, or 
other businesses not primarily catering to the students of the 
institution.
    (h) Certificates will not be issued where such issuance will result 
in a reduction of the wage rate paid to a current employee, including 
current student employees.



Sec. 519.16  Terms and conditions of employment under full-time student
certificates and under temporary authorization.

    (a) A full-time student certificate will not be issued for a period 
longer than 1 year, nor will it be issued retroactively. It shall 
specify its effective and expiration dates. A copy of the certificate 
shall be posted during its effective period in a conspicuous place or 
places in the institution of higher education readily visible to all 
employees, for example, adjacent to the time clock or on the bulletin 
board used for notices to the employees. If temporary authorization is 
in effect under paragraph (a) of Sec. 519.14, a notice thereof shall be 
similarly posted during the effective period of such authorization.
    (b) Full-time students may not be employed under a certificate at 
less than 85 percent of the minimum wage applicable under section 6 of 
the Act.
    (c) An institution of higher education shall not employ full-time 
students at subminimum wages under this subpart in unrelated trades or 
businesses as defined and applied under sections 511 through 515 of the 
Internal Revenue Code, such as apartment houses, stores, or other 
businesses not primarily catering to the students of the institution.
    (d) An institution of higher education subject to a finding by the 
Secretary that it is in violation of the requirements of section 
14(b)(3) of the Act or of this subpart must be issued a full-time 
student certificate before it can employ full-time students at wages 
below those required by section 6 of the Act. The Administrator or his/
her authorized representative will not issue a full-time student 
certificate to such an institution without adequate assurances and 
safeguards to insure that the violations found by the Secretary will not 
continue.
    (e) Full-time students shall not be permitted to work at subminimum

[[Page 143]]

wages for more than 8 hours a day, nor for more than 40 hours a week 
when school is not in session, nor more than 20 hours a week when school 
is in session (apart from a full-time student's summer vacation), except 
that when a full-day school holiday occurs the weekly limitation on the 
maximum hours which may be worked shall be increased by 8 hours for each 
such holiday but in no event shall the 40-hour limitation be exceeded. 
(Note: School is considered to be in session for a student taking one or 
more courses during a summer or other vacation.) Whenever a full-time 
student is employed for more than 20 hours in any workweek in 
conformance with this paragraph, the employer shall note in his/her 
payroll that school was not in session during all or part of that 
workweek or the student was in his/her summer vacation.
    (f) Neither oppressive child labor as defined in section 3(1) of the 
Act and regulations issued under the Act nor any other employment in 
violation of a Federal, State or local child labor law or ordinance 
shall come within the terms of any certificate issued under this 
subpart.
    (g) Full-time students shall be employed at subminimum wages under 
this subpart only outside of their school hours, i.e., only outside of 
the scheduled hours of instruction of the individual full-time student.
    (h) No full-time student shall be hired under a full-time student 
certificate for work in a unit or units of the campus where abnormal 
labor conditions, such as a strike or lockout, exist.
    (i) No provision of any full-time student certificate shall excuse 
noncompliance with higher standards applicable to full-time students 
which may be established under the Walsh-Healey Public Contracts Act or 
any other Federal law, State law, local ordinance, or union or other 
agreement. Thus, certificates issued under this subpart have no 
application to employment under the Service Contract Act.
    (j) No full-time student certificate shall apply to any employee to 
whom a certificate issued under section 14(a) or (c) of the Act has 
application.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.17  Records to be kept.

    (a) The employer shall designate each worker employed as a full-time 
student under a full-time student certificate at subminimum wages, as 
provided under part 516 of this chapter.
    (b)(1) In addition to the records required under part 516 of this 
chapter and this subpart, the employer shall keep the records specified 
in paragraphs (b)(2) and (3) of this section specifically relating to 
full-time students employed at subminimum wages.
    (2) The institution shall obtain at the time of hiring and keep in 
its records information that the employee is its full-time student at 
the physical location of the institution in accordance with its accepted 
definition of a full-time student. During a period between attendance at 
different schools not longer than the usual summer vacation, the 
acceptance by the institution of the full-time student for its next term 
will satisfy the requirements of (b)(2) of this section.
    (3) An institution of higher education shall maintain records 
showing the total number of all full-time students of the type defined 
in Sec. 519.12(a) employed at the campus of the institution at less 
than the minimum wage otherwise applicable under the Act, and the total 
number of all employees at the campus to whom the minimum wage provision 
of the Act applies.
    (c) The records required in this section, including a copy of any 
full-time student certificate issued, shall be kept for a period of 3 
years at the place and made available for inspection, both as provided 
in part 516 of this chapter.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



Sec. 519.18  Amendment or replacement of a full-time student certificate.

    In the absence of an objection by the employer (which may be 
resolved in the manner provided in part 528 of this chapter) the 
authorized officer upon his/her own motion may amend the provisions of a 
certificate when it is necessary by reason of the amendment of these 
regulations, or may withdraw a certificate and issue a replacement 
certificate when necessary to correct

[[Page 144]]

omissions or apparent defects in the original certificates.



Sec. 519.19  Reconsideration and review.

    (a) Within 15 days after being informed of a denial of an 
application for a full-time student certificate or within 45 days after 
Federal Register publication of a statement of the terms of the 
certificate granted, (subsequent to April 30, 1976, within 60 days after 
a certificate is granted), any person aggrieved by the action of an 
authorized officer in denying or granting a certificate may:
    (1) File a written request for reconsideration thereof by the 
authorized officer who made the decision in the first instance, or
    (2) File with the Administrator a written request for review.
    (b) A request for reconsideration shall be accompanied by a 
statement of the additional evidence which the applicant believes may 
materially affect the decision and a showing that there were reasonable 
grounds for failure to present such evidence in the original 
proceedings.
    (c) Any person aggrieved by the reconsideration of an authorized 
officer may, within 15 days after such determination, file with the 
Administrator a written request for review.
    (d) A request for review shall be granted where reasonable grounds 
for the review are set forth in the request.
    (e) If a request for reconsideration or review is granted, the 
authorized officer or the Administrator may, to the extent he/she deems 
it appropriate, afford other interested persons an opportunity to 
present data, views, or argument.

[40 FR 6329, Feb. 11, 1975; 40 FR 22546, May 23, 1975]



PART 520_EMPLOYMENT UNDER SPECIAL CERTIFICATE OF MESSENGERS, LEARNERS 
(INCLUDING STUDENT-LEARNERS), AND APPRENTICES--Table of Contents



Subpart A [Reserved]

 Subpart B_What Are the General Provisions Governing the Employment of 
 Messengers, Learners (Including Student-Learners), and Apprentices at 
                            Subminimum Wages?

Sec.
520.200 What is the legal authority for payment of wages lower than the 
          minimum wage required by section 6(a) of the Fair Labor 
          Standards Act?
520.201 How are those classifications of workers which may be paid 
          subminimum wages under section 14(a) of the Fair Labor 
          Standards Act defined?
520.202 How do persons who want to apply for a particular certificate 
          find out what is needed?
520.203 What records does an employer have to keep when subminimum wage 
          certificates are granted? How long do they have to be kept?
520.204 If someone does not agree with the Department of Labor's 
          decision on a certificate, can the decision be appealed?
520.205 How do these rules affect other Federal, state and local laws 
          and collective bargaining agreements?

                          Subpart C_Definitions

520.300 Definitions.

    Subpart D_Messengers, Learners (Excluding Student-Learners), and 
                               Apprentices

520.400 Who are messengers, learners, and apprentices?
520.401 Are there any industries, occupations, etc. that do not qualify 
          for a certificate to employ messengers, learners, or 
          apprentices at subminimum wages?
520.402 How do I obtain authority to employ messengers, learners, or 
          apprentices at subminimum wages?
520.403 What information is required when applying for authority to pay 
          less than the minimum wage?
520.404 What must I demonstrate in my application for a messenger, 
          learner, or apprentice certificate to receive a favorable 
          review?
520.405 Must I notify my employees that I am applying for a certificate 
          to employ messengers and/or learners at subminimum wages?

[[Page 145]]

520.406 What happens once I have submitted my request for authorization 
          to pay messengers, learners, or apprentices subminimum wages?
520.407 What is the subminimum wage for messengers and what must I do to 
          comply with the terms of my certificate?
520.408 What is the subminimum wage for learners and what must I do to 
          comply with the terms of my certificate?
520.409 When will authority to pay apprentices special minimum wages 
          become effective and what is the special minimum wage rate?
520.410 How long does a messenger, learner, or apprentice certificate 
          remain in effect?
520.411 Does a certificate authorizing payment of subminimum wages to 
          messengers and/or learners remain in effect during the renewal 
          process?
520.412 What records, in addition to those required by Part 516 of this 
          chapter and section 520.203 of this part, must I keep relating 
          to the employment of messengers, learners, or apprentices 
          under special certificate?

                       Subpart E_Student-Learners

520.500 Who is a student-learner?
520.501 How do I obtain authority to employ student-learners at 
          subminimum wages?
520.502 What information must an application to employ student-learners 
          at subminimum wages contain?
520.503 What must I demonstrate in my application for a student-learner 
          certificate to receive a favorable review?
520.504 When will authority to pay student-learners subminimum wages 
          become effective?
520.505 How will I be notified that my request to employ student-
          learners at subminimum wages has been denied and can I appeal 
          the denial?
520.506 What is the subminimum wage for student-learners and what must I 
          do to comply with the terms of my student-learner certificate?
520.507 How long does my certificate remain in effect?
520.508 What records, in addition to those required by Part 516 of this 
          chapter and section 520.203 of this part, must I keep when 
          student-learners are employed?

    Authority: Sec. 14, 52 Stat. 1062, 1064 (29 U.S.C. 214); secs. 2-12, 
60 Stat. 237-244; (5 U.S.C. 1001-1011); 52 Stat. 1068, as amended, 29 
U.S.C. 214.

    Source: 62 FR 64959, Dec. 9, 1997, unless otherwise noted.

Subpart A [Reserved]



 Subpart B_What are the General Provisions Governing the Employment of 
 Messengers, Learners (Including Student-Learners), and Apprentices at 
                            Subminimum Wages?



Sec. 520.200  What is the legal authority for payment of wages lower 
than the minimum wage required by section 6(a) of the

Fair Labor Standards Act?

    Section 14(a) of the Fair Labor Standards Act provides, in order to 
prevent curtailment of employment opportunities, for the payment of 
special minimum wage rates to workers employed as messengers, learners 
(including student-learners), and apprentices under special certificates 
issued by the Department of Labor.



Sec. 520.201  How are those classifications of workers which may be 
paid subminimum wages under section 14(a) of the Fair Labor Standards

Act defined?

    (a) A messenger is a worker who is primarily engaged in delivering 
letters and messages for a firm whose principal business is the delivery 
of such letters and messages.
    (b) A learner is a worker who is being trained for an occupation, 
which is not customarily recognized as an apprenticeable trade, for 
which skill, dexterity and judgment must be learned and who, when 
initially employed, produces little or nothing of value. Except in 
extraordinary circumstances, an employee cannot be considered a 
``learner'' once he/she has acquired a total of 240 hours of job-related 
and/or vocational training with the same or other employer(s) or 
training facility(ies) during the past three years. An individual 
qualifying as a ``learner'' may only be trained in two qualifying 
occupations.
    (c) A student-learner is a student who is at least sixteen years of 
age, or at least eighteen years of age if employed in an occupation 
which the Secretary has declared to be particularly hazardous, who is 
receiving instruction in an accredited school, college or university and 
who is employed on a part-

[[Page 146]]

time basis, pursuant to a ``bona fide vocational training program'' as 
defined in subpart C of this part.
    (d) An apprentice is a worker, at least sixteen years of age unless 
a higher minimum age standard is otherwise fixed by law, who is employed 
to learn a skilled trade through a registered apprenticeship program. 
Training is provided through structured on-the-job training combined 
with supplemental related theoretical and technical instruction. This 
term excludes pre-apprentices, trainees, learners, and student-learners. 
The terms learner and student-learner are defined in subpart C of this 
part. Standards governing the registration of apprenticeship programs 
are established and administered by the U.S. Department of Labor, 
Employment and Training Administration, Bureau of Apprenticeship and 
Training (BAT) and are found in Regulations, 29 CFR Part 29.
    (e) Additional terms used in this part are defined in subpart C of 
this part.



Sec. 520.202  How do persons who want to apply for a particular 
certificate find out what is needed?

    The application process, terms, conditions and requirements of 
certificates and other matters are discussed in subparts D and E of this 
part. Messengers, learners (excluding student-learners), and apprentices 
are discussed in subpart D of this part and student-learners in subpart 
E of this part.



Sec. 520.203  What records does an employer have to keep when subminimum
wage certificates are granted? How long do they have to be kept?

    (a) In addition to other records required under the recordkeeping 
requirements (part 516 of this chapter), the employer is required to 
keep records specific to certification under section 14(a) of the Fair 
Labor Standards Act. All workers employed under a subminimum wage 
certificate shall be designated as such on the employer's payroll 
records. Further recordkeeping requirements are described in each 
applicable subpart of this part (see Sec. Sec. 520.412 and 520.508 of 
this part).
    (b) Employers must maintain and preserve all required records for at 
least three years from the last date of employment under a subminimum 
wage program. The employer's copy of the application and the certificate 
shall also be maintained for three years. Such records shall be kept 
secure and accessible at the place of employment or where payroll 
records are customarily maintained. All records must be available for 
inspection and copying by the Administrator.



Sec. 520.204  If someone does not agree with the Department of Labor's 
decision on a certificate, can the decision be appealed?

    (a) Any person, applicant, trade union, association, etc. who does 
not agree with action granting or denying a certificate (pursuant to 
Sec. Sec. 520.406 and 520.505) may, within 60 days of that action or 
such additional time as the Administrator may allow, file with the 
Administrator a petition for review. The decision of the Administrator 
becomes final unless such a written request is timely filed.
    (b) Such requests should contain a statement of the additional 
evidence which the person believes may materially affect the decision 
and establish that there were reasonable grounds for failure to present 
such evidence during the original certification process.
    (c) If a request for reconsideration or review is granted, the 
Administrator, to the extent it is deemed appropriate, may afford other 
interested persons an opportunity to present data and views.
    (d) The Administrator may conduct an investigation, which may 
include a hearing, prior to taking any action pursuant to this part.



Sec. 520.205  How do these rules affect other Federal, state and local
laws and collective bargaining agreements?

    No provision of this part, or of any special minimum wage 
certificate issued thereunder, shall excuse noncompliance with any other 
Federal or state law or municipal ordinance or collective bargaining 
agreement establishing higher standards.

[[Page 147]]



                          Subpart C_Definitions



Sec. 520.300  Definitions.

    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, United States Department of Labor, 
or his/her authorized representative.
    Apparel industry means the manufacturing of the following products 
as referred to in subpart D of this part:
    (1) Rainwear means the manufacture of waterproofed garments and 
raincoats from oiled cloth or other materials, whether vulcanized, 
rubberized, cravenetted, or otherwise processed.
    (2) Leather and sheep-lined clothing means the manufacture of 
leather, leather-trimmed and sheeplined garments for men, women or 
children.
    (3) Women's apparel division of the apparel industry for the 
manufacture of women's, misses', and juniors' dresses means the 
production of women's, misses' and juniors' dresses; washable service 
garments; blouses from woven or purchased knit fabric; women's, misses', 
children's and infants' underwear, nightwear and negligees from woven 
fabrics; corsets and other body supporting garments from any material; 
infants' and children's outerwear; and other garments similar to them.
    (4) Robes, means the manufacture of robes from any woven material or 
from purchased knitted materials, including, without limitation, men's, 
women's and children's bath, lounging and beach robes and dressing 
gowns.
    Apprentice means a worker, at least sixteen years of age unless a 
higher minimum age standard is otherwise fixed by law, who is employed 
to learn a skilled trade through a registered apprenticeship program. 
Training is provided through structured on-the-job training combined 
with supplemental related theoretical and technical instruction. This 
term excludes pre-apprentices, trainees, learners, and student-learners. 
The terms learner and student-learner are defined in this subpart.
    Apprenticeship agreement means a written agreement between an 
apprentice and either his/her employer, or an apprenticeship committee 
acting as agent for employer(s), which contains the terms and conditions 
of the employment and training of the apprentice.
    Apprenticeship committee means those persons designated by the 
sponsor to act for it in the administration of the program. A committee 
may be ``joint'', i.e., it is composed of an equal number of 
representatives of the employer(s) and of the employees represented by a 
bona fide collective bargaining agent(s) and has been established to 
conduct, operate, or administer an apprenticeship program and enter into 
apprenticeship agreements with apprentices. A committee may be 
``unilateral'' or ``non-joint'' and shall mean a program sponsor in 
which a bona fide collective bargaining agent is not a participant.
    Apprenticeship program means a plan containing all terms and 
conditions for the qualification, recruitment, selection, employment and 
training of apprentices, including such matters as the requirements for 
a written apprenticeship agreement.
    BAT means the Bureau of Apprenticeship and Training, Employment and 
Training Administration, United States Department of Labor.
    Bona fide vocational training program means a program authorized and 
approved by a state board of vocational education or other recognized 
educational body that provides for part-time employment training which 
may be scheduled for a part of the work day or workweek, for alternating 
weeks or for other limited periods during the year, supplemented by and 
integrated with a definitely organized plan of instruction designed to 
teach technical knowledge and related industrial information given as a 
regular part of the student-learner's course by an accredited school, 
college, or university.
    Department means the United States Department of Labor.
    Experienced worker means a worker whose total experience in an 
authorized learner occupation in the industry, including vocational 
training, within the past three years is equal to or greater than 240 
hours or such other period as authorized by a learner certificate issued 
pursuant to the regulations in this part.

[[Page 148]]

    Experienced worker available for employment means an experienced 
worker residing within the area from which the plant/business 
customarily draws its labor supply or within a reasonable commuting 
distance of such area, and who is willing and able to accept employment 
in the plant/business; or an experienced worker residing outside of the 
area from which the plant/business customarily draws its labor supply, 
who has in fact made himself or herself available for employment at the 
plant/business.
    FLSA means the Fair Labor Standards Act of 1938 as amended (29 
U.S.C. 201 et seq.).
    Learner means a worker who is being trained for an occupation, which 
is not customarily recognized as an apprenticeable trade, for which 
skill, dexterity and judgment must be learned and who, when initially 
employed produces little or nothing of value. Except in extraordinary 
circumstances, an employee cannot be considered a ``learner'' once he/
she has acquired a total of 240 hours of job-related and/or vocational 
training with the same or other employer(s) or training facility(ies) 
during the past three years. An individual qualifying as a ``learner'' 
may only be trained in two qualifying occupations.
    Learning period means a period of time measured in work hours and 
vocational training hours that is normally required to fully train an 
inexperienced worker in a particular occupation within an industry where 
the learner is employed. The learning period will not exceed 240 hours 
for any qualifying occupation except in extraordinary circumstances 
where the employer demonstrates that the occupation to be learned 
requires an extended period of specialized training.
    Men's and boys' clothing industry means the industry which 
manufactures men's, youths', and boys' suits, coats, and overcoats.
    Messenger means a worker who is primarily engaged in delivering 
letters and messages for a firm whose principal business is the delivery 
of such letters and messages.
    Minimum wage means the wage rate required by section 6 of FLSA. For 
purposes of this part, subminimum wage rates are based exclusively on 
the applicable minimum wage provided by section 6(a) of FLSA.
    Recognized apprenticeship agency means either a state apprenticeship 
agency recognized by the BAT, or if no such apprenticeship agency exists 
in the state, the BAT.
    Registered apprenticeship program or agreement means a program or 
agreement which has been approved by a recognized apprenticeship agency 
as meeting the basic standards of apprenticeship adopted and published 
by BAT.
    Secretary or Secretary of Labor means the Secretary of Labor, United 
States Department of Labor or his/her authorized representative.
    Shoe manufacturing industry means the manufacture or partial 
manufacture of footwear from any material and by any process except 
knitting, vulcanizing of the entire article or vulcanizing (as distinct 
from cementing) of the sole to the upper, including the manufacturing of 
the following: athletic shoes; boots; boot tops; burial shoes; custom-
made boots or shoes; moccasins; puttees, except spiral puttees; sandals; 
shoes completely rebuilt in a shoe factory; slippers. This term also 
includes the manufacture from leather or from any shoe-upper material of 
all cut stock and findings for footwear, including bows, ornaments, and 
trimmings. It also includes the manufacture of cutsoles; midsoles; 
insoles; taps; lifts; rands; toplifts; bases; shanks; boxtoes; counters; 
stays; stripping; sock linings; and heel pads. Shoe manufacturing also 
includes the manufacture of heels from any material except molded 
rubber, but not including the manufacture of woodheel blocks; the 
manufacture of cut upper parts for footwear, including linings, vamps 
and quarters; and the manufacture of pasted shoe stock; as well as the 
manufacture of boot and shoe patterns. However, the manufacture of cut 
stock and findings is included within this definition only when 
performed by companies engaged in the production of shoes who 
incorporate most of the cut stock and findings in the manufacture of 
their product(s).
    Skilled trade means an apprenticeable occupation which possesses all 
of the following characteristics:

[[Page 149]]

    (1) It is customarily learned in a practical way through a 
structured, systematic program of on-the-job supervised training.
    (2) It is clearly identified and commonly recognized throughout an 
industry.
    (3) It involves manual, mechanical or technical skills and knowledge 
which require a minimum of 2,000 hours of on-the-job work experience.
    (4) It requires related instruction to supplement the on-the-job 
training.
    (5) It is not merely a part of an apprenticeable occupation and does 
not fall into any of the following categories: marketing; sales 
administration; administrative support; executive and managerial; 
professional and semi-professional occupations (this category covers 
occupations for which entrance requirements customarily include 
education of college level).
    Standards of apprenticeship means the apprenticeship program is an 
organized, written plan embodying the terms and conditions of 
employment, training, and supervision of one or more apprentices in the 
apprenticeable occupation, which meets the requirements established by 
BAT, and is subscribed to by a sponsor who has undertaken to carry out 
the apprentice training program.
    State means any state of the United States or the District of 
Columbia or any territory or possession of the United States.
    Student-learner means a student who is at least sixteen years of 
age, or at least eighteen years of age if employed in an occupation 
which the Secretary has declared to be particularly hazardous, who is 
receiving instruction in an accredited school, college or university and 
who is employed by an establishment on a part-time basis, pursuant to a 
bona fide vocational training program.
    Subminimum wage means the rates which may be paid under temporary 
authorization or under certificate as provided by section 14(a) of FLSA 
and this part.
    Vocational Training Program. See ``Bona fide vocational training 
program''.
    Wage and Hour Division means the Wage and Hour Division, Employment 
Standards Administration, United States Department of Labor.



    Subpart D_Messengers, Learners (Excluding Student-Learners), and 
                               Apprentices



Sec. 520.400  Who are messengers, learners, and apprentices?

    The terms messenger, learner, and apprentice are defined in subpart 
C of this part.



Sec. 520.401  Are there any industries, occupations, etc. that do not
qualify for a certificate to employ messengers, learners, or 

apprentices at subminimum 
          wages?

    (a) Certificates to employ messengers at subminimum wages are 
available to only those establishments engaged in the business of 
providing messenger service, i.e., the delivery of letters and messages. 
Requests for such certificates are uniformly denied to applicants whose 
principal business purpose is not the delivery of messages and letters.
    (b) All applications for special certificates authorizing the 
employment of learners at subminimum wage rates in the manufacture of 
products in the following industries shall be denied (definitions for 
all listed activities can be found in subpart C of this part):
    (1) In the apparel industry:
    (i) Rainwear
    (ii) Leather and sheep-lined clothing
    (iii) Women's apparel division of the apparel industry for the 
manufacture of women's misses', and juniors' dresses;
    (iv) Robes
    (2) Shoe manufacturing industry
    (3) Men's and boys' clothing industry.
    (c) No certificates will be granted authorizing the employment of 
learners at subminimum wage rates as homeworkers; in maintenance 
occupations such as guard, porter, or custodian; in office and clerical 
occupations in any industry; or in operations of a temporary or sporadic 
nature.
    (d) Authorization to employ apprentices at subminimum wages will 
only be granted if permitted by the BAT regulations (29 CFR Part 29).

[[Page 150]]



Sec. 520.402  How do I obtain authority to employ messengers, learners,
or apprentices at subminimum wages?

    (a) Employers wishing to employ messengers, learners, or apprentices 
as defined in subpart C of this part at subminimum wages must apply for 
authority to do so from the Administrator at the Wage and Hour 
Division's Regional Office having administrative jurisdiction over the 
geographic area in which the employment is to take place. To obtain the 
address of the Regional Office which services your geographic area, 
please contact your local Wage and Hour Office (under ``Department of 
Labor'' in the blue pages of your local telephone book).
    (b) In the case of messengers, such application may be filed by an 
employer or group of employers. Preferential consideration will be given 
to applications filed by groups or organizations which are deemed to be 
representative of the interests of a whole industry or branch thereof.



Sec. 520.403  What information is required when applying for authority 
to pay less than the minimum wage?

    (a) A separate application must be made for each plant or 
establishment requesting authorization for employment of messengers and/
or learners at subminimum wages, on the official form furnished by the 
Wage and Hour Division, containing all information required by the form 
including:
    (1) Information concerning efforts made by the applicant to obtain 
experienced workers in occupation(s) for which learners are requested;
    (2) The occupations/industry in which the messenger(s) and/or 
learner(s) are to be employed;
    (3) A statement explaining why employment of messenger(s) and/or 
learners(s) at subminimum wages is needed to prevent curtailment of 
employment opportunities;
    (4) The number of messengers and/or learners the applicant 
anticipates employing at subminimum wages under special certificate;
    (5) If requesting authorization for the employment of learners at 
subminimum wages for a learning period greater than 240 hours, 
information pertinent to the extraordinary circumstances necessitating 
such a request. While each such request will be considered on its own 
merit, it is anticipated that such authorizations would be limited to 
occupations requiring an extended period of specialized training;
    (6) The number of messengers and/or learners hired at subminimum 
wages during the twelve-month period prior to making application;
    (7) Total number of nonsupervisory workers in the particular plant 
or establishment for which a certificate is requested;
    (8) The number of experienced workers in the learner occupations and 
their straight-time average hourly earnings during the last payroll 
period and the corresponding payroll period in the prior year; and
    (9) The type of equipment to be used by learners.
    (b) For apprentices, the employer or apprenticeship committee must 
submit a copy of the registered apprenticeship program.
    (c) Any applicant may also submit such additional information as may 
be pertinent. Applications which fail to provide the information 
required by the form may be returned to the applicant with a notation of 
deficiencies and without prejudice against submission of a new or 
revised application.

(The information collection requirements contained in paragraphs (a), 
(b) and (c) were approved by the Office of Management and Budget under 
control number 1215-0192.)



Sec. 520.404  What must I demonstrate in my application for a 
messenger, learner, or apprentice certificate to receive a 

favorable review?

    (a) The application must demonstrate that a certificate is necessary 
in order to prevent the curtailment of opportunities for employment.
    (b) The issuance of a messenger and/or learner certificate must not 
tend to create unfair competitive labor cost advantages nor have the 
effect of impairing or depressing wage rates or working standards of 
experienced workers performing work of a like or comparable character in 
the industry.
    (c) Abnormal labor conditions such as a strike, lock-out, or other 
similar condition, must not exist at the plant

[[Page 151]]

or establishment for which a messenger and/or learner certificate is 
requested.
    (d) It must be shown that an adequate supply of qualified 
experienced workers is not available for employment in those occupations 
for which authorization to pay subminimum wages to learners has been 
requested; that the experienced workers presently employed in the plant 
or establishment in occupations in which learners are requested are 
afforded an opportunity, to the fullest extent possible, for full-time 
employment upon completion of the learning period; and that learners are 
available for employment.
    (e) Reasonable efforts must have been made to recruit workers paid 
at least the minimum wage in those occupations in which certificates to 
employ learners at subminimum wages have been requested. This includes 
the placement of an order with the local State or Territorial Public 
Employment Service Office (except in possessions where there is no such 
office) not more than fifteen days prior to the date of application. 
Written evidence from such office that the order has been placed shall 
be submitted by the employer with the application.
    (f) The occupation or occupations in which learners are to receive 
training must involve a sufficient degree of skill to necessitate an 
appreciable learning period.
    (g) An apprenticeship program must conform with or substantially 
conform with the standards of apprenticeship as defined in subpart C of 
this part.
    (h) There must be no serious outstanding violations involving the 
employee(s) for whom a certificate is being requested nor any serious 
outstanding violations of a certificate previously issued, nor any 
serious violations of the FLSA which provide reasonable grounds to 
conclude that the terms of a certificate may not be complied with, if 
issued.



Sec. 520.405  Must I notify my employees that I am applying for a 
certificate to employ messengers and/or learners at subminimum wages?

    Upon making application for a messenger and/or learner certificate 
or for renewal thereof, an employer shall post a copy of the first page 
of the completed application form in a conspicuous place in each 
department of the plant or establishment where he/she proposes to employ 
messengers and/or learners at subminimum wage rates. Such notice shall 
remain posted until the application is acted upon by the Administrator.

(The information collection requirements contained in paragraphs (a), 
(b) and (c) were approved by the Office of Management and Budget under 
control number 1215-0192.)



Sec. 520.406  What happens once I have submitted my request for 
authorization to pay messengers, learners, or apprentices subminimum

wages?

    (a) All applications submitted for authorization to pay wages lower 
than those required by section 6(a) of the FLSA will be considered and 
acted upon (issued or denied) subject to the conditions specified in 
Sec. Sec. 520.403 and 520.404 of this part.
    (b) If, in the case of messengers and/or learners, available 
information indicates that the requirements of this part are satisfied, 
the Administrator shall issue a special certificate which will be mailed 
to the employer. If a special certificate is denied, the employer shall 
be given written notice of the denial. If a messenger and/or learner 
certificate is denied, notice of such denial shall be without prejudice 
to the filing of any subsequent application.
    (c) If, in the case of apprentices, the apprenticeship agreement and 
other available information indicate that the requirements of this part 
are satisfied, the Administrator shall issue a special certificate. The 
special certificate, if issued, shall be mailed to the employer or the 
apprenticeship committee and a copy shall be mailed to the apprentice. 
If a special certificate is denied, the employer or the apprenticeship 
committee, the apprentice and the recognized apprenticeship agency shall 
be given written notice of the denial. The employer shall pay the 
apprentice the minimum wage applicable under section 6(a) of the FLSA 
from the date of receipt of notice of such denial.

[[Page 152]]



Sec. 520.407  What is the subminimum wage for messengers and what must
I do to comply with the terms of my certificate?

    (a) A messenger certificate, if issued, shall specify:
    (1) The subminimum wage rate of not less than 95 percent of the 
applicable minimum wage required by section 6(a) of the FLSA; and
    (2) The effective and expiration dates of the certificate.
    (b) The employer shall post a copy of the messenger certificate 
during its effective period in a conspicuous place where it can be 
readily seen by employees.
    (c) No messenger shall be hired under a messenger certificate while 
abnormal labor conditions such as a strike, lock-out, or other similar 
condition, exist.



Sec. 520.408  What is the subminimum wage for learners and what must
I do to comply with the terms of my certificate?

    (a) All learner certificates shall specify:
    (1) The subminimum wage rate of not less than 95 percent of the 
applicable minimum wage required by section 6(a) of the FLSA;
    (2) The number or proportion of learners authorized to be employed 
on any one day;
    (3) The occupations in which learners may be employed;
    (4) The authorized learning period of not more than 240 hours, 
except in extraordinary situations as discussed in Sec. 520.403; and
    (5) The effective and expiration dates of the certificate.
    (b) Learners properly hired prior to the date on which a learner 
certificate expires may be continued in employment at subminimum wage 
rates for the duration of their authorized learning period under the 
terms of the certificate, even though the certificate may expire before 
the learning period is completed.
    (c) The employer shall post a copy of the learner certificate during 
its effective period and thereafter until all authorized learners have 
completed their learning period(s). The certificate shall be posted in a 
conspicuous place in each department of the plant where learners are to 
be employed.
    (d) No learners shall be hired under a learner certificate if, at 
the time the employment begins, experienced workers capable of equaling 
the performance of a worker of minimum acceptable skill are available 
for employment. Before hiring learners during the effective period of 
the certificate, the employer shall place an order for experienced 
workers with the local State or Territorial Public Employment Service 
Office (except in possessions where there is no such office) or have 
such an active order on file. Written evidence that an order has been 
placed or is on active file shall be maintained in the employer's 
records.
    (e) No learner shall be hired under a learner certificate while 
abnormal labor conditions such as a strike, lock-out, or other similar 
condition exist in the plant or establishment.
    (f) For each individual learner, the number of hours of previous 
employment and hours of vocational or similar facility(ies) training 
must be deducted from the authorized learning period if within the past 
three years the learner has been employed or received vocational 
training in a given occupation and industry.
    (g) If experienced workers are paid on a piece rate basis, learners 
shall be paid at least the same piece rates as experienced workers 
employed on similar work in the plant and shall receive earnings based 
on such piece rates whenever such earnings exceed the subminimum wage 
rates permitted in the certificate.



Sec. 520.409  When will authority to pay apprentices special minimum
wages become effective and what is the special minimum wage rate?

    (a) An apprenticeship program which has been registered with a 
recognized apprenticeship agency shall constitute a temporary special 
certificate authorizing the employment of an apprentice at the wages and 
under the conditions specified in such program until a special 
certificate is issued or denied. This temporary authorization is, 
however, conditioned on the requirement that within 90 days from the 
beginning date of employment of the apprentice, the

[[Page 153]]

employer or the apprenticeship committee shall send one copy of each 
apprenticeship agreement, with evidence of registration, to the 
appropriate Regional Office of the Wage and Hour Division.
    (b) The wage rate specified by the apprenticeship program becomes 
the special minimum wage rate that must be paid unless the Administrator 
issues a certificate modifying the terms and conditions of employment of 
apprentices at special minimum wages.



Sec. 520.410  How long does a messenger, learner, or apprentice 
certificate remain in effect?

    (a) Messenger and/or learner certificates may be issued for a period 
of not longer than one year.
    (b) Each special apprentice certificate shall specify the conditions 
and limitations under which it is granted, including the periods of time 
during which subminimum wage rates may be paid pursuant to a registered 
apprenticeship program.
    (c) No certificate may be issued retroactively.
    (d) The Administrator may amend the provisions of a certificate when 
necessary to correct omissions or defects in the original certificate or 
reflect changes in this part.



Sec. 520.411  Does a certificate authorizing payment of subminimum
wages to messengers and/or learners remain in effect during the

renewal process?

    (a) Application for renewal of a messenger and/or learner 
certificate shall be made on the same form as described in this section 
and employees shall be advised of such renewal application in the same 
manner as explained in Sec. 520.405. No effective messenger and/or 
learner certificate shall expire until action on an application for 
renewal shall have been finally determined, provided that such 
application has been properly executed in accordance with the 
requirements, and filed with and received by the Administrator not less 
than fifteen nor more than thirty days prior to the expiration date. A 
final determination means either the granting of or initial denial of 
the application for renewal of a messenger and/or learner certificate, 
or withdrawal of the application. A ``properly executed application'' is 
one which contains the complete information required on the form, and 
the required certification by the applicant.
    (b) A renewal certificate will not be issued unless there is a clear 
showing that the conditions set forth in section 520.404 of this part 
still prevail.



Sec. 520.412  What records, in addition to those required by Part 516
of this chapter and section 520.203 of this part, must I keep 

relating to the employment 
          of messengers, learners, or apprentices under special 
          certificate?

    (a) Each worker employed as a messenger, learner, or apprentice 
under a certificate shall be designated as such on the employer's 
payroll records. All such messengers, learners, or apprentices shall be 
listed together as a separate group on the payroll records, with each 
messenger's, learner's, or apprentice's occupation being shown.
    (b) At the time learners are hired, the employer shall also obtain 
and keep in his/her records a statement signed by each employee showing 
all applicable experience which the learner had in the employer's 
industry, including vocational training, during the preceding three 
years. The statement shall contain the dates of such previous 
employment, names and addresses of employers, the occupation or 
occupations in which the learner was engaged and the types of products 
upon which the learner worked. The statement shall also contain 
information concerning pertinent training in vocational training schools 
or similar training facilities, including the dates of such training and 
the identity of the vocational school or training facility. If the 
learner has had no applicable experience or pertinent training, a 
statement to that effect signed by the learner shall likewise be kept in 
the employer's records.
    (c) The employer shall maintain a file of all evidence and records, 
including any correspondence, pertaining to the filing or cancellation 
of job orders placed with the local State or Territorial Public 
Employment Service Office pertaining to job orders for occupations to be 
performed by learners.

[[Page 154]]

    (d) Every employer who employs apprentices under temporary or 
special certificates shall preserve for three years from the last 
effective date of the certificate copies of the apprenticeship program, 
apprenticeship agreement and special certificate under which such an 
apprentice is employed.
    (e) Every apprenticeship committee which holds a certificate under 
this part shall keep the following records for each apprentice under its 
control and supervision:
    (1) The apprenticeship program, apprenticeship agreement and special 
certificate under which the apprentice is employed by an employer;
    (2) The cumulative amount of work experience gained by the 
apprentice, in order to establish the proper wage at the time of his/her 
assignment to an employer; and
    (3) A list of the employers to whom the apprentice was assigned and 
the period of time he/she worked for each employer.
    (f) The records required in this section, including a copy of the 
application(s) submitted and any special certificate(s) issued, shall be 
kept and made available for inspection for at least three years from the 
expiration date of the certificate(s).



                       Subpart E_Student-Learners



Sec. 520.500  Who is a student-learner?

    The term student-learner is defined in subpart C.



Sec. 520.501  How do I obtain authority to employ student-learners 
at subminimum wages?

    (a) Employers wishing to employ student-learners at subminimum wages 
must apply for authority to do so from the Administrator at the Wage and 
Hour Division's Regional Office having administrative jurisdiction over 
the geographic area in which the employment is to take place. To obtain 
the address of the Regional Office which services your geographic area, 
please contact your local Wage and Hour Office (under ``Department of 
Labor'' in the blue pages of your local telephone book).
    (b) Application must be made on the official form furnished by the 
Wage and Hour Division and must be signed by the employer, the 
appropriate school official and the student-learner. A separate 
application must be filed by the employer for each student-learner the 
employer proposes to employ at subminimum wages.

(The information collection requirements contained in paragraph (b) were 
approved by the Office of Management and Budget under control number 
1215-0192.)



Sec. 520.502  What information must an application to employ student-learners
at subminimum wages contain?

    Student-learner applications must contain:
    (a) A statement clearly outlining the vocational training program 
and showing, particularly, the processes in which the student-learner 
will be engaged when in training on the job;
    (b) A statement clearly outlining the school instruction directly 
related to the job;
    (c) The total number of workers employed in the establishment;
    (d) The number and hourly wage rates of experienced workers employed 
in the occupation in which the student-learner is to be trained;
    (e) The hourly wage rate or progressive wage schedule which the 
employer proposes to pay the student-learner;
    (f) The age of the student-learner;
    (g) The period of employment training at subminimum wages;
    (h) The number of hours of employment training a week and the number 
of hours of school instruction a week;
    (i) A certification by the appropriate school official that the 
student named on the application form will be receiving instruction in 
an accredited school, college, or university and will be employed 
pursuant to a bona fide vocational training program, as defined in 
subpart C of this part. The certification by the school official must 
satisfy the following conditions:
    (1) The application must be properly executed in conformance with 
Sec. 520.501 of this subpart;
    (2) The employment training must conform with the provisions of 
Sec. 520.503 (a), (c), (d), and (g) and paragraphs (a) and (c) of Sec. 
520.506;

[[Page 155]]

    (3) The occupation must not be one for which a student-learner 
application was previously submitted by the employer and a special 
certificate was denied by the Administrator.

(The information collection requirements contained in paragraphs (a), 
(b), (c), (d), (e), (f), (g), (h) and (i) were approved by the Office of 
Management and Budget under control number 1215-0192.)



Sec. 520.503  What must I demonstrate in my application for a 
student-learner certificate to receive a favorable review?

    Each student-learner application must demonstrate that:
    (a) The training program under which the student-learner will be 
employed is a bona fide vocational training program as defined in 
subpart C of this part;
    (b) The employment of the student-learner at subminimum wages 
authorized by the special certificate must be necessary to prevent 
curtailment of opportunities for employment;
    (c) The student-learner is at least sixteen years of age, or at 
least eighteen years of age if employed in any occupation which the 
Secretary has declared to be particularly hazardous (see part 570, 
subpart E, of this chapter, but note the specific exemptions for 
student-learners in several of the orders);
    (d) The occupation for which the student-learner is receiving 
preparatory training requires a sufficient degree of skill to 
necessitate a substantial learning period;
    (e) The training is not for the purpose of acquiring manual 
dexterity and high production speed in repetitive operations;
    (f) The employment of a student-learner will not have the effect of 
displacing a worker employed in the establishment;
    (g) The employment of the student-learners at subminimum wages must 
not tend to impair or depress the wage rates or working standards 
established for experienced workers for work of a like or comparable 
character;
    (h) The occupational needs of the community or industry warrant the 
training of student-learners;
    (i) There are no serious outstanding violations of the provisions of 
a student-learner certificate previously issued to the employer, or 
serious violations of any other provisions of the FLSA by the employer 
which provide reasonable grounds to conclude that the terms of the 
certificate would not be complied with, if issued;
    (j) The issuance of such a certificate would not tend to prevent the 
development of apprenticeship programs in accordance with the 
regulations applicable thereto (subpart D of this part) or would not 
impair established apprenticeship standards in the occupation or 
industry involved; and
    (k) The number of student-learners to be employed in one 
establishment is not more than a small proportion of its work force.



Sec. 520.504  When will authority to pay student-learners subminimum
wages become effective?

    (a) Certification by the appropriate school official on an 
application for a special student-learner certificate shall constitute a 
temporary authorization. This temporary authorization is effective from 
the date such application is forwarded to the Wage and Hour Division in 
conformance with Sec. 520.501.
    (b) At the end of 30 days, this application shall become the 
permanent special student-learner certificate unless, after review, the 
Administrator denies the application, issues a certificate with modified 
terms and conditions, or expressly extends the period of review.



Sec. 520.505  How will I be notified that my request to employ 
student-learners at subminimum wages has been denied and can I 

appeal the denial?

    (a) If, after review, an application is denied, notification of 
denial will be made to the appropriate school official, the employer and 
the student. This notification will occur within 30 days following the 
date such application was forwarded to the Wage and Hour Division, 
unless additional time for review is considered necessary or 
appropriate.
    (b) If additional time for review is considered necessary or 
appropriate, the proper school official, the employer, and the student 
shall be so notified. To the extent feasible, the Administrator may 
provide an opportunity to other interested persons to

[[Page 156]]

present data and views on the application before denying a special 
student-learner certificate.
    (c) Whenever a notification of denial is mailed to the employer, 
such denial shall be without prejudice to any subsequent application, 
except under the circumstances referred to in Sec. 520.502(i)(3).
    (d) Section 520.204 of this part describes the procedures for 
requesting reconsideration of a decision to grant or deny a certificate.



Sec. 520.506  What is the subminimum wage for student-learners and
what must I do to comply with the terms of my student-learner certificate?

    (a) The special minimum wage rate paid to student-learners shall be 
not less than 75 percent of the applicable minimum under section 6(a) of 
the FLSA.
    (b) Compliance with items listed for favorable review of a student-
learner application (Sec. 540.503) must be demonstrated.
    (c)(1) The number of hours of employment training each week at 
subminimum wages pursuant to a certificate, when added to the hours of 
school instruction, shall not exceed 40 hours, except that authorization 
may be granted by the Administrator for a greater number of hours if 
found to be justified by extraordinary circumstances.
    (2) When school is not in session on any school day, the student-
learner may work a number of hours in addition to the weekly hours of 
employment training authorized by the certificate; provided,
    (i) The total hours worked shall not exceed 8 hours on any such day, 
and
    (ii) A notation shall be made in the employer's records to the 
effect that school not being in session was the reason additional hours 
were worked on such day.
    (3) During the school term, when school is not in session for the 
entire week, the student-learner may work at his/her employment training 
a number of hours in the week in addition to those authorized by the 
certificate; provided,
    (i) The total hours shall not exceed 40 hours in any such week, and
    (ii) A notation shall be made in the employer's records to the 
effect that school not being in session was the reason additional hours 
were worked in such week.
    (d) A special student-learner certificate shall not constitute 
authorization to pay a subminimum wage rate to a student-learner in any 
week in which he/she is employed for a number of hours in addition to 
the number authorized in the certificate, except as provided in 
paragraphs (c)(1), (2), and (3) of this section.



Sec. 520.507  How long does my certificate remain in effect?

    (a) A special student-learner certificate shall be effective for a 
period not to exceed the length of one school year unless a longer 
period is found to be justified by extraordinary circumstances. These 
circumstances must be explained in detail at the time of application. 
While each such request will be considered on its own merit, it is 
anticipated that such authorizations would be limited to occupations 
requiring an extended period of specialized training;
    (b) No certificate shall authorize employment training beyond the 
date of graduation.
    (c) No special student-learner certificate may be issued 
retroactively.



Sec. 520.508  What records, in addition to those required by Part 516
of this chapter and section 520.203 of this part, must I keep when 

student-learners are 
          employed?

    Any worker employed as a student-learner shall be identified as such 
on the payroll records, with each student-learner's occupation and rate 
of pay being shown. Notations should be made in the employer's records 
when additional hours are worked by reason of school not being in 
session.

                        PARTS 521	523 [RESERVED]



PART 525_EMPLOYMENT OF WORKERS WITH DISABILITIES UNDER SPECIAL
CERTIFICATES--Table of Contents



Sec.
525.1 Introduction.
525.2 Purpose and scope.
525.3 Definitions.
525.4 Patient workers.

[[Page 157]]

525.5 Wage payments.
525.6 Compensable time.
525.7 Application for certificates.
525.8 Special provisions for temporary authority.
525.9 Criteria for employment of workers with disabilities under 
          certificates at special minimum wage rates.
525.10 Prevailing wage rates.
525.11 Issuance of certificates.
525.12 Terms and conditions of special minimum wage certificates.
525.13 Renewal of special minimum wage certificates.
525.14 Posting of notices.
525.15 Industrial homework.
525.16 Records to be kept by employers.
525.17 Revocation of certificates.
525.18 Review.
525.19 Investigations and hearings.
525.20 Relation to other laws.
525.21 Lowering of wage rates.
525.22 Employee's right to petition.
525.23 Work activities centers.
525.24 Advisory Committee on Special Minimum Wages.

    Authority: 52 Stat. 1060, as amended (29 U.S.C. 201-219); Pub. L. 
99-486, 100 Stat. 1229 (29 U.S.C. 214).

    Source: 54 FR 32928, Aug. 10, 1989, unless otherwise noted.



Sec. 525.1  Introduction.

    The Fair Labor Standards Amendments of 1986 (Pub. L. 99-486, 100 
Stat. 1229) substantially revised those provisions of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 201) (FLSA) permitting the employment 
of individuals disabled for the work to be performed (workers with 
disabilities) at special minimum wage rates below the rate that would 
otherwise be required by statute. These provisions are codified at 
section 14(c) of the FLSA and:
    (a) Provide for the employment under certificates of individuals 
with disabilities at special minimum wage rates which are commensurate 
with those paid to workers not disabled for the work to be performed 
employed in the vicinity for essentially the same type, quality, and 
quantity of work;
    (b) Require employers to provide written assurances that wage rates 
of individuals paid on an hourly rate basis be reviewed at least once 
every six months and that the wages of all employees be reviewed at 
least annually to reflect changes in the prevailing wages paid to 
experienced individuals not disabled for the work to be performed 
employed in the locality for essentially the same type of work;
    (c) Prohibit employers from reducing the wage rates prescribed by 
certificate in effect on June 1, 1986, for two years;
    (d) Permit the continuance or establishment of work activities 
centers; and
    (e) Provide that any employee receiving a special minimum wage rate 
pursuant to section 14(c), or the parent or guardian of such an 
employee, may petition for a review of that wage rate by an 
administrative law judge.



Sec. 525.2  Purpose and scope.

    The regulations in this part govern the issuance of all certificates 
authorizing the employment of workers with disabilities at special 
minimum wages pursuant to section 14(c) of FLSA.



Sec. 525.3  Definitions.

    (a) FLSA means the Fair Labor Standards Act of 1938, as amended.
    (b) Secretary means the Secretary of Labor or the Secretary of 
Labor's authorized representative.
    (c) Administrator means the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, or the Administrator's authorized 
representative.
    (d) Worker with a disability for the purpose of this part means an 
individual whose earning or productive capacity is impaired by a 
physical or mental disability, including those relating to age or 
injury, for the work to be performed. Disabilities which may affect 
earning or productive capacity include blindness, mental illness, mental 
retardation, cerebral palsy, alcoholism, and drug addiction. The 
following, taken by themselves, are not considered disabilities for the 
purposes of this part: Vocational, social, cultural, or educational 
disabilities; chronic unemployment; receipt of welfare benefits; 
nonattendance at school; juvenile delinquency; and, correctional parole 
or probation. Further, a disability which may affect earning or 
productive capacity for one type of work may not affect such capacity 
for another.

[[Page 158]]

    (e) Patient worker means a worker with a disability, as defined 
above, employed by a hospital or institution providing residential care 
where such worker receives treatment or care without regard to whether 
such worker is a resident of the establishment.
    (f) Hospital or institution, hereafter referred to as institution, 
is a public or private, nonprofit or for-profit facility primarily 
engaged in (i.e., more than 50 percent of the income is attributable to) 
providing residential care for the sick, the aged, or the mentally ill 
or retarded, including but not limited to nursing homes, intermediate 
care facilities, rest homes, convalescent homes, homes for the elderly 
and infirm, halfway houses, residential centers for drug addicts or 
alcoholics, and the like, whether licensed or not licensed.
    (g) Employ is defined in FLSA as to suffer or permit to work. An 
employment relationship arises whenever an individual, including an 
individual with a disability, is suffered or permitted to work. The 
determination of an employment relationship does not depend upon the 
level of performance or whether the work is of some therapeutic benefit. 
However, an individual does not become an employee if engaged in such 
activities as making craft products where the individual voluntarily 
participates in such activities and the products become the property of 
the individual making them, or all of the funds resulting from the sale 
of the products are divided among the participants in the activity or 
are used in purchasing additional materials to make craft products.
    (h) Special minimum wage is a wage authorized under a certificate 
issued to an employer under this part that is less than the statutory 
minimum wage.
    (i) Commensurate wage is a special minimum wage paid to a worker 
with a disability which is based on the worker's individual productivity 
in proportion to the wage and productivity of experienced nondisabled 
workers performing essentially the same type, quality, and quantity of 
work in the vicinity in which the individual under certificate is 
employed. For example, the commensurate wage of a worker with a 
disability who is 75% as productive as the average experienced 
nondisabled worker, taking into consideration the type, quality, and 
quantity of work of the disabled worker, would be set at 75% of the wage 
paid to the nondisabled worker. For purposes of these regulations, a 
commensurate wage is always a special minimum wage, i.e., a wage below 
the statutory minimum.
    (j) Vicinity or locality means the geographic area from which the 
labor force of the community is drawn.
    (k) Experienced worker means a worker who has learned the basic 
elements or requirements of the work to be performed, ordinarily by 
completion of a probationary or training period. Typically, such a 
worker will have received at least one pay raise after successful 
completion of the probationary or training period.



Sec. 525.4  Patient workers.

    With respect to patient workers, as defined in Sec. 525.3(e), a 
major factor in determining if an employment relationship exists is 
whether the work performed is of any consequential economic benefit to 
the institution. Generally, work shall be considered to be of 
consequential economic benefit if it is of the type that workers without 
disabilities normally perform, in whole or in part in the institution or 
elsewhere. However, a patient does not become an employee if he or she 
merely performs personal housekeeping chores, such as maintaining his or 
her own quarters, or receives a token remuneration in connection with 
such services. It may also be possible for patients in family-like 
settings such as group homes to rotate or share household tasks or 
chores without becoming employees.



Sec. 525.5  Wage payments.

    (a) An individual whose earning or productive capacity is not 
impaired for the work being performed cannot be employed under a 
certificate issued pursuant to this part and must be paid at least the 
applicable minimum wage. An individual whose earning or productive 
capacity is impaired to the extent that the individual is unable to earn 
at least the applicable minimum wage may be paid a commensurate wage, 
but only after the employer has obtained a

[[Page 159]]

certificate authorizing payment of special minimum wages from the 
appropriate office of the Wage and Hour Division of the Department of 
Labor.
    (b) With respect to patient workers employed in institutions, no 
deductions can be made from such individuals' commensurate wages to 
cover the cost of room, board, or other services provided by the 
facility. Such an individual must receive his or her wages free and 
clear, except for amounts deducted for taxes assessed against the 
employee and any voluntary wage assignments directed by the employee. 
(See part 531 of this title.) However, it is not the intention of these 
regulations to preclude the institution thereafter from assessing or 
collecting charges for room, board, and other services actually provided 
to an individual to the extent permitted by applicable Federal or State 
law and on the same basis as it assesses and collects from nonworking 
patients.



Sec. 525.6  Compensable time.

    Individuals employed subject to this part must be compensated for 
all hours worked. Compensable time includes not only those hours during 
which the individual is actually performing productive work but also 
includes those hours when no work is performed but the individual is 
required by the employer to remain available for the next assignment. 
However, where the individual is completely relieved from duty and is 
not required to remain available for the next assignment, such time will 
not be considered compensable time. For example, an individual employed 
by a rehabilitation facility would not be engaged in a compensable 
activity where such individual is completely relieved from duty but is 
provided therapy or the opportunity to participate in an alternative 
program or activity in the facility not involving work and not directly 
related to the worker's job (e.g., self-help skills training, 
recreation, job seeking skills training, independent living skills, or 
adult basic education). The burden of establishing that such hours are 
not compensable rests with the facility and such hours must be clearly 
distinguishable from compensable hours. (For further information on 
compensable time in general under FLSA, see part 785 of this title.)



Sec. 525.7  Application for certificates.

    (a) Application for a certificate may be filed by any employer with 
the Regional Office of the Wage and Hour Division having administrative 
jurisdiction over the geographic area in which the employment is to take 
place.
    (b) The employer shall provide answers to all of the applicable 
questions contained on the application form provided by the Regional 
Office.
    (c) The application shall be signed by the employer or the 
employer's authorized representative.



Sec. 525.8  Special provisions for temporary authority.

    (a) Temporary authority may be granted to an employer permitting the 
employment of workers with disabilities pursuant to a vocational 
rehabilitation program of the Veterans Administration for veterans with 
a service-incurred disability or a vocational rehabilitation program 
administered by a State agency.
    (b) Temporary authority is effective for 90 days from the date the 
appropriate section of the application form is signed and completed by 
the duly designated representative of the State agency or the Veterans 
Administration. Such authority may not be renewed or extended by the 
issuing agency.
    (c) The signed application constitutes the temporary authority to 
employ workers with disabilities at special minimum wage rates. A copy 
of the application must be forwarded within 10 days to the appropriate 
Regional Office of the Wage and Hour Division. Upon receipt, the 
application will be reviewed and, where appropriate, a certificate will 
be issued by the Regional Office. Where additional information is 
required or certification is denied, the applicant will receive 
notification from the Regional Office.



Sec. 525.9  Criteria for employment of workers with disabilities 
under certificates at special minimum wage rates.

    (a) In order to determine that special minimum wage rates are 
necessary in

[[Page 160]]

order to prevent the curtailment of opportunities for employment, the 
following criteria will be considered:
    (1) The nature and extent of the disabilities of the individuals 
employed as these disabilities relate to the individuals' productivity;
    (2) The prevailing wages of experienced employees not disabled for 
the job who are employed in the vicinity in industry engaged in work 
comparable to that performed at the special minimum wage rate;
    (3) The productivity of the workers with disabilities compared to 
the norm established for nondisabled workers through the use of a 
verifiable work measurement method (see Sec. 525.12(h)) or the 
productivity of experienced nondisabled workers employed in the vicinity 
on comparable work; and,
    (4) The wage rates to be paid to the workers with disabilities for 
work comparable to that performed by experienced nondisabled workers.
    (b) In order to be granted a certificate authorizing the employment 
of workers with disabilities at special minimum wage rates, the employer 
must provide the following written assurances concerning such 
employment:
    (1) In the case of individuals paid hourly rates, the special 
minimum wage rates will be reviewed by the employer at periodic 
intervals at a minimum of once every six months; and,
    (2) Wages for all employees will be adjusted by the employer at 
periodic intervals at a minimum of once each year to reflect changes in 
the prevailing wages paid to experienced nondisabled individuals 
employed in the locality for essentially the same type of work.



Sec. 525.10  Prevailing wage rates.

    (a) A prevailing wage rate is a wage rate that is paid to an 
experienced worker not disabled for the work to be performed. The 
Department recognizes that there may be more than one wage rate for a 
specific type of work in a given area. An employer must be able to 
demonstrate that the rate being used as prevailing for determining a 
commensurate wage was objectively determined according to the guidelines 
contained in this section.
    (b) An employer whose work force primarily consists of nondisabled 
workers or who employs more than a token number of nondisabled workers 
doing similar work may use as the prevailing wage the wage rate paid to 
that employer's experienced nondisabled employees performing similar 
work. Where an agency places a worker or workers with disabilities on 
the premises of an employer described above, the wage paid to the 
employer's experienced workers may be used as prevailing.
    (c) An employer whose work force primarily consists of workers 
disabled for the work to be performed may determine the prevailing wage 
by ascertaining the wage rates paid to the experienced nondisabled 
workers of other employers in the vicinity. Such data may be obtained by 
surveying comparable firms in the area that employ primarily nondisabled 
workers doing similar work. The firms surveyed must be representative of 
comparable firms in terms of wages paid to experienced workers doing 
similar work. The appropriate size of such a sample will depend on the 
number of firms doing similar work but should include no less than three 
firms unless there are fewer firms doing such work in the area. A 
comparable firm is one which is of similar size in terms of employees or 
which competes for or bids on contracts of a similar size or nature. 
Employers may contact other sources such as the Bureau of Labor 
Statistics or private or State employment services where surveys are not 
practical. If similar work cannot be found in the area defined by the 
geographic labor market, the closest comparable community may be used.
    (d) The prevailing wage rate must be based upon the wage rate paid 
to experienced nondisabled workers as defined elsewhere in these 
regulations. Employment services which only provide entry level wage 
data are not acceptable as sources for prevailing wage information as 
required in these regulations.
    (e) There is no prescribed method for tabulating the results of a 
prevailing wage survey. For example, either a weighted or unweighted 
average would

[[Page 161]]

be acceptable provided the employer is consistent in the methodology 
used.
    (f) The prevailing wage must be based upon work utilizing similar 
methods and equipment. Where the employer is unable to obtain the 
prevailing wage for a specific job to be performed on the premises, such 
as collating documents, it would be acceptable to use as the prevailing 
wage the wage paid to experienced individuals employed in similar jobs 
such as file clerk or general office clerk, requiring the same general 
skill levels.
    (g) The following information should be recorded in documenting the 
determination of prevailing wage rates:
    (1) Date of contact with firm or other source;
    (2) Name, address, and phone number of firm or other source 
contacted;
    (3) Individual contacted within firm or source;
    (4) Title of individual contacted;
    (5) Wage rate information provided;
    (6) Brief description of work for which wage information is 
provided;
    (7) Basis for the conclusion that wage rate is not based upon an 
entry level position. (See also Sec. 525.10(c).)
    (h) A prevailing wage may not be less than the minimum wage 
specified in section 6(a) of FLSA.



Sec. 525.11  Issuance of certificates.

    (a) Upon consideration of the criteria cited in these regulations, a 
special certificate may be issued.
    (b) If a special minimum wage certificate is issued, a copy shall be 
sent to the employer. If denied, the employer will be notified in 
writing and told the reasons for the denial, as well as the right to 
petition under Sec. 525.18.



Sec. 525.12  Terms and conditions of special minimum wage certificates.

    (a) A special minimum wage certificate shall specify the terms and 
conditions under which it is granted.
    (b) A special minimum wage certificate shall apply to all workers 
employed by the employer to which the special certificate is granted 
provided such workers are in fact disabled for the work they are to 
perform.
    (c) A special minimum wage certificate shall be effective for a 
period to be designated by the Administrator. Workers with disabilities 
may be paid wages lower than the statutory minimum wage rate set forth 
in section 6 of FLSA only during the effective period of the 
certificate.
    (d) Workers paid under special minimum wage certificates shall be 
paid wages commensurate with those paid experienced nondisabled workers 
employed in the vicinity in which they are employed for essentially the 
same type, quality, and quantity of work.
    (e) Workers with disabilities shall be paid not less than one and 
one-half times their regular rates of pay for all hours worked in excess 
of the maximum workweek applicable under section 7 of FLSA.
    (f) The wages of all workers paid a special minimum wage under this 
part shall be adjusted by the employer at periodic intervals at a 
minimum of once a year to reflect changes in the prevailing wages paid 
to experienced individuals not disabled for the work to be performed 
employed in the vicinity for essentially the same type of work.
    (g) Each worker with a disability and, where appropriate, a parent 
or guardian of the worker, shall be informed, orally and in writing, of 
the terms of the certificate under which such worker is employed. This 
requirement may be satisfied by making copies of the certificate 
available. Where a worker with disabilities displays an understanding of 
the terms of a certificate and requests that other parties not be 
informed, it is not necessary to inform a parent or guardian.
    (h) In establishing piece rates for workers with disabilities, the 
following criteria shall be used:
    (1) Industrial work measurement methods such as stop watch time 
studies, predetermined time systems, standard data, or other measurement 
methods (hereinafter referred to as ``work measurement methods'') shall 
be used by the employer to establish standard production rates of 
workers not disabled for the work to be performed. The Department will 
accept the use of whatever method an employer chooses to use. However, 
the employer has the responsibility of demonstrating that a particular 
method is generally accepted by industrial

[[Page 162]]

engineers and has been properly executed. No specific training or 
certification will be required. Where work measurement methods have 
already been applied by another employer or source, and documentation 
exists to show that the methods used are the same, it is not necessary 
to repeat these methods to establish production standards.
    (i) The piece rates shall be based on the standard production rates 
(number of units an experienced worker not disabled for the work is 
expected to produce per hour) and the prevailing industry wage rate paid 
experienced nondisabled workers in the vicinity for essentially the same 
type and quality of work or for work requiring similar skill. 
(Prevailing industry wage rate divided by the standard number of units 
per hour equals the piece rate.).
    (ii) Piece rates shall not be less than the prevailing piece rates 
paid experienced workers not disabled for the work doing the same or 
similar work in the vicinity when such piece rates exist and can be 
compared with the actual employment situations of the workers with 
disabilities.
    (2) Any work measurement method used to establish piece rates shall 
be verifiable through the use of established industrial work measurement 
techniques.
    (i) If stop watch time studies are made, they shall be made with a 
person or persons whose productivity represents normal or near normal 
performance. If their productivity does not represent normal or near 
normal performance, adjustments of performance shall be made. Such 
adjustments, sometimes called ``performance rating'' or ``leveling'' 
shall be made only by a person knowledgeable in this technique, as 
evidenced by successful completion of training in this area. The persons 
observed should be given time to practice the work to be performed in 
order to provide them with an opportunity to overcome the initial 
learning curve. The persons observed shall be trained to use the 
specific work method and tools which are available to workers with 
disabilities employed under special minimum wage certificates.
    (ii) Appropriate time shall be allowed for personal time, fatigue, 
and unavoidable delays. Generally, not less than 15% allowances (9-10 
minutes per hour) shall be used in conducting time studies.
    (iii) Work measurements shall be conducted using the same work 
method that will be utilized by the workers with disabilities. When 
modifications such as jigs or fixtures are made to production methods to 
accommodate special needs of individual workers with disabilities, 
additional work measurements need not be conducted where the 
modifications enable the workers with disabilities to perform the work 
or increase productivity but would impede a worker without disabilities. 
Where workers with disabilities do not have a method available to them, 
as for example where an adequate number of machines are not available, a 
second work measurement should be conducted.
    (i) Each worker with a disability employed on a piece rate basis 
should be paid full earnings. Employers may ``pool'' earnings only where 
piece rates cannot be established for each individual worker. An example 
of this situation is a team production operation where each worker's 
individual contribution to the finished product cannot be determined 
separately. However, in such situations, the employer should make every 
effort to objectively divide the earnings according to the productivity 
level of each individual worker.
    (j) The following terms shall be met for workers with disabilities 
employed at hourly rates:
    (1) Hourly rates shall be based upon the prevailing hourly wage 
rates paid to experienced workers not disabled for the job doing 
essentially the same type of work and using similar methods or equipment 
in the vicinity. (See also Sec. 525.10.)
    (2) An initial evaluation of a worker's productivity shall be made 
within the first month after employment begins in order to determine the 
worker's commensurate wage rate. The results of the evaluation shall be 
recorded and the worker's wages shall be adjusted accordingly no later 
than the first complete pay period following the initial evaluation. 
Each worker is entitled

[[Page 163]]

to commensurate wages for all hours worked. Where the wages paid to the 
worker during pay periods prior to the initial evaluation were less than 
the commensurate wage indicated by the evaluation, the employer must 
compensate the worker for any such difference unless it can be 
demonstrated that the initial payments reflected the commensurate wage 
due at that time.
    (3) Upon completion of not more than six months of employment, a 
review shall be made with respect to the quantity and quality of work of 
each hourly-rated worker with a disability as compared to that of 
nondisabled workers engaged in similar work or work requiring similar 
skills and the findings shall be recorded. The worker's productivity 
shall then be reviewed and the findings recorded at least every 6 months 
thereafter. A review and recording of productivity shall also be made 
after a worker changes jobs and at least every 6 months thereafter. The 
worker's wages shall be adjusted accordingly no later than the first 
complete pay period following each review. Conducting reviews at six-
month intervals should be viewed as a minimum requirement since workers 
with disabilities are entitled to commensurate wages for all hours 
worked. Reviews must be conducted in a manner and frequency to insure 
payment of commensurate wages. For example, evaluations should not be 
conducted before a worker has had an opportunity to become familiar with 
the job or at a time when the worker is fatigued or subject to 
conditions that result in less than normal productivity.
    (4) Each review should contain, as a minimum and in addition to the 
data cited above, the following: name of the individual being reviewed; 
date and time of the review; and, name and position of the individual 
doing the review.



Sec. 525.13  Renewal of special minimum wage certificates.

    (a) Applications may be filed for renewal of special minimum wage 
certificates.
    (b) If an application for renewal has been properly and timely 
filed, an existing special minimum wage certificate shall remain in 
effect until the application for renewal has been granted or denied.
    (c) Workers with disabilities may not continue to be paid special 
minimum wages after notice that an application for renewal has been 
denied.
    (d) Except in cases of willfulness or those in which the public 
interest requires otherwise, before an application for renewal is denied 
facts or conduct which may warrant such action shall be called to the 
attention of the employer in writing and such employer shall be afforded 
an opportunity to demonstrate or achieve compliance with all legal 
requirements.



Sec. 525.14  Posting of notices.

    Every employer having workers who are employed under special minimum 
wage certificates shall at all times display and make available to 
employees a poster as prescribed and supplied by the Administrator. The 
Administrator will make available, upon request, posters in other 
formats such as Braille or recorded tapes. Such a poster will explain, 
in general terms, the conditions under which special minimum wages may 
be paid and shall be posted in a conspicuous place on the employer's 
premises where it may be readily observed by the workers with 
disabilities, the parents and guardians of such workers, and other 
workers. Where an employer finds it inappropriate to post such a notice, 
this requirement may be satisfied by providing the poster directly to 
all employees subject to its terms.



Sec. 525.15  Industrial homework.

    (a) Where the employer is an organization or institution carrying 
out a recognized program of rehabilitation for workers with disabilities 
and holds a special certificate issued pursuant to this part, 
certification under regulations governing the employment of industrial 
homeworkers (29 CFR part 530) is not required.
    (b) For all other types of employers, special rules apply to the 
employment of homeworkers in the following industries: Jewelry 
manufacturing, knitted outerwear, gloves and mittens, buttons and 
buckles, handkerchief manufacturing, embroideries, and women's apparel. 
(See 29 CFR part 530.)

[[Page 164]]



Sec. 525.16  Records to be kept by employers.

    Every employer, or where appropriate (in the case of records 
verifying the workers' disabilities) the referring agency or facility, 
of workers employed under special minimum wage certificates shall 
maintain and have available for inspection records indicating:
    (a) Verification of the workers' disabilities;
    (b) Evidence of the productivity of each worker with a disability 
gathered on a continuing basis or at periodic intervals (not to exceed 
six months in the case of employees paid hourly wage rates);
    (c) The prevailing wages paid workers not disabled for the job 
performed who are employed in industry in the vicinity for essentially 
the same type of work using similar methods and equipment as that used 
by each worker with disabilities employed under a special minimum wage 
certificate (see also Sec. 525.10(b) and (d));
    (d) The production standards and supporting documentation for 
nondisabled workers for each job being performed by workers with 
disabilities employed under special certificates; and
    (e) The records required under all of the applicable provisions of 
part 516 of this title, except that any provision pertaining to 
homeworker handbooks shall not be applicable to workers with 
disabilities who are employed by a recognized nonprofit rehabilitation 
facility and working in or about a home, apartment, tenement, or room in 
a residential establishment. (See Sec. 525.15) Records required by this 
section shall be maintained and preserved for the periods specified in 
part 516 of this title.

(Approved by the Office of Management and Budget under control number 
1215-0017)



Sec. 525.17  Revocation of certificates.

    (a) A special minimum wage certificate may be revoked for cause at 
any time. A certificate may be revoked:
    (1) As of the date of issuance, if it is found that 
misrepresentations or false statements have been made in obtaining the 
certificate or in permitting a worker with a disability to be employed 
thereunder;
    (2) As of the date of violation, if it is found that any of the 
provisions of FLSA or of the terms of the certificate have been 
violated; or
    (3) As of the date of notice of revocation, if it is found that the 
certificate is no longer necessary in order to prevent curtailment of 
opportunities for employment, or that the requirements of these 
regulations other than those referred to in paragraph (a)(2) of this 
section have not been complied with.
    (b) Except in cases of willfulness or those in which the public 
interest requires otherwise, before any certificate shall be revoked, 
facts or conduct which may warrant such action shall be called to the 
attention of the employer in writing and such employer shall be afforded 
an opportunity to demonstrate or achieve compliance with all legal 
requirements.



Sec. 525.18  Review.

    Any person aggrieved by any action of the Administrator taken 
pursuant to this part may, within 60 days or such additional time as the 
Administrator may allow, file with the Administrator a petition for 
review. Such review, if granted, shall be made by the Administrator. 
Other interested persons, to the extent it is deemed appropriate, may be 
afforded an opportunity to present data and views.



Sec. 525.19  Investigations and hearings.

    The Administrator may conduct an investigation, which may include a 
hearing, prior to taking any action pursuant to these regulations. To 
the extent it is deemed appropriate, the Administrator may provide an 
opportunity to other interested persons to present data and views. 
Proceedings initiated pursuant to this section are separate from those 
taken pursuant to FLSA section 14(c)(5) and Sec. 525.22.



Sec. 525.20  Relation to other laws.

    No provision of these regulations, or of any special minimum wage 
certificate issued thereunder, shall excuse noncompliance with any other 
Federal or State law or municipal ordinance establishing higher 
standards.

[[Page 165]]



Sec. 525.21  Lowering of wage rates.

    (a) No employer may reduce the minimum hourly wage rate, guaranteed 
by a special minimum wage certificate in effect on June 1, 1986, of any 
worker with disabilities from June 1, 1986 until May 31, 1988, without 
prior authorization of the Secretary.
    (b) This provision applies to those workers with disabilities who 
were:
    (1) Employed during the pay period which included June 1, 1986, even 
if no work was performed during that pay period; and
    (2) Employed under a group or individual special minimum wage 
certificate which specified a minimum guaranteed rate, i.e., a special 
certificate issued under former section 14(c) (1) or (2)(b) of FLSA.
    (c) In order to obtain authority to lower the wage rate of a worker 
with a disability to whom this provision applies to a rate below the 
certificate rate, the employer must submit information as prescribed 
under this section to the appropriate Regional Office. The burden of 
establishing the necessity of lowering the wage of a worker with a 
disability rests with the employer.
    (d) In reviewing a request to lower a wage rate of a worker with a 
disability, documented evidence of the following will be considered:
    (1) Any change in the worker's disabling condition which has a 
substantially negative impact on productive capacity;
    (2) Any change in the type of work being performed in the facility 
which would affect the productivity of the worker with a disability or 
which would result in the application of a lower prevailing wage rate;
    (3) Any change in general economic conditions in the locality in 
which the work is performed which results in lower prevailing wage 
rates.
    (e) A wage rate may not be lowered until authorization is obtained.



Sec. 525.22  Employee's right to petition.

    (a) Any employee receiving a special minimum wage at a rate 
specified pursuant to subsection 14(c) of FLSA or the parent or guardian 
of such an employee may petition the Secretary to obtain a review of 
such special minimum wage rate. No particular form of petition is 
required, except that a petition must be signed by the individual, or 
the parent or guardian of the individual, and should contain the name 
and address of the employee and the name and address of the employee's 
employer. A petition may be filed in person or by mail with the 
Administrator of the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, Room S3502, 200 Constitution 
Avenue NW., Washington, DC 20210. The petitioner may be represented by 
counsel in any stage of such proceedings. Upon receipt, the petition 
shall be forwarded immediately to the Chief Administrative Law Judge.
    (b) Upon receipt of a petition, the Chief Administrative Law Judge 
shall, within 10 days of the receipt of the petition by the Secretary, 
appoint an Administrative Law Judge (ALJ) to hear the case. Upon 
receipt, the ALJ shall notify the employer named in the petition. The 
ALJ shall also notify the employee, the employer, the Administrator, and 
the Associate Solicitor for Fair Labor Standards of the time and place 
of the hearing. The date of the hearing shall be not more than 30 days 
after the assignment of the case to the ALJ. All the parties shall be 
given at least eight days' notice of such hearing. Because of the time 
constraints imposed by the statute, requests for postponement shall be 
granted only sparingly and for compelling reasons.
    (c) Hearings held under this subpart shall be conducted, consistent 
with statutory time limitations, under the Department's rules of 
practice and procedure for administrative hearings found in 29 CFR part 
18. There shall be a minimum of formality in the proceeding consistent 
with orderly procedure. Any employer who intends to participate in the 
proceeding shall provide to the ALJ, and shall serve on the petitioner 
and the Associate Solicitor for Fair Labor Standards no later than 15 
days prior to the commencement of the hearing, or as soon as practical 
depending on when the notice of a hearing as required under paragraph 
(b) of this section was received, that documentary evidence pertaining 
to the employee or employees identified in the petition which is 
contained in the

[[Page 166]]

records required by Sec. 525.16 (a), (b), (c) and (d). The 
Administrator shall be permitted to participate by counsel in the 
proceeding upon application.
    (d) In determining whether any special minimum wage rate is 
justified, the ALJ shall consider, to the extent evidence is available, 
the productivity of the employee or employees identified in the petition 
and the conditions under which such productivity was measured, and the 
productivity of other employees performing work of essentially the same 
type and quality for other employers in the same vicinity and the 
conditions under which much productivity was mesured. In these 
proceedings, the burden of proof on all matters relating to the 
propriety of a wage at issue shall rest with the employer.
    (e) The ALJ shall issue a decision within 30 days after the 
termination of the hearing and shall serve the decision on the 
Administrator and all interested parties by Express Mail or other 
similar system guaranteeing one-day delivery. The decision shall contain 
appropriate findings and conclusions and an order. If the ALJ finds that 
the special minimum wage being paid or which has been paid is not 
justified, the order shall specify the lawful rate and the period of 
employment to which the rate is applicable. In the absence of evidence 
sufficient to support the conclusion that the proper wage should be less 
than the minimum wage, the ALJ shall order that the minimum wage be 
paid.
    (f) Within 15 days after the date of the decision of the ALJ, the 
petitioner, the Administrator, or the employer who seeks review thereof 
may request review by the Secretary. No particular form of request is 
required, except that a request must be in writing and must attach a 
copy of the ALJ's decision. Requests for review shall be filed with the 
Secretary of Labor, 200 Constitution Ave. NW., Washington, DC 20210. Any 
other interested party may file a reply thereto with the Secretary and 
the Administrator within 5 working days of receipt of such request for 
review. The request for review and reply thereto shall be transmitted by 
the Administrator to all interested parties by Express Mail or other 
similar system guaranteeing one-day delivery.
    (g) The decision of the ALJ shall be deemed to be final agency 
action 30 days after issuance thereof, unless within 30 days of the date 
of the decision the Secretary grants a request to review the decision. 
Where such request for review is granted, within 30 days after receipt 
of such request the Secretary shall review the record and shall either 
adopt the decision of the ALJ or issue exceptions. The decision of the 
ALJ, together with any exceptions issued by the Secretary, shall be 
deemed to be a final agency action.
    (h) Within 30 days of issuance of the final action of the Secretary 
reviewing the decision of the ALJ or declining to grant such review, any 
person adversely affected or aggrieved by such action may seek judicial 
review pursuant to chapter 7 of title 5, United States Code. The record 
of the case, including the record of proceedings before the ALJ, shall 
be transmitted by the Secretary to the appropriate court pursuant to the 
rules of such court.



Sec. 525.23  Work activities centers.

    Nothing in these regulations shall be interpreted to prevent an 
employer from maintaining or establishing work activities centers to 
provide therapeutic activities for workers with disabilities as long as 
the employer complies with the requirement of these regulations. Work 
activities centers shall include centers planned and designed to provide 
therapeutic activities for workers with severe disabilities affecting 
their productive capacity. Any establishment whose workers with 
disabilities are employed at special minimum wages must comply with the 
requirements of this part, regardless of the designation of such 
establishment.



Sec. 525.24  Advisory Committee on Special Minimum Wages.

    The Advisory Committee on Special Minimum Wages, the members of 
which are appointed by the Secretary, shall advise and make 
recommendations to the Administrator concerning the administration and 
enforcement of these regulations and the need for amendments thereof and 
shall serve

[[Page 167]]

such other functions as may be desired by the Administrator.

                           PART 527 [RESERVED]



    PART 528_ANNULMENT OR WITHDRAWAL OF CERTIFICATES FOR THE
    EMPLOYMENT OF STUDENT-LEARNERS, APPRENTICES, LEARNERS, MESSENGERS
    
    , HANDICAPPED PERSONS, STUDENT-
WORKERS, AND FULL-TIME STUDENTS IN AGRICULTURE OR IN RETAIL OR

SERVICE ESTABLISHMENTS AT SPECIAL MINIMUM WAGE RATES--Table of Contents



Sec.
528.1 Applicability of the regulations in this part.
528.2 Definition of terms.
528.3 Withdrawal and annulment of certificates.
528.4 According opportunity to demonstrate or achieve compliance.
528.5 Proceedings for withdrawal or annulment.
528.6 Review.
528.7 Effect of order of annulment or withdrawal.

    Authority: Sec. 14, 52 Stat. 1068, as amended; 29 U.S.C. 214, unless 
otherwise noted.



Sec. 528.1  Applicability of the regulations in this part.

    The regulations in this part shall govern the annulment or 
withdrawal of any certificate except a temporary certificate issued 
pending final action on an application, issued pursuant to parts 519, 
520, 521, 522, 523, 524, and 527 of this chapter, and having effect 
under section 14 of the Fair Labor Standards Act of 1938.

[27 FR 3994, Apr. 26, 1962]



Sec. 528.2  Definition of terms.

    As used in the regulations contained in this part, the term:
    (a) Withdrawal shall mean termination of validity of a certificate 
with prospective effect from the time of the action of withdrawal.
    (b) Annulment shall mean withdrawal of a certificate with 
retroactive effect to the date of issuance.
    (c) Authorized representative shall mean: (1) The Assistant Regional 
Administrators for the Wage and Hour Division (who are authorized to 
redelegate this authority) within their respective regions, and (2) the 
Caribbean Director of the Wage and Hour Division for the area covered by 
the Caribbean office.
    (d) Area director shall include any area director of the Wage and 
Hour Division.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913). 
Employment Standards Order No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.3  Withdrawal and annulment of certificates.

    (a) An authorized representative may withdraw a certificate from any 
employer within that representative's region who, acting under color of 
any certificate or application for the employment of learners, 
handicapped workers, student workers, student learners, apprentices, 
messengers, or full-time students in agriculture, retail, or service 
establishments, or in institutions of higher education at subminimum 
wages under section 14 of the act, fails to comply with the limitations 
in such certificate or otherwise violates the act.
    (b) An authorized representative may annul a certificate affected by 
mistake in its issuance if the employer knowingly induced or knowingly 
took advantage of the mistake. Where the employer did not knowingly 
induce the mistake but knowingly took advantage of it, a new certificate 
shall be issued by the authorized representative if, and on such terms 
as, such certificate would have been issued had there been no mistake 
limited in its term from the date of issuance to the date of annulment 
of the annulled certificate.
    (c) A certificate may be withdrawn in the public interest by a 
representative authorized to issue such type of certificate whenever any 
part of the exemption it provides is no longer necessary to prevent 
curtailment of opportunities for employment. If appropriate, a more 
limited replacement certificate may be

[[Page 168]]

issued by the authorized representative.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913); 
Employment Standards Order No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.4  According opportunity to demonstrate or achieve compliance.

    Prior to instituting proceedings for withdrawal of a certificate 
under paragraph (a) of Sec. 528.3, except in cases of willfullness, an 
area director shall mail a letter to the employer setting forth alleged 
facts or conduct which may warrant withdrawal of the certificate, and 
fixing a time and a place for a conference at which the employer shall 
be accorded an opportunity to show that no cause for withdrawal under 
Sec. 528.3(a) exists or that compliance has been achieved by paying 
wages improperly withheld and by taking steps adequate to insure that 
new cause for annulment or withdrawal will not occur. By written report 
to the appropriate authorized representative, a copy of which shall be 
mailed to the employer, the area director shall concisely summarize the 
conference and shall include conclusions as to whether the employer 
demonstrated or achieved compliance. If the authorized representative is 
satisfied that the employer either demonstrated or achieved such 
compliance, no proceedings shall be instituted under Sec. 528.3(a) for 
the withdrawal of the certificate.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913), 
Employment Standards Order 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.5  Proceedings for withdrawal or annulment.

    The representative authorized to withdraw or annul a certificate 
under Sec. 528.3 shall institute proceedings by a letter mailed to the 
employer and, where appropriate, to the apprenticeship agency (in the 
case of apprentice certificates) or the responsible school official (in 
the case of student-learner certificates), setting forth alleged facts 
which may warrant such annulment or withdrawal and advising the employer 
that such an annulment or withdrawal of the scope provided in Sec. 
528.7 will take effect at a time specified unless facts are presented 
which convince the authorized representative that such action should not 
be taken. The letter shall advise such person, agency, or official of 
the right to respond by mail or to appear by or with counsel or by other 
duly qualified representative at a specified time and place. If there is 
no timely objection to the withdrawal or annulment thus proposed, it 
shall be deemed effective according to the terms of the letter 
instituting the annulment or withdrawal proceeding without the necessity 
of any further action. If objection to the annulment or withdrawal as 
proposed is made within the specified time the further proceedings shall 
be as informal as practicable commensurate with orderly dispatch and 
fairness. Department of Labor investigation files or reports or portions 
thereof may be considered in such proceedings to the extent they are 
made available for examination during the proceedings. If objection to 
the proposed annulment or withdrawal is made by such specified time, the 
authorized representative shall, after considering all pertinent matters 
presented, mail a letter to the employer and, where appropriate, to the 
apprenticeship agency or the responsible school official, setting out 
that representative's findings of specific pertinent facts and 
conclusions and that representative's order concerning the proposed 
annulment or withdrawal. In proceedings instituted for annulment, the 
order may provide for withdrawal instead of annulment if the proof 
warrants such withdrawal but fails to support adequately the annulment. 
Such an order shall be deemed issued and effective according to its 
terms when mailed.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913); 
Employment Standards Order No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



Sec. 528.6  Review.

    Any employer and, when appropriate, any apprenticeship agency or 
responsible school official, who expressed timely objection to the 
proposed action

[[Page 169]]

prior to issuance of an order of annulment or withdrawal may obtain 
review, limited to the question of whether the findings of fact support 
the order under the regulations in this part. Application for such 
review shall be in writing addressed to the Administrator and mailed 
within 15 days after the order is issued. The Administrator may affirm, 
modify, or reverse the order, or may remand it for further proceedings. 
The order under review shall not be stayed in effect pending such 
review. Any aggrieved person may obtain such review of an order entered 
in proceedings instituted under paragraph (c) of Sec. 528.3.

[21 FR 5316, July 17, 1956, as amended at 22 FR 5683, July 18, 1957]



Sec. 528.7  Effect of order of annulment or withdrawal.

    Except as otherwise expressly provided in such order, any order of 
annulment or withdrawal under paragraph (a) or (b) of Sec. 528.3 shall 
be effective to terminate all certifications to which the regulations in 
this part apply in effect at the establishment where the cause for 
withdrawal arose or where the annulled certificate had effect. After 
such annulment or withdrawal, such employer shall be ineligible to 
obtain or exercise the privileges granted in such a certificate until he 
satisfies the issuing officer that he will not again give cause for 
annulment or withdrawal if a certificate is issued.

(Secretary's Order No. 16-75, dated Nov. 25, 1975 (40 FR 55913); 
Employment Standards Order No 76-2, dated Feb. 23, 1976 (41 FR 9016))

[43 FR 28469, June 30, 1978]



PART 530_EMPLOYMENT OF HOMEWORKERS IN CERTAIN INDUSTRIES--
Table of Contents



                            Subpart A_General

Sec.
530.1 Definitions.
530.2 Restriction of homework.
530.3 Application forms for individual homeworker certificates.
530.4 Terms and conditions for the issuance of individual homeworker 
          certificates.
530.5 Investigation.
530.6 Termination of individual homeworker certificates.
530.7 Revocation and cancellation of individual homeworker certificates.
530.8 Preservation of individual homeworker certificates.
530.9 Records and reports.
530.10 Delegation of authority to grant, deny, or cancel an individual 
          homeworker certificate.
530.11 Petition for review.
530.12 Special provisions.

               Subpart B_Homeworker Employer Certificates

530.101 General.
530.102 Requests for employer certificates.
530.103 Employer assurances.
530.104 Bonding or security payments.
530.105 Investigations.

     Subpart C_Denial/Revocation of Homeworker Employer Certificates

530.201 Conflict with State law.
530.202 Piece rates--work measurement.
530.203 Outstanding violations and open investigations.
530.204 Discretionary denial or revocation.
530.205 Mandatory denial or revocation.
530.206 Special circumstances.

                     Subpart D_Civil Money Penalties

530.301 General.
530.302 Amounts of civil money penalties.
530.303 Considerations in determining amounts.
530.304 Procedures for assessment.

                   Subpart E_Administrative Procedures

530.401 Applicability of procedures and rules.
530.402 Notice of determination.
530.403 Request for hearing.
530.404 Referral to Administrative Law Judge.
530.405 General.
530.406 Decision and order of Administrative Law Judge.
530.407 Procedures for initiating and undertaking review.
530.408 Notice of the Secretary to review decision.
530.409 Final decision of the Secretary.
530.410 Special procedures.
530.411 Emergency certificate revocation procedures.
530.412 Alternative summary proceedings.
530.413 Certification of the record.
530.414 Equal Access to Justice Act.

    Authority: Sec. 11, 52 Stat. 1066 (29 U.S.C. 211) as amended by sec. 
9, 63 Stat. 910 (29 U.S.C. 211(d)); Secretary's Order No. 6-84, 49 FR 
32473, August 14, 1984; and Employment Standards Order No. 85-01, June 
5, 1985.

[[Page 170]]


    Source: 24 FR 729, Feb. 3, 1959, unless otherwise noted.



                            Subpart A_General



Sec. 530.1  Definitions.

    (a) The meaning of the terms person, employ, employer, employee, 
goods, and production, as used in this part, is the same as in the Fair 
Labor Standards Act of 1938, as amended.
    (b) Administrator as used in this part means the Administrator of 
the Wage and Hour Division, Employment Standards Administration, U.S. 
Department of Labor, or an authorized representative of the 
Administrator.
    (c) Industrial homeworker and homeworker, as used in this part, mean 
any employee employed or suffered or permitted to perform industrial 
homework for an employer.
    (d) Industrial homework, as used in this part, means the production 
by any person in or about a home, apartment, tenement, or room in a 
residential establishment of goods for an employer who suffers or 
permits such production, regardless of the source (whether obtained from 
an employer or elsewhere) of the materials used by the homeworker in 
such production.
    (e) The women's apparel industry is defined as follows: The 
production of women's, misses' and juniors' dresses, washable service 
garments, blouses, and neckwear from woven or purchased knit fabric; 
women's, misses', children's and infants' underwear, nightwear, and 
negligees from woven fabrics; corsets and other body supporting garments 
from any material; other garments similar to the foregoing; and infants; 
and children's outerwear.
    (f) The jewelry manufacturing industry is defined as follows:
    (1)(i) The manufacturing, processing, or assembling, wholly or 
partially from any material, of jewelry, commonly or commercially so 
known. Jewelry as used herein includes without limitation, religious, 
school, college, and fraternal insignia; articles of ornament or 
adornment designed to be worn on apparel or carried on or about the 
person, including, without limitation, cigar and cigarette cases, 
holders, and lighters; watch cases; metal mesh bags and metal watch 
bracelets; and chain, mesh, and parts for use in the manufacture of any 
of the articles included in this definition. Jewelry as used in this 
part does not include pocket knives, cigar cutters, badges, emblems, 
military and naval insignia, belt buckles, and handbag and pocketbook 
frames and clasps, or commercial compacts and vanity cases, except when 
made from or embellished with precious metals or precious, semiprecious, 
synthetic or imitation stones, or the assaying, refining, and smelting 
of base or precious metals.
    (ii) The term parts as used in paragraph (e)(1)(i) of this section 
does not include parts which are used predominantly for products other 
than jewelry, such as springs, blades, and nail files. The term 
commercial compacts and vanity cases as used means compacts and vanity 
cases which bear the trade name or mark of a cosmetic manufacturer and 
are made for the purpose of distributing or advertising said cosmetics.
    (2) The manufacturing, cutting, polishing, encrusting, engraving, 
and setting of precious, semiprecious, synthetic, and imitation stones.
    (3) The manufacturing, drilling, and stringing of pearls, imitation 
pearls, and beads designed for use in the manufacture of jewelry.
    (4) The term hand-fashioned jewelry as used in Sec. 530.12(b) means 
articles of jewelry commonly known as genuine Navajo, Pueblo, Hopi, or 
Zuni handmade jewelry which in all elements of design, fashioning and 
ornamentation are handmade by methods and with the help of only such 
devices as permit the maker to determine the shape and design of each 
individual product: Provided, That silver used in the making of such 
jewelry shall be of at least nine hundred fineness, and that turquoise 
and other stones used shall be genuine stones, uncolored and untreated 
by artificial means: And provided further, That power machinery is 
permitted in the production of findings, in the cutting and polishing of 
stones, in the buffing and polishing of completed products, and in 
incidental functions. Equipment specifically prohibited shall include 
hand presses, foot presses, drop hammers, and similar equipment: And 
provided further, That solder may be of less silver content than nine 
hundred;

[[Page 171]]

And provided further, That findings may be mechanically made of any 
metal by Indians or others: And provided further, That turquoise and 
other stones may be cut and polished by Indians or others without 
restrictions as to methods or equipment used.
    (g) The knitted outerwear industry is defined as follows: The 
knitting from any yarn or mixture of yarns and the further 
manufacturing, dyeing or other finishing of knitted garments, knitted 
garment sections, or knitted garment accessories for use as external 
apparel or covering which are partially or completely manufactured in 
the same establishment as that where the knitting process is performed; 
and the manufacture of bathing suits from any purchased fabric: 
Provided, That the manufacturing, dyeing or other finishing of the 
following shall not be included:
    (1) Knitted fabric, as distinguished from garment sections or 
garments, for sale as such.
    (2) Fulled suitings, coatings, topcoatings, and overcoatings.
    (3) Garments or garment accessories made from purchased fabric, 
except bathing suits.
    (4) Gloves or mittens.
    (5) Hosiery.
    (6) Knitted garments or garment accessories for use as underwear, 
sleeping wear, or negligees.
    (7) Fleece-lined garments made from knitted fabric containing cotton 
only or containing any mixture of cotton and not more than 25 percent, 
by weight, of wool or animal fiber other than silk.
    (8) Knitted shirts of cotton or any synthetic fiber or any mixture 
of such fibers which have been knit on machinery of 10-cut or fine: 
Provided, That this exception shall not be construed to exclude from the 
knitted outerwear industry and the manufacturing, dyeing, or other 
finishing of knitted shirts made in the same establishment as that where 
the knitting process is performed, if such shirts are made wholly or in 
part of fibers other than those specified in this clause, or if such 
shirts of any fiber are knit on machinery coarser than 10-cut.
    (h) The gloves and mittens industry is defined as follows: The 
production of gloves and mittens from any material or combination of 
materials, except athletic gloves and mittens.
    (i) The button and buckle manufacturing industry is defined as 
follows: The manufacture of buttons, buckles, and slides, and the 
manufacture of blanks and parts for such articles from any material 
except metal, for use on apparel.
    (j) The handkerchief manufacturing industry is defined as follows: 
The manufacture of men's, women's and children's handkerchiefs, plain or 
ornamented, from any materials.
    (k) The embroideries industry is defined as follows: The production 
of all kinds of hand and machine-made embroideries and ornamental 
stitchings, including but not by way of limitation, tucking shirring, 
smocking, hemstitching, hand rolling, fagoting, Bonnez embroidery, 
appliqueing, crochet beading, hand drawing, machine drawing, rhinestone 
trimming, sequin trimming, spangle trimming, eyelets, passementerie, 
pleating, the application of rhinestones and nailheads, stamping and 
perforating of designs, Schifli embroidery and laces, burnt-out laces 
and velvets, Swiss handmachine embroidery, thread splitting, embroidery 
thread cutting, scallop cutting, lace cutting, lace making-up, making-up 
of embroidered yard goods, straight cutting of embroidery and cutting 
out of embroidery, embroidery trimmings, bindings (not made in textile 
establishments), pipings and emblems: Provided, That (1) the foregoing 
when produced or performed by a manufacturer of a garment, fabric or 
other article for use on such garment, fabric or other article, and (2) 
the manufacture of covered buttons and buckles, shall not be included.
    (l) As used throughout this part the terms ``Secretary'' or 
``Secretary of Labor'' shall mean the Secretary of Labor, U.S. 
Department of Labor, or his or her designee.

[24 FR 729, Feb. 3, 1959, as amended at 46 FR 50349, Oct. 9, 1981; 49 FR 
22036, May 24, 1984; 53 FR 45722, Nov. 10, 1988; 61 FR 19986, May 3, 
1996]



Sec. 530.2  Restriction of homework.

    Except as provided in subpart B of this part, no work in the 
industries defined in paragraphs (e) through (k) of

[[Page 172]]

Sec. 530.1 shall be done in or about a home, apartment, tenement, or 
room in a residential establishment unless a special homework 
certificate issued and in effect pursuant to this part has been obtained 
for each homeworker or unless the homeworker is so engaged under the 
supervision of a Sheltered Workshop, as defined in Sec. 525.2 of this 
chapter.

[53 FR 45722, Nov. 10, 1988]



Sec. 530.3  Application forms for individual homeworker certificates.

    Certificates authorizing the employment of industrial homeworkers in 
the industries defined in Sec. 530.1 may be issued on the following 
terms and conditions upon application therefore on forms provided by the 
Wage and Hour Division. Such forms shall be signed by both the 
homeworker and the employer.

(Approved by the Office of Management and Budget under control number 
1215-0005)

[24 FR 729, Feb. 3, 1959, as amended at 49 FR 18294, Apr. 30, 1984]



Sec. 530.4  Terms and conditions for the issuance of individual 
homeworker certificates.

    (a) Upon application by the homeworker and the employer on forms 
provided by the Wage and Hour Division, certificates may be issued to 
the applicant employer authorizing the employment of a particular worker 
in industrial homework in a particular industry, provided that the 
application is in proper form and sets forth facts showing that the 
worker:
    (1)(i) Is unable to adjust to factory work because of age or 
physical or mental disability; or
    (ii) Is unable to leave home because the worker's presence is 
required to care for an invalid in the home; and
    (2)(i) Was engaged in industrial homework in the particular industry 
for which the certificate is applied, as such industry is defined in 
Sec. 530.1, prior to: (a) April 4, 1942, in the button and buckle 
manufacturing industry; (b) November 2, 1942, in the embroideries 
industry; (c) April 1, 1941, in the gloves and mittens industry; (d) 
October 7, 1942, in the handkerchief manufacturing industry; (e) July 1, 
1941, in the jewelry manufacturing industry; or (f) March 5, 1942, in 
the women's apparel industry, except that if this requirement shall 
result in unusual hardship to the individual homeworker it shall not be 
applied; or
    (ii) Is engaged in industrial homework under the supervision of a 
State Vocational Rehabilitation Agency.
    (b) No homeworker shall perform industrial homework for more than 
one employer in the same industry, but homework employment in one 
industry shall not be a bar to the issuance of certificates for other 
industries.

(Information collection requirements contained in paragraph (a) were 
approved by the Office of Management and Budget under control number 
1215-0005)

[24 FR 729, Feb. 3, 1959, as amended at 43 FR 28470, June 30, 1978; 46 
FR 50349, Oct. 9, 1981; 49 FR 44270, Nov. 5, 1984; 53 FR 45722, Nov. 10, 
1988]



Sec. 530.5  Investigation.

    An investigation may be ordered in any case to obtain additional 
data or facts. A medical examination of the worker or invalid may be 
ordered or a certification of facts concerning eligibility for the 
certificate by designated officers of the State or Federal Government 
may be required.



Sec. 530.6  Termination of individual homeworker certificates.

    (a) A certificate shall be valid under the terms set forth in the 
certificate for a period to be designated by the Administrator or his 
authorized representative. Application for renewal of any certificate 
shall be filed in the same manner as an original application under this 
part.
    (b) No effective certificate shall expire until action on an 
application for renewal shall have been finally determined, provided 
that such application has been properly executed in accordance with the 
requirements, and filed not less than 15 nor more than 30 days prior to 
the expiration date. A final determination means either the granting of 
or initial denial of the application for renewal of a certificate, or 
withdrawal of the application. A ``properly executed'' application is 
one which

[[Page 173]]

contains the complete information required on the form.

[24 FR 729, Feb. 3, 1959, as amended at 27 FR 7020, July 25, 1962]



Sec. 530.7  Revocation and cancellation of individual homeworker 
certificates.

    Any certificate may be revoked for cause at any time. Violation of 
any provision of the Fair Labor Standards Act shall be sufficient 
grounds for revocation of all certificates issued to an employer, in 
which event no certificates shall be issued to the offending employer 
for a period of up to one year. Before any certificate is cancelled, 
however, interested parties shall be notified in writing of the facts 
warranting such cancellation and afforded an opportunity to demonstrate 
or achieve compliance. In appropriate circumstances, the Administrator 
shall afford an opportunity for a hearing to resolve the disputed 
matter.

[49 FR 44271, Nov. 5, 1984]



Sec. 530.8  Preservation of individual homeworker certificates.

    A copy of all certificates provided to the employer under this part 
shall be maintained for a period of at least three years after the last 
employment under the certificate.

[49 FR 44271, Nov. 5, 1984]



Sec. 530.9  Records and reports.

    The issuance of a certificate shall not relieve the employer of the 
duty of maintaining the records required in the regulations in part 516 
of this chapter and failure to keep such records shall be sufficient 
cause for the cancellation of certificates issued to such an employer.



Sec. 530.10  Delegation of authority to grant, deny, or cancel an
individual homeworker certificate.

    The Administrator may from time to time designate and appoint 
members of the Administrator's staff or State Agencies as his authorized 
representatives with full power and authority to grant, deny, or cancel 
homework certificates.

[43 FR 28470, June 30, 1978]



Sec. 530.11  Petition for review.

    Any person aggrieved by the action of an authorized representative 
of the Administrator in granting or denying a certificate may, within 15 
days thereafter or within such additional time as the Administrator for 
cause shown may allow, file with the Administrator a petition for review 
of the action of such representative praying for such relief as is 
desired. Such petition for review, if duly filed, will be acted upon by 
the Administrator or an authorized representative of the Administrator 
who took no part in the proceeding being reviewed. All interested 
parties will be afforded an opportunity to present their views in 
support of or in opposition to the matters prayed for in the petition.



Sec. 530.12  Special provisions.

    (a) Gloves and mittens industry. Any certificate issued to an 
industrial homeworker by the New York State Department of Labor under 
paragraph II of Home Work Order No. 4 Restricting Industrial Homework in 
the Glove Industry, dated June 28, 1941, will be given effect by the 
Administrator as a certificate permitting the employment of the 
homeworker under the terms of Sec. 530.4 for the period during which 
such certificate shall continue in force.
    (b) Jewelry manufacturing industry. Nothing contained in the 
regulations in this part shall be construed to prohibit the employment, 
as homeworkers, of American Indians residing on the Navajo, Pueblo, and 
Hopi Indian Reservations, who are engaged in producing genuine hand-
fashioned jewelry on the Indian reservations mentioned, provided the 
employment of such homeworker is in conformity with the following 
conditions:
    (1) That each employer of one or more Indian homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations shall submit 
in duplicate to the regional office of the Wage and Hour Division for 
the region in which the employer's place of business is located, on 
April 1, August 1, and December 1 of each year, the name and address of 
such employee engaged during the preceding 4-month period in making 
hand-fashioned jewelry on Indian reservations;

[[Page 174]]

    (2) That each employer of one or more Indian homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations shall file 
copies of the piece rates in duplicate with the regional office of the 
Wage and Hour Division for the region in which the employer's place of 
business is located on April 1, August 1, and December 1 of each year, 
and
    (3) That each employer of one or more Indian homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations shall keep, 
maintain, and have available for inspection by the Administrator or the 
Administrator's authorized representative at any time, records and 
reports showing with respect to each of the homeworkers engaged in 
making hand-fashioned jewelry on these Indian reservations, the 
following information:
    (i) Name of the homeworker.
    (ii) Address of the homeworker.
    (iii) Date of birth of the homeworker, if under 19 years of age.
    (iv) Description of work performed.
    (v) Amount of cash wage payments made to the homeworker for each pay 
period.
    (vi) Date of such payment.
    (vii) Schedule of piece rates paid.

These records shall be kept by each employer for each of the employer's 
homeworkers engaged in making hand-fashioned jewelry on Indian 
reservations, as provided in this section, in lieu of the records 
required under Sec. Sec. 516.2 and 516.31 of this chapter: Provided, 
however, That nothing in this section shall relieve an employer from 
maintaining all other records required by part 516 of this chapter.

[24 FR 729, Feb. 3, 1959, as amended at 43 FR 28470, June 30, 1978]



               Subpart B_Homeworker Employer Certificates

    Source: 53 FR 45722, Nov. 10, 1988, unless otherwise noted.



Sec. 530.101  General.

    (a) Except as provided in subpart C, a certificate may be issued to 
an employer authorizing the employment of homeworkers in
    (1) The knitted outerwear, gloves and mittens, and embroideries 
industries as defined in paragraphs (g), (h), and (k), respectively, at 
Sec. 530.1, effective January 9, 1989;
    (2) In the button and buckle and handkerchief manufacturing 
industries as defined in paragraphs (i) and (j), respectively, of Sec. 
530.1, effective July 9, 1989; and
    (3) In the jewelry industry as defined in paragraph (f) of Sec. 
530.1, effective July 9, 1989, but only where the employer's homeworkers 
are engaged exclusively in the stringing of beads and other jewelry and 
the carding and packaging of jewelry. The terms ``carding and packaging 
of jewelry'' include the attaching of jewelry to cards, boxing and 
wrapping, and the use of common household glues available to the general 
public, but do not include potentially hazardous operations such as the 
use of industrial glues, epoxies, soldering irons, or heating elements.
    (b) This certificate may be issued irrespective of whether 
individual homeworkers meet the conditions set forth in paragraph (a) of 
Sec. 530.4 of Subpart A. Unless suspended or revoked, such certificates 
are valid for two-year periods. Applications for renewals must be 
submitted no later than thirty (30) days prior to the expiration date of 
the current certificate. Except as provided in subpart A, in the absence 
of a certificate, the employment of homeworkers in these industries is 
prohibited, and an employer violating this prohibition is subject to all 
the sanctions provided in the Fair Labor Standards Act and in this part, 
including an injunction restraining the employment of homeworkers.
    (c) Certificates authorizing such employment may be issued on the 
following terms and conditions upon written application to the 
Administrator, Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.



Sec. 530.102  Requests for employer certificates.

    The initial request for certification or renewal application shall 
be signed by the employer and shall contain the name of the firm, its 
mailing address,

[[Page 175]]

the physical location of the firm's principal place of business and a 
description of the business operations and items produced. In addition, 
the initial or renewal application shall contain the names, addresses, 
and languages (if other than English) spoken by the homeworkers that are 
currently employed (if any) or expected to be employed. The employer 
shall also provide the Administrator, within thirty (30) days, a notice 
of each change of address of the principal place of business. The 
notification shall be in writing and addressed to the Administrator, 
Wage and Hour Division, Employment Standards Administration, 200 
Constitution Avenue, NW., Washington, DC 20210.



Sec. 530.103  Employer assurances.

    In order to be granted a certificate authorizing the employment of 
industrial homeworkers, the employer must provide written assurances 
concerning the employment of homeworkers subject to section 11(d) of the 
Fair Labor Standards Act to the effect that:
    (a) All homeworkers shall be paid in accordance with the monetary 
provisions of the Act.
    (b) All homeworkers shall be employed in compliance with the child 
labor provisions contained in section 12 of the Act and regulations and 
orders issued pursuant to section 12. All homeworkers will be instructed 
not to permit minors to work in violation of such provisions.
    (c) Records of hours worked and wages paid shall be maintained in 
accordance with section 11 of the Act and part 516 of this chapter.
    (d) All homeworkers shall complete homeworker handbooks in 
accordance with Sec. 516.31 of part 516.
    (e) All homeworkers will be instructed to accurately record all 
hours worked, piece work information, and business-related expenses in 
the handbooks.
    (f) All records shall be made available for inspection and 
transcription by the Administrator or a duly authorized and designated 
representative, or transcription by the employer upon written request.
    (g) Piece rates paid to homeworkers shall be established using stop 
watch time studies or other work measurement methods.
    (h) All homeworkers shall be encouraged to cooperate with the 
Department in any investigation that may be made.
    (i) With respect to jewelry manufacturing, no operations other than 
the stringing of beads and other jewelry and the carding and packaging 
of jewelry will be performed by homeworkers.



Sec. 530.104  Bonding or security payments.

    (a) Where in the Administrator's judgment there is not sufficient 
reason to believe that the Act will be complied with or that money will 
be available if violations of the Act occur, the Administrator may 
condition issuance or renewal of a certificate to an employer upon the 
furnishing of a bond with a surety or sureties satisfactory to the 
Administrator.
    (b) The Administrator shall condition issuance or reinstatement of a 
certificate to any employer whose application for a certificate had 
previously been denied, or whose certificate had been revoked, upon the 
furnishing of a bond.
    (c) Any bond required by the Administrator under paragraph (a) or 
(b) of this section shall be in an amount determined by the 
Administrator, up to $2500 for each homeworker to be employed by such 
employer under the certificate. In lieu of a bond, the employer may 
furnish a cash payment of equal amount, to be held in a special deposit 
account by the Administrator for the period during which the certificate 
is in effect. Such bond, or cash payment, shall be subject to payment or 
forfeiture, in whole or in part, upon a final determination that the 
employer has failed to pay minimum wages or overtime compensation to 
homeworkers in accordance with the Act. Any sums thus paid or forfeited 
to the Administrator shall be disbursed to affected homeworkers in 
accordance with section 16(c) of the Act.
    (d) At the Administrator's discretion, the obligation of a bond may 
be relieved, and any cash payment held as

[[Page 176]]

security in lieu thereof may be refunded (together with any interest 
accrued thereon), upon a subsequent determination that the employer is 
in compliance with the Act and that sufficient funds will be available 
to meet back wage payment obligations in the event of violations of the 
Act.



Sec. 530.105  Investigations.

    Any employer in a restricted industry who requests certification to 
employ homeworkers will be investigated promptly after the issuance of 
the certificate by the Wage and Hour Division. Where such an employer is 
found to be in violation of the FLSA, and the violations are corrected 
and future compliance is promised, the firm will be reinvestigated to 
assure that full FLSA compliance has, in fact, been achieved.



     Subpart C_Denial/Revocation of Homeworker Employer Certificates

    Source: 53 FR 45723, Nov. 10, 1988, unless otherwise noted.



Sec. 530.201  Conflict with State law.

    No certificate will be issued pursuant to Sec. 530.101 of subpart B 
above authorizing the employment of homeworkers in an industry in a 
State where the Governor (or authorized representative) has advised the 
Administrator of the Wage and Hour Division in writing that the 
employment of homeworkers in such industry, as defined in paragraphs (f) 
through (k) of Sec. 530.1, is illegal by virtue of a State labor 
standards or health and safety law.



Sec. 530.202  Piece rates--work measurement.

    (a) No certificate will be issued pursuant to Sec. 530.101 of 
subpart B to an employer who pays homeworkers based on piece rates 
unless the employer establishes the piece rates for the different types 
of items produced using stop watch time studies or other work 
measurement methods. Documentation of the work measurements used to 
establish the piece rates, and the circumstances under which such 
measurements were conducted shall be retained for three years and made 
available on request to the Wage and Hour Division.
    (b) The fact that an employer bases piece rates on work measurements 
which indicate that the homeworkers would receive at least the minimum 
wage at such piece rate(s) does not relieve the employer from the Act's 
requirement that each homeworker actually receive not less than the 
minimum wage for all hours worked.



Sec. 530.203  Outstanding violations and open investigations.

    A homework certificate will not be issued or renewed by the 
Administrator if, within the previous three years, the Administrator has 
found and notified the applicant of a monetary violation of the Fair 
Labor Standards Act in an amount certain, or the Administrator has 
assessed a civil money penalty pursuant to subpart D of these 
regulations or part 579 of this chapter (child labor), and such amounts 
are unpaid, or if the applicant is the subject of a revocation 
proceeding at the time of the application for renewal, or the applicant 
is the subject of an open investigation.



Sec. 530.204  Discretionary denial or revocation.

    Where the Administrator finds that the employment of homeworkers 
under a certificate is likely to result in violations of the Fair Labor 
Standards Act, the regulations issued thereunder, or the assurances 
required by this part, the Administrator may deny or revoke the 
certificate.



Sec. 530.205  Mandatory denial or revocation.

    The Administrator shall deny or revoke a certificate in accordance 
with the following standards and for the period specified in the 
standards:
    (a) Serious wage violations. Upon a finding by the Administrator of 
a serious wage violation, a certificate shall be denied (including 
refusal to renew) or revoked for one year. A serious wage violation is 
defined as minimum wage or overtime pay violations of the Act totalling 
$10,000 or more with respect to homeworkers; or minimum wage violations 
where 10 percent or more of a certificate holder's homeworkers (but in 
all cases at least two homeworkers)

[[Page 177]]

failed to receive at least 80 percent of the minimum wage for all hours 
worked for 6 or more weeks in any 3 month period; or minimum wage or 
overtime pay violations affecting more than half of the homeworkers of 
the certificate holder for 6 or more weeks in any 3 month period. All 
other wage violations are deemed non-serious wage violations for 
purposes of this section.
    (b) Repeated wage violations. For repeated wage violations found by 
the Administrator, a certificate shall be denied or revoked for one to 
three years, depending on the seriousness and frequency of the 
violations.
    (c) Child labor violations. Upon a finding by the Administrator of a 
violation of the child labor provisions of section 12 of the Fair Labor 
Standards Act and the regulations at part 570 of this title, a 
certificate shall be denied or revoked for one year. Upon a second 
finding by the Administrator of such a violation, the certificate shall 
be denied or revoked for three years.
    (d) Failure to pay back wages or civil money penalties judged owing. 
Upon the failure of a certificate holder to pay within 60 days back 
wages or civil money penalties finally judged by a court, administrative 
law judge or other appropriate authority, as the case may be, to be owed 
by the certificate holder, or agreed to be paid by the certificate 
holder, or within such longer period as may be specified in the final 
order or agreement, a certificate shall be denied or revoked for up to 
one year or for such period as such obligation shall remain unpaid if 
longer than one year.
    (e) Failure to cooperate in an investigation. Where the 
Administrator finds obstruction of or other failure to cooperate in a 
Wage and Hour investigation by a certificate holder which impedes the 
investigation, the certificate shall be denied or revoked for a period 
of one to three years, depending on the circumstances. For purposes of 
this regulation, cooperation includes providing records upon request to 
Wage and Hour compliance officers, identifying homeworkers of the 
certificate holder, and encouraging homeworkers to make themselves 
available in connection with an investigation.
    (f) Serious recordkeeping violations. Upon a finding by the 
Administrator that a certificate holder has engaged in a serious 
recordkeeping violation, the certificate may be revoked for up to one 
year. Upon a second finding by the Administrator of a serious 
recordkeeping violation, a certificate shall be denied or revoked for 
one to three years. A serious recordkeeping violation is defined as one 
where, either through errors in or omissions of required information, 
the name and current address of homeworkers and the data which is 
necessary for the accurate determination of hours worked by or wages 
paid to homeworkers or data necessary for the computation of wages owed 
to homeworkers is unavailable with respect to 10 percent or more of the 
homeworkers.
    (g) Deliberate misstatement in an application for a certificate or 
in other documents. Upon a finding by the Administrator of a deliberate 
misstatement of a material fact in an application for a certificate, in 
payroll records, or in any other information submitted to the Wage and 
Hour Division or maintained by the employer pursuant to these 
regulations, the certificate shall be denied or revoked for one to three 
years.
    (h) Discrimination against a homeworker. Upon a finding by the 
Administrator that a certificate holder has discharged or otherwise 
discriminated against a homeworker with respect to the homeworker's 
compensation or terms, conditions, or privileges of employment because 
the homeworker engaged in protected activity, the certificate shall be 
denied or revoked for three years. Protected activity is defined as: (1) 
Any complaint of a violation of the Act to the employer, the Department 
or other appropriate authority, or (2) any action which furthers the 
enforcement of or compliance with the Act, such as giving information to 
a Wage and Hour compliance officer.



Sec. 530.206  Special circumstances.

    At the discretion of the Administrator, a certificate need not be 
denied or revoked pursuant to Sec. Sec. 530.204 or 530.205 of this 
subpart if the Administrator finds all of the following:

[[Page 178]]

    (a) The certificate holder, despite the exercise of due care, did 
not know and did not have reason to know of the violations;
    (b) All back wages and civil money penalties found by the 
Administrator to be owing by the certificate holder have been paid; and
    (c) The certificate holder has taken appropriate steps to prevent 
recurrence of the violations.



                     Subpart D_Civil Money Penalties

    Source: 53 FR 45724, Nov. 10, 1988, unless otherwise noted.



Sec. 530.301  General.

    A system of civil money penalties is established to provide a remedy 
for any violation of the FLSA related to homework (except child labor 
violations, which are subject to civil money penalties pursuant to part 
579 of this chapter), or for any violation of the homeworker regulations 
or employers' assurances pursuant to this part, which are not so serious 
as to warrant denial or revocation of a certificate. Accordingly, no 
civil money penalty will be assessed for conduct which serves as the 
basis of proposed denial or revocation of a certificate. (See subpart C 
of this part.) Civil money penalties will be assessed only against 
employers who are operating under a certificate or who are seeking 
certification.



Sec. 530.302  Amounts of civil money penalties.

    (a) A civil money penalty, not to exceed $500 per affected 
homeworker for any one violation, may be assessed for any violation of 
the Act or of this part or of the assurances given in connection with 
the issuance of a certificate.
    (b) The amount of civil money penalties shall be determined per 
affected homeworker within the limits set forth in the following 
schedule, except that no penalty shall be assessed in the case of 
violations which are deemed to be de minimis in nature:

------------------------------------------------------------------------
                                        Penalty per affected homeworker
                                     -----------------------------------
         Nature of violation                                  Repeated,
                                        Minor   Substantial  intentional
                                                              or knowing
------------------------------------------------------------------------
Recordkeeping.......................   $10-100    $100-200     $200-500
Monetary violations.................    10-100     100-200   ...........
Employment of homeworkers without a   ........     100-200      200-500
 certificate........................
Other violations of statutes,           10-100     100-200      200-500
 regulations or employer assurances.
------------------------------------------------------------------------



Sec. 530.303  Considerations in determining amounts.

    (a) In determining the amount of a penalty within any range, the 
Administrator shall take into account the presence or absence of 
circumstances such as the following:
    (1) Good faith attempts to comply with the Act or regulations;
    (2) Extent to which the violation is under the employer's control;
    (3) Non-culpable ignorance of the requirements of the Act or 
regulations;
    (4) False documents or representations; and
    (5) Exercise of due care.
    (b) An employer's financial inability to meet obligations under the 
Act shall not constitute a mitigating or extenuating circumstance.
    (c) No civil money penalty shall be assessed against an employer, 
who applies for a certificate, solely for employing homeworkers, 
provided the employer is not currently under investigation by the Wage 
and Hour Division.



Sec. 530.304  Procedures for assessment.

    Assessment of penalties pursuant to this section, including 
administrative proceedings, shall be in accordance with the procedures 
set out in subpart E of this part.



                   Subpart E_Administrative Procedures

    Source: 53 FR 45725, Nov. 10, 1988, unless otherwise noted.



Sec. 530.401  Applicability of procedures and rules.

    The procedures and rules contained herein prescribe the 
administrative

[[Page 179]]

process which will be applied with respect to a determination to deny 
(including refusal to renew) or revoke a certificate and to a 
determination to assess civil money penalties. Special rules and 
procedures for the emergency revocation of certificates are prescribed 
in Sec. 530.412 of this subpart.



Sec. 530.402  Notice of determination.

    Whenever the Administrator determines to deny or revoke a 
certificate or determines to assess a civil money penalty, the person 
affected by such determination shall be notified of the determination in 
writing, by certified mail to the last known address. The notice 
required shall:
    (a) Set forth the determination of the Administrator, including the 
specific statutory or regulatory provision or assurance violated, the 
reasons for denying or revoking a certificate, or the amount of any 
civil money penalty assessment and the reason or reasons therefor.
    (b) Set forth the right to request a hearing on such determination.
    (c) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 530.403 of this 
subpart.
    (d) Inform any affected person or persons that in lieu of formal 
proceedings there is available an alternative summary proceeding under 
Sec. 530.412 of this subpart.
    (e) Inform any affected persons that in the absence of a timely 
request for a hearing the determination of the Administrator shall 
become final and unappealable.



Sec. 530.403  Request for hearing.

    (a) Except in the case of an emergency revocation under Sec. 
530.411 of this subpart, a request for an administrative hearing on a 
determination referred to in Sec. 530.402 of this subpart shall be made 
in writing to the Administrator of the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, 
Washington DC 20210, and must be received no later than thirty (30) days 
after issuance of the notice referred to in Sec. 530.402 of this 
subpart.
    (b) No particular form is prescribed for any request for a hearing 
permitted by this part. However, any such request shall be typewritten 
or legibly written; specify the issue or issues stated in the notice of 
determination giving rise to such request; state the specific reason or 
reasons why the person requesting the hearing believes such 
determination is in error; be signed by the person making the request or 
by an authorized representative of such person; and include the address 
at which such person or authorized representative desires to receive 
further communications relating thereto.
    (c) In the case of an emergency revocation, a request for an 
administrative hearing shall be made in writing to the Chief 
Administrative Law Judge, U.S. Department of Labor, 1111 20th Street, 
NW., suite 700, Washington, DC 20036, and must be received no later than 
20 days after the issuance of the notice referred to in Sec. 530.402 of 
this subpart.



Sec. 530.404  Referral to Administrative Law Judge.

    Upon receipt of a timely request for a hearing, the request and a 
copy of the notice of administrative determination complained of, shall, 
by Order of Reference, be referred to the Chief Administrative Law 
Judge, for a determination in an administrative proceeding as provided 
herein. The notice of administrative determination and request for 
hearing shall, respectively, be given the effect of a complaint and 
answer thereto for purposes of the administrative proceedings, subject 
to any amendment that may be permitted under 29 CFR part 18.



Sec. 530.405  General.

    Except as specifically provided in these regulations, the ``Rules of 
Practice and Procedure for Administrative Hearings before the Office of 
Administrative Law Judges'' established by the Secretary at 29 CFR part 
18 shall apply to administrative proceedings described in this subpart.



Sec. 530.406  Decision and order of Administrative Law Judge.

    (a) The Administrative Law Judge shall prepare, after completion of 
the

[[Page 180]]

hearing and closing of the record, a decision on the issues referred by 
the Administrator.
    (b) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. If the Administrative 
Law Judge finds that the Administrator has established by a 
preponderance of the evidence the factual basis for the determination to 
deny or revoke a certificate or to assess a civil money penalty, that 
determination shall be affirmed. The decision shall also include an 
appropriate order which may affirm, deny, reverse, or modify, in whole 
or in part, the determination of the Administrator. The reason or 
reasons for such order shall be stated in the decision.
    (c) The decision shall be served on all parties and the Secretary in 
person or by certified mail. The decision when served by the 
Administrative Law Judge shall constitute the final order of the 
Department of Labor unless the Secretary, as provided for in Sec. 
530.407 of this subpart, determines to review the decision.



Sec. 530.407  Procedures for initiating and undertaking review.

    Any party desiring review of the decision of the Administrative Law 
Judge may petition the Secretary to review the decision. To be 
effective, such petition must be received by the Secretary within 30 
days of the date of the decision of the Administrative Law Judge. Copies 
of the petition shall be served on all parties and on the Chief 
Administrative Law Judge. If the Secretary does not issue a notice 
accepting a petition for review within 30 days after receipt of a timely 
filing of the petition, or within 30 days of the date of the decision if 
no petition has been received, the decision of the Administrative Law 
Judge shall be deemed the final agency action.



Sec. 530.408  Notice of the Secretary to review decision.

    Whenever the Secretary determines to review the decision and order 
of an Administrative Law Judge, the Secretary shall notify each party of 
the issue or issues raised; the form in which submission shall be made 
(i.e., briefs, oral argument, etc.); and, the time within which such 
presentation shall be submitted.



Sec. 530.409  Final decision of the Secretary.

    The Secretary's final decision shall be served upon all parties and 
the Administrative Law Judge, in person or by certified mail.



Sec. 530.410  Special procedures.

    In a revocation proceeding pursuant to Sec. 530.205(d) of subpart C 
of this part arising as a result of a certificate holder's failure to 
pay back wages or civil money penalties judged owing, the Administrator 
may file a motion for expedited decision, attaching to the notice, by 
affidavit or other means, evidence that a final order has been entered 
or agreement signed requiring respondent to pay back wages or civil 
money penalties and that the back wages or civil money penalties have 
not been paid. The respondent in the proceeding shall have 20 days in 
which to file a countering affidavit or other evidence. If no evidence 
countering the material assertions of the Administrator has been 
submitted within 20 days, the Administrative Law Judge shall, within 30 
days thereafter, affirm the revocation or denial of the certificate. If 
the respondent does timely file such evidence, the Administrative Law 
Judge shall schedule a hearing pursuant to Sec. 530.411(c) of this 
subpart and the case shall be subject to the expeditious procedures 
following therein.



Sec. 530.411  Emergency certificate revocation procedures.

    (a) When the Administrator determines that immediate revocation of a 
homework certificate is necessary to safeguard the payment of minimum 
wages to homeworkers, a notice of proposed emergency revocation of a 
certificate shall be sent to the certificate holder pursuant to Sec. 
530.402 of this subpart setting forth reasons requiring emergency 
revocation of the certificate.
    (b) If no request for a hearing pursuant to Sec. 530.403 of this 
subpart is received within 20 days of the date of receipt of the notice 
by the certificate

[[Page 181]]

holder, the proposed revocation of the certificate shall become final.
    (c) The Office of Administrative Law Judges shall notify the parties 
at their last known address, of the date, time and place for the 
hearing, which shall be no more than 60 days from the date of receipt of 
the request for the hearing. All parties shall be given at least 5 days 
notice of such hearing. No requests for postponement shall be granted 
except for compelling reasons.
    (d) The Administrative Law Judge shall issue a decision pursuant to 
Sec. 530.406 of this subpart within 30 days after the termination of a 
proceeding at which evidence was submitted. The decision shall be served 
on all parties and the Secretary by certified mail and shall constitute 
the final order of the Department of Labor unless the Secretary 
determines to review the decision.
    (e) Any party desiring review of the decision of the Administrative 
Law Judge may petition the Secretary to review the decision of the 
Administrative Law Judge. To be effective, such petition must be 
received by the Secretary within 30 days of the date of the decision of 
the Administrative Law Judge. If the Secretary does not issue a notice 
accepting a petition for review within 15 days after receipt of a timely 
filing of the petition, or within 30 days of the date of the decision if 
no petition is filed, the decision of the Administrative Law Judge shall 
be deemed the final agency action.
    (f) The Secretary's decision shall be issued within 60 days of the 
notice by the Secretary accepting the submission, and shall be served 
upon all parties and the Administrative Law Judge, in person or by 
certified mail.



Sec. 530.412  Alternative summary proceedings.

    In lieu of an administrative hearing before an Administrative Law 
Judge under the above procedures, an applicant or certificate holder who 
does not dispute the factual findings of the Administrator may, within 
30 days of the date of issuance of the notice of denial, revocation, or 
assessment (or within 20 days in the case of a notice of emergency 
revocation) petition the Administrator instead to reconsider the denial 
or revocation of the certificate or the assessment of civil money 
penalties. An applicant or certificate holder electing this informal 
procedure may appear before the Administrator in person, make a written 
submission to the Administrator, or both. Such reconsideration by the 
Administrator shall be available only upon waiver by the applicant or 
certificate holder of the formal hearing procedures provided by the 
above regulations.



Sec. 530.413  Certification of the record.

    Upon receipt of a complaint seeking review of a final decision 
issued pursuant to this part filed in a United States District Court, 
after the administrative remedies have been exhausted, the Chief 
Administrative Law Judge shall promptly index, certify and file with the 
appropriate United States District Court, a full, true, and correct copy 
of the entire record, including the transcript of proceedings.



Sec. 530.414  Equal Access to Justice Act.

    Proceedings under this part are not subject to the provisions of the 
Equal Access to Justice Act. In any hearing conducted pursuant to these 
regulations, Administrative Law Judges shall have no power or authority 
to award attorney fees or other litigation expenses pursuant to the 
Equal Access to Justice Act.



PART 531_WAGE PAYMENTS UNDER THE FAIR LABOR STANDARDS ACT OF 1938--
Table of Contents



                      Subpart A_Preliminary Matters

Sec.
531.1 Definitions.
531.2 Purpose and scope.

  Subpart B_Determinations of ``Reasonable Cost'' and ``Fair Value''; 
               Effects of Collective Bargaining Agreements

531.3 General determinations of ``reasonable cost''.
531.4 Making determinations of ``reasonable cost''.
531.5 Making determinations of ``fair value''.
531.6 Effects of collective bargaining agreements.
531.7 [Reserved]

[[Page 182]]

                        Subpart C_Interpretations

531.25 Introductory statement.
531.26 Relation to other laws.

                        How Payments May Be Made

531.27 Payment in cash or its equivalent required.
531.28 Restrictions applicable where payment is not in cash or its 
          equivalent.
531.29 Board, lodging, or other facilities.
531.30 ``Furnished'' to the employee.
531.31 ``Customarily'' furnished.
531.32 ``Other facilities.''
531.33 ``Reasonable cost''; ``fair value''.
531.34 Payment in scrip or similar medium not authorized.
531.35 ``Free and clear'' payment; ``kick-backs''.

           Payment Where Additions or Deductions Are Involved

531.36 Nonovertime workweeks.
531.37 Overtime workweeks.

              Payments Made to Persons Other Than Employees

531.38 Amounts deducted for taxes.
531.39 Payments to third persons pursuant to court order.
531.40 Payments to employee's assignee.

                       Subpart D_Tipped Employees

531.50 Statutory provisions with respect to tipped employees.
531.51 Conditions for taking tip credits in making wage payments.
531.52 General characteristics of ``tips.''
531.53 Payments which constitute tips.
531.54 Tip pooling.
531.55 Examples of amounts not received as tips.
531.56 ``More than $30 a month in tips.''
531.57 Receiving the minimum amount ``customarily and regularly.''
531.58 Initial and terminal months.
531.59 The tip wage credit.
531.60 Overtime payments.

    Authority: Sec. 3(m), 52 Stat. 1060; sec. 2, 75 Stat. 65; sec. 101, 
80 Stat. 830; sec. 29(B), 88 Stat. 55, Pub. L. 93-259; Pub. L. 95-151, 
29 U.S.C. 203(m) and (t); Pub. L. 104-188, Sec. 2105(b); Pub. L. 110-
28, 121 Stat. 112.

    Source: 32 FR 13575, Sept. 28, 1967, unless otherwise noted.



                      Subpart A_Preliminary Matters



Sec. 531.1  Definitions.

    (a) Administrator means the Administrator of the Wage and Hour 
Division or his authorized representative. The Secretary of Labor has 
delegated to the Administrator the functions vested in him under section 
3(m) of the Act.
    (b) Act means the Fair Labor Standards Act of 1938, as amended.



Sec. 531.2  Purpose and scope.

    (a) Section 3(m) of the Act defines the term ``wage'' to include the 
``reasonable cost'', as determined by the Secretary of Labor, to an 
employer of furnishing any employee with board, lodging, or other 
facilities, if such board, lodging, or other facilities are customarily 
furnished by the employer to his employees. In addition, section 3(m) 
gives the Secretary authority to determine the ``fair value.'' of such 
facilities on the basis of average cost to the employer or to groups of 
employers similarly situated, on average value to groups of employees, 
or other appropriate measures of ``fair value.'' Whenever so determined 
and when applicable and pertinent, the ``fair value'' of the facilities 
involved shall be includable as part of ``wages'' instead of the actual 
measure of the costs of those facilities. The section provides, however, 
that the cost of board, lodging, or other facilities shall not be 
included as part of ``wages'' if excluded therefrom by a bona fide 
collective bargaining agreement. Section 3(m) also provides a method for 
determining the wage of a tipped employee.
    (b) This part 531 contains any determinations made as to the 
``reasonable cost'' and ``fair value'' of board, lodging, or other 
facilities having general application, and describes the procedure 
whereby determinations having general or particular application may be 
made. The part also interprets generally the provisions of section 3(m) 
of the Act, including the term ``tipped employee'' as defined in section 
3(t).



  Subpart B_Determinations of ``Reasonable Cost'' and ``Fair Value''; 
               Effects of Collective Bargaining Agreements



Sec. 531.3  General determinations of ``reasonable cost.''

    (a) The term reasonable cost as used in section 3(m) of the Act is 
hereby determined to be not more than the actual

[[Page 183]]

cost to the employer of the board, lodging, or other facilities 
customarily furnished by him to his employees.
    (b) Reasonable cost does not include a profit to the employer or to 
any affiliated person.
    (c) Except whenever any determination made under Sec. 531.4 is 
applicable, the ``reasonable cost'' to the employer of furnishing the 
employee with board, lodging, or other facilities (including housing) is 
the cost of operation and maintenance including adequate depreciation 
plus a reasonable allowance (not more than 5 1/2 percent) for interest 
on the depreciated amount of capital invested by the employer: Provided, 
That if the total so computed is more than the fair rental value (or the 
fair price of the commodities or facilities offered for sale), the fair 
rental value (or the fair price of the commodities or facilities offered 
for sale) shall be the reasonable cost. The cost of operation and 
maintenance, the rate of depreciation, and the depreciated amount of 
capital invested by the employer shall be those arrived at under good 
accounting practices. As used in this paragraph, the term ``good 
accounting practices'' does not include accounting practices which have 
been rejected by the Internal Revenue Service for tax purposes, and the 
term ``depreciation'' includes obsolescence.
    (d)(1) The cost of furnishing ``facilities'' found by the 
Administrator to be primarily for the benefit or convenience of the 
employer will not be recognized as reasonable and may not therefore be 
included in computing wages.
    (2) The following is a list of facilities found by the Administrator 
to be primarily for the benefit of convenience of the employer. The list 
is intended to be illustrative rather than exclusive: (i) Tools of the 
trade and other materials and services incidental to carrying on the 
employer's business; (ii) the cost of any construction by and for the 
employer; (iii) the cost of uniforms and of their laundering, where the 
nature of the business requires the employee to wear a uniform.



Sec. 531.4  Making determinations of ``reasonable cost.''

    (a) Procedure. Upon his own motion or upon the petition of any 
interested person, the Administrator may determine generally or 
particularly the ``reasonable cost'' to an employer of furnishing any 
employee with board, lodging, or other facilities, if such board, 
lodging, or other facilities are customarily furnished by the employer 
to his employees. Notice of proposed determination shall be published in 
the Federal Register, and interested persons shall be afforded an 
opportunity to participate through submission of written data, views, or 
arguments. Such notice shall indicate whether or not an opportunity will 
be afforded to make oral presentations. Whenever the latter opportunity 
is afforded, the notice shall specify the time and place of any hearing 
and the rules governing such proceedings. Consideration shall be given 
to all relevant matter presented in the adoption of any rule.
    (b) Contents of petitions submitted by interested persons. Any 
petition by an employee or an authorized representative of employees, an 
employer or group of employers, or other interested persons for a 
determination of ``reasonable cost'' shall include the following 
information:
    (1) The name and location of the employer's or employers' place or 
places of business;
    (2) A detailed description of the board, lodging, or other 
facilities furnished by the employer or employers, whether or not these 
facilities are customarily furnished by the employer or employers, and 
whether or not they are alleged to constitute ``wages'';
    (3) The charges or deductions made for the facility or facilities by 
the employer or employers;
    (4) When the actual cost of the facility or facilities is known an 
itemized statement of such cost to the employer or employers of the 
furnished facility or facilities;
    (5) The cash wages paid;
    (6) The reason or reasons for which the determination is requested, 
including any reason or reasons why the determinations in Sec. 531.3 
should not apply; and
    (7) Whether an opportunity to make an oral presentation is 
requested; and if it is requested, the inclusion of a summary of any 
expected presentation.

[[Page 184]]



Sec. 531.5  Making determinations of ``fair value.''

    (a) Procedure. The procedures governing the making of determinations 
of the ``fair value'' of board, lodging, or other facilities for defined 
classes of employees and in defined areas under section 3(m) of the Act 
shall be the same as that prescribed in Sec. 531.4 with respect to 
determinations of ``reasonable cost.''
    (b) Petitions of interested persons. Any petition by an employee or 
an authorized representative of employees, an employer or group of 
employers, or other interested persons for a determination of ``fair 
value'' under section 3(m) of the Act shall contain the information 
required under paragraph (b) of Sec. 531.4, and in addition, to the 
extent possible, the following:
    (1) A proposed definition of the class or classes of employees 
involved;
    (2) A proposed definition of the area to which any requested 
determination would apply;
    (3) Any measure of ``fair value'' of the furnished facilities which 
may be appropriate in addition to the cost of such facilities.



Sec. 531.6  Effects of collective bargaining agreements.

    (a) The cost of board, lodging, or other facilities shall not be 
included as part of the wage paid to any employee to the extent it is 
excluded therefrom under the terms of a bona fide collective bargaining 
agreement applicable to the particular employee.
    (b) A collective bargaining agreement shall be deemed to be ``bona 
fide'' when it is made with a labor organization which has been 
certified pursuant to the provision of section 7(b)(1) or 7(b)(2) of the 
Act by the National Labor Relations Board, or which is the certified 
representative of the employees under the provisions of the National 
Labor Relations Act, as amended, or the Railway Labor Act, as amended.
    (c) Collective bargaining agreements made with representatives who 
have not been so certified will be ruled on individually upon submission 
to the Administrator.



Sec. 531.7  [Reserved]



                        Subpart C_Interpretations



Sec. 531.25  Introductory statement.

    (a) The ultimate decisions on interpretations of the Act are made by 
the courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
subpart are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (Reorganization Plan 6 of 1950, 64 Stat. 
1263; Gen. Order 45A, May 24, 1950, 15 FR 3290). The Supreme Court has 
recognized that such interpretations of this Act ``provide a practical 
guide to employers and employees as to how the office representing the 
public interest in its enforcement will seek to apply it'' and 
``constitute a body of experience and informed judgment to which courts 
and litigants may properly resort for guidance.'' Further, as stated by 
the Court: ``Good administration of the Act and good judicial 
administration alike require that the standards of public enforcement 
and those for determining private rights shall be at variance only where 
justified by very good reasons.'' (Skidmore v. Swift, 323 U.S. 134.)
    (b) The interpretations of the law contained in this subpart are 
official interpretations of the Department of Labor with respect to the 
application under described circumstances of the provisions of law which 
they discuss. The interpretations indicate, with respect to the methods 
of paying the compensation required by sections 6 and 7 and the 
application thereto of the provisions of section 3(m) of the Act, the 
construction of the law which the

[[Page 185]]

Secretary of Labor and the Administrator believe to be correct and which 
will guide them in the performance of their administrative duties under 
the Act unless and until they are otherwise directed by authoritative 
decisions of the courts or conclude, upon reexamination of an 
interpretation, that it is incorrect. Reliance may be placed upon the 
interpretations as provided in section 10 of the Portal-to-Portal Act 
(29 U.S.C. 259) so long as they remain effective and are not modified, 
amended, rescinded, or determined by judicial authority to be incorrect. 
For discussion of section 10 of the Portal-to-Portal Act, see part 790 
of this chapter.



Sec. 531.26  Relation to other laws.

    Various Federal, State, and local legislation requires the payment 
of wages in cash; prohibits or regulates the issuance of scrip, tokens, 
credit cards, ``dope checks'' or coupons; prevents or restricts payment 
of wages in services or facilities; controls company stores and 
commissaries; outlaws ``kickbacks''; restrains assignment and 
garnishment of wages; and generally governs the calculation of wages and 
the frequency and manner of paying them. Where such legislation is 
applicable and does not contravene the requirements of the Act, nothing 
in the Act, the regulations, or the interpretations announced by the 
Administrator should be taken to override or nullify the provisions of 
these laws.

                        How Payments May Be Made



Sec. 531.27  Payment in cash or its equivalent required.

    (a) Standing alone, sections 6 and 7 of the Act require payments of 
the prescribed wages, including overtime compensation, in cash or 
negotiable instrument payable at par. Section 3(m) provides, however, 
for the inclusion in the ``wage'' paid to any employee, under the 
conditions which it prescribes of the ``reasonable cost,'' or ``fair 
value'' as determined by the Secretary, of furnishing such employee with 
board, lodging, or other facilities. In addition, section 3(m) provides 
that a tipped employee's wages may consist in part of tips. It is 
section 3(m) which permits and governs the payment of wages in other 
than cash.
    (b) It should not be assumed that because the term ``wage'' does not 
appear in section 7, all overtime compensation must be paid in cash and 
may not be paid in board, lodging, or other facilities. There appears to 
be no evidence in either the statute or its legislative history which 
demonstrates the intention to provide one rule for the payment of the 
minimum wage and another rule for the payment of overtime compensation. 
The principles stated in paragraph (a) of this section are considered 
equally applicable to payment of the minimum hourly wage required by 
section 6 or of the wages required by the equal pay provisions of 
section 6(d), and to payment, when overtime is worked, of the 
compensation required by section 7. Thus, in determining whether he has 
met the minimum wage and overtime requirements of the Act, the employer 
may credit himself with the reasonable cost to himself of board, 
lodging, or other facilities customarily furnished by him to his 
employees when the cost of such board, lodging, or other facilities is 
not excluded from wages paid to such employees under the term of a bona 
fide collective bargaining agreement applicable to the employees. Unless 
the context clearly indicates otherwise, the term ``wage'' is used in 
this part to designate the amount due under either section 6 or section 
7 without distinction. It should be remembered, however, that the wage 
paid for a job, within the meaning of the equal pay provisions of 
section 6(d), may include remuneration for employment which is not 
included in the employee's regular rate of pay under section 7(e) of the 
act or is not allocable to compensation for hours of work required by 
the minimum wage provisions of section 6. Reference should be made to 
parts 778 and 800 of this chapter for a more detailed discussion of the 
applicable principles.
    (c) Tips may be credited or offset against the wages payable under 
the Act in certain circumstances, as discussed later in this subpart. 
See also the recordkeeping requirements contained in part 516 of this 
chapter.

[[Page 186]]



Sec. 531.28  Restrictions applicable where payment is not in cash
or its equivalent.

    It appears to have been the clear intention of Congress to protect 
the basic minimum wage and overtime compensation required to be paid to 
the employee by sections 6 and 7 of the Act from profiteering or 
manipulation by the employer in dealings with the employee. Section 3(m) 
of the Act and subpart B of this part accordingly prescribe certain 
limitations and safeguards which control the payment of wages in other 
than cash or its equivalent. (Special recordkeeping requirements must 
also be met. These are contained in part 516 of this chapter.) These 
provisions, it should be emphasized, do not prohibit payment of wages in 
facilities furnished either as additions to a stipulated wage or as 
items for which deductions from the stipulated wage will be made; they 
prohibit only the use of such a medium of payment to avoid the 
obligation imposed by sections 6 and 7.



Sec. 531.29  Board, lodging, or other facilities.

    Section 3(m) applies to both of the following situations: (a) Where 
board, lodging, or other facilities are furnished in addition to a 
stipulated wage; and (b) where charges for board, lodging, or other 
facilities are deducted from a stipulated wage. The use of the word 
``furnishing'' and the legislative history of section 3(m) clearly 
indicate that this section was intended to apply to all facilities 
furnished by the employer as compensation to the employee, regardless of 
whether the employer calculates charges for such facilities as additions 
to or deductions from wages.



Sec. 531.30  ``Furnished'' to the employee.

    The reasonable cost of board, lodging, or other facilities may be 
considered as part of the wage paid an employee only where customarily 
``furnished'' to the employee. Not only must the employee receive the 
benefits of the facility for which he is charged, but it is essential 
that his acceptance of the facility be voluntary and uncoerced. See 
Williams v. Atlantic Coast Line Railroad Co. (E.D.N.C.). 1 W.H. Cases 
289.



Sec. 531.31  ``Customarily'' furnished.

    The reasonable cost of board, lodging, or other facilities may be 
considered as part of the wage paid an employee only where 
``customarily'' furnished to the employee. Where such facilities are 
``furnished'' to the employee, it will be considered a sufficient 
satisfaction of this requirement if the facilities are furnished 
regularly by the employer to his employees or if the same or similar 
facilities are customarily furnished by other employees engaged in the 
same or similar trade, business, or occupation in the same or similar 
communities. See Walling v. Alaska Pacific Consolidated Mining Co., 152 
F. (2d) 812 (C.A. 9), cert. denied, 327 U.S. 803; Southern Pacific Co. 
v. Joint Council (C.A. 9) 7 W.H. Cases 536. Facilities furnished in 
violation of any Federal, State, or local law, ordinance or prohibition 
will not be considered facilities ``customarily'' furnished.



Sec. 531.32  ``Other facilities.''

    (a) ``Other facilities,'' as used in this section, must be something 
like board or lodging. The following items have been deemed to be within 
the meaning of the term: Meals furnished at company restaurants or 
cafeterias or by hospitals, hotels, or restaurants to their employees; 
meals, dormitory rooms, and tuition furnished by a college to its 
student employees; housing furnished for dwelling purposes; general 
merchandise furnished at company stores and commissaries (including 
articles of food, clothing, and household effects); fuel (including 
coal, kerosene, firewood, and lumber slabs), electricity, water, and gas 
furnished for the noncommercial personal use of the employee; 
transportation furnished employees between their homes and work where 
the travel time does not constitute hours worked compensable under the 
Act and the transportation is not an incident of and necessary to the 
employment.
    (b) Shares of capital stock in an employer company, representing 
only a

[[Page 187]]

contingent proprietary right to participate in profits and losses or in 
the assets of the company at some future dissolution date, do not appear 
to be ``facilities'' within the meaning of the section.
    (c) It should also be noted that under Sec. 531.3(d)(1), the cost 
of furnishing ``facilities'' which are primarily for the benefit or 
convenience of the employer will not be recognized as reasonable and may 
not therefore be included in computing wages. Items in addition to those 
set forth in Sec. 531.3 which have been held to be primarily for the 
benefit or convenience of the employer and are not therefore to be 
considered ``facilities'' within the meaning of section 3(m) include: 
Safety caps, explosives, and miners' lamps (in the mining industry); 
electric power (used for commercial production in the interest of the 
employer); company police and guard protection; taxes and insurance on 
the employer's buildings which are not used for lodgings furnished to 
the employee; ``dues'' to chambers of commerce and other organizations 
used, for example, to repay subsidies given to the employer to locate 
his factory in a particular community; transportation charges where such 
transportation is an incident of and necessary to the employment (as in 
the case of maintenance-of-way employees of a railroad); charges for 
rental of uniforms where the nature of the business requires the 
employee to wear a uniform; medical services and hospitalization which 
the employer is bound to furnish under workmen's compensation acts, or 
similar Federal, State, or local law. On the other hand, meals are 
always regarded as primarily for the benefit and convenience of the 
employee. For a discussion of reimbursement for expenses such as 
``supper money,'' ``travel expenses,'' etc., see Sec. 778.217 of this 
chapter.



Sec. 531.33  ``Reasonable cost''; ``fair value.''

    (a) Section 3(m) directs the Administrator to determine ``the 
reasonable cost * * * to the employer of furnishing * * * facilities'' 
to the employee, and in addition it authorizes him to determine ``the 
fair value'' of such facilities for defined classes of employees and in 
defined areas, which may be used in lieu of the actual measure of the 
cost of such facilities in ascertaining the ``wages'' paid to any 
employee. Subpart B contains three methods whereby an employer may 
ascertain whether any furnished facilities are a part of ``wages'' 
within the meaning of section 3(m): (1) An employer may calculate the 
``reasonable cost'' of facilities in accordance with the requirements 
set forth in Sec. 531.3; (2) an employer may request that a 
determination of ``reasonable cost'' be made, including a determination 
having particular application; and (3) an employer may request that a 
determination of ``fair value'' of the furnished facilities be made to 
be used in lieu of the actual measure of the cost of the furnished 
facilities in assessing the ``wages'' paid to an employee.
    (b) ``Reasonable cost,'' as determined in Sec. 531.3 ``does not 
include a profit to the employer or to any affiliated person.'' Although 
the question of affiliation is one of fact, where any of the following 
persons operate company stores or commissaries or furnish lodging or 
other facilities they will normally be deemed ``affiliated persons'' 
within the meaning of the regulations: (1) A spouse, child, parent, or 
other close relative of the employer; (2) a partner, officer, or 
employee in the employer company or firm; (3) a parent, subsidiary, or 
otherwise closely connected corporation; and (4) an agent of the 
employer.



Sec. 531.34  Payment in scrip or similar medium not authorized.

    Scrip, tokens, credit cards, ``dope checks,'' coupons, and similar 
devices are not proper mediums of payment under the Act. They are 
neither cash nor ``other facilities'' within the meaning of section 
3(m). However, the use of such devices for the purpose of conveniently 
and accurately measuring wages earned or facilities furnished during a 
single pay period is not prohibited. Piecework earnings, for example, 
may be calculated by issuing tokens (representing a fixed amount of work 
performed) to the employee, which are redeemed at the end of the pay 
period for cash. The tokens do not discharge the obligation of the 
employer to pay

[[Page 188]]

wages, but they may enable him to determine the amount of cash which is 
due to the employee. Similarly, board, lodging, or other facilities may 
be furnished during the pay period in exchange for scrip or coupons 
issued prior to the end of the pay period. The reasonable cost of 
furnishing such facilities may be included as part of the wage, since 
payment is being made not in scrip but in facilities furnished under the 
requirements of section 3(m). But the employer may not credit himself 
with ``unused scrip'' or ``coupons outstanding'' on the pay day in 
determining whether he has met the requirements of the Act because such 
scrip or coupons have not been redeemed for cash or facilities within 
the pay period. Similarly, the employee cannot be charged with the loss 
or destruction of scrip or tokens.



Sec. 531.35  ``Free and clear'' payment; ``kickbacks.''

    Whether in cash or in facilities, ``wages'' cannot be considered to 
have been paid by the employer and received by the employee unless they 
are paid finally and unconditionally or ``free and clear.'' The wage 
requirements of the Act will not be met where the employee ``kicks-
back'' directly or indirectly to the employer or to another person for 
the employer's benefit the whole or part of the wage delivered to the 
employee. This is true whether the ``kick-back'' is made in cash or in 
other than cash. For example, if it is a requirement of the employer 
that the employee must provide tools of the trade which will be used in 
or are specifically required for the performance of the employer's 
particular work, there would be a violation of the Act in any workweek 
when the cost of such tools purchased by the employee cuts into the 
minimum or overtime wages required to be paid him under the Act. See 
also in this connection, Sec. 531.32(c).

           Payment Where Additions or Deductions Are Involved



Sec. 531.36  Nonovertime workweeks.

    (a) When no overtime is worked by the employees, section 3(m) and 
this part apply only to the applicable minimum wage for all hours 
worked. To illustrate, where an employee works 40 hours a week at a cash 
wage rate of at least the applicable minimum wage and is paid that 
amount free and clear at the end of the workweek, and in addition is 
furnished facilities, no consideration need be given to the question of 
whether such facilities meet the requirements of section 3(m) and this 
part, since the employee has received in cash the applicable minimum 
wage for all hours worked. Similarly, where an employee is employed at a 
rate in excess of the applicable minimum wage and during a particular 
workweek works 40 hours for which the employee receives at least the 
minimum wage free and clear, the employer having deducted from wages for 
facilities furnished, whether such deduction meets the requirement of 
section 3(m) and subpart B of this part need not be considered, since 
the employee is still receiving, after the deduction has been made, a 
cash wage of at least the minimum wage for each hour worked. Deductions 
for board, lodging, or other facilities may be made in nonovertime 
workweeks even if they reduce the cash wage below the minimum wage, 
provided the prices charged do not exceed the ``reasonable cost'' of 
such facilities. When such items are furnished the employee at a profit, 
the deductions from wages in weeks in which no overtime is worked are 
considered to be illegal only to the extent that the profit reduces the 
wage (which includes the ``reasonable cost'' of the facilities) below 
the required minimum wage. Facilities must be measured by the 
requirements of section 3(m) and this part to determine if the employee 
has received the applicable minimum wage in cash or in facilities which 
may be legitimately included in ``wages'' payable under the Act.
    (b) Deductions for articles such as tools, miners' lamps, dynamite 
caps, and other items which do not constitute ``board, lodging, or other 
facilities'' may likewise be made in nonovertime workweeks if the 
employee nevertheless received the required minimum wage in cash free 
and clear; but to the extent that they reduce the wages of the employee 
in any such

[[Page 189]]

workweek below the minimum required by the Act, they are illegal.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18855, Apr. 5, 2011]



Sec. 531.37  Overtime workweeks.

    (a) Section 7 requires that the employee receive compensation for 
overtime hours at ``a rate of not less than one and one-half times the 
regular rate at which he is employed.'' When overtime is worked by an 
employee who receives the whole or part of his or her wage in facilities 
and it becomes necessary to determine the portion of wages represented 
by facilities, all such facilities must be measured by the requirements 
of section 3(m) and subpart B of this part. It is the Administrator's 
opinion that deductions may be made, however, on the same basis in an 
overtime workweek as in nonovertime workweeks (see Sec. 531.36), if 
their purpose and effect are not to evade the overtime requirements of 
the Act or other law, providing the amount deducted does not exceed the 
amount which could be deducted if the employee had only worked the 
maximum number of straight-time hours during the workweek. Deductions in 
excess of this amount for such articles as tools or other articles which 
are not ``facilities'' within the meaning of the Act are illegal in 
overtime workweeks as well as in nonovertime workweeks. There is no 
limit on the amount which may be deducted for ``board, lodging, or other 
facilities'' in overtime workweeks (as in workweeks when no overtime is 
worked), provided that these deductions are made only for the 
``reasonable cost'' of the items furnished. These principles assume a 
situation where bona fide deductions are made for particular items in 
accordance with the agreement or understanding of the parties. If the 
situation is solely one of refusal or failure to pay the full amount of 
wages required by section 7, these principles have no application. 
Deductions made only in overtime workweeks, or increases in the prices 
charged for articles or services during overtime workweeks will be 
scrutinized to determine whether they are manipulations to evade the 
overtime requirements of the Act.
    (b) Where deductions are made from the stipulated wage of an 
employee, the regular rate of pay is arrived at on the basis of the 
stipulated wage before any deductions have been made. Where board, 
lodging, or other facilities are customarily furnished as additions to a 
cash wage, the reasonable cost of the facilities to the employer must be 
considered as part of the employee's regular rate of pay. See Walling v. 
Alaska Pacific Consolidated Mining Co., 152 F.2d 812 (9th Cir. 1945), 
cert. denied, 327 U.S. 803.

[76 FR 18855, Apr. 5, 2011]

              Payments Made to Persons Other Than Employees



Sec. 531.38  Amounts deducted for taxes.

    Taxes which are assessed against the employee and which are 
collected by the employer and forwarded to the appropriate governmental 
agency may be included as ``wages'' although they do not technically 
constitute ``board, lodging, or other facilities'' within the meaning of 
section 3(m). This principle is applicable to the employee's share of 
social security and State unemployment insurance taxes, as well as other 
Federal, State, or local taxes, levies, and assessments. No deduction 
may be made for any tax or share of a tax which the law requires to be 
borne by the employer.



Sec. 531.39  Payments to third persons pursuant to court order.

    (a) Where an employer is legally obliged, as by order of a court of 
competent and appropriate jurisdiction, to pay a sum for the benefit or 
credit of the employee to a creditor of the employee, trustee, or other 
third party, under garnishment, wage attachment, trustee process, or 
bankruptcy proceeding, deduction from wages of the actual sum so paid is 
not prohibited: Provided, That neither the employer nor any person 
acting in his behalf or interest derives any profit or benefit from the 
transaction. In such case, payment to the third person for the benefit 
and credit of the employee will be considered equivalent, for the 
purposes of the Act, to payment to the employee.

[[Page 190]]

    (b) The amount of any individual's earnings withheld by means of any 
legal or equitable procedure for the payment of any debt may not exceed 
the restriction imposed by section 303(a), title III, Restriction on 
Garnishment, of the Consumer Credit Protection Act (82 Stat. 163, 164; 
15 U.S.C. 1671 et seq.). The application of title III is discussed in 
part 870 of this chapter. When the payment to a third person of moneys 
withheld pursuant to a court order under which the withholdings exceeds 
that permitted by the CCPA, the excess will not be considered equivalent 
to payment of wages to the employee for purpose of the Fair Labor 
Standards Act.

[35 FR 10757, July 2, 1970]



Sec. 531.40  Payments to employee's assignee.

    (a) Where an employer is directed by a voluntary assignment or order 
of his employee to pay a sum for the benefit of the employee to a 
creditor, donee, or other third party, deduction from wages of the 
actual sum so paid is not prohibited: Provided, That neither the 
employer nor any person acting in his behalf or interest, directly or 
indirectly, derives any profit or benefit from the transaction. In such 
case, payment to the third person for the benefit and credit of the 
employee will be considered equivalent, for purposes of the Act, to 
payment to the employee.
    (b) No payment by the employer to a third party will be recognized 
as a valid payment of compensation required under the Act where it 
appears that such payment was part of a plan or arrangement to evade or 
circumvent the requirements of section 3(m) or subpart B of this part. 
For the protection of both employer and employee it is suggested that 
full and adequate record of all assignments and orders be kept and 
preserved and that provisions of the applicable State law with respect 
to signing, sealing, witnessing, and delivery be observed.
    (c) Under the principles stated in paragraphs (a) and (b) of this 
section, employers have been permitted to treat as payments to employees 
for purposes of the Act sums paid at the employees' direction to third 
persons for the following purposes: Sums paid, as authorized by the 
employee, for the purchase in his behalf of U.S. savings stamps or U.S. 
savings bonds; union dues paid pursuant to a collective bargaining 
agreement with bona fide representatives of the employees and as 
permitted by law; employees' store accounts with merchants wholly 
independent of the employer; insurance premiums (paid to independent 
insurance companies where the employer is under no obligation to supply 
the insurance and derives, directly or indirectly, no benefit or profit 
from it); voluntary contributions to churches and charitable, fraternal, 
athletic, and social organizations, or societies from which the employer 
receives no profit or benefit directly or indirectly.



                       Subpart D_Tipped Employees



Sec. 531.50  Statutory provisions with respect to tipped employees.

    (a) With respect to tipped employees, section 3(m) provides that, in 
determining the wage an employer is required to pay a tipped employee, 
the amount paid such employee by the employee's employer shall be an 
amount equal to--
    (1) the cash wage paid such employee which for purposes of such 
determination shall be not less than the cash wage required to be paid 
such an employee on August 20, 1996 [i.e., $2.13]; and
    (2) an additional amount on account of the tips received by such 
employee which amount is equal to the difference between the wage 
specified in paragraph (1) and the wage in effect under section 
206(a)(1) of this title.
    (b) ``Tipped employee'' is defined in section 3(t) of the Act as 
follows: Tipped employee means any employee engaged in an occupation in 
which he customarily and regularly receives more than $30 a month in 
tips.

[76 FR 18855, Apr. 5, 2011]



Sec. 531.51  Conditions for taking tip credits in making wage payments.

    The wage credit permitted on account of tips under section 3(m) may 
be

[[Page 191]]

taken only with respect to wage payments made under the Act to those 
employees whose occupations in the workweeks for which such payments are 
made are those of ``tipped employees'' as defined in section 3(t). Under 
section 3(t), the occupation of the employee must be one ``in which he 
customarily and regularly receives more than $30 a month in tips.'' To 
determine whether a tip credit may be taken in paying wages to a 
particular employee it is necessary to know what payments constitute 
``tips,'' whether the employee receives ``more than $30 a month'' in 
such payments in the occupation in which he is engaged, and whether in 
such occupation he receives these payments in such amount ``customarily 
and regularly.'' The principles applicable to a resolution of these 
questions are discussed in the following sections.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18855, Apr. 5, 2011]



Sec. 531.52  General characteristics of ``tips.''

    A tip is a sum presented by a customer as a gift or gratuity in 
recognition of some service performed for him. It is to be distinguished 
from payment of a charge, if any, made for the service. Whether a tip is 
to be given, and its amount, are matters determined solely by the 
customer, who has the right to determine who shall be the recipient of 
the gratuity. Tips are the property of the employee whether or not the 
employer has taken a tip credit under section 3(m) of the FLSA. The 
employer is prohibited from using an employee's tips, whether or not it 
has taken a tip credit, for any reason other than that which is 
statutorily permitted in section 3(m): As a credit against its minimum 
wage obligations to the employee, or in furtherance of a valid tip pool. 
Only tips actually received by an employee as money belonging to the 
employee may be counted in determining whether the person is a ``tipped 
employee'' within the meaning of the Act and in applying the provisions 
of section 3(m) which govern wage credits for tips.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18855, Apr. 5, 2011]



Sec. 531.53  Payments which constitute tips.

    In addition to cash sums presented by customers which an employee 
keeps as his own, tips received by an employee include, within the 
meaning of the Act, amounts paid by bank check or other negotiable 
instrument payble at par and amounts transferred by the employer to the 
employee pursuant to directions from credit customers who designate 
amounts to be added to their bills as tips. Special gifts in forms other 
than money or its equivalent as above described such as theater tickets, 
passes, or merchandise, are not counted as tips received by the employee 
for purposes of the Act.



Sec. 531.54  Tip pooling.

    Where employees practice tip splitting, as where waiters give a 
portion of their tips to the busboys, both the amounts retained by the 
waiters and those given the busboys are considered tips of the 
individuals who retain them, in applying the provisions of section 3(m) 
and 3(t). Similarly, where an accounting is made to an employer for his 
information only or in furtherance of a pooling arrangement whereby the 
employer redistributes the tips to the employees upon some basis to 
which they have mutually agreed among themselves, the amounts received 
and retained by each individual as his own are counted as his tips for 
purposes of the Act. Section 3(m) does not impose a maximum contribution 
percentage on valid mandatory tip pools, which can only include those 
employees who customarily and regularly receive tips. However, an 
employer must notify its employees of any required tip pool contribution 
amount, may only take a tip credit for the amount of tips each employee 
ultimately receives, and may not retain any of the employees' tips for 
any other purpose.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18856, Apr. 5, 2011]



Sec. 531.55  Examples of amounts not received as tips.

    (a) A compulsory charge for service, such as 15 percent of the 
amount of the bill, imposed on a customer by an employer's 
establishment, is not a tip

[[Page 192]]

and, even if distributed by the employer to its employees, cannot be 
counted as a tip received in applying the provisions of section 3(m) and 
3(t). Similarly, where negotiations between a hotel and a customer for 
banquet facilities include amounts for distribution to employees of the 
hotel, the amounts so distributed are not counted as tips received.
    (b) As stated above, service charges and other similar sums which 
become part of the employer's gross receipts are not tips for the 
purposes of the Act. Where such sums are distributed by the employer to 
its employees, however, they may be used in their entirety to satisfy 
the monetary requirements of the Act.

[76 FR 18856, Apr. 5, 2011]



Sec. 531.56  ``More than $30 a month in tips.''

    (a) In general. An employee who receives tips, within the meaning of 
the Act, is a ``tipped employee'' under the definition in section 3(t) 
when, in the occupation in which he is engaged, the amounts he receives 
as tips customarily and regularly total ``more than $30 a month.'' An 
employee employed in an occupation in which the tips he receives meet 
this minimum standard is a ``tipped employee'' for whom the wage credit 
provided by section 3(m) may be taken in computing the compensation due 
him under the Act for employment in such occupation, whether he is 
employed in it full time or part time. An employee employed full time or 
part time in an occupation in which he does not receive more than $30 a 
month in tips customarily and regularly is not a ``tipped employee'' 
within the meaning of the Act and must receive the full compensation 
required by its provisions in cash or allowable facilities without any 
deduction for tips received under the provisions of section 3(m).
    (b) Month. The definition of tipped employee does not require that 
the calendar month be used in determining whether more than $30 a month 
is customarily and regularly received as tips. Any appropriate recurring 
monthly period beginning on the same day of the calendar month may be 
used.
    (c) Individual tip receipts are controlling. An employee must 
himself customarily and regularly receive more than $30 a month in tips 
in order to qualify as a tipped employee. The fact that he is part of a 
group which has a record of receiving more than $20 a month in tips will 
not qualify him. For example, a waitress who is newly hired will not be 
considered a tipped employee merely because the other waitresses in the 
establishment receive tips in the requisite amount. For the method of 
applying the test in initial and terminal months of employment, see 
Sec. 531.58.
    (d) Significance of minimum monthly tip receipts. More than $30 a 
month in tips customarily and regularly received by the employee is a 
minimum standard that must be met before any wage credit for tips is 
determined under section 3(m). It does not govern or limit the 
determination of the appropriate amount of wage credit under section 
3(m) that may be taken for tips under section 6(a)(1) (tip credit equals 
the difference between the minimum wage required by section 6(a)(1) and 
$2.13 per hour).
    (e) Dual jobs. In some situations an employee is employed in a dual 
job, as for example, where a maintenance man in a hotel also serves as a 
waiter. In such a situation the employee, if he customarily and 
regularly receives at least $30 a month in tips for his work as a 
waiter, is a tipped employee only with respect to his employment as a 
waiter. He is employed in two occupations, and no tip credit can be 
taken for his hours of employment in his occupation of maintenance man. 
Such a situation is distinguishable from that of a waitress who spends 
part of her time cleaning and setting tables, toasting bread, making 
coffee and occasionally washing dishes or glasses. It is likewise 
distinguishable from the counterman who also prepares his own short 
orders or who, as part of a group of countermen, takes a turn as a short 
order cook for the group. Such related duties in an occupation that is a 
tipped occupation need not by themselves be directed toward producing 
tips.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18855, Apr. 5, 2011]

[[Page 193]]



Sec. 531.57  Receiving the minimum amount ``customarily and regularly.''

    The employee must receive more than $30 a month in tips 
``customarily and regularly'' in the occupation in which he is engaged 
in order to qualify as a tipped employee under section 3(t). If it is 
known that he always receives more than the stipulated amount each 
month, as may be the case with many employees in occupations such as 
those of waiters, bellhops, taxicab drivers, barbers, or beauty 
operators, the employee will qualify and the tip credit provisions of 
section 3(m) may be applied. On the other hand, an employee who only 
occasionally or sporadically receives tips totaling more than $30 a 
month, such as at Christmas or New Years when customers may be more 
generous than usual, will not be deemed a tipped employee. The phrase 
``customarily and regularly'' signifies a frequency which must be 
greater than occasional, but which may be less than constant. If an 
employee is in an occupation in which he normally and recurrently 
receives more than $30 a month in tips, he will be considered a tipped 
employee even though occasionally because of sickness, vacation, 
seasonal fluctuations or the like, he fails to receive more than $20 in 
tips in a particular month.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18855, Apr. 5, 2011]



Sec. 531.58  Initial and terminal months.

    An exception to the requirement that an employee, whether full-time, 
part-time, permanent or temporary, will qualify as a tipped employee 
only if he customarily and regularly receives more than $30 a month in 
tips is made in the case of initial and terminal months of employment. 
In such months the purpose of the provision for tipped employees would 
seem fulfilled if qualification as a tipped employee is based on his 
receipt of tips in the particular week or weeks of such month at a rate 
in excess of $30 a month, where the employee has worked less than a 
month because he started or terminated employment during the month.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18855, Apr. 5, 2011]



Sec. 531.59  The tip wage credit.

    (a) In determining compliance with the wage payment requirements of 
the Act, under the provisions of section 3(m) the amount paid to a 
tipped employee by an employer is increased on account of tips by an 
amount equal to the formula set forth in the statute (minimum wage 
required by section 6(a)(1) of the Act minus $2.13), provided that the 
employer satisfies all the requirements of section 3(m). This tip credit 
is in addition to any credit for board, lodging, or other facilities 
which may be allowable under section 3(m).
    (b) As indicated in Sec. 531.51, the tip credit may be taken only 
for hours worked by the employee in an occupation in which the employee 
qualifies as a ``tipped employee.'' Pursuant to section 3(m), an 
employer is not eligible to take the tip credit unless it has informed 
its tipped employees in advance of the employer's use of the tip credit 
of the provisions of section 3(m) of the Act, i.e.: The amount of the 
cash wage that is to be paid to the tipped employee by the employer; the 
additional amount by which the wages of the tipped employee are 
increased on account of the tip credit claimed by the employer, which 
amount may not exceed the value of the tips actually received by the 
employee; that all tips received by the tipped employee must be retained 
by the employee except for a valid tip pooling arrangement limited to 
employees who customarily and regularly receive tips; and that the tip 
credit shall not apply to any employee who has not been informed of 
these requirements in this section. The credit allowed on account of 
tips may be less than that permitted by statute (minimum wage required 
by section 6(a)(1) minus $2.13); it cannot be more. In order for the 
employer to claim the maximum tip credit, the employer must demonstrate 
that the employee received at least that amount in actual tips. If the 
employee received less than the maximum tip credit amount in tips, the 
employer is required to pay the balance so that the employee receives at 
least the minimum wage with the defined combination of wages and tips. 
With the exception of tips contributed to a valid tip pool as described 
in

[[Page 194]]

Sec. 531.54, the tip credit provisions of section 3(m) also require 
employers to permit employees to retain all tips received by the 
employee.

[76 FR 18856, Apr. 5, 2011]



Sec. 531.60  Overtime payments.

    When overtime is worked by a tipped employee who is subject to the 
overtime pay provisions of the Act, the employee's regular rate of pay 
is determined by dividing the employee's total remuneration for 
employment (except statutory exclusions) in any workweek by the total 
number of hours actually worked by the employee in that workweek for 
which such compensation was paid. (See part 778 of this chapter for a 
detailed discussion of overtime compensation under the Act.) In 
accordance with section 3(m), a tipped employee's regular rate of pay 
includes the amount of tip credit taken by the employer per hour (not in 
excess of the minimum wage required by section 6(a)(1) minus $2.13), the 
reasonable cost or fair value of any facilities furnished to the 
employee by the employer, as authorized under section 3(m) and this part 
531, and the cash wages including commissions and certain bonuses paid 
by the employer. Any tips received by the employee in excess of the tip 
credit need not be included in the regular rate. Such tips are not 
payments made by the employer to the employee as remuneration for 
employment within the meaning of the Act.

[32 FR 13575, Sept. 28, 1967, as amended at 76 FR 18856, Apr. 5, 2011]



PART 536_AREA OF PRODUCTION--Table of Contents



Sec.
536.1-536.2 [Reserved]
536.3 ``Area of production'' as used in section 13(b)(14) of the Fair 
          Labor Standards Act.

    Authority: Sec. 13(a)(17), 52 Stat. 1067, as amended, sec. 9, 75 
Stat. 71, as amended, sec. 204(b), 80 Stat. 835; 29 U.S.C. 213(b)(14).

    Source: 27 FR 400, Jan. 13, 1962, unless otherwise noted.



Sec. Sec. 536.1-536.2   [Reserved]



Sec. 536.3  ``Area of production'' as used in section 13(b)(14) of
the Fair Labor Standards Act.

    (a) An employee employed by an establishment commonly recognized as 
a country elevator and having not more than five employees (including 
such an establishment which sells products and services used in the 
operation of a farm) shall be regarded as employed within the ``area of 
production,'' within the meaning of section 13(b)(14) of the Fair Labor 
Standards Act, if the establishment by which he is employed is located 
in the open country or in a rural community and 95 percent of the 
agricultural commodities received by the establishment for storage or 
for market come from normal rural sources of supply within the following 
air-line distances from the establishment:
    (1) With respect to grain and soybeans--50 miles;
    (2) With respect to any other agricultural commodities--20 miles.
    (b) For the purpose of this section:
    (1) ``Open country or rural community'' shall not include any city, 
town, or urban place of 2,500 or greater population or any area within:
    (i) One air-line mile of the city, town, or urban place with a 
population of 2,500 up to by not including 50,000, or
    (ii) Three air-line miles of any city, town, or urban place with a 
population of 50,000 up to but not including 500,000, or
    (iii) Five air-line miles of any city with a population of 500,000 
or greater, according to the latest available United States Census.
    (2) The commodities shall be considered to come from ``normal rural 
sources of supply'' within the specified distances from the 
establishment if they are received: (i) From farms within such specified 
distances, or (ii) from farm assemblers or other establishments through 
which the commodity customarily moves, which are within such specified 
distances and located in the open country or in a rural community, or 
(iii) from farm assemblers or other establishments not located in the 
open country or in a rural community provided it can be demonstrated 
that

[[Page 195]]

the commodities were produced on farms within such specified distances.
    (3) The period for determining whether 95 percent of the commodities 
are received from normal rural sources of supply shall be the last 
preceding calendar month in which operations were carried on for two 
workweeks or more, except that until such time as an establishment has 
operated for such a calendar month the period shall be the time during 
which it has been in operation.
    (4) The percentage of commodities received from normal rural sources 
of supply within the specified distances shall be determined by weight, 
volume or other physical unit of measure, except that dollar value shall 
be used if different commodities received in the establishment are 
customarily measured in physical units that are not comparable.

(Sec. 13(a) (17), 52 Stat. 1067, as amended, sec. 9, 75 Stat. 71; 29 
U.S.C. 213 (a) (17))

[27 FR 400, Jan. 13, 1962, as amended at 71 FR 16666, Apr. 3, 2006]



PART 541_DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE,
ADMINISTRATIVE, PROFESSIONAL, COMPUTER AND OUTSIDE SALES EMPLOYEES--

Table of Contents



                      Subpart A_General Regulations

Sec.
541.0 Introductory statement.
541.1 Terms used in regulations.
541.2 Job titles insufficient.
541.3 Scope of the section 13(a)(1) exemptions.
541.4 Other laws and collective bargaining agreements.

                      Subpart B_Executive Employees

541.100 General rule for executive employees.
541.101 Business owner.
541.102 Management.
541.103 Department or subdivision.
541.104 Two or more other employees.
541.105 Particular weight.
541.106 Concurrent duties.

                   Subpart C_Administrative Employees

541.200 General rule for administrative employees.
541.201 Directly related to management or general business operations.
541.202 Discretion and independent judgment.
541.203 Administrative exemption examples.
541.204 Educational establishments.

                    Subpart D_Professional Employees

541.300 General rule for professional employees.
541.301 Learned professionals.
541.302 Creative professionals.
541.303 Teachers.
541.304 Practice of law or medicine.

                      Subpart E_Computer Employees

541.400 General rule for computer employees.
541.401 Computer manufacture and repair.
541.402 Executive and administrative computer employees.

                    Subpart F_Outside Sales Employees

541.500 General rule for outside sales employees.
541.501 Making sales or obtaining orders.
541.502 Away from employer's place of business.
541.503 Promotion work.
541.504 Drivers who sell.

                      Subpart G_Salary Requirements

541.600 Amount of salary required.
541.601 Highly compensated employees.
541.602 Salary basis.
541.603 Effect of improper deductions from salary.
541.604 Minimum guarantee plus extras.
541.605 Fee basis.
541.606 Board, lodging or other facilities.

           Subpart H_Definitions And Miscellaneous Provisions

541.700 Primary duty.
541.701 Customarily and regularly.
541.702 Exempt and nonexempt work.
541.703 Directly and closely related.
541.704 Use of manuals.
541.705 Trainees.
541.706 Emergencies.
541.707 Occasional tasks.
541.708 Combination exemptions.
541.709 Motion picture producing industry.
541.710 Employees of public agencies.

    Authority: 29 U.S.C. 213; Public Law 101-583, 104 Stat. 2871; 
Reorganization Plan No. 6 of 1950 (3 CFR 1945-53 Comp. p. 1004); 
Secretary's Order No. 4-2001 (66 FR 29656).

    Source: 69 FR 22260, Apr. 23, 2004, unless otherwise noted.

[[Page 196]]



                      Subpart A_General Regulations



Sec. 541.0  Introductory statement.

    (a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, 
provides an exemption from the Act's minimum wage and overtime 
requirements for any employee employed in a bona fide executive, 
administrative, or professional capacity (including any employee 
employed in the capacity of academic administrative personnel or teacher 
in elementary or secondary schools), or in the capacity of an outside 
sales employee, as such terms are defined and delimited from time to 
time by regulations of the Secretary, subject to the provisions of the 
Administrative Procedure Act. Section 13(a)(17) of the Act provides an 
exemption from the minimum wage and overtime requirements for computer 
systems analysts, computer programmers, software engineers, and other 
similarly skilled computer employees.
    (b) The requirements for these exemptions are contained in this part 
as follows: executive employees, subpart B; administrative employees, 
subpart C; professional employees, subpart D; computer employees, 
subpart E; outside sales employees, subpart F. Subpart G contains 
regulations regarding salary requirements applicable to most of the 
exemptions, including salary levels and the salary basis test. Subpart G 
also contains a provision for exempting certain highly compensated 
employees. Subpart H contains definitions and other miscellaneous 
provisions applicable to all or several of the exemptions.
    (c) Effective July 1, 1972, the Fair Labor Standards Act was amended 
to include within the protection of the equal pay provisions those 
employees exempt from the minimum wage and overtime pay provisions as 
bona fide executive, administrative, and professional employees 
(including any employee employed in the capacity of academic 
administrative personnel or teacher in elementary or secondary schools), 
or in the capacity of an outside sales employee under section 13(a)(1) 
of the Act. The equal pay provisions in section 6(d) of the Fair Labor 
Standards Act are administered and enforced by the United States Equal 
Employment Opportunity Commission.



Sec. 541.1  Terms used in regulations.

    Act means the Fair Labor Standards Act of 1938, as amended.
    Administrator means the Administrator of the Wage and Hour Division, 
United States Department of Labor. The Secretary of Labor has delegated 
to the Administrator the functions vested in the Secretary under 
sections 13(a)(1) and 13(a)(17) of the Fair Labor Standards Act.



Sec. 541.2  Job titles insufficient.

    A job title alone is insufficient to establish the exempt status of 
an employee. The exempt or nonexempt status of any particular employee 
must be determined on the basis of whether the employee's salary and 
duties meet the requirements of the regulations in this part.



Sec. 541.3  Scope of the section 13(a)(1) exemptions.

    (a) The section 13(a)(1) exemptions and the regulations in this part 
do not apply to manual laborers or other ``blue collar'' workers who 
perform work involving repetitive operations with their hands, physical 
skill and energy. Such nonexempt ``blue collar'' employees gain the 
skills and knowledge required for performance of their routine manual 
and physical work through apprenticeships and on-the-job training, not 
through the prolonged course of specialized intellectual instruction 
required for exempt learned professional employees such as medical 
doctors, architects and archeologists. Thus, for example, non-management 
production-line employees and non-management employees in maintenance, 
construction and similar occupations such as carpenters, electricians, 
mechanics, plumbers, iron workers, craftsmen, operating engineers, 
longshoremen, construction workers and laborers are entitled to minimum 
wage and overtime premium pay under the Fair Labor Standards Act, and 
are not exempt under the regulations in this part no matter how highly 
paid they might be.
    (b)(1) The section 13(a)(1) exemptions and the regulations in this 
part also do

[[Page 197]]

not apply to police officers, detectives, deputy sheriffs, state 
troopers, highway patrol officers, investigators, inspectors, 
correctional officers, parole or probation officers, park rangers, fire 
fighters, paramedics, emergency medical technicians, ambulance 
personnel, rescue workers, hazardous materials workers and similar 
employees, regardless of rank or pay level, who perform work such as 
preventing, controlling or extinguishing fires of any type; rescuing 
fire, crime or accident victims; preventing or detecting crimes; 
conducting investigations or inspections for violations of law; 
performing surveillance; pursuing, restraining and apprehending 
suspects; detaining or supervising suspected and convicted criminals, 
including those on probation or parole; interviewing witnesses; 
interrogating and fingerprinting suspects; preparing investigative 
reports; or other similar work.
    (2) Such employees do not qualify as exempt executive employees 
because their primary duty is not management of the enterprise in which 
the employee is employed or a customarily recognized department or 
subdivision thereof as required under Sec. 541.100. Thus, for example, 
a police officer or fire fighter whose primary duty is to investigate 
crimes or fight fires is not exempt under section 13(a)(1) of the Act 
merely because the police officer or fire fighter also directs the work 
of other employees in the conduct of an investigation or fighting a 
fire.
    (3) Such employees do not qualify as exempt administrative employees 
because their primary duty is not the performance of work directly 
related to the management or general business operations of the employer 
or the employer's customers as required under Sec. 541.200.
    (4) Such employees do not qualify as exempt professionals because 
their primary duty is not the performance of work requiring knowledge of 
an advanced type in a field of science or learning customarily acquired 
by a prolonged course of specialized intellectual instruction or the 
performance of work requiring invention, imagination, originality or 
talent in a recognized field of artistic or creative endeavor as 
required under Sec. 541.300. Although some police officers, fire 
fighters, paramedics, emergency medical technicians and similar 
employees have college degrees, a specialized academic degree is not a 
standard prerequisite for employment in such occupations.



Sec. 541.4  Other laws and collective bargaining agreements.

    The Fair Labor Standards Act provides minimum standards that may be 
exceeded, but cannot be waived or reduced. Employers must comply, for 
example, with any Federal, State or municipal laws, regulations or 
ordinances establishing a higher minimum wage or lower maximum workweek 
than those established under the Act. Similarly, employers, on their own 
initiative or under a collective bargaining agreement with a labor 
union, are not precluded by the Act from providing a wage higher than 
the statutory minimum, a shorter workweek than the statutory maximum, or 
a higher overtime premium (double time, for example) than provided by 
the Act. While collective bargaining agreements cannot waive or reduce 
the Act's protections, nothing in the Act or the regulations in this 
part relieves employers from their contractual obligations under 
collective bargaining agreements.



                      Subpart B_Executive Employees



Sec. 541.100  General rule for executive employees.

    (a) The term ``employee employed in a bona fide executive capacity'' 
in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or other 
facilities;
    (2) Whose primary duty is management of the enterprise in which the 
employee is employed or of a customarily recognized department or 
subdivision thereof;
    (3) Who customarily and regularly directs the work of two or more 
other employees; and

[[Page 198]]

    (4) Who has the authority to hire or fire other employees or whose 
suggestions and recommendations as to the hiring, firing, advancement, 
promotion or any other change of status of other employees are given 
particular weight.
    (b) The phrase ``salary basis'' is defined at Sec. 541.602; 
``board, lodging or other facilities'' is defined at Sec. 541.606; 
``primary duty'' is defined at Sec. 541.700; and ``customarily and 
regularly'' is defined at Sec. 541.701.



Sec. 541.101  Business owner.

    The term ``employee employed in a bona fide executive capacity'' in 
section 13(a)(1) of the Act also includes any employee who owns at least 
a bona fide 20-percent equity interest in the enterprise in which the 
employee is employed, regardless of whether the business is a corporate 
or other type of organization, and who is actively engaged in its 
management. The term ``management'' is defined in Sec. 541.102. The 
requirements of Subpart G (salary requirements) of this part do not 
apply to the business owners described in this section.



Sec. 541.102  Management.

    Generally, ``management'' includes, but is not limited to, 
activities such as interviewing, selecting, and training of employees; 
setting and adjusting their rates of pay and hours of work; directing 
the work of employees; maintaining production or sales records for use 
in supervision or control; appraising employees' productivity and 
efficiency for the purpose of recommending promotions or other changes 
in status; handling employee complaints and grievances; disciplining 
employees; planning the work; determining the techniques to be used; 
apportioning the work among the employees; determining the type of 
materials, supplies, machinery, equipment or tools to be used or 
merchandise to be bought, stocked and sold; controlling the flow and 
distribution of materials or merchandise and supplies; providing for the 
safety and security of the employees or the property; planning and 
controlling the budget; and monitoring or implementing legal compliance 
measures.



Sec. 541.103  Department or subdivision.

    (a) The phrase ``a customarily recognized department or 
subdivision'' is intended to distinguish between a mere collection of 
employees assigned from time to time to a specific job or series of jobs 
and a unit with permanent status and function. A customarily recognized 
department or subdivision must have a permanent status and a continuing 
function. For example, a large employer's human resources department 
might have subdivisions for labor relations, pensions and other 
benefits, equal employment opportunity, and personnel management, each 
of which has a permanent status and function.
    (b) When an enterprise has more than one establishment, the employee 
in charge of each establishment may be considered in charge of a 
recognized subdivision of the enterprise.
    (c) A recognized department or subdivision need not be physically 
within the employer's establishment and may move from place to place. 
The mere fact that the employee works in more than one location does not 
invalidate the exemption if other factors show that the employee is 
actually in charge of a recognized unit with a continuing function in 
the organization.
    (d) Continuity of the same subordinate personnel is not essential to 
the existence of a recognized unit with a continuing function. An 
otherwise exempt employee will not lose the exemption merely because the 
employee draws and supervises workers from a pool or supervises a team 
of workers drawn from other recognized units, if other factors are 
present that indicate that the employee is in charge of a recognized 
unit with a continuing function.



Sec. 541.104  Two or more other employees.

    (a) To qualify as an exempt executive under Sec. 541.100, the 
employee must customarily and regularly direct the work of two or more 
other employees. The phrase ``two or more other employees'' means two 
full-time employees or their equivalent. One full-time and two half-time 
employees, for example, are equivalent to two full-time employees. Four 
half-time employees are also equivalent.

[[Page 199]]

    (b) The supervision can be distributed among two, three or more 
employees, but each such employee must customarily and regularly direct 
the work of two or more other full-time employees or the equivalent. 
Thus, for example, a department with five full-time nonexempt workers 
may have up to two exempt supervisors if each such supervisor 
customarily and regularly directs the work of two of those workers.
    (c) An employee who merely assists the manager of a particular 
department and supervises two or more employees only in the actual 
manager's absence does not meet this requirement.
    (d) Hours worked by an employee cannot be credited more than once 
for different executives. Thus, a shared responsibility for the 
supervision of the same two employees in the same department does not 
satisfy this requirement. However, a full-time employee who works four 
hours for one supervisor and four hours for a different supervisor, for 
example, can be credited as a half-time employee for both supervisors.



Sec. 541.105  Particular weight.

    To determine whether an employee's suggestions and recommendations 
are given ``particular weight,'' factors to be considered include, but 
are not limited to, whether it is part of the employee's job duties to 
make such suggestions and recommendations; the frequency with which such 
suggestions and recommendations are made or requested; and the frequency 
with which the employee's suggestions and recommendations are relied 
upon. Generally, an executive's suggestions and recommendations must 
pertain to employees whom the executive customarily and regularly 
directs. It does not include an occasional suggestion with regard to the 
change in status of a co-worker. An employee's suggestions and 
recommendations may still be deemed to have ``particular weight'' even 
if a higher level manager's recommendation has more importance and even 
if the employee does not have authority to make the ultimate decision as 
to the employee's change in status.



Sec. 541.106  Concurrent duties.

    (a) Concurrent performance of exempt and nonexempt work does not 
disqualify an employee from the executive exemption if the requirements 
of Sec. 541.100 are otherwise met. Whether an employee meets the 
requirements of Sec. 541.100 when the employee performs concurrent 
duties is determined on a case-by-case basis and based on the factors 
set forth in Sec. 541.700. Generally, exempt executives make the 
decision regarding when to perform nonexempt duties and remain 
responsible for the success or failure of business operations under 
their management while performing the nonexempt work. In contrast, the 
nonexempt employee generally is directed by a supervisor to perform the 
exempt work or performs the exempt work for defined time periods. An 
employee whose primary duty is ordinary production work or routine, 
recurrent or repetitive tasks cannot qualify for exemption as an 
executive.
    (b) For example, an assistant manager in a retail establishment may 
perform work such as serving customers, cooking food, stocking shelves 
and cleaning the establishment, but performance of such nonexempt work 
does not preclude the exemption if the assistant manager's primary duty 
is management. An assistant manager can supervise employees and serve 
customers at the same time without losing the exemption. An exempt 
employee can also simultaneously direct the work of other employees and 
stock shelves.
    (c) In contrast, a relief supervisor or working supervisor whose 
primary duty is performing nonexempt work on the production line in a 
manufacturing plant does not become exempt merely because the nonexempt 
production line employee occasionally has some responsibility for 
directing the work of other nonexempt production line employees when, 
for example, the exempt supervisor is unavailable. Similarly, an 
employee whose primary duty is to work as an electrician is not an 
exempt executive even if the employee also directs the work of other 
employees on the job site, orders parts and materials for the job, and 
handles requests from the prime contractor.

[[Page 200]]



                   Subpart C_Administrative Employees



Sec. 541.200  General rule for administrative employees.

    (a) The term ``employee employed in a bona fide administrative 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary or fee basis at a rate of not less than 
$455 per week (or $380 per week, if employed in American Samoa by 
employers other than the Federal Government), exclusive of board, 
lodging or other facilities;
    (2) Whose primary duty is 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
    (3) Whose primary duty includes the exercise of discretion and 
independent judgment with respect to matters of significance.
    (b) The term ``salary basis'' is defined at Sec. 541.602; ``fee 
basis'' is defined at Sec. 541.605; ``board, lodging or other 
facilities'' is defined at Sec. 541.606; and ``primary duty'' is 
defined at Sec. 541.700.



Sec. 541.201  Directly related to management or general business operations.

    (a) To qualify for the administrative exemption, an employee's 
primary duty must be the performance of work directly related to the 
management or general business operations of the employer or the 
employer's customers. The phrase ``directly related to the management or 
general business operations'' refers to the type of work performed by 
the employee. To meet this requirement, an employee must perform work 
directly related to assisting with the running or servicing of the 
business, as distinguished, for example, from working on a manufacturing 
production line or selling a product in a retail or service 
establishment.
    (b) Work directly related to management or general business 
operations includes, but is not limited to, work in functional areas 
such as tax; finance; accounting; budgeting; auditing; insurance; 
quality control; purchasing; procurement; advertising; marketing; 
research; safety and health; personnel management; human resources; 
employee benefits; labor relations; public relations, government 
relations; computer network, internet and database administration; legal 
and regulatory compliance; and similar activities. Some of these 
activities may be performed by employees who also would qualify for 
another exemption.
    (c) An employee may qualify for the administrative exemption if the 
employee's primary duty is the performance of work directly related to 
the management or general business operations of the employer's 
customers. Thus, for example, employees acting as advisers or 
consultants to their employer's clients or customers (as tax experts or 
financial consultants, for example) may be exempt.



Sec. 541.202  Discretion and independent judgment.

    (a) To qualify for the administrative exemption, an employee's 
primary duty must include the exercise of discretion and independent 
judgment with respect to matters of significance. In general, the 
exercise of discretion and independent judgment involves the comparison 
and the evaluation of possible courses of conduct, and acting or making 
a decision after the various possibilities have been considered. The 
term ``matters of significance'' refers to the level of importance or 
consequence of the work performed.
    (b) The phrase ``discretion and independent judgment'' must be 
applied in the light of all the facts involved in the particular 
employment situation in which the question arises. Factors to consider 
when determining whether an employee exercises discretion and 
independent judgment with respect to matters of significance include, 
but are not limited to: whether the employee has authority to formulate, 
affect, interpret, or implement management policies or operating 
practices; whether the employee carries out major assignments in 
conducting the operations of the business; whether the employee performs 
work that affects business operations to a substantial degree, even if 
the employee's assignments are related to operation of a particular 
segment of the business; whether the employee has

[[Page 201]]

authority to commit the employer in matters that have significant 
financial impact; whether the employee has authority to waive or deviate 
from established policies and procedures without prior approval; whether 
the employee has authority to negotiate and bind the company on 
significant matters; whether the employee provides consultation or 
expert advice to management; whether the employee is involved in 
planning long- or short-term business objectives; whether the employee 
investigates and resolves matters of significance on behalf of 
management; and whether the employee represents the company in handling 
complaints, arbitrating disputes or resolving grievances.
    (c) The exercise of discretion and independent judgment implies that 
the employee has authority to make an independent choice, free from 
immediate direction or supervision. However, employees can exercise 
discretion and independent judgment even if their decisions or 
recommendations are reviewed at a higher level. Thus, the term 
``discretion and independent judgment'' does not require that the 
decisions made by an employee have a finality that goes with unlimited 
authority and a complete absence of review. The decisions made as a 
result of the exercise of discretion and independent judgment may 
consist of recommendations for action rather than the actual taking of 
action. The fact that an employee's decision may be subject to review 
and that upon occasion the decisions are revised or reversed after 
review does not mean that the employee is not exercising discretion and 
independent judgment. For example, the policies formulated by the credit 
manager of a large corporation may be subject to review by higher 
company officials who may approve or disapprove these policies. The 
management consultant who has made a study of the operations of a 
business and who has drawn a proposed change in organization may have 
the plan reviewed or revised by superiors before it is submitted to the 
client.
    (d) An employer's volume of business may make it necessary to employ 
a number of employees to perform the same or similar work. The fact that 
many employees perform identical work or work of the same relative 
importance does not mean that the work of each such employee does not 
involve the exercise of discretion and independent judgment with respect 
to matters of significance.
    (e) The exercise of discretion and independent judgment must be more 
than the use of skill in applying well-established techniques, 
procedures or specific standards described in manuals or other sources. 
See also Sec. 541.704 regarding use of manuals. The exercise of 
discretion and independent judgment also does not include clerical or 
secretarial work, recording or tabulating data, or performing other 
mechanical, repetitive, recurrent or routine work. An employee who 
simply tabulates data is not exempt, even if labeled as a 
``statistician.''
    (f) An employee does not exercise discretion and independent 
judgment with respect to matters of significance merely because the 
employer will experience financial losses if the employee fails to 
perform the job properly. For example, a messenger who is entrusted with 
carrying large sums of money does not exercise discretion and 
independent judgment with respect to matters of significance even though 
serious consequences may flow from the employee's neglect. Similarly, an 
employee who operates very expensive equipment does not exercise 
discretion and independent judgment with respect to matters of 
significance merely because improper performance of the employee's 
duties may cause serious financial loss to the employer.



Sec. 541.203  Administrative exemption examples.

    (a) Insurance claims adjusters generally meet the duties 
requirements for the administrative exemption, whether they work for an 
insurance company or other type of company, if their duties include 
activities such as interviewing insureds, witnesses and physicians; 
inspecting property damage; reviewing factual information to prepare 
damage estimates; evaluating and making recommendations regarding 
coverage of claims; determining liability and total

[[Page 202]]

value of a claim; negotiating settlements; and making recommendations 
regarding litigation.
    (b) Employees in the financial services industry generally meet the 
duties requirements for the administrative exemption if their duties 
include work such as collecting and analyzing information regarding the 
customer's income, assets, investments or debts; determining which 
financial products best meet the customer's needs and financial 
circumstances; advising the customer regarding the advantages and 
disadvantages of different financial products; and marketing, servicing 
or promoting the employer's financial products. However, an employee 
whose primary duty is selling financial products does not qualify for 
the administrative exemption.
    (c) An employee who leads a team of other employees assigned to 
complete major projects for the employer (such as purchasing, selling or 
closing all or part of the business, negotiating a real estate 
transaction or a collective bargaining agreement, or designing and 
implementing productivity improvements) generally meets the duties 
requirements for the administrative exemption, even if the employee does 
not have direct supervisory responsibility over the other employees on 
the team.
    (d) An executive assistant or administrative assistant to a business 
owner or senior executive of a large business generally meets the duties 
requirements for the administrative exemption if such employee, without 
specific instructions or prescribed procedures, has been delegated 
authority regarding matters of significance.
    (e) Human resources managers who formulate, interpret or implement 
employment policies and management consultants who study the operations 
of a business and propose changes in organization generally meet the 
duties requirements for the administrative exemption. However, personnel 
clerks who ``screen'' applicants to obtain data regarding their minimum 
qualifications and fitness for employment generally do not meet the 
duties requirements for the administrative exemption. Such personnel 
clerks typically will reject all applicants who do not meet minimum 
standards for the particular job or for employment by the company. The 
minimum standards are usually set by the exempt human resources manager 
or other company officials, and the decision to hire from the group of 
qualified applicants who do meet the minimum standards is similarly made 
by the exempt human resources manager or other company officials. Thus, 
when the interviewing and screening functions are performed by the human 
resources manager or personnel manager who makes the hiring decision or 
makes recommendations for hiring from the pool of qualified applicants, 
such duties constitute exempt work, even though routine, because this 
work is directly and closely related to the employee's exempt functions.
    (f) Purchasing agents with authority to bind the company on 
significant purchases generally meet the duties requirements for the 
administrative exemption even if they must consult with top management 
officials when making a purchase commitment for raw materials in excess 
of the contemplated plant needs.
    (g) Ordinary inspection work generally does not meet the duties 
requirements for the administrative exemption. Inspectors normally 
perform specialized work along standardized lines involving well-
established techniques and procedures which may have been catalogued and 
described in manuals or other sources. Such inspectors rely on 
techniques and skills acquired by special training or experience. They 
have some leeway in the performance of their work but only within 
closely prescribed limits.
    (h) Employees usually called examiners or graders, such as employees 
that grade lumber, generally do not meet the duties requirements for the 
administrative exemption. Such employees usually perform work involving 
the comparison of products with established standards which are 
frequently catalogued. Often, after continued reference to the written 
standards, or through experience, the employee acquires sufficient 
knowledge so that reference to written standards is unnecessary. The 
substitution of the employee's memory for a manual of standards does not 
convert the character of the

[[Page 203]]

work performed to exempt work requiring the exercise of discretion and 
independent judgment.
    (i) Comparison shopping performed by an employee of a retail store 
who merely reports to the buyer the prices at a competitor's store does 
not qualify for the administrative exemption. However, the buyer who 
evaluates such reports on competitor prices to set the employer's prices 
generally meets the duties requirements for the administrative 
exemption.
    (j) Public sector inspectors or investigators of various types, such 
as fire prevention or safety, building or construction, health or 
sanitation, environmental or soils specialists and similar employees, 
generally do not meet the duties requirements for the administrative 
exemption because their work typically does not involve work directly 
related to the management or general business operations of the 
employer. Such employees also do not qualify for the administrative 
exemption because their work involves the use of skills and technical 
abilities in gathering factual information, applying known standards or 
prescribed procedures, determining which procedure to follow, or 
determining whether prescribed standards or criteria are met.



Sec. 541.204  Educational establishments.

    (a) The term ``employee employed in a bona fide administrative 
capacity'' in section 13(a)(1) of the Act also includes employees:
    (1) Compensated for services on a salary or fee basis at a rate of 
not less than $455 per week (or $380 per week, if employed in American 
Samoa by employers other than the Federal Government) exclusive of 
board, lodging or other facilities, or on a salary basis which is at 
least equal to the entrance salary for teachers in the educational 
establishment by which employed; and
    (2) Whose primary duty is performing administrative functions 
directly related to academic instruction or training in an educational 
establishment or department or subdivision thereof.
    (b) The term ``educational establishment'' means an elementary or 
secondary school system, an institution of higher education or other 
educational institution. Sections 3(v) and 3(w) of the Act define 
elementary and secondary schools as those day or residential schools 
that provide elementary or secondary education, as determined under 
State law. Under the laws of most States, such education includes the 
curriculums in grades 1 through 12; under many it includes also the 
introductory programs in kindergarten. Such education in some States may 
also include nursery school programs in elementary education and junior 
college curriculums in secondary education. The term ``other educational 
establishment'' includes special schools for mentally or physically 
disabled or gifted children, regardless of any classification of such 
schools as elementary, secondary or higher. Factors relevant in 
determining whether post-secondary career programs are educational 
institutions include whether the school is licensed by a state agency 
responsible for the state's educational system or accredited by a 
nationally recognized accrediting organization for career schools. Also, 
for purposes of the exemption, no distinction is drawn between public 
and private schools, or between those operated for profit and those that 
are not for profit.
    (c) The phrase ``performing administrative functions directly 
related to academic instruction or training'' means work related to the 
academic operations and functions in a school rather than to 
administration along the lines of general business operations. Such 
academic administrative functions include operations directly in the 
field of education. Jobs relating to areas outside the educational field 
are not within the definition of academic administration.
    (1) Employees engaged in academic administrative functions include: 
the superintendent or other head of an elementary or secondary school 
system, and any assistants, responsible for administration of such 
matters as curriculum, quality and methods of instructing, measuring and 
testing the learning potential and achievement of students, establishing 
and maintaining academic and grading standards, and other aspects of the 
teaching program; the principal and any vice-principals

[[Page 204]]

responsible for the operation of an elementary or secondary school; 
department heads in institutions of higher education responsible for the 
administration of the mathematics department, the English department, 
the foreign language department, etc.; academic counselors who perform 
work such as administering school testing programs, assisting students 
with academic problems and advising students concerning degree 
requirements; and other employees with similar responsibilities.
    (2) Jobs relating to building management and maintenance, jobs 
relating to the health of the students, and academic staff such as 
social workers, psychologists, lunch room managers or dietitians do not 
perform academic administrative functions. Although such work is not 
considered academic administration, such employees may qualify for 
exemption under Sec. 541.200 or under other sections of this part, 
provided the requirements for such exemptions are met.



                    Subpart D_Professional Employees



Sec. 541.300  General rule for professional employees.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Compensated on a salary or fee basis at a rate of not less than 
$455 per week (or $380 per week, if employed in American Samoa by 
employers other than the Federal Government), exclusive of board, 
lodging, or other facilities; and
    (2) Whose primary duty is the performance of work:
    (i) Requiring knowledge of an advanced type in a field of science or 
learning customarily acquired by a prolonged course of specialized 
intellectual instruction; or
    (ii) Requiring invention, imagination, originality or talent in a 
recognized field of artistic or creative endeavor.
    (b) The term ``salary basis'' is defined at Sec. 541.602; ``fee 
basis'' is defined at Sec. 541.605; ``board, lodging or other 
facilities'' is defined at Sec. 541.606; and ``primary duty'' is 
defined at Sec. 541.700.



Sec. 541.301  Learned professionals.

    (a) To qualify for the learned professional exemption, an employee's 
primary duty must be the performance of work requiring advanced 
knowledge in a field of science or learning customarily acquired by a 
prolonged course of specialized intellectual instruction. This primary 
duty test includes three elements:
    (1) The employee must perform work requiring advanced knowledge;
    (2) The advanced knowledge must be in a field of science or 
learning; and
    (3) The advanced knowledge must be customarily acquired by a 
prolonged course of specialized intellectual instruction.
    (b) The phrase ``work requiring advanced knowledge'' means work 
which is predominantly intellectual in character, and which includes 
work requiring the consistent exercise of discretion and judgment, as 
distinguished from performance of routine mental, manual, mechanical or 
physical work. An employee who performs work requiring advanced 
knowledge generally uses the advanced knowledge to analyze, interpret or 
make deductions from varying facts or circumstances. Advanced knowledge 
cannot be attained at the high school level.
    (c) The phrase ``field of science or learning'' includes the 
traditional professions of law, medicine, theology, accounting, 
actuarial computation, engineering, architecture, teaching, various 
types of physical, chemical and biological sciences, pharmacy and other 
similar occupations that have a recognized professional status as 
distinguished from the mechanical arts or skilled trades where in some 
instances the knowledge is of a fairly advanced type, but is not in a 
field of science or learning.
    (d) The phrase ``customarily acquired by a prolonged course of 
specialized intellectual instruction'' restricts the exemption to 
professions where specialized academic training is a standard 
prerequisite for entrance into the profession. The best prima facie 
evidence that an employee meets this requirement is possession of the 
appropriate

[[Page 205]]

academic degree. However, the word ``customarily'' means that the 
exemption is also available to employees in such professions who have 
substantially the same knowledge level and perform substantially the 
same work as the degreed employees, but who attained the advanced 
knowledge through a combination of work experience and intellectual 
instruction. Thus, for example, the learned professional exemption is 
available to the occasional lawyer who has not gone to law school, or 
the occasional chemist who is not the possessor of a degree in 
chemistry. However, the learned professional exemption is not available 
for occupations that customarily may be performed with only the general 
knowledge acquired by an academic degree in any field, with knowledge 
acquired through an apprenticeship, or with training in the performance 
of routine mental, manual, mechanical or physical processes. The learned 
professional exemption also does not apply to occupations in which most 
employees have acquired their skill by experience rather than by 
advanced specialized intellectual instruction.
    (e)(1) Registered or certified medical technologists. Registered or 
certified medical technologists who have successfully completed three 
academic years of pre-professional study in an accredited college or 
university plus a fourth year of professional course work in a school of 
medical technology approved by the Council of Medical Education of the 
American Medical Association generally meet the duties requirements for 
the learned professional exemption.
    (2) Nurses. Registered nurses who are registered by the appropriate 
State examining board generally meet the duties requirements for the 
learned professional exemption. Licensed practical nurses and other 
similar health care employees, however, generally do not qualify as 
exempt learned professionals because possession of a specialized 
advanced academic degree is not a standard prerequisite for entry into 
such occupations.
    (3) Dental hygienists. Dental hygienists who have successfully 
completed four academic years of pre-professional and professional study 
in an accredited college or university approved by the Commission on 
Accreditation of Dental and Dental Auxiliary Educational Programs of the 
American Dental Association generally meet the duties requirements for 
the learned professional exemption.
    (4) Physician assistants. Physician assistants who have successfully 
completed four academic years of pre-professional and professional 
study, including graduation from a physician assistant program 
accredited by the Accreditation Review Commission on Education for the 
Physician Assistant, and who are certified by the National Commission on 
Certification of Physician Assistants generally meet the duties 
requirements for the learned professional exemption.
    (5) Accountants. Certified public accountants generally meet the 
duties requirements for the learned professional exemption. In addition, 
many other accountants who are not certified public accountants but 
perform similar job duties may qualify as exempt learned professionals. 
However, accounting clerks, bookkeepers and other employees who normally 
perform a great deal of routine work generally will not qualify as 
exempt professionals.
    (6) Chefs. Chefs, such as executive chefs and sous chefs, who have 
attained a four-year specialized academic degree in a culinary arts 
program, generally meet the duties requirements for the learned 
professional exemption. The learned professional exemption is not 
available to cooks who perform predominantly routine mental, manual, 
mechanical or physical work.
    (7) Paralegals. Paralegals and legal assistants generally do not 
qualify as exempt learned professionals because an advanced specialized 
academic degree is not a standard prerequisite for entry into the field. 
Although many paralegals possess general four-year advanced degrees, 
most specialized paralegal programs are two-year associate degree 
programs from a community college or equivalent institution. However, 
the learned professional exemption is available for paralegals who 
possess advanced specialized degrees in other professional fields and 
apply advanced knowledge in that field in the

[[Page 206]]

performance of their duties. For example, if a law firm hires an 
engineer as a paralegal to provide expert advice on product liability 
cases or to assist on patent matters, that engineer would qualify for 
exemption.
    (8) Athletic trainers. Athletic trainers who have successfully 
completed four academic years of pre-professional and professional study 
in a specialized curriculum accredited by the Commission on 
Accreditation of Allied Health Education Programs and who are certified 
by the Board of Certification of the National Athletic Trainers 
Association Board of Certification generally meet the duties 
requirements for the learned professional exemption.
    (9) Funeral directors or embalmers. Licensed funeral directors and 
embalmers who are licensed by and working in a state that requires 
successful completion of four academic years of pre-professional and 
professional study, including graduation from a college of mortuary 
science accredited by the American Board of Funeral Service Education, 
generally meet the duties requirements for the learned professional 
exemption.
    (f) The areas in which the professional exemption may be available 
are expanding. As knowledge is developed, academic training is broadened 
and specialized degrees are offered in new and diverse fields, thus 
creating new specialists in particular fields of science or learning. 
When an advanced specialized degree has become a standard requirement 
for a particular occupation, that occupation may have acquired the 
characteristics of a learned profession. Accrediting and certifying 
organizations similar to those listed in paragraphs (e)(1), (e)(3), 
(e)(4), (e)(8) and (e)(9) of this section also may be created in the 
future. Such organizations may develop similar specialized curriculums 
and certification programs which, if a standard requirement for a 
particular occupation, may indicate that the occupation has acquired the 
characteristics of a learned profession.



Sec. 541.302  Creative professionals.

    (a) To qualify for the creative professional exemption, an 
employee's primary duty must be the performance of work requiring 
invention, imagination, originality or talent in a recognized field of 
artistic or creative endeavor as opposed to routine mental, manual, 
mechanical or physical work. The exemption does not apply to work which 
can be produced by a person with general manual or intellectual ability 
and training.
    (b) To qualify for exemption as a creative professional, the work 
performed must be ``in a recognized field of artistic or creative 
endeavor.'' This includes such fields as music, writing, acting and the 
graphic arts.
    (c) The requirement of ``invention, imagination, originality or 
talent'' distinguishes the creative professions from work that primarily 
depends on intelligence, diligence and accuracy. The duties of employees 
vary widely, and exemption as a creative professional depends on the 
extent of the invention, imagination, originality or talent exercised by 
the employee. Determination of exempt creative professional status, 
therefore, must be made on a case-by-case basis. This requirement 
generally is met by actors, musicians, composers, conductors, and 
soloists; painters who at most are given the subject matter of their 
painting; cartoonists who are merely told the title or underlying 
concept of a cartoon and must rely on their own creative ability to 
express the concept; essayists, novelists, short-story writers and 
screen-play writers who choose their own subjects and hand in a finished 
piece of work to their employers (the majority of such persons are, of 
course, not employees but self-employed); and persons holding the more 
responsible writing positions in advertising agencies. This requirement 
generally is not met by a person who is employed as a copyist, as an 
``animator'' of motion-picture cartoons, or as a retoucher of 
photographs, since such work is not properly described as creative in 
character.
    (d) Journalists may satisfy the duties requirements for the creative 
professional exemption if their primary duty is work requiring 
invention, imagination, originality or talent, as opposed to work which 
depends primarily on intelligence, diligence and accuracy. Employees of 
newspapers, magazines, television and other media are not exempt

[[Page 207]]

creative professionals if they only collect, organize and record 
information that is routine or already public, or if they do not 
contribute a unique interpretation or analysis to a news product. Thus, 
for example, newspaper reporters who merely rewrite press releases or 
who write standard recounts of public information by gathering facts on 
routine community events are not exempt creative professionals. 
Reporters also do not qualify as exempt creative professionals if their 
work product is subject to substantial control by the employer. However, 
journalists may qualify as exempt creative professionals if their 
primary duty is performing on the air in radio, television or other 
electronic media; conducting investigative interviews; analyzing or 
interpreting public events; writing editorials, opinion columns or other 
commentary; or acting as a narrator or commentator.



Sec. 541.303  Teachers.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act also means any employee with a 
primary duty of teaching, tutoring, instructing or lecturing in the 
activity of imparting knowledge and who is employed and engaged in this 
activity as a teacher in an educational establishment by which the 
employee is employed. The term ``educational establishment'' is defined 
in Sec. 541.204(b).
    (b) Exempt teachers include, but are not limited to: Regular 
academic teachers; teachers of kindergarten or nursery school pupils; 
teachers of gifted or disabled children; teachers of skilled and semi-
skilled trades and occupations; teachers engaged in automobile driving 
instruction; aircraft flight instructors; home economics teachers; and 
vocal or instrumental music instructors. Those faculty members who are 
engaged as teachers but also spend a considerable amount of their time 
in extracurricular activities such as coaching athletic teams or acting 
as moderators or advisors in such areas as drama, speech, debate or 
journalism are engaged in teaching. Such activities are a recognized 
part of the schools' responsibility in contributing to the educational 
development of the student.
    (c) The possession of an elementary or secondary teacher's 
certificate provides a clear means of identifying the individuals 
contemplated as being within the scope of the exemption for teaching 
professionals. Teachers who possess a teaching certificate qualify for 
the exemption regardless of the terminology (e.g., permanent, 
conditional, standard, provisional, temporary, emergency, or unlimited) 
used by the State to refer to different kinds of certificates. However, 
private schools and public schools are not uniform in requiring a 
certificate for employment as an elementary or secondary school teacher, 
and a teacher's certificate is not generally necessary for employment in 
institutions of higher education or other educational establishments. 
Therefore, a teacher who is not certified may be considered for 
exemption, provided that such individual is employed as a teacher by the 
employing school or school system.
    (d) The requirements of Sec. 541.300 and Subpart G (salary 
requirements) of this part do not apply to the teaching professionals 
described in this section.



Sec. 541.304  Practice of law or medicine.

    (a) The term ``employee employed in a bona fide professional 
capacity'' in section 13(a)(1) of the Act also shall mean:
    (1) Any employee who is the holder of a valid license or certificate 
permitting the practice of law or medicine or any of their branches and 
is actually engaged in the practice thereof; and
    (2) Any employee who is the holder of the requisite academic degree 
for the general practice of medicine and is engaged in an internship or 
resident program pursuant to the practice of the profession.
    (b) In the case of medicine, the exemption applies to physicians and 
other practitioners licensed and practicing in the field of medical 
science and healing or any of the medical specialties practiced by 
physicians or practitioners. The term ``physicians'' includes medical 
doctors including general practitioners and specialists, osteopathic 
physicians (doctors of osteopathy), podiatrists, dentists (doctors

[[Page 208]]

of dental medicine), and optometrists (doctors of optometry or bachelors 
of science in optometry).
    (c) Employees engaged in internship or resident programs, whether or 
not licensed to practice prior to commencement of the program, qualify 
as exempt professionals if they enter such internship or resident 
programs after the earning of the appropriate degree required for the 
general practice of their profession.
    (d) The requirements of Sec. 541.300 and subpart G (salary 
requirements) of this part do not apply to the employees described in 
this section.



                      Subpart E_Computer Employees



Sec. 541.400  General rule for computer employees.

    (a) Computer systems analysts, computer programmers, software 
engineers or other similarly skilled workers in the computer field are 
eligible for exemption as professionals under section 13(a)(1) of the 
Act and under section 13(a)(17) of the Act. Because job titles vary 
widely and change quickly in the computer industry, job titles are not 
determinative of the applicability of this exemption.
    (b) The section 13(a)(1) exemption applies to any computer employee 
compensated on a salary or fee basis at a rate of not less than $455 per 
week (or $380 per week, if employed in American Samoa by employers other 
than the Federal Government), exclusive of board, lodging or other 
facilities, and the section 13(a)(17) exemption applies to any computer 
employee compensated on an hourly basis at a rate not less than $27.63 
an hour. In addition, under either section 13(a)(1) or section 13(a)(17) 
of the Act, the exemptions apply only to computer employees whose 
primary duty consists of:
    (1) The application of systems analysis techniques and procedures, 
including consulting with users, to determine hardware, software or 
system functional specifications;
    (2) The design, development, documentation, analysis, creation, 
testing or modification of computer systems or programs, including 
prototypes, based on and related to user or system design 
specifications;
    (3) The design, documentation, testing, creation or modification of 
computer programs related to machine operating systems; or
    (4) A combination of the aforementioned duties, the performance of 
which requires the same level of skills.
    (c) The term ``salary basis'' is defined at Sec. 541.602; ``fee 
basis'' is defined at Sec. 541.605; ``board, lodging or other 
facilities'' is defined at Sec. 541.606; and ``primary duty'' is 
defined at Sec. 541.700.



Sec. 541.401  Computer manufacture and repair.

    The exemption for employees in computer occupations does not include 
employees engaged in the manufacture or repair of computer hardware and 
related equipment. Employees whose work is highly dependent upon, or 
facilitated by, the use of computers and computer software programs 
(e.g., engineers, drafters and others skilled in computer-aided design 
software), but who are not primarily engaged in computer systems 
analysis and programming or other similarly skilled computer-related 
occupations identified in Sec. 541.400(b), are also not exempt computer 
professionals.



Sec. 541.402  Executive and administrative computer employees.

    Computer employees within the scope of this exemption, as well as 
those employees not within its scope, may also have executive and 
administrative duties which qualify the employees for exemption under 
subpart B or subpart C of this part. For example, systems analysts and 
computer programmers generally meet the duties requirements for the 
administrative exemption if their primary duty includes work such as 
planning, scheduling, and coordinating activities required to develop 
systems to solve complex business, scientific or engineering problems of 
the employer or the employer's customers. Similarly, a senior or lead 
computer programmer who manages the work of two or more other 
programmers in a customarily recognized department or subdivision of the 
employer, and whose recommendations as to the hiring, firing, 
advancement, promotion or other

[[Page 209]]

change of status of the other programmers are given particular weight, 
generally meets the duties requirements for the executive exemption.



                    Subpart F_Outside Sales Employees



Sec. 541.500  General rule for outside sales employees.

    (a) The term ``employee employed in the capacity of outside 
salesman'' in section 13(a)(1) of the Act shall mean any employee:
    (1) Whose primary duty is:
    (i) making sales within the meaning of section 3(k) of the Act, or
    (ii) obtaining orders or contracts for services or for the use of 
facilities for which a consideration will be paid by the client or 
customer; and
    (2) Who is customarily and regularly engaged away from the 
employer's place or places of business in performing such primary duty.
    (b) The term ``primary duty'' is defined at Sec. 541.700. In 
determining the primary duty of an outside sales employee, work 
performed incidental to and in conjunction with the employee's own 
outside sales or solicitations, including incidental deliveries and 
collections, shall be regarded as exempt outside sales work. Other work 
that furthers the employee's sales efforts also shall be regarded as 
exempt work including, for example, writing sales reports, updating or 
revising the employee's sales or display catalogue, planning itineraries 
and attending sales conferences.
    (c) The requirements of subpart G (salary requirements) of this part 
do not apply to the outside sales employees described in this section.



Sec. 541.501  Making sales or obtaining orders.

    (a) Section 541.500 requires that the employee be engaged in:
    (1) Making sales within the meaning of section 3(k) of the Act, or
    (2) Obtaining orders or contracts for services or for the use of 
facilities.
    (b) Sales within the meaning of section 3(k) of the Act include the 
transfer of title to tangible property, and in certain cases, of 
tangible and valuable evidences of intangible property. Section 3(k) of 
the Act states that ``sale'' or ``sell'' includes any sale, exchange, 
contract to sell, consignment for sale, shipment for sale, or other 
disposition.
    (c) Exempt outside sales work includes not only the sales of 
commodities, but also ``obtaining orders or contracts for services or 
for the use of facilities for which a consideration will be paid by the 
client or customer.'' Obtaining orders for ``the use of facilities'' 
includes the selling of time on radio or television, the solicitation of 
advertising for newspapers and other periodicals, and the solicitation 
of freight for railroads and other transportation agencies.
    (d) The word ``services'' extends the outside sales exemption to 
employees who sell or take orders for a service, which may be performed 
for the customer by someone other than the person taking the order.



Sec. 541.502  Away from employer's place of business.

    An outside sales employee must be customarily and regularly engaged 
``away from the employer's place or places of business.'' The outside 
sales employee is an employee who makes sales at the customer's place of 
business or, if selling door-to-door, at the customer's home. Outside 
sales does not include sales made by mail, telephone or the Internet 
unless such contact is used merely as an adjunct to personal calls. 
Thus, any fixed site, whether home or office, used by a salesperson as a 
headquarters or for telephonic solicitation of sales is considered one 
of the employer's places of business, even though the employer is not in 
any formal sense the owner or tenant of the property. However, an 
outside sales employee does not lose the exemption by displaying samples 
in hotel sample rooms during trips from city to city; these sample rooms 
should not be considered as the employer's places of business. 
Similarly, an outside sales employee does not lose the exemption by 
displaying the employer's products at a trade show. If selling actually 
occurs, rather than just sales promotion, trade shows of short duration 
(i.e., one or two weeks) should not be considered as the employer's 
place of business.

[[Page 210]]



Sec. 541.503  Promotion work.

    (a) Promotion work is one type of activity often performed by 
persons who make sales, which may or may not be exempt outside sales 
work, depending upon the circumstances under which it is performed. 
Promotional work that is actually performed incidental to and in 
conjunction with an employee's own outside sales or solicitations is 
exempt work. On the other hand, promotional work that is incidental to 
sales made, or to be made, by someone else is not exempt outside sales 
work. An employee who does not satisfy the requirements of this subpart 
may still qualify as an exempt employee under other subparts of this 
rule.
    (b) A manufacturer's representative, for example, may perform 
various types of promotional activities such as putting up displays and 
posters, removing damaged or spoiled stock from the merchant's shelves 
or rearranging the merchandise. Such an employee can be considered an 
exempt outside sales employee if the employee's primary duty is making 
sales or contracts. Promotion activities directed toward consummation of 
the employee's own sales are exempt. Promotional activities designed to 
stimulate sales that will be made by someone else are not exempt outside 
sales work.
    (c) Another example is a company representative who visits chain 
stores, arranges the merchandise on shelves, replenishes stock by 
replacing old with new merchandise, sets up displays and consults with 
the store manager when inventory runs low, but does not obtain a 
commitment for additional purchases. The arrangement of merchandise on 
the shelves or the replenishing of stock is not exempt work unless it is 
incidental to and in conjunction with the employee's own outside sales. 
Because the employee in this instance does not consummate the sale nor 
direct efforts toward the consummation of a sale, the work is not exempt 
outside sales work.



Sec. 541.504  Drivers who sell.

    (a) Drivers who deliver products and also sell such products may 
qualify as exempt outside sales employees only if the employee has a 
primary duty of making sales. In determining the primary duty of drivers 
who sell, work performed incidental to and in conjunction with the 
employee's own outside sales or solicitations, including loading, 
driving or delivering products, shall be regarded as exempt outside 
sales work.
    (b) Several factors should be considered in determining if a driver 
has a primary duty of making sales, including, but not limited to: a 
comparison of the driver's duties with those of other employees engaged 
as truck drivers and as salespersons; possession of a selling or 
solicitor's license when such license is required by law or ordinances; 
presence or absence of customary or contractual arrangements concerning 
amounts of products to be delivered; description of the employee's 
occupation in collective bargaining agreements; the employer's 
specifications as to qualifications for hiring; sales training; 
attendance at sales conferences; method of payment; and proportion of 
earnings directly attributable to sales.
    (c) Drivers who may qualify as exempt outside sales employees 
include:
    (1) A driver who provides the only sales contact between the 
employer and the customers visited, who calls on customers and takes 
orders for products, who delivers products from stock in the employee's 
vehicle or procures and delivers the product to the customer on a later 
trip, and who receives compensation commensurate with the volume of 
products sold.
    (2) A driver who obtains or solicits orders for the employer's 
products from persons who have authority to commit the customer for 
purchases.
    (3) A driver who calls on new prospects for customers along the 
employee's route and attempts to convince them of the desirability of 
accepting regular delivery of goods.
    (4) A driver who calls on established customers along the route and 
persuades regular customers to accept delivery of increased amounts of 
goods or of new products, even though the initial sale or agreement for 
delivery was made by someone else.
    (d) Drivers who generally would not qualify as exempt outside sales 
employees include:

[[Page 211]]

    (1) A route driver whose primary duty is to transport products sold 
by the employer through vending machines and to keep such machines 
stocked, in good operating condition, and in good locations.
    (2) A driver who often calls on established customers day after day 
or week after week, delivering a quantity of the employer's products at 
each call when the sale was not significantly affected by solicitations 
of the customer by the delivering driver or the amount of the sale is 
determined by the volume of the customer's sales since the previous 
delivery.
    (3) A driver primarily engaged in making deliveries to customers and 
performing activities intended to promote sales by customers (including 
placing point-of-sale and other advertising materials, price stamping 
commodities, arranging merchandise on shelves, in coolers or in 
cabinets, rotating stock according to date, and cleaning and otherwise 
servicing display cases), unless such work is in furtherance of the 
driver's own sales efforts.



                      Subpart G_Salary Requirements



Sec. 541.600  Amount of salary required.

    (a) To qualify as an exempt executive, administrative or 
professional employee under section 13(a)(1) of the Act, an employee 
must be compensated on a salary basis at a rate of not less than $455 
per week (or $380 per week, if employed in American Samoa by employers 
other than the Federal Government), exclusive of board, lodging or other 
facilities. Administrative and professional employees may also be paid 
on a fee basis, as defined in Sec. 541.605.
    (b) The $455 a week may be translated into equivalent amounts for 
periods longer than one week. The requirement will be met if the 
employee is compensated biweekly on a salary basis of $910, semimonthly 
on a salary basis of $985.83, or monthly on a salary basis of $1,971.66. 
However, the shortest period of payment that will meet this compensation 
requirement is one week.
    (c) In the case of academic administrative employees, the 
compensation requirement also may be met by compensation on a salary 
basis at a rate at least equal to the entrance salary for teachers in 
the educational establishment by which the employee is employed, as 
provided in Sec. 541.204(a)(1).
    (d) In the case of computer employees, the compensation requirement 
also may be met by compensation on an hourly basis at a rate not less 
than $27.63 an hour, as provided in Sec. 541.400(b).
    (e) In the case of professional employees, the compensation 
requirements in this section shall not apply to employees engaged as 
teachers (see Sec. 541.303); employees who hold a valid license or 
certificate permitting the practice of law or medicine or any of their 
branches and are actually engaged in the practice thereof (see Sec. 
541.304); or to employees who hold the requisite academic degree for the 
general practice of medicine and are engaged in an internship or 
resident program pursuant to the practice of the profession (see Sec. 
541.304). In the case of medical occupations, the exception from the 
salary or fee requirement does not apply to pharmacists, nurses, 
therapists, technologists, sanitarians, dietitians, social workers, 
psychologists, psychometrists, or other professions which service the 
medical profession.



Sec. 541.601  Highly compensated employees.

    (a) An employee with total annual compensation of at least $100,000 
is deemed exempt under section 13(a)(1) of the Act if the employee 
customarily and regularly performs any one or more of the exempt duties 
or responsibilities of an executive, administrative or professional 
employee identified in subparts B, C or D of this part.
    (b)(1) ``Total annual compensation'' must include at least $455 per 
week paid on a salary or fee basis. Total annual compensation may also 
include commissions, nondiscretionary bonuses and other nondiscretionary 
compensation earned during a 52-week period. Total annual compensation 
does not include board, lodging and other facilities as defined in Sec. 
541.606, and does not include payments for medical insurance, payments 
for life insurance, contributions to retirement plans and the cost of 
other fringe benefits.

[[Page 212]]

    (2) If an employee's total annual compensation does not total at 
least the minimum amount established in paragraph (a) of this section by 
the last pay period of the 52-week period, the employer may, during the 
last pay period or within one month after the end of the 52-week period, 
make one final payment sufficient to achieve the required level. For 
example, an employee may earn $80,000 in base salary, and the employer 
may anticipate based upon past sales that the employee also will earn 
$20,000 in commissions. However, due to poor sales in the final quarter 
of the year, the employee actually only earns $10,000 in commissions. In 
this situation, the employer may within one month after the end of the 
year make a payment of at least $10,000 to the employee. Any such final 
payment made after the end of the 52-week period may count only toward 
the prior year's total annual compensation and not toward the total 
annual compensation in the year it was paid. If the employer fails to 
make such a payment, the employee does not qualify as a highly 
compensated employee, but may still qualify as exempt under subparts B, 
C or D of this part.
    (3) An employee who does not work a full year for the employer, 
either because the employee is newly hired after the beginning of the 
year or ends the employment before the end of the year, may qualify for 
exemption under this section if the employee receives a pro rata portion 
of the minimum amount established in paragraph (a) of this section, 
based upon the number of weeks that the employee will be or has been 
employed. An employer may make one final payment as under paragraph 
(b)(2) of this section within one month after the end of employment.
    (4) The employer may utilize any 52-week period as the year, such as 
a calendar year, a fiscal year, or an anniversary of hire year. If the 
employer does not identify some other year period in advance, the 
calendar year will apply.
    (c) A high level of compensation is a strong indicator of an 
employee's exempt status, thus eliminating the need for a detailed 
analysis of the employee's job duties. Thus, a highly compensated 
employee will qualify for exemption if the employee customarily and 
regularly performs any one or more of the exempt duties or 
responsibilities of an executive, administrative or professional 
employee identified in subparts B, C or D of this part. An employee may 
qualify as a highly compensated executive employee, for example, if the 
employee customarily and regularly directs the work of two or more other 
employees, even though the employee does not meet all of the other 
requirements for the executive exemption under Sec. 541.100.
    (d) This section applies only to employees whose primary duty 
includes performing office or non-manual work. Thus, for example, non-
management production-line workers and non-management employees in 
maintenance, construction and similar occupations such as carpenters, 
electricians, mechanics, plumbers, iron workers, craftsmen, operating 
engineers, longshoremen, construction workers, laborers and other 
employees who perform work involving repetitive operations with their 
hands, physical skill and energy are not exempt under this section no 
matter how highly paid they might be.



Sec. 541.602  Salary basis.

    (a) General rule. An employee will be considered to be paid on a 
``salary basis'' within the meaning of these regulations if the employee 
regularly receives each pay period on a weekly, or less frequent basis, 
a predetermined amount constituting all or part of the employee's 
compensation, which amount is not subject to reduction because of 
variations in the quality or quantity of the work performed. Subject to 
the exceptions provided in paragraph (b) of this section, an exempt 
employee must receive the full salary for any week in which the employee 
performs any work without regard to the number of days or hours worked. 
Exempt employees need not be paid for any workweek in which they perform 
no work. An employee is not paid on a salary basis if deductions from 
the employee's predetermined compensation are made for absences 
occasioned by the employer or by the operating requirements of the 
business. If the employee is ready, willing and able to

[[Page 213]]

work, deductions may not be made for time when work is not available.
    (b) Exceptions. The prohibition against deductions from pay in the 
salary basis requirement is subject to the following exceptions:
    (1) Deductions from pay may be made when an exempt employee is 
absent from work for one or more full days for personal reasons, other 
than sickness or disability. Thus, if an employee is absent for two full 
days to handle personal affairs, the employee's salaried status will not 
be affected if deductions are made from the salary for two full-day 
absences. However, if an exempt employee is absent for one and a half 
days for personal reasons, the employer can deduct only for the one 
full-day absence.
    (2) Deductions from pay may be made for absences of one or more full 
days occasioned by sickness or disability (including work-related 
accidents) if the deduction is made in accordance with a bona fide plan, 
policy or practice of providing compensation for loss of salary 
occasioned by such sickness or disability. The employer is not required 
to pay any portion of the employee's salary for full-day absences for 
which the employee receives compensation under the plan, policy or 
practice. Deductions for such full-day absences also may be made before 
the employee has qualified under the plan, policy or practice, and after 
the employee has exhausted the leave allowance thereunder. Thus, for 
example, if an employer maintains a short-term disability insurance plan 
providing salary replacement for 12 weeks starting on the fourth day of 
absence, the employer may make deductions from pay for the three days of 
absence before the employee qualifies for benefits under the plan; for 
the twelve weeks in which the employee receives salary replacement 
benefits under the plan; and for absences after the employee has 
exhausted the 12 weeks of salary replacement benefits. Similarly, an 
employer may make deductions from pay for absences of one or more full 
days if salary replacement benefits are provided under a State 
disability insurance law or under a State workers' compensation law.
    (3) While an employer cannot make deductions from pay for absences 
of an exempt employee occasioned by jury duty, attendance as a witness 
or temporary military leave, the employer can offset any amounts 
received by an employee as jury fees, witness fees or military pay for a 
particular week against the salary due for that particular week without 
loss of the exemption.
    (4) Deductions from pay of exempt employees may be made for 
penalties imposed in good faith 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, such as rules prohibiting smoking in explosive plants, oil 
refineries and coal mines.
    (5) Deductions from pay of exempt employees may be made for unpaid 
disciplinary suspensions of one or more full days imposed in good faith 
for infractions of workplace conduct rules. Such suspensions must be 
imposed pursuant to a written policy applicable to all employees. Thus, 
for example, an employer may suspend an exempt employee without pay for 
three days for violating a generally applicable written policy 
prohibiting sexual harassment. Similarly, an employer may suspend an 
exempt employee without pay for twelve days for violating a generally 
applicable written policy prohibiting workplace violence.
    (6) An employer is not required to pay the full salary in the 
initial or terminal week of employment. Rather, an employer may pay a 
proportionate part of an employee's full salary for the time actually 
worked in the first and last week of employment. In such weeks, the 
payment of an hourly or daily equivalent of the employee's full salary 
for the time actually worked will meet the requirement. However, 
employees are not paid on a salary basis within the meaning of these 
regulations if they are employed occasionally for a few days, and the 
employer pays them a proportionate part of the weekly salary when so 
employed.
    (7) An employer is not required to pay the full salary for weeks in 
which an exempt employee takes unpaid leave under the Family and Medical

[[Page 214]]

Leave Act. Rather, when an exempt employee takes unpaid leave under the 
Family and Medical Leave Act, an employer may pay a proportionate part 
of the full salary for time actually worked. For example, if an employee 
who normally works 40 hours per week uses four hours of unpaid leave 
under the Family and Medical Leave Act, the employer could deduct 10 
percent of the employee's normal salary that week.
    (c) When calculating the amount of a deduction from pay allowed 
under paragraph (b) of this section, the employer may use the hourly or 
daily equivalent of the employee's full weekly salary or any other 
amount proportional to the time actually missed by the employee. A 
deduction from pay as a penalty for violations of major safety rules 
under paragraph (b)(4) of this section may be made in any amount.



Sec. 541.603  Effect of improper deductions from salary.

    (a) An employer who makes improper deductions from salary shall lose 
the exemption if the facts demonstrate that the employer did not intend 
to pay employees on a salary basis. An actual practice of making 
improper deductions demonstrates that the employer did not intend to pay 
employees on a salary basis. The factors to consider when determining 
whether an employer has an actual practice of making improper deductions 
include, but are not limited to: the number of improper deductions, 
particularly as compared to the number of employee infractions 
warranting discipline; the time period during which the employer made 
improper deductions; the number and geographic location of employees 
whose salary was improperly reduced; the number and geographic location 
of managers responsible for taking the improper deductions; and whether 
the employer has a clearly communicated policy permitting or prohibiting 
improper deductions.
    (b) If the facts demonstrate that the employer has an actual 
practice of making improper deductions, the exemption is lost during the 
time period in which the improper deductions were made for employees in 
the same job classification working for the same managers responsible 
for the actual improper deductions. Employees in different job 
classifications or who work for different managers do not lose their 
status as exempt employees. Thus, for example, if a manager at a company 
facility routinely docks the pay of engineers at that facility for 
partial-day personal absences, then all engineers at that facility whose 
pay could have been improperly docked by the manager would lose the 
exemption; engineers at other facilities or working for other managers, 
however, would remain exempt.
    (c) Improper deductions that are either isolated or inadvertent will 
not result in loss of the exemption for any employees subject to such 
improper deductions, if the employer reimburses the employees for such 
improper deductions.
    (d) If an employer has a clearly communicated policy that prohibits 
the improper pay deductions specified in Sec. 541.602(a) and includes a 
complaint mechanism, reimburses employees for any improper deductions 
and makes a good faith commitment to comply in the future, such employer 
will not lose the exemption for any employees unless the employer 
willfully violates the policy by continuing to make improper deductions 
after receiving employee complaints. If an employer fails to reimburse 
employees for any improper deductions or continues to make improper 
deductions after receiving employee complaints, the exemption is lost 
during the time period in which the improper deductions were made for 
employees in the same job classification working for the same managers 
responsible for the actual improper deductions. The best evidence of a 
clearly communicated policy is a written policy that was distributed to 
employees prior to the improper pay deductions by, for example, 
providing a copy of the policy to employees at the time of hire, 
publishing the policy in an employee handbook or publishing the policy 
on the employer's Intranet.
    (e) This section shall not be construed in an unduly technical 
manner so as to defeat the exemption.

[[Page 215]]



Sec. 541.604  Minimum guarantee plus extras.

    (a) An employer may provide an exempt employee with additional 
compensation without losing the exemption or violating the salary basis 
requirement, if the employment arrangement also includes a guarantee of 
at least the minimum weekly-required amount paid on a salary basis. 
Thus, for example, an exempt employee guaranteed at least $455 each week 
paid on a salary basis may also receive additional compensation of a one 
percent commission on sales. An exempt employee also may receive a 
percentage of the sales or profits of the employer if the employment 
arrangement also includes a guarantee of at least $455 each week paid on 
a salary basis. Similarly, the exemption is not lost if an exempt 
employee who is guaranteed at least $455 each week paid on a salary 
basis also receives additional compensation based on hours worked for 
work beyond the normal workweek. Such additional compensation may be 
paid on any basis (e.g., flat sum, bonus payment, straight-time hourly 
amount, time and one-half or any other basis), and may include paid time 
off.
    (b) An exempt employee's earnings may be computed on an hourly, a 
daily or a shift basis, without losing the exemption or violating the 
salary basis requirement, if the employment arrangement also includes a 
guarantee of at least the minimum weekly required amount paid on a 
salary basis regardless of the number of hours, days or shifts worked, 
and a reasonable relationship exists between the guaranteed amount and 
the amount actually earned. The reasonable relationship test will be met 
if the weekly guarantee is roughly equivalent to the employee's usual 
earnings at the assigned hourly, daily or shift rate for the employee's 
normal scheduled workweek. Thus, for example, an exempt employee 
guaranteed compensation of at least $500 for any week in which the 
employee performs any work, and who normally works four or five shifts 
each week, may be paid $150 per shift without violating the salary basis 
requirement. The reasonable relationship requirement applies only if the 
employee's pay is computed on an hourly, daily or shift basis. It does 
not apply, for example, to an exempt store manager paid a guaranteed 
salary of $650 per week who also receives a commission of one-half 
percent of all sales in the store or five percent of the store's 
profits, which in some weeks may total as much as, or even more than, 
the guaranteed salary.



Sec. 541.605  Fee basis.

    (a) Administrative and professional employees may be paid on a fee 
basis, rather than on a salary basis. An employee will be considered to 
be paid on a ``fee basis'' within the meaning of these regulations if 
the employee is paid an agreed sum for a single job regardless of the 
time required for its completion. These payments resemble piecework 
payments with the important distinction that generally a ``fee'' is paid 
for the kind of job that is unique rather than for a series of jobs 
repeated an indefinite number of times and for which payment on an 
identical basis is made over and over again. Payments based on the 
number of hours or days worked and not on the accomplishment of a given 
single task are not considered payments on a fee basis.
    (b) To determine whether the fee payment meets the minimum amount of 
salary required for exemption under these regulations, the amount paid 
to the employee will be tested by determining the time worked on the job 
and whether the fee payment is at a rate that would amount to at least 
$455 per week if the employee worked 40 hours. Thus, an artist paid $250 
for a picture that took 20 hours to complete meets the minimum salary 
requirement for exemption since earnings at this rate would yield the 
artist $500 if 40 hours were worked.



Sec. 541.606  Board, lodging or other facilities.

    (a) To qualify for exemption under section 13(a)(1) of the Act, an 
employee must earn the minimum salary amount set forth in Sec. 541.600, 
``exclusive of board, lodging or other facilities.'' The phrase 
``exclusive of board, lodging or other facilities'' means ``free and 
clear'' or independent of any claimed credit for non-cash items of value 
that

[[Page 216]]

an employer may provide to an employee. Thus, the costs incurred by an 
employer to provide an employee with board, lodging or other facilities 
may not count towards the minimum salary amount required for exemption 
under this part 541. Such separate transactions are not prohibited 
between employers and their exempt employees, but the costs to employers 
associated with such transactions may not be considered when determining 
if an employee has received the full required minimum salary payment.
    (b) Regulations defining what constitutes ``board, lodging, or other 
facilities'' are contained in 29 CFR part 531. As described in 29 CFR 
531.32, the term ``other facilities'' refers to items similar to board 
and lodging, such as meals furnished at company restaurants or 
cafeterias or by hospitals, hotels, or restaurants to their employees; 
meals, dormitory rooms, and tuition furnished by a college to its 
student employees; merchandise furnished at company stores or 
commissaries, including articles of food, clothing, and household 
effects; housing furnished for dwelling purposes; and transportation 
furnished to employees for ordinary commuting between their homes and 
work.



           Subpart H_Definitions and Miscellaneous Provisions



Sec. 541.700  Primary duty.

    (a) To qualify for exemption under this part, an employee's 
``primary duty'' must be the performance of exempt work. The term 
``primary duty'' means the principal, main, major or most important duty 
that the employee performs. Determination of an employee's primary duty 
must be based on all the facts in a particular case, with the major 
emphasis on the character of the employee's job as a whole. Factors to 
consider when determining the primary duty of an employee include, but 
are not limited to, the relative importance of the exempt duties as 
compared with other types of duties; the amount of time spent performing 
exempt work; the employee's relative freedom from direct supervision; 
and the relationship between the employee's salary and the wages paid to 
other employees for the kind of nonexempt work performed by the 
employee.
    (b) The amount of time spent performing exempt work can be a useful 
guide in determining whether exempt work is the primary duty of an 
employee. Thus, employees who spend more than 50 percent of their time 
performing exempt work will generally satisfy the primary duty 
requirement. Time alone, however, is not the sole test, and nothing in 
this section requires that exempt employees spend more than 50 percent 
of their time performing exempt work. Employees who do not spend more 
than 50 percent of their time performing exempt duties may nonetheless 
meet the primary duty requirement if the other factors support such a 
conclusion.
    (c) Thus, for example, assistant managers in a retail establishment 
who perform exempt executive work such as supervising and directing the 
work of other employees, ordering merchandise, managing the budget and 
authorizing payment of bills may have management as their primary duty 
even if the assistant managers spend more than 50 percent of the time 
performing nonexempt work such as running the cash register. However, if 
such assistant managers are closely supervised and earn little more than 
the nonexempt employees, the assistant managers generally would not 
satisfy the primary duty requirement.



Sec. 541.701  Customarily and regularly.

    The phrase ``customarily and regularly'' means a frequency that must 
be greater than occasional but which, of course, may be less than 
constant. Tasks or work performed ``customarily and regularly'' includes 
work normally and recurrently performed every workweek; it does not 
include isolated or one-time tasks.



Sec. 541.702  Exempt and nonexempt work.

    The term ``exempt work'' means all work described in Sec. Sec. 
541.100, 541.101, 541.200, 541.300, 541.301, 541.302, 541.303, 541.304, 
541.400 and 541.500, and the activities directly and closely related to 
such work. All other work is considered ``nonexempt.''

[[Page 217]]



Sec. 541.703  Directly and closely related.

    (a) Work that is ``directly and closely related'' to the performance 
of exempt work is also considered exempt work. The phrase ``directly and 
closely related'' means tasks that are related to exempt duties and that 
contribute to or facilitate performance of exempt work. Thus, ``directly 
and closely related'' work may include physical tasks and menial tasks 
that arise out of exempt duties, and the routine work without which the 
exempt employee's exempt work cannot be performed properly. Work 
``directly and closely related'' to the performance of exempt duties may 
also include recordkeeping; monitoring and adjusting machinery; taking 
notes; using the computer to create documents or presentations; opening 
the mail for the purpose of reading it and making decisions; and using a 
photocopier or fax machine. Work is not ``directly and closely related'' 
if the work is remotely related or completely unrelated to exempt 
duties.
    (b) The following examples further illustrate the type of work that 
is and is not normally considered as directly and closely related to 
exempt work:
    (1) Keeping time, production or sales records for subordinates is 
work directly and closely related to an exempt executive's function of 
managing a department and supervising employees.
    (2) The distribution of materials, merchandise or supplies to 
maintain control of the flow of and expenditures for such items is 
directly and closely related to the performance of exempt duties.
    (3) A supervisor who spot checks and examines the work of 
subordinates to determine whether they are performing their duties 
properly, and whether the product is satisfactory, is performing work 
which is directly and closely related to managerial and supervisory 
functions, so long as the checking is distinguishable from the work 
ordinarily performed by a nonexempt inspector.
    (4) A supervisor who sets up a machine may be engaged in exempt 
work, depending upon the nature of the industry and the operation. In 
some cases the setup work, or adjustment of the machine for a particular 
job, is typically performed by the same employees who operate the 
machine. Such setup work is part of the production operation and is not 
exempt. In other cases, the setting up of the work is a highly skilled 
operation which the ordinary production worker or machine tender 
typically does not perform. In large plants, non-supervisors may perform 
such work. However, particularly in small plants, such work may be a 
regular duty of the executive and is directly and closely related to the 
executive's responsibility for the work performance of subordinates and 
for the adequacy of the final product. Under such circumstances, it is 
exempt work.
    (5) A department manager in a retail or service establishment who 
walks about the sales floor observing the work of sales personnel under 
the employee's supervision to determine the effectiveness of their sales 
techniques, checks on the quality of customer service being given, or 
observes customer preferences is performing work which is directly and 
closely related to managerial and supervisory functions.
    (6) A business consultant may take extensive notes recording the 
flow of work and materials through the office or plant of the client; 
after returning to the office of the employer, the consultant may 
personally use the computer to type a report and create a proposed table 
of organization. Standing alone, or separated from the primary duty, 
such note-taking and typing would be routine in nature. However, because 
this work is necessary for analyzing the data and making 
recommendations, the work is directly and closely related to exempt 
work. While it is possible to assign note-taking and typing to nonexempt 
employees, and in fact it is frequently the practice to do so, 
delegating such routine tasks is not required as a condition of 
exemption.
    (7) A credit manager who makes and administers the credit policy of 
the employer, establishes credit limits for customers, authorizes the 
shipment of orders on credit, and makes decisions on whether to exceed 
credit limits would be performing work exempt under Sec. 541.200. Work 
that is directly and closely related to these exempt duties may include 
checking the status of

[[Page 218]]

accounts to determine whether the credit limit would be exceeded by the 
shipment of a new order, removing credit reports from the files for 
analysis, and writing letters giving credit data and experience to other 
employers or credit agencies.
    (8) A traffic manager in charge of planning a company's 
transportation, including the most economical and quickest routes for 
shipping merchandise to and from the plant, contracting for common-
carrier and other transportation facilities, negotiating with carriers 
for adjustments for damages to merchandise, and making the necessary 
rearrangements resulting from delays, damages or irregularities in 
transit, is performing exempt work. If the employee also spends part of 
the day taking telephone orders for local deliveries, such order-taking 
is a routine function and is not directly and closely related to the 
exempt work.
    (9) An example of work directly and closely related to exempt 
professional duties is a chemist performing menial tasks such as 
cleaning a test tube in the middle of an original experiment, even 
though such menial tasks can be assigned to laboratory assistants.
    (10) A teacher performs work directly and closely related to exempt 
duties when, while taking students on a field trip, the teacher drives a 
school van or monitors the students' behavior in a restaurant.



Sec. 541.704  Use of manuals.

    The use of manuals, guidelines or other established procedures 
containing or relating to highly technical, scientific, legal, financial 
or other similarly complex matters that can be understood or interpreted 
only by those with advanced or specialized knowledge or skills does not 
preclude exemption under section 13(a)(1) of the Act or the regulations 
in this part. Such manuals and procedures provide guidance in addressing 
difficult or novel circumstances and thus use of such reference material 
would not affect an employee's exempt status. The section 13(a)(1) 
exemptions are not available, however, for employees who simply apply 
well-established techniques or procedures described in manuals or other 
sources within closely prescribed limits to determine the correct 
response to an inquiry or set of circumstances.



Sec. 541.705  Trainees.

    The executive, administrative, professional, outside sales and 
computer employee exemptions do not apply to employees training for 
employment in an executive, administrative, professional, outside sales 
or computer employee capacity who are not actually performing the duties 
of an executive, administrative, professional, outside sales or computer 
employee.



Sec. 541.706  Emergencies.

    (a) An exempt employee will not lose the exemption by performing 
work of a normally nonexempt nature because of the existence of an 
emergency. Thus, when emergencies arise that threaten the safety of 
employees, a cessation of operations or serious damage to the employer's 
property, any work performed in an effort to prevent such results is 
considered exempt work.
    (b) An ``emergency'' does not include occurrences that are not 
beyond control or for which the employer can reasonably provide in the 
normal course of business. Emergencies generally occur only rarely, and 
are events that the employer cannot reasonably anticipate.
    (c) The following examples illustrate the distinction between 
emergency work considered exempt work and routine work that is not 
exempt work:
    (1) A mine superintendent who pitches in after an explosion and digs 
out workers who are trapped in the mine is still a bona fide executive.
    (2) Assisting nonexempt employees with their work during periods of 
heavy workload or to handle rush orders is not exempt work.
    (3) Replacing a nonexempt employee during the first day or partial 
day of an illness may be considered exempt emergency work depending on 
factors such as the size of the establishment and of the executive's 
department, the nature of the industry, the consequences that would flow 
from the failure to replace the ailing employee immediately, and the 
feasibility of filling the employee's place promptly.

[[Page 219]]

    (4) Regular repair and cleaning of equipment is not emergency work, 
even when necessary to prevent fire or explosion; however, repairing 
equipment may be emergency work if the breakdown of or damage to the 
equipment was caused by accident or carelessness that the employer could 
not reasonably anticipate.



Sec. 541.707  Occasional tasks.

    Occasional, infrequently recurring tasks that cannot practicably be 
performed by nonexempt employees, but are the means for an exempt 
employee to properly carry out exempt functions and responsibilities, 
are considered exempt work. The following factors should be considered 
in determining whether such work is exempt work: Whether the same work 
is performed by any of the exempt employee's subordinates; 
practicability of delegating the work to a nonexempt employee; whether 
the exempt employee performs the task frequently or occasionally; and 
existence of an industry practice for the exempt employee to perform the 
task.



Sec. 541.708  Combination exemptions.

    Employees who perform a combination of exempt duties as set forth in 
the regulations in this part for executive, administrative, 
professional, outside sales and computer employees may qualify for 
exemption. Thus, for example, an employee whose primary duty involves a 
combination of exempt administrative and exempt executive work may 
qualify for exemption. In other words, work that is exempt under one 
section of this part will not defeat the exemption under any other 
section.



Sec. 541.709  Motion picture producing industry.

    The requirement that the employee be paid ``on a salary basis'' does 
not apply to an employee in the motion picture producing industry who is 
compensated at a base rate of at least $695 a week (exclusive of board, 
lodging, or other facilities). Thus, an employee in this industry who is 
otherwise exempt under subparts B, C or D of this part, and who is 
employed at a base rate of at least $695 a week is exempt if paid a 
proportionate amount (based on a week of not more than 6 days) for any 
week in which the employee does not work a full workweek for any reason. 
Moreover, an otherwise exempt employee in this industry qualifies for 
exemption if the employee is employed at a daily rate under the 
following circumstances:
    (a) The employee is in a job category for which a weekly base rate 
is not provided and the daily base rate would yield at least $695 if 6 
days were worked; or
    (b) The employee is in a job category having a weekly base rate of 
at least $695 and the daily base rate is at least one-sixth of such 
weekly base rate.



Sec. 541.710  Employees of public agencies.

    (a) An employee of a public agency who otherwise meets the salary 
basis requirements of Sec. 541.602 shall not be disqualified from 
exemption under Sec. Sec. 541.100, 541.200, 541.300 or 541.400 on the 
basis that such employee is paid according to a pay system established 
by statute, ordinance or regulation, or by a policy or practice 
established pursuant to principles of public accountability, under which 
the employee accrues personal leave and sick leave and which requires 
the public agency employee's pay to be reduced or such employee to be 
placed on leave without pay for absences for personal reasons or because 
of illness or injury of less than one work-day when accrued leave is not 
used by an employee because:
    (1) Permission for its use has not been sought or has been sought 
and denied;
    (2) Accrued leave has been exhausted; or
    (3) The employee chooses to use leave without pay.
    (b) Deductions from the pay of an employee of a public agency for 
absences due to a budget-required furlough shall not disqualify the 
employee from being paid on a salary basis except in the workweek in 
which the furlough occurs and for which the employee's pay is 
accordingly reduced.

[[Page 220]]



PART 547_REQUIREMENTS OF A ``BONA FIDE THRIFT OR SAVINGS PLAN''--
Table of Contents



Sec.
547.0 Scope and effect of part.
547.1 Essential requirements for qualifications.
547.2 Disqualifying provisions.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207.

    Source: 19 FR 4864, Aug. 3, 1954, unless otherwise noted.



Sec. 547.0  Scope and effect of part.

    (a) The regulations in this part set forth the requirements of a 
``bona fide thrift or savings plan'' under section 7(e)(3)(b) of the 
Fair Labor Standards Act of 1938, as amended (hereinafter called the 
Act). In determining the total remuneration for employment which section 
7(e) of the Act requires to be included in the regular rate at which an 
employee is employed, it is not necessary to include any sums paid to or 
on behalf of such employee, in recognition of services performed by him 
during a given period, which are paid pursuant to a bona fide thrift or 
savings plan meeting the requirements set forth herein. In the 
formulation of these regulations due regard has been given to the 
factors and standards set forth in section 7(e)(3)(b) of the Act.
    (b) Where a thrift or savings plan is combined in a single program 
(whether in one or more documents) with a plan or trust for providing 
profit-sharing payments to employees, or with a plan or trust for 
providing old age, retirement, life, accident or health insurance or 
similar benefits for employees, contributions made by the employer 
pursuant to such thrift or savings plan may be excluded from the regular 
rate if the plan meets the requirements of the regulation in this part 
and the contributions made for the other purposes may be excluded from 
the regular rate if they meet the tests set forth in regulations. Part 
549, or the tests set forth in Interpretative Bulletin, part 778 of this 
chapter, Sec. Sec. 778.214 and 778.215, as the case may be.



Sec. 547.1  Essential requirements for qualifications.

    (a) A ``bona fide thrift or savings plan'' for the purpose of 
section 7(e)(3)(b) of the Act is required to meet all the standards set 
forth in paragraphs (b) through (f) of this section and must not contain 
the disqualifying provisions set forth in Sec. 547.2.
    (b) The thrift or savings plan constitutes a definite program or 
arrangement in writing, adopted by the employer or by contract as a 
result of collective bargaining and communicated or made available to 
the employees, which is established and maintained, in good faith, for 
the purpose of encouraging voluntary thrift or savings by employees by 
providing an incentive to employees to accumulate regularly and retain 
cash savings for a reasonable period of time or to save through the 
regular purchase of public or private securities.
    (c) The plan specifically shall set forth the category or categories 
of employees participating and the basis of their eligibility. 
Eligibility may not be based on such factors as hours of work, 
production, or efficiency of the employees' Provided, however, That 
hours of work may be used to determine eligibility of part-time or 
casual employees.
    (d) The amount any employee may save under the plan shall be 
specified in the plan or determined in accordance with a definite 
formula specified in the plan, which formula may be based on one or more 
factors such as the straight-time earnings or total earnings, base rate 
of pay, or length of service of the employee.
    (e) The employer's total contribution in any year may not exceed 15 
percent of the participating employees' total earnings during that year. 
In addition, the employer's total contribution in any year may not 
exceed the total amount saved or invested by the participating employees 
during that year: Provided, however, That a plan permitting a greater 
contribution may be submitted to the Administrator and approved by him 
as a ``bona fide thrift or savings plan'' within the meaning of section 
7(e)(3)(b) of the Act if:
    (1) The plan meets all the other standards of this section;

[[Page 221]]

    (2) The plan contains none of the disqualifying factors enumerated 
in Sec. 547.2;
    (3) The employer's contribution is based to a substantial degree 
upon retention of savings; and
    (4) The amount of the employer's contribution bears a reasonable 
relationship to the amount of savings retained and the period of 
retention.
    (f) The employer's contributions shall be apportioned among the 
individual employees in accordance with a definite formula or method of 
calculation specified in the plan, which formula or method of 
calculation is based on the amount saved or the length of time the 
individual employee retains his savings or investment in the plan: 
Provided, That no employee's share determined in accordance with the 
plan may be diminished because of any other remuneration received by 
him.

(Approved by the Office of Management and Budget under control number 
1215-0119)

[19 FR 4864, Aug. 3, 1954, as amended at 47 FR 145, Jan. 5, 1982; 71 FR 
16666, Apr. 3, 2006]



Sec. 547.2  Disqualifying provisions.

    (a) No employee's participation in the plan shall be on other than a 
voluntary basis.
    (b) No employee's wages or salary shall be dependent upon or 
influenced by the existence of such thrift or savings plan or the 
employer's contributions thereto.
    (c) The amounts any employee may save under the plan, or the amounts 
paid by the employer under the plan may not be based upon the employee's 
hours of work, production or efficiency.



PART 548_AUTHORIZATION OF ESTABLISHED BASIC RATES FOR COMPUTING 
OVERTIME PAY--Table of Contents



                      Subpart A_General Regulations

Sec.
548.1 Scope and effect of regulations.
548.2 General conditions.
548.3 Authorized basic rates.
548.4 Application for authorization of a ``basic rate.''

                        Subpart B_Interpretations

                              Introduction

548.100 Introductory statement.

                      Requirements for a Basic Rate

548.200 Requirements.

                         Authorized Basic Rates

548.300 Introductory statement.
548.301 Salaried employees.
548.302 Average earnings for period other than a workweek.
548.303 Average earnings for each type of work.
548.304 Excluding value of lunches furnished.
548.305 Excluding certain additions to wages.
548.306 Average earnings for year or quarter year preceding the current 
          quarter.

                     Rates Authorized on Application

548.400 Procedures.
548.401 Agreement or understanding.
548.402 Applicable overtime provisions.
548.403 Description of method of calculation.
548.404 Kinds of jobs or employees.
548.405 Representative period.

                       Computation of Overtime Pay

548.500 Methods of computation.
548.501 Overtime hours based on nonstatutory standards.
548.502 Other payments.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207, unless 
otherwise noted.



                      Subpart A_General Regulations

    Source: 20 FR 5679, Aug. 6, 1955, unless otherwise noted.



Sec. 548.1  Scope and effect of regulations.

    The regulations in this part set forth the requirements for 
authorization of established basic rates to be used in the computation 
of overtime pay in accordance with section 7(g)(3) of the Fair Labor 
Standards Act of 1938, as amended. Payment of overtime compensation in 
accordance with other subsections of section 7 of the Act is explained 
in part 778 of this title (Interpretative Bulletin on Overtime 
Compensation).



Sec. 548.2  General conditions.

    The requirements of section 7 of the Act with respect to the payment 
of overtime compensation to an employee for a workweek longer than the 
applicable number of hours established in section 7(a) of the Act, will 
be met under the provisions of section 7(g)(3)

[[Page 222]]

of the Act by payments which satisfy all the following standards:
    (a) Overtime compensation computed in accordance with this part and 
section 7(g)(3) of the Act is paid pursuant to an agreement or 
understanding arrived at between the employer and the employee or as a 
result of collective bargaining before performance of the work;
    (b) A rate is established by such agreement or understanding as the 
basic rate to be used in computing overtime compensation thereunder;
    (c) The established basic rate is a specified rate or a rate which 
can be derived from the application of a specified method of 
calculation;
    (d) The established basic rate is a bona fide rate and is not less 
than the minimum hourly rate required by applicable law;
    (e) The basic rate so established is authorized by Sec. 548.3 or is 
authorized by the Administrator under Sec. 548.4 as being substantially 
equivalent to the average hourly earnings of the employee, exclusive of 
overtime premiums, in the particular work over a representative period 
of time;
    (f) Overtime hours are compensated at a rate of not less than one 
and one-half times such established basic rate;
    (g) The hours for which the employee is paid not less than one and 
one-half times such established basic rate qualify as overtime hours 
under section 7(e) (5), (6), or (7) of the Act;
    (h) The number of hours for which the employee is paid not less than 
one and one-half times such established basic rate equals or exceeds the 
number of hours worked by him in any workweek in excess of the maximum 
workweek applicable to such employees under subsection 7(a) of the Act;
    (i) The employee's average hourly earnings for the workweek 
exclusive of payments described in paragraphs (1) through (7) of section 
7(e) of the Act are not less than the minimum hourly rate required by 
this Act or other applicable law;
    (j) Extra overtime compensation is properly computed and paid on 
other forms of additional pay which have not been considered in arriving 
at the basic rate but which are required to be included in computing the 
regular rate.

[20 FR 5679, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]



Sec. 548.3  Authorized basic rates.

    A rate which meets all of the conditions of Sec. 548.2 and which in 
addition satisfies all the conditions set forth in one of the following 
paragraphs will be regarded as being substantially equivalent to the 
average hourly earnings of the employee, exclusive of overtime premiums, 
in the particular work over a representative period of time and may be 
used in computing overtime compensation for purposes of section 7(g)(3) 
of the Act, and Sec. 548.2:
    (a) A rate per hour which is obtained by dividing a monthly or semi-
monthly salary by the number of regular working days in each monthly or 
semi-monthly period and then by the number or hours in the normal or 
regular workday. Such a rate may be used to compute overtime 
compensation for all the overtime hours worked by the employee during 
the monthly or semimonthly period for which the salary is paid.
    (b) A rate per hour which is obtained by averaging the earnings, 
exclusive of payments described in paragraphs (1) through (7) of section 
7(e) of the Act, of the employee for all work performed during the 
workday or any other longer period not exceeding sixteen calendar days 
for which such average is regularly computed under the agreement or 
understanding. Such a rate may be used to compute overtime compensation 
for all the overtime hours worked by the employee during the particular 
period for which the earnings average is computed.
    (c) A rate per hour which is obtained by averaging the earnings, 
exclusive of payments described in paragraphs (1) through (7) of section 
7(e) of the Act, of the employee for each type of work performed during 
each workweek, or any other longer period not exceeding sixteen calendar 
days, for which such average is regularly computed under the agreement 
or understanding. Such a rate may be used to compute overtime 
compensation, during the particular period for which such average is 
computed, for all the overtime hours

[[Page 223]]

worked by the employee at the type of work for which the rate is 
obtained.
    (d) The rate or rates which may be used under the Act to compute 
overtime compensation of the employee but excluding the cost of meals 
where the employer customarily furnishes not more than a single meal per 
day.
    (e) The rate or rates (not less than the rates required by section 6 
(a) and (b) of the Act) which may be used under the Act to compute 
overtime compensation of the employee but excluding additional payments 
in cash or in kind which, if included in the computation of overtime 
under the Act, would not increase the total compensation of the employee 
by more than 50 cents a week on the average for all overtime weeks (in 
excess of the number of hours applicable under section 7(a) of the Act) 
in the period for which such additional payments are made.
    (f)(1) A rate per hour for each workweek equal to the average hourly 
remuneration of the employee for employment during the annual period or 
the quarterly period immediately preceding the calendar or fiscal 
quarter year in which such workweek ends, provided: (i) It is a fact, 
confirmed by proper records of the employer, that the terms, conditions, 
and circumstances of employment during such prior period, including 
weekly hours of work, work assignments and duties, and the basis of 
remuneration for employment, were not significantly different from the 
terms, conditions, and circumstances of employment which affect the 
employee's regular rates of pay during the current quarter year, or 
differ only because of some change in basic salary or similar 
nonfluctuating factor for which suitable adjustments have been made in 
the calculations to accurately reflect such change and (ii) such average 
hourly remuneration during the prior period is computed by the method or 
methods authorized in the following paragraphs.
    (2) The average hourly remuneration on which the rate authorized in 
paragraph (f)(1) of this section is based shall be computed: (i) By 
totaling all remuneration for employment during the workweeks ending in 
the prior period (including all earnings at hourly or piece rates, 
bonuses, commission or other incentive payments, and other forms of 
remuneration paid to or on behalf of the employee) except overtime 
premiums and other payments excluded from the regular rate pursuant to 
provisions of section 7(e) of the Act, and (ii) by dividing the amount 
thus obtained by the number of hours worked in such prior period for 
which such compensation was paid.
    (3) Where it is not practicable for an employer to compute the total 
remuneration of an employee for employment in the prior period in time 
to determine obligations under the Act for the current quarter year (as 
where computation of bonus, commission, or incentive payments cannot be 
made immediately at the end of the period), a one month grace period may 
be used. If this one month grace period is used, it will be deemed in 
compliance with paragraph (f)(1) of this section to use the basic rate 
authorized therein for the quarter commencing one month after the next 
preceding four-quarter or quarter-year period (whichever length period 
is adopted as the base period for the rate determination). Once the 
grace period method of computation is adopted it must be used for each 
successive quarter.

(52 Stat. 1060, as amended; 29 U.S.C. 201)

[20 FR 5679, Aug. 6, 1955, as amended at 28 FR 11266, Oct. 22, 1963; 31 
FR 6769, May 6, 1966]



Sec. 548.4  Application for authorization of a ``basic rate.''

    (a) Application may be made by any employer or group of employers, 
for authorization of a basic rate or rates, other than those approved 
under Sec. 548.3. Application must be made jointly with any collective 
bargaining representative of employees covered by the application. 
Application must be made to the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, Washington, DC 20210.
    (b) Each application shall contain the following:
    (1) A statement of the agreement or understanding arrived at between 
the employer and employee, including the proposed effective date, the 
term of the agreement or understanding, and a statement of the 
applicable overtime provisions, and

[[Page 224]]

    (2) A description of the basic rate of the method or formula to be 
used in computing the basic rate for the type of work or position to 
which it will be applicable, and
    (3) A statement of the kinds of jobs or employees covered by the 
agreement, and
    (4) The facts and reasons relied upon to show that the basic rate so 
established is substantially equivalent to the average hourly earnings 
of the employee, exclusive of overtime premiums, in the particular work 
over a representative period of time. For such showing, a basic rate 
shall be deemed ``substantially equivalent'' to the average hourly 
earnings of the employee if, during a representative period, the 
employee's total overtime earnings calculated at the basic rate in 
accordance with the applicable overtime provisions are substantially 
equivalent to the amount of such earnings when computed in accordance 
with section 7(a) of the Act on the basis of the employee's average 
hourly earnings for each workweek, and
    (5) Such additional information as the Administrator may require.
    (c) The Administrator shall require that notice of the application 
be given to affected employees in such manner as he deems appropriate. 
The Administrator shall notify the applicants in writing of his decision 
as to each application.
    (d) In authorizing a basic rate pursuant to this part, the 
Administrator shall include such conditions as are necessary to insure 
that the basic rate will be used only so long as it is substantially 
equivalent to the average hourly earnings of the employee, exclusive of 
overtime premiums, in the particular work over a representative period 
of time, and such other conditions as are necessary or appropriate to 
insure compliance with the provisions of the Act.
    (e) The Administrator may at any time, upon his own motion or upon 
written request of any interested party setting forth reasonable grounds 
therefor, and after a hearing or other opportunity to interested persons 
to present their views, amend or revoke any authorization granted under 
this part.



                        Subpart B_Interpretations

                              Introduction



Sec. 548.100  Introductory statement.

    (a) This subpart contains material explaining and illustrating the 
terms used in subpart A of this part which were issued under section 
7(g)(3) of the Fair Labor Standards Act. The purpose of section 7(g)(3) 
of the Act, and subpart A of this part, is to provide an exception from 
the requirements of computing overtime pay at the regular rate, \1\ and 
to allow, under specific conditions, the use of an established ``basic'' 
rate \2\ instead. Basic rates are alternatives to the regular rate of 
pay under section 7(a), and their use is optional. The use of basic 
rates is principally intended to simplify bookkeeping and computation of 
overtime pay.
---------------------------------------------------------------------------

    \1\ The regular rate is the average hourly earnings of an employee 
for a workweek. See Sec. Sec. 778.107 to 778.122 of this chapter on 
overtime compensation. Sections 7(g)(1) and 7(g)(2) of the Act permit 
overtime compensation to be computed, under specified conditions, at 
time and one-half the bona fide hourly or piece rate applicable to the 
work performed during the overtime hours. See Sec. Sec. 778.415 to 
778.421 of this chapter.
    \2\ The term ``basic'' rate as used in this part means the rate 
authorized under section 7(g)(3) of the Fair Labor Standards Act. Such a 
rate may be used to compute overtime compensation under the Walsh-Healey 
Public Contracts Act. (See Rulings and Interpretations No. 3. section 
42(e)(1)). However, the term ``basic'' rate in this part should not be 
confused with the more general use of the term in the Public Contracts 
Act to describe all rates which may be used to compute overtime 
compensation or the use of the term in any other statute.
---------------------------------------------------------------------------

    (b) Section 7(g) of the Fair Labor Standards Act provides that an 
employer will comply with the overtime requirements of the Act if:

* * * pursuant to an agreement or understanding arrived at between the 
employer and the employee before performance of the work, the amount 
paid to the employee for the number of hours worked by him in such 
workweek in excess of the maximum workweek applicable to such employee 
under such subsection [7](a):

                                * * * * *

[[Page 225]]

    (3) is computed at a rate not less than one and one-half times the 
rate established by such agreement or understanding as the basic rate to 
be used in computing overtime compensation thereunder: Provided, That 
the rate so established shall be authorized by regulation by the 
Secretary of Labor as being substantially equivalent to the average 
hourly earnings of the employee, exclusive of overtime premiums, in the 
particular work over a representative period of time; and if (i) the 
employee's average hourly earnings for the workweek exclusive of 
payments described in paragraphs (1) through (7) of subsection (e) are 
not less than the minimum hourly rate required by applicable law, and 
(ii) extra overtime compensation is properly computed and paid on other 
forms of additional pay required to be included in computing the regular 
rate.

[20 FR 5680, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]

                      Requirements for a Basic Rate



Sec. 548.200  Requirements.

    The following conditions must be satisfied if a ``basic'' rate is to 
be considered proper under section 7(g)(3) and subpart A of this part.
    (a) Agreement or understanding. There must be an agreement or 
understanding establishing a basic rate or rates. This agreement must be 
arrived at before performance of the work to which it is intended to 
apply. It may be arrived at directly with the employee or through his 
representative. The ``basic'' rate method of computing overtime may be 
used for as many of the employees in an establishment as the employer 
chooses, provided he has reached an agreement or understanding with 
these employees prior to the performance of the work. \3\
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    \3\ The records which an employer is required to maintain and 
preserve for an employee compensated for overtime hours on the basis of 
a basic rate are described in Sec. Sec. 516.5(b)(5) and 516.21 of this 
subchapter.
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    (b) The rate. The established basic rate may be a specified rate or 
a rate which can be derived from the application of a specified method 
of calculation. For instance, under certain conditions the Regulations 
permit the use of the daily average hourly earnings of the employee as a 
basis for computing daily overtime. \4\ Thus, a method rather than a 
specific rate is authorized. Also, under certain conditions, the cost of 
a single meal a day furnished to employees may be excluded from the 
computation of overtime pay. \5\ It is the exclusion of the cost of the 
meals that is authorized and each employee's rate of pay, whatever it 
may be--an hourly rate, a piece rate or a salary--is his basic rate.
---------------------------------------------------------------------------

    \4\ See Sec. 548.302.
    \5\ See Sec. 548.304.
---------------------------------------------------------------------------

    (c) Minimum wage. The employee's average hourly earnings for the 
workweek (exclusive of overtime pay and other pay which may be excluded 
from the regular rate) \6\ and the established basic rate used to 
compute overtime pay may not be less than the legal minimum. \7\
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    \6\ See Sec. Sec. 778.200 through 778.225 of this chapter for 
further discussion of what payments may be excluded.
    \7\ The legal minimum is the highest rate required by the Fair Labor 
Standards Act or other Federal, State or local law.

[20 FR 5680, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956]

                         Authorized Basic Rates



Sec. 548.300  Introductory statement.

    Section 548.3 contains a description of a number of basic rates any 
one of which, when established by agreement or understanding, is 
authorized for use without prior specific approval of the Administrator. 
These basic rates have been found in use in industry and the 
Administrator has determined that they are substantially equivalent to 
the straight-time average hourly earnings of the employee over a 
representative period of time. The authorized basic rates are described 
below.

[20 FR 5681, Aug. 6, 1955]



Sec. 548.301  Salaried employees.

    (a) Section 548.3(a) authorizes as an established basic rate: ``A 
rate per hour which is obtained by dividing a monthly or semi-monthly 
salary by the number of regular working days in each monthly or semi-
monthly period and then by the number of hours in the normal or regular 
workday. Such a rate may be used to compute overtime compensation for 
all the overtime hours worked by the employee during the

[[Page 226]]

monthly or semi-monthly period for which the salary is paid.''
    (b) Section 548.3(a) may be applied to salaried employees paid on a 
monthly or semi-monthly basis. Under section 7(a) of the Act the method 
of computing the regular rate of pay for an employee who is paid on a 
monthly or semi-monthly salary basis is to reduce the salary to its 
weekly equivalent by multiplying the monthly salary by 12 (the number of 
months) or the semi-monthly salary by 24, and dividing by 52 (the number 
of weeks). The weekly equivalent is then divided by the number of hours 
in the week which the salary is intended to compensate. \8\ Section 
548.3(a) is designed to provide an alternative method of computing the 
rate for overtime purposes in the case of an employee who is compensated 
on a monthly or semi-monthly salary basis, where this method is found 
more desirable. This method is applicable only where the salary is paid 
for a specified number of days per week and a specified number of hours 
per day normally or regularly worked by the employee. It permits the 
employer to take into account the variations in the number of regular 
working days in each pay period. The basic rate authorized by Sec. 
548.3(a) is obtained by dividing the monthly or semi-monthly salary by 
the number of regular working days in the month or half-month, and then 
by the number of hours of the normal or regular work day.
---------------------------------------------------------------------------

    \8\ See Sec. 778.113 of this chapter.

    Example. An employee is compensated at a semi-monthly salary of $154 
for a workweek of 5 days of 8 hours each, Monday through Friday. If a 
particular half-month begins on Tuesday and ends on the second Tuesday 
following, there are 11 working days in that half-month. The employee's 
basic rate would then be computed by dividing the $154 salary by 11 
working days of 8 hours each, or 88 hours. The basic rate in this 
situation would therefore be $1.75 an hour. The basic rate would remain 
the same regardless of the fact that the employee did not actually work 
11 days of 8 hours each because of the occurrence of a holiday, or 
because the employee took a day off, or because he worked longer than 8 
hours on some days during the period, or because he worked fewer than 8 
hours on some days, or because he worked more then 11 days. In any of 
these circumstances the employee's basic rate would still be $1.75 an 
hour. If in the next semimonthly period there are 10 working days the 
rate would be computed by dividing the salary of $154 by 80 working 
hours, or 10 days of 8 hours each. The basic rate would therefore be 
$1.925 an hour. The rate would remain $1.925 an hour even though the 
employee did not in fact work ten 8-hour days during the period for the 
---------------------------------------------------------------------------
reasons indicated above, or for any other reason.

    (c) The overtime compensation for each workweek should be computed 
at not less than time and one-half the established basic rate applicable 
in the period during which the overtime is worked. Thus, in the example 
given above all overtime worked in the first half-month would be 
computed at not less than time and one-half the basic rate of $1.75 an 
hour; in the second half-month overtime would be paid for at not less 
than time and one-half the rate of $1.925 an hour. Where a workweek 
overlaps two semimonthly periods part of the overtime may be performed 
in one semimonthly period and part in another semimonthly period with a 
different basic rate. If it is desired to avoid computing overtime 
compensation in the same workweek at two different rates, the employment 
arrangement may provide that overtime compensation for each workweek 
should be computed at the established basic rate applicable in the half-
monthly or monthly period during which the workweek ends.

(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)

[20 FR 5681, Aug. 6, 1955, as amended at 32 FR 3293, Feb. 25, 1967]



Sec. 548.302  Average earnings for period other than a workweek.

    (a) Section 548.3(b) authorizes as an established basic rate: ``A 
rate per hour which is obtained by averaging the earnings, exclusive of 
payments described in paragraphs (1) through (7) of section 7(e) of the 
act, of the employee for all work performed during the workday or any 
other longer period not exceeding sixteen calendar days for which such 
average is regularly computed under the agreement or understanding. Such 
a rate may be used to compute overtime compensation for all the overtime 
hours worked by the employee during the particular period for

[[Page 227]]

which the earnings average is computed.''
    (b)(1) The ordinary method of computing overtime under the act is at 
the employee's regular rate of pay, obtained by averaging his hourly 
earnings for each workweek. Section 548.3(b) authorizes overtime to be 
computed on the basis of the employee's average hourly earnings for a 
period longer or shorter than a workweek. It permits the payment of 
overtime compensation on the basis of average hourly earnings for a day, 
a week, two weeks or any period up to 16 calendar days, if the period is 
established and agreed to with the employee prior to the performance of 
the work. \9\ The agreement or understanding may contemplate that the 
basic rate will be the average hourly earnings for a day or a specified 
number of days within the sixteen day limit, or it may provide that the 
basic rate will be the average hourly earnings for the period required 
to complete a specified job or jobs.
---------------------------------------------------------------------------

    \9\ Averaging over periods in excess of 16 calendar days may in 
appropriate cases be authorized by the Administrator under Sec. 548.4.

    Example 1. An employee is employed on a piece-work basis with 
overtime after 8 hours a day and on Saturday. Ordinarily his overtime 
compensation would be computed by averaging his earnings for the entire 
workweek to arrive at the regular rate of pay and then computing the 
overtime compensation due. Under this subsection of the regulations the 
employer and the employee may agree to compute overtime on the basis of 
the average hourly earnings for each day. Similarly, in a situation 
involving a bi-weekly or a semi-monthly pay period the employer may find 
it convenient to compute overtime on the basis of the average hourly 
earnings for the bi-weekly or semi-monthly period. \10\
---------------------------------------------------------------------------

    \10\ See Sec. 548.301 (c) for a discussion of the method of 
computing overtime for an employee paid on a semi-monthly basis.
---------------------------------------------------------------------------

    Example 2. An employee, who normally would come within the forty 
hour provision of section 7(a) of the Act, is paid a fixed amount of 
money for the completion of each job. Each job takes 2 or 3 days to 
complete. Under the employment agreement, the employee is entitled to 
time and one-half an authorized basic rate for all hours worked in 
excess of forty in the workweek. The authorized basic rate is the 
employee's average hourly earnings for each job. Suppose he completes 
two jobs in a particular workweek and all his overtime hours are on job 
No. 2. The employee's average hourly earnings on job No. 2 may be used 
to compute his overtime pay.

    (2) In this connection it should be noted that although the basic 
rate is obtained by averaging earnings over a period other than a 
workweek the number of overtime hours under the act must be determined 
on a workweek basis.
    (c) In computing the basic rate under Sec. 548.3(b), the employer 
may exclude from the computation the payments which he could exclude in 
computing the ``regular'' rate of pay. \11\
---------------------------------------------------------------------------

    \11\ See Sec. Sec. 778.200 through 778.225 of this chapter for an 
explanation of what payments may be excluded.

[20 FR 5681, Aug. 6, 1955, as amended at 26 FR 7731, Aug. 18, 1961]



Sec. 548.303  Average earnings for each type of work.

    (a) Section 548.3(c) authorizes as an established basic rate: ``A 
rate per hour which is obtained by averaging the earnings, exclusive of 
payments described in paragraphs (1) through (7) of section 7(e) of the 
act, of the employee for each type of work performed during each 
workweek, or any other longer period not exceeding sixteen calendar 
days, for which such average is regularly computed under the agreement 
or understanding. Such a rate may be used to compute overtime 
compensation, during the particular period for which such average is 
computed, for all the overtime hours worked by the employee at the type 
of work for which the rate is obtained.''
    (b) Section 548.3(c) differs from Sec. 548.3(b) in this way: 
Section 548.3(b) provides for the computation of the basic rate on the 
average of all earnings during the specified period; Sec. 548.3(c) 
permits the basic rate to be computed on the basis of the earnings for 
each particular type of work. Thus, if the employee performs different 
types of work, each involving a different rate of pay such as different 
piece-rate, job rates, or a combination of these with hourly rates, a 
separate basic rate may be computed for each type of work and overtime 
computed

[[Page 228]]

on the basis of the rate or rates applicable to the type of work 
performed during the overtime hours.

    Example. An employee who is paid on a weekly basis with overtime 
after 40 hours works six 8-hour days in a workweek under an agreement or 
understanding reached pursuant to this subsection. He performs three 
different types of piecework, each at a different rate of pay. The basic 
rates to be used for computing overtime in this situation would be 
arrived at by dividing the earnings for each type of work by the number 
of hours during which that type of work was performed. There would thus 
be three different basic rates, one for each type of work. Since the 
overtime hours used in this illustration occur on the sixth day, the 
types of work performed on the sixth day would determine the basic rate 
or rates on which overtime would be computed that week. Thus, if the 
average hourly earnings for the three types of work are respectively 
$1.70 an hour in type A, $1.80 an hour in type B, and $2 an hour in type 
C, and on the sixth day the employee works on type B, his overtime 
premium for the sixth day would be one-half the basic rate of $1.80 an 
hour, multiplied by the 8 hours worked on that day.

(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)

[20 FR 5681, Aug. 6, 1955, as amended at 32 FR 3293, Feb. 25, 1967]



Sec. 548.304  Excluding value of lunches furnished.

    (a) Section 548.3(d) authorizes as established basic rates:

    The rate or rates which may be used under the Act to compute 
overtime compensation of the employee but excluding the cost of meals 
where the employer customarily furnishes not more than a single meal per 
day.

    (b) It is the purpose of Sec. 548.3(d) to permit the employer upon 
agreement with his employees to omit from the computation of overtime 
the cost of a free daily lunch or other single daily meal furnished to 
the employees. The policy behind Sec. 548.3(d) is derived from the 
Administrator's experience that the amount of additional overtime 
compensation involved in such cases is trivial and does not justify the 
bookkeeping required in computing it. Section 548.3(d) is applicable 
only in cases where the employer customarily furnishes no more than a 
single meal a day. If more than one meal a day is customarily furnished 
by the employer all such meals must be taken into account in computing 
the regular rate of pay and the overtime compensation due. \12\ In a 
situation where the employer furnishes three meals a day to his 
employees he may not, under Sec. 548.3(d), omit one of the three meals 
in computing overtime compensation. However, if an employer furnishes a 
free lunch every day and, in addition, occasionally pays ``supper 
money'' \13\ when the employees work overtime, the cost of the lunches 
and the supper money may both be excluded from the overtime rates.
---------------------------------------------------------------------------

    \12\ See Sec. 531.37 of this chapter.
    \13\ See Sec. 778.217(b)(4) of this chapter.

[20 FR 5682, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956]



Sec. 548.305  Excluding certain additions to wages.

    (a) Section 548.3(e) authorizes as established basic rates: ``The 
rate or rates (not less than the rates required by section 6 (a) and (b) 
of the Act) which may be used under the Act to compute overtime 
compensation of the employee but excluding additional payments in cash 
or in kind which, if included in the computation of overtime under the 
Act, would not increase the total compensation of the employee by more 
than 50 cents a week on the average for all overtime weeks (in excess of 
the number of hours applicable under section 7(a) of the Act) in the 
period for which such additional payments are made.''
    (b) Section 548.3(e) permits the employer, upon agreement or 
understanding with the employee, to omit from the computation of 
overtime certain incidental payments which have a trivial effect on the 
overtime compensation due. Examples of payments which may be excluded 
are: modest housing, bonuses or prizes of various sorts, tuition paid by 
the employer for the employee's attendance at a school, and cash 
payments or merchandise awards for soliciting or obtaining new business. 
It may also include such things as payment by the employer of the 
employee's social security tax.
    (c) The exclusion of one or more additional payments under Sec. 
548.3(e) must not affect the overtime compensation of the employee by 
more than 50 cents

[[Page 229]]

a week on the average for the overtime weeks.

    Example. An employee, who normally would come within the 40-hour 
provision of section 7(a) of the Act, is paid a cost-of-living bonus of 
$260 each calendar quarter, or $20 per week. The employee works overtime 
in only 2 weeks in the 13-week period, and in each of these overtime 
weeks he works 50 hours. He is therefore entitled to $2 as overtime 
compensation on the bonus for each week in which overtime was worked 
(i.e., $20 bonus divided by 50 hours equals 40 cents an hour; 10 
overtime hours, times one-half, times 40 cents an hour, equals $2 per 
week). Since the overtime on the bonus is more than 50 cents on the 
average for the 2 overtime weeks, this cost-of-living bonus would not be 
excluded from the overtime computation under Sec. 548.3(e).

    (d) It is not always necessary to make elaborate computations to 
determine whether the effect of the exclusion of a bonus or other 
incidental payment on the employee's total compensation will exceed 50 
cents a week on the average. Frequently the addition to regular wages is 
so small or the number of overtime hours is so limited that under any 
conceivable circumstances exclusion of the additional payments from the 
rate used to compute the employee's overtime compensation would not 
affect the employee's total earnings by more than 50 cents a week. The 
determination that this is so may be made by inspection of the payroll 
records or knowledge of the normal working hours.

    Example. An employer has a policy of giving employees who have a 
perfect attendance record during a 4-week period a bonus of $10. The 
employee never works more than 50 hours a week. It is obvious that 
exclusion of this attendance bonus from the rate of pay used to compute 
overtime compensation could not affect the employee's total earnings by 
more than 50 cents a week. \14\
---------------------------------------------------------------------------

    \14\ For a 50-hour week, an employee's bonus would have to amount to 
$5 a week to affect his overtime compensation by 50 cents.

    (e) There are many situations in which the employer and employee 
cannot predict with any degree of certainty the amount of bonus to be 
paid at the end of the bonus period. They may not be able to anticipate 
with any degree of certainty the number of hours an employee might work 
each week during the bonus period. In such situations the employer and 
employee may agree prior to the performance of the work that a bonus 
will be disregarded in the computation of overtime pay if the employee's 
total earnings are not affected by more than 50 cents a week on the 
average for all overtime weeks during the bonus period. If it turns out 
at the end of the bonus period that the effect on the employee's total 
compensation would not exceed 50 cents a week on the average, then 
additional overtime compensation must be paid on the bonus. (See Sec. 
778.209 of this chapter, for an explanation of how to compute overtime 
on the bonus.)
    (f) In order to determine whether the exclusion of a bonus or other 
incidental payment would affect the total compensation of the employee 
by not more than 50 cents a week on the average, a comparison is made 
between his total compensation computed under the employment agreement 
and his total compensation computed in accordance with the applicable 
overtime provisions of the Act.

    Example. An employee, who normally would come within the 40-hour 
provision of section 7(a) of the Act, is paid at piece rates and at one 
and one-half times the applicable piece rates for work performed during 
hours in excess of 40 in the workweek. The employee is also paid a 
bonus, which when apportioned over the bonus period, amounts to $2 a 
week. He never works more than 50 hours a week. The piece rates could be 
established as basic rates under the employment agreement and no 
additional overtime compensation paid on the bonus. The employee's total 
compensation computed in accordance with the applicable overtime 
provision of the Act, section 7(g)(1) \15\ would be affected by not more 
than 20 cents in any week by not paying overtime compensation on the 
bonus. \16\
---------------------------------------------------------------------------

    \15\ Section 7(g)(1) of the Act provides that overtime compensation 
may be paid at one and one-half times the applicable piece rate but 
extra overtime compensation must be properly computed and paid on 
additional pay required to be included in computing the regular rate.
    \16\ Bonus of $2 divided by fifty hours equals 4 cents an hour. Half 
of this hourly rate multiplied by ten overtime hours equals 20 cents.


[[Page 230]]


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    (g) Section 548.3(e) is not applicable to employees employed at 
subminimum wage rates under learner certificates, or special 
certificates for handicapped workers, or in the case of employees in 
Puerto Rico or the Virgin Islands employed at special minimum rates 
authorized by wage orders issued pursuant to the Act.

[31 FR 6769, May 6, 1966]



Sec. 548.306  Average earnings for year or quarter year preceding 
the current quarter.

    (a) Section 548.3(f)(1) authorizes as an established basic rate:

    A rate per hour for each workweek equal to the average hourly 
remuneration of the employee for employment during the annual period or 
the quarterly period immediately preceding the calendar or fiscal 
quarter year in which such workweek ends, provided (i) it is a fact, 
confirmed by proper records of the employer, that the terms, conditions, 
and circumstances of employment during such prior period, including 
weekly hours of work, work assignments and duties, and the basis of 
remuneration for employment, were not significantly different from the 
terms, conditions, and circumstances of employment which affect the 
employee's regular rates of pay during the current quarter year, and 
(ii) such average hourly remuneration during the prior period is 
computed by the method or methods authorized in the following 
subparagraphs.

    (b) There may be circumstances in which it would be impossible or 
highly impracticable for an employer at the end of a pay period to 
compute, allocate, and pay to an employee certain kinds of remuneration 
for employment during that pay period. This may be true in the case of 
such types of compensation as commissions, recurring bonuses, and other 
incentive payments which are calculated on work performance over a 
substantial period of time. Since the total amount of straight-time 
remuneration is unknown at the time of payment the full regular rate 
cannot be ascertained and overtime compensation could not be paid 
immediately except for the provisions of Sec. 548.3(f). In many such 
situations, the necessity for any subsequent computation and payment of 
the additional overtime compensation due on these types of remuneration 
can be avoided and all overtime premium pay due under the Act, including 
premium pay due on such a commission, bonus or incentive payment, can be 
paid at the end of the pay period rather than at some later date, if the 
parties to the employment agreement so desire. This is authorized by 
Sec. 548.3(f)(1), which provides an alternate method of paying overtime 
premium pay by permitting an employer, under certain conditions, to use 
an established basic rate for computing overtime premium pay at the end 
of each pay period rather than waiting until some later date when the 
exact amounts of the commission, bonus, or other incentive payment can 
be ascertained. Such established rate may also be used in other 
appropriate situations where the parties desire to avoid the necessity 
of recomputing the regular rate from week to week.
    (c)(1) The rate authorized by Sec. Sec. 548.3(f)(1) is an average 
hourly rate based on earnings and hours worked during the workweeks 
ending in a representative period consisting of either the four quarter-
years or the last quarter-year immediately preceding the calendar or 
fiscal quarter-year in which the established rate is to be used. Such a 
rate may be used only if it is a fact, confirmed by proper records of 
the employer, that the terms, conditions, and circumstances of 
employment during this prior period were not significantly different 
from those affecting the employee's regular rates of pay during the 
current quarterly period. Significant differences in weekly hours of 
work, work assignments and duties, the basis of remuneration for 
employment, or other factors in the employment which could result in 
substantial differences in regular rates of pay as between the two 
periods will render the use of an established rate based on such a prior 
period inappropriate, and its use is not authorized under such 
circumstances.
    (2) However, an increase in the basic salary or other constant 
factor would not preclude the use of such a rate provided that accurate 
adjustments are made. For instance, assume that during the previous 
annual period an employee was compensated on the basis of a weekly 
salary of $70 plus a commission of 1 percent of sales. If his weekly

[[Page 231]]

salary is raised to $80 for the next annual period (assuming he still 
receives his commission of 1 percent of sales) the annual rate on which 
the established rate is to be computed must be adjusted by an increase 
of $520 ($10x52 weeks). For instance, assume the above employee earned a 
total of $4,244 and worked 2,318 hours during the previous annual period 
when his salary was $70 per week. Normally his established basic rate 
would be computed by dividing 2,318 hours into $4,244, thus arriving at 
a rate of $1.83. However, since the rate must reflect the increase in 
salary it must be computed by adding the anticipated increase to the pay 
received during the previous annual period ($4,244+ $520=$4,764). The 
established basic rate would then be $2.05.
    (d) Establishment of the rate explained in paragraphs (b) and (c) of 
this section is authorized under the circumstances there stated, 
provided it is computed in accordance with Sec. 548.3(f)(2), which 
prescribes the following method: First, all of the employees' 
remuneration for employment during the workweeks ending in the 
representative four-quarter or quarter-year period immediately preceding 
the current quarter, except overtime premiums and other payments 
excluded from the regular rate under section 7(e) of the Act, must be 
totaled. All straight-time earnings at hourly or piece rates or in the 
form of salary, commissions, bonus or other incentive payments, and 
board, lodging, or other facilities to the extent required under section 
3(m) of the Act and Part 531 of this chapter, together with all other 
forms of remuneration paid to or on behalf of the employee must be 
included in the above total. Second, this total sum must be divided by 
the total number of hours worked during all the workweeks ending in the 
prior period for which such remuneration was paid. The average hourly 
rate obtained through this division may be used as the established rate 
for computing overtime compensation in any workweek, in which the 
employee works in excess of the applicable maximum standard number of 
hours, ending in the calendar or fiscal quarter-year period following 
the four-quarter or quarterly period used for determination of this 
rate. This is authorized irrespective of any fluctuations of average 
straight-time hourly earnings above or below such rate from workweek to 
workweek within the quarter.
    (e) As a variant to the method of computation described in paragraph 
(d) of this section, it is provided in Sec. 548.3(f)(3), with respect 
to situations where it is not practicable for an employer to compute the 
total remuneration of an employee for employment in the prior period in 
time to determine obligations under the Act for the current quarter 
year, a one-month grace period may be used. This method is authorized, 
for example, in employment situations where the computation of bonuses, 
commissions, or other incentive payments cannot be made immediately at 
the end of the four-quarter or quarterly base period. If this one month 
grace period is used, it will be deemed in compliance with Sec. 
548.3(f)(1) to use the basic rate authorized therein for the quarter 
commencing one month after the next preceding four-quarter or quarter-
year period. To illustrate, suppose an employer and employee agree that 
the employee will be paid for overtime work at one and one-half times a 
basic rate computed in accordance with Sec. 548.3(f)(1), but on the pay 
day for the first workweek ending in the current quarter his records do 
not show all commissions earned by the employee in the preceding 
quarter. The employer and employee may therefore elect to use a one 
month grace period. This would mean that a basic rate for the quarter 
January 1-March 31, for example, which is derived from the prior four-
quarter (January 1-December 31) or quarterly (October 1-December 31) 
period, as the case may be, would be applied during a quarterly period 
commencing one month later (February 1-April 30) than the period 
(January 1-March 31) in which it would otherwise be applicable. The same 
adjustment would be made in succeeding quarters. Once the grace method 
of computation is adopted it must be used for each successive quarter.
    (f) The established basic rate must be designated and substantiated 
in the employer's records as required by part 516 of this chapter, and 
other requirements of such part with respect to

[[Page 232]]

records must be met. An agreement or understanding between the parties 
to use such rate must be reached prior to the quarter-year period in 
which the work to which it is applied is performed. The agreement or 
understanding may be limited to a fixed period or may be a continuing 
one, but use of the established rate under such an agreement or 
understanding is not authorized for any period in which terms, 
conditions, and circumstances of employment become significantly 
different from those obtaining during the period from which the rate was 
derived. This method of computation cannot be used if there is any 
change in the employee's position, method of pay, or amount of salary or 
if the employee was not employed during the full period used to 
determine the rate.
    (g) To function properly and to provide, over an extended period, 
overtime premium pay substantially equivalent to the pay the employee 
would receive if overtime were paid on the true regular rate, the plan 
must provide that overtime be computed on the established basic rate in 
every overtime week without regard to the fact that in some weeks the 
employee receives more premium pay than he would using the true regular 
rate and in some weeks less. Plans initiated pursuant to this section 
are based on averages and, if properly applied, will yield substantially 
the same overtime compensation in a representative period as the 
employee would have received if it were computed on the true regular 
rate.
    (h) The following examples assume the employee is due overtime 
premium pay for hours worked over 40 in the workweek.
    (1)  Example. A sales employee whose applicable maximum hours 
standard is 40 hours enters into an agreement with his employer that he 
will be paid a salary plus a commission based on a certain percentage of 
sales. He agrees that this compensation will constitute his total 
straight-time earnings for all hours worked each week, provided such 
compensation equals or exceeds the applicable minimum wage.
    The employee further agrees that he is to receive overtime premium 
pay for each workweek on the normal pay day for that week; based each 
quarter on one-half his established basic rate derived by taking the 
hourly average of the total straight-time remuneration he received 
during the workweeks ending in the four-quarter period immediately 
preceding the current quarter. For example, his established basic rate 
for each workweek ending in the first quarter of 1964 (January through 
March) is determined by computing his average hourly rate for employment 
during all workweeks ending in the four quarter periods of 1963.
    Assume the employee worked the following number of hours and 
received the straight-time pay indicated:

------------------------------------------------------------------------
                                               Pay         Hours worked
   Line No.             Quarters        --------------------------------
 
------------------------------------------------------------------------
1.............  1st--1963..............   $1,074  ......     550  ......
2.............  2d--1963...............      980    $980     480     489
3.............  3d--1963...............    1,069   1,069     542     542
4.............  4th--1963..............    1,365   1,365     619     619
                                        ---------        --------
5.............  1, 2, 3, 4--1963.......    4,488  ......   2,200  ......
6.............  1st--1964..............  .......   1,168  ......     531
                                                 --------        -------
7.............  2, 3, 4 (1963) 1 (1964)  .......   4,582  ......   2,181
------------------------------------------------------------------------


The employee's basic rate for the first quarter of 1964 (line 6) is 
determined by the hours worked and pay received in the four previous 
quarters (lines 1, 2, 3 and 4). Total pay received during that period 
($4,488.00, line 5) is divided by the total hours worked (2,200 hours, 
line 5) to derive the established basic rate ($2.04 per hour). This is 
the hourly rate on which overtime is computed in each workweek ending in 
the first quarter of 1964 in which the employee worked in excess of the 
applicable maximum hours standard. For instance, if in the first week of 
that quarter the employee worked 47 hours he would be due his guaranteed 
salary, his commission (at a later date) plus $7.14 as overtime premium 
pay (7 hoursx2.04x 1/2 ). It does not matter that the employee actually 
earned and ultimately received $90.71 in salary and commission as his 
total straight-time pay for that week and that his true hourly rate 
would be only $1.93 ($90.71/47 hours). The established basic rate is an 
average rate and is designed to be used, and must be used, in every 
overtime week

[[Page 233]]

in the quarter for which it was computed, without regard to the 
employee's true hourly rate in the particular week.
    The employee's basic rate for the second quarter of 1964 will be 
similarly computed at the end of the first quarter of that year by 
adding together the hours worked and pay received in the second, third, 
and fourth quarters of 1963 and the first quarter of 1964 (lines 2, 3, 4 
and 6) so that the totals now reflect the figures in line 7. The regular 
rate is again computed by dividing pay received ($4,582.00) by hours 
worked (2,181) and the new basic rate would be $2.10.
    (2) Example. Assume that an employee employed under a similar 
arrangement agrees to receive overtime premium pay for each workweek on 
the normal pay day, based each quarter on one-half his established basic 
rate determined by the quarterly method rather than by the annual method 
previously discussed. His established basic rate for the first quarter 
of 1964 would therefore be determined by computing his average hourly 
rate for the last quarter of 1963. To illustrate, if in the latter 
quarter the employee received $1,156.00 in straight time compensation 
and worked 561 hours, his basic rate for the first quarter of 1964 would 
therefore be $2.06 ($1,156.00/561 hours). During the overtime weeks in 
this quarter there would be due him, in addition to his straight time 
compensation, premium pay of $1.03 ($2.06x 1/2) for each hour he works 
in excess of the applicable maximum hours standard.
    As in the previous example the established basic rate must be used 
in every overtime week in the quarter for which it was computed without 
regard to the employee's true hourly rate in the particular quarter.

(Sec. 1, 52 Stat. 1060, 1062, as amended, 29 U.S.C. 201, et seq.)

[28 FR 11266, Oct. 22, 1963, as amended at 32 FR 3293, Feb. 26, 1967]

                     Rates Authorized on Application



Sec. 548.400  Procedures.

    (a) If an employer wants to use an established basic rate other than 
one of those authorized under Sec. 548.3, he must obtain specific prior 
approval from the Administrator. For example, if an employer wishes to 
compute overtime compensation for piece workers for each workweek in a 
4-week period at established basic rates which are the straight-time 
average hourly earnings for each employee for the immediately preceding 
4-week period, he should apply to the Administrator for authorization. 
The application for approval of such a basic rate should be addressed to 
the Administrator of the Wage and Hour Division, U.S. Department of 
Labor, Washington, DC 20210. No particular form of application is 
required but the minimum necessary information outlined in Sec. 548.4 
should be included. The application may be made by an employer or a 
group of employers. If any of the employees covered by the application 
is represented by a collective bargaining agent, a joint application of 
the employer and the bargaining agent should be filed. It is not 
necessary to file separate applications for each employee. One 
application will cover as many employees as will be paid at the proposed 
basic rate or rates.
    (b) Prior approval of the Administrator is also required if the 
employer desires to use a basic rate or basic rates which come within 
the scope of a combination of two or more of the paragraphs in Sec. 
548.3 unless the basic rate or rates sought to be adopted meet the 
requirements of a single paragraph in Sec. 548.3. For instance, an 
employee may receive free lunches, the cost of which, by agreement or 
understanding, is not to be included in the rate used to compute 
overtime compensation. \17\ In addition, the employee may receive an 
attendance bonus which, by agreement or understanding, is to be excluded 
from the rate used to compute overtime compensation. \18\ Since these 
exclusions involve two paragraphs of Sec. 548.3, prior approval of the 
Administrator would be necessary unless the exclusion of the cost of the 
free lunches together with the attendance bonus do not affect the 
employee's overtime compensation by more than 50 cents a week on the 
average, in which case the employer and the employee may treat

[[Page 234]]

the situation as one falling within a single paragraph, Sec. 548.3(e).
---------------------------------------------------------------------------

    \17\ See Sec. 548.304.
    \18\ See Sec. 548.305.

---------------------------------------------------------------------------
(Sec. 1, 52 Stat. 1060, as amended, 29 U.S.C. 201, et seq.)

[20 FR 5682, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956; 32 FR 
3294, Feb. 25, 1967]



Sec. 548.401  Agreement or understanding.

    If the agreement or understanding establishing the basic rate is in 
writing, whether incorporated in a collective bargaining agreement or 
not, a copy of the agreement or understanding should be attached to the 
application. If it is not in writing, however, the application to the 
Administrator for approval of a basic rate should contain a written 
statement describing the substance of the agreement or understanding, 
including the proposed effective date and term of the agreement or 
understanding. The term of the agreement or understanding may be of 
definite duration, or may run indefinitely until modified or changed. If 
an agreement or understanding is modified, a new application for 
authorization should be made. \19\
---------------------------------------------------------------------------

    \19\ See Sec. 548.200 for a further explanation of the requirements 
as to the agreement or understanding establishing the basic rate.

[20 FR 5683, Aug. 6, 1955, as amended at 21 FR 338, Jan. 18, 1956]



Sec. 548.402  Applicable overtime provisions.

    The application should also contain a description of the terms of 
employment relating to overtime so that the Administrator can determine 
how the established basic rate will be used if it is approved. For 
instance, if the employees are to be paid time and one-half the basic 
rate for all hours worked in excess of 35 each workweek, this should be 
stated in the application. If the employees are to be paid double time 
for work on Sundays the application should so state.

[20 FR 5683, Aug. 6, 1955]



Sec. 548.403  Description of method of calculation.

    The established basic rate for which approval will be sought will 
normally be a formula or method of calculation of a rate rather than a 
specific dollars and cents rates. \20\ The application should contain a 
complete description of the formula or method of calculation of the 
established basic rate, including any necessary examples which will 
enable the Administrator to understand how the rate will be computed and 
applied.
---------------------------------------------------------------------------

    \20\ See Sec. 548.200.

[20 FR 5683, Aug. 6, 1955]



Sec. 548.404  Kinds of jobs or employees.

    The application should describe or otherwise identify the employees 
to whom the established basic rate will apply. The individual employees 
need not be identified by name but may be described in terms of job 
classification, department, location or other appropriate identifying 
characteristics.

[20 FR 5683, Aug. 6, 1955]



Sec. 548.405  Representative period.

    (a) The application must set forth the facts relied upon to show 
that the established basic rate is substantially equivalent to the 
average hourly earnings of the employee exclusive of overtime premiums 
over a representative period of time. \21\ The basic rate will be 
considered ``substantially equivalent'' to the average hourly earnings 
of the employee if, during a representative period, the employee's total 
overtime earnings calculated at the basic rate in accordance with the 
applicable overtime provisions are approximately equal to the employee's 
total overtime earnings computed on his average hourly earnings for each 
workweek in accordance with section 7(a) of the Act. \22\
---------------------------------------------------------------------------

    \21\ See Sec. Sec. 778.200 through 778.207 of this chapter for 
further discussion of overtime premiums which may be excluded from the 
regular rate of pay.
    \22\ See Sec. Sec. 778.208 through 778.225 of this chapter for 
further discussion of the exclusion of vacation pay, holiday pay, 
discretionary bonuses and other payments from the average hourly 
earnings which comprise the employee's regular rate of pay.
---------------------------------------------------------------------------

    (b) The length of time constituting a representative period will 
depend on the factors that cause the employee's average hourly earnings 
to vary appreciably from week to week. For instance, if the variation in 
earnings of

[[Page 235]]

an employee paid on an incentive basis is due to the difference in 
availability of work in the slow and busy seasons the period used for 
comparison of overtime earnings would have to include both a slow and a 
busy season in order to be representative. Likewise, if a piece-worker's 
average hourly earnings vary appreciably from week to week because of 
differences in materials or styles worked on, the period used for 
purposes of comparison would have to include work on the different 
---------------------------------------------------------------------------
materials and styles in order to be representative.

[20 FR 5683, Aug. 6, 1955]

                       Computation of Overtime Pay



Sec. 548.500  Methods of computation.

    The methods of computing overtime pay on the basic rates for piece 
workers, hourly rated employees, and salaried employees are the same as 
the methods of computing overtime pay at the regular rate.

    Example 1. Under an employment agreement the basic rate to be used 
in computing overtime compensation for a piece worker for hours of work 
in excess of 8 in each day is the employee's average hourly earnings for 
all work performed during that day. \23\ The employee is entitled to 
one-half the basic rate for each daily overtime hour in addition to the 
total piece work earnings for the day.
---------------------------------------------------------------------------

    \23\ See Sec. 548.302.
---------------------------------------------------------------------------

    Example 2. An employee, who normally would come within the forty 
hour provision of section 7(a) of the Act, has a basic rate which is his 
monthly salary divided by the number of regular hours of work in the 
month. \24\ If the salary is intended to cover straight-time 
compensation for a forty hour week he would be entitled to overtime for 
every hour after forty computed on the basis of one and one-half times 
the established basic rate, in addition to his monthly salary. If the 
salary is intended to cover a workweek shorter than forty hours, such as 
thirty-five hours, he would be entitled to additional straight time at 
the basic rate for the hours between thirty-five and forty and also to 
overtime at one and one-half time that rate for all hours worked in 
excess of forty in a week.
---------------------------------------------------------------------------

    \24\ See Sec. 548.301.

[20 FR 5683, Aug. 6, 1955, as amended at 26 FR 7732, Aug. 18, 1961]



Sec. 548.501  Overtime hours based on nonstatutory standards.

    Many employees are paid daily overtime pay or Saturday overtime pay 
or overtime pay on a basis other than the statutory standard of overtime 
pay required by section 7(a) of the Act. In these cases, the number of 
hours for which an employee is paid at least one and one-half times an 
established basic rate must equal or exceed the number of hours worked 
in excess of the applicable number of hours established in section 7(a) 
of the Act in the workweek. However, only overtime hours under the 
employment agreement which also qualify as overtime hours under section 
7(e) (5), (6), or (7) of the Act \25\ may be offset against the hours of 
work in excess of the applicable number of hours established in section 
7(a) of the Act.
---------------------------------------------------------------------------

    \25\ See Sec. Sec. 778.201 through 778.207 of this chapter.

[26 FR 7732, Aug. 18, 1961]



Sec. 548.502  Other payments.

    Extra overtime compensation must be separately computed and paid on 
payments such as bonuses or shift differentials which are not included 
in the computation of the established basic rate and which would have 
been included in the regular rate of pay. \26\
---------------------------------------------------------------------------

    \26\ Unless specifically excluded by agreement or understanding and 
prior authorization is obtained from the Administrator. See Sec. 
548.400(b).

    Example 1. An employee is paid on an hourly rate basis plus a 
production bonus, and also a shift differential of 10 cents for each 
hour worked on the second shift. The authorized basic rate under the 
agreement is the employee's daily average hourly earnings, and under the 
employment agreement he is paid one and one-half times the basic rate 
for all hours worked in excess of 8 each day. Suppose his production 
bonus is included in the computation of the basic rate, but the shift 
differential is not. In addition to overtime compensation computed at 
the basic rate the employee must be paid an extra 5 cents for each 
overtime hour worked on the second shift.
    Example 2. A piece worker, under his employment agreement, is paid 
overtime compensation for daily overtime and for hours of work on 
Saturday based on an authorized basic rate obtained by averaging his 
piece

[[Page 236]]

work earnings for the half-month. In addition, he is paid a monthly 
cost-of-living bonus which is not included in the computation of the 
basic rate. It will be necessary for the employer to compute and pay 
overtime compensation separately on the bonus. \27\
---------------------------------------------------------------------------

    \27\ See Sec. 778.209 of this chapter for an explanation of how to 
compute overtime on the bonus.

[20 FR 5683, Aug. 6, 1955]



PART 549_REQUIREMENTS OF A ``BONA FIDE PROFIT-SHARING PLAN OR TRUST''
--Table of Contents



Sec.
549.0 Scope and effect of regulations.
549.1 Essential requirements for qualifications.
549.2 Disqualifying provisions.
549.3 Distinction between plan and trust.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207.

    Source: 18 FR 3292, June 10, 1953, unless otherwise noted.



Sec. 549.0  Scope and effect of regulations.

    (a) The regulations in this part set forth the requirements of a 
``bona fide profit-sharing plan or trust'' under section 7(e)(3)(b) of 
the Fair Labor Standards Act of 1938, as amended (hereinafter called the 
Act). In determining the total remuneration for employment which section 
7(e) of the Act requires to be included in the regular rate at which an 
employee is employed, it is not necessary to include any sums paid to or 
on behalf of such employee, in recognition of services performed by him 
during a given period, which are paid pursuant to a bona fide profit-
sharing plan or trust meeting the requirements set forth herein. In the 
formulation of these regulations due regard has been given to the 
factors and standards set forth in section 7(e)(3)(b) of the Act.
    (b) The inclusion or exclusion from the regular rate of 
contributions made by an employer pursuant to any plan or trust for 
providing old age, retirement, life, accident or health insurance or 
similar benefits for employees (regardless of whether the plan or trust 
is financed out of profits) is governed by section 7(e)(4) of the Act, 
the requirements of which are set forth in the Interpretative Bulletin 
on Overtime Compensation, part 778, of this chapter, Sec. Sec. 778.214 
and 778.215. However, where such a plan or trust is combined in a single 
program (whether in one or more documents) with a plan or trust for 
providing profit-sharing payments to employees, the profit-sharing 
payments may be excluded from the regular rate if they meet the 
requirements of the regulations in this part and the contributions made 
by the employer for providing the benefits described in section 7(e)(4) 
of the Act may be excluded from the regular rate if they meet the tests 
set forth in the Interpretative Bulletin, part 778, of this chapter, 
Sec. Sec. 778.214 and 778.215.



Sec. 549.1  Essential requirements for qualifications.

    (a) A bona fide profit-sharing plan or trust for purposes of section 
7(e)(3)(b) of the Act is required to meet all of the standards set forth 
in paragraphs (b) through (g) of this section and must not contain any 
of the disqualifying provisions set forth in Sec. 549.2.
    (b) The profit-sharing plan or trust constitutes a definite program 
or arrangement in writing, communicated or made available to the 
employees, which is established and maintained in good faith for the 
purpose of distributing to the employees a share of profits as 
additional remuneration over and above the wages or salaries paid to 
employees which wages or salaries are not dependent upon or influenced 
by the existence of such profit-sharing plan or trust or the amount of 
the payments made pursuant thereto.
    (c) All contributions or allocations by the employer to the fund or 
trust to be distributed to the employees are:
    (1) Derived solely from profits of the employer's business 
enterprise, establishment or plant as a whole, or an established branch 
or division of the business or enterprise which is recognized as such 
for general business purposes and for which profits are separately and 
regularly calculated in accordance with accepted accounting practice; 
and

[[Page 237]]

    (2) Made periodically, but not more frequently than is customary or 
consonant with accepted accounting practice to make periodic 
determinations of profit.
    (d) Eligibility to share in profits extends:
    (1) At least to all employees who are subject to the minimum wage 
and overtime provisions of the Act, or to all such employees in an 
established part of the employer's business as described in paragraph 
(c) of this section: Provided, however, That such eligibility may be 
determined by factors such as length of service or minimum schedule of 
hours or days of work which are specified in the plan or trust, and 
further, that eligibility need not extend to officers of the employer; 
or
    (2) To such classifications of employees as the employer may 
designate with the approval of the Administrator upon a finding, after 
notice to interested persons, including employee representatives, and an 
opportunity to present their views either orally or in writing, that it 
is in accord with the meaning and intent of the provisions of section 
7(e)(3)(b) of the Act and this part. The Administrator may give such 
notice by requiring the employer to post a notice approved by the 
Administrator for a specified period in a place or places where notices 
to employees are customarily posted or at such other place or places 
designated by the Administrator, or he may require notice to be given in 
such other manner as he deems appropriate.
    (e) The amounts paid to individual employees are determined in 
accordance with a definite formula or method of calculation specified in 
the plan or trust. The formula or method of calculation may be based on 
any one or more or more of such factors as straight-time earnings, total 
earnings, base rate of pay of the employee, straight-time hours or total 
hours worked by employees, or length of service, or distribution may be 
made on a per capita basis.
    (f) An employee's total share determined in accordance with 
paragraph (e) of this section may not be diminished because of any other 
remuneration received by him.
    (g) Provision is made either for payment to the individual employees 
of their respective shares of profits within a reasonable period after 
the determination of the amount of profits to be distributed, or for the 
irrevocable deposit by the employer of his employees' distributive 
shares of profits with a trustee for deferred distribution to such 
employees of their respective shares after a stated period of time or 
upon the occurrence of appropriate contingencies specified in the plan 
or trust: Provided, however, That the right of an employee to receive 
his share is not made dependent upon his continuing in the employ of the 
employer after the period for which the determination of profits has 
been made.

(Approved by the Office of Management and Budget under control number 
1215-0119)

[18 FR 3292, June 10, 1953, as amended at 47 FR 145, Jan. 5, 1982; 71 FR 
16666, Apr. 3, 2006]



Sec. 549.2  Disqualifying provisions.

    No plan or trust which contains any one of the following provisions 
shall be deemed to meet the requirements of a bona fide profit-sharing 
plan or trust under section 7(e)(3)(b) of the Act:
    (a) If the share of any individual employee is determined in 
substance on the basis of attendance, quality or quantity of work, rate 
of production, or efficiency;
    (b) If the amount to be paid periodically by the employer into the 
fund or trust to be distributed to the employees is a fixed sum;
    (c) If periodic payments of minimum amounts to the employees are 
guaranteed by the employer;
    (d) If any individual employee's share, by the terms of the plan or 
trust, is set at a predetermined fixed sum or is so limited as to 
provide in effect for the payment of a fixed sum, or is limited to or 
set at a predetermined specified rate per hour or other unit of work or 
worktime;
    (e) If the employer's contributions or allocations to the fund or 
trust to be distributed to the employees are based on factors other than 
profits such as hours of work, production, efficiency, sales or savings 
in cost.

[[Page 238]]



Sec. 549.3  Distinction between plan and trust.

    As used in this part:
    (a) Profit-sharing plan means any such program or arrangement as 
qualifies hereunder which provides for the distribution by the employer 
to his employees of their respective shares of profits;
    (b) Profit-sharing trust means any such program or arrangement as 
qualifies under this part which provides for the irrevocable deposit by 
the employer of his employees' distributive shares of profits with a 
trustee for deferred distribution to such employees of their respective 
shares.



PART 550_DEFINING AND DELIMITING THE TERM ``TALENT FEES''
--Table of Contents



Sec.
550.1 ``Talent fees'' as used in section 7(e)(3)(c) of the Fair Labor 
          Standards Act, as amended.
550.2 Definitions.

    Authority: Sec. 7, 52 Stat. 1063, as amended; 29 U.S.C. 207.



Sec. 550.1  ``Talent fees'' as used in section 7(e)(3)(c) of the Fair
Labor Standards Act, as amended.

    The term talent fees in section 7(e)(3)(c) of the Act shall mean 
extra payments made to performers, including announcers on radio and 
television programs, where the payment is made:
    (a) To an employee having regular duties as a staff performer 
(including announcers), as an extra payment for services as a performer 
on a particular commercial program or a particular series of commercial 
programs (including commercial spot announcements) or for special 
services as a performer on a particular sustaining program or a 
particular series of sustaining programs;
    (b) In pursuance of an applicable employment agreement or 
understanding or an applicable collective bargaining agreement in a 
specific amount agreed upon in advance of the performance of the 
services or special services for which the extra payment is made: 
Provided, however, That where services described in paragraph (a) of 
this section are performed on a program falling outside of the regular 
workday or workweek as established and scheduled in good faith in 
accordance with the provisions of the applicable employment agreement, 
the Administrator will not regard the Act as requiring additional 
compensation as a result of the time worked on the program if the 
parties agree in advance of such program that a special payment made 
therefor shall include any increased statutory compensation attributable 
to the additional worktime thereon and if such special payment, when 
made, is actually sufficient in amount to include the statutory straight 
time and overtime compensation (computed without regard to talent fees) 
for the additional time worked in the workweek resulting from the 
performer's services on such program.

[15 FR 402, Jan. 25, 1950, as amended at 18 FR 5069, Aug. 25, 1953]



Sec. 550.2  Definitions.

    As used in the regulations in this part:
    (a) The term extra payment shall mean a payment, in a specific 
amount, made in addition to the straight-time and overtime compensation 
which would be due the performer under the agreement applicable to his 
employment and under the Act if the time spent in performing the 
services or special services referred to in paragraph (a) of Sec. 550.1 
had been devoted exclusively to duties as a staff performer; but shall 
not include any payment any part of which is credited or offset against 
any remuneration otherwise payable to the performer under any contract 
or statutory provision;
    (b) The term performer shall mean a person who performs a 
distinctive, personalized service as a part of an actual broadcast or 
telecast including an actor, singer, dancer, musician, comedian, or any 
person who entertains, affords amusement to, or occupies the interest of 
a radio or television audience by acting, singing, dancing, reading, 
narrating, performing feats of skill, or announcing, or describing or 
relating facts, events and other matters of interest, and who actively 
participates in such capacity in the actual presentation of a radio or 
television program. It shall not include such persons as script writers, 
stand-ins, or directors who are neither seen nor heard by the

[[Page 239]]

radio or television audience; nor shall it include persons who 
participate in the broadcast or telecast purely as technicians such as 
engineers, electricians and stage hands;
    (c) The term special services shall mean services beyond the scope 
of a performer's regular or ordinary duties as a staff performer under 
the agreement applicable to the employment.

[15 FR 402, Jan. 25, 1950]



PART 551_LOCAL DELIVERY DRIVERS AND HELPERS; WAGE PAYMENT 
PLANS--Table of Contents



Sec.
551.1 Statutory provision.
551.2 Findings authorized by this part.
551.3 Petition for a finding.
551.4 Requirements for a petition.
551.5 Information to be submitted.
551.6 Action on petition.
551.7 Finding.
551.8 Definitions.
551.9 Recordkeeping requirements.

    Authority: Sec. 9, 75 Stat. 74; 29 U.S.C. 213(b).

    Source: 30 FR 8585, July 7, 1965, unless otherwise noted.



Sec. 551.1  Statutory provision.

    The following provision for exemption from the overtime pay 
provision is contained in section 13(b) of the Fair Labor Standards Act 
of 1938, as amended (29 U.S.C. 213(b)):

    (b) The provisions of section 7 shall not apply with respect to:

                                * * * * *

    (11) any employee employed as a driver or driver's helper making 
local deliveries, who is compensated for such employment on the basis of 
trip rates, or other delivery payment plan, if the Secretary shall find 
that such plan has the general purpose and effect of reducing hours 
worked by such employees to, or below, the maximum workweek applicable 
to them under section 7(a).


Under this provision, an employee employed and compensated as described 
in the quoted paragraph (11) may be employed without payment of overtime 
compensation for a workweek longer than the maximum workweek applicable 
to him under section 7(a) of the Act, but only if it is established by a 
finding of the Secretary that the employee is compensated for his 
employment as a driver or driver's helper making local deliveries on the 
basis of trip rates or other delivery payment plan that has the general 
purpose and effect stated in section 13(b)(11). Such a finding is 
prescribed by the statute as one of the ``explicit prerequisites to 
exemption''. (See Arnold v. Kanowsky, 361 U.S. 388, 392.)



Sec. 551.2  Findings authorized by this part.

    (a) The Administrator, pursuant to the authority vested in him by 
the Secretary of Labor, will make and apply findings under section 
13(b)(11) of the Act as provided in this part. Such findings shall be 
made only upon petitions meeting the requirements of this part, and only 
as authorized in this section.
    (b) For the purpose of establishing whether a wage payment plan has 
the purpose and effect required by section 13(b)(11) for an exemption 
from the overtime provisions of the Act, the Administrator shall have 
authority, upon a proper showing and in accordance with the provisions 
of this part, to make a finding as to the general purpose and effect of 
any specific plan of compensation on the basis of trip rates or other 
delivery payment plan, with respect to the reduction of the length of 
the workweeks worked by the employees of any specific employer who are 
compensated in accordance with such plan for their employment by such 
employer as drivers or drivers' helpers making local deliveries.
    (c) Any finding made as to the purpose and effect of such a wage 
payment plan pursuant to a petition therefor will be based upon a 
consideration of all relevant facts shown or represented to exist with 
respect to such plan that are made available to the Administrator. A 
finding that such plan has the general effect of reducing the hours 
worked by drivers or drivers' helpers compensated thereunder to, or 
below, the maximum workweek applicable to them under section 7(a) of the 
Act is not authorized under this part unless the Administrator finds 
that during the most recently completed representative period of one 
year (based on the experience of the employer in question,

[[Page 240]]

or if such employer has not previously used such plan, on the experience 
of another employer using such plan under substantially the same 
conditions, all as defined in Sec. 551.8(g)(1)), the average weekly 
hours, taken in the aggregate, of all full-time employees covered by the 
plan are not in excess of the maximum workweek applicable to such 
employees under section 7(a), or unless the Administrator makes an 
interim finding with respect to such plan that, notwithstanding a lack 
of experience under it for a representative period of 1 year, its 
provisions and manner of operation, together with the other available 
information concerning the plan, indicate clearly that by the end of 
such first representative year the effect of the plan will have been to 
reduce the average weekly hours worked by the employees covered by the 
plan in such first year of operation to, or below, such maximum 
applicable workweek.



Sec. 551.3  Petition for a finding.

    Any employer desiring to establish an exemption from the overtime 
pay requirements of the Act with respect to employees whose employment 
and compensation may be considered to qualify therefor under section 
13(b)(11) may petition the Administrator, in writing, for a finding 
under such section and this part. If the wage payment plan with respect 
to which the finding is sought has been the subject of collective 
bargaining with representatives of employees covered by the plan, the 
employer shall provide timely notice of such petition, in writing, to 
the authorized representatives or representatives of such employees and 
shall submit a copy of such notice to the Administrator.



Sec. 551.4  Requirements for petition.

    A petition for a finding under section 13(b)(11) of the Act and this 
part shall include in such detail as the Administrator may deem 
necessary for evaluation under the standards provided by the statute and 
this part, all the information required by Sec. 551.5. Such information 
may be presented in any form convenient to the petitioner; no particular 
form is prescribed for the petition. The petition shall also include, by 
attachment, a copy of any collective bargaining agreement or other 
document governing the method of payment for the work of employees 
covered by the wage payment plan with respect to which a finding is 
requested. The petition, together with any such documents, shall be 
filed with the Administrator, Wage and Hour Division, United States 
Department of Labor, Washington, DC 20210.



Sec. 551.5  Information to be submitted.

    Every petition filed under Sec. Sec. 551.3 and 551.4 shall contain 
the following information:
    (a) A full statement of the facts relied upon by the petitioner to 
establish, under the applicable definitions in Sec. 551.8, that the 
wage payment plan submitted for consideration: (1) Applies to employees 
employed (i) as drivers or drivers' helpers, or both, (ii) in ``making 
local deliveries'' and (2) determines, ``on the basis of trip rates or 
other delivery payment plan'', the compensation which such employees 
receive for such employment; and
    (b) A complete description of the wage payment plan and full 
information concerning its application showing, among other things: (1) 
The method of compensation which it provides and the types of payments 
made to employees covered by the plan, together with such information as 
may be necessary to show how these payments are computed and how and to 
what extent they are actually used in determining the total compensation 
received by employees covered by the plan, (2) a full description of all 
duties performed by the employees compensated under the plan, including 
information as to the types of goods delivered, their points of origin 
and destination and the purposes for and geographical area within which 
they are transported by the employees, the relationship of the employer 
to the consignor and consignee, and the numbers, (minimum, maximum, and 
average or typical) of round trips made by such employees in 
transporting such goods during the workday and of deliveries made during 
each such trip, and (3) other relevant information concerning the 
employees compensated under the plan including the total number of such 
employees employed full-time as drivers or drivers' helpers

[[Page 241]]

making local deliveries under the provisions of the plan during the most 
recent representative annual period as defined in Sec. 551.8(g)(1), the 
weekly hours worked and the average workweek of such employees during 
such period and, if there are any significant variations in the number 
of such employees so employed in the particular workweeks within the 
period, a full statement of the facts concerning such variations, 
information as to any workweeks in which any employees compensated under 
the plan devote less than eighty percent of their worktime to duties as 
drivers or drivers' helpers making local deliveries; and
    (c) A statement of the facts and reasons based on the history and 
application of the plan which are relied upon to support a finding that 
the plan has the general purpose and effect of reducing the hours worked 
by drivers or drivers' helpers covered by its provisions to, or below, 
the statutory maximum workweek applicable to them under the Act.



Sec. 551.6  Action on petition.

    (a) Upon the filing of a petition as provided in this part, the 
Administrator will give consideration thereto, and make any further 
inquiry into the facts that he may deem necessary. The Administrator may 
require, before taking further action thereof, that notice of the 
petition be given to affected employees in such manner as he shall 
determine to be appropriate to afford them an opportunity to submit any 
facts or reasons supporting or opposing the finding prayed for in the 
petition. If the Administrator determines that the petition fails to 
satisfy any of the requirements of this part, he shall deny the request 
for a finding or, in his discretion, advise petitioners that further 
consideration will be given to the submission if the deficiencies are 
remedied within a specified time. No further consideration will be 
given, however, to a request for a finding if the Administrator 
determines that the factual situation as described in the petition is 
not one in which authority to make the finding is provided by section 
13(b)(11) and this part.
    (b) If the Administrator determines that a petition meets all 
requirements of this part and if he is satisfied from consideration of 
all relevant facts and information available to him that the wage 
payment plan submitted has, within the meaning of section 13(b)(11) of 
the Act and this part, the general purpose and effect with respect to 
drivers or drivers' helpers making local deliveries, who are employed 
pursuant to its provisions on the basis of trip rates or other delivery 
payment plan, of reducing the hours worked by such employees to, or 
below, the maximum workweek applicable to them under section 7(a) of the 
Act, the Administrator will make an appropriate finding to this effect, 
and notify the petitioner; otherwise the request for such a finding will 
be denied.



Sec. 551.7  Finding.

    (a) A finding by the Administrator under paragraph (b) of Sec. 
551.6 that a wage payment plan has the purpose and effect required for 
exemption of employees under section 13(b)(11) and this part shall be 
effective in accordance with its terms upon notification to petitioners 
as provided in Sec. 551.6(b). The finding shall include such terms and 
conditions and such limitations with respect to its application as the 
Administrator shall deem necessary to ensure that no exemption will be 
based thereon in the event of any significant change in any of the 
essential supporting facts.
    (b) A finding made pursuant to this part may be amended or revoked 
by the Administrator at any time upon his own motion or upon written 
request of any interested person setting forth reasonable grounds 
therefor. Before taking such action, the Administrator shall afford 
opportunity to interested persons to present their views and shall give 
consideration to any relevant information that they may present.



Sec. 551.8  Definitions.

    As used in this part:
    (a) Secretary means the Secretary of Labor.
    (b) Administrator means the Administrator of the Wage and Hour 
Division, United States Department of Labor.
    (c) Finding means a finding made pursuant to section 13(b)(11) of 
the Fair

[[Page 242]]

Labor Standards Act as provided in this part.
    (d) Making local deliveries includes the activities customarily and 
regularly performed in the physical transfer, to customers of a business 
establishment situated within the rural or urban community or 
metropolitan area in which the establishment is located, of goods sold 
or otherwise disposed of to such local customers by such establishment. 
Included are activities performed by the driver or driver's helpers as 
an incident to or in conjunction with making such deliveries, such as 
picking up and returning the delivery vehicle at the beginning and end 
of the workday, cleaning the vehicle, checking it to see that it is in 
operating condition, loading and unloading or assisting in loading or 
unloading the goods, and picking up empty containers or other goods from 
customers for return to the establishment. Not included in the making of 
local deliveries are such transportation as the carriage of passengers; 
the transportation of any load of goods that would normally require a 
round trip longer than a single workday for delivery and return to the 
starting point; any movement of goods which does not accomplish a 
transfer of possession from one person to another; transportation of 
goods as a part of a process of production; and transportation of goods 
within a local community or metropolitan area as an integral part of a 
carriage of such goods from a point outside such community or area to a 
destination within it, rather than as a part of the activities 
customarily performed in making local deliveries, as defined in this 
section, in the same manner as deliveries of goods held locally for 
local disposition.
    (e) Employee employed as a driver or driver's helper making local 
deliveries includes any employee who is employed in any workweek:
    (1) To drive a delivery vehicle used in making local deliveries, or
    (2) To assist the driver of such a vehicle in making such 
deliveries, being required to ride on the vehicle to perform such work,

and whose work in making local deliveries, as defined in paragraph (d) 
of this section, accounts for at least 80 percent of his hours of work 
in such workweek. In making and applying any finding as provided in this 
part, no employee shall be considered to be employed as a driver or 
driver's helper making local deliveries in any workweek when more than 
20 percent of his hours of work results from the performance of duties 
other than those included in making such local deliveries.
    (f) A plan of compensation on the basis of trip rates or other 
delivery payment plan means any plan whereby employees employed as 
drivers or drivers' helpers making local deliveries are compensated for 
their employment on a basis such that the amount of payment which they 
receive is governed in substantial part by a system of wage payments 
based on units of work measurement such as numbers of trips taken, miles 
driven, stops made, or units of goods delivered (but not including any 
plan based solely on the number of hours worked) so that there is a 
substantial inducement to employees to minimize the number of hours 
worked.
    (g) For purposes of determining whether and to what extent a plan of 
compensation on the basis of trip rates or other delivery payment plan 
has the effect of reducing the weekly hours worked by employees employed 
by an employer as drivers or drivers' helpers making local deliveries 
pursuant to such plan:
    (1) The most recently completed representative period of one year 
(Sec. 551.2(c)) or most recent representative annual period (Sec. 
551.5(b)(3)) shall mean a one-year period within which such employees 
were so employed on a regular full-time basis by such employer (or, if 
such employer has not previously used such plan, by another employer 
using the plan under substantially the same conditions, which period 
shall include a calendar or fiscal quarter-year ending not more than 
four months prior to the date as of which the effect of such plan is to 
be considered, together with the three quarter-year periods immediately 
preceding such recently completed quarter-year; and
    (2) The average weekly hours or average workweek of the full-time 
employees so employed during such annual period shall mean the number of 
hours obtained by the following computation:

[[Page 243]]

(i) All the hours worked during such annual period by all the full-time 
employees regularly employed under the plan shall be totaled; (ii) the 
number of workweeks worked by each such employee during such annual 
period under such plan shall be computed, and the totals added together; 
and (iii) the average weekly hours, taken in the aggregate, of all such 
employees shall be computed by dividing the sum resulting from 
computation (i) by the sum resulting from computation (ii).



Sec. 551.9  Recordkeeping requirements.

    The records which must be kept and the computations which must be 
made with respect to employees for whom the overtime pay exemption under 
section 13(b)(11) is taken are specified in Sec. 516.15 of this 
chapter.

[35 FR 17841, Nov. 20, 1970]



PART 552_APPLICATION OF THE FAIR LABOR STANDARDS ACT TO DOMESTIC 
SERVICE--Table of Contents



                      Subpart A_General Regulations

Sec.
552.1 Terms used in regulations.
552.2 Purpose and scope.
552.3 Domestic service employment.
552.4 Babysitting services.
552.5 Casual basis.
552.6 Companionship services for the aged or infirm.

                        Subpart B_Interpretations

552.99 Basis for coverage of domestic service employees.
552.100 Application of minimum wage and overtime provisions.
552.101 Domestic service employment.
552.102 Live-in domestic service employees.
552.103 Babysitting services in general.
552.104 Babysitting services performed on a casual basis.
552.105 Individuals performing babysitting services in their own homes.
552.106 Companionship services for the aged or infirm.
552.107 Yard maintenance workers.
552.108 Child labor provisions.
552.109 Third party employment.
552.110 Recordkeeping requirements.

    Authority: Secs. 13(a)(15) and 13(b)(21) of the Fair Labor Standards 
Act, as amended (29 U.S.C. 213(a)(15), (b)(21)), 88 Stat. 62; Sec. 29(b) 
of the Fair Labor Standards Amendments of 1974 (Pub. L. 93-259, 88 Stat. 
76), unless otherwise noted.

    Source: 40 FR 7405, Feb. 20, 1975, unless otherwise noted.



                      Subpart A_General Regulations



Sec. 552.1  Terms used in regulations.

    (a) Administrator means the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, or the Administrator's authorized 
representative.
    (b) Act means the Fair Labor Standards Act of 1938, as amended.



Sec. 552.2  Purpose and scope.

    (a) This part provides necessary rules for the application of the 
Act to domestic service employment in accordance with the following 
amendments made by the Fair Labor Standards Amendments of 1974, 88 Stat. 
55, et seq.
    (b) Section 2(a) of the Act finds that the ``employment of persons 
in domestic service in households affects commerce.'' Section 6(f) 
extends the minimum wage protection under section 6(b) to employees 
employed as domestic service employees under either of the following 
circumstances:
    (1) If the employee's compensation for such services from his/her 
employer would constitute wages under section 209(a)(6) of title II of 
the Social Security Act, that is, if the cash remuneration during a 
calendar year is not less than $1,000 in 1995, or the amount designated 
for subsequent years pursuant to the adjustment provision in section 
3121(x) of the Internal Revenue Code of 1986; or
    (2) If the employee was employed in such domestic service work by 
one or more employers for more than 8 hours in the aggregate in any 
workweek.

Section 7(l) extends generally the protection of the overtime provisions 
of section 7(a) to such domestic service employees. Section 13(a)(15) 
provides both a minimum wage and overtime exemption for ``employees 
employed on a casual basis in domestic service employment to provide 
babysitting services'' and for domestic service employees employed'' to 
provide companionship services for individuals who (because of age or 
infirmity) are unable to care for themselves.'' Section 13(b)(21)

[[Page 244]]

provides an overtime exemption for domestic service employees who reside 
in the household in which they are employed.
    (c) The definitions required by section 13(a)(15) are contained in 
Sec. Sec. 552.3, 552.4, 552.5 and 552.6.

(Sec. 29(b), 88 Stat. 76; (29 U.S.C. 206(f)); Secretary's Order No. 16-
75, dated Nov. 25, 1975 (40 FR 55913), and Employment Standards Order 
No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[40 FR 7405, Feb. 20, 1975, as amended at 44 FR 37221, June 26, 1979; 60 
FR 46767, 46768, Sept. 8, 1995]



Sec. 552.3  Domestic service employment.

    As used in section 13(a)(15) of the Act, the term domestic service 
employment refers to services of a household nature performed by an 
employee in or about a private home (permanent or temporary) of the 
person by whom he or she is employed. The term includes employees such 
as cooks, waiters, butlers, valets, maids, housekeepers, governesses, 
nurses, janitors, laundresses, caretakers, handymen, gardeners, footmen, 
grooms, and chauffeurs of automobiles for family use. It also includes 
babysitters employed on other than a casual basis. This listing is 
illustrative and not exhaustive.



Sec. 552.4  Babysitting services.

    As used in section 13(a)(15) of the Act, the term babysitting 
services shall mean the custodial care and protection, during any part 
of the 24-hour day, of infants or children in or about the private home 
in which the infants or young children reside. The term ``babysitting 
services'' does not include services relating to the care and protection 
of infants or children which are performed by trained personnel, such as 
registered, vocational, or practical nurses. While such trained 
personnel do not qualify as babysitters, this fact does not remove them 
from the category of a covered domestic service employee when employed 
in or about a private household.



Sec. 552.5  Casual basis.

    As used in section 13(a)(15) of the Act, the term casual basis, when 
applied to babysitting services, shall mean employment which is 
irregular or intermittent, and which is not performed by an individual 
whose vocation is babysitting. Casual babysitting services may include 
the performance of some household work not related to caring for the 
children: Provided, however, That such work is incidental, i.e., does 
not exceed 20 percent of the total hours worked on the particular 
babysitting assignment.



Sec. 552.6  Companionship services for the aged or infirm.

    As used in section 13(a)(15) of the Act, the term companionship 
services shall mean those services which provide fellowship, care, and 
protection for a person who, because of advanced age or physical or 
mental infirmity, cannot care for his or her own needs. Such services 
may include household work related to the care of the aged or infirm 
person such as meal preparation, bed making, washing of clothes, and 
other similar services. They may also include the performance of general 
household work: Provided, however, That such work is incidental, i.e., 
does not exceed 20 percent of the total weekly hours worked. The term 
``companionship services'' does not include services relating to the 
care and protection of the aged or infirm which require and are 
performed by trained personnel, such as a registered or practical nurse. 
While such trained personnel do not qualify as companions, this fact 
does not remove them from the category of covered domestic service 
employees when employed in or about a private household.



                        Subpart B_Interpretations



Sec. 552.99  Basis for coverage of domestic service employees.

    Congress in section 2(a) of the Act specifically found that the 
employment of persons in domestic service in households affects 
commerce. In the legislative history it was pointed out that employees 
in domestic service employment handle goods such as soaps, mops, 
detergents, and vacuum cleaners that have moved in or were produced for 
interstate commerce and also that they free members of the household to 
themselves to engage in activities in interstate commerce (S. Rep. 93-
690,

[[Page 245]]

pp. 21-22). The Senate Committee on Labor and Public Welfare ``took note 
of the expanded use of the interstate commerce clause by the Supreme 
Court in numerous recent cases (particularly Katzenbach v. McClung, 379 
U.S. 294 (1964)),'' and concluded ``that coverage of domestic employees 
is a vital step in the direction of ensuring that all workers affecting 
interstate commerce are protected by the Fair Labor Standards Act'' (S. 
Rep. 93-690, pp. 21-22).



Sec. 552.100  Application of minimum wage and overtime provisions.

    (a)(1) Domestic service employees must receive for employment in any 
household a minimum wage of not less than that required by section 6(a) 
of the Fair Labor Standards Act.
    (2) In addition, domestic service employees who work more than 40 
hours in any one workweek for the same employer must be paid overtime 
compensation at a rate not less than one and one-half times the 
employee's regular rate of pay for such excess hours, unless the 
employee is one who resides in the employer's household. In the case of 
employees who reside in the household where they are employed, section 
13(b)(21) of the Act provides an overtime, but not a minimum wage, 
exemption. See Sec. 552.102.
    (b) In meeting the wage responsibilities imposed by the Act, 
employers may take appropriate credit for the reasonable cost or fair 
value, as determined by the Administrator, of food, lodging and other 
facilities customarily furnished to the employee by the employer such as 
drugs, cosmetics, drycleaning, etc. See S. Rep. 93-690, p. 19, and 
section 3(m) of the Act. Credit may be taken for the reasonable cost or 
fair value of these facilities only when the employee's acceptance of 
them is voluntary and uncoerced. See regulations, part 531. Where 
uniforms are required by the employer, the cost of the uniforms and 
their care may not be included in such credit.
    (c) For enforcement purposes, the Administrator will accept a credit 
taken by the employer of up to 37.5 percent of the statutory minimum 
hourly wage for a breakfast (if furnished), up to 50 percent of the 
statutory minimum hourly wage for a lunch (if furnished), and up to 62.5 
percent of the statutory minimum hourly wage for a dinner (if 
furnished), which meal credits when combined do not in total exceed 150 
percent of the statutory minimum hourly wage for any day. Nothing herein 
shall prevent employers from crediting themselves with the actual cost 
or fair value of furnishing meals, whichever is less, as determined in 
accordance with part 531 of this chapter, if such cost or fair value is 
different from the meal credits specified above: Provided, however, that 
employers keep, maintain and preserve (for a period of 3 years) the 
records on which they rely to justify such different cost figures.
    (d) In the case of lodging furnished to live-in domestic service 
employees, the Administrator will accept a credit taken by the employer 
of up to seven and one-half times the statutory minimum hourly wage for 
each week lodging is furnished. Nothing herein shall prevent employers 
from crediting themselves with the actual cost or fair value of 
furnishing lodging, whichever is less, as determined in accordance with 
part 531 of this chapter, if such cost or fair value is different from 
the amount specified above, provided, however, that employers keep, 
maintain, and preserve (for a period of 3 years) the records on which 
they rely to justify such different cost figures. In determining 
reasonable cost or fair value, the regulations and rulings in 29 CFR 
part 531 are applicable.

(Sec. 29(b), 88 Stat. 76; (29 U.S.C. 206(f)); Secretary's Order No. 16-
75, dated Nov. 25, 1975 (40 FR 55913), and Employment Standards Order 
No. 76-2, dated Feb. 23, 1976 (41 FR 9016))

[40 FR 7405, Feb. 20, 1975, as amended at 44 FR 6716, Feb. 2, 1979; 60 
FR 46768, Sept. 8, 1995]



Sec. 552.101  Domestic service employment.

    (a) The definition of domestic service employment contained in Sec. 
552.3 is derived from the regulations issued under the Social Security 
Act (20 CFR 404.1057) and from ``the generally accepted meaning'' of the 
term. Accordingly, the term includes persons who are frequently referred 
to as ``private household workers.'' See S. Rep. 93-690,

[[Page 246]]

p. 20. The domestic service must be performed in or about the private 
home of the employer whether that home is a fixed place of abode or a 
temporary dwelling as in the case of an individual or family traveling 
on vacation. A separate and distinct dwelling maintained by an 
individual or a family in an apartment house, condominium or hotel may 
constitute a private home.
    (b) Employees employed in dwelling places which are primarily 
rooming or boarding houses are not considered domestic service 
employees. The places where they work are not private homes but 
commercial or business establishments. Likewise, employees employed in 
connection with a business or professional service which is conducted in 
a home (such as a real estate, doctor's, dentist's or lawyer's office) 
are not domestic service employees.
    (c) In determining the total hours worked, the employer must include 
all time the employee is required to be on the premises or on duty and 
all time the employee is suffered or permitted to work. Special rules 
for live-in domestic service employees are set forth in Sec. 552.102.

[40 FR 7405, Feb. 20, 1975, as amended at 60 FR 46768, Sept. 8, 1995]



Sec. 552.102  Live-in domestic service employees.

    (a) Domestic service employees who reside in the household where 
they are employed are entitled to the same minimum wage as domestic 
service employees who work by the day. However, section 13(b)(21) 
provides an exemption from the Act's overtime requirements for domestic 
service employees who reside in the household where employed. But this 
exemption does not excuse the employer from paying the live-in worker at 
the applicable minimum wage rate for all hours worked. In determining 
the number of hours worked by a live-in worker, the employee and the 
employer may exclude, by agreement between themselves, the amount of 
sleeping time, meal time and other periods of complete freedom from all 
duties when the employee may either leave the premises or stay on the 
premises for purely personal pursuits. For periods of free time (other 
than those relating to meals and sleeping) to be excluded from hours 
worked, the periods must be of sufficient duration to enable the 
employee to make effective use of the time. If the sleeping time, meal 
periods or other periods of free time are interrupted by a call to duty, 
the interruption must be counted as hours worked. See regulations part 
785, Sec. 785.23.
    (b) Where there is a reasonable agreement, as indicated in (a) 
above, it may be used to establish the employee's hours of work in lieu 
of maintaining precise records of the hours actually worked. The 
employer shall keep a copy of the agreement and indicate that the 
employee's work time generally coincides with the agreement. If it is 
found by the parties that there is a significant deviation from the 
initial agreement, a separate record should be kept for that period or a 
new agreement should be reached that reflects the actual facts.



Sec. 552.103  Babysitting services in general.

    The term ``babysitting services'' is defined in Sec. 552.4. 
Babysitting is a form of domestic service, and babysitters other than 
those working on a casual basis are entitled to the same benefits under 
the Act as other domestic service employees.



Sec. 552.104  Babysitting services performed on a casual basis.

    (a) Employees performing babysitting services on a casual basis, as 
defined in Sec. 552.5 are excluded from the minimum wage and overtime 
provisions of the Act. The rationale for this exclusion is that such 
persons are usually not dependent upon the income from rendering such 
services for their livelihood. Such services are often provided by (1) 
Teenagers during non-school hours or for a short period after completing 
high school but prior to entering other employment as a vocation, or (2) 
older persons whose main source of livelihood is from other means.
    (b) Employment in babysitting services would usually be on a 
``casual basis,'' whether performed for one or more employees, if such 
employment by all such employers does not exceed 20 hours per week in 
the aggregate. Employment in excess of these hours

[[Page 247]]

may still be on a ``casual basis'' if the excessive hours of employment 
are without regularity or are for irregular or intermittent periods. 
Employment in babysitting services shall also be deemed to be on a 
``casual basis'' (regardless of the number of weekly hours worked by the 
babysitter) in the case of individuals whose vocations are not domestic 
service who accompany families for a vacation period to take care of the 
children if the duration of such employment does not exceed 6 weeks.
    (c) If the individual performing babysitting services on a ``casual 
basis'' devotes more than 20 percent of his or her time to household 
work during a babysitting assignment, the exemption for ``babysitting 
services on a casual basis'' does not apply during that assignment and 
the individual must be paid in accordance with the Act's minimum wage 
and overtime requirements. This does not affect the application of the 
exemption for previous or subsequent babysitting assignments where the 
20 percent tolerance is not exceeded.
    (d) Individuals who engage in babysitting as a full-time occupation 
are not employed on a ``casual basis.''

[40 FR 7405, Feb. 20, 1975, as amended at 60 FR 46768, Sept. 8, 1995]



Sec. 552.105  Individuals performing babysitting services in their
own homes.

    (a) It is clear from the legislative history that the Act's new 
coverage of domestic service employees is limited to those persons who 
perform such services in or about the private household of the employer. 
Accordingly, if such services are performed away from the employer's 
permanent, or temporary household there is no coverage under sections 
6(f) and 7(l) of the Act. A typical example would be an individual who 
cares for the children of others in her own home. This type of 
operation, however, could, depending on the particular facts, qualify as 
a preschool or day care center and thus be covered under section 
3(s)(1)(B) of the Act in which case the person providing the service 
would be required to comply with the applicable provisions of the Act.
    (b) An individual in a local neighborhood who takes four or five 
children into his or her home, which is operated as a day care home, and 
who does not have more than one employee or whose only employees are 
members of that individual's immediate family is not covered by the Fair 
Labor Standards Act.

[40 FR 7405, Feb. 20, 1975, as amended at 60 FR 46768, Sept. 8, 1995]



Sec. 552.106  Companionship services for the aged or infirm.

    The term ``companionship services for the aged or infirm'' is 
defined in Sec. 552.6. Persons who provide care and protection for 
babies and young children, who are not physically or mentally infirm, 
are considered babysitters, not companions. The companion must perform 
the services with respect to the aged or infirm persons and not 
generally to other persons. The ``casual'' limitation does not apply to 
companion services.



Sec. 552.107  Yard maintenance workers.

    Persons who mow lawns and perform other yard work in a neighborhood 
community generally provide their own equipment, set their own work 
schedule and occasionally hire other individuals. Such persons will be 
recognized as independent contractors who are not covered by the Act as 
domestic service employees. On the other hand, gardeners and yardmen 
employed primarily by one household are not usually independent 
contractors.



Sec. 552.108  Child labor provisions.

    Congress made no change in section 12 as regards domestic service 
employees. Accordingly, the child labor provisions of the Act do not 
apply unless the underaged minor (a) is individually engaged in commerce 
or in the production of goods for commerce, or (b) is employed by an 
enterprise meeting the coverage tests of sections 3(r) and 3(s)(1) of 
the Act, or (c) is employed in or about a home where work in the 
production of goods for commerce is performed.



Sec. 552.109  Third party employment.

    (a) Employees who are engaged in providing companionship services, 
as defined in Sec. 552.6, and who are employed by an employer or agency 
other than the family or household using their

[[Page 248]]

services, are exempt from the Act's minimum wage and overtime pay 
requirements by virtue of section 13(a)(15). Assigning such an employee 
to more than one household or family in the same workweek would not 
defeat the exemption for that workweek, provided that the services 
rendered during each assignment come within the definition of 
companionship services.
    (b) Employees who are engaged in providing babysitting services and 
who are employed by an employer or agency other than the family or 
household using their services are not employed on a ``casual basis'' 
for purposes of the section 13(a)(15) exemption. Such employees are 
engaged in this occupation as a vocation.
    (c) Live-in domestic service employees who are employed by an 
employer or agency other than the family or household using their 
services are exempt from the Act's overtime requirements by virtue of 
section 13(b)(21). This exemption, however, will not apply where the 
employee works only temporarily for any one family or household, since 
that employee would not be ``residing'' on the premises of such family 
or household.



Sec. 552.110  Recordkeeping requirements.

    (a) The general recordkeeping regulations are found in part 516 of 
this chapter and they require that every employer having covered 
domestic service employees shall keep records which show for each such 
employee: (1) Name in full, (2) social security number, (3) address in 
full, including zip code, (4) total hours worked each week by the 
employee for the employer, (5) total cash wages paid each week to the 
employee by the employer, (6) weekly sums claimed by the employer for 
board, lodging or other facilities, and (7) extra pay for weekly hours 
worked in excess of 40 by the employee for the employer. No particular 
form of records is required, so long as the above information is 
recorded and the record is maintained and preserved for a period of 3 
years.
    (b) In the case of an employee who resides on the premises, records 
of the actual hours worked are not required. Instead, the employer may 
maintain a copy of the agreement referred to in Sec. 552.102. The more 
limited recordkeeping requirement provided by this subsection does not 
apply to third party employers. No records are required for casual 
babysitters.
    (c) Where a domestic service employee works on a fixed schedule, the 
employer may use a schedule of daily and weekly hours that the employee 
normally works and either the employer or the employee may: (1) Indicate 
by check marks, statement or other method that such hours were actually 
worked, and (2) when more or less than the scheduled hours are worked, 
show the exact number of hours worked.
    (d) The employer may require the domestic service employee to record 
the hours worked and submit such record to the employer.



PART 553_APPLICATION OF THE FAIR LABOR STANDARDS ACT TO EMPLOYEES
OF STATE AND LOCAL GOVERNMENTS--Table of Contents



                            Subpart A_General

                              Introduction

Sec.
553.1 Definitions.
553.2 Purpose and scope.
553.3 Coverage--general.

                     Section 3(e)(2)(C)--Exclusions

553.10 General.
553.11 Exclusion for elected officials and their appointees.
553.12 Exclusion for employees of legislative branches.

        Section 7(o)--Compensatory Time and Compensatory Time Off

553.20 Introduction.
553.21 Statutory provisions.
553.22 ``FLSA compensatory time'' and ``FLSA compensatory time off''.
553.23 Agreement or understanding prior to performance of work.
553.24 ``Public safety'', ``emergency response'', and ``seasonal'' 
          activities.
553.25 Conditions for use of compensatory time (``reasonable period'', 
          ``unduly disrupt'').
553.26 Cash overtime payments.
553.27 Payments for unused compensatory time.
553.28 Other compensatory time.

[[Page 249]]

                            Other Exemptions

553.30 Occasional or sporadic employment--section 7(p)(2).
553.31 Substitution--section 7(p)(3).
553.32 Other FLSA exemptions.

                              Recordkeeping

553.50 Records to be kept of compensatory time.
553.51 Records to be kept for employees paid pursuant to section 7(k).

                          Subpart B_Volunteers

553.100 General.
553.101 ``Volunteer'' defined.
553.102 Employment by the same public agency.
553.103 ``Same type of services'' defined.
553.104 Private individuals who volunteer services to public agencies.
553.105 Mutual aid agreements.
553.106 Payment of expenses, benefits, or fees.

   Subpart C_Fire Protection and Law Enforcement Employees of Public 
                                Agencies

                           General Principles

553.200 Statutory provisions: section 13(b)(20).
553.201 Statutory provisions: section 7(k).
553.202 Limitations.

                         Exemption Requirements

553.210 Fire protection activities.
553.211 Law enforcement activities.
553.212 Twenty percent limitation on nonexempt work.
553.213 Public agency employees engaged in both fire protection and law 
          enforcement activities.
553.214 Trainees.
553.215 [Reserved]
553.216 Other exemptions.

            Tour of Duty and Compensable Hours of Work Rules

553.220 ``Tour of duty'' defined.
553.221 Compensable hours of work.
553.222 Sleep time.
553.223 Meal time.
553.224 ``Work period'' defined.
553.225 Early relief.
553.226 Training time.
553.227 Outside employment.

                       Overtime Compensation Rules

553.230 Maximum hours standards for work periods of 7 to 28 days--
          section 7(k).
553.231 Compensatory time off.
553.232 Overtime pay requirements.
553.233 ``Regular rate'' defined.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended (29 U.S.C. 201-
219); Pub. L. 99-150, 99 Stat. 787 (29 U.S.C. 203, 207, 211). Pub. L. 
106-151, 113 Stat. 1731 (29 U.S.C. 203(y)).

    Source: 52 FR 2032, Jan. 16, 1987, unless otherwise noted.



                            Subpart A_General

                              Introduction



Sec. 553.1  Definitions.

    (a) Act or FLSA means the Fair Labor Standards Act of 1938, as 
amended (52 Stat. 1060, as amended; 29 U.S.C. 201-219).
    (b) 1985 Amendments means the Fair Labor Standards Amendments of 
1985 (Pub. L. 99-150).
    (c) Public agency means a State, a political subdivision of a State 
or an interstate governmental agency.
    (d) State means a State of the United States, the District of 
Columbia, Puerto Rico, the Virgin Islands, or any other Territory or 
possession of the United States (29 U.S.C. 203(c) and 213(f)).



Sec. 553.2  Purpose and scope.

    (a) The 1985 Amendments to the Fair Labor Standards Act (FLSA) 
changed certain provisions of the Act as they apply to employees of 
State and local public agencies. The purpose of part 553 is to set forth 
the regulations to carry out the provisions of these Amendments, as well 
as other FLSA provisions previously in existence relating to such public 
agency employees.
    (b) The regulations in this part are divided into three subparts. 
Subpart A interprets and applies the special FLSA provisions that are 
generally applicable to all covered and nonexempt employees of State and 
local governments. Subpart A also contains provisions concerning certain 
individuals (i.e., elected officials, their appointees, and legislative 
branch employees) who are excluded from the definition of ``employee'' 
and thus from FLSA coverage. This subpart also interprets and applies 
sections 7(o), and 7(p)(2), 7(p)(3), and 11(c) of the Act regarding 
compensatory time off, occasional or sporadic part-time employment, and 
the performance of substitute work by public agency employees, 
respectively.

[[Page 250]]

    (c) Subpart B of this part deals with ``volunteer'' services 
performed by individuals for public agencies. Subpart C applies various 
FLSA provisions as they relate to fire protection and law enforcement 
employees of public agencies.



Sec. 553.3  Coverage--general.

    (a)(1) In 1966, Congress amended the FLSA to extend coverage to 
State and local government employees engaged in the operation of 
hospitals, nursing homes, schools, and mass transit systems.
    (2) In 1972, the Education Amendments further extended coverage to 
employees of public preschools.
    (3) In 1974, the FLSA Amendments extended coverage to virtually all 
of the remaining State and local government employees who were not 
covered as a result of the 1966 and 1972 legislation.
    (b) Certain definitions already in the Act were modified by the 1974 
Amendments. The definition of the term ``employer'' was changed to 
include public agencies and that of ``employee'' was amended to include 
individuals employed by public agencies. The definition of 
``enterprise'' contained in section 3(r) of the Act was modified to 
provide that activities of a public agency are performed for a 
``business purpose.'' The term ``enterprise engaged in commerce or in 
the production of goods for commerce'' defined in section 3(s) of the 
Act was expanded to include public agencies.

                     Section 3(e)(2)(C)--Exclusions



Sec. 553.10  General.

    Section 3(e)(2)(C) of the Act excludes from the definition of 
``employee'', and thus from coverage, certain individuals employed by 
public agencies. This exclusion applies to elected public officials, 
their immediate advisors, and certain individuals whom they appoint or 
select to serve in various capacities. In addition, the 1985 Amendments 
exclude employees of legislative branches of State and local 
governments. A condition for exclusion is that the employee must not be 
subject to the civil service laws of the employing State or local 
agency.



Sec. 553.11  Exclusion for elected officials and their appointees.

    (a) Section 3(e)(2)(C) provides an exclusion from the Act's coverage 
for officials elected by the voters of their jurisdictions. Also 
excluded under this provision are personal staff members and officials 
in policymaking positions who are selected or appointed by the elected 
public officials and certain advisers to such officials.
    (b) The statutory term ``member of personal staff'' generally 
includes only persons who are under the direct supervision of the 
selecting elected official and have regular contact with such official. 
The term typically does not include individuals who are directly 
supervised by someone other than the elected official even though they 
may have been selected by the official. For example, the term might 
include the elected official's personal secretary, but would not include 
the secretary to an assistant.
    (c) In order to qualify as personal staff members or officials in 
policymaking positions, the individuals in question must not be subject 
to the civil service laws of their employing agencies. The term ``civil 
service laws'' refers to a personnel system established by law which is 
designed to protect employees from arbitrary action, personal 
favoritism, and political coercion, and which uses a competitive or 
merit examination process for selection and placement. Continued tenure 
of employment of employees under civil service, except for cause, is 
provided. In addition, such personal staff members must be appointed by, 
and serve solely at the pleasure or discretion of, the elected official.
    (d) The exclusion for ``immediate adviser'' to elected officials is 
limited to staff who serve as advisers on constitutional or legal 
matters, and who are not subject to the civil service rules of their 
employing agency.



Sec. 553.12  Exclusion for employees of legislative branches.

    (a) Section 3(e)(2)(C) of the Act provides an exclusion from the 
definition of the term ``employee'' for individuals who are not subject 
to the civil service laws of their employing agencies and are employed 
by legislative branches

[[Page 251]]

or bodies of States, their political subdivisions or interstate 
governmental agencies.
    (b) Employees of State or local legislative libraries do not come 
within this statutory exclusion. Also, employees of school boards, other 
than elected officials and their appointees (as discussed in Sec. 
553.11), do not come within this exclusion.

        Section 7(o)--Compensatory Time and Compensatory Time Off



Sec. 553.20  Introduction.

    Section 7 of the FLSA requires that covered, nonexempt employees 
receive not less than one and one-half times their regular rates of pay 
for hours worked in excess of the applicable maximum hours standards. 
However, section 7(o) of the Act provides an element of flexibility to 
State and local government employers and an element of choice to their 
employees or the representatives of their employees regarding 
compensation for statutory overtime hours. The exemption provided by 
this subsection authorizes a public agency which is a State, a political 
subdivision of a State, or an interstate governmental agency, to provide 
compensatory time off (with certain limitations, as provided in Sec. 
553.21) in lieu of monetary overtime compensation that would otherwise 
be required under section 7. Compensatory time received by an employee 
in lieu of cash must be at the rate of not less than one and one-half 
hours of compensatory time for each hour of overtime work, just as the 
monetary rate for overtime is calculated at the rate of not less than 
one and one-half times the regular rate of pay.



Sec. 553.21  Statutory provisions.

    Section 7(o) provides as follows:

    (o)(1) Employees of a public agency which is a State, a political 
subdivision of a State, or an interstate governmental agency may 
receive, in accordance with this subsection and in lieu of overtime 
compensation, compensatory time off at a rate not less than one and one-
half hours for each hour of employment for which overtime compensation 
is required by this section.
    (2) A public agency may provide compensatory time under paragraph 
(1) only--
    (A) Pursuant to--
    (i) Applicable provisions of a collective bargaining agreement, 
memorandum of understanding, or any other agreement between the public 
agency and representatives of such employees; or
    (ii) In the case of employees not covered by subclause (i), an 
agreement or understanding arrived at between the employer and employee 
before the performance of the work; and
    (B) If the employee has not accrued compensatory time in excess of 
the limit applicable to the employee prescribed by paragraph (3).
    In the case of employees described in clause (A)(ii) hired prior to 
April 15, 1986, the regular practice in effect on April 15, 1986, with 
respect to compensatory time off for such employees in lieu of the 
receipt of overtime compensation, shall constitute an agreement or 
understanding under such clause (A)(ii). Except as provided in the 
previous sentence, the provision of compensatory time off to such 
employees for hours worked after April 14, 1986, shall be in accordance 
with this subsection.
    (3)(A) If the work of an employee for which compensatory time may be 
provided included work in a public safety activity, an emergency 
response activity, or a seasonal activity, the employee engaged in such 
work may accrue not more than 480 hours of compensatory time for hours 
worked after April 15, 1986. If such work was any other work, the 
employee engaged in such work may accrue not more than 240 hours of 
compensatory time for hours worked after April 15, 1986. Any such 
employee who, after April 15, 1986, has accrued 480 or 240 hours, as the 
case may be, of compensatory time off shall, for additional overtime 
hours of work, be paid overtime compensation.
    (B) If compensation is paid to an employee for accrued compensatory 
time off, such compensation shall be paid at the regular rate earned by 
the employee at the time the employee receives such payment.
    (4) An employee who has accrued compensatory time off authorized to 
be provided under paragraph (1) shall, upon termination of employment, 
be paid for the unused compensatory time at a rate of compensation not 
less than--
    (A) The average regular rate received by such employee during the 
last 3 years of the employee's employment, or
    (B) The final regular rate received by such employee, whichever is 
higher.
    (5) An employee of a public agency which is a State, political 
subdivision of a State, or an interstate governmental agency--
    (A) Who has accrued compensatory time off authorized to be provided 
under paragraph (1), and
    (B) Who has requested the use of such compensatory time, shall be 
permitted by the employee's employer to use such time within

[[Page 252]]

a reasonable period after making the request if the use of the 
compensatory time does not unduly disrupt the operations of the public 
agency.
    (6) For purposes of this subsection--
    (A) The term overtime compensation means the compensation required 
by subsection (a), and
    (B) The terms compensatory time and compensatory time off means 
hours during which an employee is not working, which are not counted as 
hours worked during the applicable workweek or other work period for 
purposes of overtime compensation, and for which the employee is 
compensated at the employee's regular rate.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.22  ``FLSA compensatory time'' and ``FLSA compensatory time off''.

    (a) Compensatory time and compensatory time off are interchangeable 
terms under the FLSA. Compensatory time off is paid time off the job 
which is earned and accrued by an employee in lieu of immediate cash 
payment for employment in excess of the statutory hours for which 
overtime compensation is required by section 7 of the FLSA.
    (b) The Act requires that compensatory time under section 7(o) be 
earned at a rate not less than one and one-half hours for each hour of 
employment for which overtime compensation is required by section 7 of 
the FLSA. Thus, the 480-hour limit on accrued compensatory time 
represents not more than 320 hours of actual overtime worked, and the 
240-hour limit represents not more than 160 hours of actual overtime 
worked.
    (c) The 480- and 240-hour limits on accrued compensatory time only 
apply to overtime hours worked after April 15, 1986. Compensatory time 
which an employee has accrued prior to April 15, 1986, is not subject to 
the overtime requirements of the FLSA and need not be aggregated with 
compensatory time accrued after that date.



Sec. 553.23  Agreement or understanding prior to performance of work.

    (a) General. (1) As a condition for use of compensatory time in lieu 
of overtime payment in cash, section 7(o)(2)(A) of the Act requires an 
agreement or understanding reached prior to the performance of work. 
This can be accomplished pursuant to a collective bargaining agreement, 
a memorandum of understanding or any other agreement between the public 
agency and representatives of the employees. If the employees do not 
have a representative, compensatory time may be used in lieu of cash 
overtime compensation only if such an agreement or understanding has 
been arrived at between the public agency and the individual employee 
before the performance of work. No agreement or understanding is 
required with respect to employees hired prior to April 15, 1986, who do 
not have a representative, if the employer had a regular practice in 
effect on April 15, 1986, of granting compensatory time off in lieu of 
overtime pay.
    (2) Agreements or understandings may provide that compensatory time 
off in lieu of overtime payment in cash may be restricted to certain 
hours of work only. In addition, agreements or understandings may 
provide for any combination of compensatory time off and overtime 
payment in cash (e.g., one hour compensatory time credit plus one-half 
the employee's regular hourly rate of pay in cash for each hour of 
overtime worked) so long as the premium pay principle of at least ``time 
and one-half'' is maintained. The agreement or understanding may include 
other provisions governing the preservation, use, or cashing out of 
compensatory time so long as these provisions are consistent with 
section 7(o) of the Act. To the extent that any provision of an 
agreement or understanding is in violation of section 7(o) of the Act, 
the provision is superseded by the requirements of section 7(o).
    (b) Agreement or understanding between the public agency and a 
representative of the employees. (1) Where employees have a 
representative, the agreement or understanding concerning the use of 
compensatory time must be between the representative and the public 
agency either through a collective bargaining agreement or through a 
memorandum of understanding or other type of oral or written agreement. 
In the absence of a collective bargaining agreement applicable to the 
employees, the representative need not be a formal or recognized 
bargaining agent as long as the representative is designated by the 
employees. Any

[[Page 253]]

agreement must be consistent with the provisions of section 7(o) of the 
Act.
    (2) Section 2(b) of the 1985 Amendments provides that a collective 
bargaining agreement in effect on April 15, 1986, which permits 
compensatory time off in lieu of overtime compensation, will remain in 
effect until the expiration date of the collective bargaining agreement 
unless otherwise modified. However, the terms and conditions of such 
agreement under which compensatory time off is provided after April 14, 
1986, must not violate the requirements of section 7(o) of the Act and 
these regulations.
    (c) Agreement or understanding between the public agency and 
individual employees. (1) Where employees of a public agency do not have 
a recognized or otherwise designated representative, the agreement or 
understanding concerning compensatory time off must be between the 
public agency and the individual employee and must be reached prior to 
the performance of work. This agreement or understanding with individual 
employees need not be in writing, but a record of its existence must be 
kept. (See Sec. 553.50.) An employer need not adopt the same agreement 
or understanding with different employees and need not provide 
compensatory time to all employees. The agreement or understanding to 
provide compensatory time off in lieu of cash overtime compensation may 
take the form of an express condition of employment, provided (i) the 
employee knowingly and voluntarily agrees to it as a condition of 
employment and (ii) the employee is informed that the compensatory time 
received may be preserved, used or cashed out consistent with the 
provisions of section 7(o) of the Act. An agreement or understanding may 
be evidenced by a notice to the employee that compensatory time off will 
be given in lieu of overtime pay. In such a case, an agreement or 
understanding would be presumed to exist for purposes of section 7(o) 
with respect to any employee who fails to express to the employer an 
unwillingness to accept compensatory time off in lieu of overtime pay. 
However, the employee's decision to accept compensatory time off in lieu 
of cash overtime payments must be made freely and without coercion or 
pressure.
    (2) Section 2(a) of the 1985 Amendments provides that in the case of 
employees who have no representative and were employed prior to April 
15, 1986, a public agency that has had a regular practice of awarding 
compensatory time off in lieu of overtime pay is deemed to have reached 
an agreement or understanding with these employees as of April 15, 1986. 
A public agency need not secure an agreement or understanding with each 
employee employed prior to that date. If, however, such a regular 
practice does not conform to the provisions of section 7(o) of the Act, 
it must be modified to do so with regard to practices after April 14, 
1986. With respect to employees hired after April 14, 1986, the public 
employer who elects to use compensatory time must follow the guidelines 
on agreements discussed in paragraph (c)(1) of this section.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.24  ``Public safety'', ``emergency response'', and
``seasonal'' activities.

    (a) Section 7(o)(3)(A) of the FLSA provides that an employee of a 
public agency which is a State, a political subdivision of a State, or 
an interstate governmental agency, may accumulate not more than 480 
hours of compensatory time for FLSA overtime hours which are worked 
after April 15, 1986, if the employee is engaged in ``public safety'', 
``emergency response'', or ``seasonal'' activity. Employees whose work 
includes ``seasonal'', ``emergency response'', or ``public safety'' 
activities, as well as other work, will not be subject to both limits of 
accrual for compensatory time. If the employee's work regularly involves 
the activities included in the 480-hour limit, the employee will be 
covered by that limit. A public agency cannot utilize the higher cap by 
simple classification or designation of an employee. The work performed 
is controlling. Assignment of occasional duties within the scope of the 
higher cap will not entitle the employer to use the higher cap. 
Employees whose work does not regularly involve ``seasonal'', 
``emergency response'', or ``public safety'' activities

[[Page 254]]

are subject to a 240-hour compensatory time accrual limit for FLSA 
overtime hours which are worked after April 15, 1986.
    (b) Employees engaged in ``public safety'', ``emergency response'', 
or ``seasonal'' activities, who transfer to positions subject to the 
240-hour limit, may carry over to the new position any accrued 
compensatory time. The employer will not be required to cash out the 
accrued compensatory time which is in excess of the lower limit. 
However, the employee must be compensated in cash wages for any 
subsequent overtime hours worked until the number of accrued hours of 
compensatory time falls below the 240-hour limit.
    (c) ``Public safety activities'': The term ``public safety 
activities'' as used in section 7(o)(3)(A) of the Act includes law 
enforcement, fire fighting or related activities as described in 
Sec. Sec. 553.210 (a) and (b) and 553.211 (a)-(c), and (f). An employee 
whose work regularly involves such activities will qualify for the 480-
hour accrual limit. However, the 480-hour accrual limit will not apply 
to office personnel or other civilian employees who may perform public 
safety activities only in emergency situations, even if they spend 
substantially all of their time in a particular week in such activities. 
For example, a maintenance worker employed by a public agency who is 
called upon to perform fire fighting activities during an emergency 
would remain subject to the 240-hour limit, even if such employee spent 
an entire week or several weeks in a year performing public safety 
activities. Certain employees who work in ``public safety'' activities 
for purposes of section 7(o)(3)(A) may qualify for the partial overtime 
exemption in section 7(k) of the Act. (See Sec. 553.201)
    (d) ``Emergency response activity'': The term ``emergency response 
activity'' as used in section 7(o)(3)(A) of the Act includes dispatching 
of emergency vehicles and personnel, rescue work and ambulance services. 
As is the case with ``public safety'' and ``seasonal'' activities, an 
employee must regularly engage in ``emergency response'' activities to 
be covered under the 480-hour limit. A city office worker who may be 
called upon to perform rescue work in the event of a flood or snowstorm 
would not be covered under the higher limit, since such emergency 
response activities are not a regular part of the employee's job. 
Certain employees who work in ``emergency response'' activities for 
purposes of section 7(o)(3)(A) may qualify for the partial overtime 
exemption in section 7(k) of the Act. (See Sec. 553.215.)
    (e)(1) ``Seasonal activity'': The term ``seasonal activity'' 
includes work during periods of significantly increased demand, which 
are of a regular and recurring nature. In determining whether employees 
are considered engaged in a seasonal activity, the first consideration 
is whether the activity in which they are engaged is a regular and 
recurring aspect of the employee's work. The second consideration is 
whether the projected overtime hours during the period of significantly 
increased demand are likely to result in the accumulation during such 
period of more than 240 compensatory time hours (the number available 
under the lower cap). Such projections will normally be based on the 
employer's past experience with similar employment situations.
    (2) Seasonal activity is not limited strictly to those operations 
that are very susceptible to changes in the weather. As an example, 
employees processing tax returns over an extended period of 
significantly increased demand whose overtime hours could be expected to 
result in the accumulation during such period of more than 240 
compensatory time hours will typically qualify as engaged in a seasonal 
activity.
    (3) While parks and recreation activity is primarily seasonal 
because peak demand is generally experienced in fair weather, mere 
periods of short but intense activity do not make an employee's job 
seasonal. For example, clerical employees working increased hours for 
several weeks on a special project or assigned to an afternoon of 
shoveling snow off the courthouse steps would not be considered engaged 
in seasonal activities, since the increased activity would not result in 
the accumulation during such period of more than 240 compensatory time 
hours. Further,

[[Page 255]]

persons employed in municipal auditoriums, theaters, and sports 
facilities that are open for specific, limited seasons would be 
considered engaged in seasonal activities, while those employed in 
facilities that operate year round generally would not.
    (4) Road crews, while not necessarily seasonal workers, may have 
significant periods of peak demand, for instance during the snow plowing 
season or road construction season. The snow plow operator/road crew 
employee may be able to accrue compensatory time to the higher cap, 
while other employees of the same department who do not have lengthy 
periods of peak seasonal demand would remain under the lower cap.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.25  Conditions for use of compensatory time
(``reasonable period'', ``unduly disrupt'').

    (a) Section 7(o)(5) of the FLSA provides that any employee of a 
public agency who has accrued compensatory time and requested use of 
this compensatory time, shall be permitted to use such time off within a 
``reasonable period'' after making the request, if such use does not 
``unduly disrupt'' the operations of the agency. This provision, 
however, does not apply to ``other compensatory time'' (as defined below 
in Sec. 553.28), including compensatory time accrued for overtime 
worked prior to April 15, 1986.
    (b) Compensatory time cannot be used as a means to avoid statutory 
overtime compensation. An employee has the right to use compensatory 
time earned and must not be coerced to accept more compensatory time 
than an employer can realistically and in good faith expect to be able 
to grant within a reasonable period of his or her making a request for 
use of such time.
    (c) Reasonable period. (1) Whether a request to use compensatory 
time has been granted within a ``reasonable period'' will be determined 
by considering the customary work practices within the agency based on 
the facts and circumstances in each case. Such practices include, but 
are not limited to (a) the normal schedule of work, (b) anticipated peak 
workloads based on past experience, (c) emergency requirements for staff 
and services, and (d) the availability of qualified substitute staff.
    (2) The use of compensatory time in lieu of cash payment for 
overtime must be pursuant to some form of agreement or understanding 
between the employer and the employee (or the representative of the 
employee) reached prior to the performance of the work. (See Sec. 
553.23.) To the extent that the (conditions under which an employee can 
take compensatory time off are contained in an agreement or 
understanding as defined in Sec. 553.23, the terms of such agreement or 
understanding will govern the meaning of ``reasonable period''.
    (d) Unduly disrupt. When an employer receives a request for 
compensatory time off, it shall be honored unless to do so would be 
``unduly disruptive'' to the agency's operations. Mere inconvenience to 
the employer is an insufficient basis for denial of a request for 
compensatory time off. (See H. Rep. 99-331, p. 23.) For an agency to 
turn down a request from an employee for compensatory time off requires 
that it should reasonably and in good faith anticipate that it would 
impose an unreasonable burden on the agency's ability to provide 
services of acceptable quality and quantity for the public during the 
time requested without the use of the employee's services.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.26  Cash overtime payments.

    (a) Overtime compensation due under section 7 may be paid in cash at 
the employer's option, in lieu of providing compensatory time off under 
section 7(o) of the Act in any workweek or work period. The FLSA does 
not prohibit an employer from freely substituting cash, in whole or 
part, for compensatory time off; and overtime payment in cash would not 
affect subsequent granting of compensatory time off in future workweeks 
or work periods. (See Sec. 553.23(a)(2).)
    (b) The principles for computing cash overtime pay are contained in 
29 CFR part 778. Cash overtime compensation must be paid at a rate not 
less than one and one-half times the regular rate at

[[Page 256]]

which the employee is actually paid. (See 29 CFR 778.107.)
    (c) In a workweek or work period during which an employee works 
hours which are overtime hours under FLSA and for which cash overtime 
payment will be made, and the employee also takes compensatory time off, 
the payment for such time off may be excluded from the regular rate of 
pay under section 7(e)(2) of the Act. Section 7(e)(2) provides that the 
regular rate shall not be deemed to include

    . . . payments made for occasional periods when no work is performed 
due to vacation, holiday, . . . or other similar cause.


As explained in 29 CFR 778.218(d), the term ``other similar cause'' 
refers to payments made for periods of absence due to factors like 
holidays, vacations, illness, and so forth. Payments made to an employee 
for periods of absence due to the use of accrued compensatory time are 
considered to be the type of payments in this ``other similar cause'' 
category.



Sec. 553.27  Payments for unused compensatory time.

    (a) Payments for accrued compensatory time earned after April 14, 
1986, may be made at any time and shall be paid at the regular rate 
earned by the employee at the time the employee receives such payment.
    (b) Upon termination of employment, an employee shall be paid for 
unused compensatory time earned after April 14, 1986, at a rate of 
compensation not less than--
    (1) The average regular rate received by such employee during the 
last 3 years of the employee's employment, or
    (2) The final regular rate received by such employee, whichever is 
higher.
    (c) The phrase last 3 years of employment means the 3-year period 
immediately prior to termination. Where an employee's last 3 years of 
employment are not continuous because of a break in service, the period 
of employment after the break in service will be treated as new 
employment. However, such a break in service must have been intended to 
be permanent and any accrued compensatory time earned after April 14, 
1986, must have been cashed out at the time of initial separation. Where 
the final period of employment is less than 3 years, the average rate 
still must be calculated based on the rate(s) in effect during such 
period.
    (d) The term ``regular rate'' is defined in 29 CFR 778.108. As 
indicated in Sec. 778.109, the regular rate is an hourly rate, although 
the FLSA does not require employers to compensate employees on an hourly 
basis.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.28  Other compensatory time.

    (a) Compensatory time which is earned and accrued by an employee for 
employment in excess of a nonstatutory (that is, non-FLSA) requirement 
is considered ``other'' compensatory time. The term ``other'' 
compensatory time off means hours during which an employee is not 
working and which are not counted as hours worked during the period when 
used. For example, a collective bargaining agreement may provide that 
compensatory time be granted to employees for hours worked in excess of 
8 in a day, or for working on a scheduled day off in a nonovertime 
workweek. The FLSA does not require compensatory time to be granted in 
such situations.
    (b) Compensatory time which is earned and accrued by an employee 
working hours which are ``overtime'' hours under State or local law, 
ordinance, or other provisions, but which are not overtime hours under 
section 7 of the FLSA is also considered ``other'' compensatory time. 
For example, a local law or ordinance may provide that compensatory time 
be granted to employees for hours worked in excess of 35 in a workweek. 
Under section 7(a) of the FLSA, only hours worked in excess of 40 in a 
workweek are overtime hours which must be compensated at one and one-
half times the regular rate of pay.
    (c) Similarly, compensatory time earned or accrued by an employee 
for employment in excess of a standard established by the personnel 
policy or practice of an employer, or by custom, which does not result 
from the FLSA provision, is another example of ``other'' compensatory 
time.

[[Page 257]]

    (d) The FLSA does not require that the rate at which ``other'' 
compensatory time is earned has to be at a rate of one and one-half 
hours for each hour of employment. The rate at which ``other'' 
compensatory time is earned may be some lesser or greater multiple of 
the rate or the straight-time rate itself.
    (e) The requirements of section 7(o) of the FLSA, including the 
limitations on accrued compensatory time, do not apply to ``other'' 
compensatory time as described above.

                            Other Exemptions



Sec. 553.30  Occasional or sporadic employment-section 7(p)(2).

    (a) Section 7(p)(2) of the FLSA provides that where State or local 
government employees, solely at their option, work occasionally or 
sporadically on a part-time basis for the same public agency in a 
different capacity from their regular employment, the hours worked in 
the different jobs shall not be combined for the purpose of determining 
overtime liability under the Act.
    (b) Occasional or sporadic. (1) The term occasional or sporadic 
means infrequent, irregular, or occurring in scattered instances. There 
may be an occasional need for additional resources in the delivery of 
certain types of public services which is at times best met by the part-
time employment of an individual who is already a public employee. Where 
employees freely and solely at their own option enter into such 
activity, the total hours worked will not be combined for purposes of 
determining any overtime compensation due on the regular, primary job. 
However, in order to prevent overtime abuse, such hours worked are to be 
excluded from computing overtime compensation due only where the 
occasional or sporadic assignments are not within the same general 
occupational category as the employee's regular work.
    (2) In order for an employee's occasional or sporadic work on a 
part-time basis to qualify for exemption under section 7(p)(2), the 
employee's decision to work in a different capacity must be made freely 
and without coercion, implicit or explicit, by the employer. An employer 
may suggest that an employee undertake another kind of work for the same 
unit of government when the need for assistance arises, but the employee 
must be free to refuse to perform such work without sanction and without 
being required to explain or justify the decision.
    (3) Typically, public recreation and park facilities, and stadiums 
or auditoriums utilize employees in occasional or sporadic work. Some of 
these employment activities are the taking of tickets, providing 
security for special events (e.g., concerts, sports events, and 
lectures), officiating at youth or other recreation and sports events, 
or engaging in food or beverage sales at special events, such as a 
county fair. Employment in such activity may be considered occasional or 
sporadic for regular employees of State or local government agencies 
even where the need can be anticipated because it recurs seasonally 
(e.g., a holiday concert at a city college, a program of scheduled 
sports events, or assistance by a city payroll clerk in processing 
returns at tax filing time). An activity does not fail to be occasional 
merely because it is recurring. In contrast, for example, if a parks 
department clerk, in addition to his or her regular job, also regularly 
works additional hours on a part-time basis (e.g., every week or every 
other week) at a public park food and beverage sales center operated by 
that agency, the additional work does not constitute intermittent and 
irregular employment and, therefore, the hours worked would be combined 
in computing any overtime compensation due.
    (c) Different capacity. (1) In order for employment in these 
occasional or sporadic activities not to be considered subject to the 
overtime requirements of section 7 of the FLSA, the regular government 
employment of the individual performing them must also be in a different 
capacity, i.e., it must not fall within the same general occupational 
category.
    (2) In general, the Administrator will consider the duties and other 
factors contained in the definitions of the 3-digit categories of 
occupations in the Dictionary of Occupational Titles (except

[[Page 258]]

in the case of public safety employees as discussed below in section 
(3)), as well as all the facts and circumstances in a particular case, 
in determining whether employment in a second capacity is substantially 
different from the regular employment.
    (3) For example, if a public park employee primarily engaged in 
playground maintenance also from time to time cleans an evening 
recreation center operated by the same agency, the additional work would 
be considered hours worked for the same employer and subject to the 
Act's overtime requirements because it is not in a different capacity. 
This would be the case even though the work was occasional or sporadic, 
and, was not regularly scheduled. Public safety employees taking on any 
kind of security or safety function within the same local government are 
never considered to be employed in a different capacity.
    (4) However, if a bookkeeper for a municipal park agency or a city 
mail clerk occasionally referees for an adult evening basketball league 
sponsored by the city, the hours worked as a referee would be considered 
to be in a different general occupational category than the primary 
employment and would not be counted as hours worked for overtime 
purposes on the regular job. A person regularly employed as a bus driver 
may assist in crowd control, for example, at an event such as a winter 
festival, and in doing so, would be deemed to be serving in a different 
capacity.
    (5) In addition, any activity traditionally associated with teaching 
(e.g., coaching, career counseling, etc.) will not be considered as 
employment in a different capacity. However, where personnel other than 
teachers engage in such teaching-related activities, the work will be 
viewed as employment in a different capacity, provided that these 
activities are performed on an occasional or sporadic basis and all 
other requirements for this provision are met. For example, a school 
secretary could substitute as a coach for a basketball team or a 
maintenance engineer could provide instruction on auto repair on an 
occasional or sporadic basis.



Sec. 553.31  Substitution--section 7(p)(3).

    (a) Section 7(p)(3) of the FLSA provides that two individuals 
employed in any occupation by the same public agency may agree, solely 
at their option and with the approval of the public agency, to 
substitute for one another during scheduled work hours in performance of 
work in the same capacity. The hours worked shall be excluded by the 
employer in the calculation of the hours for which the substituting 
employee would otherwise be entitled to overtime compensation under the 
Act. Where one employee substitutes for another, each employee will be 
credited as if he or she had worked his or her normal work schedule for 
that shift.
    (b) The provisions of section 7(p)(3) apply only if employees' 
decisions to substitute for one another are made freely and without 
coercion, direct or implied. An employer may suggest that an employee 
substitute or ``trade time'' with another employee working in the same 
capacity during regularly scheduled hours, but each employee must be 
free to refuse to perform such work without sanction and without being 
required to explain or justify the decision. An employee's decision to 
substitute will be considered to have been made at his/her sole option 
when it has been made (i) without fear of reprisal or promise of reward 
by the employer, and (ii) exclusively for the employee's own 
convenience.
    (c) A public agency which employs individuals who substitute or 
``trade time'' under this subsection is not required to keep a record of 
the hours of the substitute work.
    (d) In order to qualify under section 7(p)(3), an agreement between 
individuals employed by a public agency to substitute for one another at 
their own option must be approved by the agency. This requires that the 
agency be aware of the arrangement prior to the work being done, i.e., 
the employer must know what work is being done, by whom it is being 
done, and where and when it is being done. Approval is manifest when the 
employer is aware of the substitution and indicates approval in whatever 
manner is customary.

[[Page 259]]



Sec. 553.32  Other FLSA exemptions.

    (a) There are other exemptions from the minimum wage and/or overtime 
requirements of the FLSA which may apply to certain employees of public 
agencies. The following sections provide a discussion of some of the 
major exemptions which may be applicable. This list is not 
comprehensive.
    (b) Section 7(k) of the Act provides a partial overtime pay 
exemption for public agency employees employed in fire protection or law 
enforcement activities (including security personnel in correctional 
institutions). In addition, section 13(b)(20) provides a complete 
overtime pay exemption for any employee of a public agency engaged in 
fire protection or law enforcement activities, if the public agency 
employs less than five employees in such activities. (See subpart C of 
this part.)
    (c) Section 13(a)(1) of the Act provides an exemption from both the 
minimum wage and overtime pay requirements for any employee employed in 
a bona fide executive, administrative, professional, or outside sales 
capacity, as these terms are defined and delimited in part 541 of this 
title. An employee will qualify for exemption if he or she meets all of 
the pertinent tests relating to duties, responsibilities, and salary.
    (d) Section 7(j) of the Act provides that a hospital or residential 
care establishment may, pursuant to a prior agreement or understanding 
with an employee or employees, adopt a fixed work period of 14 
consecutive days for the purpose of computing overtime pay in lieu of 
the regular 7-day workweek. Workers employed under section 7(j) must 
receive not less than one and one-half times their regular rates of pay 
for all hours worked over 8 in any workday, and over 80 in the 14-day 
work period. (See Sec. 778.601 of this title.)
    (e) Section 13(a)(3) of the Act provides a minimum wage and overtime 
pay exemption for any employee employed by an amusement or recreational 
establishment if (1) it does not operate for more than 7 months in any 
calendar year or (2) during the preceding calendar year, its average 
receipts for any 6 months of such year were not more than 33\1/3\ 
percent of its average receipts for the other 6 months of such year. In 
order to meet the requirements of section 13(a)(3)(B), the establishment 
in the previous year must have received at least 75 percent of its 
income within 6 months. The 6 months, however, need not be 6 consecutive 
months. State and local governments operate parks and recreational areas 
to which this exemption may apply.
    (f) Section 13(b)(1) of the Act provides an exemption from the 
overtime pay requirements for ``Any employee with respect to whom the 
Secretary of Transportation has power to establish qualifications and 
maximum hours of service pursuant to the provisions of section 204 of 
the Motor Carrier Act, 1935.'' (recodified at section 3102, 49 U.S.C.). 
With regard to State or local governments, this overtime pay exemption 
may affect mass transit systems engaged in interstate commerce. This 
exemption is applicable to drivers, driver's helpers, loaders, and 
mechanics employed by a common carrier whose activities directly affect 
the safety of operation of motor vehicles in the transportation on the 
public highways of passengers or property. (See part 782 of this title.)
    (g) Section 7(n) of the Act provides that, for the purpose of 
computing overtime pay, the hours of employment of a mass transit 
employee do not include the time spent in charter activities if (1) 
pursuant to a prior agreement the time is not to be so counted, and (2) 
such charter activities are not a part of the employee's regular 
employment.
    (h) Additional overtime pay exemptions which may apply to emloyees 
of public agencies are contained in sections 13(b)(2) (employees of 
certain common carriers by rail), 13(b)(9) (certain employees of small 
market radio and television stations), and section 13(b)(12) (employees 
in agriculture) of the Act. Further, section 13(a)(6) of the Act 
provides a minimum wage and overtime pay exemption for agricultural 
employees who work on small farms. (See part 780 of this title.)

[[Page 260]]

                              Recordkeeping



Sec. 553.50  Records to be kept of compensatory time.

    For each employee subject to the compensatory time and compensatory 
time off provisions of section 7(o) of the Act, a public agency which is 
a State, a political subdivision of a State or an interstate 
governmental agency shall maintain and preserve records containing the 
basic information and data required by Sec. 516.2 of this title and, in 
addition:
    (a) The number of hours of compensatory time earned pursuant to 
section 7(o) each workweek, or other applicable work period, by each 
employee at the rate of one and one-half hour for each overtime hour 
worked;
    (b) The number of hours of such compensatory time used each 
workweek, or other applicable work period, by each employee;
    (c) The number of hours of compensatory time compensated in cash, 
the total amount paid and the date of such payment; and
    (d) Any collective bargaining agreement or written understanding or 
agreement with respect to earning and using compensatory time off. If 
such agreement or understanding is not in writing, a record of its 
existence must be kept.



Sec. 553.51  Records to be kept for employees paid pursuant to section 7(k).

    For each employee subject to the partial overtime exemption in 
section 7(k) of the Act, a public agency which is a State, a political 
subdivision of a State, or an interstate governmental agency shall 
maintain and preserve records containing the information and data 
required by Sec. 553.50 and, in addition, make some notation on the 
payroll records which shows the work period for each employee and which 
indicates the length of that period and its starting time. If all the 
workers (or groups of workers) have a work period of the same length 
beginning at the same time on the same day, a single notation of the 
time of day and beginning day of the work period will suffice for these 
workers.



                          Subpart B_Volunteers



Sec. 553.100  General.

    Section 3(e) of the Fair Labor Standards Act, as amended in 1985, 
provides that individuals performing volunteer services for units of 
State and local governments will not be regarded as ``employees'' under 
the statute. The purpose of this subpart is to define the circumstances 
under which individuals may perform hours of volunteer service for units 
of State and local governments without being considered to be their 
employees during such hours for purposes of the FLSA.



Sec. 553.101  ``Volunteer'' defined.

    (a) An individual who performs hours of service for a public agency 
for civic, charitable, or humanitarian reasons, without promise, 
expectation or receipt of compensation for services rendered, is 
considered to be a volunteer during such hours. Individuals performing 
hours of service for such a public agency will be considered volunteers 
for the time so spent and not subject to sections 6, 7, and 11 of the 
FLSA when such hours of service are performed in accord with sections 
3(e)(4) (A) and (B) of the FLSA and the guidelines in this subpart.
    (b) Congress did not intend to discourage or impede volunteer 
activities undertaken for civic, charitable, or humanitarian purposes, 
but expressed its wish to prevent any manipulation or abuse of minimum 
wage or overtime requirements through coercion or undue pressure upon 
individuals to ``volunteer'' their services.
    (c) Individuals shall be considered volunteers only where their 
services are offered freely and without pressure or coercion, direct or 
implied, from an employer.
    (d) An individual shall not be considered a volunteer if the 
individual is otherwise employed by the same public agency to perform 
the same type of services as those for which the individual proposes to 
volunteer.



Sec. 553.102  Employment by the same public agency.

    (a) Section 3(e)(4)(A)(ii) of the FLSA does not permit an individual 
to perform hours of volunteer service for a

[[Page 261]]

public agency when such hours involve the same type of services which 
the individual is employed to perform for the same public agency.
    (b) Whether two agencies of the same State or local government 
constitute the same public agency can only be determined on a case-by-
case basis. One factor that would support a conclusion that two agencies 
are separate is whether they are treated separately for statistical 
purposes in the Census of Governments issued by the Bureau of the 
Census, U.S. Department of Commerce.



Sec. 553.103  ``Same type of services'' defined.

    (a) The 1985 Amendments provide that employees may volunteer hours 
of service to their public employer or agency provided ``such services 
are not the same type of services which the individual is employed to 
perform for such public agency.'' Employees may volunteer their services 
in one capacity or another without contemplation of pay for services 
rendered. The phrase ``same type of services'' means similar or 
identical services. In general, the Administrator will consider, but not 
as the only criteria, the duties and other factors contained in the 
definitions of the 3-digit categories of occupations in the Dictionary 
of Occupational Titles in determining whether the volunteer activities 
constitute the ``same type of services'' as the employment activities. 
Equally important in such a determination will be the consideration of 
all the facts and circumstances in a particular case, including whether 
the volunteer service is closely related to the actual duties performed 
by or responsibilities assigned to the employee.
    (b) An example of an individual performing services which constitute 
the ``same type of services'' is a nurse employed by a State hospital 
who proposes to volunteer to perform nursing services at a State-
operated health clinic which does not qualify as a separate public 
agency as discussed in Sec. 553.102. Similarly, a firefighter cannot 
volunteer as a firefighter for the same public agency.
    (c) Examples of volunteer services which do not constitute the 
``same type of services'' include: A city police officer who volunteers 
as a part-time referee in a basketball league sponsored by the city; an 
employee of the city parks department who serves as a volunteer city 
firefighter; and an office employee of a city hospital or other health 
care institution who volunteers to spend time with a disabled or elderly 
person in the same institution during off duty hours as an act of 
charity.



Sec. 553.104  Private individuals who volunteer services to public agencies.

    (a) Individuals who are not employed in any capacity by State or 
local government agencies often donate hours of service to a public 
agency for civic or humanitarian reasons. Such individuals are 
considered volunteers and not employees of such public agencies if their 
hours of service are provided with no promise expectation, or receipt of 
compensation for the services rendered, except for reimbursement for 
expenses, reasonable benefits, and nominal fees, or a combination 
thereof, as discussed in Sec. 553.106. There are no limitations or 
restrictions imposed by the FLSA on the types of services which private 
individuals may volunteer to perform for public agencies.
    (b) Examples of services which might be performed on a volunteer 
basis when so motivated include helping out in a sheltered workshop or 
providing personal services to the sick or the elderly in hospitals or 
nursing homes; assisting in a school library or cafeteria; or driving a 
school bus to carry a football team or band on a trip. Similarly, 
individuals may volunteer as firefighters or auxiliary police, or 
volunteer to perform such tasks as working with retarded or handicapped 
children or disadvantaged youth, helping in youth programs as camp 
counselors, soliciting contributions or participating in civic or 
charitable benefit programs and volunteering other services needed to 
carry out charitable or educational programs.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]

[[Page 262]]



Sec. 553.105  Mutual aid agreements.

    An agreement between two or more States, political subdivisions, or 
interstate governmental agencies for mutual aid does not change the 
otherwise volunteer character of services performed by employees of such 
agencies pursuant to said agreement. For example, where Town A and Town 
B have entered into a mutual aid agreement related to fire protection, a 
firefighter employed by Town A who also is a volunteer firefighter for 
Town B will not have his or her hours of volunteer service for Town B 
counted as part of his or her hours of employment with Town A. The mere 
fact that services volunteered to Town B may in some instances involve 
performance in Town A's geographic jurisdiction does not require that 
the volunteer's hours are to be counted as hours of employment with Town 
A.



Sec. 553.106  Payment of expenses, benefits, or fees.

    (a) Volunteers may be paid expenses, reasonable benefits, a nominal 
fee, or any combination thereof, for their service without losing their 
status as volunteers.
    (b) An individual who performs hours of service as a volunteer for a 
public agency may receive payment for expenses without being deemed an 
employee for purposes of the FLSA. A school guard does not become an 
employee because he or she receives a uniform allowance, or 
reimbursement for reasonable cleaning expenses or for wear and tear on 
personal clothing worn while performing hours of volunteer service. (A 
uniform allowance must be reasonably limited to relieving the volunteer 
of the cost of providing or maintaining a required uniform from personal 
resources.) Such individuals would not lose their volunteer status 
because they are reimbursed for the approximate out-of-pocket expenses 
incurred incidental to providing volunteer services, for example, 
payment for the cost of meals and transportation expenses.
    (c) Individuals do not lose their status as volunteers because they 
are reimbursed for tuition, transportation and meal costs involved in 
their attending classes intended to teach them to perform efficiently 
the services they provide or will provide as volunteers. Likewise, the 
volunteer status of such individuals is not lost if they are provided 
books, supplies, or other materials essential to their volunteer 
training or reimbursement for the cost thereof.
    (d) Individuals do not lose their volunteer status if they are 
provided reasonable benefits by a public agency for whom they perform 
volunteer services. Benefits would be considered reasonable, for 
example, when they involve inclusion of individual volunteers in group 
insurance plans (such as liability, health, life, disability, workers' 
compensation) or pension plans or ``length of service'' awards, commonly 
or traditionally provided to volunteers of State and local government 
agencies, which meet the additional test in paragraph (f) of this 
section.
    (e) Individuals do not lose their volunteer status if they receive a 
nominal fee from a public agency. A nominal fee is not a substitute for 
compensation and must not be tied to productivity. However, this does 
not preclude the payment of a nominal amount on a ``per call'' or 
similar basis to volunteer firefighters. The following factors will be 
among those examined in determining whether a given amount is nominal: 
The distance traveled and the time and effort expended by the volunteer; 
whether the volunteer has agreed to be available around-the-clock or 
only during certain specified time periods; and whether the volunteer 
provides services as needed or throughout the year. An individual who 
volunteers to provide periodic services on a year-round basis may 
receive a nominal monthly or annual stipend or fee without losing 
volunteer status.
    (f) Whether the furnishing of expenses, benefits, or fees would 
result in individuals' losing their status as volunteers under the FLSA 
can only be determined by examining the total amount of payments made 
(expenses, benefits, fees) in the context of the economic realities of 
the particular situation.

[[Page 263]]



   Subpart C_Fire Protection and Law Enforcement Employees of Public 
                                Agencies

                           General Principles



Sec. 553.200  Statutory provisions: section 13(b)(20).

    (a) Section 13(b)(20) of the FLSA provides a complete overtime pay 
exemption for ``any employee of a public agency who in any workweek is 
employed in fire protection activities or any employee of a public 
agency who in any workweek is employed in law enforcement activities 
(including security personnel in correctional institutions), if the 
public agency employs during the workweek less than 5 employees in fire 
protection or law enforcement activities, as the case may be.''
    (b) In determining whether a public agency qualifies for the section 
13(b)(20) exemption, the fire protection and law enforcement activities 
are considered separately. Thus, if a public agency employs less than 
five employees in fire protection activities, but five or more employees 
in law enforcement activities (including security personnel in a 
correctional institution), it may claim the exemption for the fire 
protection employees but not for the law enforcement employees. No 
distinction is made between full-time and part-time employees, or 
between employees on duty and employees on leave status, and all such 
categories must be counted in determining whether the exemption applies. 
Individuals who are not considered ``employees'' for purposes of the 
FLSA by virtue of section 3(e) of the Act (including persons who are 
``volunteers'' within the meaning of Sec. 553.101, and ``elected 
officials and their appointees'' within the meaning of Sec. 553.11) are 
not counted in determining whether the section 13(b)(20) exemption 
applies.
    (c) The section 13(b)(20) exemption applies on a workweek basis. It 
is therefore possible that employees may be subject to maximum hours 
standard in certain workweeks, but not in others. In those workweeks in 
which the section 13(b)(20) exemption does not apply, the public agency 
is entitled to utilize the section 7(k) exemption which is explained 
below in Sec. 553.201.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987]



Sec. 553.201  Statutory provisions: section 7(k).

    (a) Section 7(k) of the Act provides a partial overtime pay 
exemption for fire protection and law enforcement personnel (including 
security personnel in correctional institutions) who are employed by 
public agencies on a work period basis. This section of the Act formerly 
permitted public agencies to pay overtime compensation to such employees 
in work periods of 28 consecutive days only after 216 hours of work. As 
further set forth in Sec. 553.230 of this part, the 216-hour standard 
has been replaced, pursuant to the study mandated by the statute, by 212 
hours for fire protection employees and 171 hours for law enforcement 
employees. In the case of such employees who have a work period of at 
least 7 but less than 28 consecutive days, overtime compensation is 
required when the ratio of the number of hours worked to the number of 
days in the work period exceeds the ratio of 212 (or 171) hours to 28 
days.
    (b) As specified in Sec. Sec. 553.20 through 553.28 of subpart A, 
workers employed under section 7(k) may, under certain conditions, be 
compensated for overtime hours worked with compensatory time off rather 
than immediate overtime premium pay.



Sec. 553.202  Limitations.

    The application of sections 13(b)(20) and 7(k), by their terms, is 
limited to public agencies, and does not apply to any private 
organization engaged in furnishing fire protection or law enforcement 
services. This is so even if the services are provided under contract 
with a public agency.

                         Exemption Requirements



Sec. 553.210  Fire protection activities.

    (a) As used in sections 7(k) and 13(b)(20) of the Act, the term 
``any employee * * * in fire protection activities'' refers to ``an 
employee, including a firefighter, paramedic, emergency

[[Page 264]]

medical technician, rescue worker, ambulance personnel, or hazardous 
materials worker, who--(1) is trained in fire suppression, has the legal 
authority and responsibility to engage in fire suppression, and is 
employed by a fire department of a municipality, county, fire district, 
or State; and (2) is engaged in the prevention, control, and 
extinguishment of fires or response to emergency situations where life, 
property, or the environment is at risk.''
    (b) Not included in the term ``employee in fire protection 
activities'' are the so-called ``civilian'' employees of a fire 
department, fire district, or forestry service who engage in such 
support activities as those performed by dispatchers, alarm operators, 
apparatus and equipment repair and maintenance workers, camp cooks, 
clerks, stenographers, etc.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987, as amended at 76 
FR 18856, Apr. 5, 2011]



Sec. 553.211  Law enforcement activities.

    (a) As used in sections 7(k) and 13(b)(20) of the Act, the term 
``any employee . . . in law enforcement activities'' refers to any 
employee (1) who is a uniformed or plainclothed member of a body of 
officers and subordinates who are empowered by State statute or local 
ordinance to enforce laws designed to maintain public peace and order 
and to protect both life and property from accidental or willful injury, 
and to prevent and detect crimes, (2) who has the power to arrest, and 
(3) who is presently undergoing or has undergone or will undergo on-the-
job training and/or a course of instruction and study which typically 
includes physical training, self-defense, firearm proficiency, criminal 
and civil law principles, investigative and law enforcement techniques, 
community relations, medical aid and ethics.
    (b) Employees who meet these tests are considered to be engaged in 
law enforcement activities regardless of their rank, or of their status 
as ``trainee,'' ``probationary,'' or ``permanent,'' and regardless of 
their assignment to duties incidental to the performance of their law 
enforcement activities such as equipment maintenance, and lecturing, or 
to support activities of the type described in paragraph (g) of this 
section, whether or not such assignment is for training or 
familiarization purposes, or for reasons of illness, injury or 
infirmity. The term would also include rescue and ambulance service 
personnel if such personnel form an integral part of the public agency's 
law enforcement activities. See Sec. 553.215.
    (c) Typically, employees engaged in law enforcement activities 
include city police; district or local police, sheriffs, under sheriffs 
or deputy sheriffs who are regularly employed and paid as such; court 
marshals or deputy marshals; constables and deputy constables who are 
regularly employed and paid as such; border control agents; state 
troopers and highway patrol officers. Other agency employees not 
specifically mentioned may, depending upon the particular facts and 
pertinent statutory provisions in that jurisdiction, meet the three 
tests described above. If so, they will also qualify as law enforcement 
officers. Such employees might include, for example, fish and game 
wardens or criminal investigative agents assigned to the office of a 
district attorney, an attorney general, a solicitor general or any other 
law enforcement agency concerned with keeping public peace and order and 
protecting life and property.
    (d) Some of the law enforcement officers listed above, including but 
not limited to certain sheriffs, will not be covered by the Act if they 
are elected officials and if they are not subject to the civil service 
laws of their particular State or local jurisdiction. Section 3(e)(2)(C) 
of the Act excludes from its definition of ``employee'' elected 
officials and their personal staff under the conditions therein 
prescribed. 29 U.S.C. 203(e)(2)(C), and see Sec. 553.11. Such 
individuals, therefore, need not be counted in determining whether the 
public agency in question has less than five employees engaged in law 
enforcement activities for purposes of claiming the section 13(b)(20) 
exemption.
    (e) Employees who do not meet each of the three tests described 
above are not engaged in ``law enforcement activities'' as that term is 
used in sections 7(k) and 13(b)(20). Employees who normally would not 
meet each of these tests include

[[Page 265]]

    (1) Building inspectors (other than those defined in Sec. 
553.213(a)),
    (2) Health inspectors,
    (3) Animal control personnel,
    (4) Sanitarians,
    (5) civilian traffic employees who direct vehicular and pedestrian 
traffic at specified intersections or other control points,
    (6) Civilian parking checkers who patrol assigned areas for the 
purpose of discovering parking violations and issuing appropriate 
warnings or appearance notices,
    (7) Wage and hour compliance officers,
    (8) Equal employment opportunity compliance officers,
    (9) Tax compliance officers,
    (10) Coal mining inspectors, and
    (11) Building guards whose primary duty is to protect the lives and 
property of persons within the limited area of the building.
    (f) The term ``any employee in law enforcement activities'' also 
includes, by express reference, ``security personnel in correctional 
instititions.'' A correctional institution is any government facility 
maintained as part of a penal system for the incarceration or detention 
of persons suspected or convicted of having breached the peace or 
committed some other crime. Typically, such facilities include 
penitentiaries, prisons, prison farms, county, city and village jails, 
precinct house lockups and reformatories. Employees of correctional 
institutions who qualify as security personnel for purposes of the 
section 7(k) exemption are those who have responsibility for controlling 
and maintaining custody of inmates and of safeguarding them from other 
inmates or for supervising such functions, regardless of whether their 
duties are performed inside the correctional institution or outside the 
institution (as in the case of road gangs). These employees are 
considered to be engaged in law enforcement activities regardless of 
their rank (e.g., warden, assistant warden or guard) or of their status 
as ``trainee,'' ``probationary,'' or ``permanent,'' and regardless of 
their assignment to duties incidental to the performance of their law 
enforcement activities, or to support activities of the type described 
in paragraph (g) of this section, whether or not such assignment is for 
training or familiarization purposes or for reasons of illness, injury 
or infirmity.
    (g) Not included in the term ``employee in law enforcement 
activities'' are the so-called ``civilian'' employees of law enforcement 
agencies or correctional institutions who engage in such support 
activities as those performed by dispatcher, radio operators, apparatus 
and equipment maintenance and repair workers, janitors, clerks and 
stenographers. Nor does the term include employees in correctional 
institutions who engage in building repair and maintenance, culinary 
services, teaching, or in psychological, medical and paramedical 
services. This is so even though such employees may, when assigned to 
correctional institutions, come into regular contact with the inmates in 
the performance of their duties.



Sec. 553.212  Twenty percent limitation on nonexempt work.

    (a) Employees engaged in law enforcement activities as described in 
Sec. 553.211 may also engage in some nonexempt work which is not 
performed as an incident to or in conjunction with their law enforcement 
activities. The performance of such nonexempt work will not defeat 
either the section 13(b)(20) or 7(k) exemptions unless it exceeds 20 
percent of the total hours worked by that employee during the workweek 
or applicable work period. A person who spends more than 20 percent of 
his/her working time in nonexempt activities is not considered to be an 
employee engaged in law enforcement activities for purposes of this 
part.
    (b) Public agency fire protection and law enforcement personnel may, 
at their own option, undertake employment for the same employer on an 
occasional or sporadic and part-time basis in a different capacity from 
their regular employment. (See Sec. 553.30.) The performance of such 
work does not affect the application of the section 13(b)(20) or 7(k) 
exemptions with respect to the regular employment. In addition, the 
hours of work in the different capacity need not be counted as hours 
worked for overtime purposes on

[[Page 266]]

the regular job, nor are such hours counted in determining the 20 
percent tolerance for nonexempt work for law enforcement personnel 
discussed in paragraph (a) of this section.

[52 FR 2032, Jan. 16, 1987, as amended at 76 FR 18856, Apr. 5, 2011]



Sec. 553.213  Public agency employees engaged in both fire protection
and law enforcement activities.

    (a) Some public agencies have employees (often called ``public 
safety officers'') who engage in both fire protection and law 
enforcement activities, depending on the agency needs at the time. This 
dual assignment would not defeat either the section 13(b)(20) or 7(k) 
exemption, provided that each of the activities performed meets the 
appropriate tests set forth in Sec. Sec. 553.210 and 553.211. This is 
so regardless of how the employee's time is divided between the two 
activities. However, all time spent in nonexempt activities by public 
safety officers within the work period, whether performed in connection 
with fire protection or law enforcement functions, or with neither, must 
be combined for purposes of the 20 percent limitation on nonexempt work 
discussed in Sec. 553.212.
    (b) As specified in Sec. 553.230, the maximum hours standards under 
section 7(k) are different for employees engaged in fire protection and 
for employees engaged in law enforcement. For those employees who 
perform both fire protection and law enforcement activities, the 
applicable standard is the one which applies to the activity in which 
the employee spends the majority of work time during the work period.



Sec. 553.214  Trainees.

    The attendance at a bona fide fire or police academy or other 
training facility, when required by the employing agency, constitutes 
engagement in activities under section 7(k) only when the employee meets 
all the applicable tests described in Sec. 553.210 or Sec. 553.211 
(except for the power of arrest for law enforcement personnel), as the 
case may be. If the applicable tests are met, then basic training or 
advanced training is considered incidental to, and part of, the 
employee's fire protection or law enforcement activities.



Sec. 553.215  [Reserved]



Sec. 553.216  Other exemptions.

    Although the 1974 Amendments to the FLSA provided special exemptions 
for employees of public agencies engaged in fire protection and law 
enforcement activities, such workers may also be subject to other 
exemptions in the Act, and public agencies may claim such other 
applicable exemptions in lieu of sections 13(b)(20) and 7(k). For 
example, section 13(a)(1) provides a complete minimum wage and overtime 
pay exemption for any employee employed in a bona fide executive, 
administrative, or professional capacity, as those terms are defined and 
delimited in 29 CFR part 541. The section 13(a)(1) exemption can be 
claimed for any fire protection or law enforcement employee who meets 
all of the tests specified in part 541 relating to duties, 
responsibilities, and salary. Thus, high ranking police officials who 
are engaged in law enforcement activities, may also, depending on the 
facts, qualify for the section 13(a)(1) exemption as ``executive'' 
employees. Similarly, certain criminal investigative agents may qualify 
as ``administrative'' employees under section 13(a)(1). However, the 
election to take the section 13(a)(1) exemption for an employee who 
qualifies for it will not result in excluding that employee from the 
count that must be made to determine the application of the section 
13(b)(20) exemption to the agency's other employees.

            Tour of Duty and Compensable Hours of Work Rules



Sec. 553.220  ``Tour of duty'' defined.

    (a) The term ``tour of duty'' is a unique concept applicable only to 
employees for whom the section 7(k) exemption is claimed. This term, as 
used in section 7(k), means the period of time during which an employee 
is considered to be on duty for purposes of determining compensable 
hours. It may be a scheduled or unscheduled period. Such periods include 
``shifts'' assigned to employees often days in advance of the 
performance of the work.

[[Page 267]]

Scheduled periods also include time spent in work outside the ``shift'' 
which the public agency employer assigns. For example, a police officer 
may be assigned to crowd control during a parade or other special event 
outside of his or her shift.
    (b) Unscheduled periods include time spent in court by police 
officers, time spent handling emergency situations, and time spent 
working after a shift to complete an assignment. Such time must be 
included in the compensable tour of duty even though the specific work 
performed may not have been assigned in advance.
    (c) The tour of duty does not include time spent working for a 
separate and independent employer in certain types of special details as 
provided in Sec. 553.227. The tour of duty does not include time spent 
working on an occasional or sporadic and part-time basis in a different 
capacity from the regular work as provided in Sec. 553.30. The tour of 
duty does not include time spent substituting for other employees by 
mutual agreement as specified in Sec. 553.31.
    (d) The tour of duty does not include time spent in volunteer 
firefighting or law enforcement activities performed for a different 
jurisdiction, even where such activities take place under the terms of a 
mutual aid agreement in the jurisdiction in which the employee is 
employed. (See Sec. 553.105.)



Sec. 553.221  Compensable hours of work.

    (a) The general rules on compensable hours of work are set forth in 
29 CFR part 785 which is applicable to employees for whom the section 
7(k) exemption is claimed. Special rules for sleep time (Sec. 553.222) 
apply to both law enforcement and firefighting employees for whom the 
section 7(k) exemption is claimed. Also, special rules for meal time 
apply in the case of employees in fire protection activities (Sec. 
553.223). Part 785 does not discuss the special provisions that apply to 
State and local government workers with respect to the treatment of 
substitution, special details for a separate and independent employer, 
early relief, and work performed on an occasional or sporadic and part-
time basis, all of which are covered in this subpart.
    (b) Compensable hours of work generally include all of the time 
during which an employee is on duty on the employer's premises or at a 
prescribed workplace, as well as all other time during which the 
employee is suffered or permitted to work for the employer. Such time 
includes all pre-shift and post-shift activities which are an integral 
part of the employee's principal activity or which are closely related 
to the performance of the principal activity, such as attending roll 
call, writing up and completing tickets or reports, and washing and re-
racking fire hoses.
    (c) Time spent away from the employer's premises under conditions 
that are so circumscribed that they restrict the employee from 
effectively using the time for personal pursuits also constitutes 
compensable hours of work. For example, where a police station must be 
evacuated because of an electrical failure and the employees are 
expected to remain in the vicinity and return to work after the 
emergency has passed, the entire time spent away from the premises is 
compensable. The employees in this example cannot use the time for their 
personal pursuits.
    (d) An employee who is not required to remain on the employer's 
premises but is merely required to leave word at home or with company 
officials where he or she may be reached is not working while on call. 
Time spent at home on call may or may not be compensable depending on 
whether the restrictions placed on the employee preclude using the time 
for personal pursuits. Where, for example, an employee in fire 
protection activities has returned home after the shift, with the 
understanding that he or she is expected to return to work in the event 
of an emergency in the night, such time spent at home is normally not 
compensable. On the other hand, where the conditions placed on the 
employee's activities are so restrictive that the employee cannot use 
the time effectively for personal pursuits, such time spent on call is 
compensable.
    (e) Normal home to work travel is not compensable, even where the 
employee is expected to report to work at a location away from the 
location of the employer's premises.

[[Page 268]]

    (f) A police officer, who has completed his or her tour of duty and 
who is given a patrol car to drive home and use on personal business, is 
not working during the travel time even where the radio must be left on 
so that the officer can respond to emergency calls. Of course, the time 
spent in responding to such calls is compensable.
    (g) The fact that employees cannot return home after work does not 
necessarily mean that they continue on duty after their shift. For 
example, employees in fire protection activities working on a forest 
fire may be transported to a camp after their shift in order to rest and 
eat a meal. As a practical matter, the employee in fire protection 
activities may be precluded from going to their homes because of the 
distance of the fire from their residences.

[52 FR 2032, Jan. 16, 1987; 52 FR 2648, Jan. 23, 1987, as amended at 76 
FR 18857, Apr. 5, 2011]



Sec. 553.222  Sleep time.

    (a) Where a public employer elects to pay overtime compensation to 
employees in fire protection activities and/or law enforcement personnel 
in accordance with section 7(a)(1) of the Act, the public agency may 
exclude sleep time from hours worked if all the conditions in Sec. 
785.22 of this title are met.
    (b) Where the employer has elected to use the section 7(k) 
exemption, sleep time cannot be excluded from the compensable hours of 
work where
    (1) The employee is on a tour of duty of less than 24 hours, which 
is the general rule applicable to all employees under Sec. 785.21, and
    (2) Where the employee is on a tour of duty of exactly 24 hours, 
which is a departure from the general rules in part 785.
    (c) Sleep time can be excluded from compensable hours of work, 
however, in the case of police officers or employees in fire protection 
activities who are on a tour of duty of more than 24 hours, but only if 
there is an expressed or implied agreement between the employer and the 
employees to exclude such time. In the absence of such an agreement, the 
sleep time is compensable. In no event shall the time excluded as sleep 
time exceed 8 hours in a 24-hour period. If the sleep time is 
interrupted by a call to duty, the interruption must be counted as hours 
worked. If the sleep period is interrupted to such an extent that the 
employee cannot get a reasonable night's sleep (which, for enforcement 
purposes means at least 5 hours), the entire time must be counted as 
hours of work.

[52 FR 2032, Jan. 16, 1987, as amended at 76 FR 18857, Apr. 5, 2011]



Sec. 553.223  Meal time.

    (a) If a public agency elects to pay overtime compensation to 
employees in fire protection activities and law enforcement personnel in 
accordance with section 7(a)(1) of the Act, the public agency may 
exclude meal time from hours worked if all the tests in Sec. 785.19 of 
this title are met.
    (b) If a public agency elects to use the section 7(k) exemption, the 
public agency may, in the case of law enforcement personnel, exclude 
meal time from hours worked on tours of duty of 24 hours or less, 
provided that the employee is completely relieved from duty during the 
meal period, and all the other tests in Sec. 785.19 of this title are 
met. On the other hand, where law enforcement personnel are required to 
remain on call in barracks or similar quarters, or are engaged in 
extended surveillance activities (e.g., ``stakeouts''), they are not 
considered to be completely relieved from duty, and any such meal 
periods would be compensable.
    (c) With respect to employees in fire protection activities employed 
under section 7(k), who are confined to a duty station, the legislative 
history of the Act indicates Congressional intent to mandate a departure 
from the usual FLSA ``hours of work'' rules and adoption of an overtime 
standard keyed to the unique concept of ``tour of duty'' under which 
firefighters are employed. Where the public agency elects to use the 
section 7(k) exemption for employees in fire protection activities, meal 
time cannot be excluded from the compensable hours of work where (1) the 
employee in fire protection activities is on a tour of duty of less than 
24 hours, and (2) where the employee in fire protection activities is on 
a tour of

[[Page 269]]

duty of exactly 24 hours, which is a departure from the general rules in 
Sec. 785.22 of this title.
    (d) In the case of police officers or employees in fire protection 
activities who are on a tour of duty of more than 24 hours, meal time 
may be excluded from compensable hours of work provided that the tests 
in Sec. Sec. 785.19 and 785.22 of this title are met.

[52 FR 2032, Jan. 16, 1987, as amended at 76 FR 18857, Apr. 5, 2011]



Sec. 553.224  ``Work period'' defined.

    (a) As used in section 7(k), the term ``work period'' refers to any 
established and regularly recurring period of work which, under the 
terms of the Act and legislative history, cannot be less than 7 
consecutive days nor more than 28 consecutive days. Except for this 
limitation, the work period can be of any length, and it need not 
coincide with the duty cycle or pay period or with a particular day of 
the week or hour of the day. Once the beginning and ending time of an 
employee's work period is established, however, it remains fixed 
regardless of how many hours are worked within the period. The beginning 
and ending of the work period may be changed, provided that the change 
is intended to be permanent and is not designed to evade the overtime 
compensation requirements of the Act.
    (b) An employer may have one work period applicable to all 
employees, or different work periods for different employees or groups 
of employees.



Sec. 553.225  Early relief.

    It is a common practice among employees engaged in fire protection 
activities to relieve employees on the previous shift prior to the 
scheduled starting time. Such early relief time may occur pursuant to 
employee agreement, either expressed or implied. This practice will not 
have the effect of increasing the number of compensable hours of work 
for employees employed under section 7(k) where it is voluntary on the 
part of the employees and does not result, over a period of time, in 
their failure to receive proper compensation for all hours actually 
worked. On the other hand, if the practice is required by the employer, 
the time involved must be added to the employee's tour of duty and 
treated as compensable hours of work.



Sec. 553.226  Training time.

    (a) The general rules for determining the compensability of training 
time under the FLSA are set forth in Sec. Sec. 785.27 through 785.32 of 
this title.
    (b) While time spent in attending training required by an employer 
is normally considered compensable hours of work, following are 
situations where time spent by employees of State and local governments 
in required training is considered to be noncompensable:
    (1) Attendance outside of regular working hours at specialized or 
follow-up training, which is required by law for certification of public 
and private sector employees within a particular governmental 
jurisdiction (e.g., certification of public and private emergency rescue 
workers), does not constitute compensable hours of work for public 
employees within that jurisdiction and subordinate jurisdictions.
    (2) Attendance outside of regular working hours at specialized or 
follow-up training, which is required for certification of employees of 
a governmental jurisdiction by law of a higher level of government 
(e.g., where a State or county law imposes a training obligation on city 
employees), does not constitute compensable hours of work.
    (3) Time spent in the training described in paragraphs (b) (1) or 
(2) of this section is not compensable, even if all or part of the costs 
of the training is borne by the employer.
    (c) Police officers or employees in fire protection activities, who 
are in attendance at a police or fire academy or other training 
facility, are not considered to be on duty during those times when they 
are not in class or at a training session, if they are free to use such 
time for personal pursuits. Such free time is not compensable.

[52 FR 2032, Jan. 16, 1987, as amended at 76 FR 18857, Apr. 5, 2011]



Sec. 553.227  Outside employment.

    (a) Section 7(p)(1) makes special provision for fire protection and 
law enforcement employees of public agencies

[[Page 270]]

who, at their own option, perform special duty work in fire protection, 
law enforcement or related activities for a separate and independent 
employer (public or private) during their off-duty hours. The hours of 
work for the separate and independent employer are not combined with the 
hours worked for the primary public agency employer for purposes of 
overtime compensation.
    (b) Section 7(p)(1) applies to such outside employment provided (1) 
The special detail work is performed solely at the employee's option, 
and (2) the two employers are in fact separate and independent.
    (c) Whether two employers are, in fact, separate and independent can 
only be determined on a case-by-case basis.
    (d) The primary employer may facilitate the employment or affect the 
conditions of employment of such employees. For example, a police 
department may maintain a roster of officers who wish to perform such 
work. The department may also select the officers for special details 
from a list of those wishing to participate, negotiate their pay, and 
retain a fee for administrative expenses. The department may require 
that the separate and independent employer pay the fee for such services 
directly to the department, and establish procedures for the officers to 
receive their pay for the special details through the agency's payroll 
system. Finally, the department may require that the officers observe 
their normal standards of conduct during such details and take 
disciplinary action against those who fail to do so.
    (e) Section 7(p)(1) applies to special details even where a State 
law or local ordinance requires that such work be performed and that 
only law enforcement or fire protection employees of a public agency in 
the same jurisdiction perform the work. For example, a city ordinance 
may require the presence of city police officers at a convention center 
during concerts or sports events. If the officers perform such work at 
their own option, the hours of work need not be combined with the hours 
of work for their primary employer in computing overtime compensation.
    (f) The principles in paragraphs (d) and (e) of this section with 
respect to special details of public agency fire protection and law 
enforcement employees under section 7(p)(1) are exceptions to the usual 
rules on joint employment set forth in part 791 of this title.
    (g) Where an employee is directed by the public agency to perform 
work for a second employer, section 7(p)(1) does not apply. Thus, 
assignments of police officers outside of their normal work hours to 
perform crowd control at a parade, where the assignments are not solely 
at the option of the officers, would not qualify as special details 
subject to this exception. This would be true even if the parade 
organizers reimburse the public agency for providing such services.
    (h) Section 7(p)(1) does not prevent a public agency from 
prohibiting or restricting outside employment by its employees.

                       Overtime Compensation Rules



Sec. 553.230  Maximum hours standards for work periods of 
7 to 28 days--section 7(k).

    (a) For those employees engaged in fire protection activities who 
have a work period of at least 7 but less than 28 consecutive days, no 
overtime compensation is required under section 7(k) until the number of 
hours worked exceeds the number of hours which bears the same 
relationship to 212 as the number of days in the work period bears to 
28.
    (b) For those employees engaged in law enforcement activities 
(including security personnel in correctional institutions) who have a 
work period of at least 7 but less than 28 consecutive days, no overtime 
compensation is required under section 7(k) until the number of hours 
worked exceeds the number of hours which bears the same relationship to 
171 as the number of days in the work period bears to 28.
    (c) The ratio of 212 hours to 28 days for employees engaged in fire 
protection activities is 7.57 hours per day (rounded) and the ratio of 
171 hours to 28 days for employees engaged in law enforcement activities 
is 6.11 hours per day (rounded). Accordingly, overtime compensation (in 
premium pay or compensatory time) is required for all hours worked in 
excess of the following

[[Page 271]]

maximum hours standards (rounded to the nearest whole hour):

------------------------------------------------------------------------
                                                 Maximum hours standards
                                               -------------------------
              Work period (days)                    Fire         Law
                                                 protection  enforcement
------------------------------------------------------------------------
28............................................          212          171
27............................................          204          165
26............................................          197          159
25............................................          189          153
24............................................          182          147
23............................................          174          141
22............................................          167          134
21............................................          159          128
20............................................          151          122
19............................................          144          116
18............................................          136          110
17............................................          129          104
16............................................          121           98
15............................................          114           92
14............................................          106           86
13............................................           98           79
12............................................           91           73
11............................................           83           67
10............................................           76           61
9.............................................           68           55
8.............................................           61           49
7.............................................           53           43
------------------------------------------------------------------------



Sec. 553.231  Compensatory time off.

    (a) Law enforcement and fire protection employees who are subject to 
the section 7(k) exemption may receive compensatory time off in lieu of 
overtime pay for hours worked in excess of the maximum for their work 
period as set forth in Sec. 553.230. The rules for compensatory time 
off are set forth in Sec. Sec. 553.20 through 553.28 of this part.
    (b) Section 7(k) permits public agencies to balance the hours of 
work over an entire work period for law enforcement and fire protection 
employees. For example, if a firefighter's work period is 28 consecutive 
days, and he or she works 80 hours in each of the first two weeks, but 
only 52 hours in the third week, and does not work in the fourth week, 
no overtime compensation (in cash wages or compensatory time) would be 
required since the total hours worked do not exceed 212 for the work 
period. If the same employee in fire protection activities had a work 
period of only 14 days, overtime compensation or compensatory time off 
would be due for 54 hours (160 minus 106 hours) in the first 14 day work 
period.

[52 FR 2032, Jan. 16, 1987, as amended at 76 FR 18857, Apr. 5, 2011]



Sec. 553.232  Overtime pay requirements.

    If a public agency pays employees subject to section 7(k) for 
overtime hours worked in cash wages rather than compensatory time off, 
such wages must be paid at one and one-half times the employees' regular 
rates of pay. In addition, employees who have accrued the maximum 480 
hours of compensatory time must be paid cash wages of time and one-half 
their regular rates of pay for overtime hours in excess of the maximum 
for the work period set forth in Sec. 553.230.



Sec. 553.233  ``Regular rate'' defined.

    The rules for computing an employee's ``regular rate'', for purposes 
of the Act's overtime pay requirements, are set forth in part 778 of 
this title. These rules are applicable to employees for whom the section 
7(k) exemption is claimed when overtime compensation is provided in cash 
wages. However, wherever the word ``workweek'' is used in part 778, the 
words ``work period'' should be substituted.



PART 570_CHILD LABOR REGULATIONS, ORDERS AND STATEMENTS OF 
INTERPRETATION--Table of Contents



                            Subpart A_General

Sec.
570.1 Definitions.
570.2 Minimum age standards.

                      Subpart B_Certificates of Age

570.5 Certificates of age and their effect.
570.6 Contents and disposition of certificates of age.
570.7 Documentary evidence required for issuance of a certificate of 
          age.
570.8 Issuance of a Federal certificate of age.
570.9 States in which State certificates of age are accepted.
570.10 Rules for certificates of age in the State of Alaska and the 
          Territory of Guam.
570.11 Continued acceptability of certificates of age.
570.12 Revoked certificates of age.

[[Page 272]]

                        Provisions of Other Laws

570.25 Effect on laws other than the Federal child labor standards.

  Subpart C_Employment of Minors Between 14 and 16 Years of Age (Child 
                              Labor Reg. 3)

570.31 Secretary's determinations concerning the employment of minors 14 
          and 15 years of age.
570.32 Effect of this subpart.
570.33 Occupations that are prohibited to minors 14 and 15 years of age.
570.34 Occupations that may be performed by minors 14 and 15 years of 
          age.
570.35 Hours of work and conditions of employment permitted for minors 
          14 and 15 years of age.
570.36 Work experience and career exploration program.
570.37 Work-study program.
570.38 Effect of a certificate of age under this subpart.
570.39 Effect of this subpart on other laws.

Subpart D [Reserved]

   Subpart E_Occupations Particularly Hazardous for the Employment of 
Minors Between 16 and 18 Years of Age or Detrimental to Their Health or 
                               Well-Being

570.50 General.
570.51 Occupations in or about plants or establishments manufacturing or 
          storing explosives or articles containing explosive components 
          (Order 1).
570.52 Occupations of motor-vehicle driver and outside helper (Order 2).
570.53 Coal-mine occupations (Order 3).
570.54 Forest fire fighting and forest fire prevention occupations, 
          timber tract occupations, forestry service occupations, 
          logging occupations, and occupations in the operation of any 
          sawmill, lath mill, shingle mill, or cooperage stock mill 
          (Order 4).
570.55 Occupations involved in the operation of power-driven woodworking 
          machines (Order 5).
570.57 Exposure to radioactive substances and to ionizing radiations 
          (Order 6).
570.58 Occupations involved in the operation of power-driven hoisting 
          apparatus (Order 7).
570.59 Occupations involved in the operation of power-driven metal 
          forming, punching, and shearing machines (Order 8).
570.60 Occupations in connection with mining, other than coal (Order 9).
570.61 Occupations in the operation of power-driven meat-processing 
          machines and occupations involving slaughtering, meat and 
          poultry packing, processing, or rendering (Order 10).
570.62 Occupations involved in the operation of bakery machines (Order 
          11).
570.63 Occupations involved in the operation of balers, compactors, and 
          paper-products machine (Order 12).
570.64 Occupations involved in the manufacture of brick, tile, and 
          kindred products (Order 13).
570.65 Occupations involving the operations of circular saws, band saws, 
          guillotine shears, chain saws, reciprocating saws, wood 
          chippers, and abrasive cutting discs (Order 14).
570.66 Occupations involved in wrecking, demolition, and shipbreaking 
          operations (Order 15).
570.67 Occupations in roofing operations and on or about a roof (Order 
          16).
570.68 Occupations in excavation operations (Order 17).

 Subpart E	1_Occupations in Agriculture Particularly Hazardous for the 
               Employment of Children Below the Age of 16

570.70 Purpose and scope.
570.71 Occupations involved in agriculture.
570.72 Exemptions.

Subpart F [Reserved]

   Subpart G_General Statements of Interpretation of the Child Labor 
     Provisions of the Fair Labor Standards Act of 1938, as Amended

                                 General

570.101 Introductory statement.
570.102 General scope of statutory provisions.
570.103 Comparison with wage and hour provisions.

                        Coverage of Section 12(a)

570.104 General.
570.105 ``Producer, manufacturer, or dealer''.
570.106 ``Ship or deliver for shipment in commerce''.
570.107 ``Goods''.
570.108 ``Produced''.
570.109 ``Establishment situated in the United States''.
570.110 ``In or about''.
570.111 Removal ``within 30 days''.

                        Coverage of Section 12(c)

570.112 General.
570.113 Employment ``in commerce or in the production of goods for 
          commerce''.

      Joint and Separate Applicability of Sections 12(a) and 12(c)

570.114 General.
570.115 Joint applicability.

[[Page 273]]

570.116 Separate applicability.

                         Oppressive Child Labor

570.117 General.
570.118 Sixteen-year minimum.
570.119 Fourteen-year minimum.
570.120 Eighteen-year minimum.
570.121 Age certificates.

                               Exemptions

570.122 General.
570.123 Agriculture.
570.124 Delivery of newspapers.
570.125 Actors and performers.
570.126 Parental exemption.
570.127 Homeworkers engaged in the making of evergreen wreaths.
570.128 Loading of certain scrap paper balers and paper box compactors.
570.129 Limited driving of automobiles and trucks by 17-year-olds.
570.130 Employment of certain youth inside and outside of places of 
          business that use power-driven machinery to process wood 
          products.

                               Enforcement

570.140 General.
570.141 Good faith defense.
570.142 Relation to other laws.

    Source: 16 FR 7008, July 20, 1951, unless otherwise noted. 
Redesignated at 28 FR 1634, Feb. 21, 1963, and further redesignated and 
amended at 36 FR 25156, Dec. 29, 1971.



                            Subpart A_General

    Authority: Secs. 3, 11, 12, 52 Stat. 1060, as amended, 1066, as 
amended, 1067, as amended; 29 U.S.C. 203, 211, 212.

    Source: 41 FR 26834, June 29, 1976, unless otherwise noted.



Sec. 570.1  Definitions.

    As used in this part:
    (a) Act means the Fair Labor Standards Act of 1938, as amended (52 
Stat. 1060, as amended; 29 U.S.C. 201-219).
    (b) Oppressive child labor means employment of a minor in an 
occupation for which he does not meet the minimum age standards of the 
Act, as set forth in Sec. 570.2 of this subpart.
    (c) Oppressive child labor age means an age below the minimum age 
established under the Act for the occupation in which a minor is 
employed or in which his employment is contemplated.
    (d) A certificate of age means a certificate as provided in Sec. 
570.5(b) (1) or (2) of this part.
    (e) [Reserved]
    (f) Secretary'' or Secretary of Labor means the Secretary of Labor, 
United States Department of Labor, or his authorized representative.
    (g) Wage and Hour Division means the Wage and Hour Division, 
Employment Standards Administration, United States Department of Labor.
    (h) Administrator means the Administrator of the Wage and Hour 
Division or his authorized representative.
    (i) State agency means any officer, executive department, board, 
bureau or commission of a State or any division or unit thereof 
authorized to take action with respect to the application of laws 
relating to minors.



Sec. 570.2  Minimum age standards.

    (a) All occupations except in agriculture. (1) The Act, in section 
3(1), sets a general 16-year minimum age which applies to all employment 
subject to its child labor provisions in any occupation other than in 
agriculture, with the following exceptions:
    (i) The Act authorizes the Secretary of Labor to provide by 
regulation or by order that the employment of employees between the ages 
of 14 and 16 years in occupations other than manufacturing and mining 
shall not be deemed to constitute oppressive child labor, if and to the 
extent that the Secretary of Labor determines that such employment is 
confined to periods which will not interfere with their schooling and to 
conditions which will not interfere with their health and well-being 
(see subpart C of this part); and
    (ii) The Act sets an 18-year minimum age with respect to employment 
in any occupation found and declared by the Secretary of Labor to be 
particularly hazardous for the employment of minors of such age or 
detrimental to their health or well-being (see subpart E of this part).
    (2) The Act exempts from its minimum age requirements the employment 
by a parent of his own child, or by a person standing in place of a 
parent of a child in his custody, except in occupations to which the 18-
year age minimum applies and in manufacturing and mining occupations.

[[Page 274]]

    (b) Occupations in agriculture. The Act sets a 16-year age minimum 
for employment in agriculture during school hours for the school 
district in which the employed minor is living at the time, and also for 
employment in any occupation in agriculture that the Secretary of Labor 
finds and declares to be particularly hazardous except where such 
employee is employed by his parent or by a person standing in the place 
of his parent on a farm owned or operated by such parent or person (see 
Subpart E-1 of this part). There is a minimum age requirement of 14 
years generally for employment in agriculture outside school hours for 
the school district where such employee is living while so employed. 
However, (1) a minor 12 or 13 years of age may be so employed with 
written consent of his parent or person standing in place of his parent, 
or may work on a farm where such parent or person is also employed, and 
(2) a minor under 12 years of age may be employed by his parent or by a 
person standing in place of his parent on a farm owned or operated by 
such parent or person, or may be employed with consent of such parent or 
person on a farm where all employees are exempt from the minimum wage 
provisions by virtue of section 13(a) (6) (A) of the Act.



                      Subpart B_Certificates of Age

    Authority: 29 U.S.C. 203(l), 211, 212.

    Source: 41 FR 26835, June 29, 1976, unless otherwise noted.



Sec. 570.5  Certificates of age and their effect.

    (a) To protect an employer from unwitting violation of the minimum 
age standards under the Act, section 3(1) of the Act provides that 
``oppressive child labor shall not be deemed to exist by virtue of the 
employment in any occupation of any person with respect to whom the 
employer shall have on file an unexpired certificate issued and held 
pursuant to regulations of the Secretary of Labor certifying that such 
person is above the oppressive child-labor age.'' The provisions of this 
subpart provide for age certificates based on the best available 
documentary evidence of age. Certificates issued and effective pursuant 
to this subpart furnish an employer with proof of the age of a minor 
employee upon which he may rely in determining whether the minor is at 
least the minimum age for the occupation in which he is to be employed.
    (b) The employment of any minor shall not be deemed to constitute 
oppressive child labor under the Act if his employer shall have on file 
an unexpired certificate, issued and held in accordance with this 
subpart, which shall be either:
    (1) A Federal certificate of age, issued by a person authorized by 
the Administrator of the Wage and Hour Division, showing that such minor 
is above the oppressive child-labor age applicable to the occupation in 
which he is employed, or
    (2) A State certificate, which may be in the form of and known as an 
age, employment, or working certificate or permit, issued by or under 
the supervision of a State agency in a State which has been designated 
for this purpose by the Administrator showing that such minor is above 
the oppressive child-labor age applicable to the occupation in which the 
minor is employed. States so designated are listed in Sec. 570.9(a). 
Any such certificate shall have the force and effect specified in Sec. 
570.9.
    (c) The prospective employer of a minor, in order to protect himself 
from unwitting violation of the Act, should obtain a certificate (as 
specified in paragraphs (b) (1) and (2) of this section) for the minor 
if there is any reason to believe that the minor's age may be below the 
applicable minimum for the occupation in which he is to be employed. 
Such certificate should always be obtained where the minor claims to be 
only 1 or 2 years above the applicable minimum age for the occupation in 
which he is to be employed. It should also be obtained for every minor 
claiming to be older than 2 years above the applicable minimum age if 
his physical appearance indicates that this may not be true.



Sec. 570.6  Contents and disposition of certificates of age.

    (a) Except as provided in Sec. Sec. 570.9 and 570.10, a certificate 
of age which shall

[[Page 275]]

have the effect specified in Sec. 570.5 shall contain the following 
information:
    (1) Name and address of minor.
    (2) Place and date of birth of minor, together with a statement 
indicating the evidence on which this is based. The place of birth need 
not appear on the certificate if it is obtained and kept on file by the 
person issuing the certificate.
    (3) Sex of minor.
    (4) Signature of minor.
    (5) Name and address of minor's parent or person standing in place 
of parent. This information need not appear on the certificate if it is 
obtained and kept on file by the person issuing the certificate.
    (6) Name and address of employer, if minor is under 18.
    (7) Industry of employer, if minor is under 18.
    (8) Occupation of minor, if minor is under 18.
    (9) Signature of issuing officer.
    (10) Date and place of issuance.
    (b)(1) We will send a certificate of age for a minor under 18 years 
of age to the prospective employer of the minor. That employer must keep 
the certificate on file at the minor's workplace. When the minor 
terminates employment, the employer must give the certificate to the 
minor. The minor may then present the previously issued certificate to 
future employers as proof of age as described in Sec. 570.5.
    (2) Whenever a certificate of age is issued for a minor 18 or 19 
years of age it may be given to the minor by the person issuing the 
certificate. Every minor 18 or 19 years of age shall, upon entering 
employment, deliver his certificate of age to his employer for filing 
and upon the termination of the employment, the employer shall return 
the certificate to the minor.

(The information collection requirements contained in paragraph (a) were 
approved by the Office of Management and Budget under control number 
1215-0083)

[41 FR 26835, June 29, 1976, as amended at 49 FR 18294, Apr. 30, 1984; 
69 FR 75402, Dec. 16, 2004]



Sec. 570.7  Documentary evidence required for issuance of a 
certificate of age.

    (a) Except as otherwise provided in Sec. Sec. 570.9 and 570.10, a 
certificate of age which shall have the effect specified in Sec. 570.5 
shall be issued only upon application of the minor desiring employment 
or of the prospective employer to the person authorized to issue such 
certificate and only after acceptable documentary evidence of age has 
been received, examined, and approved. Such evidence shall consist of 
one of the following to be required in the order of preference herein 
designated:
    (1) A birth certificate or attested transcript thereof or a signed 
statement of the recorded date and place of birth, issued by a registrar 
of vital statistics or other officer charged with the duty of recording 
births.
    (2) A record of baptism or attested transcript thereof showing the 
date and place of birth and date and place of baptism of the minor, or a 
bona fide contemporary record of the date and place of the minor's birth 
kept in the Bible in which the records of the births in the family of 
the minor are preserved, or other documentary evidence satisfactory to 
the Administrator, such as a passport showing the age of the minor, or a 
certificate of arrival in the United States issued by the United States 
immigration office and showing the age of the minor, or a life-insurance 
policy: Provided, That such other documentary evidence has been in 
existence at least 1 year prior to the time it is offered as evidence: 
And provided further, That a school record of age or an affidavit of a 
parent or a person standing in place of a parent, or other written 
statement of age shall not be accepted except as specified in paragraph 
(a) (3) of this section;
    (3) The school record or the school-census record of the age of the 
minor, together with the sworn statement of a parent or person standing 
in place of a parent as to the age of the minor and also a certificate 
signed by a physician specifying what in his opinion is the physical age 
of the minor. Such certificate shall show the height and weight of the 
minor and other facts concerning his physical development

[[Page 276]]

which were revealed by such examination and upon which the opinion of 
the physician as to the physical age of the minor is based. If the 
school or school-census record of age is not obtainable, the sworn 
statement of the parent or person standing in place of a parent as to 
the date of birth of the minor, together with a physician's certificate 
of age as hereinbefore specified, may be accepted as evidence of age.
    (b) The officer issuing a certificate of age for a minor shall 
require the evidence of age specified in paragraph (a)(1) of this 
section in preference to that specified in paragraphs (a)(2) and (3) of 
this section, and shall not accept the evidence of age permitted by 
either subsequent paragraph unless he shall receive and file evidence 
that reasonable efforts have been made to obtain the preferred evidence 
required by the preceding paragraph or paragraphs before accepting any 
subsequently named evidence: Provided, That to avoid undue delay in the 
issuance of certificates, evidence specified in paragraph (a)(2) of this 
section may be accepted, or if such evidence is not available, evidence 
specified in paragraph (a)(3) of this section may be accepted if a 
verification of birth has been requested but has not been received from 
the appropriate bureau of vital statistics.



Sec. 570.8  Issuance of a Federal certificate of age.

    A Federal certificate of age which shall have the effect specified 
in Sec. 570.5 shall be issued by a person authorized by the 
Administrator of the Wage and Hour Division and shall be issued in 
accordance with the provisions of Sec. Sec. 570.6 and 570.7.



Sec. 570.9  States in which State certificates of age are accepted.

    (a) The States in which age, employment, or working certificates or 
permits have been found by the Administrator to be issued by or under 
the supervision of a State agency substantially in accordance with the 
provisions of Sec. Sec. 570.6 and 570.7 and which are designated as 
States in which certificates so issued shall have the force and effect 
specified in Sec. 570.5, except as individual certificates may be 
revoked in accordance with Sec. 570.11 of this subpart, are:

Alabama, Arkansas, California, Colorado, Connecticut, Delaware, District 
of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, 
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, 
Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New 
Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, 
Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, 
Tennessee, Vermont, Virginia, West Virginia, Wisconsin and Wyoming.

    (b) State certificates requiring conditions or restrictions 
additional to those required by this subpart shall not be deemed to be 
inconsistent herewith.
    (c) The designation of a State under this section shall have force 
and effect indefinitely unless withdrawal of such designation is deemed 
desirable for the effective administration of the Act. No withdrawal of 
the designation of a State under this section shall make any certificate 
invalid if it was issued by or under the supervision of a State agency 
as herein provided prior to such withdrawal.



Sec. 570.10  Rules for certificates of age in the State of Alaska 
and the Territory of Guam.

    The State of Alaska and the Territory of Guam are designated as 
States in which any of the following documents shall have the same 
effect as Federal certificates of age as specified in Sec. 570.5:
    (a) A birth certificate or attested transcript thereof, or a signed 
statement of the recorded date and place of birth issued by a registrar 
of vital statistics or other officer charged with the duty of recording 
births, or
    (b) A record of baptism or attested transcript thereof showing the 
date of birth of the minor, or
    (c) With respect to the State of Alaska, a statement on the census 
records of the Bureau of Indian Affairs and signed by an administrative 
representative thereof showing the name, date of birth, and place of 
birth of the minor.



Sec. 570.11  Continued acceptability of certificates of age.

    (a) Whenever a person duly authorized to make investigations under 
this Act shall obtain substantial evidence

[[Page 277]]

that the age of the minor as given on a certificate held by an employer 
subject to this Act is incorrect, he shall inform the employer and the 
minor of such evidence and of his intention to request through the 
appropriate channels that action be taken to establish the correct age 
of the minor and to determine the continued acceptability of the 
certificate as proof of age under the Act. The said authorized person 
shall request in writing through the appropriate channels that action be 
taken on the acceptability of the certificate as proof of age under the 
Fair Labor Standards Act and shall state the evidence of age of the 
minor which he has obtained and the reasons for such request. A copy of 
this request shall be sent to the Administrator of the Wage and Hour 
Division for further handling through the State agency responsible for 
the issuance of certificates, except that in those States where Federal 
certificates of age are issued, action necessary to establish the 
correct age of the minor and to revoke the certificate if it is found 
that the minor is under age shall be taken by the Administrator of the 
Wage and Hour Division or his designated representative.
    (b) The Administrator shall have final authority in those States in 
which State certificates are accepted as proof of age under the Act for 
determining the continued acceptability of the certificate, and shall 
have final authority for such determination in those States in which 
Federal certificates of age are issued. When such determination has been 
made in any case, notice thereof shall be given to the employer and the 
minor. In those cases involving the continued acceptability of State 
certificates, the appropriate State agency and the official who issued 
the certificate shall also be notified.



Sec. 570.12  Revoked certificates of age.

    A certificate which has been revoked as proof of age under the Act 
shall be of no force and effect under the Act after notice of such 
revocation.

                        Provisions of Other Laws



Sec. 570.25  Effect on laws other than the Federal child labor standards.

    No provision of this subpart shall under any circumstances justify 
or be construed to permit noncompliance with the provisions of any other 
Federal law or of any State law or municipal ordinance establishing 
higher standards than those established under this subpart.



  Subpart C_Employment of Minors Between 14 and 16 Years of Age (Child 
                              Labor Reg. 3)

    Authority: 29 U.S.C. 203(l), 212, 213(c).



Sec. 570.31  Secretary's determinations concerning the employment
of minors 14 and 15 years of age.

    The employment of minors between 14 and 16 years of age in the 
occupations, for the periods, and under the conditions specified in 
Sec. 570.34 and Sec. 570.35, does not interfere with their schooling 
or with their health and well-being and shall not be deemed to be 
oppressive child labor.

[75 FR 28448, May 20, 2010]



Sec. 570.32  Effect of this subpart.

    This subpart concerns the employment of youth between 14 and 16 
years of age in nonagricultural occupations; standards for the 
employment of minors in agricultural occupations are detailed in subpart 
E-1. The employment (including suffering or permitting to work) by an 
employer of minors 14 and 15 years of age in occupations detailed in 
Sec. 570.34, for the periods and under the conditions specified in 
Sec. 570.35, shall not be deemed to be oppressive child labor within 
the meaning of the Fair Labor Standards Act of 1938, as amended. 
Employment that is not specifically permitted is prohibited.

[75 FR 28448, May 20, 2010]



Sec. 570.33  Occupations that are prohibited to minors 14 and 
15 years of age.

    The following occupations, which is not an exhaustive list, 
constitute oppressive child labor within the meaning of the Fair Labor 
Standards Act when

[[Page 278]]

performed by minors who are 14 and 15 years of age:
    (a) Manufacturing, mining, or processing occupations, including 
occupations requiring the performance of any duties in work rooms or 
work places where goods are manufactured, mined or otherwise processed, 
except as permitted in Sec. 570.34 of this subpart.
    (b) Occupations that the Secretary of Labor may, pursuant to section 
3(l) of the Fair Labor Standards Act, find and declare to be hazardous 
for the employment of minors between 16 and 18 years of age or 
detrimental to their health or well-being.
    (c) Occupations that involve operating, tending, setting up, 
adjusting, cleaning, oiling, or repairing hoisting apparatus.
    (d) Work performed in or about boiler or engine rooms or in 
connection with the maintenance or repair of the establishment, 
machines, or equipment.
    (e) Occupations that involve operating, tending, setting up, 
adjusting, cleaning, oiling, or repairing any power-driven machinery, 
including but not limited to lawn mowers, golf carts, all-terrain 
vehicles, trimmers, cutters, weed-eaters, edgers, food slicers, food 
grinders, food choppers, food processors, food cutters, and food mixers. 
Youth 14 and 15 years of age may, however, operate office equipment 
pursuant to Sec. 570.34(a) and vacuum cleaners and floor waxers 
pursuant to Sec. 570.34(h).
    (f) The operation of motor vehicles; the service as helpers on such 
vehicles except those tasks permitted by Sec. 570.34(k); and the riding 
on a motor vehicle, inside or outside of an enclosed passenger 
compartment, except as permitted by Sec. 570.34(o).
    (g) Outside window washing that involves working from window sills, 
and all work requiring the use of ladders, scaffolds, or their 
substitutes.
    (h) All baking and cooking activities except that cooking which is 
permitted by Sec. 570.34(c).
    (i) Work in freezers and meat coolers and all work in the 
preparation of meats for sale except as permitted by Sec. 570.34(j). 
This section, however, does not prohibit the employment of 14- and 15-
year-olds whose duties require them to occasionally enter freezers only 
momentarily to retrieve items as permitted by Sec. 570.34(i).
    (j) Youth peddling, which entails the selling of goods or services 
to customers at locations other than the youth-employer's establishment, 
such as the customers' residences or places of business, or public 
places such as street corners and public transportation stations. 
Prohibited activities associated with youth peddling not only include 
the attempt to make a sale or the actual consummation of a sale, but 
also the preparatory and concluding tasks normally performed by a youth 
peddler in conjunction with his or her sales such as the loading and 
unloading of vans or other motor vehicles, the stocking and restocking 
of sales kits and trays, the exchanging of cash and checks with the 
employer, and the transportation of minors to and from the various sales 
areas by the employer. Prohibited youth peddling also includes such 
promotion activities as the holding, wearing, or waving of signs, 
merchandise, costumes, sandwich boards, or placards in order to attract 
potential customers, except when performed inside of, or directly in 
front of, the employer's establishment providing the product, service, 
or event being advertised. This provision does not prohibit a young 
salesperson from conducting sales for his or her employer on property 
controlled by the employer that is out of doors but may properly be 
considered part of the employer's establishment. Youth may conduct sales 
in such employer exterior facilities, whether temporary or permanent, as 
garden centers, sidewalk sales, and parking lot sales, when employed by 
that establishment. Youth peddling does not include the activities of 
persons who, as volunteers and without compensation, sell goods or 
services on behalf of eleemosynary organizations or public agencies.
    (k) Loading and unloading of goods or property onto or from motor 
vehicles, railroad cars, or conveyors, except the loading and unloading 
of personal non-power-driven hand tools, personal protective equipment, 
and personal items to and from motor vehicles as permitted by Sec. 
570.34(k).

[[Page 279]]

    (l) Catching and cooping of poultry in preparation for transport or 
for market.
    (m) Public messenger service.
    (n) Occupations in connection with:
    (1) Transportation of persons or property by rail, highway, air, 
water, pipeline, or other means;
    (2) Warehousing and storage;
    (3) Communications and public utilities;
    (4) Construction (including demolition and repair); except such 
office work (including ticket office) or sales work in connection with 
paragraphs (n)(1), (2), (3), and (4) of this section, as does not 
involve the performance of any duties on trains, motor vehicles, 
aircraft, vessels, or other media of transportation or at the actual 
site of construction operations.

[75 FR 28448, May 20, 2010]



Sec. 570.34  Occupations that may be performed by minors 14 
and 15 years of age.

    This subpart authorizes only the following occupations in which the 
employment of minors 14 and 15 years of age is permitted when performed 
for periods and under conditions authorized by Sec. 570.35 and not 
involving occupations prohibited by Sec. 570.33 or performed in areas 
or industries prohibited by Sec. 570.33.
    (a) Office and clerical work, including the operation of office 
machines.
    (b) Work of an intellectual or artistically creative nature such as, 
but not limited to, computer programming, the writing of software, 
teaching or performing as a tutor, serving as a peer counselor or 
teacher's assistant, singing, the playing of a musical instrument, and 
drawing, as long as such employment complies with all the other 
provisions contained in Sec. Sec. 570.33, 570.34, and 570.35. 
Artistically creative work is limited to work in a recognized field of 
artistic or creative endeavor.
    (c) Cooking with electric or gas grills which does not involve 
cooking over an open flame (Note: This provision does not authorize 
cooking with equipment such as rotisseries, broilers, pressurized 
equipment including fryolators, and cooking devices that operate at 
extremely high temperatures such as ``Neico broilers''). Cooking is also 
permitted with deep fryers that are equipped with and utilize a device 
which automatically lowers the baskets into the hot oil or grease and 
automatically raises the baskets from the hot oil or grease.
    (d) Cashiering, selling, modeling, art work, work in advertising 
departments, window trimming, and comparative shopping.
    (e) Price marking and tagging by hand or machine, assembling orders, 
packing, and shelving.
    (f) Bagging and carrying out customers' orders.
    (g) Errand and delivery work by foot, bicycle, and public 
transportation.
    (h) Clean up work, including the use of vacuum cleaners and floor 
waxers, and the maintenance of grounds, but not including the use of 
power-driven mowers, cutters, trimmers, edgers, or similar equipment.
    (i) Kitchen work and other work involved in preparing and serving 
food and beverages, including operating machines and devices used in 
performing such work. Examples of permitted machines and devices 
include, but are not limited to, dishwashers, toasters, dumbwaiters, 
popcorn poppers, milk shake blenders, coffee grinders, automatic coffee 
machines, devices used to maintain the temperature of prepared foods 
(such as warmers, steam tables, and heat lamps), and microwave ovens 
that are used only to warm prepared food and do not have the capacity to 
warm above 140 [deg]F. Minors are permitted to clean kitchen equipment 
(not otherwise prohibited), remove oil or grease filters, pour oil or 
grease through filters, and move receptacles containing hot grease or 
hot oil, but only when the equipment, surfaces, containers and liquids 
do not exceed a temperature of 100 [deg]F. Minors are also permitted to 
occasionally enter freezers momentarily to retrieve items in conjunction 
with restocking or food preparation.
    (j) Cleaning vegetables and fruits, and the wrapping, sealing, 
labeling, weighing, pricing, and stocking of items, including 
vegetables, fruits, and meats, when performed in areas physically 
separate from a freezer or meat cooler.

[[Page 280]]

    (k) The loading onto motor vehicles and the unloading from motor 
vehicles of the light, non-power-driven, hand tools and personal 
protective equipment that the minor will use as part of his or her 
employment at the work site; and the loading onto motor vehicles and the 
unloading from motor vehicles of personal items such as a back pack, a 
lunch box, or a coat that the minor is permitted to take to the work 
site. Such light tools would include, but are not limited to, rakes, 
hand-held clippers, shovels, and brooms. Such light tools would not 
include items like trash, sales kits, promotion items or items for sale, 
lawn mowers, or other power-driven lawn maintenance equipment. Such 
minors would not be permitted to load or unload safety equipment such as 
barriers, cones, or signage.
    (l)(1) Lifeguard. The employment of 15-year-olds (but not 14-year-
olds) to perform permitted lifeguard duties at traditional swimming 
pools and water amusement parks (including such water park facilities as 
wave pools, lazy rivers, specialized activity areas that may include 
water falls and sprinkler areas, and baby pools; but not including the 
elevated areas of power-driven water slides) when such youth have been 
trained and certified by the American Red Cross, or a similar certifying 
organization, in aquatics and water safety.
    (2) Definitions. As used in this paragraph (l):
    Permitted lifeguard duties include the rescuing of swimmers in 
danger of drowning, the monitoring of activities at poolside to prevent 
accidents, the teaching of water safety, and providing assistance to 
patrons. Lifeguards may also help to maintain order and cleanliness in 
the pool and pool areas, give swimming instructions (if, in addition to 
being certified as a lifeguard, the 15-year-old is also properly 
certified as a swimming instructor by the American Red Cross or some 
other recognized certifying organization), conduct or officiate at 
swimming meets, and administer first aid. Additional lifeguard duties 
may include checking in and out items such as towels and personal items 
such as rings, watches and apparel. Permitted duties for 15-year-olds 
include the use of a ladder to access and descend from the lifeguard 
chair; the use of hand tools to clean the pool and pool area; and the 
testing and recording of water quality for temperature and/or pH levels, 
using all of the tools of the testing process including adding chemicals 
to the test water sample. Fifteen-year-olds employed as lifeguards are, 
however, prohibited from entering or working in any mechanical room or 
chemical storage areas, including any areas where the filtration and 
chlorinating systems are housed. The term permitted lifeguard duties 
does not include the operation or tending of power-driven equipment 
including power-driven elevated water slides often found at water 
amusement parks and some swimming pools. Minors under 16 years of age 
may not be employed as dispatchers or attendants at the top of elevated 
water slides performing such tasks as maintaining order, directing 
patrons as to when to depart the top of the slide, and ensuring that 
patrons have begun their ``ride'' safely. Properly certified 15-year-old 
lifeguards may, however, be stationed at the ``splashdown pools'' 
located at the bottom of the elevated water slides to perform those 
permitted duties listed in this subsection.
    Traditional swimming pool means a water tight structure of concrete, 
masonry, or other approved materials located either indoors or outdoors, 
used for bathing or swimming and filled with a filtered and disinfected 
water supply, together with buildings, appurtenances and equipment used 
in connection therewith, excluding elevated ``water slides.'' Not 
included in the definition of a traditional swimming pool would be such 
natural environment swimming facilities as rivers, streams, lakes, 
ponds, quarries, reservoirs, wharfs, piers, canals, or oceanside 
beaches.
    Water amusement park means an establishment that not only 
encompasses the features of a traditional swimming pool, but may also 
include such additional attractions as wave pools; lazy rivers; 
specialized activities areas such as baby pools, water falls, and 
sprinklers; and elevated water slides. Not included in the definition of 
a water amusement park would be such natural

[[Page 281]]

environment swimming facilities as rivers, streams, lakes, reservoirs, 
wharfs, piers, canals, or oceanside beaches.
    (m)(1) Employment inside and outside of places of business where 
machinery is used to process wood products. The employment of a 14- or 
15-year-old who by statute or judicial order is exempt from compulsory 
school attendance beyond the eighth grade inside or outside places of 
business where machinery is used to process wood products if:
    (i) The youth is supervised by an adult relative of the youth or is 
supervised by an adult member of the same religious sect or division as 
the youth;
    (ii) The youth does not operate or assist in the operation of power-
driven woodworking machines;
    (iii) The youth is protected from wood particles or other flying 
debris within the workplace by a barrier appropriate to the potential 
hazard of such wood particles or flying debris or by maintaining a 
sufficient distance from machinery in operation; and
    (iv) The youth is required to use, and uses, personal protective 
equipment to prevent exposure to excessive levels of noise and saw dust.
    (2) Compliance. Compliance with the provisions of paragraphs 
(m)(1)(iii) and (m)(1)(iv) of this section will be accomplished when the 
employer is in compliance with the requirements of the applicable 
governing standards issued by the U.S. Department of Labor's 
Occupational Safety and Health Administration (OSHA) or, in those areas 
where OSHA has authorized the state to operate its own Occupational 
Safety and Health Plan, the applicable standards issued by the Office 
charged with administering the State Occupational Safety and Health 
Plan. The employment of youth under this section must comply with the 
other sections of this subpart, including the hours and time of day 
standards established by Sec. 570.35.
    (3) Definitions. As used in this paragraph (m):
    Inside or outside places of business shall mean the actual physical 
location of the establishment employing the youth, including the 
buildings and surrounding land necessary to the business operations of 
that establishment.
    Operate or assist in the operation of power-driven woodworking 
machines shall mean the operating of such machines, including 
supervising or controlling the operation of such machines, feeding 
material into such machines, helping the operator feed material into 
such machines, unloading materials from such machines, and helping the 
operator unload materials from such machines. The term also includes the 
occupations of setting-up, adjusting, repairing, oiling, or cleaning 
such machines.
    Places of business where machinery is used to process wood products 
shall mean such permanent workplaces as sawmills, lath mills, shingle 
mills, cooperage stock mills, furniture and cabinet making shops, gazebo 
and shed making shops, toy manufacturing shops, and pallet shops. The 
term shall not include construction sites, portable sawmills, areas 
where logging is being performed, or mining operations.
    Power-driven woodworking machines shall mean all fixed or portable 
machines or tools driven by power and used or designed for cutting, 
shaping, forming, surfacing, nailing, stapling, wire stitching, 
fastening or otherwise assembling, pressing, or printing wood, veneer, 
trees, logs, or lumber.
    Supervised by an adult relative or is supervised by an adult member 
of the same religious sect or division as the youth has several 
components. Supervised means that the youth's on-the-job activities must 
be directed, monitored, overseen, and controlled by certain named 
adults. Such supervision must be close, direct, constant, and 
uninterrupted. An adult shall mean an individual who is at least 
eighteen years of age. A relative shall mean the parent (or someone 
standing in the place of a parent), grandparent, sibling, uncle, or aunt 
of the young worker. A member of the same religious sect or division as 
the youth refers to an individual who professes membership in the same 
religious sect or division to which the youth professes membership.
    (n) Work in connection with cars and trucks if confined to the 
following: dispensing gasoline and oil; courtesy service; car cleaning, 
washing and polishing by hand; and other occupations permitted by this 
section, but not

[[Page 282]]

including work involving the use of pits, racks, or lifting apparatus, 
or involving the inflation of any tire mounted on a rim equipped with a 
removable retaining ring.
    (o) Work in connection with riding inside passenger compartments of 
motor vehicles except as prohibited by Sec. 570.33(f) or Sec. 
570.33(j), or when a significant reason for the minor being a passenger 
in the vehicle is for the purpose of performing work in connection with 
the transporting--or assisting in the transporting of--other persons or 
property. The transportation of the persons or property does not have to 
be the primary reason for the trip for this exception to apply. Each 
minor riding as a passenger in a motor vehicle must have his or her own 
seat in the passenger compartment; each seat must be equipped with a 
seat belt or similar restraining device; and the employer must instruct 
the minors that such belts or other devices must be used. In addition, 
each driver transporting the young workers must hold a State driver's 
license valid for the type of driving involved and, if the driver is 
under the age of 18, his or her employment must comply with the 
provisions of Sec. 570.52.

[75 FR 28448, May 20, 2010]



Sec. 570.35  Hours of work and conditions of employment permitted
for minors 14 and 15 years of age.

    (a) Hours standards. Except as provided in paragraph (c) of this 
section, employment in any of the permissible occupations to which this 
subpart is applicable shall be confined to the following periods:
    (1) Outside of school hours;
    (2) Not more than 40 hours in any 1 week when school is not in 
session;
    (3) Not more than 18 hours in any 1 week when school is in session;
    (4) Not more than 8 hours in any 1 day when school is not in 
session;
    (5) Not more than 3 hours in any 1 day when school is in session, 
including Fridays;
    (6) Between 7 a.m. and 7 p.m. in any 1 day, except during the summer 
(June 1 through Labor Day) when the evening hour will be 9 p.m.
    (b) Definitions. As used in this section:
    Outside school hours means such periods as before and after school 
hours, holidays, summer vacations, weekends, and any other day or part 
of a day when school is not in session as determined by the local public 
school district in which the minor resides when employed. Summer school 
sessions, held in addition to the regularly scheduled school year, are 
considered to be outside of school hours.
    School hours refers to the hours that the local public school 
district where the minor resides while employed is in session during the 
regularly scheduled school year.
    Week means a fixed and regularly recurring period of 168 hours--
seven consecutive 24-hour periods--that is identical to the workweek the 
employer establishes for the employee under Sec. 778.105 of this title.
    Week when school is in session refers to any week the local public 
school district where the minor resides while employed is in session and 
students are required to attend for at least one day or partial day.
    (c) Exceptions. (1) School is not considered to be in session, and 
exceptions from the hours limitations standards listed in paragraphs 
(a)(1), (3), and (5) of this section are provided, for any youth 14 or 
15 years of age who:
    (i) Has graduated from high school;
    (ii) Has been excused from compulsory school attendance by the state 
or other jurisdiction once he or she has completed the eighth grade and 
his or her employment complies with all the requirements of the state 
school attendance law;
    (iii) Has a child to support and appropriate state officers, 
pursuant to state law, have waived school attendance requirements for 
this minor;
    (iv) Is subject to an order of a state or federal court prohibiting 
him or her from attending school; or
    (v) Has been permanently expelled from the local public school he or 
she would normally attend, unless the youth is required, by state or 
local law or ordinance, or by court order, to attend another school.
    (2) In the case of minors 14 and 15 years of age who are employed to 
perform sports-attending services at professional sporting events, i.e., 
baseball,

[[Page 283]]

basketball, football, soccer, tennis, etc., the requirements of 
paragraphs (a)(2) through (a)(6) of this section shall not apply, 
provided that the duties of the sports-attendant occupation consist of 
pre- and post-game or practice setup of balls, items and equipment; 
supplying and retrieving balls, items and equipment during a sporting 
event; clearing the field or court of debris, moisture, etc., during 
play; providing ice, drinks, towels, etc., to players during play; 
running errands for trainers, managers, coaches, and players before, 
during, and after a sporting event; and returning and/or storing balls, 
items and equipment in club house or locker room after a sporting event. 
For purposes of this exception, impermissible duties include grounds or 
field maintenance such as grass mowing, spreading or rolling tarpaulins 
used to cover playing areas, etc.; cleaning and repairing equipment; 
cleaning locker rooms, showers, lavatories, rest rooms, team vehicles, 
club houses, dugouts or similar facilities; loading and unloading balls, 
items and equipment from team vehicles before and after a sporting 
event; doing laundry; and working in concession stands or other selling 
and promotional activities.
    (3) Exceptions from certain of the hours standards contained in 
paragraphs (a)(1) and (a)(3) of this section are provided for the 
employment of minors who are enrolled in and employed pursuant to a 
school-supervised work-experience and career exploration program as 
detailed in Sec. 570.36.
    (4) Exceptions from certain of the hours standards contained in 
paragraphs (a)(1) and (a)(5) of this section are provided for the 
employment of minors who are participating in a work-study program 
designed as described in Sec. 570.37.

[75 FR 28448, May 20, 2010]



Sec. 570.36  Work experience and career exploration program.

    (a) This section varies some provisions of this subpart for the 
employment of minors between 14 and 16 years of age who are enrolled in 
and employed pursuant to a school-supervised and school-administered 
work-experience and career exploration program which meets the 
requirements of paragraph (b) of this section, in the occupations 
permitted under paragraph (c) of this section, and for the periods and 
under the conditions specified in paragraph (d) of this section. With 
these safeguards, such employment is found not to interfere with the 
schooling of the minors or with their health and well-being and 
therefore is not deemed to be oppressive child labor.
    (b)(1) A school-supervised and school-administered work-experience 
and career exploration program shall meet the educational standards 
established and approved by the State Educational Agency in the 
respective State.
    (2) The State Educational Agency shall file with the Administrator 
of the Wage and Hour Division a letter of application for approval of a 
State program as one not interfering with schooling or with the health 
and well-being of the minors involved and therefore not constituting 
oppressive child labor. The application must include information 
concerning the criteria listed in paragraph (b)(3) of this section. The 
Administrator of the Wage and Hour Division shall approve the 
application, or give prompt notice of any denial and the reasons 
therefor.
    (3) The criteria to be used in consideration of applications are the 
following:
    (i) Eligibility. Any student aged 14 or 15 years who authoritative 
local school personnel identify as being able to benefit from the 
program shall be eligible to participate.
    (ii) Credits. Students shall receive school credits for both in-
school related instruction and on-the-job experience.
    (iii) Size. Each program unit shall be a reasonable size. A unit of 
12 to 25 students to one teacher-coordinator would be generally 
considered reasonable. Whether other sizes are reasonable would depend 
upon the individual facts and circumstances involved.
    (iv) Instructional schedule. There shall be (a) allotted time for 
the required classroom instruction in those subjects necessary for 
graduation under the State's standards and (b) regularly scheduled 
classroom periods of instruction devoted to job-related and to 
employability skill instruction.

[[Page 284]]

    (v) Teacher-coordinator. Each program unit shall be under the 
supervision of a school official to be designated for the purpose of the 
program as a teacher-coordinator, who shall generally supervise the 
program and coordinate the work and education aspects of the program and 
make regularly scheduled visits to the work stations.
    (vi) Written training agreement. No student shall participate in the 
program until there has been made a written training agreement signed by 
the teacher-coordinator, the employer, and the student. The agreement 
shall also be signed or otherwise consented to by the student's parent 
or guardian.
    (vii) Other provisions. Any other provisions of the program 
providing safeguards ensuring that the employment permitted under this 
section will not interfere with the schooling of the minors or with 
their health and well-being may also be submitted for use in 
consideration of the application.
    (4) Every State Educational Agency having students in a program 
approved pursuant to the requirements of this section shall comply with 
the following:
    (i) Permissible occupations. No student shall be assigned to work in 
any occupation other than one permitted under paragraph (c) of this 
section.
    (ii) Records and reports. The names and addresses of each school 
enrolling work experience and career exploration program students and 
the number of enrollees in each unit shall be kept at the State 
Educational Agency office. A copy of the written training agreement for 
each student participating in the program shall be kept in the State 
Educational Agency office or in the local educational office. The 
records required for this paragraph shall be kept for a period of 3 
years from the date of enrollment in the program and shall be made 
available for inspection or transcription to the representatives of the 
Administrator of the Wage and Hour Division.
    (c) Employment of minors enrolled in a program approved pursuant to 
the requirements of this section shall be permitted in all occupations 
except the following:
    (1) Manufacturing and mining.
    (2) Occupations declared to be hazardous for the employment of 
minors between 16 and 18 years of age in subpart E of this part, and 
occupations in agriculture declared to be hazardous for employment of 
minors below the age of 16 in subpart E-1 of this part.
    (3) Occupations other than those permitted under Sec. 570.34, 
except upon approval of a variation by the Administrator of the Wage and 
Hour Division in acting on the program application of the State 
Educational Agency. The Administrator shall have discretion to grant 
requests for special variations if the applicant demonstrates that the 
activity will be performed under adequate supervision and training 
(including safety precautions) and that the terms and conditions of the 
proposed employment will not interfere with the health or well-being or 
schooling of the minor enrolled in an approved program. The granting of 
a special variation is determined on a case-by-case basis.
    (i) The Administrator's decision on whether to grant a special 
variation will be based on information provided in the application filed 
by the State Educational Agency, and/or any supplemental information 
that may be requested by the Administrator.
    (ii) The Administrator's decision shall be in writing, and may 
designate specific equipment safeguards or other terms and conditions 
governing the work-activity approved by variation. If the request is 
denied, in whole or part, the reason(s) for the decision will be 
provided to the applicant, who may request reconsideration.
    (iii) A special variation will be valid only during the period 
covered by an approved program, and must be renewed with the filing of a 
new program application.
    (iv) The Administrator shall revoke or deny a special variation, in 
whole or in part, where there is reason to believe that program 
participants have been or will be employed contrary to terms and 
conditions specified for the variation, or these regulations, other 
provisions of the Fair Labor Standards Act, or otherwise in conditions 
detrimental to their health or well-being or schooling.

[[Page 285]]

    (v) Requests for special variations and related documentation will 
be available for examination in the Branch of Child Labor and Polygraph 
Standards, Wage and Hour Division, Room S3510, 200 Constitution Avenue, 
NW., Washington, DC 20210. Any interested person may oppose the granting 
of a special variation or may request reconsideration or revocation of a 
special variation. Such requests shall set forth reasons why the special 
variation should be denied or revoked.
    (d) Employment of minors enrolled in a program approved pursuant to 
the requirements of this section shall be confined to not more than 23 
hours in any 1 week when school is in session and not more than 3 hours 
in any day when school is in session, any portion of which may be during 
school hours. Insofar as these provisions are inconsistent with the 
provisions of Sec. 570.35, this section shall be controlling.
    (e) The employment of a minor enrolled in a program pursuant to the 
requirements of this section must not have the effect of displacing a 
worker employed in the establishment of the employer.
    (f) Programs shall be in force and effect for a period of two (2) 
school years from the date of their approval by the Administrator of the 
Wage and Hour Division. A new application for approval must be filed at 
the end of that period. Failure to meet the requirements of this section 
may result in withdrawal of approval.

(The information collection requirements contained in paragraphs 
(b)(3)(vi) and (4) were approved by the Office of Management and Budget 
under control number 1215-0121)

[40 FR 40801, Sept. 4, 1975; 40 FR 44130, Sept. 25, 1975; 47 FR 145, 
Jan. 5, 1982; 47 FR 28095, June 29, 1982, as amended at 49 FR 18294, 
Apr. 30, 1984; 60 FR 19339, Apr. 17, 1995. Redesignated and amended at 
75 FR 28452, May 20, 2010]



Sec. 570.37  Work-study program.

    (a) This section varies the provisions contained in Sec. 
570.35(a)(1) and (a)(5) for the employment of minors 14 and 15 years of 
age who are enrolled in and employed pursuant to a school-supervised and 
school-administered work-study program that meets the requirements of 
paragraph (b) of this section, in the occupations permitted by Sec. 
570.34, and for the periods and under the conditions specified in 
paragraph (c) of this section. With these safeguards, such employment is 
found not to interfere with the schooling of the minors or with their 
health and well-being and therefore is not deemed to be oppressive child 
labor.
    (b)(1) A school-supervised and school-administered work-study 
program shall meet the educational standards established and approved by 
the State Educational Agency in the respective state.
    (2) The superintendent of the public or private school system 
supervising and administering the work-study program shall file with the 
Administrator of the Wage and Hour Division a letter of application for 
approval of the work-study program as one not interfering with schooling 
or with the health and well-being of the minors involved and therefore 
not constituting oppressive child labor. The application shall be filed 
at least sixty days before the start of the school year and must include 
information concerning the criteria listed in paragraph (b)(3) of this 
section. The Administrator of the Wage and Hour Division shall approve 
the application, or give prompt notice of any denial and the reasons 
therefor.
    (3) The criteria to be used in consideration of applications under 
this section are the following:
    (i) Eligibility. Any student 14 or 15 years of age, enrolled in a 
college preparatory curriculum, whom authoritative personnel from the 
school attended by the youth identify as being able to benefit from the 
program shall be able to participate.
    (ii) Instructional schedule. Every youth shall receive, every school 
year he or she participates in the work-study program, at least the 
minimum number of hours of classroom instruction, as required by the 
State Educational Agency responsible for establishing such standards, to 
complete a fully-accredited college preparatory curriculum. Such 
classroom instruction shall include, every year the youth participates 
in the work-study program, training in workplace safety and state and 
federal child labor provisions and rules.

[[Page 286]]

    (iii) Teacher-coordinator. Each school participating in a work-study 
program shall designate a teacher-coordinator under whose supervision 
the program will operate. The teacher-coordinator shall generally 
supervise and coordinate the work and educational aspects of the program 
and make regularly scheduled visits to the workplaces of the 
participating students to confirm that minors participating in the work-
study program are employed in compliance with all applicable provisions 
of this part and section 6 of the Fair Labor Standards Act. Such 
confirmation shall be noted in any letters of application filed by the 
superintendent of the public or private school system in accordance with 
paragraph (b)(2) of this section when seeking continuance of its work-
study program.
    (iv) Written participation agreement. No student shall participate 
in the work-study program until there has been made a written agreement 
signed by the teacher-coordinator, the employer, and the student. The 
agreement shall also be signed or otherwise consented to by the 
student's parent or guardian. The agreement shall detail the objectives 
of the work-study program; describe the specific job duties to be 
performed by the participating minor as well as the number of hours and 
times of day that the minor will be employed each week; affirm that the 
participant will receive the minimum number of hours of class-room 
instruction as required by the State Educational Agency for the 
completion of a fully-accredited college preparatory curriculum; and 
affirm that the employment of the minor will be in compliance with the 
child labor provisions of both this part and the laws of the state where 
the work will be performed, and the applicable minimum wage provisions 
contained in section 6 of the FLSA.
    (v) Other provisions. Any other provisions of the program providing 
safeguards ensuring that the employment permitted under this section 
will not interfere with the schooling of the minors or with their health 
and well-being may also be submitted for use in considering the 
application.
    (4) Every public or private school district having students in a 
work-study program approved pursuant to these requirements, and every 
employer employing students in a work-study program approved pursuant to 
these requirements, shall comply with the following:
    (i) Permissible occupations. No student shall be assigned to work in 
any occupation other than one permitted under Sec. 570.34.
    (ii) Records and reports. A copy of the written agreement for each 
student participating in the work-study program shall be kept by both 
the employer and the school supervising and administering the program 
for a period of three years from the date of the student's enrollment in 
the program. Such agreements shall be made available upon request to the 
representatives of the Administrator of the Wage and Hour Division for 
inspection, transcription, and/or photocopying.
    (c) Employment of minors enrolled in a program approved pursuant to 
the requirements of this section shall be confined to not more than 18 
hours in any one week when school is in session, a portion of which may 
be during school hours, in accordance with the following formula that is 
based upon a continuous four-week cycle. In three of the four weeks, the 
participant is permitted to work during school hours on only one day per 
week, and for no more than for eight hours on that day. During the 
remaining week of the four-week cycle, such minor is permitted to work 
during school hours on no more than two days, and for no more than for 
eight hours on each of those two days. The employment of such minors 
would still be subject to the time of day and number of hours standards 
contained in Sec. Sec. 570.35(a)(2), (a)(3), (a)(4), and (a)(6). To the 
extent that these provisions are inconsistent with the provisions of 
Sec. 570.35, this section shall be controlling.
    (d) Programs shall be in force and effect for a period to be 
determined by the Administrator of the Wage and Hour Division, but in no 
case shall be in effect for longer than two school years from the date 
of their approval by the Administrator of the Wage and Hour Division. A 
new application for approval must be filed at the end of

[[Page 287]]

that period. Failure to meet the requirements of this section may result 
in withdrawal of the approval.

(The information collection requirements contained in Sec. 570.37 were 
approved by the OMB under Control No. 1215-0208)

[75 FR 28452, May 20, 2010]



Sec. 570.38  Effect of a certificate of age under this subpart.

    The employment of any minor in any of the occupations to which this 
subpart is applicable, if confined to the periods specified in Sec. 
570.35, shall not be deemed to constitute oppressive child labor within 
the meaning of the act if the employer shall have on file an unexpired 
certificate, issued in substantially the same manner as that provided 
for the issuance of certificates in subpart A of this part relating to 
certificates of age, certifying that such minor is of an age between 14 
and 16 years.

[16 FR 7008, July 20, 1951. Redesignated at 27 FR 4165, May 2, 1962, and 
28 FR 1634, Feb. 21, 1963. Redesignated and amended at 36 FR 25156, Dec. 
29, 1971. Redesignated at 75 FR 28452, May 20, 2010]



Sec. 570.39  Effect of this subpart on other laws.

    No provision of this subpart shall under any circumstances justify 
or be construed to permit noncompliance with the wage and hour 
provisions of the act or with the provisions of any other Federal law or 
of any State law or municipal ordinance establishing higher standards 
than those established under this subpart.

[16 FR 7008, July 20, 1951. Redesignated at 27 FR 4165, May 2, 1962, and 
28 FR 1634, Feb. 21, 1963. Redesignated and amended at 36 FR 25156, Dec. 
29, 1971. Redesignated at 75 FR 28452, May 20, 2010]

Subpart D [Reserved]



   Subpart E_Occupations Particularly Hazardous for the Employment of 
Minors Between 16 and 18 Years of Age or Detrimental to Their Health or 
                               Well-Being

    Authority: 29 U.S.C. 203(l), 212, 213(c).
    Note: The provisions of this subpart declaring certain occupations 
to be particularly hazardous for the employment of minors between 16 and 
18 years of age or detrimental to their health or well-being do not 
apply to employment in agriculture.



Sec. 570.50  General.

    (a) Higher standards. Nothing in this subpart shall authorize non-
compliance with any Federal or State law, regulation, or municipal 
ordinance establishing a higher standard. If more than one standard 
within this subpart applies to a single activity the higher standard 
shall be applicable.
    (b) Apprentices. Some sections in this subpart contain an exemption 
for the employment of apprentices. Such an exemption shall apply only 
when: (1) The apprentice is employed in a craft recognized as an 
apprenticeable trade; (2) the work of the apprentice in the occupations 
declared particularly hazardous is incidental to his training; (3) such 
work is intermittent and for short periods of time and is under the 
direct and close supervision of a journeyman as a necessary part of such 
apprentice training; and (4) the apprentice is registered by the Bureau 
of Apprenticeship and Training of the United States Department of Labor 
as employed in accordance with the standards established by that Bureau, 
or is registered by a State agency as employed in accordance with the 
standards of the State apprenticeship agency recognized by the Bureau of 
Apprenticeship and Training, or is employed under a written 
apprenticeship agreement and conditions which are found by the Secretary 
of labor to conform substantially with such Federal or State standards.
    (c) Student-learners. Some sections in this subpart contain an 
exemption for the employment of student-learners. Such an exemption 
shall apply when:
    (1) The student-learner is enrolled in a course of study and 
training in a cooperative vocational training program under a recognized 
State or local educational authority or in a course of study in a 
substantially similar program conducted by a private school and;
    (2) Such student-learner is employed under a written agreement which 
provides:

[[Page 288]]

    (i) That the work of the student-learner in the ocupations declared 
particularly hazardous shall be incidental to his training;
    (ii) That such work shall be intermittent and for short periods of 
time, and under the direct and close supervision of a qualified and 
experienced person;
    (iii) That safety instructions shall be given by the school and 
correlated by the employer with on-the-job training; and
    (iv) That a schedule of organized and progressive work processes to 
be performed on the job shall have been prepared.

Each such written agreement shall contain the name of student-learner, 
and shall be signed by the employer and the school coordinator or 
principal. Copies of each agreement shall be kept on file by both the 
school and the employer. This exemption for the employment of student-
learners may be revoked in any individual situation where it is found 
that reasonable precautions have not been observed for the safety of 
minors employed thereunder. A high school graduate may be employed in an 
occupation in which he has completed training as provided in this 
paragraph as a student-learner, even though he is not yet 18 years of 
age.

[28 FR 3449, Apr. 9, 1963, as amended at 33 FR 12777, Sept. 10, 1968. 
Redesignated and amended at 36 FR 25156, Dec. 29, 1971]



Sec. 570.51  Occupations in or about plants or establishments 
manufacturing or storing explosives or articles containing explosive 

components (Order 1).

    (a) Finding and declaration of fact. The following occupations in or 
about plants or establishments manufacturing or storing explosives or 
articles containing explosive components are particularly hazardous for 
minors between 16 and 18 years of age or detrimental to their health or 
well-being:
    (1) All occupations in or about any plant or establishment (other 
than retail establishments or plants or establishments of the type 
described in paragraph (a)(2) of this section) manufacturing or storing 
explosives or articles containing explosive components except where the 
occupation is performed in a ``nonexplosives area'' as defined in 
paragraph (b)(3) of this section.
    (2) The following occupations in or about any plant or establishment 
manufacturing or storing small-arms ammunition not exceeding .60 caliber 
in size, shotgun shells, or blasting caps when manufactured or stored in 
conjunction with the manufacture of small-arms ammunition:
    (i) All occupations involved in the manufacturing, mixing, 
transporting, or handling of explosive compounds in the manufacture of 
small-arms ammunition and all other occupations requiring the 
performance of any duties in the explosives area in which explosive 
compounds are manufactured or mixed.
    (ii) All occupations involved in the manufacturing, transporting, or 
handling of primers and all other occupations requiring the performance 
of any duties in the same building in which primers are manufactured.
    (iii) All occupations involved in the priming of cartridges and all 
other occupations requiring the performance of any duties in the same 
workroom in which rim-fire cartridges are primed.
    (iv) All occupations involved in the plate loading of cartridges and 
in the operation of automatic loading machines.
    (v) All occupations involved in the loading, inspecting, packing, 
shipping and storage of blasting caps.
    (b) Definitions. For the purpose of this section:
    (1) The term plant or establishment manufacturing or storing 
explosives or articles containing explosive component means the land 
with all the buildings and other structures thereon used in connection 
with the manufacturing or processing or storing of explosives or 
articles containing explosive components.
    (2) The terms explosives and articles containing explosive 
components mean and include ammunition, black powder, blasting caps, 
fireworks, high explosives, primers, smokeless powder, and explosives 
and explosive materials as defined in 18 U.S.C. 841(c)-(f) and the 
implementing regulations at 27 CFR part 555. The terms include any 
chemical compound, mixture, or device, the primary or common purpose of 
which is to function by explosion, as well as all

[[Page 289]]

goods identified in the most recent list of explosive materials 
published by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
Department of Justice. This list is not intended to be all-inclusive and 
is updated and published annually in the Federal Register pursuant to 18 
U.S.C. 841(d). A copy of the most recent version of the list may be 
found through the Bureau of Alcohol, Tobacco, Firearms, and Explosives' 
Web site at http://www.atf.gov.
    (3) An area meeting all of the criteria in paragraphs (b)(3) (i) 
through (iv) of this section shall be deemed a ``nonexplosives area'':
    (i) None of the work performed in the area involves the handling or 
use of explosives;
    (ii) The area is separated from the explosives area by a distance 
not less than that prescribed in the American Table of Distances for the 
protection of inhabited buildings;
    (iii) The area is separated from the explosives area by a fence or 
is otherwise located so that it constitutes a definite designated area; 
and
    (iv) Satisfactory controls have been established to prevent 
employees under 18 years of age within the area from entering any area 
in or about the plant which does not meet criteria of paragraphs (b)(3) 
(i) through (iii) of this section.

[17 FR 4324, May 13, 1952. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and amended at 28 FR 3449, Apr. 9, 1963. Redesignated and amended at 36 
FR 25156, Dec. 29, 1971; 69 FR 75403, Dec. 16, 2004]



Sec. 570.52  Occupations of motor-vehicle driver and outside helper (Order 2).

    (a) Findings and declaration of fact. Except as provided in 
paragraph (b) of this section, the occupations of motor-vehicle driver 
and outside helper on any public road, highway, in or about any mine 
(including open pit mine or quarry), place where logging or sawmill 
operations are in progress, or in any excavation of the type identified 
in Sec. 570.68(a) are particularly hazardous for the employment of 
minors between 16 and 18 years of age.
    (b) Exemption--Incidental and occasional driving by 17-year-olds. 
Minors who are at least 17 years of age may drive automobiles and trucks 
on public roadways when all the following criteria are met:
    (1) The automobile or truck does not exceed 6,000 pounds gross 
vehicle weight, and the vehicle is equipped with a seat belt or similar 
restraining device for the driver and for any passengers and the 
employer has instructed the employee that such belts or other devices 
must be used;
    (2) The driving is restricted to daylight hours;
    (3) The minor holds a State license valid for the type of driving 
involved in the job performed and has no records of any moving 
violations at the time of hire;
    (4) The minor has successfully completed a State-approved driver 
education course;
    (5) The driving does not involve: the towing of vehicles; route 
deliveries or route sales; the transportation for hire of property, 
goods, or passengers; urgent, time-sensitive deliveries; or the 
transporting at any one time of more than three passengers, including 
the employees of the employer;
    (6) The driving performed by the minor does not involve more than 
two trips away from the primary place of employment in any single day 
for the purpose of delivering goods of the minor's employer to a 
customer (except urgent, time-sensitive deliveries which are completely 
banned in paragraph (b)(5) of this section;
    (7) The driving performed by the minor does not involve more than 
two trips away from the primary place of employment in any single day 
for the purpose of transporting passengers (other than the employees of 
the employer);
    (8) The driving takes place within a thirty (30) mile radius of the 
minor's place of employment; and,
    (9) The driving is only occasional and incidental to the employee's 
employment.
    (c) Definitions. For the purpose of this section:
    (1) The term motor vehicle shall mean any automobile, truck, truck-
tractor, trailer, semitrailer, motorcycle, or similar vehicle propelled 
or drawn by mechanical power and designed for use as a means of 
transportation but shall

[[Page 290]]

not include any vehicle operated exclusively on rails.
    (2) The term driver shall mean any individual who, in the course of 
employment, drives a motor vehicle at any time.
    (3) The term outside helper shall mean any individual, other than a 
driver, whose work includes riding on a motor vehicle outside the cab 
for the purpose of assisting in transporting or delivering goods.
    (4) The term gross vehicle weight includes the truck chassis with 
lubricants, water and a full tank or tanks of fuel, plus the weight of 
the cab or driver's compartment, body and special chassis and body 
equipment, and payload.
    (5) The term occasional and incidental means no more than one-third 
of an employee's worktime in any workday and no more than 20 percent of 
an employee's worktime in any workweek.
    (6) The term urgent, time-sensitive deliveries means trips which, 
because of such factors as customer satisfaction, the rapid 
deterioration of the quality or change in temperature of the product, 
and/or economic incentives, are subject to time-lines, schedules, and/or 
turn-around times which might impel the driver to hurry in the 
completion of the delivery. Prohibited trips would include, but are not 
limited to, the delivery of pizzas and prepared foods to the customer; 
the delivery of materials under a deadline (such as deposits to a bank 
at closing); and the shuttling of passengers to and from transportation 
depots to meet transport schedules. Urgent, time-sensitive deliveries 
would not depend on the delivery's points of origin and termination, and 
would include the delivery of people and things to the employer's place 
of business as well as from that business to some other location.

[56 FR 58630, Nov. 20, 1991, as amended at 69 FR 75403, Dec. 16, 2004]



Sec. 570.53  Coal-mine occupations (Order 3).

    (a) Finding and declaration of fact. All occupations in or about any 
coal mine, except the occupation of slate or other refuse picking at a 
picking table or picking chute in a tipple or breaker and occupations 
requiring the performance of duties solely in offices or in repair or 
maintenance shops located in the surface part of any coal-mining plant, 
are particularly hazardous for the employment of minors between 16 and 
18 years of age.
    (b) Definitions. For the purpose of this section:
    (1) The term coal shall mean any rank of coal including lignite, 
bituminous, and the anthracite coals.
    (2) The term all occupations in or about any coal mine shall mean 
all types of work performed in any underground working, open-pit, or 
surface part of any coal-mining plant, that contribute to the 
extraction, grading, cleaning, or other handling of coal.

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and amended at 28 FR 3449, Apr. 9, 1963. Redesignated and amended at 36 
FR 25156, Dec. 29, 1971]



Sec. 570.54  Forest fire fighting and forest fire prevention 
occupations, timber tract occupations, forestry service occupations,

logging occupations, and 

          occupations in the operation of any sawmill, lath mill, 
          shingle mill, or cooperage stock mill (Order 4).

    (a) Finding and declarations of fact. All occupations in forest fire 
fighting and forest fire prevention, in timber tracts, in forestry 
services, logging, and the operation of any sawmill, lath mill, shingle 
mill, or cooperage stock mill are particularly hazardous for the 
employment of minors between 16 and 18 years of age, except the 
following when not prohibited by any other section of this subpart:
    (1) Work in offices or in repair or maintenance shops.
    (2) Work in the construction, operation, repair, or maintenance of 
living and administrative quarters, including logging camps and fire 
fighting base camps.
    (3) Work in the repair or maintenance of roads, railroads or flumes 
and work in construction and maintenance of telephone lines, but only if 
the minors are not engaged in the operation of power-driven machinery, 
the handling or use of explosives, the felling or bucking of timber, the 
collecting or transporting of logs, or work on trestles.
    (4) The following tasks in forest fire prevention provided none of 
these tasks

[[Page 291]]

may be performed in conjunction with or in support of efforts to 
extinguish a forest fire: the clearing of fire trails or roads; the 
construction, maintenance, and patrolling of fire lines; the piling and 
burning of slash; the maintaining of fire fighting equipment; and acting 
as a fire lookout or fire patrolman.
    (5) Work related to forest marketing and forest economics when 
performed away from the forest.
    (6) Work in the feeding or care of animals.
    (7) Peeling of fence posts, pulpwood, chemical wood, excelsior wood, 
cordwood, or similar products, when not done in conjunction with and at 
the same time and place as other logging occupations declared hazardous 
by this section.
    (8) The following additional exceptions apply to the operation of a 
permanent sawmill or the operation of any lath mill, shingle mill, or 
cooperage stock mill, but not to a portable sawmill. In addition, the 
following exceptions do not apply to work which entails entering the 
sawmill building, except for those minors whose employment meets the 
requirements of the limited exemptions discussed in Sec. Sec. 570.34(m) 
and 570.54(c):
    (i) Straightening, marking, or tallying lumber on the dry chain or 
the dry drop sorter.
    (ii) Pulling lumber from the dry chain, except minors under 16 years 
of age may not pull lumber from the dry chain as such youth are 
prohibited from operating or tending power-driven machinery by Sec. 
570.33(e) of this part.
    (iii) Clean-up in the lumberyard.
    (iv) Piling, handling, or shipping of cooperage stock in yards or 
storage sheds other than operating or assisting in the operation of 
power-driven equipment; except minors under 16 years of age may not 
perform shipping duties as they are prohibited from employment in 
occupations in connection with the transportation of property by rail, 
highway, air, water, pipeline, or other means by Sec. 570.33(n)(1) of 
this part.
    (v) Clerical work in yards or shipping sheds, such as done by 
ordermen, tally-men, and shipping clerks.
    (vi) Clean-up work outside shake and shingle mills, except when the 
mill is in operation.
    (vii) Splitting shakes manually from precut and split blocks with a 
froe and mallet, except inside the mill building or cover.
    (viii) Packing shakes into bundles when done in conjunction with 
splitting shakes manually with a froe and mallet, except inside the mill 
building or cover.
    (ix) Manual loading of bundles of shingles or shakes into trucks or 
railroad cars, provided that the employer has on file a statement from a 
licensed doctor of medicine or osteopathy certifying the minor capable 
of performing this work without injury to himself, except minors under 
16 years of age may not load bundles of shingles or shakes into trucks 
or railroad cars as they are prohibited from loading and unloading goods 
or property onto or from motor vehicles, railroad cars, or conveyors by 
Sec. 570.33(k) of this part.
    (b) Definitions. As used in this section:
    All occupations in forest fire fighting and forest fire prevention 
shall include the controlling and extinguishing of fires, the wetting 
down of areas or extinguishing of spot fires, and the patrolling of 
burned areas to assure the fire has been extinguished. The term shall 
also include the following tasks when performed in conjunction with, or 
in support of, efforts to extinguish a forest fire: the piling and 
burning of slash; the clearing of fire trails or roads; the 
construction, maintenance, and patrolling of fire lines; acting as a 
fire lookout or fire patrolman; and the maintaining of fire fighting 
equipment. The prohibition concerning the employment of youth in forest 
fire fighting and fire prevention applies to all forest and timber tract 
locations, logging operations, and sawmill operations, including all 
buildings located within such areas.
    All occupations in forestry services shall mean all work involved in 
the support of timber production, wood technology, forestry economics 
and marketing, and forest protection. The term includes such services as 
timber cruising, surveying, or logging-engineering parties; estimating 
timber; timber valuation; forest pest control; forest fire fighting and 
forest fire prevention as defined in this section; and

[[Page 292]]

reforestation. The term shall not include work in forest nurseries, 
establishments primarily engaged in growing trees for purposes of 
reforestation. The term shall not include the gathering of forest 
products such as balsam needles, ginseng, huckleberry greens, maple sap, 
moss, Spanish moss, sphagnum moss, teaberries, and tree seeds; the 
distillation of gum, turpentine, and rosin if carried on at the gum 
farm; and the extraction of pine gum.
    All occupations in logging shall mean all work performed in 
connection with the felling of timber; the bucking or converting of 
timber into logs, poles, piles, ties, bolts, pulpwood, chemical wood, 
excelsior wood, cordwood, fence posts, or similar products; the 
collecting, skidding, yarding, loading, transporting and unloading of 
such products in connection with logging; the constructing, repairing 
and maintaining of roads, railroads, flumes, or camps used in connection 
with logging; the moving, installing, rigging, and maintenance of 
machinery or equipment used in logging; and other work performed in 
connection with logging.
    All occupations in the operation of any sawmill, lath mill, shingle 
mill, or cooperage-stock mill shall mean all work performed in or about 
any such mill in connection with storing of logs and bolts; converting 
logs or bolts into sawn lumber, lathers, shingles, or cooperage stock; 
storing drying, and shipping lumber, laths, shingles, cooperage stock, 
or other products of such mills; and other work performed in connection 
with the operation of any sawmill, lath mill, shingle mill, or 
cooperage-stock mill. The term shall not include work performed in the 
planing-mill department or other remanufacturing departments of any 
sawmill or remanufacturing plant not a part of a sawmill.
    All occupations in timber tracts means all work performed in or 
about establishments that cultivate, manage or sell standing timber. The 
term includes work performed in timber culture, timber tracts, timber-
stand improvement, and forest fire fighting and fire prevention. It 
includes work on tree farms, except those tree farm establishments that 
meet the definition of agriculture contained in 29 U.S.C. 203(f).
    Inside or outside places of business shall mean the actual physical 
location of the establishment employing the youth, including the 
buildings and surrounding land necessary to the business operations of 
that establishment.
    Operate or assist in the operation of power-driven woodworking 
machines includes operating such machines, including supervising or 
controlling the operation of such machines, feeding material into such 
machines, helping the operator feed material into such machines, 
unloading materials from such machines, and helping the operator unload 
materials from such machines. The term also includes the occupations of 
setting-up, adjusting, repairing, oiling, or cleaning such machines.
    Places of business where machinery is used to process wood products 
shall mean such permanent workplaces as sawmills, lath mills, shingle 
mills, cooperage stock mills, furniture and cabinet making shops, gazebo 
and shed making shops, toy manufacturing shops, and pallet shops. The 
term shall not include construction sites, portable sawmills, areas 
where logging is being performed, or mining operations.
    Portable sawmill shall mean a sawmilling operation where no office 
or repair or maintenance shop is ordinarily maintained, and any 
lumberyard operated in conjunction with the sawmill is used only for the 
temporary storage of green lumber.
    Power-driven woodworking machines shall mean all fixed or portable 
machines or tools driven by power and used or designed for cutting, 
shaping, forming, surfacing, nailing, stapling, wire stitching, 
fastening or otherwise assembling, pressing or printing wood, veneer, 
trees, logs, or lumber.
    Remanufacturing department shall mean those departments of a sawmill 
where lumber products such as boxes, lawn furniture, and the like are 
remanufactured from previously cut lumber. The kind of work performed in 
such departments is similar to that done in planing mill departments in 
that rough lumber is surfaced or made into other finished products. The 
term is not intended to denote those operations in sawmills where rough 
lumber is cut to dimensions.

[[Page 293]]

    Supervised by an adult relative or is supervised by an adult member 
of the same religious sect or division as the youth, as a term, has 
several components. Supervised refers to the requirement that the 
youth's on-the-job activities be directed, monitored, and controlled by 
certain named adults. Such supervision must be close, direct, constant 
and uninterrupted. An adult shall mean an individual who is at least 
eighteen years of age. A relative shall mean the parent (or someone 
standing in place of a parent), grandparent, sibling, uncle, or aunt of 
the young worker. A member of the same religious sect or division as the 
youth refers to an individual who professes membership in the same 
religious sect or division to which the youth professes membership.
    (c) Exemptions. (1) The provisions contained in paragraph (a)(8) of 
this section that prohibit youth between 16 and 18 years of age from 
performing any work that entails entering the sawmill building do not 
apply to the employment of a youth who is at least 14 years of age and 
less than 18 years of age and who by statute or judicial order is exempt 
from compulsory school attendance beyond the eighth grade, if:
    (i) The youth is supervised by an adult relative or by an adult 
member of the same religious sect or division as the youth;
    (ii) The youth does not operate or assist in the operation of power-
driven woodworking machines;
    (iii) The youth is protected from wood particles or other flying 
debris within the workplace by a barrier appropriate to the potential 
hazard of such wood particles or flying debris or by maintaining a 
sufficient distance from machinery in operation; and
    (iv) The youth is required to use, and uses, personal protective 
equipment to prevent exposure to excessive levels of noise and saw dust.
    (2) Compliance with the provisions of paragraphs (c)(1)(iii) and 
(iv) of this section will be accomplished when the employer is in 
compliance with the requirements of the applicable governing standards 
issued by the U.S. Department of Labor's Occupational Safety and Health 
Administration (OSHA) or, in those areas where OSHA has authorized the 
state to operate its own Occupational Safety and Health Plan, the 
applicable standards issued by the Office charged with administering the 
State Occupational Safety and Health Plan.

[75 FR 28453, May 20, 2010]



Sec. 570.55  Occupations involved in the operation of power-driven 
woodworking machines (Order 5).

    (a) Finding and declaration of fact. The following occupations 
involved in the operation of power-driven wood-working machines are 
particularly hazardous for minors between 16 and 18 years of age:
    (1) The occupation of operating power-driven woodworking machines, 
including supervising or controlling the operation of such machines, 
feeding material into such machines, and helping the operator to feed 
material into such machines but not including the placing of material on 
a moving chain or in a hopper or slide for automatic feeding.
    (2) The occupations of setting up, adjusting, repairing, oiling, or 
cleaning power-driven woodworking machines.
    (3) The occupations of off-bearing from circular saws and from 
guillotine-action veneer clippers.
    (b) Definitions. As used in this section:
    Off-bearing shall mean the removal of material or refuse directly 
from a saw table or from the point of operation. Operations not 
considered as off-bearing within the intent of this section include:
    (i) The removal of material or refuse from a circular saw or 
guillotine-action veneer clipper where the material or refuse has been 
conveyed away from the saw table or point of operation by a gravity 
chute or by some mechanical means such as a moving belt or expulsion 
roller; and
    (ii) The following operations when they do not involve the removal 
of materials or refuse directly from a saw table or point of operation: 
The carrying, moving, or transporting of materials from one machine to 
another or from one part of a plant to another; the

[[Page 294]]

piling, stacking, or arranging of materials for feeding into a machine 
by another person; and the sorting, tying, bundling, or loading of 
materials.
    Power-driven woodworking machines shall mean all fixed or portable 
machines or tools driven by power and used or designed for cutting, 
shaping, forming, surfacing, nailing, stapling, wire stitching, 
fastening or otherwise assembling, pressing or printing wood, veneer, 
trees, logs, or lumber.
    (c) Exemptions. This section shall not apply to the employment of 
apprentices or student-learners under the conditions prescribed in Sec. 
570.50 (b) and (c).

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and amended at 28 FR 3449, Apr. 9, 1963. Redesignated and amended at 36 
FR 25156, Dec. 29, 1971; 75 FR 28455, May 20, 2010]



Sec. 570.57  Exposure to radioactive substances and to ionizing 
radiations (Order 6).

    (a) Finding and declaration of fact. The following occupations 
involving exposure to radioactive substances and to ionizing radiations 
are particularly hazardous and detrimental to health for minors between 
16 and 18 years of age:
    (1) Any work in any workroom in which (i) radium is stored or used 
in the manufacture of self-luminous compound, (ii) self-luminous 
compound is made, processed, or packaged, (iii) self-luminous compound 
is stored, used, or worked upon, (iv) incandescent mantles are made from 
fabric and solutions containing thorium salts, or are processed or 
packaged, (v) other radioactive substances are present in the air in 
average concentrations exceeding 10 percent of the maximum permissible 
concentrations in the air recommended for occupational exposure by the 
National Committee on Radiation Protection, as set forth in the 40-hour 
week column of table one of the National Bureau of Standards Handbook 
No. 69 entitled ``Maximum Permissible Body Burdens and Maximum 
Permissible Concentrations of Radionuclides in Air and in Water for 
Occupational Exposure,'' issued June 5, 1959.
    (2) Any other work which involves exposure to ionizing radiations in 
excess of 0.5 rem per year.
    (b) Definitions. As used in this section:
    (1) The term self-luminous compound shall mean any mixture of 
phosphorescent material and radium, mesothorium, or other radioactive 
element;
    (2) The term workroom shall include the entire area bounded by walls 
of solid material and extending from floor to ceiling;
    (3) The term ionizing radiations shall mean alpha and beta 
particles, electrons, protons, neutrons, gamma and X-ray and all other 
radiations which produce ionizations directly or indirectly, but does 
not include electromagnetic radiations other than gamma and X-ray.

[22 FR 3657, May 24, 1957, as amended at 26 FR 8885, Sept. 21, 1961. 
Redesignated at 28 FR 1634, Feb. 21, 1963, and amended at 28 FR 3449, 
Apr. 9, 1963. Redesignated and amended at 36 FR 25156, Dec. 29, 1971]



Sec. 570.58  Occupations involved in the operation of power-driven
hoisting apparatus (Order 7).

    (a) Findings and declaration of fact. The following occupations 
involved in the operation of power-driven hoisting apparatus are 
particularly hazardous for minors between 16 and 18 years of age:
    (1) Work of operating, tending, riding upon, working from, 
repairing, servicing, or disassembling an elevator, crane, derrick, 
hoist, or high-lift truck, except operating or riding inside an 
unattended automatic operation passenger elevator. Tending such 
equipment includes assisting in the hoisting tasks being performed by 
the equipment.
    (2) Work of operating, tending, riding upon, working from, 
repairing, servicing, or disassembling a manlift or freight elevator, 
except 16- and 17-year-olds may ride upon a freight elevator operated by 
an assigned operator. Tending such equipment includes assisting in the 
hoisting tasks being performed by the equipment.
    (b) Definitions. As used in this section:
    Crane shall mean a power-driven machine for lifting and lowering a 
load and moving it horizontally, in which the hoisting mechanism is an 
integral

[[Page 295]]

part of the machine. The term shall include all types of cranes, such as 
cantilever gantry, crawler, gantry, hammerhead, ingot pouring, jib, 
locomotive, motor-truck, overhead traveling, pillar jib, pintle, portal, 
semi-gantry, semi-portal, storage bridge, tower, walking jib, and wall 
cranes.
    Derrick shall mean a power-driven apparatus consisting of a mast or 
equivalent members held at the top by guys or braces, with or without a 
boom, for use with a hoisting mechanism or operating ropes. The term 
shall include all types of derricks, such as A-frame, breast, Chicago 
boom, gin-pole, guy, and stiff-leg derrick.
    Elevator shall mean any power-driven hoisting or lowering mechanism 
equipped with a car or platform which moves in guides in a substantially 
vertical direction. The term shall include both passenger and freight 
elevators (including portable elevators or tiering machines), but shall 
not include dumbwaiters.
    High-lift truck shall mean a power-driven industrial type of truck 
used for lateral transportation that is equipped with a power-operated 
lifting device usually in the form of a fork or platform capable of 
tiering loaded pallets or skids one above the other. Instead of a fork 
or a platform, the lifting device may consist of a ram, scoop, shovel, 
crane, revolving fork, or other attachments for handling specific loads. 
The term shall mean and include highlift trucks known under such names 
as fork lifts, fork trucks, fork lift trucks, tiering trucks, backhoes, 
front-end loaders, skid loaders, skid-steer loaders, Bobcat loaders, or 
stacking trucks, but shall not mean low-lift trucks or low-lift platform 
trucks that are designed for the transportation of but not the tiering 
of materials.
    Hoist shall mean a power-driven apparatus for raising or lowering a 
load by the application of a pulling force that does not include a car 
or platform running in guides. The term shall include all types of 
hoists, such as base mounted electric, clevis suspension, hook 
suspension, monorail, overhead electric, simple drum, and trolley 
suspension hoists.
    Manlift shall mean a device intended for the conveyance of persons 
that consists of platforms or brackets mounted on, or attached to, an 
endless belt, cable, chain or similar method of suspension; with such 
belt, cable or chain operating in a substantially vertical direction and 
being supported by and driven through pulleys, sheaves or sprockets at 
the top and bottom. The term shall also include truck- or equipment-
mounted aerial platforms commonly referred to as scissor lifts, boom-
type mobile elevating work platforms, work assist vehicles, cherry 
pickers, basket hoists, and bucket trucks.
    (c) Exception. (1) This section shall not prohibit the operation of 
an automatic elevator and an automatic signal operation elevator 
provided that the exposed portion of the car interior (exclusive of 
vents and other necessary small openings), the car door, and the 
hoistway doors are constructed of solid surfaces without any opening 
through which a part of the body may extend; all hoistway openings at 
floor level have doors which are interlocked with the car door so as to 
prevent the car from starting until all such doors are closed and 
locked; the elevator (other than hydraulic elevators) is equipped with a 
device which will stop and hold the car in case of overspeed or if the 
cable slackens or breaks; and the elevator is equipped with upper and 
lower travel limit devices which will normally bring the car to rest at 
either terminal and a final limit switch which will prevent the movement 
in either direction and will open in case of excessive over travel by 
the car.
    (2) For the purpose of this exception the term automatic elevator 
shall mean a passenger elevator, a freight elevator, or a combination 
passenger-freight elevator, the operation of which is controlled by 
pushbuttons in such a manner that the starting, going to the landing 
selected, leveling and holding, and the opening and closing of the car 
and hoistway doors are entirely automatic.
    (3) For the purpose of this exception, the term automatic signal 
operation elevator shall mean an elevator which is started in response 
to the operation of a switch (such as a lever or pushbutton) in the car 
which when operated

[[Page 296]]

by the operator actuates a starting device that automatically closes the 
car and hoistway doors--from this point on, the movement of the car to 
the landing selected, leveling and holding when it gets there, and the 
opening of the car and hoistway doors are entirely automatic.

[16 FR 7008, July 20, 1951, as amended at 20 FR 6386, Aug. 31, 1955. 
Redesignated at 28 FR 1634, Feb. 21, 1963, and amended at 28 FR 3449, 
Apr. 9, 1963; 32 FR 15479, Nov. 7, 1967. Redesignated and amended at 36 
FR 25156, Dec. 29, 1971; 75 FR 28455, May 20, 2010]



Sec. 570.59  Occupations involved in the operation of power-driven
metal forming, punching, and shearing machines (Order 8).

    (a) Finding and declaration of fact. The following occupations are 
particularly hazardous for the employment of minors between 16 and 18 
years of age:
    (1) The occupations of operator of or helper on the following power-
driven metal forming, punching, and shearing machines:
    (i) All rolling machines, such as beading, straightening, 
corrugating, flanging, or bending rolls; and hot or cold rolling mills.
    (ii) All pressing or punching machines, such as punch presses except 
those provided with full automatic feed and ejection and with a fixed 
barrier guard to prevent the hands or fingers of the operator from 
entering the area between the dies; power presses; and plate punches.
    (iii) All bending machines, such as apron brakes and press brakes.
    (iv) All hammering machines, such as drop hammers and power hammers.
    (v) All shearing machines, such as guillotine or squaring shears; 
alligator shears; and rotary shears.
    (2) The occupations of setting up, adjusting, repairing, oiling, or 
cleaning these machines including those with automatic feed and 
ejection.
    (b) Definitions. (1) The term operator shall mean a person who 
operates a machine covered by this section by performing such functions 
as starting or stopping the machine, placing materials into or removing 
them from the machine, or any other functions directly involved in 
operation of the machine.
    (2) The term helper shall mean a person who assists in the operation 
of a machine covered by this section by helping place materials into or 
remove them from the machine.
    (3) The term forming, punching, and shearing machines shall mean 
power-driven metal-working machines, other than machine tools, which 
change the shape of or cut metal by means of tools, such as dies, rolls, 
or knives which are mounted on rams, plungers, or other moving parts. 
Types of forming, punching, and shearing machines enumerated in this 
section are the machines to which the designation is by custom applied.
    (c) Exemptions. This section shall not apply to the employment of 
apprentices or student-learners under the conditions prescribed in Sec. 
570.50 (b) and (c).

[16 FR 7008, July 20, 1951, as amended at 25 FR 9848, Oct. 14, 1960. 
Redesignated at 28 FR 1634, Feb. 21, 1963, and amended at 28 FR 3449, 
Apr. 9, 1963. Redesignated at 36 FR 25156, Dec. 29, 1971]



Sec. 570.60  Occupations in connection with mining, other than coal (Order 9).

    (a) Finding and declaration of fact. All occupations in connection 
with mining, other than coal, are particularly hazardous for the 
employment of minors between 16 and 18 years of age or detrimental to 
their health or well-being and employment in such occupations is 
therefore prohibited under section 12 of the Fair Labor Standards Act, 
as amended, except the following:
    (1) Work in offices, in the warehouse or supply house, in the change 
house, in the laboratory, and in repair or maintenance shops not located 
underground.
    (2) Work in the operation and maintenance of living quarters.
    (3) Work outside the mine in surveying, in the repair and 
maintenance of roads, and in general clean-up about the mine property 
such as clearing brush and digging drainage ditches.
    (4) Work of track crews in the building and maintaining of sections 
of railroad track located in those areas of open-cut metal mines where 
mining and haulage activities are not being conducted at the time and 
place that

[[Page 297]]

such building and maintenance work is being done.
    (5) Work in or about surface placer mining operations other than 
placer dredging operations and hydraulic placer mining operations.
    (6) The following work in metal mills other than in mercury-recovery 
mills or mills using the cyanide process:
    (i) Work involving the operation of jigs, sludge tables, flotation 
cells, or drier-filters;
    (ii) Work of hand-sorting at picking table or picking belt;
    (iii) General clean-up work:

Provided, however, That nothing in this section shall be construed as 
permitting employment of minors in any occupation prohibited by any 
other hazardous occupations order issued by the Secretary of Labor.
    (b) Definitions. As used in this section: The term all occupations 
in connection with mining, other than coal shall mean all work performed 
underground in mines and quarries; on the surface at underground mines 
and underground quarries; in or about open-cut mines, open quarries, 
clay pits, and sand and gravel operations; at or about placer mining 
operations; at or about dredging operations for clay, sand or gravel; at 
or about bore-hole mining operations; in or about all metal mills, 
washer plants, or grinding mills reducing the bulk of the extracted 
minerals; and at or about any other crushing, grinding, screening, 
sizing, washing or cleaning operations performed upon the extracted 
minerals except where such operations are performed as a part of a 
manufacturing process. The term shall not include work performed in 
subsequent manufacturing or processing operations, such as work 
performed in smelters, electro-metallurgical plants, refineries 
reduction plants, cement mills, plants where quarried stone is cut, 
sanded and further processed, or plants manufacturing clay glass or 
ceramic products. Neither shall the term include work performed in 
connection with coal mining, in petroleum production, in natural-gas 
production, nor in dredging operations which are not a part of mining 
operations, such as dredging for construction or navigation purposes.

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and amended at 28 FR 3449, Apr. 9, 1963. Redesignated at 36 FR 25156, 
Dec. 29, 1971]



Sec. 570.61  Occupations in the operation of power-driven 
meat-processing machines and occupations involving slaughtering,

meat and poultry packing, 
          processing, or rendering (Order 10).

    (a) Findings and declaration of fact. The following occupations in 
or about slaughtering and meat packing establishments, rendering plants, 
or wholesale, retail or service establishments are particularly 
hazardous for the employment of minors between 16 and 18 years of age or 
detrimental to their health or well-being:
    (1) All occupations on the killing floor, in curing cellars, and in 
hide cellars, except the work of messengers, runners, handtruckers, and 
similar occupations which require entering such workrooms or workplaces 
infrequently and for short periods of time.
    (2) All occupations involved in the recovery of lard and oils, 
except packaging and shipping of such products and the operation of 
lard-roll machines.
    (3) All occupations involved in tankage or rendering of dead 
animals, animal offal, animal fats, scrap meats, blood, and bones into 
stock feeds, tallow, inedible greases, fertilizer ingredients, and 
similar products.
    (4) All occupations involved in the operation or feeding of the 
following power-driven machines, including setting-up, adjusting, 
repairing, or oiling such machines or the cleaning of such machines or 
the individual parts or attachments of such machines, regardless of the 
product being processed by these machines (including, for example, the 
slicing in a retail delicatessen of meat, poultry, seafood, bread, 
vegetables, or cheese, etc.): meat patty forming machines, meat and bone 
cutting saws, poultry scissors or shears; meat slicers, knives (except 
bacon-slicing machines), headsplitters, and guillotine cutters; 
snoutpullers and jawpullers; skinning machines; horizontal rotary 
washing machines; casing-cleaning machines

[[Page 298]]

such as crushing, stripping, and finishing machines; grinding, mixing, 
chopping, and hashing machines; and presses (except belly-rolling 
machines). Except, the provisions of this subsection shall not apply to 
the operation of those lightweight, small capacity, portable, countertop 
mixers discussed in Sec. 570.62(b)(1) of this chapter when used as a 
mixer to process materials other than meat or poultry.
    (5) All boning occupations.
    (6) All occupations that involve the pushing or dropping of any 
suspended carcass, half carcass, or quarter carcass.
    (7) All occupations involving the handlifting or handcarrying any 
carcass or half carcass of beef, pork, horse, deer, or buffalo, or any 
quarter carcass of beef, horse, or buffalo.
    (b) Definitions. As used in this section:
    Boning occupations means the removal of bones from meat cuts. It 
does not include work that involves cutting, scraping, or trimming meat 
from cuts containing bones.
    Curing cellar includes a workroom or workplace which is primarily 
devoted to the preservation and flavoring of meat, including poultry, by 
curing materials. It does not include a workroom or workplace solely 
where meats are smoked.
    Hide cellar includes a workroom or workplace where hides are graded, 
trimmed, salted, and otherwise cured.
    Killing floor includes a workroom, workplace where such animals as 
cattle, calves, hogs, poultry, sheep, lambs, goats, buffalo, deer, or 
horses are immobilized, shackled, or killed, and the carcasses are 
dressed prior to chilling.
    Retail/wholesale or service establishments include establishments 
where meat or meat products, including poultry, are processed or 
handled, such as butcher shops, grocery stores, restaurants and quick 
service food establishments, hotels, delicatessens, and meat locker 
(freezer-locker) companies, and establishments where any food product is 
prepared or processed for serving to customers using machines prohibited 
by paragraph (a) of this section.
    Rendering plants means establishments engaged in the conversion of 
dead animals, animal offal, animal fats, scrap meats, blood, and bones 
into stock feeds, tallow, inedible greases, fertilizer ingredients, and 
similar products.
    Slaughtering and meat packing establishments means places in or 
about which such animals as cattle, calves, hogs, poultry, sheep, lambs, 
goats, buffalo, deer, or horses are killed, butchered, or processed. The 
term also includes establishments which manufacture or process meat or 
poultry products, including sausage or sausage casings from such 
animals.
    (c) Exemptions. This section shall not apply to:
    (1) The killing and processing of rabbits or small game in areas 
physically separated from the killing floor.
    (2) The employment of apprentices or student-learners under the 
conditions prescribed in Sec. 570.50(b) and (c).

[56 FR 58631, Nov. 20, 1991, as amended at 75 FR 28455, May 20, 2010]



Sec. 570.62  Occupations involved in the operation of bakery machines
(Order 11).

    (a) Finding and declaration of fact. The following occupations 
involved in the operation of power-driven bakery machines are 
particularly hazardous for the employment of minors between 16 and 18 
years of age:
    (1) The occupations of operating, assisting to operate, or setting 
up, adjusting, repairing, oiling, or cleaning any horizontal or vertical 
dough mixer; batter mixer; bread dividing, rounding, or molding machine; 
dough brake; dough sheeter; combination bread slicing and wrapping 
machine; or cake cutting band saw.
    (2) The occupation of setting up or adjusting a cookie or cracker 
machine.
    (b) Exceptions. (1) This section shall not apply to the operation, 
including the setting up, adjusting, repairing, oiling and cleaning, of 
lightweight, small capacity, portable counter-top power-driven food 
mixers that are, or are comparable to, models intended for household 
use. For purposes of this exemption, a lightweight, small capacity mixer 
is one that is not hardwired into the establishment's power source, is 
equipped with a motor that operates at no more than \1/2\ horsepower, 
and is

[[Page 299]]

equipped with a bowl with a capacity of no more than five quarts. 
Except, this exception shall not apply when the mixer is used, with or 
without attachments, to process meat or poultry products as prohibited 
by Sec. 570.61(a)(4).
    (2) This section shall not apply to the operation of pizza-dough 
rollers, a type of dough sheeter, that: have been constructed with 
safeguards contained in the basic design so as to prevent fingers, 
hands, or clothing from being caught in the in-running point of the 
rollers; have gears that are completely enclosed; and have microswitches 
that disengage the machinery if the backs or sides of the rollers are 
removed. This exception applies only when all the safeguards detailed in 
this paragraph are present on the machine, are operational, and have not 
been overridden. This exception does not apply to the setting up, 
adjusting, repairing, oiling or cleaning of such pizza-dough rollers.

[17 FR 5610, June 21, 1952, as amended at 25 FR 9849, Oct. 14, 1960. 
Redesignated at 28 FR 1634, Feb. 21, 1963, and amended at 28 FR 3449, 
Apr. 9, 1963. Redesignated and amended at 36 FR 25156, Dec. 29, 1971; 75 
FR 28456, May 20, 2010]



Sec. 570.63  Occupations involved in the operation of balers,
compactors, and paper-products machines (Order 12).

    (a) Findings and declaration of fact. The following occupations are 
particularly hazardous for the employment of minors between 16 and 18 
years of age:
    (1) The occupations of operation or assisting to operate any of the 
following power-driven paper products machines:
    (i) Arm-type wire stitcher or stapler, circular or band saw, corner 
cutter or mitering machine, corrugating and single-or-double facing 
machine, envelope die-cutting press, guillotine paper cutter or shear, 
horizontal bar scorer, laminating or combining machine, sheeting 
machine, scrap paper baler, paper box compactor, or vertical slotter.
    (ii) Platen die-cutting press, platen printing press, or punch press 
which involves hand feeding of the machine.
    (2) The occupations of operation or assisting to operate any baler 
that is designed or used to process materials other than paper.
    (3) The occupations of operation or assisting to operate any 
compactor that is designed or used to process materials other than 
paper.
    (4) The occupations of setting up, adjusting, repairing, oiling, or 
cleaning any of the machines listed in paragraphs (a)(1), (2), and (3) 
of this section.
    (b) Definitions. As used in this section:
    Applicable ANSI Standard means the American National Standard 
Institute's Standard ANSI Z245.5-1990 American National Standard for 
Refuse Collection, Processing, and Disposal--Baling Equipment--Safety 
Requirements (ANSI S245.5-1990) for scrap paper balers or the American 
National Standard Institute's Standard ANSI Z245.2-1992 American 
National Standard for Refuse Collection, Processing, and Disposal 
Equipment--Stationary Compactors--Safety Requirements (ANSI Z245.2-1992) 
for paper box compactors. Additional applicable standards are the 
American National Standard Institute's Standard ANSI Z245.5-1997 
American National Standard for Equipment Technology and Operations for 
Wastes and Recyclable Materials--Baling Equipment--Safety Requirements 
(ANSI Z245.5-1997), the American National Standard Institute's Standard 
ANSI Z245.5-2004 American National Standard for Equipment Technology and 
Operations for Wastes and Recyclable Materials--Baling Equipment--Safety 
Requirements for Installation, Maintenance and Operation (ANSI Z245.5-
2004), and the American National Standard Institute's Standard ANSI 
Z245.5-2008 American National Standard for Equipment Technology and 
Operations for Wastes and Recyclable Materials--Baling Equipment--Safety 
Requirements (ANSI Z245.5-2008) for scrap paper balers or the American 
National Standard Institute's Standard ANSI Z245.2-1997 American 
National Standard for Equipment Technology and Operations for Wastes and 
Recyclable Materials--Stationary Compactors--Safety Requirements (ANSI 
Z245.2-1997), the American National Standard Institute's Standard ANSI 
Z245.2-2004 American National Standard

[[Page 300]]

for Equipment Technology and Operations for Wastes and Recyclable 
Materials--Stationary Compactors--Safety Requirements for Installation, 
Maintenance and Operation (ANSI Z245.2-2004), and the American National 
Standard Institute's Standard ANSI Z245.2-2008 American National 
Standard for Equipment Technology and Operations for Wastes and 
Recyclable Materials--Stationary Compactors--Safety Requirements for 
Installation, Maintenance and Operation (ANSI Z245.2-2008) for paper box 
compactors, which the Secretary has certified to be at least as 
protective of the safety of minors as Standard ANSI Z245.5-1990 for 
scrap paper balers or Standard ANSI Z245.2-1992 for paper box 
compactors. The ANSI standards for scrap paper balers and paper box 
compactors govern the manufacture and modification of the equipment, the 
operation and maintenance of the equipment, and employee training. These 
ANSI standards are incorporated by reference in this paragraph and have 
the same force and effect as other standards in this part. Only the 
mandatory provisions (i.e., provisions containing the word ``shall'' or 
other mandatory language) of these standards are adopted as standards 
under this part. These standards are incorporated by reference as they 
exist on the date of the approval; if any changes are made in these 
standards which the Secretary finds to be as protective of the safety of 
minors as the current standards, the Secretary will publish a Notice of 
the change of standards in the Federal Register. These incorporations by 
reference were approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of these 
standards are available for purchase from the American National 
Standards Institute (ANSI), 25 West 43rd St., Fourth Floor, New York, NY 
10036. The telephone number for ANSI is (212) 642-4900 and its Web site 
is located at http://www.ansi.org. In addition, these standards are 
available for inspection at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call (202) 741-6030, or go to: http://
www.archives.gov/federal--register/code--of--federal--regulations/ibr--
locations.html. These standards are also available for inspection at the 
Occupational Safety and Health Administration's Docket Office, Room N-
2625, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, or any of its regional offices. The telephone 
number for the Occupational Safety and Health Administration's Docket 
Office is (202) 693-2350 and its Web site is located at http://
dockets.osha.gov.
    Baler that is designed or used to process materials other than paper 
means a powered machine designed or used to compress materials other 
than paper and cardboard boxes, with or without binding, to a density or 
form that will support handling and transportation as a material unit 
without requiring a disposable or reusable container.
    Compactor that is designed or used to process materials other than 
paper means a powered machine that remains stationary during operation, 
designed or used to compact refuse other than paper or cardboard boxes 
into a detachable or integral container or into a transfer vehicle.
    Operating or assisting to operate means all work that involves 
starting or stopping a machine covered by this section, placing 
materials into or removing materials from a machine, including clearing 
a machine of jammed materials, paper, or cardboard, or any other work 
directly involved in operating the machine. The term does not include 
the stacking of materials by an employee in an area nearby or adjacent 
to the machine where such employee does not place the materials into the 
machine.
    Paper box compactor means a powered machine that remains stationary 
during operation, used to compact refuse, including paper boxes, into a 
detachable or integral container or into a transfer vehicle.
    Paper products machine means all power-driven machines used in 
remanufacturing or converting paper or pulp into a finished product, 
including preparing such materials for recycling; or preparing such 
materials for disposal. The term applies to such machines whether they 
are used in establishments that manufacture converted paper or pulp 
products, or in any other

[[Page 301]]

type of manufacturing or nonmanufacturing establishment. The term also 
applies to those machines which, in addition to paper products, process 
other material for disposal.
    Scrap paper baler means a powered machine used to compress paper and 
possibly other solid waste, with or without binding, to a density or 
form that will support handling and transportation as a material unit 
without requiring a disposable or reusable container.
    (c) Exemptions. (1) Sixteen- and 17-year-olds minors may load 
materials into, but not operate or unload, those scrap paper balers and 
paper box compactors that are safe for 16- and 17-year-old employees to 
load and cannot be operated while being loaded. For the purpose of this 
exemption, a scrap paper baler or a paper box compactor is considered to 
be safe for 16- and 17-year-old to load only if all of the following 
conditions are met:
    (i) The scrap paper baler or paper box compactor meets the 
applicable ANSI standard (the employer must initially determine if the 
equipment meets the applicable ANSI standard, and the Administrator or 
his/her designee may make a determination when conducting an 
investigation of the employer);
    (ii) The scrap paper baler or paper box compactor includes an on-off 
switch incorporating a key-lock or other system and the control of the 
system is maintained in the custody of employees who are 18 years of age 
or older;
    (iii) The on-off switch of the scrap paper baler or paper box 
compactor is maintained in an off position when the machine is not in 
operation; and
    (iv) The employer posts a notice on the scrap paper baler or paper 
box compactor (in a prominent position and easily visible to any person 
loading, operating, or unloading the machine) that includes and conveys 
all of the following information:
    (A)(1) That the scrap paper baler or compactor meets the industry 
safety standard applicable to the machine, as specified in paragraph (b) 
of this section and displayed in the following table.

------------------------------------------------------------------------
                                             In order for employers to
 In order for employers to take advantage  take advantage of the limited
  of the limited exception discussed in     exception discussed in this
 this section, the scrap paper baler must      section, the paper box
meet one of the following ANSI Standards:    compactor must meet one of
                                           the following ANSI Standards:
------------------------------------------------------------------------
ANSI Standard Z245.5-1990................  ANSI Standard Z245.2-1992.
ANSI Standard Z245.5-1997................  ANSI Standard Z245.2-1997.
ANSI Standard Z245.5-2004................  ANSI Standard Z245.2-2004.
ANSI Standard Z245.5-2008................  ANSI Standard Z245.2-2008.
------------------------------------------------------------------------

    (2) The notice shall completely identify the appropriate ANSI 
standard.
    (B) That sixteen- and 17-year-old employees may only load the scrap 
paper baler or paper box compactor.
    (C) That no employee under the age of 18 may operate or unload the 
scrap paper baler or paper box compactor.
    (2) This section shall not apply to the employment of apprentices or 
student-learners under the conditions prescribed in Sec. 570.50 (b) and 
(c).

[56 FR 58632, Nov. 20, 1991, as amended at 69 FR 75403, Dec. 16, 2004; 
75 FR 28456, May 20, 2010]



Sec. 570.64  Occupations involved in the manufacture of brick, tile,
and kindred products (Order 13).

    (a) Findings and declaration of fact. The following occupations 
involved in the manufacture of clay construction products and of silica 
refractory products are particularly hazardous for the employment of 
minors between 16 and 18 years of age, and detrimental to their health 
and well-being.
    (1) All work in or about establishments in which clay construction 
products are manufactured, except (i) work in storage and shipping: (ii) 
work in offices, laboratories, and storerooms; and (iii) work in the 
drying departments of plants manufacturing sewer pipe.
    (2) All work in or about establishments in which silica brick or 
other silica refractories are manufactured, except work in offices.
    (3) Nothing in this section shall be construed as permitting 
employment of minors in any occupation prohibited by any other hazardous 
occupations order issued by the Secretary of Labor.

[[Page 302]]

    (b) Definitions. (1) The term clay construction products shall mean 
the following clay products: Brick, hollow structural tile, sewer pipe 
and kindred products, refractories, and other clay products such as 
architectural terra cotta, glazed structural tile, roofing tile, stove 
lining, chimney pipes and tops, wall coping, and drain tile. The term 
shall not include the following non-structural-bearing clay products: 
Ceramic floor and wall tile, mosaic tile, glazed and enameled tile, 
faience, and similar tile, nor shall the term include non-clay 
construction products such as sand-lime brick, glass brick, or non-clay 
refractories.
    (2) The term silica brick or other silica refractories shall mean 
refractory products produced from raw materials containing free silica 
as their main constituent.

[21 FR 5773, Aug. 2, 1956, as amended at 23 FR 6240, Aug. 14, 1958. 
Redesignated at 28 FR 1634, Feb. 21, 1963, and amended at 28 FR 3450, 
Apr. 9, 1963. Redesignated and amended at 36 FR 25156, Dec. 29, 1971]



Sec. 570.65  Occupations involved in the operations of circular saws,
band saws, guillotine shears, chain saws, reciprocating saws, wood 

chippers, and abrasive 
          cutting discs (Order 14).

    (a) Findings and declaration of fact. The following occupations are 
particularly hazardous for the employment of minors between 16 and 18 
years of age:
    (1) The occupations of operator of or helper on the following power-
driven fixed or portable machines except machines equipped with full 
automatic feed and ejection:
    (i) Circular saws.
    (ii) Band saws.
    (iii) Guillotine shears.
    (2) The occupations of operator of or helper on the following power-
driven fixed or portable machines:
    (i) Chain saws.
    (ii) Reciprocating saws.
    (iii) Wood chippers.
    (iv) Abrasive cutting discs.
    (3) The occupations of setting-up, adjusting, repairing, oiling, or 
cleaning circular saws, band saws, guillotine shears, chain saws, 
reciprocating saws, wood chippers, and abrasive cutting discs.
    (b) Definitions. As used in this section:
    Abrasive cutting disc shall mean a machine equipped with a disc 
embedded with abrasive materials used for cutting materials.
    Band saw shall mean a machine equipped with an endless steel band 
having a continuous series of notches or teeth, running over wheels or 
pulleys, and used for sawing materials.
    Chain saw shall mean a machine that has teeth linked together to 
form an endless chain used for cutting materials.
    Circular saw shall mean a machine equipped with a thin steel disc 
having a continuous series of notches or teeth on the periphery, mounted 
on shafting, and used for sawing materials.
    Guillotine shear shall mean a machine equipped with a moveable blade 
operated vertically and used to shear materials. The term shall not 
include other types of shearing machines, using a different form of 
shearing action, such as alligator shears or circular shears.
    Helper shall mean a person who assists in the operation of a machine 
covered by this section by helping place materials into or remove them 
from the machine.
    Operator shall mean a person who operates a machine covered by this 
section by performing such functions as starting or stopping the 
machine, placing materials into or removing them from the machine, or 
any other functions directly involved in operation of the machine.
    Reciprocating saw shall mean a machine equipped with a moving blade 
that alternately changes direction on a linear cutting axis used for 
sawing materials.
    Wood chipper shall mean a machine equipped with a feed mechanism, 
knives mounted on a rotating chipper disc or drum, and a power plant 
used to reduce to chips or shred such materials as tree branches, trunk 
segments, landscape waste, and other materials.

[[Page 303]]

    (c) Exemptions. This section shall not apply to the employment of 
apprentices or student-learners under the conditions prescribed in Sec. 
570.50 (b) and (c).

[25 FR 9849, Oct. 14, 1960. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and amended at 28 FR 3450, Apr. 9, 1963. Redesignated and amended at 36 
FR 25156, Dec. 29, 1971; 75 FR 28457, May 20, 2010]



Sec. 570.66  Occupations involved in wrecking, demolition, and 
shipbreaking operations (Order 15).

    (a) Finding and declaration of fact. All occupations in wrecking, 
demolition, and shipbreaking operations are particularly hazardous for 
the employment of minors between 16 and 18 years of age and detrimental 
to their health and well-being.
    (b) Definition. The term wrecking, demolition, and shipbreaking 
operations shall mean all work, including clean-up and salvage work, 
performed at the site of the total or partial razing, demolishing, or 
dismantling of a building, bridge, steeple, tower, chimney, other 
structure, ship or other vessel.

[25 FR 9850, Oct. 14, 1960. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and amended at 28 FR 3450, Apr. 9, 1963. Redesignated and amended at 36 
FR 25156, Dec. 29, 1971]



Sec. 570.67  Occupations in roofing operations and on or about
a roof (Order 16).

    (a) Finding and declaration of fact. All occupations in roofing 
operations and all occupations on or about a roof are particularly 
hazardous for the employment of minors between 16 and 18 years of age or 
detrimental to their health.
    (b) Definitions. On or about a roof includes all work performed upon 
or in close proximity to a roof, including carpentry and metal work, 
alterations, additions, maintenance and repair, including painting and 
coating of existing roofs; the construction of the sheathing or base of 
roofs (wood or metal), including roof trusses or joists; gutter and 
downspout work; the installation and servicing of television and 
communication equipment such as cable and satellite dishes; the 
installation and servicing of heating, ventilation and air conditioning 
equipment or similar appliances attached to roofs; and any similar work 
that is required to be performed on or about roofs.
    Roofing operations means all work performed in connection with the 
installation of roofs, including related metal work such as flashing, 
and applying weatherproofing materials and substances (such as 
waterproof membranes, tar, slag or pitch, asphalt prepared paper, tile, 
composite roofing materials, slate, metal, translucent materials, and 
shingles of asbestos, asphalt, wood or other materials) to roofs of 
buildings or other structures. The term also includes all jobs on the 
ground related to roofing operations such as roofing laborer, roofing 
helper, materials handler and tending a tar heater.
    (c) Exemptions. This section shall not apply to the employment of 
apprentices or student-learners under the conditions prescribed in Sec. 
570.50 (b) and (c).

[27 FR 102, Jan. 5, 1962. Redesignated at 28 FR 1634, Feb. 21, 1963, and 
amended at 28 FR 3450, Apr. 9, 1963. Redesignated and amended at 36 FR 
25156, Dec. 29, 1971; 69 FR 57404, Dec. 16, 2004]



Sec. 570.68  Occupations in excavation operations (Order 17).

    (a) Finding and declaration of fact. The following occupations in 
excavation operations are particularly hazardous for the employment of 
persons between 16 and 18 years of age:
    (1) Excavating, working in, or backfilling (refilling) trenches, 
except (i) manually excavating or manually backfilling trenches that do 
not exceed four feet in depth at any point, or (ii) working in trenches 
that do not exceed four feet in depth at any point.
    (2) Excavating for buildings or other structures or working in such 
excavations, except: (i) Manually excavating to a depth not exceeding 
four feet below any ground surface adjoining the excavation, or (ii) 
working in an excavation not exceeding such depth, or (iii) working in 
an excavation where the side walls are shored or sloped to the angle of 
repose.
    (3) Working within tunnels prior to the completion of all driving 
and shoring operations.
    (4) Working within shafts prior to the completion of all sinking and 
shoring operations.

[[Page 304]]

    (b) Exemptions. This section shall not apply to the employment of 
apprentices or student-learners under the conditions prescribed in Sec. 
570.50 (b) and (c).

[28 FR 3449, Apr. 9, 1963. Redesignated at 36 FR 25156, Dec. 29, 1971]



 Subpart E-1_Occupations in Agriculture Particularly Hazardous for the 
               Employment of Children Below the Age of 16

    Authority: Secs. 12, 13, 18, 52 Stat. 1067, 1069, as amended; 29 
U.S.C. 212, 213, 218.



Sec. 570.70  Purpose and scope.

    (a) Purpose. Section 13(c)(2) of the Fair Labor Standards Act of 
1938, as amended (29 U.S.C. 213(c)(2)) states that the ``provisions of 
section 12 [of the Act] relating to child labor shall apply to an 
employee below the age of 16 employed in agriculture in an occupation 
that the Secretary of Labor finds and declares to be particularly 
hazardous for the employment of children below the age of 16, except 
where such employee is employed by his parent or by a person standing in 
the place of his parent on a farm owned or operated by such parent or 
person.'' The purpose of this subpart is to apply this statutory 
provision.
    (b) Exception. This subpart shall not apply to the employment of a 
child below the age of 16 by his parent or by a person standing in the 
place of his parent on a farm owned or operated by such parent or 
person.
    (c) Statutory definitions. As used in this subpart, the terms 
agriculture, employer, and employ have the same meanings as the 
identical terms contained in section 3 of the Fair Labor Standards Act 
of 1938, as amended (29 U.S.C. 203), which are as follows:
    (1) Agriculture includes farming in all its branches and among other 
things includes the cultivation and tillage of soil, dairying, the 
production, cultivation, growing, and harvesting of any agricultural or 
horticultural commodities (including commodities defined as agricultural 
commodities in section 15(g) of the Agricultural Marketing Act, as 
amended), the raising of livestock, bees, fur-bearing animals, or 
poultry, and any practices (including any forestry or lumbering 
operations) performed by a farmer or on a farm as an incident to or in 
conjunction with such farming operations, including preparation for 
market, delivery to storage or to market or to carriers for 
transportation to market.
    (2) Employer includes any person acting directly or indirectly in 
the interest of an employer in relation to an employee but shall not 
include the United States or any State or political subdivision of a 
State (except with respect to employees of a State or a political 
subdivision thereof, employed:
    (i) In a hospital, institution, or school referred to in the last 
sentence of section (r) of the Act, or
    (ii) In the operation of a railway or carrier referred to in such 
sentence), or any labor organization (other than when acting as an 
employer), or anyone acting in the capacity of officer or agent of such 
labor organization.
    (iii) Employ includes to suffer or permit to work.

[35 FR 221, Jan. 7, 1970, as amended at 35 FR 2822, Feb. 11, 1970. 
Redesignated at 36 FR 25156, Dec. 29, 1971]



Sec. 570.71  Occupations involved in agriculture.

    (a) Findings and declarations of fact as to specific occupations. 
The following occupations in agriculture are particularly hazardous for 
the employment of children below the age of 16:
    (1) Operating a tractor of over 20 PTO horsepower, or connecting or 
disconnecting an implement or any of its parts to or from such a 
tractor.
    (2) Operating or assisting to operate (including starting, stopping, 
adjusting, feeding, or any other activity involving physical contact 
associated with the operation) any of the following machines:
    (i) Corn picker, cotton picker, grain combine, hay mower, forage 
harvester, hay baler, potato digger, or mobile pea viner;
    (ii) Feed grinder, crop dryer, forage blower, auger conveyor, or the 
unloading mechanism of a nongravity-type self-unloading wagon or 
trailer; or
    (iii) Power post-hole digger, power post driver, or nonwalking type 
rotary tiller.

[[Page 305]]

    (3) Operating or assisting to operate (including starting, stopping, 
adjusting, feeding, or any other activity involving physical contact 
associated with the operation) any of the following machines:
    (i) Trencher or earthmoving equipment;
    (ii) Fork lift;
    (iii) Potato combine; or
    (iv) Power-driven circular, band, or chain saw.
    (4) Working on a farm in a yard, pen, or stall occupied by a:
    (i) Bull, boar, or stud horse maintained for breeding purposes; or
    (ii) Sow with suckling pigs, or cow with newborn calf (with 
umbilical cord present)
    (5) Felling, bucking, skidding, loading, or unloading timber with 
butt diameter of more than 6 inches.
    (6) Working from a ladder or scaffold (painting, repairing, or 
building structures, pruning trees, picking fruit, etc.) at a height of 
over 20 feet.
    (7) Driving a bus, truck, or automobile when transporting 
passengers, or riding on a tractor as a passenger or helper.
    (8) Working inside:
    (i) A fruit, forage, or grain storage designed to retain an oxygen 
deficient or toxic atmosphere;
    (ii) An upright silo within 2 weeks after silage has been added or 
when a top unloading device is in operating position;
    (iii) A manure pit; or
    (iv) A horizontal silo while operating a tractor for packing 
purposes.
    (9) Handling or applying (including cleaning or decontaminating 
equipment, disposal or return of empty containers, or serving as a 
flagman for aircraft applying) agricultural chemicals classified under 
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 135 et 
seq.) as Category I of toxicity, identified by the word ``poison'' and 
the ``skull and crossbones'' on the label; or Category II of toxicity, 
identified by the word ``warning'' on the label;
    (10) Handling or using a blasting agent, including but not limited 
to, dynamite, black powder, sensitized ammonium nitrate, blasting caps, 
and primer cord; or
    (11) Transporting, transferring, or applying anhydrous ammonia.
    (b) Occupational definitions. In applying machinery, equipment, or 
facility terms used in paragraph (a) of this section, the Wage and Hour 
Division will be guided by the definitions contained in the current 
edition of Agricultural Engineering, a dictionary and handbook, 
Interstate Printers and Publishers, Danville, Ill. Copies of this 
dictionary and handbook are available for examination in Regional 
Offices of the Wage and Hour Division, U.S. Department of Labor.

[35 FR 221, Jan. 7, 1970. Redesignated at 36 FR 25156, Dec. 29, 1971]



Sec. 570.72  Exemptions.

    (a) Student-learners. The findings and declarations of fact in Sec. 
570.71(a) shall not apply to the employment of any child as vocational 
agriculture student-learner in any of the occupations described in 
paragraph (1), (2), (3), (4), (5), or (6) of Sec. 570.71(a) when each 
of the following requirements are met:
    (1) The student-learner is enrolled in a vocational education 
training program in agriculture under a recognized State or local 
educational authority, or in a substantially similar program conducted 
by a private school;
    (2) Such student-learner is employed under a written agreement which 
provides; (i) that the work of the student-learner is incidental to his 
training; (ii) that such work shall be intermittent, for short periods 
of time, and under the direct and close supervision of a qualified and 
experienced person; (iii) that safety instruction shall be given by the 
school and correlated by the employer with on-the-job training; and (iv) 
that a schedule of organized and progressive work processes to be 
performed on the job have been prepared;
    (3) Such written agreement contains the name of the student-learner, 
and is signed by the employer and by a person authorized to represent 
the educational authority or school; and
    (4) Copies of each such agreement are kept on file by both the 
educational authority or school and by the employer.
    (b) Federal Extension Service. The findings and declarations of fact 
in

[[Page 306]]

Sec. 570.71(a) shall not apply to the employment of a child under 16 
years of age in those occupations in which he has successfully completed 
one or more training programs described in paragraph (b) (1), (2), or 
(3) of this section provided he has been instructed by his employer on 
safe and proper operation of the specific equipment he is to use; is 
continuously and closely supervised by the employer where feasible; or, 
where not feasible, in work such as cultivating, his safety is checked 
by the employer at least at midmorning, noon, and midafternoon.
    (1) 4-H tractor operation program. The child is qualified to be 
employed in an occupation described in Sec. 570.71(a)(1) provided:
    (i) He is a 4-H member;
    (ii) He is 14 years of age, or older;
    (iii) He is familiar with the normal working hazards in agriculture;
    (iv) He has completed a 10-hour training program which includes the 
following units from the manuals of the 4-H tractor program conducted 
by, or in accordance with the requirements of, the Cooperative Extension 
Service of a land grant university:
    (a) First-year Manual:

Unit 1--Learning How to be Safe;
Unit 4--The Instrument Panel;
Unit 5--Controls for Your Tractor;
Unit 6--Daily Maintenance and Safety Check; and
Unit 7--Starting and Stopping Your Tractor;

    (b) Second-year Manual:

Unit 1--Tractor Safety on the Farm;

    (c) Third-year Manual:

Unit 1--Tractor Safety on the Highway;
Unit 3--Hitches, Power-take-off, and Hydraulic Controls;

    (v) He has passed a written examination on tractor safety and has 
demonstrated his ability to operate a tractor safely with a two-wheeled 
trailed implement on a course similar to one of the 4-H Tractor 
Operator's Contest Courses; and
    (vi) His employer has on file with the child's records kept pursuant 
to part 516 of this title (basically, name, address, and date of birth) 
a copy of a certificate acceptable by the Wage and Hour Division, signed 
by the leader who conducted the training program and by an Extension 
Agent of the Cooperative Extension Service of a land grant university to 
the effect that the child has completed all the requirements specified 
in paragraphs (b)(1) (i) through (v) of this section.
    (2) 4-H machine operation program. The child is qualified to be 
employed in an occupation described in Sec. 570.71(a)(2) providing:
    (i) He satisfies all the requirements specified in paragraphs 
(b)(2)(i) through (v) of this section;
    (ii) He has completed an additional 10-hour training program on farm 
machinery safety, including 4-H Fourth-Year Manual, Unit 1, Safe Use of 
Farm Machinery;
    (iii) He has passed a written and practical examination on safe 
machinery operation; and
    (iv) His employer has on file with the child's records kept pursuant 
to part 516 of this title (basically, name, address, and date of birth) 
a copy of a certificate acceptable by the Wage and Hour Division, signed 
by the leader who conducted the training program and by an Extension 
Agent of the Cooperative Extension Service of a land grant university, 
to the effect that the child has completed all of the requirements 
specified in paragraphs (b)(2) (i) through (iii) of this section.
    (3) Tractor and machine operation program. The child is qualified to 
be employed in an occupation described in Sec. 570.71(a) (1) and (2) 
providing:
    (i) He is 14 years of age, or older;
    (ii) He has completed a 4-hour orientation course familiarizing him 
with the normal working hazards in agriculture;
    (iii) He has completed a 20-hour training program on safe operation 
of tractors and farm machinery, which covers all material specified in 
paragraphs (b) (1)(iv) and (2)(ii) of this section.
    (iv) He has passed a written examination on tractor and farm 
machinery safety, and has demonstrated his ability to operate a tractor 
with a two-wheeled trailed implement on a course similar to a 4-H 
Tractor Operator's Contest Course, and to operate farm machinery safely.
    (v) His employer has on file with the child's records kept pursuant 
to part

[[Page 307]]

516 of this title (basically, name, address and date of birth) a copy of 
a certificate acceptable by the Wage and Hour Division, signed by the 
volunteer leader who conducted the training program and by an Extension 
Agent of the Cooperative Extension Service of a land grant university, 
to the effect that all of the requirements of paragraphs (b)(2) (i) 
through (iv) of this section have been met.
    (c) Vocational agriculture training. The findings and declarations 
of fact in Sec. 570.71(a) shall not apply to the employment of a 
vocational agriculture student under 16 years of age in those 
occupations in which he has successfully completed one or more training 
programs described in paragraph (c)(1) or (2) of this section and who 
has been instructed by his employer in the safe and proper operation of 
the specific equipment he is to use, who is continuously and closely 
supervised by his employer where feasible or, where not feasible, in 
work such as cultivating, whose safety is checked by the employer at 
least at midmorning, noon, and midafternoon, and who also satisfies 
whichever of the following program requirements are pertinent:
    (1) Tractor operation program. The student is qualified to be 
employed in an occupation described in Sec. 570.71(a)(1) provided:
    (i) He is 14 years of age, or older;
    (ii) He is familiar with the normal working hazards in agriculture;
    (iii) He has completed a 15-hour training program which includes the 
required units specified in the Vocational Agriculture Training Program 
in Safe Tractor Operation, outlined by the Office of Education, U.S. 
Department of Health, Education, and Welfare and acceptable by the U.S. 
Department of Labor. The training program is outlined in Special Paper 
No. 8, April 1969, prepared at Michigan State University, East Lansing, 
Mich., for the Office of Education. Copies of this training program 
outline are available for examination in the Regional Offices of the 
Wage and Hour Division, U.S. Department of Labor, and a copy may be 
obtained from the Office of Education, U.S. Department of Health, 
Education, and Welfare, Washington, DC 20202.
    (iv) He has passed both a written test and a practical test on 
tractor safety including a demonstration of his ability to operate 
safely a tractor with a two-wheeled trailed implement on a test course 
similar to that described in the Vocational Agriculture Training Program 
in Safe Tractor Operation, outlined by the Office of Education, U.S. 
Department of Health, Education, and Welfare; and
    (v) His employer has on file with the child's records kept pursuant 
to part 516 of this title (basically, name, address, and date of birth) 
a copy of a certificate acceptable by the Wage and Hour Division, signed 
by the Vocational Agriculture teacher who conducted the program to the 
effect that the student has completed all the requirements specified in 
paragraphs (c)(1)(i) through (iv) of this section.
    (2) Machinery operation program. The student is qualified to be 
employed in an occupation described in paragraph (2) of Sec. 570.71(a) 
provided he has completed the Tractor Operation Program described in 
paragraph (c)(1) of this section and:
    (i) He has completed an additional 10-hour training program which 
includes the required units specified in the Vocational Agriculture 
Training Program in Safe Farm Machinery Operation, outlined by the 
Office of Education, U.S. Department of Health, Education, and Welfare 
and approved by the U.S. Department of Labor;
    (ii) He has passed both a written test and a practical test on safe 
machinery operation similar to that described in the Vocational 
Agriculture Training Program in Safe Farm Machinery Operation, outlined 
by the Office of Education, U.S. Department of Health, Education, and 
Welfare; and
    (iii) His employer has on file with the child's records kept 
pursuant to part 516 of this title (basically, name, address and date of 
birth) a copy of a certificate acceptable by the Wage and Hour Division, 
signed by the Vocational Agriculture teacher who conducted the program 
to the effect that student has completed all the requirements specified 
in paragraphs (c)(2)(i) and (ii) of this section.

[[Page 308]]

    (d) Agency review. The provisions of paragraphs (a), (b), and (c) of 
this section will be reviewed and reevaluated before January 1, 1972. In 
addition, determinations will be made as to whether the use of 
protective frames, crush resistant cabs, and other personal protective 
devices should be made a condition of these exemptions.

[35 FR 221, Jan. 7, 1970. Redesignated at 36 FR 25156, Dec. 29, 1971]

Subpart F [Reserved]



   Subpart G_General Statements of Interpretation of the Child Labor 
     Provisions of the Fair Labor Standards Act of 1938, as Amended

    Authority: 52 Stat. 1060-1069, as amended; 29 U.S.C. 201-219.

                                 General



Sec. 570.101  Introductory statement.

    (a) This subpart discusses the meaning and scope of the child labor 
provisions contained in the Fair Labor Standards Act, as amended 
(hereinafter referred to as the Act). These provisions seek to protect 
the safety, health, well-being, and opportunities for schooling of 
youthful workers and authorize the Secretary of Labor to issue legally 
binding orders or regulations in certain instances and under certain 
conditions. The child labor provisions are found in sections 3(1), 
11(b), 12, 13 (c) and (d), 15(a)(4), 16(a), and 18 of the Act. They are 
administered and enforced by the Secretary of Labor who has delegated to 
the Wage and Hour Division the duty of making investigations to obtain 
compliance, and of developing standards for the issuance of regulations 
and orders relating to: (1) Hazardous occupations, (2) employment of 14- 
and 15-year-old children, and (3) age certificates.
    (b) The interpretations of the Secretary contained in this subpart 
indicate the construction of the law which will guide him in performing 
his duties until he is directed otherwise by authoritative rulings of 
the courts or until he shall subsequently decide that his prior 
interpretation is incorrect.

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963. 
Redesignated and amended at 36 FR 25156, Dec. 29, 1971]



Sec. 570.102  General scope of statutory provisions.

    The most important of the child labor provisions are contained in 
sections 12(a), 12(c), and 3(l) of the Act. Section 12(a) provides that 
no producer, manufacturer, or dealer shall ship or deliver for shipment 
in interstate or foreign commerce any goods produced in an establishment 
in or about which oppressive child labor was employed within 30 days 
before removal of the goods. The full text of this subsection is set 
forth in Sec. 570.104 and its terms are discussed in Sec. Sec. 570.105 
to 570.111, inclusive. Section 12(c) prohibits any employer from 
employing oppressive child labor in interstate or foreign commerce or in 
the production of goods for such commerce. The text and discussion of 
this provision appear in Sec. Sec. 570.112 and 570.113. Section 3(l) of 
the Act, which defines the term ``oppressive child labor,'' is set forth 
in Sec. 570.117 and its provisions are discussed in Sec. Sec. 570.118 
to 570.121, inclusive. It will further be noted that the Act provides 
various specific exemptions from the foregoing provisions which are set 
forth and discussed in Sec. Sec. 570.122 to 570.130, inclusive.

[75 FR 28458, May 20, 2010]



Sec. 570.103  Comparison with wage and hour provisions.

    A comparison of the child labor provisions with the so-called wage 
and hours provisions contained in the Act discloses some important 
distinctions which should be mentioned.
    (a) The child labor provisions contain no requirements in regard to 
wages. The wage and hours provisions, on the other hand, provide for 
minimum rates of pay for straight time and overtime pay at a rate not 
less than one and one-half times the regular rate of pay for overtime 
hours worked. Except as provided in certain exemptions contained in the 
Act, these rates are required to be paid all employees subject to the 
wage and hours provisions, regardless of their age or sex. The fact 
therefore,

[[Page 309]]

that the employment of a particular child is prohibited by the child 
labor provisions or that certain shipments or deliveries may be 
proscribed on account of such employment, does not relieve the employer 
of the duties imposed by the wage and hours provisions to compensate the 
child in accordance with those requirements.
    (b) There are important differences between the child labor 
provisions and the wage and hours provisions with respect to their 
general coverage. As pointed out in Sec. 570.114, two separate and 
basically different coverage provisions are contained in section 12 
relating to child labor. One of these provisions (section 12(c)), which 
applies to the employment by an employer of oppressive child labor in 
commerce or in the production of goods for commerce, is similar to the 
wage and hours coverage provisions, which include employees engaged in 
commerce or in the production of goods for commerce or employed in 
enterprises having employees so engaged. The other provision (section 
12(a)), however, differs fundamentally in its basic concepts of coverage 
from the wage and hours provisions, as will be explained in Sec. Sec. 
570.104 to 570.111.
    (c) Another distinction is that the exemptions provided by the Act 
from the minimum wage and/or overtime provisions are more numerous and 
differ from the exemptions granted from the child labor provisions. 
There are only eight specific child labor exemptions of which only two 
apply to the minimum wage and overtime pay requirements as well. These 
are the exemptions for employees engaged in the delivery of newspapers 
to the consumer and homeworkers engaged in the making of wreaths 
composed principally of evergreens.\3\ Apart from these two exceptions, 
none of the specific exemptions from the minimum wage and/or overtime 
pay requirements applies to the child labor provisions. However, it 
should be noted that the exclusion of certain employers by section 3(d) 
\4\ of the Act applies to the child labor provisions as well as the wage 
and hours provisions.
---------------------------------------------------------------------------

    \3\ Both of these exemptions are contained in section 13(d) of the 
FLSA.
    \4\ Section 3(d) defines `employer' as including ``any person acting 
directly or indirectly in the interest of an employer in relation to an 
employee and includes a public agency, but does not include any labor 
organization (other than when acting as an employer) or anyone acting in 
the capacity of officer or agent of such labor organization.''

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963. 
Redesignated and amended at 36 FR 25156, Dec. 29, 1971; 75 FR 28458, May 
20, 2010]

                        Coverage of Section 12(a)



Sec. 570.104  General.

    Section 12(a) of the Act provides as follows:

No producer, manufacturer, or dealer shall ship or deliver for shipment 
in commerce any goods produced in an establishment situated in the 
United States in or about which within 30 days prior to the removal of 
such goods therefrom any oppressive child labor has been employed: 
Provided, That any such shipment or delivery for shipment of such goods 
by a purchaser who acquired them in good faith in reliance on written 
assurance from the producer, manufacturer, or dealer that the goods were 
produced in compliance with the requirements of this section, and who 
acquired such goods for value without notice of any such violation, 
shall not be deemed prohibited by this subsection: And provided further, 
That a prosecution and conviction of a defendant for the shipment or 
delivery for shipment of any goods under the conditions herein 
prohibited shall be a bar to any further prosecution against the same 
defendant for shipments or deliveries for shipment of any such goods 
before the beginning of said prosecution.


In determining the applicability of this provision, consideration of the 
meaning of the terms used is necessary. These terms are discussed in 
Sec. Sec. 570.105 to 570.111, inclusive.



Sec. 570.105  ``Producer, manufacturer, or dealer''.

    It will be observed that the prohibition of section 12(a) with 
respect to certain shipments or deliveries for shipment is confined to 
those made by producers, manufacturers, and dealers. The terms 
``producer, manufacturer, or dealer'' used in this provision are not 
expressly defined by the statute. However, in view of the definition of 
``produced'' in section 3(j), for purposes of this section a 
``producer'' is considered

[[Page 310]]

to be one who engages in producing, manufacturing, handling or in any 
other manner working on goods in any State. \5\ Since manufacturing is 
considered a specialized form of production, the word ``manufacturer'' 
does not have as broad an application as the word ``producer.'' 
Manufacturing generally involves the transformation of raw materials or 
semifinished goods into new or different articles. A person may be 
considered a ``manufacturer'' even though his goods are made by hand, as 
is often true of products made by homeworkers. Moreover, it is 
immaterial whether manufacturing is his sole or main business. Thus, the 
term includes retailers who, in addition to retail selling, engage in 
such manufacturing activities as the making of slip-covers or curtains, 
the baking of bread, the making of candy, or the making of window 
frames. The word ``dealer'' refers to anyone who deals in goods (as 
defined in section 3(i) of the Act), \6\ including persons engaged in 
buying, selling, trading, distributing, delivering, etc. It includes 
middlemen, factors, brokers, commission merchants, wholesalers, 
retailers and the like.
---------------------------------------------------------------------------

    \5\ For a discussion of the definition of ``produced'' as it relates 
to section 12(a), see Sec. 570.108.
    \6\ See Sec. 570.107.
---------------------------------------------------------------------------



Sec. 570.106  ``Ship or deliver for shipment in commerce''.

    (a) Section 12(a) forbids producers, manufacturers, and dealers to 
``ship or deliver for shipment in commerce'' the goods referred to 
therein. A producer, manufacturer, or dealer may ``ship'' goods in 
commerce either by moving them himself in interstate or foreign commerce 
or by causing them to so move, as by delivery to a carrier. \7\ Thus, a 
baker ``ships'' his bread in commerce whether he carries it in his own 
truck across State lines or sends it by contract or common carrier to 
his customers in other States. The word ``ship'' must be applied in its 
ordinary meaning. For example, it does not apply to the transmission of 
telegraphic messages. \8\
---------------------------------------------------------------------------

    \7\ Section 3(b) of the Act defines ``commerce'' to mean ``trade, 
commerce, transportation, transmission, or communication among the 
several States or between any State and any place outside thereof.''
    \8\ Western Union Telegraph Co. v. Lenroot, 323 U.S. 490.
---------------------------------------------------------------------------

    (b) To ``deliver for shipment in commerce'' means to surrender the 
custody of goods to another under such circumstances that the person 
surrendering the goods knows or has reason to believe that the goods 
will later be shipped in commerce. \9\ Typical is the case of a Detroit 
manufacturer who delivers his goods in Detroit to a distributor who, as 
the manufacturer is well aware, will ship the goods into another State. 
A delivery for shipment in commerce may also be made where raw materials 
are delivered by their producer to a manufacturer in the same State who 
converts them into new products which are later shipped across State 
lines. If the producer in such case is aware or has reason to believe 
that the finished products will ultimately be sent into another State, 
his delivery of the raw materials to the manufacturer is a delivery for 
shipment in commerce. Another example is a paper box manufacturer who 
ships a carton of boxes to a fresh fruit or vegetable packing shed 
within the same State, with knowledge or reason to believe that the 
boxes will there be filled with fruits or vegetables and shipped outside 
the State. In such case the box manufacturer has delivered the boxes for 
shipment in commerce.
---------------------------------------------------------------------------

    \9\ Tobin v. Grant, N. D. Calif., 79 Sup. 975 which was a suit for 
injunction by the Secretary of Labor against a manufacturer of books and 
book covers employing oppressive child labor. The facts showed that the 
manufactured articles sold by defendant to purchasers in the same State 
had an ultimate out-of-State destination which was manifest to 
defendant. The court construed the words ``deliver for shipment in 
commerce'' as sufficiently broad to cover this situation even though the 
purchasers acquired title to the goods.
---------------------------------------------------------------------------



Sec. 570.107  ``Goods''. \10\
---------------------------------------------------------------------------

    \10\ The term goods is discussed in more detail in part 776 of this 
title (Interpretative Bulletin on the coverage of the wage and hours 
provisions) issued by the Administrator of the Wage and Hour Division.
---------------------------------------------------------------------------

    (a) Section 12(a) prohibits the shipment or delivery for shipment in 
commerce of ``any goods'' produced in an

[[Page 311]]

establishment which were removed within 30 days of the employment there 
of oppressive child labor. It should be noted that the statute does not 
base the prohibition of section 12(a) upon the percentage of an 
establishment's output which is shipped in commerce.
    (b) The Act furnishes its own definition of ``goods'' in section 
3(i), as follows:

Goods means goods (including ships and marine equipment), wares, 
products, commodities, merchandise, or articles or subjects of commerce 
of any character, or any part or ingredient thereof, but does not 
include goods after their delivery into the actual physical possession 
of the ultimate consumer thereof other than a producer, manufacturer, or 
processor thereof.


The term includes such things as food-stuffs, clothing, machinery, 
printed materials, blueprints and also includes intangibles such as 
news, ideas, and intelligence. The statute expressly excludes goods 
after their delivery into the actual physical possession of an ultimate 
consumer other than a producer, manufacturer, or processor thereof. 
Accordingly, such a consumer may lawfully ship articles in his 
possession although they were ineligible for shipments (commonly called 
``hot goods'') before he received them. \11\
---------------------------------------------------------------------------

    \11\ For a discussion of the exclusionary clause in section 3(i) of 
the Act, see Powell et al. v. United States Cartridge Co., 70 S. CT. 
755.
---------------------------------------------------------------------------



Sec. 570.108  ``Produced''.

    The word ``produced'' as used in the Act is defined by section 3(j) 
to mean:

* * * produced, manufactured, mined, handled, or in any other manner 
worked on in any state; * * * \12\
---------------------------------------------------------------------------

    \12\ The remaining portion of section 3(j) provides: `` * * * and 
for the purposes of this Act an employee shall be deemed to have been 
engaged in the production of goods if such employee was employed in 
producing, manufacturing, mining, handling, transporting, or in any 
other manner working on such goods, or in any closely related process or 
occupation directly essential to the production thereof, in any State.''

    (a) The prohibition of section 12(a) cannot apply to a shipment of 
goods unless those goods (including any part or ingredient thereof) were 
actually ``produced'' in and removed from an establishment where 
oppressive child labor was employed. This provision is applicable even 
though the under-age employee does not engage in the production of the 
goods themselves if somewhere in the establishment in or about which he 
is employed goods are ``produced'' which are subsequently shipped or 
delivered for shipment in commerce. In contrast to this restrictive 
requirement of section 12(a), it will be noted that the employees 
covered under the wage and hours provisions as engaged in the production 
of goods for commerce are not limited to those in or about 
establishments where such goods are being produced. If the requisite 
relationship \13\ to production of such goods is present, an employee is 
covered for wage and hours purposes regardless of whether his work 
brings him in or near any establishment where the goods are produced. 
\14\
---------------------------------------------------------------------------

    \13\ See footnote 12.
    \14\ See part 776 of this title (interpretative Bulletin on the 
coverage of the wage and hours provisions) issued by the Administrator 
of the Wage and Hour Division. Also, see Sec. Sec. 570.112 and 570.113.
---------------------------------------------------------------------------

    (b) Since the first word in the definition of ``produced'' repeats 
the term being defined, it seems clear that the first word must carry 
the meaning that it has in everyday language. Goods are commonly spoken 
of as ``produced'' if they have been brought into being as a result of 
the application of work. The words ``manufactured'' and ``mined'' in the 
definition refer to special forms of production. The former term is 
generally applied to the products of industry where existing raw 
materials are transformed into new or different articles by the use of 
industrial methods, either by the aid of machinery or by manual 
operations. Mining is a type of productive activity involving the taking 
of materials from the ground, such as coal from a coal mine, oil from 
oil wells, or stone from quarries. The statute also defines the term 
``produced'' to mean ``handled'' or ``in any other manner work on.'' 
\15\ These words relate not only to operations carried on in the course 
of manufacturing, mining, or

[[Page 312]]

production as commonly described, but include as well all kinds of 
operations which prepare goods for their entry into the stream of 
commerce, without regard to whether the goods are to be further 
processed or are so-called ``finished goods.'' \16\ Accordingly, 
warehouses, fruit and vegetable packing sheds, distribution yards, grain 
elevators, etc., where goods are sorted, graded, stored, packed, labeled 
or otherwise handled or worked on in preparation for their shipment out 
of the State are producing establishments for purposes of section 12(a). 
\17\ However, the handling or working on goods, performed by employees 
of carriers which accomplishes the interstate transit or movement in 
commerce itself, does not constitute production under the Act. \18\
---------------------------------------------------------------------------

    \15\ For a more complete discussion of these words, see Sec. 776.16 
of part 776 (bulletin on coverage of the wage and hours provisions) of 
chapter V of this title.
    \16\ In Western Union Telegraph Co. v. Lenroot, 323 U.S. 490, the 
Supreme Court stated that these words bring within the statutory 
definition ``every step in putting the subject of commerce in a state to 
enter commerce,'' including ``all steps, whether manufacture or not, 
which lead to readiness for putting goods into the stream of commerce'' 
and ``every kind of incidental operation preparatory to putting goods 
into the stream of commerce.''
    \17\ Lenroot v. Kemp and Lenroot v. Hazlehurst Mercantile Co., 153 
F. 2d 153 (C.A. 5), where the court directed issuance of injunctions to 
restrain violations of the child labor provisions by operators of 
vegetable packing sheds at which they bought, then washed, sorted, 
crated, and packed cabbage and tomatoes for shipment in interstate 
commerce.
    \18\ Western Union Telegraph Co. v. Lenroot, 323 U.S. 490.
---------------------------------------------------------------------------



Sec. 570.109  ``Establishment situated in the United States''.

    (a)(1) The statute does not expressly define ``establishment.'' 
Accordingly, the term should be given a meaning which is not only 
consistent with its ordinary usage, but also designed to accomplish the 
general purposes of the Act. As normally used in business and in 
Government, the word ``establishment'' refers to a distinct physical 
place of business. This is the meaning attributed to the term as it is 
used in section 13(a)(2) of the Act. \19\ Since the establishments 
covered under section 12(a) of the Act are those in which goods are 
produced, the term ``establishment'' there refers to a physical place 
where goods are produced. Typical producing establishments are 
industrial plants, mines, quarries, and the like. The producing 
establishment, however, need not have a permanently fixed location as is 
the case with a factory or mine. A boat, for instance, where productive 
activities such as catching or canning fish are carried on is considered 
a producing establishment for purposes of section 12(a).
---------------------------------------------------------------------------

    \19\ A. H. Phillips, Inc. v. Walling, 324 U.S. 490. See part 779 
(bulletin on the retail and service establishment exemption from the 
wage and hours provisions) of chapter V of this title.
---------------------------------------------------------------------------

    (2) Frequently, questions arise as to what should be considered a 
single establishment. No hard and fast rule can be laid down which will 
fix the area of all establishments. Accordingly, a determination of the 
area contained in a single establishment must be based upon the facts of 
each individual situation. Facts which are particularly pertinent in 
this connection, however, are those which relate to the physical 
characteristics and the manner of operation and control of the business. 
Sometimes, an establishment may extend over an area of several square 
miles as is common with farms, logging enterprises, mines, and quarries. 
On the other hand, it may be confined to a few square feet. A typical 
illustration of this is a loft building that houses the workshops of 
hundreds of independent manufacturing firms. Each of the workshops is, 
for purposes of this section, a separate establishment.
    (3) Similar principles are applicable in determining whether several 
buildings located on the same premises constitute one establishment or 
more than one. For example, where several factory buildings are located 
on the same premises and owned and operated by the same person, they are 
generally to be considered as a single establishment. On the other hand, 
factory buildings located on the same premises, but owned and operated 
by different persons, will not ordinarily be treated as a single 
establishment. Where the several factories, however, are engaged in a 
joint productive enterprise, they may constitute a single establishment. 
This is the case, for example, where a large shipyard contains the 
plants of a number of subcontractors who are engaged

[[Page 313]]

in making parts or equipment for the boats that are built in the yard.
    (b) The phrase ``situated in the United States'' is construed to 
include any of the 50 States or the District of Columbia or any 
Territory or possession of the United States.



Sec. 570.110  ``In or about''.

    (a) Section 12(a) excludes from the channels of interstate commerce 
goods produced in an establishment ``in or about'' which oppressive 
child labor has been employed. In a great many situations it is 
obviously easy to determine whether a minor is employed ``in'' an 
establishment. Thus, he is so employed where he performs his 
occupational duties on the premises of the producing establishment. 
Furthermore, a minor is also considered as employed in an establishment 
where he performs most of his duties off the premises but is regularly 
required to perform certain occupational duties in the establishment, 
such as loading or unloading a truck, checking in or out, or washing 
windows. This is true in such cases even though the minor is employed by 
someone other than the owner or operator of the particular 
establishment. On the other hand, a minor is not considered to be 
employed in an establishment other than his employer's merely because 
such establishment is visited by him for brief periods of time and for 
the sole purpose of picking up or delivering a message or other small 
article.
    (b) If, in the light of the statements in paragraph (a) of this 
section, the minor cannot be considered as employed in the 
establishment, he may, nevertherless, be employed ``about'' it if he 
performs his occupational duties sufficiently close in proximity to the 
actual place of production to fall within the commonly understood 
meaning of the term ``about.'' This would be true in a situation where 
the foregoing proximity test is met and the occupation of the minor is 
directly related to the activities carried on in the producing 
establishment, in this connection, occupations are considered 
sufficiently related to the activities carried on in the producing 
establishment to meet the second test above at least where the requisite 
relationship to production of goods exists within the meaning of section 
3(j) of the Act. \20\ By way of example, a driver's helper employed to 
assist in the distribution of the products of a bottling company who 
regularly boards the delivery truck immediately outside the premises of 
the bottling plant is considered employed ``in or about'' such 
establishment, without regard to whether he ever enters the plant 
itself. On the other hand, employees working entirely within one 
establishment are not considered to be employed ``in or about'' a wholly 
different establishment occupying separate premises and operated by 
another employer. This would be true even though the two establishments 
are contiguous. But in other situations the distance between the 
producing establishment and the minor's place of employment may be a 
decisive factor. Thus, a minor employed in clearing rights-of-way for 
power lines many miles away from the power plant cannot well be said to 
be employed ``in or about'' such establishment. In view of the great 
variety of establishments and employments, however, no hard and fast 
rule can be laid down which will once and for all distinguish between 
employments that are ``about'' an establishment and those that are not. 
Therefore, each case must be determined on its own merits. In 
determining whether a particular employment is ``about'' an 
establishment, consideration of the following factors should prove 
helpful:
---------------------------------------------------------------------------

    \20\ See part 776 (bulletin on coverage of the wage and hours 
provisions) of this title.
---------------------------------------------------------------------------

    (1) Actual distance between the producing establishment and the 
minor's place of employment;
    (2) Nature of the establishment;
    (3) Ownership or control of the premises involved;
    (4) Nature of the minor's activities in relation to the 
establishment's purpose;
    (5) Identity of the minor's employer and the establishment's owner;
    (6) Extent of control by the producing establishment's owner over 
the minor's employment.



Sec. 570.111  Removal ``within 30 days''.

    According to section 12(a) goods produced in an establishment in or 
about

[[Page 314]]

which oppressive child labor has been employed are barred as ``hot 
goods'' from being shipped or delivered for shipment in commerce in the 
following two situations: First, if they were removed from the 
establishment while any oppressive child labor was still being employed 
in or about it; second, if they were removed from an establishment in or 
about which oppressive child labor was no longer employed but less than 
30 days had then elapsed since any such employment of oppressive child 
labor came to an end. Once any goods have been removed from a producing 
establishment within the above-mentioned thirty-day period, they are 
barred at any time theafter from being shipped or delivered for shipment 
in commerce so long as they remain ``goods'' for purposes of the Act. 
\21\ Goods are considered removed from an establishment just as soon as 
they are taken away from the establishment as that term has been 
defined. \22\ The statute does not require that this ``removal'' from 
the establishment be made for the purpose or in the course of a shipment 
or delivery for shipment in commerce. A ``removal'' within the meaning 
of the statute also takes place where the goods are removed from the 
establishment for some other purpose such as storage, the granting of a 
lien or other security interest, or further processing.
---------------------------------------------------------------------------

    \21\ However, section 12(a) contains a provision relieving innocent 
purchasers from liability thereunder provided certain conditions are 
met. For a discussion of this provision, see Sec. 570.141.
    \22\ For a discussion of the meaning of ``establishment,'' see Sec. 
570.109.
    \23\ [Reserved]

[16 FR 7008, July 20, 1951, as amended at 23 FR 6240, Aug. 14, 1958. 
Redesignated at 28 FR 1634, Feb. 21, 1963. Redesignated and amended at 
36 FR 25156, Dec. 29, 1971; 75 FR 28458, May 20, 2010]

                        Coverage of Section 12(c)



Sec. 570.112  General.

    (a) Section 12(c) of the Act provides as follows:

No employer shall employ any oppressive child labor in commerce or in 
the production of goods for commerce or in an enterprise engaged in 
commerce or in the production of goods for commerce.

    (b) This provision, which was added by amendments of 1949 and 1961 
to the Act, broadens child labor coverage to include employment in 
commerce. Moreover, it establishes a direct prohibition of the 
employment of oppressive child labor in commerce or in the production of 
goods for commerce. The legislative history pertaining to this provision 
leads to the conclusion that Congress intend its application to be 
generally consistent with that of wage and hours coverage provisions. 
The application of the provision depends on the existence of two 
necessary elements: (1) The employment of ``oppressive child labor'' 
\24\ by some employer and (2) the employment of such oppressive child 
labor in activities or enterprises which are in commerce or in the 
production of goods for commerce within the meaning of the Act.
---------------------------------------------------------------------------

    \24\ ``Oppressive child labor'' is discussed in Sec. Sec. 570.117 
to 570.121, inclusive.
    \25\ [Reserved]

[36 FR 25156, Dec. 29, 1971]



Sec. 570.113  Employment ``in commerce or in the production of goods for commerce''.

    (a) The term ``employ'' is broadly defined in section 3(g) of the 
Act to include ``to suffer or permit to work.'' The Act expressly 
provides that the term ``employer'' includes ``any person acting 
directly or indirectly in the interest of an employer in relation to an 
employee''. The nature of an employer-employee relationship is 
ordinarily to be determined not solely on the basis of the contractual 
relationship between the parties but also in the light of all the facts 
and circumstances. Moreover, the terms ``employer'' and ``employ'' as 
used in the Act are broader than the common-law concept of employment 
and must be interpreted broadly in the light of the mischief to be 
corrected. Thus, neither the technical relationship between the parties 
nor the fact that the minor is unsupervised or receives no compensation 
is controlling in determining whether an employer-employee relationship 
exists for purposes of section 12(c) of the Act. However, these are 
matters which should be

[[Page 315]]

considered along with all other facts and circumstances surrounding the 
relationship of the parties in arriving at such determination. The words 
``suffer or permit to work'' include those who suffer by a failure to 
hinder and those who permit by acquiescence in addition to those who 
employ by oral or written contract. A typical illustration of employment 
of oppressive child labor by suffering or permitting an under-aged minor 
to work is that of an employer who knows that his employee is utilizing 
the services of such a minor as a helper or substitute in performing his 
employer's work. If the employer acquiesces in the practice or fails to 
exercise his power to hinder it, he is himself suffering or permitting 
the helper to work and is, therefore, employing him, within the meaning 
of the Act. Where employment does exist within the meaning of the Act, 
it must, of course, be in commerce or in the production of goods for 
commerce or in an enterprise engaged in commerce or in the production of 
goods for commerce in order for section 12(c) to be applicable.
    (b) As previously indicated, the scope of coverage of section 12(c) 
of the Act is, in general, coextensive with that of the wage and hours 
provisions. The basis for this conclusion is provided by the similarity 
in the language used in the respective provisions and by statements 
appearing in the legislative history concerning the intended effect of 
the addition of section 12(c). Accordingly, it may be generally stated 
that employees considered to be within the scope of the phrases ``in 
commerce or in the production of goods for commerce'' for purposes of 
the wage and hours provisions are also included within the identical 
phrases used in section 12(c). To avoid needless repetition, reference 
is herein made to the full discussion of principles relating to the 
general coverage of the wage and hours provisions contained in parts 776 
and 779 of this chapter. In this connection, however, it should be borne 
in mind that lack of coverage under the wage and hours provisions or 
under section 12(c) does not necessarily preclude the applicability of 
section 12(a) of the Act. \26\
---------------------------------------------------------------------------

    \26\ See Sec. 570.116

[36 FR 25156, Dec. 29, 1971]

      Joint and Separate Applicability of Sections 12(a) and 12(c)



Sec. 570.114  General.

    It should be noted that section 12(a) does not directly outlaw the 
employment of oppressive child labor. Instead, it prohibits the shipment 
or delivery for shipment in interstate or foreign commerce of goods 
produced in an establishment where oppressive child labor has been 
employed within 30 days before removal of the goods. Section 12(c), on 
the other hand, is a direct prohibition against the employment of 
oppressive child labor in commerce, or in the production of goods for 
commerce. Moreover, the two subsections provide different methods for 
determining the employees who are covered thereby. Thus, subsection (a) 
may be said to apply to young workers on an ``establishment'' basis. If 
the standards for child labor are not observed in the employment of 
minors in or about an establishment where goods are produced and from 
which such goods are removed within the statutory 30-day period, it 
becomes unlawful for any producer, manufacturer, or dealer (other than 
an innocent purchaser who is in compliance with the requirements for a 
good faith defense as provided in the subsection) to ship or deliver 
those goods for shipment in commerce. It is not necessary for the minor 
himself to have been employed by the producer of such goods or in their 
production in order for the ban to apply. On the other hand, whether the 
employment of a particular minor below the applicable age standard will 
subject his employer to the prohibition of subsection (c) is dependent 
upon the minor himself being employed in commerce or in the production 
of goods for commerce, or in an enterprise engaged in commerce or in 
production of goods for commerce within the meaning of the Act. If such 
a minor is so employed by his employer and is not specifically exempt 
from the

[[Page 316]]

child labor provisions then his employment under such circumstances 
constitutes a violation of section 12(c) regardless of where he may be 
employed or what his employer may do. Moreover, a violation of section 
12(c) occurs under the foregoing circumstances without regard to whether 
there is a ``removal'' of goods or a shipment or delivery for shipment 
in commerce.

[36 FR 25157, Dec. 29, 1971]



Sec. 570.115  Joint applicability.

    The child labor coverage provisions contained in sections 12(a) and 
12(c) of the Act may be jointly applicable in certain situations. For 
example, a manufacturer of women's dresses who ships them in interstate 
commerce, employs a minor under 16 years of age who gathers and bundles 
scraps of material in the cutting room of the plant. Since the 
employment of the minor under such circumstances constitutes oppressive 
child labor and involves the production of goods for commerce, the 
direct prohibition of section 12(c) is applicable to the case. In 
addition, section 12(a) also applies to the manufacturer if the dresses 
are removed from the establishment during the course of the minor's 
employment or within 30 days thereafter. To illustrate further, suppose 
that a transportation company employs a 17-year-old boy as helper on a 
truck used for hauling materials between railroads and the plants of its 
customers who are engaged in producing goods for shipment in commerce. 
The employment of the minor as helper on a truck is oppressive child 
labor because such occupation has been declared particularly hazardous 
by the Secretary for children between 16 and 18 years of age. Since his 
occupation involves the transportation of goods which are moving in 
interstate commerce, his employment in such occupation by the 
transportation company is, therefore, directly prohibited by the terms 
of section 12(c). If the minor's duties in this case should, for 
example, include loading and unloading the truck at the establishments 
of the customers of his employer, then the provisions of section 12(a) 
might be applicable with respect to such customers. This would be true 
where any goods which they produce and ship in commerce are removed from 
the producing establishment within 30 days after the minor's employment 
there.



Sec. 570.116  Separate applicability.

    There are situations where section 12(c) does not apply because the 
minor himself is not considered employed in commerce or in the 
production of goods for commerce. This does not exclude the possibility 
of coverage under the provisions of section 12(a), however. In those 
cases where oppressive child labor is employed in commerce but not in or 
about a producing establishment, coverage exists under section 12(c) but 
not under the provisions of section 12(a). The employment of telegraph 
messengers under 16 years of age would normally involve this type of 
situation. \27\ There may also be cases where oppressive child labor is 
employed in occupations closely related and directly essential to the 
production of goods in a separate establishment and therefore covered by 
section 12(c) but due to the fact that none of the goods produced in the 
establishment where the minors work are ever shipped or delivered for 
shipment in commerce either in the same form or as a part or ingredient 
of other goods, coverage of section 12(a) is lacking. An illustration of 
this type of situation would be the employment of a minor under the 
applicable age minimum in a plant engaged in the production of 
electricity which is sold and consumed exclusively within the same State 
and some of which is used by establishments in the production of goods 
for commerce.
---------------------------------------------------------------------------

    \27\ In ``Western Union Telegraph Co. v. Lenroot,'' 323 U.S. 490, 
the court held section 12(a) inapplicable to Western Union on the 
grounds that the company does not ``produce'' or ``ship'' goods within 
the meaning of that subsection.

[36 FR 25157, Dec. 29, 1971]

                         Oppressive Child Labor



Sec. 570.117  General.

    (a) Section 3(1) of the Act defines ``oppressive child labor'' as 
follows:

Oppressive child labor means a condition of employment under which (1) 
any employee under the age of sixteen years is employed by an employer 
(other than a parent or a

[[Page 317]]

person standing in place of a parent employing his own child or a child 
in his custody under the age of sixteen years in an occupation other 
than manufacturing or mining or an occupation found by the Secretary of 
Labor to be particularly hazardous for the employment of children 
between the ages of sixteen and eighteen years or detrimental to their 
health or well-being) in any occupation, or (2) any employee between the 
ages of sixteen and eighteen years is employed by an employer in any 
occupation which the Secretary of Labor shall find and by order declare 
to be particularly hazardous for the employment of children between such 
ages or detrimental to their health or well-being, but oppressive child 
labor shall not be deemed to exist by virtue of the employment in any 
occupation of any person with respect to whom the employer shall have on 
file an unexpired certificate issued and held pursuant to regulations of 
the Secretary of Labor certifying that such person is above the 
oppressive child labor age. The Secretary of Labor shall provide by 
regulation or by order that the employment of employees between the ages 
of fourteen and sixteen years in occupations other than manufacturing 
and mining shall not be deemed to constitute oppressive child labor if 
and to the extent that the Secretary of Labor determines that such 
employment is confined to periods which will not interfere with their 
schooling and to conditions which will not interfere with their health 
and well-being.

    (b) It will be noted that the term includes generally the employment 
of young workers under the age of 16 years in any occupation. In 
addition, the term includes employment of minors 16 and 17 years of age 
by an employer in any occupation which the Secretary finds and declares 
to be particularly hazardous for the employment of children of such ages 
or detrimental to their health or well-being. Authority is also given 
the Secretary to issue orders or regulations permitting the employment 
of children 14 and 15 years of age in nonmanufacturing and nonmining 
occupations where he determines that such employment is confined to 
periods which will not interfere with their schooling and to conditions 
which will not interfere with their health and well-being. The 
subsection further provides for the issuance of age certificates 
pursuant to regulations of the Secretary which will protect an employer 
from unwitting employment of oppressive child labor.



Sec. 570.118  Sixteen-year minimum.

    The Act sets a 16-year-age minimum for employment in manufacturing 
or mining occupations, although under FLSA section 13(c)(7), certain 
youth between the ages of 14 and 18 may, under specific conditions, be 
employed inside and outside of places of business that use power-driven 
machinery to process wood products. Furthermore, the 16-year-age minimum 
for employment is applicable to employment in all other occupations 
unless otherwise provided by regulation or order issued by the 
Secretary.

[75 FR 28458, May 20, 2010]



Sec. 570.119  Fourteen-year minimum.

    With respect to employment in occupations other than manufacturing 
and mining and in accordance with the provisions of FLSA section 
13(c)(7), the Secretary is authorized to issue regulations or orders 
lowering the age minimum to 14 years where he or she finds that such 
employment is confined to periods that will not interfere with the 
minors' schooling and to conditions that will not interfere with their 
health and well-being. Pursuant to this authority, the Secretary has 
detailed in Sec. 570.34 all those occupations in which 14- and 15-year-
olds may be employed when the work is performed outside school hours and 
is confined to other specified limits. The Secretary, in order to 
provide clarity and assist employers in attaining compliance, has listed 
in Sec. 570.33 certain prohibited occupations that, over the years, 
have been the frequent subject of questions or violations. The list of 
occupations in Sec. 570.33 is not exhaustive. The Secretary has also 
set forth, in Sec. 570.35, additional conditions that limit the periods 
during which 14- and 15-year-olds may be employed. The employment of 
minors under 14 years of age is not permissible under any circumstances 
if the employment is covered by the child labor provisions and not 
specifically exempt.

[75 FR 28458, May 20, 2010]



Sec. 570.120  Eighteen-year minimum.

    To protect young workers from hazardous employment, the FLSA 
provides for a minimum age of 18 years in

[[Page 318]]

occupations found and declared by the Secretary to be particularly 
hazardous or detrimental to the health or well-being for minors 16 and 
17 years of age. Hazardous occupations orders are the means through 
which occupations are declared to be particularly hazardous for minors. 
Since 1995, the promulgation and amendment of the hazardous occupations 
orders have been effectuated under the Administrative Procedure Act 
(APA), 5 U.S.C. 551 et seq. The effect of these orders is to raise the 
minimum age for employment to 18 years in the occupations covered. 
Seventeen orders, published in subpart E of this part, have thus far 
been issued under the FLSA and are now in effect.

[75 FR 28458, May 20, 2010]



Sec. 570.121  Age certificates.

    (a) To protect an employer from unwitting violation of the minimum 
age standards, it is provided in section 3(1)(2) of the Act that 
``oppressive child labor shall not be deemed to exist by virtue of the 
employment in any occupation of any person with respect to whom the 
employer shall have on file an unexpired certificate issued and held 
pursuant to regulations of the Secretary of Labor certifying that such 
person is above the oppressive child labor age.'' An age certificate is 
a statement of a minor's age issued under regulations of the Secretary 
(Child Labor Regulation No. 1), \31\ based on the best available 
documentary evidence of age, and carrying the signatures of the minor 
and the issuing officer. Its purpose is to furnish an employer with 
reliable proof of the age of a minor employee in order that he may, as 
specifically provided by the act, protect himself against unintentional 
violation of the child labor provisions. Pursuant to the regulations of 
the Secretary, State employment or age certificates are accepted as 
proof of age in 45 States, the District of Columbia, and Puerto Rico, 
and Federal certificates of age in Idaho, Mississippi, South Carolina 
and Texas. If there is a possibility that the minor whom he intends to 
employ is below the applicable age minimum for the occupation in which 
he is to be employed, the employer should obtain an age certificate for 
him.
---------------------------------------------------------------------------

    \31\ Subpart A of this part.
---------------------------------------------------------------------------

    (b) It should be noted that the age certificate furnishes protection 
to the employer as provided by the act only if it shows the minor to be 
above the minimum age applicable thereunder to the occupation in which 
he is employed. Thus, a State certificate which shows a minor's age to 
be above the minimum required by State law for the occupation in which 
he is employed does not protect his employer for purposes of the Fair 
Labor Standards Act unless the age shown on such certificate is also 
above the minimum provided under that act for such occupation.

                               Exemptions



Sec. 570.122  General.

    (a) Specific exemptions from the child labor requirements of the Act 
are provided for:
    (1) Employment of children in agriculture outside of school hours 
for the school district where they live while so employed;
    (2) Employment of employees engaged in the delivery of newspapers to 
the consumer;
    (3) Employment of children as actors or performers in motion 
pictures or in theatrical, radio, or television productions;
    (4) Employment by a parent or a person standing in a parent's place 
of his own child or a child in his custody under the age of sixteen 
years in any occupation other than manufacturing, mining, or an 
occupation found by the Secretary to be particularly hazardous for the 
employment of children between the ages of sixteen and eighteen years or 
detrimental to their health or well-being.
    (5) Employment of homeworkers engaged in the making of evergreen 
wreaths, including the harvesting of the evergreens or other forest 
products used in making such wreaths.
    (6) Employment of 16- and 17-year-olds to load, but not operate or 
unload, certain scrap paper balers and paper box compactors under 
specified conditions.
    (7) Employment of 17-year-olds to perform limited driving of cars 
and

[[Page 319]]

trucks during daylight hours under specified conditions.
    (8) Employment of youths between the ages of 14 and 18 years who, by 
statute or judicial order, are excused from compulsory school attendance 
beyond the eighth grade, under specified conditions, in places of 
business that use power-driven machinery to process wood products.
    (b) When interpreting these provisions, the Secretary will be guided 
by the principle that such exemptions should be narrowly construed and 
their application limited to those employees who are plainly and 
unmistakably within their terms. Thus, the fact that a child's 
occupation involves the performance of work which is considered exempt 
from the child labor provisions will not relieve his employer from the 
requirements of section 12(c) or the producer, manufacturer, or dealer 
from the requirements of section 12(a) if, during the course of his 
employment, the child spends any part of his time doing work which is 
covered but not so exempt.

[75 FR 28459, May 20, 2010]



Sec. 570.123  Agriculture.

    (a) Section 13(c) of the Act provides an exemption from the child 
labor provisions for ``any employee employed in agriculture outside of 
school hours for the school district where such employee is living while 
he is so employed.'' This is the only exemption from the child labor 
provisions relating to agriculture or the products of agriculture. The 
various agricultural exemptions provided by sections 7(b)(3), 7(c), 
13(a)(6), 13(a)(10) and 13(b)(5) from all or part of the minimum wage 
and overtime pay requirements are not applicable to the child labor 
provisions. This exemption, it will be noted, is limited to periods 
outside of school hours in contrast to the complete exemption for 
employment in ``agriculture'' under the wage and hours provisions. Under 
the original act, the exemption became operative whenever the applicable 
State law did not require the minor to attend school. The legislative 
history clearly indicates that in amending this provision, Congress 
sought to establish a clearer and simpler test for permissive employment 
which could be applied without the necessity of exploring State legal 
requirements regarding school attendance in the particular State. It 
recognized that the original provision fell short of achieving the 
objective of permitting agricultural work only so long as it did not 
infringe upon the opportunity of children for education. By recasting 
the exemption on an ``outside of school hours'' basis, Congress intended 
to provide a test which could be more effectively applied toward 
carrying out this purpose.
    (b) The applicability of the exemption to employment in agriculture 
as defined in section 3(f) \32\ of the Act depends in general upon 
whether such employment conflict with school hours for the locality 
where the child lives. Since the phrase ``school hours'' is not defined 
in the Act, it must be given the meaning that it has in ordinary speech. 
Moreover, it will be noted that the statute speaks of school hours ``for 
the school district'' rather than for the individual child. Thus, the 
provision does not depend for its application upon the individual 
student's requirements for attendance at school. For example, if an 
individual student is excused from his studies for a day or a part of a 
day by the superintendent or the school board, the exemption would not 
apply if school was in session then. ``Outside of school hours'' 
generally may be said to refer to such periods as before or after school 
hours, holidays, summer vacation, Sundays, or any other days on which 
the school for the district in which the minor lives does not assemble. 
Since ``school hours for the school district'' do not apply to minors 
who

[[Page 320]]

have graduated from high school, the entire year would be considered 
``outside of school hours'' and, therefore, their employment in 
agriculture would be permitted at any time. While it is the position of 
the Department that a minor who leaves one district where schools are 
closed and who moves into and lives in another district where schools 
are in session may not work during the hours that schools are in session 
in the new district, it will not be asserted that this position prevents 
the employment of a minor in a district where schools are in session, if 
the school last attended by the minor has closed for summer vacation. As 
a reasonable precaution, however, no employer should employ a child 
under such circumstances before May 15, and after that date he should do 
so only if he is shown by the minor satisfactory evidence in the form of 
a written statement signed by a school official stating that the school 
with which he is connected is the one last attended by the minor and 
that the school is closed for summer vacation. Such statement should 
contain the minor's name, the name and address of the school, the date 
the school closed for the current year, the date the statement was 
signed, and the title of the school official signing the statement.
---------------------------------------------------------------------------

    \32\ Agriculture as defined in section 3(f) includes ``farming in 
all its branches and among other things includes the cultivation and 
tillage of the soil, dairying, the production, cultivation, growing, and 
harvesting of any agricultural or horticultural commodities (including 
commodities defined as agricultural commodities in section 15(g) of the 
Agricultural Marketing Act, as amended), the raising of livestock, bees, 
fur-bearing animals, or poultry, and any practices (including any 
forestry, or lumbering operations) performed by a farmer or on a farm as 
an incident to or in conjunction with such farming operations, including 
preparation for market, delivery to storage or to market or to carriers 
for transportation to market.''
---------------------------------------------------------------------------

    (c) Attention is directed to the fact that by virtue of the parental 
exemption provided in section 3(1) of the Act, children under 16 years 
of age are permitted to work, for their parents on their parents' farms 
at any time provided they are not employed in a manufacturing or mining 
occupation.
    (d) The orders (subpart E of this part) declaring certain 
occupations to be particularly hazardous for the employment of minors 
between 16 and 18 years of age or detrimental to their health or well-
being do not apply to employment in agriculture, pending study as to the 
hazardous or detrimental nature of occupations in agriculture. \33\
---------------------------------------------------------------------------

    \33\ See note to subpart E of this part.

[16 FR 7008, July 20, 1951, as amended at 23 FR 3062, May 8, 1958. 
Redesignated at 28 FR 1634, Feb. 21, 1963. Redesignated and amended at 
36 FR 25156, Dec. 29, 1971]



Sec. 570.124  Delivery of newspapers.

    Section 13(d) of the Act provides an exemption from the child labor 
as well as the wage and hours provisions for employees engaged in the 
delivery of newspapers to the consumer. This provision applies to 
carriers engaged in making deliveries to the homes of subscribers or 
other consumers of newspapers (including shopping news). It also 
includes employees engaged in the street sale or delivery of newspapers 
to the consumer. However, employees engaged in hauling newspapers to 
drop stations, distributing centers, newsstands, etc., do not come 
within the exemption because they do not deliver to the consumer.



Sec. 570.125  Actors and performers.

    Section 13(c) of the Act provides an exemption from the child labor 
provisions for ``any child employed as an actor or performer in motion 
pictures or theatrical productions, or in radio or television 
productions.'' The term ``performer'' used in this provision is 
obviously more inclusive than the term ``actor.'' In regulations issued 
pursuant to section 7(d)(3) of the Act, the Administrator of the Wage 
and Hour Division has defined a ``performer'' on radio and television 
programs for purposes of that section. \34\ The Secretary will follow 
this definition in determining whether a child is employed as a ``* * * 
performer * * * in radio or television productions'' for purposes of 
this exemption. Moreover, in many situations

[[Page 321]]

the definition will be helpful in determining whether a child qualifies 
as a ``* * * performer in motion pictures or theatrical productions * * 
*'' within the meaning of the exemption.
---------------------------------------------------------------------------

    \34\ Section 550.2(b) of this title provides:
    (b) The term ``performer'' shall mean a person who performs a 
distinctive, personalized service as a part of an actual broadcast or 
telecast including an actor, singer, dancer, musician, comedian, or any 
person who entertains, affords amusement to, or occupies the interest of 
a radio or television audience by acting, singing, dancing, reading, 
narrating, performing feats of skill, or announcing, or describing or 
relating facts, events and other matters of interest, and who actively 
participates in such capacity in the actual presentation of a radio or 
television program. It shall not include such persons as script writers, 
stand-ins, or directors who are neither seen nor heard by the radio or 
television audience; nor shall it include persons who participate in the 
broadcast or telecast purely as technicians such as engineers, 
electricians and stage hands.
---------------------------------------------------------------------------



Sec. 570.126  Parental exemption.

    By the parenthetical phrase included in section 3(l)(1) of the Act, 
a parent or a person standing in place of a parent may employ his own 
child or a child in his custody under the age of 16 years in any 
occupation other than the following: (a) Manufacturing; (b) mining; (c) 
an occupation found by the Secretary to be particularly hazardous or 
detrimental to health or well-being for children between the ages of 16 
and 18 years. This exemption may apply only in those cases where the 
child is exclusively employed by his parent or a person standing in his 
parents' place. Thus, where a child assists his father in performing 
work for the latter's employer and the child is considered to be 
employed both by his father and his father's employer, the parental 
exemption would not be applicable. The words ``parent'' or a ``person 
standing in place of a parent'' include natural parents, or any other 
person, where the relationship between that person and a child is such 
that the person may be said to stand in place of a parent. For example, 
one who takes a child into his home and treats it as a member of his own 
family, educating and supporting the child as if it were his own, is 
generally said to stand to the child in place of a parent. It should 
further be noted that occupations found by the Secretary to be hazardous 
or detrimental to health or well-being for children between 16 and 18 
years of age, as well as manufacturing and mining occupations, are 
specifically excluded from the scope of the exemption.



Sec. 570.127  Homeworkers engaged in the making of evergreen wreaths.

    FLSA section 13(d) provides an exemption from the child labor 
provisions, as well as the minimum wage and overtime provisions, for 
homeworkers engaged in the making of wreaths composed principally of 
natural holly, pine, cedar, or other evergreens (including the 
harvesting of the evergreens or other forest products used in making 
such wreaths).

[75 FR 28459, May 20, 2010]



Sec. 570.128  Loading of certain scrap paper balers and paper
box compactors.

    (a) Section 13(c)(5) of the FLSA provides for an exemption from the 
child labor provisions for the employment of 16- and 17-year-olds to 
load, but not operate or unload, certain power-driven scrap paper balers 
and paper box compactors under certain conditions. The provisions of 
this exemption, which are contained in HO 12 (Sec. 570.63) include that 
the scrap paper baler or compactor meet an applicable standard 
established by the American National Standards Institute (ANSI) and 
identified in the statute, or a more recent ANSI standard that the 
Secretary of Labor has found, incorporated by reference (see Sec. 
570.63), and declared to be as protective of the safety of young workers 
as the ANSI standard named in the statute.
    (b) These standards have been incorporated into these regulations by 
reference by the Federal Register as discussed in Sec. 570.63. In 
addition, the scrap paper baler or paper box compactor must include an 
on-off switch incorporating a key-lock or other system and the control 
of the system must be maintained in the custody of employees who are at 
least 18 years of age. The on-off switch of the scrap paper baler or 
paper box compactor must be maintained in an off position when the 
machine is not in operation. Furthermore, the employer must also post a 
notice on the scrap paper baler or paper box compactor that conveys 
certain information, including the identification of the applicable ANSI 
standard that the equipment meets, that 16- and 17-year-old employees 
may only load the scrap paper baler or paper box compactor, and that no 
employee under the age of 18 may operate or unload the scrap paper baler 
or paper box compactor.

[75 FR 28459, May 20, 2010]

[[Page 322]]



Sec. 570.129  Limited driving of automobiles and trucks by 17-year-olds.

    Section 13(c)(6) of the FLSA provides an exemption for 17-year-olds, 
but not 16-year-olds, who, as part of their employment, perform the 
occasional and incidental driving of automobiles and trucks on public 
highways under specified conditions. These specific conditions, which 
are contained in HO 2 (Sec. 570.52), include that the automobile or 
truck may not exceed 6,000 pounds gross vehicle weight, the driving must 
be restricted to daylight hours, the vehicle must be equipped with a 
seat belt or similar restraining device for the driver and for any 
passengers, and the employer must instruct the employee that such belts 
or other devices must be used. In addition, the 17-year-old must hold a 
State license valid for the type of driving involved in the job, have 
successfully completed a State-approved driver education course, and 
have no records of any moving violations at the time of his or her hire. 
The exemption also prohibits the minor from performing any driving 
involving the towing of vehicles; route deliveries or route sales; the 
transportation for hire of property, goods, or passengers; urgent, time-
sensitive deliveries; or the transporting of more than three passengers 
at any one time. The exemption also places limitations on the number of 
trips the 17-year-old may make each day and restricts the driving to a 
30-mile radius of the minor's place of employment.

[75 FR 28459, May 20, 2010]



Sec. 570.130  Employment of certain youth inside and outside of places
of business that use power-driven machinery to process wood products.

    Section 13(c)(7) of the FLSA provides a limited exemption from the 
child labor provisions for certain youths between the ages of 14 and 18 
years who, by statute or judicial order, are excused from compulsory 
school attendance beyond the eighth grade, that permits their employment 
inside and outside of places of business that use power-driven machinery 
to process wood products. The provisions of this exemption are contained 
in subpart C of this part (Sec. 570.34(m)) and HO 4 (Sec. 570.54). 
Although the exemption allows certain youths between the ages of 14 and 
18 years to be employed inside and outside of places of business that 
use power-driven machines to process wood products, it does so only if 
such youths do not operate or assist in the operation of power-driven 
woodworking machines. The exemption also requires that the youth be 
supervised by an adult relative or by an adult member of the same 
religious sect as the youth. The youth must also be protected from wood 
particles or other flying debris within the workplace by a barrier 
appropriate to the potential hazard of such wood particles or flying 
debris or by maintaining a sufficient distance from machinery in 
operation. For the exemption to apply, the youth must also be required 
to use personal protective equipment to prevent exposure to excessive 
levels of noise and sawdust.

[75 FR 28460, May 20, 2010]

                               Enforcement



Sec. 570.140  General.

    (a) Section 15(a)(4) of the Act makes any violation of the 
provisions of sections 12(a) or 12(c) unlawful. Any such unlawful act or 
practice may be enjoined by the United States District Courts under 
section 17 upon court action, filed by the Secretary pursuant to section 
12(b) and, if willful will subject the offender to the criminal 
penalties provided in section 16(a) of the Act. Section 16(a) provides 
that any person who willfully violates any of the provisions of section 
15 shall upon conviction thereof be subject to a fine of not more than 
$10,000, or to imprisonment for not more than six months, or both. No 
person shall be imprisoned under this subsection except for an offense 
committed after the conviction of such person for a prior offense under 
this subsection.
    (b) In addition, FLSA section 16(e) states that any person who 
violates the provisions of FLSA sections 12 or 13(c), relating to child 
labor, or any regulations issued under those sections, shall be subject 
to a civil penalty, not to exceed:
    (1) $11,000, for each employee who was the subject of such a 
violation; or

[[Page 323]]

    (2) $50,000 with regard to each such violation that causes the death 
or serious injury of any employee under the age of 18 years, which 
penalty may be doubled where the violation is repeated or willful.
    (c) Part 579 of this chapter, Child Labor Violations--Civil Money 
Penalties, provides for the issuance of the notice of civil money 
penalties for any violation of FLSA sections 12 or 13(c) relating to 
child labor. Part 580 of this chapter, Civil Money Penalties--Procedures 
for Assessing and Contesting Penalties, describes the administrative 
process for assessment and resolution of the civil money penalties. When 
a civil money penalty is assessed against an employer for a child labor 
violation, the employer has the right, within 15 days after receipt of 
the notice of such penalty, to file an exception to the determination 
that the violation or violations occurred. When such an exception is 
filed with the office making the assessment, the matter is referred to 
the Chief Administrative Law Judge, and a formal hearing is scheduled. 
At such a hearing, the employer or an attorney retained by the employer 
may present such witnesses, introduce such evidence and establish such 
facts as the employer believes will support the exception. The 
determination of the amount of any civil money penalty becomes final if 
no exception is taken to the administrative assessment thereof, or if no 
exception is filed to the decision and order of the administrative law 
judge.

[75 FR 28460, May 20, 2010]



Sec. 570.141  Good faith defense.

    A provision is contained in section 12(a) of the Act relieving any 
purchaser from liability thereunder who ships or delivers for shipment 
in commerce goods which he acquired in good faith in reliance on written 
assurance from the producer, manufacturer, or dealer that the goods were 
produced in compliance with section 12, and which he acquired for value 
without notice of any violation. \36\
---------------------------------------------------------------------------

    \36\ For a complete discussion of this subject see part 789 of this 
title, General Statement on the Provisions of section 12(a) and section 
15(a)(1) of the Fair Labor Standards Act, as amended, relating to 
Written Assurances.

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and further redesignated and amended at 36 FR 25156, Dec. 29, 1971. 
Redesignated at 75 FR 28459, May 20, 2010]



Sec. 570.142  Relation to other laws.

    Section 18 provides, in part, that ``no provision of this act 
relating to the employment of child labor shall justify noncompliance 
with any Federal or State law or municipal ordinance establishing a 
higher standard than the standard established under this act.'' The 
child labor requirements of the Fair Labor Standards Act, as amended, 
must be complied with as to the employment of minors within their 
general coverage and not excepted from their operation by special 
provision of the act itself regardless of any State, local, or other 
Federal law that may be applicable to the same employment. Furthermore, 
any administrative action pursuant to other laws, such as the issuance 
of a work permit to a minor or the referral by an employment agency of a 
minor to an employer does not necessarily relieve a person of liability 
under this act. Where such other legislation is applicable and does not 
contravene the requirements of the Fair Labor Standards Act, however, 
nothing in the act, the regulations or the interpretations announced by 
the Secretary should be taken to override or nullify the provisions of 
these laws. Although compliance with other applicable legislation does 
not constitute compliance with the act unless the requirements of the 
act are thereby met, compliance with the act, on the other hand, does 
not relieve any person of liability under other laws that establish 
higher child labor standards than those prescribed by or pursuant to the 
act. Moreover, such laws, if at all applicable, continue to apply to the 
employment of all minors who either are not within the general coverage 
of the child labor provisions of the act or who

[[Page 324]]

are specifically excepted from their requirements.

[16 FR 7008, July 20, 1951. Redesignated at 28 FR 1634, Feb. 21, 1963, 
and further redesignated and amended at 36 FR 25156, Dec. 29, 1971. 
Redesignated at 75 FR 28459, May 20, 2010]



PART 575_WAIVER OF CHILD LABOR PROVISIONS FOR AGRICULTURAL EMPLOYMENT
OF 10 AND 11 YEAR OLD MINORS IN HAND HARVESTING OF SHORT SEASON 

CROPS--Table of Contents



Sec.
575.1 Purpose and scope.
575.2 Definitions.
575.3 Application for waiver.
575.4 Information to be included in application.
575.5 Supporting data to accompany application.
575.6 Procedure for action on an application.
575.7 Statutory conditions for employment under the waiver.
575.8 Secretary's conditions for employment under the waiver.
575.9 Failure to comply with terms and conditions of the waiver.

    Authority: Secs. 11, 12, 13, 18, 52 Stat. 1067, 1069, as amended; 29 
U.S.C. 211, 212, 213, 218; Secretary of Labor's Order No. 16-75, 40 FR 
55913; Employment Standards Order No. 2-75, 40 FR 56743.

    Source: 43 FR 26562, June 21, 1978, unless otherwise noted.



Sec. 575.1  Purpose and scope.

    (a) Section 13(c)(4) was added to the Fair Labor Standards Act of 
1938, as amended, by the Fair Labor Standards Amendments of 1977. This 
section provides that:

    (A) An employer or group of employers may apply to the Secretary for 
a waiver of the application of section 12 to the employment for not more 
than 8 weeks in any calendar year of individuals who are less than 12 
years of age, but not less than 10 years of age, as hand harvest 
laborers in an agricultural operation which has been, and is customarily 
and generally recognized as being, paid on a piece rate basis in the 
region in which such individuals would be employed. The Secretary may 
not grant such a waiver unless he finds, based on objective data 
submitted by the applicant, that:
    (i) The crop to be harvested is one with a particularly short 
harvesting season and the application of section 12 would cause severe 
economic disruption in the industry of the employer or group of 
employers applying for the waiver;
    (ii) The employment of the individuals to whom the waiver would 
apply would not be deleterious to their health or well-being;
    (iii) The level and type of pesticides and other chemicals used 
would not have an adverse effect on the health or well-being of the 
individuals to whom the waiver would apply;
    (iv) Individuals age 12 and above are not available for such 
employment; and
    (v) The industry of such employer or group of employers has 
traditionally and substantially employed individuals under 12 years of 
age without displacing substantial job opportunities for individuals 
over 16 years of age.
    (B) Any waiver granted by the Secretary under subparagraph (A) shall 
require that:
    (i) The individuals employed under such waiver be employed outside 
of school hours for the school district where they are living while so 
employed;
    (ii) Such individuals while so employed commute daily from their 
permanent residence to the farm on which they are so employed; and
    (iii) Such individuals be employed under such waiver (I) for not 
more than 8 weeks between June 1 and October 15 of any calendar year, 
and (II) in accordance with such other terms and conditions as the 
Secretary shall prescribe for such individuals' protection.

    (b) The child labor provisions of the Fair Labor Standards Act, 
section 12, require the following age standards for employment in 
agriculture:
    (1) 16 years of age in any occupation at any time;
    (2) 14 and 15 years of age outside of school hours except in 
occupations found and declared by the Secretary to be particularly 
hazardous for the employment of minors under 16 years of age (subpart E-
1, 29 CFR 570.70, et seq.);
    (3) 12 and 13 years of age in nonhazardous occupations outside of 
school hours if:
    (i) Such employment is with the written consent of a parent or 
person standing in the place of a parent of such minor, or
    (ii) Such employment is on the same farm where such parent or person 
is also employed;
    (4) Under 12 years of age in nonhazardous occupations outside of 
school hours if such employment is with the written consent of a parent 
or person standing in place of a parent of such minor, on a farm where, 
because of the

[[Page 325]]

provisions of section 13(a)(6)(A) of the Act, none of the employees are 
required to be paid at the wage rate prescribed by section 6(a)(5) of 
the Act;
    (5) 10 and 11 years of age in nonhazardous occupations outside of 
school hours employed to hand-harvest short season crop or crops under a 
waiver issued pursuant to section 13(c)(4) of the Act and this part:
    (6) Minors of any age may be employed by their parents or persons 
standing in place of their parents at any time in any occupation on a 
farm owned or operated by their parents or persons standing in place of 
their parents.
    (c) This part provides the procedures to be used under section 
13(c)(4) of the Act. This part describes the information and defines the 
supporting data that the employer or group of employers must submit when 
applying for a waiver of the child labor provisions for the employment 
of 10 and 11 year old minors as hand-harvest laborers in an agricultural 
operation. It further explains the specific requirements imposed by the 
statute for employment under a waiver and specifies the conditions 
prescribed by the Secretary for employment under a waiver.



Sec. 575.2  Definitions.

    As used in this part:
    Act means the Fair Labor Standards Act of 1938, as amended (52 Stat. 
1060, as amended; 29 U.S.C. 201, et seq.).
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, and 
includes an authorized representative designated by the Administrator to 
perform any of the functions of the Administrator under this part.
    Agriculture means agriculture as defined in section 3(f) of the Act 
and as interpreted in part 780 of this chapter.
    Commute daily means the minors shall travel by foot, car, or other 
vehicle designed for transporting passengers from their permanent 
residences to the field or farm where they will work and return thereto 
at the end of each workday.
    Department means the U.S. Department of Labor.
    Employer means employer as defined in section 3(d) of the Act.
    Group of employers means a number of employers who seek to be 
considered together for the purpose of applying for a waiver under 
section 13(c)(4) of the Act.
    Hand-harvest laborers means agricultural workers engaged solely in 
harvesting by hand soil grown crops such as but not limited to berries, 
potatoes, and beans, and as interpreted in Sec. 780.312 of this 
chapter.
    Outside school hours means such periods as determined by the school 
district of the minor's permanent residence. These periods include 
before or after school hours, holidays, summer vacation, Saturdays, 
Sundays, or any other days on which the school for the school district 
does not assemble.
    Permanent residence means the place where the minor and the minor's 
parent or person standing in place of a parent reside year-round.
    Secretary means the Secretary of Labor, United States Department of 
Labor, or an authorized representative of the Secretary.
    Waiver means a letter signed by the Administrator advising the named 
employer or group of employers that 10 and 11 year old minors may be 
employed in the hand-harvesting of the specified short season crop or 
crops for the period designated, in accordance with the terms and 
conditions set forth in section 13(c)(4) of the Act and this part.

[43 FR 26562, June 21, 1978; 43 FR 28471, June 30, 1978]



Sec. 575.3  Application for waiver.

    (a) An application for a waiver shall be filed with the 
Administrator of the Wage and Hour Division, Employment Standards 
Administration, United States Department of Labor, Washington, DC 20210. 
To permit adequate time for processing, it is recommended that such 
applications be filed 6 weeks prior to the period the waiver is to be in 
effect.
    (b) No particular form is prescribed. The application, which may be 
in letter form, shall be typewritten or clearly written and shall 
include the following information:

[[Page 326]]

    (1) The general information as described in Sec. 575.4 of this 
part:
    (i) Name and address of employer or group of employers;
    (ii) Telephone number;
    (iii) Location of farm(s);
    (iv) Crop or crops to be hand harvested;
    (v) Whether payment is customarily paid on a piece rate basis;
    (vi) Requested period of waiver;
    (vii) Statement that such employment shall be outside school hours;
    (2) The objective data as required in Sec. 575.5 of this part to 
show that:
    (i) The crops have a short harvesting season;
    (ii) Without 10 and 11 year olds the industry would suffer severe 
economic disruption;
    (iii) Employment will not be deleterious to the health and well-
being of 10 and 11 year olds;
    (iv) The level of pesticides will not adversely affect 10 and 11 
year olds;
    (v) Individuals 12 years and over are not available for employment;
    (vi) Employer or group of employers has traditionally used minors 
under 12 years and this will not displace employees 16 years or older.
    (c) The application shall be signed and dated by the employer or 
group of employers requesting the waiver or by the authorized 
representative of such employer or group.

(Approved by the Office of Management and Budget under control number 
1215-0120)

[43 FR 26562, June 21, 1978, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 575.4  Information to be included in application.

    An application for a waiver pursuant to section 13(c)(4) of the Act 
shall contain the following information:
    (a) The name, address, and zip code of the employer, or each 
employer of a group of employers, and the authorized representative, if 
any, of an employer or group.
    (b) The telephone number and area code for any employer or 
authorized representative from whom additional information concerning 
the application may be obtained.
    (c) The address, location, and/or area (State, county, and/or other 
geographic designation), clearly identifying each employer's farm(s) or 
field(s) where 10 and 11 year old hand-harvest laborers are to be 
employed.
    (d) The specific crop or crops to be hand-harvested at each 
designated farm or field.
    (e) Substantiation of the claim that such agricultural operation 
``is customarily and generally recognized as being paid on a piece rate 
basis in the region in which such individuals would be employed.'' The 
Administrator will accept signed statements to that effect from 
agricultural employers and employees and others, such as agricultural 
extension agents, in the region of employment who are familiar with 
farming operations and practices in the region and with the method of 
compensation used in such operations and practices.
    (f) Designated dates of not more than 8 weeks an any calendar year, 
between June 1 and October 15, during which it is anticipated that 10 
and 11 year old minors will be employed in the hand-harvesting of the 
specified short season crop or crops.
    (g) A statement that the 10- and 11-year old hand harvesters will be 
employed outside school hours.



Sec. 575.5  Supporting data to accompany application.

    Objective data, as required by section 13(c)(4) of the Act, shall 
also be submitted by the employer or group of employers applying for a 
waiver, to show that:
    (a) The crop to be harvested is one with a ``particularly short 
harvesting season.'' The variety of each crop to be harvested must 
ordinarily be harvested within 4 weeks in the region in which the waiver 
will be applicable. The Administrator will accept the written statement 
to that effect from the agricultural extension agent for the county.
    (b) The 12-year minimum age prescribed by the Act for such 
employment would cause ``severe economic disruption in the industry of 
the employer or group of employers applying for the waiver.'' Severe 
economic disruption in the industry refers to the consequences of not 
meeting a compelling need for the employment of 10- and

[[Page 327]]

11-year olds to avoid loss of a significant portion of the crop. 
Evidence of this need includes the projected number of laborers needed 
to harvest the acreage planted and evidence that recruitment 
requirements specified in paragraph (e) of this section have been 
complied with. Data concerning the number of hand harvest laborers used 
in previous years for given acreages will serve as a basis for 
evaluating needs for the current year. If the requisite number of 
workers cannot be recruited from the labor supply of 12 years and above, 
this would ordinarily demonstrate the compelling need for the employment 
of 10 and 11 year olds.
    (c) The employment of minors under the waiver ``would not be 
deleterious to their health or well-being.'' This refers to the 
prospective effect on the health or well-being generally (i.e., other 
than the tolerance level of pesticides or other chemicals) of 10 and 11 
year-old hand harvesters. The Administrator will accept signed 
statements to that effect from doctors, or nurses or public health 
officials in the region.
    (d) The ``level and type of pesticides and other chemicals used 
would not have an adverse effect on the health or well-being of'' minors 
employed under the waiver. The safe reentry standards established by the 
Environmental Protection Agency, and followed by other Federal and State 
agencies, were established for adult workers and have not been shown to 
be safe for 10 and 11 year olds. Therefore, the applicant, in order to 
satisfy this condition, will either have to submit a statement that no 
pesticides or other chemicals were used on the crop to be harvested or 
submit data which upon study by the Secretary or the Secretary's 
designee establishes a safe reentry times for 10 and 11 year olds. If 
such data, or additional studies conducted by the Secretary or the 
Secretary's designee, establish safe reentry standards for 10 and 11 
year olds, this section will be amended to include such standards and 
the applicant will then need only identify the type and level of 
pesticides or chemicals used and the date of last application of same 
prior to harvest.
    (e) Individuals age 12 and above are not available for such 
employment. Evidence of such unavailability must be documented by the 
applicant by:
    (1) Placement of intrastate and interstate job orders, in which the 
piece rate is specified, with the state employment service sufficiently 
in advance of the harvest to allow reasonable time for the recruitment 
of local and migrant workers. An interstate order need not be placed if 
the applicant can demonstrate that suitable housing is not available.
    (2) Placement of at least two advertisements in local papers of 
general circulation or advertisements over local radio stations.
    (3) Contact with farm labor contractors, migrant workers, and other 
potential workers.
    (4) Contact with schools, business and labor organizations, non-
profit organizations and public agencies to enlist their help. Data 
showing the responses received to these solicitations must be 
categorized by age and submitted with the waiver application to verify 
that older workers are not available to perform the work.
    (f) The ``industry of such employer or groups of employers has 
traditionally and substantially employed individuals under twelve years 
of age without displacing substantial job opportunities for individuals 
over sixteen years of age.'' Documentation that the industry has 
traditionally and substantially employed individuals under 12 years of 
age may include newspaper reports, magazine articles, research 
organization reports, or other appropriate sources. Data to indicate 
that such employment did not displace substantial job opportunities for 
individuals over 16 years of age may include the signed statement of an 
appropriate official of the employment service agency of the State (or 
States, if region designated crosses State lines) certifying to that 
fact. This certification must be based on statistical documentation for 
at least the previous year.
    (g) When supporting data required by this section are submitted by 
an employer or group of employers, the objective data required by 
paragraph (d) of this section shall be submitted on the basis of each 
individual employer. However, objective data required by paragraphs (a), 
(b), (c), (e), and (f) of

[[Page 328]]

this section may be submitted for the specific geographic area, e.g., an 
entire county, of the employer or group of employers.

[43 FR 26562, June 21, 1978; 43 FR 28471, June 30, 1978, as amended at 
44 FR 22061, Apr. 13, 1979; 44 FR 24059, Apr. 24, 1979; 44 FR 29049, May 
18, 1979; 45 FR 55177, Aug. 19, 1980]



Sec. 575.6  Procedure for action on an application.

    (a) Upon receipt of an application for a waiver, the Administrator 
shall review all of the information and supporting data. If sufficient, 
the Administrator shall grant a waiver; if insufficient, the 
Administrator may seek further information. If such information is not 
made available to the Administrator, the Administrator shall deny the 
waiver.
    (b) The Administrator shall deny the application for a waiver from 
any employer against whom a final civil money penalty is outstanding 
under section 16(e) of the Act for violation of the child labor 
provisions of the Act.
    (c) The waiver, in the form of a letter signed by the Administrator, 
shall set forth the terms and conditions for employment under the waiver 
as provided in Sec. Sec. 575.7 and 575.8. The waiver shall be issued to 
the employer or group of employers applying for it.
    (d) If a waiver is granted there will be published in the Federal 
Register a general notice to that effect setting forth for each waiver 
granted: the name of the employer or the name of each employer of a 
group of employers; the address of each such employer, including city, 
state, and zip code; and the dates of the period the waiver will be in 
effect.
    (e) If a waiver is denied, the Administrator shall give written 
notice of such denial to the employer or group of employers applying for 
a waiver. Such denial will be without prejudice to the filing of any 
subsequent application.



Sec. 575.7  Statutory conditions for employment under the waiver.

    Any waiver granted pursuant to section 13(c)(4) of the Act and this 
part shall require that:
    (a) Employment of 10 and 11 year old minors pursuant to the waiver 
be outside school hours.
    (b) Individuals employed commute daily from their permanent 
residence to the farms(s) or field(s) where employed.
    (c) Such individuals be employed for not more than 8 weeks between 
June 1 and October 15 of any calendar year. When schools are in session, 
any employment under a waiver shall be confined to outside of school 
hours.



Sec. 575.8  Secretary's conditions for employment under the waiver.

    The Secretary prescribes the following terms and conditions for the 
protection of minors employed pursuant to a waiver granted under section 
13(c)(4) of the Act:
    (a) An employer or group of employers granted such a waiver shall 
obtain and keep on file a signed statement of the parent or person 
standing in the place of the parent of each 10 and 11-year old minor 
employed consenting to the employment of such minor under the waiver.
    (b) Any employment pursuant to a waiver shall be in compliance with 
applicable Federal and State laws, and any regulations issued under 
them.
    (c) No employer or group of employers shall employ any 10 or 11 year 
old minor pursuant to a waiver for more than 5 hours in any one day or 
for more than 30 hours in any workweek with a meal break of at least 30 
minutes and two rest breaks of at least 15 minutes each.
    (d) An employer or group of employers granted such a waiver shall 
provide immediately adjacent to the field(s) to be hand harvested: (1) 
Adequate sanitary facilities, such as portable toilets; (2) adequate and 
clean drinking water in covered containers with spouts, and an adequate 
supply of paper or plastic cups for individual drinking use; and (3) a 
specified adult employee, who is appropriately equipped and is 
knowledgeable about first-aid treatment and readily available to give 
such treatment when needed.
    (e) An employer or group of employers granted such a waiver shall 
provide emergency transportation either to the minor's permanent 
residence or to the nearest hospital for any 10 or 11 year old hand 
harvester who becomes ill or

[[Page 329]]

is injured during the normal hours of employment.
    (f) No 10 or 11 year old employed under a waiver shall ride upon or 
be employed in the operation of or in the close proximity to any power 
driven machinery or equipment. Generally, a distance of fifty feet or 
more will be construed to meet the requirement that employment not be in 
``close proximity'' to machinery or equipment.
    (g) An employer or group of employers granted such a waiver who 
owns, operates, or causes to be operated any vehicle for the 
transportation of such minors shall be responsible for assuring that:
    (1) Every such vehicle is in compliance with all applicable Federal 
and State safety and health standards and with the rules and regulations 
issued by the Bureau of Motor Carrier Safety, Federal Highway 
Administration of the U.S. Department of Transportation;
    (2) Every such vehicle be designed for transporting passengers and 
be operated by a lawfully licensed driver; and
    (3) A vehicle liability insurance policy provides insurance in an 
amount not less than the amounts applicable to vehicles used in the 
transportation of passengers under the Interstate Commerce Act and its 
regulations. These amounts currently are as follows:

               Insurance Required for Passenger Equipment
------------------------------------------------------------------------
                                                               More than
                                                  12 or less      12
                                                  passengers  passengers
------------------------------------------------------------------------
Limit for bodily injuries to or death of 1          $100,000    $100,000
 person.........................................
Limit for bodily injuries to or death of all         300,000     500,000
 persons injured or killed in any 1 accident
 (subject to a maximum of $100,000 for bodily
 injuries to or death of 1 person)..............
Limit for loss or damage in any 1 accident to         50,000      50,000
 property of others (excluding cargo)...........
------------------------------------------------------------------------

    (h) A copy of the waiver shall be posted or readily available at the 
site or sites of such employment of such minors during the entire 
period.
    (i) The employer or group of employers shall maintain and preserve a 
record of the name, address, and occupation of each minor employed under 
the waiver in accordance with Sec. 516.33(b) of this chapter. In 
addition, the record shall also include the date of birth, the name and 
address of the school in which the minor is enrolled, and the number of 
hours worked each day and each week of the designated period. Each 
employer required to maintain records under this part shall preserve 
them for a period of at least 2 years.
    (j) A waiver shall be effective for the period designated therein 
with no provision for amendment

[43 FR 26562, June 21, 1978; 43 FR 28471, June 30, 1978]



Sec. 575.9  Failure to comply with the terms and conditions of 
the waiver.

    If the employer or group of employers granted a waiver pursuant to 
section 13(c)(4) of the Act and this part do not comply with the terms 
and conditions set forth in the waiver and this part, the waiver shall 
be null and void and the employer or group of employers will be subject 
to civil money penalties under section 16(e) of the Act.



PART 578_MINIMUM WAGE AND OVERTIME VIOLATIONS_CIVIL MONEY PENALTIES--
Table of Contents



Sec.
578.1 What does this part cover?
578.2 Definitions.
578.3 What types of violations may result in a penalty being assessed?
578.4 Determination of penalty.

    Authority: Sec. 9, Pub. L. 101-157, 103 Stat. 938, sec. 3103, Pub. 
L. 101-508, 104 Stat. 1388-29 (29 U.S.C. 216(e)), Pub. L. 101-410, 104 
Stat. 890 (28 U.S.C. 2461 note), as amended by Pub. L. 104-134, section 
31001(s), 110 Stat. 1321-358, 1321-373.

    Source: 57 FR 49129, Oct. 29, 1992, unless otherwise noted.



Sec. 578.1  What does this part cover?

    Section 9 of the Fair Labor Standards Amendments of 1989 amended 
section 16(e) of the Act to provide that any person who repeatedly or 
willfully violates the minimum wage (section 6) or overtime provisions 
(section 7) of the Act shall be subject to a civil money penalty not to 
exceed $1,000 for each such violation. The Federal Civil Penalties 
Inflation Adjustment Act of 1990 (Pub. L. 101-410), as amended by the 
Debt Collection Improvement Act

[[Page 330]]

of 1996 (Pub. L. 104-134, section 31001(s)), requires that inflationary 
adjustments be periodically made in these civil money penalties 
according to a specified cost-of-living formula. This part defines terms 
necessary for administration of the civil money penalty provisions, 
describes the violations for which a penalty may be imposed, and 
describes criteria for determining the amount of penalty to be assessed. 
The procedural requirements for assessing and contesting such penalties 
are contained in 29 CFR part 580.

[66 FR 63503, Dec. 7, 2001]



Sec. 578.2  Definitions.

    (a) Act means the Fair Labor Standards Act of 1938, as amended (52 
Stat. 1060 (29 U.S.C. 201 et seq.));
    (b) Administrator means the Administrator of the Wage and Hour 
Division, Employment Standards Administration, U.S. Department of Labor, 
and includes any official of the Wage and Hour Division who is 
authorized by the Administrator to perform any of the functions of the 
Administrator under this part.
    (c) Person includes any individual, partnership, corporation, 
association, business trust, legal representative, or organized group of 
persons.



Sec. 578.3  What types of violations may result in a penalty 
being assessed?

    (a) A penalty of up to $1,000 per violation may be assessed against 
any person who repeatedly or willfully violates section 6 (minimum wage) 
or section 7 (overtime) of the Act; Provided, however, that for any 
violation occurring on or after January 7, 2002 the civil money penalty 
amount will increase to up to $1,100. The amount of the penalty will be 
determined by applying the criteria in Sec. 578.4.
    (b) Repeated violations. An employer's violation of section 6 or 
section 7 of the Act shall be deemed to be ``repeated'' for purposes of 
this section:
    (1) Where the employer has previously violated section 6 or 7 of the 
Act, provided the employer has previously received notice, through a 
responsible official of the Wage and Hour Division or otherwise 
authoritatively, that the employer allegedly was in violation of the 
provisions of the Act; or
    (2) Where a court or other tribunal has made a finding that an 
employer has previously violated section 6 or 7 of the Act, unless an 
appeal therefrom which has been timely filed is pending before a court 
or other tribunal with jurisdiction to hear the appeal, or unless the 
finding has been set aside or reversed by such appellate tribunal.
    (c) Willful violations. (1) An employer's violation of section 6 or 
section 7 of the Act shall be deemed to be ``willful'' for purposes of 
this section where the employer knew that its conduct was prohibited by 
the Act or showed reckless disregard for the requirements of the Act. 
All of the facts and circumstances surrounding the violation shall be 
taken into account in determining whether a violation was willful.
    (2) For purposes of this section, an employer's conduct shall be 
deemed knowing, among other situations, if the employer received advice 
from a responsible official of the Wage and Hour Division to the effect 
that the conduct in question is not lawful.
    (3) For purposes of this section, an employer's conduct shall be 
deemed to be in reckless disregard of the requirements of the Act, among 
other situations, if the employer should have inquired further into 
whether its conduct was in compliance with the Act, and failed to make 
adequate further inquiry.

[57 FR 49129, Oct. 29, 1992; 57 FR 57280, Dec. 3, 1992, as amended at 66 
FR 63503, Dec. 7, 2001]



Sec. 578.4  Determination of penalty.

    (a) In determining the amount of penalty to be assessed for any 
repeated or willful violation of section 6 or section 7 of the Act, the 
Administrator shall consider the seriousness of the violations and the 
size of the employer's business.
    (b) Where appropriate, the Administrator may also consider other 
relevant factors in assessing the penalty, including but not limited to 
the following:
    (1) Whether the employer has made efforts in good faith to comply 
with the provisions of the Act and this part;
    (2) The employer's explanation for the violations, including whether 
the violations were the result of a bona fide dispute of doubtful legal 
certainty;

[[Page 331]]

    (3) The previous history of violations, including whether the 
employer is subject to injunction against violations of the Act;
    (4) The employer's commitment to future compliance;
    (5) The interval between violations;
    (6) The number of employees affected; and
    (7) Whether there is any pattern to the violations.



PART 579_CHILD LABOR VIOLATIONS_CIVIL MONEY PENALTIES--
Table of Contents



Sec.
579.1 Purpose and scope.
579.2 Definitions.
579.3 Violations for which child labor civil money penalties may be 
          assessed.
579.4 [Reserved]
579.5 Determining the amount of the penalty and assessing the penalty.

    Authority: 29 U.S.C. 203(l), 211, 212, 213(c), 216; Reorg. Plan No. 
6 of 1950, 64 Stat. 1263, 5 U.S.C. App; secs. 25, 29, 88 Stat. 72, 76; 
Secretary of Labor's Order No. 09-2009 (Nov. 16, 2009): Delegation of 
Authorities and Assignment of Responsibilities to the Administrator, 
Wage and Hour Division, 74 FR 58836; 104 Stat. 890 (28 U.S.C. 2461 
note), as amended by 110 Stat. 1321-373 and 112 Stat. 3293.



Sec. 579.1  Purpose and scope.

    (a) Section 16(e), added to the Fair Labor Standards Act of 1938, as 
amended, by the Fair Labor Standards Amendments of 1974, and as further 
amended by the Fair Labor Standards Amendments of 1989, the Omnibus 
Budget Reconciliation Act of 1990, the Compactor and Balers Safety 
Standards Modernization Act of 1996, and the Genetic Information 
Nondiscrimination Act of 2008, provides for the imposition of civil 
money penalties in the following manner:
    (1)(i) Any person who violates the provisions of sections 212 or 
213(c) of the FLSA, relating to child labor, or any regulation issued 
pursuant to such sections, shall be subject to a civil penalty not to 
exceed:
    (A) $11,000 for each employee who was the subject of such a 
violation; or
    (B) $50,000 with regard to each such violation that causes the death 
or serious injury of any employee under the age of 18 years, which 
penalty may be doubled where the violation is a repeated or willful 
violation.
    (ii) For purposes of paragraph (a)(1)(i)(B) of this section, the 
term ``serious injury'' means:
    (A) Permanent loss or substantial impairment of one of the senses 
(sight, hearing, taste, smell, tactile sensation);
    (B) Permanent loss or substantial impairment of the function of a 
bodily member, organ, or mental faculty, including the loss of all or 
part of an arm, leg, foot, hand or other body part; or
    (C) Permanent paralysis or substantial impairment that causes loss 
of movement or mobility of an arm, leg, foot, hand or other body part.
    (2) Any person who repeatedly or willfully violates section 206 or 
207 of the FLSA, relating to wages, shall be subject to a civil penalty 
not to exceed $1,100 for each such violation.
    (3) In determining the amount of any penalty under section 216(e) of 
the FLSA, the appropriateness of such penalty to the size of the 
business of the person charged and the gravity of the violation shall be 
considered. The amount of any penalty under section 216(e) of the FLSA, 
when finally determined, may be:
    (i) Deducted from any sums owing by the United States to the person 
charged;
    (ii) Recovered in a civil action brought by the Secretary in any 
court of competent jurisdiction, in which litigation the Secretary shall 
be represented by the Solicitor of Labor; or
    (iii) Ordered by the court, in an action brought for a violation of 
section 215(a)(4) or a repeated or willful violation of section 
215(a)(2) of the FLSA, to be paid to the Secretary.
    (4) Any administrative determination by the Secretary of the amount 
of any penalty under section 216(e) of the FLSA shall be final, unless 
within 15 days after receipt of notice thereof by certified mail the 
person charged with the violation takes exception to the determination 
that the violations for which the penalty is imposed occurred, in which 
event final determination of the penalty shall be made in an 
administrative proceeding after opportunity for hearing in accordance 
with section

[[Page 332]]

554 of title 5, United States Code, and regulations to be promulgated by 
the Secretary.
    (5) Except for civil penalties collected for violations of section 
212 of the FLSA, sums collected as penalties pursuant to section 216(e) 
of the FLSA shall be applied toward reimbursement of the costs of 
determining the violations and assessing and collecting such penalties, 
in accordance with the provision of section 202 of the Act entitled ``An 
Act to authorize the Department of Labor to make special statistical 
studies upon payment of the cost thereof and for other purposes'' (29 
U.S.C. 9a). Civil penalties collected for violations of section 212 
shall be deposited in the general fund of the Treasury.
    (b) The Federal Civil Penalties Inflation Adjustment Act of 1990 
(Pub. L. 101-410), as amended by the Debt Collection Improvement Act of 
1996 (Pub. L. 104-134, section 31001(s)), requires that Federal agencies 
periodically adjust their civil money penalties for inflation according 
to a specified cost-of-living formula. This law requires each agency to 
make an initial inflationary adjustment for all covered civil money 
penalties, and to make further inflationary adjustments at least once 
every four years thereafter. Any increase in the civil money penalty 
amount will apply only to violations that occur after the date the 
increase takes effect.
    (c) This part explains our procedures for issuing a notice of civil 
penalty to an employer that has violated section 12 or section 13(c)(5) 
of the Act, or any regulation issued under those sections; describes the 
types of violations for which we may impose a penalty and the factors we 
will consider in assessing the amount of the penalty; outlines the 
procedure for a person charged with violations to file an exception to 
the determination that the violations occurred; and summarizes the 
methods we will follow for collecting and recovering the penalty.

[40 FR 25792, June 18, 1975, as amended at 56 FR 8679, Feb. 28, 1991; 66 
FR 63503, Dec. 7, 2001; 69 FR 75405, Dec. 16, 2004; 75 FR 28460, May 20, 
2010]



Sec. 579.2  Definitions.

    As used in this part and part 580 of this chapter:
    Act means the Fair Labor Standards Act of 1938, as amended (52 Stat. 
1060, as amended; 29 U.S.C. 201, et seq.).
    Administrative law judge means a person appointed as provided in 5 
U.S.C. 3105 and subpart B of part 930 of title 5 of the CFR, and 
qualified to preside at hearings under 5 U.S.C. 554-557.
    Administrator means the Administrator of the Wage and Hour Division, 
U.S. Department of Labor, and includes an authorized representative 
designated by the Administrator to perform any of the functions of the 
Administrator under this part and part 580 of this chapter.
    Agency has the meaning given it by 5 U.S.C. 551.
    Chief Administrative Law Judge means the Chief Administrative Law 
Judge, Office of Administrative Law Judges, U.S. Department of Labor, 
800 K Street, NW., Suite 400, Washington, DC 20001-8002.
    Department means the U.S. Department of Labor.
    Person includes any individual, partnership, corporation, 
association, business trust, legal representative, or organized group of 
persons.
    Repeated violations has two components. An employer's violation of 
section 12 or section 13(c) of the Act relating to child labor or any 
regulation issued pursuant to such sections shall be deemed to be 
repeated for purposes of this section:
    (1) Where the employer has previously violated section 12 or section 
13(c) of the Act relating to child labor or any regulation issued 
pursuant to such sections, provided the employer has previously received 
notice, through a responsible official of the Wage and Hour Division or 
otherwise authoritatively, that the employer allegedly was in violation 
of the provisions of the Act; or,
    (2) Where a court or other tribunal has made a finding that an 
employer has previously violated section 12 or section 13(c) of the Act 
relating to child labor or any regulation issued pursuant to such 
sections, unless an appeal therefrom which has been timely filed is 
pending before a court or

[[Page 333]]

other tribunal with jurisdiction to hear the appeal, or unless the 
finding has been set aside or reversed by such appellate tribunal.
    Secretary means the Secretary of Labor, U.S. Department of Labor, or 
an authorized representative of the Secretary.
    Serious injury means:
    (1) Permanent loss or substantial impairment of one of the senses 
(sight, hearing, taste, smell, tactile sensation);
    (2) Permanent loss or substantial impairment of the function of a 
bodily member, organ, or mental faculty, including the loss of all or 
part of an arm, leg, foot, hand or other body part; or,
    (3) Permanent paralysis or substantial impairment that causes loss 
of movement or mobility of an arm, leg, foot, hand or other body part.
    Solicitor of Labor means the Solicitor, U.S. Department of Labor, 
and includes attorneys designated by the Solicitor to perform functions 
of the Solicitor under this part and part 780 of this chapter.
    Willful violations under this section has several components. An 
employer's violation of section 12 or section 13(c) of the Act relating 
to child labor or any regulation issued pursuant to such sections, shall 
be deemed to be willful for purposes of this section where the employer 
knew that its conduct was prohibited by the Act or showed reckless 
disregard for the requirements of the Act. All of the facts and 
circumstances surrounding the violation shall be taken into account in 
determining whether a violation was willful. In addition, for purposes 
of this section, an employer's conduct shall be deemed knowing, among 
other situations, if the employer received advice from a responsible 
official of the Wage and Hour Division to the effect that the conduct in 
question is not lawful. For purposes of this section, an employer's 
conduct shall be deemed to be in reckless disregard of the requirements 
of the Act, among other situations, if the employer should have inquired 
further into whether its conduct was in compliance with the Act, and 
failed to make adequate further inquiry.

[75 FR 28461, May 20, 2010]



Sec. 579.3  Violations for which child labor civil money penalties 
may be assessed.

    (a) What constitutes the violation. Each of the following 
constitutes a violation of the Act and/or the Secretary's regulations 
for which a penalty as provided by section 16(e) of the Act and this 
part may be imposed, unless employment of the minor or minors referred 
to is shown to come within a specific exemption or exception described 
in paragraph (c) of this section:
    (1) Each shipment or delivery for shipment in commerce by a 
producer, manufacturer, or dealer of any goods produced in an 
establishment situated in the United States in or about which, within 
thirty days prior to the removal of such goods therefrom, there has been 
employed any minor as described in paragraph (b) of this section;
    (2) Each employment by an employer of any minor as described in 
paragraph (b) of this section, for any period in commerce or in the 
production of goods for commerce or in any enterprise engaged in 
commerce or in the production of goods for commerce;
    (3)-(4) [Reserved]
    (5) The failure by an employer employing any minor for whom records 
must be kept under any provision of part 516 of this title to maintain 
and preserve, as required by such provision, such records concerning the 
date of the minor's birth and concerning the proof of the minor's age as 
specified therein; and
    (6) The failure by an employer employing any minor subject to any 
provision of 29 CFR part 570, to take or cause to be taken such action 
as is necessary to assure compliance with all requirements of such 
provision which, by the regulations in such part, are made conditions 
for lawful employment of such minor.
    (b) Minors whose employment may result in violation. The violations 
described in paragraph (a) may result from employment of any of the 
following minors as described:
    (1) Any minor under the age of 18 years in any occupation (other 
than in

[[Page 334]]

agriculture) in which employment, as set forth in subpart E of part 570 
of this chapter, has been found and declared by the Secretary to be 
particularly hazardous for or detrimental to the health or well-being of 
minors below such age;
    (2) Any minor under the age of 16 years:
    (i) In agriculture during school hours for the school district where 
such minor is living while so employed; or
    (ii) In agriculture in any occupation found and declared by the 
Secretary as set forth in subpart E-1 of part 570 of this chapter, to be 
particularly hazardous for the employment of minors below such age; or
    (iii) In any manufacturing or mining occupation; or
    (iv) In any other occupation other than in agriculture unless it is 
established that such minor is at least 14 years of age and the 
employment of such minor in such occupation is specifically permitted by 
and in accord with regulations of the Secretary as set forth in subpart 
C of part 570 of this chapter;
    (3) Any minor under the age of 14 years:
    (i) In any occupation other than in agriculture; or
    (ii) In agriculture, outside of school hours for the school district 
where such minor is living while so employed, unless it is established 
either:
    (A) That such minor is not less than 12 years of age and either (1) 
that such employment is with the written consent of a parent or person 
standing in place of a parent of such minor, or (2) that such employment 
is on the same farm where such parent or person is also employed; or
    (B) That such minor, if less than 12 years of age, is employed as 
described in paragraph (b)(4)(i) or (b)(4)(ii) of this section; and
    (4) Any minor under the age of 12 years, unless it is established 
that such minor is employed in agriculture outside of school hours for 
the school district where such minor is living while so employed, and:
    (i) Is employed by a parent or by a person standing in place of a 
parent of such minor, on a farm owned or operated by such parent or 
person; or
    (ii) Is employed with the written consent of a parent or person 
standing in place of a parent of such minor, on a farm where, because of 
the provisions of section 13(a)(6) of the Act, none of the employees are 
required to be paid at the wage rate prescribed by section 6(a)(5) of 
the Act.
    (c) Exemptions and exceptions. Conduct which otherwise might 
constitute a violation of the Act as described in paragraphs (a) and (b) 
of this section may be shown to be not violative of the child labor 
provisions by evidence that a specific exemption or exception provided 
in the Act makes such conduct permissible. Thus, the Act provides:
    (1) That none of the child labor provisions of section 12 shall 
apply to: (i) Any child employed as an actor or performer in motion 
pictures or theatrical productions, or in radio or television 
productions; (ii) any employee engaged in the delivery of newspapers to 
the consumer; (iii) any homeworker engaged in the making of wreaths 
composed principally of natural holly, pine, cedar, or other evergreens 
(including the harvesting of the evergreens or other forest products 
used in making such wreaths); or (iv) any employee whose services during 
the workweek are performed in a workplace within a foreign country or 
within territory under the jurisdiction of the United States other than 
the States, territories, and possessions listed in section 13(f) of the 
Act (see Act, sections 13(c)(3), 13(d), 13(f));
    (2) That, with respect to the violations described in paragraph 
(a)(1) of this section, any such shipment or delivery for shipment of 
such goods by a purchaser who acquired them in good faith in reliance on 
written assurance from the producer, manufacturer, or dealer that the 
goods were produced in compliance with the requirements of section 12 of 
the Act, and who acquired such goods for value without notice of any 
such violation, shall not be deemed prohibited (see Act, section 12(a) 
and 29 CFR part 789);
    (3) That, with respect to violations described in paragraph (a)(2) 
of this section resulting from employment of minors as described in 
paragraph (b) (2)(iv), a parent or person standing in place of a parent 
may lawfully employ

[[Page 335]]

his or her own child or a child in his or her custody under the age of 
16 years in an occupation other than: (i) Manufacturing or (ii) mining 
or (iii) an occupation found and declared by the Secretary of Labor to 
be particularly hazardous for the employment of children between the 
ages of 16 and 18 years or detrimental to their health or well-being, 
and an employer may lawfully employ a young worker between 14 and 16 
years of age in an occupation permitted and under conditions prescribed 
by 29 CFR part 570, subpart C;
    (4) That, with respect to violations described in paragraph (a)(2) 
of this section resulting from employment of minors in agriculture as 
described in paragraph (b)(2)(iii), a parent or person standing in place 
of a parent may lawfully employ on a farm owned or operated by such 
parent or person, his or her own child or a child in his or her custody 
under the age of 16 years in an occupation in agriculture found and 
declared by the Secretary of Labor to be particularly hazardous for the 
employment of children below such age;
    (5) That, with respect to violations described in paragraph (a)(2) 
of this section resulting from employment of minors in agriculture as 
described in paragraph (b)(3)(ii), employment of minors 12 or 13 years 
of age is lawful under the conditions prescribed in paragraph 
(b)(3)(ii)(A) of this section and employment of minors under 12 years of 
age is lawful under the conditions prescribed in paragraph (b)(3)(ii)(B) 
of this section; and
    (6) That, with respect to violations described in paragraph (a)(2) 
of this section resulting from employment of minors in agriculture as 
described in paragraph (b)(4), employment of minors under 12 years of 
age is lawful under the conditions prescribed in paragraph (b)(4)(i) or 
(ii) of this section.

[40 FR 25792, June 18, 1975, as amended at 41 FR 26836, June 29, 1976; 
69 FR 75405, Dec. 16, 2004]



Sec. 579.4  [Reserved]



Sec. 579.5  Determining the amount of the penalty and assessing the penalty.

    (a) The administrative determination of the amount of the civil 
penalty for each employee who was the subject of a violation of section 
12 or section 13(c) of the Act relating to child labor or of any 
regulation under those sections will be based on the available evidence 
of the violation or violations and will take into consideration the size 
of the business of the person charged and the gravity of the violations 
as provided in paragraphs (b) through (d) of this section. The 
provisions of section 16(e)(1)(A)(ii) of the Fair Labor Standards Act, 
regarding the assessment of civil penalties not to exceed $50,000 with 
regard to each violation that causes the death or serious injury of any 
employee under the age of 18 years, apply only to those violations that 
occur on or after May 21, 2008.
    (b) In determining the amount of such penalty there shall be 
considered the appropriateness of such penalty to the size of the 
business of the person charged with the violation or violations, taking 
into account the number of employees employed by that person (and if the 
employment is in agriculture, the man-days of hired farm labor used in 
pertinent calendar quarters), dollar volume of sales or business done, 
amount of capital investment and financial resources, and such other 
information as may be available relative to the size of the business of 
such person.
    (c) In determining the amount of such penalty there shall be 
considered the appropriateness of such penalty to the gravity of the 
violation or violations, taking into account, among other things, any 
history of prior violations; any evidence of willfulness or failure to 
take reasonable precautions to avoid violations; the number of minors 
illegally employed; the age of the minors so employed and records of the 
required proof of age; the occupations in which the minors were so 
employed; exposure of such minors to hazards and any resultant injury to 
such minors; the duration of such illegal employment; and, as 
appropriate, the hours of the day in which it occurred and whether such 
employment was during or outside school hours.
    (d) Based on all the evidence available, including the investigation 
history of the person so charged and the degree of willfulness involved 
in the

[[Page 336]]

violation, it shall further be determined, where appropriate,
    (1) Whether the evidence shows that the violation is ``de minimis'' 
and that the person so charged has given credible assurance of future 
compliance, and whether a civil penalty in the circumstances is 
necessary to achieve the objectives of the Act; or
    (2) Whether the evidence shows that the person so charged had no 
previous history of child labor violations, that the violations 
themselves involved no intentional or heedless exposure of any minor to 
any obvious hazard or detriment to health or well-being and were 
inadvertent, and that the person so charged has given credible assurance 
of future compliance, and whether a civil penalty in the circumstances 
is necessary to achieve the objectives of the Act.
    (e) An administrative determination of the amount of the civil money 
penalty for a particular violation or particular violations of section 
12 or section 13(c) relating to child labor or any regulation issued 
under those sections shall become final 15 days after receipt of the 
notice of penalty by certified mail by the person so charged unless such 
person has, pursuant to Sec. 580.6 filed with the Secretary an 
exception to the determination that the violation or violations for 
which the penalty is imposed occurred.
    (f) A determination of the penalty made in an administrative 
proceeding after opportunity for hearing as provided in section 16(e) of 
the Act and pursuant to Part 580 of this chapter shall be final.

[40 FR 25792, June 18, 1975, as amended at 56 FR 8679, Feb. 28, 1991; 66 
FR 63503, Dec. 7, 2001; 75 FR 28461, May 20, 2010]



PART 580_CIVIL MONEY PENALTIES_PROCEDURES FOR ASSESSING AND 
CONTESTING PENALTIES--Table of Contents



Sec.
580.1 Definitions.
580.2 Applicability of procedures and rules.
580.3 Written notice of determination required.
580.4 Contents of notice.
580.5 Finality of notice.
580.6 Exception to determination of penalty and request for hearing.

                            Rules of Practice

580.7 General.
580.8 Service and computation of time.
580.9 Commencement of proceeding.

                          Referral for Hearing

580.10 Referral to Administrative Law Judge.
580.11 Appointment of Administrative Law Judge and notification of 
          prehearing conference and hearing date.
580.12 Decision and Order of Administrative Law Judge.
580.13 Procedures for appeals to the Administrative Review Board.
580.14 [Reserved]
580.15 Responsibility of the Office of Administrative Law Judges for the 
          administrative record.
580.16 Final decision of the Administrative Review Board.
580.17 Retention of official record.
580.18 Collection and recovery of penalty.

    Authority: 29 U.S.C. 9a, 203, 209, 211, 212, 213(c), 216; Reorg. 
Plan No. 6 of 1950, 64 Stat. 1263, 5 U.S.C. App; secs. 25, 29, 88 Stat. 
72, 76; Secretary of Labor's Order No. 4-2001, 66 FR 29656; 5 U.S.C. 
500, 503, 551, 559; 103 Stat. 938.

    Source: 56 FR 24991, May 31, 1991, unless otherwise noted.



Sec. 580.1  Definitions.

    As used in this part:
    Act means the Fair Labor Standards Act of 1938, as amended (52 Stat. 
1060 as amended; 29 U.S.C. 201 et seq.).
    Administrative law judge means a person appointed as provided in 5 
U.S.C. 3105 and subpart B of part 930 of title 5 of the CFR, and 
qualified to preside at hearings under 5 U.S.C. 554-557.
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, and 
includes any official of the Wage and Hour Division authorized by the 
Administrator to perform any of the functions of the Administrator under 
this part and parts 578 and 579 of this chapter.
    Chief Administrative Law Judge means the Chief Administrative Law 
Judge, Office of the Administrative Law Judges, U.S. Department of 
Labor, Washington, DC 20210.
    Department means the U.S. Department of Labor.

[[Page 337]]

    Person includes any individual, partnership, corporation, 
association, business trust, legal representative, or organized group of 
persons.
    Secretary means the Secretary of Labor, U.S. Department of Labor, or 
a designated representative of the Secretary.
    Solicitor of Labor means the Solicitor, U.S. Department of Labor, 
and includes attorneys of the Office of the Solicitor authorized by the 
Solicitor to perform functions of the Solicitor under this part.



Sec. 580.2  Applicability of procedures and rules.

    The procedures and rules contained in this part prescribe the 
administrative process for assessment of civil money penalties for any 
violation of the child labor provisions at section 12 of the Act and any 
regulation thereunder as set forth in part 579, and for assessment of 
civil money penalties for any repeated or willful violation of the 
minimum wage provisions of section 6 or the overtime provisions of 
section 7 of the Act or the regulations thereunder set forth in 29 CFR 
subtitle B, chapter V. The substantive requirements for assessment of 
civil money penalties are set forth at 29 CFR part 579 (child labor) and 
part 578 (minimum wage and overtime).



Sec. 580.3  Written notice of determination required.

    Whenever the Administrator determines that there has been a 
violation by any person of section 12 of the Act relating to child labor 
or any regulation issued under that section, or determines that there 
has been a repeated or willful violation by any person of section 6 or 
section 7 of the Act, and determines that imposition of a civil money 
penalty for such violation is appropriate, the Administrator shall issue 
and serve a notice of such penalty on such person in person or by 
certified mail. Where service by certified mail is not accepted by the 
party, notice shall be deemed received on the date of attempted 
delivery. Where service is not accepted, the Administrator may exercise 
discretion to serve the notice by regular mail.



Sec. 580.4  Contents of notice.

    The notice required by Sec. 580.3 of this part shall:
    (a) Set forth the determination of the Administrator as to the 
amount of the penalty and the reason or reasons therefor;
    (b) Set forth the right to take exception to the assessment of 
penalties and set forth the right to request a hearing on such 
determination;
    (c) Inform any affected person or persons that in the absence of a 
timely exception to a determination of penalty and a request for a 
hearing received within 15 days of the date of receipt of the notice, 
the determination of the Administrator shall become final and 
unappealable; and
    (d) Set forth the time and method for taking exception to the 
determination and requesting a hearing, and the procedures relating 
thereto, as set forth in Sec. 580.6 of this part.



Sec. 580.5  Finality of notice.

    If the person charged with violations does not, within 15 days after 
receipt of the notice, take exception to the determination that the 
violation or violations for which the penalty is imposed occurred, the 
administrative determination by the Administrator of the amount of such 
penalty shall be deemed final and not subject to administrative or 
judicial review. Upon the determination becoming final in such a manner, 
collection and recovery of the penalty shall be instituted pursuant to 
Sec. 580.18.

[69 FR 75405, Dec. 16, 2004]



Sec. 580.6  Exception to determination of penalty and request for hearing.

    (a) Any person desiring to take exception to the determination of 
penalty, or to seek judicial review, shall request an administrative 
hearing pursuant to this part. The exception shall be in writing to the 
official who issued the determination at the Wage and Hour Division 
address appearing on the determination notice, and must be received no 
later than 15 days after the date of receipt of the notice referred to 
in Sec. 580.3. No additional time shall be added where service of the 
determination of penalties or of the exception

[[Page 338]]

thereto is made by mail. If such a request for an administrative hearing 
is timely filed, the Administrator's determination shall be inoperative 
unless and until the case is dismissed or the Administrative Law Judge 
issues a decision affirming the determination.
    (b) No particular form is prescribed for any exception to 
determination of penalty and request for hearing permitted by this part. 
However, any such request shall:
    (1) Be dated;
    (2) Be typewritten or legibly written;
    (3) Specify the issue(s) stated in the notice of determination 
giving rise to such request;
    (4) State the specific reason(s) why the person requesting the 
hearing believes such determination is in error;
    (5) Be signed by the person making the request or by an authorized 
representative of such person; and
    (6) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.

[56 FR 24991, May 31, 1991, as amended at 60 FR 17222, Apr. 5, 1995; 69 
FR 75405, Dec. 16, 2004]

                            Rules of Practice



Sec. 580.7  General.

    (a) Except as specifically provided in this subpart, and to the 
extent they do not conflict with the provisions of this subpart, the 
Rules of Practice and Procedure for Administrative Hearings Before the 
Office of Administrative Law Judges established by the Secretary at 29 
CFR part 18 shall apply to administrative proceedings under this 
subpart.
    (b) Subpart B of the Rules of Practice and Procedure for 
Administrative Hearings Before the Office of Administrative Law Judges 
(29 CFR part 18, subpart B) shall apply except as follows: 
Notwithstanding the provisions of subpart B, including the hearsay rule 
(Sec. 18.802), testimony of current or former Department of Labor 
employees concerning information obtained in the course of 
investigations and conclusions thereon, as well as any documents 
contained in Department of Labor files (other than the investigation 
file concerning the violation(s) as to which the penalty in litigation 
has been assessed), shall be admissible in proceedings under this 
subpart. Nothing in this paragraph is intended to limit the 
admissibility of any evidence which is otherwise admissible under 29 CFR 
part 18, subpart B.



Sec. 580.8  Service and computation of time.

    (a) Service of documents under this subpart shall be made by 
delivery to the individual, an officer of a corporation, or attorney of 
record or by mailing the determination to the last known address of the 
individual, officer, or attorney. If done by mail, service is complete 
upon mailing. If done in person, service is complete upon handing it to 
the attorney, officer or party; by leaving it at the office with a clerk 
or person in charge, or leaving it at a conspicuous place in the office 
if no one is in charge; or by leaving it at the attorney's or party's 
residence.
    (b) Two (2) copies of all pleadings and other documents required for 
any administrative proceeding provided by this subpart shall be served 
on the attorneys for the Department of Labor. One copy shall be served 
on the Associate Solicitor, Division of Fair Labor Standards, Office of 
the Solicitor, U.S. Department of Labor, 200 Constitution Avenue NW., 
Washington, DC 20210, and one copy on the attorney representing the 
Department in the proceeding.
    (c) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or federally-observed holiday, in which case the time period 
includes the next business day.



Sec. 580.9  Commencement of proceeding.

    Each administrative proceeding permitted under the Act and these 
regulations shall be commenced upon receipt of a timely request for 
hearing filed in accordance with Sec. 580.6 of this subpart.

                          Referral for Hearing



Sec. 580.10  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely exception to a determination of 
penalties and request for a hearing filed pursuant to and in accordance 
with Sec. 580.6 of

[[Page 339]]

this subpart, the Administrator, by the Associate Solicitor for the 
Division of Fair Labor Standards or by the Regional Solicitor for the 
Region in which the action arose, shall, by Order of Reference, refer 
the matter to the Chief Administrative Law Judge, for a determination in 
an administrative proceeding as provided herein. A copy of the notice of 
administrative determination and of the request for hearing shall be 
attached to the Order of Reference and shall, respectively, be given the 
effect of a complaint and answer thereto for purposes of the 
administrative proceeding, subject to any amendment that may be 
permitted under this subpart and 29 CFR part 18.
    (b) A copy of the Order of Reference and attachments thereto, 
together with a copy of this part, shall be served by counsel for the 
Administrator upon the person requesting the hearing, in the manner 
provided in Sec. 580.8 of this subpart.



Sec. 580.11  Appointment of Administrative Law Judge and notification 
of prehearing conference and hearing date.

    Upon receipt from the Administrator of an Order of Reference, the 
Chief Administrative Law Judge shall appoint an Administrative Law Judge 
to hear the case. The Administrative Law Judge shall notify all 
interested parties of the time and place of a prehearing conference and 
of the hearing.



Sec. 580.12  Decision and Order of Administrative Law Judge.

    (a) The Administrative Law Judge shall render a decision on the 
issues referred by the Administrator.
    (b) The decision of the Administrative Law Judge shall be limited to 
a determination of whether the respondent has committed a violation of 
section 12, or a repeated or willful violation of section 6 or section 7 
of the Act, and the appropriateness of the penalty assessed by the 
Administrator. The Administrative Law Judge shall not render 
determinations on the legality of a regulatory provision or the 
constitutionality of a statutory provision.
    (c) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may affirm, deny, reverse, or 
modify, in whole or in part, the determination of the Administrator.
    (d) The Administrative Law Judge shall serve copies of the decision 
on each of the parties.
    (e) The decision of the Administrative Law Judge shall constitute 
the final order of the Secretary unless, pursuant to Sec. 580.13 of 
this part, there is an appeal to the Secretary.



Sec. 580.13  Procedures for appeals to the Administrative Review Board.

    (a) Any party desiring review of a decision of the Administrative 
Law Judge, including judicial review, must file a petition for review 
with the Department's Administrative Review Board (Board). To be 
effective, such petition must be received by the Board within 30 days of 
the date of the decision of the Administrative Law Judge. Copies of the 
appeal shall be served on all parties and on the Chief Administrative 
Law Judge. If such a petition for review is timely filed, the decision 
of the Administrative Law Judge shall be inoperative unless and until 
the Board dismisses the appeal or issues a decision affirming the 
decision of the Administrative Law Judge.
    (b) All documents submitted to the Board shall be filed with the 
Administrative Review Board, Room S-4309, U.S. Department of Labor, 
Washington, DC 20210. An original and two copies of all documents must 
be filed.
    (c) Documents are not deemed filed with the Board until actually 
received by the Board, either on or before the due date. No additional 
time shall be added where service of a document requiring action within 
a prescribed time was made by mail.
    (d) A copy of each document filed with the Board shall be served 
upon all other parties involved in the proceeding. Such service shall be 
by personal delivery or by mail. Service by mail is deemed effected at 
the time of mailing to the last known address of the party.

[69 FR 75405, Dec. 16, 2004]

[[Page 340]]



Sec. 580.14  [Reserved]



Sec. 580.15  Responsibility of the Office of Administrative Law Judges 
for the administrative record.

    Upon receipt of a petition seeking review of the Decision and Order 
of an Administrative Law Judge, the Chief Administrative Law Judge shall 
promptly forward a copy of the complete hearing record to the Secretary.



Sec. 580.16  Final decision of the Administrative Review Board.

    The Board's final decision shall be served upon all parties and the 
Chief Administrative Law Judge, in person or by mail to the last known 
address.

[69 FR 75405, Dec. 16, 2004]



Sec. 580.17  Retention of official record.

    The official record of every completed administrative hearing 
provided by this part shall be maintained and filed under the custody 
and control of the Chief Administrative Law Judge.



Sec. 580.18  Collection and recovery of penalty.

    (a) When the determination of the amount of any civil money penalty 
provided for in this part becomes final under Sec. 580.5 in accordance 
with the administrative assessment thereof, or pursuant to the decision 
and order of an Administrative Law Judge in an administrative proceeding 
as provided in Sec. 580.12, or the decision of the Board pursuant to 
Sec. 580.16, the amount of the penalty as thus determined is 
immediately due and payable to the U.S. Department of Labor. The person 
against whom such penalty has been assessed or imposed shall promptly 
remit the amount thereof, as finally determined. The payment shall be by 
certified check or by money order, made payable to the order of the Wage 
and Hour Division, and shall be delivered or mailed to the District 
Office of the Wage and Hour Division which issued and served the 
original notice of the penalty.
    (b) Pursuant to section 16(e) of the Act, the amount of the penalty, 
finally determined as provided in Sec. 580.5, Sec. 580.12 or Sec. 
580.16, may be:
    (1) Deducted from any sums owing by the United States to the person 
charged. To effect this, any agency having sums owing from the United 
States to such person shall, on the request of the Secretary, withhold 
the specific amount of the penalty from the sums owed to the person so 
charged and remit the amount to the Secretary to satisfy the amount of 
the penalty assessed;
    (2) Recovered in a civil action brought by the Secretary in any 
court of competent jurisdiction, in which litigation the Secretary shall 
be represented by the Solicitor of Labor. When the person against whom a 
final determination assessing a civil money penalty has been made does 
not voluntarily remit the amount of such penalty to the Secretary within 
a reasonable time after notification to do so, the Solicitor of Labor 
may institute such an action to recover the amount of the penalty; or
    (3) Ordered by the court, in an action brought for a violation of 
section 15(a)(4) or a repeated or willful violation of section 15(a)(2), 
to be paid to the Secretary. Any such unlawful act or practice may be 
enjoined by the United States district courts under section 17 upon 
court action, filed by the Secretary; and failure of the person so 
enjoined to comply with the court order may subject such person to 
contempt proceedings. A willful violation of section 6, 7, or 12 of the 
Act may subject the offender to the penalties provided in section 16(a) 
of the Act, enforced by the Department of Justice in criminal 
proceedings in the United States courts. In any of the foregoing civil 
or criminal proceedings, the court may order the payment to the 
Secretary of the civil penalty finally assessed by the Secretary.

[56 FR 24991, May 31, 1991, as amended at 69 FR 75406, Dec. 16, 2004]



PART 697_INDUSTRIES IN AMERICAN SAMOA--Table of Contents



Sec.
697.1 Wage rates and industry definitions.
697.2 Industry wage rates and effective dates.
697.3 Notices.
697.4 Effective dates.

    Authority: 29 U.S.C. 205, 206, 208.

[[Page 341]]



Sec. 697.1  Industry definitions.

    (a) Government employees. This industry includes all activities of 
employees of the Government of American Samoa. This industry does not 
include any employees of the United States or its agencies.
    (b) Fish canning and processing. This industry shall include the 
canning, freezing, preserving, and other processing of any kind of fish, 
shellfish, and other aquatic forms of animal life, the manufacture of 
any by-product thereof, and the manufacture of cans and related 
activities.
    (c) Petroleum marketing. This industry shall include the wholesale 
marketing and distribution of gasoline, kerosene, lubricating oils, 
diesel and marine fuels, and other petroleum products, bunkering 
operations in connection therewith, and repair and maintenance of 
petroleum storage facilities.
    (d) Shipping and transportation. This industry shall include the 
transportation of passengers and cargo by water or by air, and all 
activities in connection therewith, including storage and lighterage 
operations: Provided, however, that this industry shall not include the 
operation of tourist bureaus and of travel and ticket agencies. 
Provided, further, that this industry shall not include bunkering of 
petroleum products or activities engaged in by seamen on American 
vessels which are documented or numbered under the laws of the United 
States, which operate exclusively between points in the Samoan Islands, 
and which are not in excess of 350 tons net capacity. Within this 
industry there shall be three classifications:
    (1) Classification A: Stevedoring, lighterage and maritime shipping 
agency activities. This classification shall include all employees of 
employers who engage in each of the following three services: 
stevedoring, lighterage and maritime shipping agency activities.
    (2) Classification B: Unloading of fish. This classification shall 
include the unloading of raw and/or frozen fish from vessels.
    (3) Classification C: All other activities. This classification 
shall include all other activities in the shipping and transportation 
industry.
    (e) Construction. This industry shall include all construction, 
reconstruction, structural renovation and demolition, on public or 
private account, of buildings, housing, highways and streets, 
catchments, dams, and any other structure.
    (f) Retailing, wholesaling and warehousing. This industry includes 
all activities in connection with the selling of goods or services at 
retail, including the operation of retail stores and other retail 
establishments, the wholesaling and warehousing and other distribution 
of commodities including but without limitation the wholesaling, 
warehousing and other distribution activities of jobbers, importers and 
exporters, manufacturers' sales branches and sales offices engaged in 
the distribution of products manufactured outside of American Samoa, 
industrial distributors, mail order establishments, brokers and agents, 
and public warehouses: Provided, however, that this industry shall not 
include retailing and wholesaling activities included within other 
industry wage orders which are applicable in American Samoa.
    (g) Bottling, brewing and dairy products. The bottling, brewing and 
dairy products industry includes the bottling, sale and distribution of 
malt beverages and soft drinks in bottles and other containers and the 
processing or recombining of fluid milk and cream for wholesale and 
retail distribution and the manufacture of malt beverages, butter, 
natural and processed cheese, condensed and evaporated milk, malted 
milk, ice cream and frozen desserts; including also any warehousing 
operation incidental to the above activities of firms engaged in these 
activities.
    (h) Printing. The printing industry is that industry which is 
engaged in printing, job printing, and duplicating. This industry shall 
not include printing performed by an employer who publishes a newspaper, 
magazine, or similar publications.
    (i) Publishing. This industry is that industry which is engaged in 
the publishing of newspapers, magazines, or similar publications other 
than the publishing of a weekly, semiweekly or daily newspaper with a 
circulation of

[[Page 342]]

less than 4,000, the major part of which circulation is within the 
county or counties contiguous thereto.
    (j) Finance and insurance. The finance and insurance industry 
includes all banks (whether privately or government owned in whole or in 
part) and trust companies, credit agencies other than banks, holding 
companies, other investment companies, collection agencies, brokers and 
dealers in securities and commodity contracts, as well as carriers of 
all types of insurance, and insurance agents and brokers.
    (k) Ship maintenance. This industry is defined as all work activity 
associated with ship repair and maintenance, including marine, railway, 
and dry dock operation.
    (l) Hotel. This industry shall include all activities in connection 
with the operation of hotels (whether privately or government owned in 
whole or in part), motels, apartment hotels, and tourist courts engaged 
in providing lodging, with or without meals, for the general public, 
including such laundry and cleaning and other activities as are engaged 
in by a hotel or motel or other lodging facility on its own linens or on 
garments of its guests.
    (m) Tour and travel services. This industry shall include the 
operation of tourist bureaus and of travel and passenger ticket services 
and agencies: Provided, however, that this industry shall not include 
the operation of a freight-shipping agency.
    (n) Private hospitals and educational institutions. This industry 
shall include all activities performed in connection with the operation 
of private hospitals, nursing homes, and related institutions primarily 
engaged in the care of the sick, the aged or the mentally or physically 
disabled or for gifted children, preschools, elementary or secondary 
schools, or institutions of higher education: Provided, however, that 
this industry shall not include employees of the Government of American 
Samoa or employees of any agency or corporation of the Government of 
American Samoa.
    (o) Garment manufacturing. This industry is defined as the 
manufacture from any material of articles of apparel and clothing made 
by knitting, spinning, crocheting, cutting, sewing, embroidering, 
dyeing, or any other processes and includes but is not limited to all 
the following clothing: men's, women's, and children's suits, clothing 
and other products; hosiery; gloves and mittens; sweaters and other 
outerwear; swimwear; leather, leather goods, and related products; 
handkerchief, scarf, and art linen products; shirts; blouses; and 
underwear; uniforms and work clothing; and includes assembling, tagging, 
ironing, and packing apparel for shipping. This industry does not 
include manufacturing, processing or mending of apparel in retail or 
service establishments, including clothing stores, laundries, and other 
stores.
    (p) Miscellaneous activities. This industry shall include every 
activity not included in any other industry defined herein.

[66 FR 44968, Aug. 27, 2001]



Sec. 697.2  Industry wage rates and effective dates.

    Every employer shall pay to each employee in American Samoa, who in 
any workweek is engaged in commerce or in the production of goods for 
commerce, or is employed in any enterprise engaged in commerce or in the 
production of goods for commerce, as these terms are defined in section 
3 of the Fair Labor Standards Act of 1938, wages at a rate not less than 
the minimum rate prescribed in this section for the industries and 
classifications in which such employee is engaged.

----------------------------------------------------------------------------------------------------------------
                                                                               Minimum wage
                                                        --------------------------------------------------------
                        Industry                             Effective          Effective          Effective
                                                          October 3, 2005    October 18, 2005   October 1, 2006
----------------------------------------------------------------------------------------------------------------
(a) Government Employees...............................              $2.77              $2.84              $2.91
(b) Fish Canning and Processing........................               3.26               3.26               3.26
(c) Petroleum Marketing................................               3.85               3.85               3.85
(d) Shipping and Transportation:
    (1) Classification A...............................               4.09               4.09               4.09
    (2) Classification B...............................               3.92               3.92               3.92

[[Page 343]]

 
    (3) Classification C...............................               3.88               3.88               3.88
(e) Construction.......................................               3.60               3.60               3.60
(f) Retailing, Wholesaling, and Warehousing............               3.10               3.10               3.10
(g) Bottling, Brewing, and Dairy Products..............               3.19               3.19               3.19
(h) Printing...........................................               3.50               3.50               3.50
(i) Publishing.........................................               3.63               3.63               3.63
(j) Finance and Insurance..............................               3.99               3.99               3.99
(k) Ship Maintenance...................................               3.34               3.42               3.51
(l) Hotel..............................................               2.86               2.93               3.00
(m) Tour and Travel Services...........................               3.31               3.39               3.48
(n) Private Hospitals and Educational Institutions.....               3.33               3.33               3.33
(o) Garment Manufacturing..............................               2.68               2.68               2.68
(p) Miscellaneous Activities...........................               2.57               2.63               2.70
----------------------------------------------------------------------------------------------------------------


[70 FR 57723, Oct. 3, 2005]



Sec. 697.3  Notices.

    Every employer subject to the provisions of Sec. 697.2 shall post 
in a conspicuous place in each department of his establishment where 
employees subject to the provisions of Sec. 697.2 are working such 
notices of this part as shall be prescribed from time to time by the 
Administrator of the Wage and Hour Division of the U.S. Department of 
Labor, and shall give such other notice as the Administrator may 
prescribe.

[41 FR 24121, June 15, 1976. Redesignated and amended at 66 FR 44969, 
Aug. 27, 2001]



Sec. 697.4  Effective dates.

    The wage rates specified in Sec. 697.2 shall be effective on 
October 18, 2005, except as otherwise specified.

[70 FR 57724, Oct. 3, 2005]

[[Page 344]]



SUBCHAPTER B_STATEMENTS OF GENERAL POLICY OR INTERPRETATION NOT DIRECTLY 
                         RELATED TO REGULATIONS





PART 775_GENERAL--Table of Contents



Sec.
775.0 General enforcement policy.
775.1 Advisory interpretations announced by the Administrator.

    Authority: 52 Stat. 1060, 29 U.S.C. 201 et seq., 61 Stat. 84, 29 
U.S.C. 251 et seq., 49 Stat. 2036, 41 U.S.C. 35 et seq.



Sec. 775.0  General enforcement policy.

    (a) In order to clarify at this time the practices and policies 
which will guide the administration and enforcement of the Fair Labor 
Standards Act of 1938, as amended (52 Stat. 1060, 29 U.S.C. 201-219), 
and the Walsh-Healey Act as amended (49 Stat. 2036, 41 U.S.C. 35-45), as 
affected by the Portal-to-Portal Act of 1947 (61 Stat. 84; 29 U.S.C. 
Sup. 251 et seq.), the following policy is announced effective June 30, 
1947.
    (b) The investigation, inspection and enforcement activities of all 
officers and agencies of the Department of Labor as they relate to the 
Fair Labor Standards Act and the Walsh-Healey Act will be carried out on 
the basis that all employers in all industries whose activities are 
subject to the provisions of the Fair Labor Standards Act or the Walsh-
Healey Act are responsible for strict compliance with the provisions 
thereof and the regulations issued pursuant thereto.
    (c) Any statements, orders, or instructions inconsistent herewith 
are rescinded.

[12 FR 3915, June 17, 1947]



Sec. 775.1  Advisory interpretations announced by the Administrator.

    Advisory interpretations announced by the Administrator serve only 
to indicate the construction of the law which will guide the 
Administrator in the performance of his administrative duties unless he 
is directed otherwise by the authoritative ruling of the courts, or 
unless he shall subsequently decide that his prior interpretation is 
incorrect.

[11 FR 14099, Dec. 5, 1946]



PART 776_INTERPRETATIVE BULLETIN ON THE GENERAL COVERAGE OF THE
WAGE AND HOURS PROVISIONS OF THE FAIR LABOR STANDARDS ACT OF 1938--

Table of Contents



                            Subpart A_General

Sec.
776.0 Subpart limited to individual employee coverage.

                      Individual Employee Coverage

776.0a Introductory statement.

                       How Coverage Is Determined

776.1 General interpretative guides.
776.2 Employee basis of coverage.
776.3 Persons engaging in both covered and noncovered activities.
776.4 Workweek standard.
776.5 Coverage not dependent on method of compensation.
776.6 Coverage not dependent on place of work.
776.7 Geographical scope of coverage.

                        Engaging ``In Commerce''

776.8 The statutory provisions.
776.9 General scope of ``in commerce'' coverage.
776.10 Employees participating in the actual movement of commerce.
776.11 Employees doing work related to instrumentalities of commerce.
776.12 Employees traveling across State lines.
776.13 Commerce crossing international boundaries.

          Engaging In ``The Production Of Goods For Commerce''

776.14 Elements of ``production'' coverage.
776.15 ``Production.''
776.16 Employment in ``producing, . . . or in any other manner working 
          on'' goods.
776.17 Employment in a ``closely related process or occupation directly 
          essential to'' production of goods.
776.18 Employees of producers for commerce.
776.19 Employees of independent employers meeting needs of producers for 
          commerce.
776.20 ``Goods.''
776.21 ``For'' commerce.

[[Page 345]]

                     Subpart B_Construction Industry

776.22 Subpart limited to individual employee coverage.

                           Enterprise Coverage

776.22a Extension of coverage to employment in certain enterprises.

        Individual Employee Coverage In The Construction Industry

776.22b Guiding principles.
776.23 Employment in the construction industry.
776.24 Travel in connection with construction projects.
776.25 Regular and recurring activities as basis of coverage.
776.26 Relationship of the construction work to the covered facility.
776.27 Construction which is related to covered production.
776.28 Covered preparatory activities.
776.29 Instrumentalities and channels of interstate commerce.
776.30 Construction performed on temporarily idle facilities.

    Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201-219.



                            Subpart A_General

    Source: 15 FR 2925, May 17, 1950, unless otherwise noted.



Sec. 776.0  Subpart limited to individual employee coverage.

    This subpart, which was adopted before the amendments of 1961 and 
1966 to the Fair Labor Standards Act, is limited to discussion of 
general coverage of the Act on the traditional basis of engagement by 
individual employees ``in commerce or in the production of goods for 
commerce''. The 1961 and 1966 amendments broadened coverage by extending 
it to other employees on an ``enterprise'' basis, when ``employed in an 
enterprise engaged in commerce or in the production of goods for 
commerce'' as defined in section 3 (r), (s), of the present Act. 
Employees covered under the principles discussed in this subpart remain 
covered under the Act as amended; however, an employee who would not be 
individually covered under the principles discussed in this subpart may 
now be subject to the Act if he is employed in a covered enterprise as 
defined in the amendments. Questions of ``enterprise coverage'' not 
answered in published statements of the Department of Labor may be 
addressed to the Administrator of the Wage and Hour Division, Department 
of Labor, Washington, DC 20210 or assistance may be requested from any 
of the Regional or District Offices of the Division.

[35 FR 5543, Apr. 3, 1970]

                      Individual Employee Coverage



Sec. 776.0a  Introductory statement.

    (a) Scope and significance of this part. (1) The Fair Labor 
Standards Act of 1938 \1\ (hereinafter referred to as the Act), brings 
within the general coverage of its wage and hours provisions every 
employee who is ``engaged in commerce or in the production of goods for 
commerce.'' \2\ What employees are so engaged must be ascertained in the 
light of the definitions of ``commerce'', ``goods'', and ``produced'' 
which are set forth in the Act as amended by the Fair Labor Standards 
Amendments of

[[Page 346]]

1949, \3\ giving due regard to authoritative interpretations by the 
courts and to the legislative history of the Act, as amended. 
Interpretations of the Administrator of the Wage and Hour Division with 
respect to this general coverage are set forth in this part to provide 
``a practical guide to employers and employees as to how the office 
representing the public interest in its enforcement will seek to apply 
it.'' \4\ These interpretations with respect to the general coverage of 
the wage and hours provisions of the Act, indicate the construction of 
the law which the Administrator believes to be correct and which will 
guide him in the performance of his administrative duties under the Act 
unless and until he is otherwise directed by authoritative decisions of 
the courts or concludes, upon reexamination of an interpretation, that 
it is incorrect.
---------------------------------------------------------------------------

    \1\ Pub. L. 718, 75th Cong., 3d sess. (52 Stat. 1060), as amended by 
the Act of June 26, 1940 (Pub. Res. No. 88, 76th Cong., 3d sess., 54 
Stat. 616); by Reorganization Plan No. 2 (60 Stat. 1095), effective July 
16, 1946; by the Portal-to-Portal Act of 1947, approved May 14, 1947 (61 
Stat. 84); and by the Fair Labor Standards Amendments of 1949, approved 
October 26, 1949 (Pub. L. 393, 81st Cong., 1st sess., 63 Stat. 910); by 
Reorganization Plan No. 6 of 1950 (15 FR 3174), effective May 24, 1950; 
and by the Fair Labor Standards Amendments of 1955, approved August 12, 
1955 (Pub. L. 381, 84th Cong., 1st sess., C. 867, 69 Stat. 711).
    \2\ The requirement of section 6 as to minimum wages is: ``Every 
employer shall pay to each of his employees who is engaged in commerce 
or in the production of goods for commerce wages at the following 
rates--'' (not less than $1.00 an hour, except in Puerto Rico and the 
Virgin Islands to which special provisions apply).
    The requirement of section 7 as to maximum hours which an employee 
may work without receiving extra pay for overtime is: ``no employer 
shall employ any of his employees who is engaged in commerce or in the 
production of goods for commerce for a workweek longer than forty hours, 
unless such employee receives compensation for his employment in excess 
of the hours above specified at a rate not less than one and one-half 
times the regular rate at which he is employed.''
    \3\ Pub. L. 393, 81st Cong., 1st sess. (63 Stat. 910). These 
amendments, effective January 25, 1950, leave the existing law unchanged 
except as to provisions specifically amended and the addition of certain 
new provisions. Section 3(b) of the Act, defining ``commerce'', and 
section 3(j), defining ``produced'', were specifically amended as 
explained in Sec. Sec. 776.13 and 776.17(a) herein.
    \4\ Skidmore v. Swift & Co., 323 U.S. 134, 138.
---------------------------------------------------------------------------

    (2) Under the Portal-to-Portal Act of 1947, \5\ interpretations of 
the Administrator may, under certain circumstances, be controlling in 
determining the rights and liabilities of employers and employees. The 
interpretations contained in this bulletin are interpretations on which 
reliance may be placed as provided in section 10 of the Portal-to-Portal 
Act, so long as they remain effective and are not modified, amended, 
rescinded, or determined by judicial authority to be incorrect. However, 
the omission to discuss a particular problem in this part or in 
interpretations supplementing it should not be taken to indicate the 
adoption of any position by the Administrator with respect to such 
problem or to constitute an administrative interpretation or practice or 
enforcement policy.
---------------------------------------------------------------------------

    \5\ Pub. L. 49, 80th Cong., 1st sess. (61 Stat. 84), discussed in 
part 790 of this chapter.
---------------------------------------------------------------------------

    (b) Exemptions and child labor provisions not discussed. This part 
does not deal with the various specific exemptions provided in the 
statute, under which certain employees engaged in commerce or in the 
production of goods for commerce and thus within the general coverage of 
the wage and hours provisions are wholly or partially excluded from the 
protection of the Act's minimum-wage and overtime-pay requirements. Some 
of these exemptions are self-executing; others call for definitions or 
other action by the Administrator. Regulations and interpretations 
relating to specific exemptions may be found in other parts of this 
chapter. Coverage and exemptions under the child labor provisions of the 
Act are discussed in a separate interpretative bulletin (Sec. Sec. 
570.101 to 570.121 of this chapter) issued by the Secretary of Labor.
    (c) Earlier interpretations superseded. All general and specific 
interpretations issued prior to July 11, 1947, with respect to the 
general coverage of the wage and hours provisions of the Act were 
rescinded and withdrawn by Sec. 776.0(b) of the general statement on 
this subject, published in the Federal Register on that date as part 776 
of this chapter (12 FR 4583). To the extent that interpretations 
contained in such general statement or in releases, opinion letters, and 
other statements issued on or after July 11, 1947, are inconsistent with 
the provisions of the Fair Labor Standards Amendments of 1949, they do 
not continue in effect after January 24, 1950. \6\ Effective on the date 
of its publication in the Federal

[[Page 347]]

Register, subpart A of this interpretative bulletin replaces and 
supersedes the general statement previously published as part 776 of 
this chapter, which statement is withdrawn. All other administrative 
rulings, interpretations, practices and enforcement policies relating to 
the general coverage of the wages and hours provisions of the Act and 
not withdrawn prior to such date are, to the extent that they are 
inconsistent with or in conflict with the principles stated in this 
interpretative bulletin, hereby rescinded and withdrawn.
---------------------------------------------------------------------------

    \6\ Section 16(c) of the Fair Labor Standards Amendments of 1949 (63 
Stat. 910) provides:
    ``Any order, regulation, or interpretation of the Administrator of 
the Wage and Hour Division or of the Secretary of Labor, and any 
agreement entered into by the Administrator or the Secretary, in effect 
under the provisions of the Fair Labor Standards Act of 1938, as 
amended, on the effective date of this Act, shall remain in effect as an 
order, regulation, interpretation, or agreement of the Administrator or 
the Secretary, as the case may be, pursuant to this Act, except to the 
extent that any such order, regulation, interpretation, or agreement may 
be inconsistent with the provisions of this Act, or may from time to 
time be amended, modified, or rescinded by the Administrator or the 
Secretary, as the case may be, in accordance with the provisions of this 
Act.''

[15 FR 2925, May 17, 1950, as amended at 21 FR 1448, Mar. 6, 1956. 
Redesignated at 35 FR 5543, Apr. 3, 1970]

                       How Coverage Is Determined



Sec. 776.1  General interpretative guides.

    The congressional policy under which employees ``engaged in commerce 
or in the production of goods for commerce'' are brought within the 
general coverage of the Act's wage and hours provisions is stated in 
section 2 of the Act. This section makes it clear that the congressional 
power to regulate interstate and foreign commerce is exercised in this 
Act in order to remedy certain evils, namely, ``labor conditions 
detrimental to the maintenance of the minimum standards of living 
necessary for health, efficiency, and the general well being of 
workers'' which Congress found ``(a) causes commerce and the channels 
and instrumentalities of commerce to be used to perpetuate such labor 
conditions among the workers of the several States; (b) burdens commerce 
and the free flow of goods in commerce; (c) constitutes an unfair method 
of competition in commerce; (d) leads to labor disputes burdening and 
obstructing commerce and the free flow of goods in commerce and (e) 
interferes with the orderly and fair marketing of goods in commerce.'' 
In carrying out these broad remedial purposes, however, the Congress did 
not choose to make the scope of the Act coextensive in all respects with 
the limits of its power over commerce or to apply it to all activities 
affecting commerce. \7\ Congress delimited the area in which the Act 
operates by providing for certain exceptions and exemptions, and by 
making wage-hour coverage applicable only to employees who are ``engaged 
in'' either ``commerce'', as defined in the Act, or ``production'' of 
``goods'' for such commerce, within the meaning of the Act's definitions 
of these terms. The Fair Labor Standards Amendments of 1949 indicate an 
intention to restrict somewhat the category of employees within the 
reach of the Act under the former definition of ``produced'' and to 
expand to some extent the group covered under the former definition of 
``commerce.'' In his interpretations, the Administrator will endeavor to 
give effect to both the broad remedial purposes of the Act and the 
limitations on its application, seeking guidance in his task from the 
terms of the statute, from authoritative court decisions, and from the 
legislative history of the Act, as amended. \8\
---------------------------------------------------------------------------

    \7\ Kirschbaum v. Walling, 316 U.S. 517; Walling v. Jacksonville 
Paper Co., 317 U.S. 564; 10 East 40th St. Bldg. Co. v. Callus, 325 U.S. 
578; A. H. Phillips, Inc. v. Walling, 324 U.S. 490; Fleming v. Hawkeye 
Pearl Button Co., 113 F. 2d 52 (C.A. 8); Armstrong v. Walling, 161 F. 2d 
515 (C.A. 1); Bowie v. Gonzalez, 117 F. 2d 11 (C.A. 1).
    \8\ Footnote references to some of the relevant court decisions are 
made for the assistance of readers who may be interested in such 
decisions.
    Footnote reference to the legislative history of the 1949 amendments 
are made at points in this part where it is believed they may be 
helpful. References to the Statement of the Managers on the part of the 
House, appended to the Conference Report on the amendments (H. Rept. No. 
1453, 81st Cong., 1st sess.) are abbreviated: H. Mgrs. St. 1949, p. --
--. References to the Statement of a majority of the Senate Conferees, 
95 Cong. Rec., October 19, 1949 at 15372-15377 are abbreviated: Sen. 
St., 1949 Cong. Rec. References to the Congressional Record are to the 
1949 daily issues, the permanent volumes being unavailable at the time 
this part was prepared.
---------------------------------------------------------------------------



Sec. 776.2  Employee basis of coverage.

    (a) The coverage of the Act's wage and hours provisions as described 
in sections 6 and 7 does not deal in a blanket way with industries as a 
whole. Thus, in section 6, it is provided that every employer shall pay 
the statutory

[[Page 348]]

minimum wage to ``each of his employees who is engaged in commerce or in 
the production of goods for commerce.'' It thus becomes primarily an 
individual matter as to the nature of the employment of the particular 
employee. Some employers in a given industry may have no employees 
covered by the Act; other employers in the industry may have some 
employees covered by the Act, and not others; still other employers in 
the industry may have all their employees within the Act's coverage. If, 
after considering all relevant factors, employees are found to be 
engaged in covered work, their employer cannot avoid his obligations to 
them under the Act on the ground that he is not ``engaged in commerce or 
in the production of goods for commerce.'' To the extent that his 
employees are so engaged, he is himself so engaged. \9\
---------------------------------------------------------------------------

    \9\ Kirschbaum v. Walling, 316 U.S. 517. See also Walling v. 
Jacksonville Paper Co., 317 U.S. 564; McLeod v. Threlkeld, 319 U.S. 491; 
Mabee v. White Plains Pub. Co., 327 U.S. 178.
---------------------------------------------------------------------------

    (b) In determining whether an individual employee is within the 
coverage of the wage and hours provisions, however, the relationship of 
an employer's business to commerce or to the production of goods for 
commerce may sometimes be an important indication of the character of 
the employee's work. \10\ It is apparent, too, from the 1949 amendment 
to the definition of ``produced'' and its legislative history that an 
examination of the character of the employer's business will in some 
borderline situations be necessary in determining whether the employees' 
occupation bears the requisite close relationship to production for 
commerce. \11\
---------------------------------------------------------------------------

    \10\ Borden Co. v. Borella, 325 U.S. 679; 10 E. 40th St. Bldg. Co. 
v. Callus, 325 U.S. 578; Armour & Co. v. Wantock, 323 U.S. 126; Donovan 
v. Shell Oil Co., 168 F. 2d 229 (C.A. 4); Hertz Driveurself Stations v. 
United States, 150 F. 2d 923 (C.A. 8); Horton v. Wilson & Co., 223 N.C. 
71, 25 S.E. 2d 437.
    \11\ H. Mgrs. St., 1949, pp. 14, 15; Sen. St. 1949 Cong. Rec. 15372.
---------------------------------------------------------------------------



Sec. 776.3  Persons engaging in both covered and noncovered activities.

    The Act applies to employees ``engaged in commerce or in the 
production of goods for commerce'' without regard to whether such 
employees, or their employer, are also engaged in other activities which 
would not bring them within the coverage of the Act. The Act makes no 
distinction as to the percentage, volume, or amount of activities of 
either employee or employer which constitute engaging in commerce or in 
the production of goods for commerce. Sections 6 and 7 refer to ``each'' 
and ``any'' employee so engaged, and section 15(a)(1) prohibits the 
introduction into the channels of interstate or foreign commerce of 
``any'' goods in the production of which ``any'' employee was employed 
in violation of section 6 or section 7. Although employees doing work in 
connection with mere isolated, sporadic, or occasional shipments in 
commerce of insubstantial amounts of goods will not be considered 
covered by virtue of that fact alone, the law is settled that every 
employee whose engagement in activities in commerce or in the production 
of goods for commerce, even though small in amount, is regular and 
recurring, is covered by the Act. \12\ This does not, however, 
necessarily mean that an employee who at some particular time may engage 
in work which brings him within the coverage of the Act is, by reason of 
that fact, thereafter indefinitely entitled to its benefits.
---------------------------------------------------------------------------

    \12\ United States v. Darby, 312 U.S. 100; Mabee v. White Plains 
Pub. Co., 327 U.S. 178; Schmidt v. Peoples Telephone Union of Maryville, 
Missouri, 138 F. 2d 13 (C.A. 8); New Mexico Public Service Co. v. Engel, 
145 F. 2d 636 (C.A. 10); Sun Pub. Co. v. Walling, 140 F. 2d 445 (C.A. 
6), certiorari denied 322 U.S. 728; Davis v. Goodman Lumber Co., 133 F. 
2d 52 (C.A. 4).
---------------------------------------------------------------------------



Sec. 776.4  Workweek standard.

    (a) The workweek is to be taken as the standard in determining the 
applicability of the Act. \13\ Thus, if in any workweek an employee is 
engaged in both covered and noncovered work he is entitled to both the 
wage and hours

[[Page 349]]

benefits of the Act for all the time worked in that week, unless 
exempted therefrom by some specific provision of the Act. The proportion 
of his time spent by the employee in each type of work is not material. 
If he spends any part of the workweek in covered work he will be 
considered on exactly the same basis as if he had engaged exclusively in 
such work for the entire period. Accordingly, the total number of hours 
which he works during the workweek at both types of work must be 
compensated for in accordance with the minimum wage and overtime pay 
provisions of the Act.
---------------------------------------------------------------------------

    \13\ See Gordon's Transports v. Walling, 162 F. 2d 203 (C.A. 6), 
certiorari denied 332 U.S. 774; Walling v. Fox-Pelletier Detective 
Agency, 4 W.H. Cases 452 (W.D. Tenn.), 8 Labor Cases 62,219; Walling v. 
Black Diamond Coal Mining Co., 59 F. Supp. 348 (W.D. Ky.); Fleming v. 
Knox, 42 F. Supp. 948 (S.D. Ga.); Roberg v. Henry Phipps Estate, 156 F. 
2d 958 (C.A. 2). For a definition of the workweek, see Sec. 778.2(c) of 
this chapter.
---------------------------------------------------------------------------

    (b) It is thus recognized that an employee may be subject to the Act 
in one workweek and not in the next. It is likewise true that some 
employees of an employer may be subject to the Act and others not. But 
the burden of effecting segregation between covered and noncovered work 
as between particular workweeks for a given employee or as between 
different groups of employees is upon the employer. Where covered work 
is being regularly or recurrently performed by his employees, and the 
employer seeks to segregate such work and thereby relieve himself of his 
obligations under sections 6 and 7 with respect to particular employees 
in particular workweeks, he should be prepared to show, and to 
demonstrate from his records, that such employees in those workweeks did 
not engage in any activities in interstate or foreign commerce or in the 
production of goods for such commerce, which would necessarily include a 
showing that such employees did not handle or work on goods or materials 
shipped in commerce or used in production of goods for commerce, or 
engage in any other work closely related and directly essential to 
production of goods for commerce. \14\ The Division's experience has 
indicated that much so-called ``segregation'' does not satisfy these 
tests and that many so-called ``segregated'' employees are in fact 
engaged in commerce or in the production of goods for commerce.
---------------------------------------------------------------------------

    \14\ See Guess v. Montague, 140 F. 2d 500 (C.A. 4).
---------------------------------------------------------------------------



Sec. 776.5  Coverage not dependent on method of compensation.

    The Act's individual employee coverage is not limited to employees 
working on an hourly wage. The requirements of section 6 as to minimum 
wages are that ``each'' employee described therein shall be paid wages 
at a rate not less than a specified rate ``an hour''. \15\ This does not 
mean that employees cannot be paid on a piecework basis or on a salary, 
commission, or other basis; it merely means that whatever the basis on 
which the workers are paid, whether it be monthly, weekly, or on a 
piecework basis, they must receive at least the equivalent of the 
minimum hourly rate. ``Each'' and ``any'' employee obviously and 
necessarily includes one compensated by a unit of time, by the piece, or 
by any other measurement. \16\ Regulations prescribed by the 
Administrator (part 516 of this chapter) provide for the keeping of 
records in such form as to enable compensation on a piecework or other 
basis to be translated into an hourly rate. \17\
---------------------------------------------------------------------------

    \15\ Special exceptions are made for Puerto Rico, the Virgin 
Islands, and American Samoa.
    \16\ United States v. Rosenwasser, 323 U.S. 360.
    \17\ For methods of translating other forms of compensation into an 
hourly rate for purposes of sections 6 and 7, see parts 531 and 778 of 
this chapter.

[35 FR 5543, Apr. 3, 1970]



Sec. 776.6  Coverage not dependent on place of work.

    Except for the general geographical limitations discussed in Sec. 
776.7, the Act contains no prescription as to the place where the 
employee must work in order to come within its coverage. It follows that 
employees otherwise coming within the terms of the Act are entitled to 
its benefits whether they perform their work at home, in the factory, or 
elsewhere. \18\ The specific provisions of the Act relative to 
regulation of homework serve to emphasize this fact. \19\
---------------------------------------------------------------------------

    \18\ Walling v. American Needlecrafts, 139 F. 2d 60 (C.A. 6); 
Walling v. Twyeffort Inc., 158 F. 2d 944 (C.A. 2); McComb v. 
Homeworkers' Handicraft Cooperative, 176 F. 2d 633 (C.A. 4).
    \19\ See 6(a)(2); Sec. 11(d).

---------------------------------------------------------------------------

[[Page 350]]



Sec. 776.7  Geographical scope of coverage.

    (a) The geographical areas within which the employees are to be 
deemed ``engaged in commerce or in the production of goods for 
commerce'' within the meaning of the Act, and thus within its coverage 
are governed by definitions in section 3 (b), (c), and (j). In the 
definition of ``produced'' in section 3(j), ``production'' is expressly 
confined to described employments ``in any State.'' (See Sec. 776.15 
(a).) ``Commerce'' is defined to mean described activities ``among the 
several States or between any State and any place outside thereof.'' 
(See Sec. 776.8.) ``State'' is defined in section 3(c) to mean ``any 
State of the United States or the District of Columbia or any Territory 
or possession of the United States.''
    (b) Under the definitions in paragraph (a) of this section, 
employees within the District of Columbia; Puerto Rico; the Virgin 
Islands; Outer Continental Shelf lands defined in the Outer Continental 
Shelf Lands Act (ch. 345, 67 Stat. 462, 43 U.S.C. 1331); American Samoa; 
Guam; Wake Island; Enewetok Atoll; Kwajalein Atoll; Johnston Island; and 
the Canal Zone are dealt with on the same basis as employees working in 
any of the 50 States. \20\ Congress did not exercise the national 
legislative power over the District of Columbia or the Territories or 
possessions referred to by extending the Act to purely local commerce 
within them.
---------------------------------------------------------------------------

    \20\ An amendment to the Fair Labor Standards Act of 1938, 71 Stat. 
514 (approved Aug. 30, 1957) provides that no employer shall be subject 
to any liability or punishment under the Act with respect to work 
performed at any time in work places excluded from the Act's coverage by 
this law or for work performed prior to Nov. 29, 1957, on Guam, Wake 
Island, or the Canal Zone; or for work performed prior to the 
establishment, by the Secretary, of a minimum wage rate applicable to 
such work in American Samoa. Work performed by employees in ``a work 
place within a foreign country or within territory under the 
jurisdiction of the United States'' other than those enumerated in this 
paragraph is exempt by this amendment from coverage under the Act. When 
part of the work performed by an employee for an employer in any 
workweek is covered work performed in any State, it makes no difference 
where the remainder of such work is performed; the employee is entitled 
to the benefits of the Act for the entire workweek unless he comes 
within some specific exemption. The reference in 71 Stat. 514 to 
liability for work performed in American Samoa is an extension of the 
relief granted by the American Samoa Labor Standards Amendments of 1956 
(29 U.S.C. Supp. IV, secs. 206, 213, and 216).

[15 FR 2925, May 17, 1950, as amended at 35 FR 5543, Apr. 3, 1970]

                        Engaging ``In Commerce''



Sec. 776.8  The statutory provisions.

    (a) The activities constituting ``commerce'' within the meaning of 
the phrase ``engaged in commerce'' in sections 6 and 7 of the Act are 
defined in section 3(b) as follows:

    Commerce means trade, commerce, transportation, transmission, or 
communication among the several States, or between any State and any 
place outside thereof. \21\
---------------------------------------------------------------------------

    \21\ As amended by section 3(a) of the Fair Labor Standards 
Amendments of 1949.


As has been noted in Sec. 776.7, the word ``State'' in this definition 
refers not only to any of the fifty States but also to the District of 
Columbia and to any Territory or possession of the United States.
    (b) It should be observed that the term commerce is very broadly 
defined. The definition does not limit the term to transportation, or to 
the ``commercial'' transactions involved in ``trade,'' although these 
are expressly included. Neither is the term confined to commerce in 
``goods.'' Obviously, ``transportation'' or ``commerce'' between any 
State and any place outside its boundaries includes a movement of 
persons as well as a movement of goods. And ``transmission'' or 
``communication'' across State lines constitutes ``commerce'' under the 
definition, without reference to whether anything so transmitted or 
communicated is ``goods.'' \22\
---------------------------------------------------------------------------

    \22\ ``Goods'' is, however, broadly defined in the Act. See Sec. 
776.20(a).

The inclusion of the term ``commerce'' in the definition of the same 
term as used in the Act implies that no special or limited meaning is 
intended; rather, that the scope of the term for purposes of the Act is 
at least as broad as it

[[Page 351]]

would be under concepts of ``commerce'' established without reference to 
this definition.



Sec. 776.9  General scope of ``in commerce'' coverage.

    Under the definitions quoted above, it is clear that the employees 
who are covered by the wage and hours provisions of the Act as employees 
``engaged in commerce'' are employees doing work involving or related to 
the movement of persons or things (whether tangibles or intangibles, and 
including information and intelligence) ``among the several States or 
between any State and any place outside thereof.'' \23\ Although this 
does not include employees engaged in activities which merely ``affect'' 
such interstate or foreign commerce, the courts have made it clear that 
coverage of the Act based on engaging in commerce extends to every 
employee employed ``in the channels of'' such commerce or in activities 
so closely related to such commerce, as a practical matter, that they 
should be considered a part of it. \24\ The courts have indicated that 
the words ``in commerce'' should not be so limited by construction as to 
defeat the purpose of Congress, but should be interpreted in a manner 
consistent with their practical meaning and effect in the particular 
situation. One practical question to be asked is whether, without the 
particular service, interstate or foreign commerce would be impeded, 
impaired, or abated; \25\ others are whether the service contributes 
materially to the consummation of transactions in interstate or foreign 
commerce \26\ or makes it possible for existing instrumentalities of 
commerce \27\ to accomplish the movement of such commerce effectively 
and to free it from burdens or obstructions. \28\
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    \23\ ``Any place outside thereof'' is not limited in meaning to 
another State or country. Any movement between a State and a place 
``outside thereof'' is ``commerce'' for purposes of the Act, such as 
ship-to-shore communication, or transportation out of a State by ship of 
food, fuel, or ice to be consumed at sea before arrival at another port.
    \24\ Walling v. Jacksonville Paper Co., 317 U.S. 564; Overstreet v. 
North Shore Corp., 318 U.S. 125; McLeod v. Threlkeld, 319 U.S. 491; 
Boutell v. Walling, 327 U.S. 463; Pedersen v. J. F. Fitzgerald Constr. 
Co., 318 U.S. 740 and 324 U.S. 720.
    \25\ Republic Pictures Corp. v. Kappler, 151 F. 2d 543 (C.A. 8), 
affirmed 327 U.S. 757; New Mexico Public Service Co. v. Engel, 145 F. 2d 
636 (C.A. 10).
    \26\ Walling v. Sondock, 132 F. 2d 77 (C.A. 5), certiorari denied 
318 U.S. 772. See also Horton v. Wilson & Co., 223 N.C. 71, 25 S.E. 2d 
437, in which the court stated that an employee is engaged ``in 
commerce'' if his services--not too remotely but substantially and 
directly--aid in such commerce as defined in the Act.
    \27\ For a list of such instrumentalities, see Sec. 776.11.
    \28\ Overstreet v. North Shore Corp., 318 U.S. 125; J. F. Fitzgerald 
Constr. Co. v. Pedersen, 324 U.S. 720; Ritch v. Puget Sound Bridge & 
Dredging Co., 156 F. 2d 334 (C.A. 9); Walling v. McCrady Constr. Co., 
156 F. 2d 932 (C.A. 3); Bennett v. V. P. Loftis, 167 F. 2d 286 (C.A. 4); 
Walling v. Patton-Tully Transp. Co., 134 F. 2d 945 (C.A. 6).
---------------------------------------------------------------------------



Sec. 776.10  Employees participating in the actual movement of commerce.

    (a) Under the principles stated in Sec. 776.9, the wage and hours 
provisions of the Act apply typically, but not exclusively, to employees 
such, as those in the telephone, \29\ telegraph, \30\ television, radio, 
\31\ transportation and shipping \32\ industries, since these industries 
serve as the actual instrumentalities and channels of interstate and

[[Page 352]]

foreign commerce. Similarly, employees of such businesses as banking, 
insurance, newspaper publishing, \33\ and others which regularly utilize 
the channels of interstate and foreign commerce in the course of their 
operations, are generally covered by the Act.
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    \29\ Schmidt v. Peoples Telephone Union of Maryville, Mo., 138 F. 2d 
13 (C.A. 8); North Shore Corp. v. Barnett, 143 F. 2d 172 (C.A. 5); 
Strand v. Garden Valley Telephone Co., 51 F. Supp. 898 (D. Minn.).
    \30\ Western Union Telegraph Co. v. Lenroot, 323 U.S. 490; Western 
Union Telegraph Co. v. McComb, 165 F. 2d 65 (C.A. 6), certiorari denied 
333 U.S. 862; Moss v. Postal Telegraph Cable Co., 42 F. Supp. 807 (M.D. 
Ga.).
    \31\ Wilson v. Shuman, 140 F. 2d 644 (C.A. 8); Wabash Radio Corp. v. 
Walling, 162 F. 2d 391 (C.A. 6).
    \32\ Overnight Motor Co. v. Missel, 316 U.S. 572; Hargis v. Wabash 
R. Co., 163 F. 2d 607 (C.A. 7); Rockton & Rion R.R. v. Walling 146 F. 2d 
111 (C.A. 4), certiorari denied 334 U.S. 880; Walling v. Keansburg 
Steamboat Co., 162 F. 2d 405 (C.A. 3); Knudsen v. Lee & Simmons, 163 F. 
2d 95 (C.A. 2); Walling v. Southwestern Greyhound Lines, 65 F. Supp. 52 
(W.D. Mo.); Walling v. Atlantic Greyhound Corp., 61 F. Supp. 992 (E.D. 
S.C.).
    \33\ Sun Pub. Co. v. Walling, 140 F. 2d 445 (C.A. 6), certiorari 
denied 322 U.S. 728. See also Oklahoma Press Pub. Co. v. Walling, 327 
U.S. 186, and McComb v. Dessau, 9 W.H. Cases 332 (S.D. Calif.) 17 Labor 
Cases, 65, 643.
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    (b) Employees whose work is an essential part of the stream of 
interstate or foreign commerce, in whatever type of business they are 
employed, are likewise engaged in commerce and within the Act's 
coverage. This would include, for example, employees of a warehouse 
whose activities are connected with the receipt or distribution of goods 
across State lines. \34\ Also, since ``commerce'' as used in the Act 
includes not only ``transmission'' of communications but 
``communication'' itself, employees whose work involves the continued 
use of the interstate mails, telegraph, telephone or similar 
instrumentalities for communication across State lines are covered by 
the Act. \35\ This does not mean that any use by an employee of the 
mails and other channels of communication is sufficient to establish 
coverage. But if the employee, as a regular and recurrent part of his 
duties, uses such instrumentalities in obtaining or communicating 
information or in sending or receiving written reports or messages, or 
orders for goods or services, or plans or other documents across State 
lines, he comes within the scope of the Act as an employee directly 
engaged in the work of ``communication'' between the State and places 
outside the State.
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    \34\ Phillips Co. v. Walling, 324 U.S. 490; Clyde v. Broderick, 144 
F. 2d 348 (C.A. 10).
    \35\ McComb v. Weller, 9 W.H. Cases 53 (W.D. Tenn.); Yunker v. Abbye 
Employment Agency, 32 N.Y.S. 2d 715; (Munic. Ct. N.Y.C.); Phillips v. 
Meeker Coop. Light & Power Asso., 63 F. Supp. 733 (D. Minn.); Anderson 
Bros. Corp. v. Flynn, 218 S.W. 2d 653 (C.A. Ky.).

[15 FR 2925, May 17, 1950, as amended at 22 FR 5684, July 18, 1957]



Sec. 776.11  Employees doing work related to instrumentalities of commerce.

    (a) Another large category of employees covered as ``engaged in 
commerce'' is comprised of employees performing the work involved in the 
maintenance, repair, or improvement of existing instrumentalities of 
commerce. (See the cases cited in footnote 28 to Sec. 776.9. See also 
the discussion of coverage of employees engaged in building and 
construction work, in subpart B of this part.) Typical illustrations of 
instrumentalities of commerce include railroads, highways, city streets, 
pipe lines, telephone lines, electrical transmission lines, rivers, 
streams, or other waterways over which interstate or foreign commerce 
more or less regularly moves; airports; railroad, bus, truck, or 
steamship terminals; telephone exchanges, radio and television stations, 
post offices and express offices; bridges and ferries carrying traffic 
moving in interstate or foreign commerce (even though within a single 
State); bays, harbors, piers, wharves and docks used for shipping 
between a State and points outside; dams, dikes, revetments and levees 
which directly facilitate the uninterrupted movement of commerce by 
enhancing or improving the usefulness of waterways, railways, and 
highways through control of water depth, channels or flow in streams or 
through control of flood waters; warehouses or distribution depots 
devoted to the receipt and shipment of goods in interstate or foreign 
commerce; ships, vehicles, and aircraft regularly used in transportation 
of persons or goods in commerce; and similar fixed or movable facilities 
on which the flow of interstate and foreign commerce depends.
    (b) It is well settled that the work of employees involved in the 
maintenance, repair, or improvement of such existing instrumentalities 
of commerce is so closely related to interstate or foreign commerce as 
to be in practice and in legal contemplation a part of it. Included 
among the employees who are thus ``engaged in commerce'' within the 
meaning of the Act are employees of railroads, telephone companies, and

[[Page 353]]

similar instrumentalities who are engaged in maintenance-of-way work; 
\36\ employees (including office workers, guards, watchmen, etc.) 
engaged in work on contracts or projects for the maintenance, repair, 
reconstruction or other improvement of such instrumentalities of 
commerce as the transportation facilities of interstate railroads, 
highways, waterways, or other interstate transportation facilities, or 
interstate telegraph, telephone, or electrical transmission facilities 
(see subpart B of this part); and employees engaged in the maintenance 
or alteration and repair of ships \37\ or trucks \38\ used as 
instrumentalities of interstate or foreign commerce. Also, employees 
have been held covered as engaged in commerce where they perform such 
work as watching or guarding ships or vehicles which are regularly used 
in commerce \39\ or maintaining, watching, or guarding warehouses, 
railroad or equipment yards, etc., where goods moving in interstate 
commerce are temporarily held, \40\ or acting as porters, janitors, or 
in other maintenance capacities in bus stations, railroad stations, 
airports, or other transportation terminals. \41\
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    \36\ Davis v. Rockton & Rion R.R., 65 F. Supp. 67 affirmed in 159 F. 
2d 291 (C.A. 4); North Shore Corp. v. Barnett, 143 F. 2d 172 (C.A. 5); 
Palmer v. Howard, 12 Lab. Cas. (CCH) par. 63, 756 (W.D. Tenn.); Williams 
v. Atlantic Coast Lines R.R. Co., 1 W.M. Cases 289 (E.D. N.C. 1940), 2 
Labor Cases (CCH) par. 18, 564.
    \37\ Slover v. Wathen, 140 F. 2d 258 (C.A. 4); Walling v. Keansburg 
Steamboat Co., 162 F. 2d 405 (C.A. 3).
    \38\ Boutell v. Walling, 327 U.S. 463; Morris v. McComb, 332 U.S. 
422; Skidmore v. John J. Casale, Inc., 160 F. 2d 527 (C.A. 2), 
certiorari denied 331 U.S. 812; Hertz Drivurself Stations v. United 
States, 150 F. 2d 923 (C.A. 8); Walling v. Sturm & Sons, Inc., 6 W.H. 
Cases 131 (D.N.J.) 10 Labor Cases (CCH) par. 62, 980.
    As to exemptions from the overtime requirements for mechanics 
employed by motor carriers, see part 782 of this chapter. For exemptions 
applicable to retail or service establishments, see part 779 of this 
chapter.
    \39\ Slover v. Wathen, 140 F. 2d 258 (C.A. 4); Agosto v. Rocafort, 5 
W.H. Cases 176 (D.P.R.), 9 Labor Cases (CCH) par. 62, 610; Cannon v. 
Miller, 155 F. 2d 500 (S. Ct. Wash.).
    \40\ Engebretson v. E. J. Albrecht Co., 150 F. 2d 602 (C.A. 7); Mid-
Continent Petroleum Corp. v. Keen, 157 F. 2d 310 (C.A. 8); Walling v. 
Mutual Wholesale Food & Supply Co., 141 F. 2d 331 (C.A. 8); Walling v. 
Sondock, 132 F. 2d 77 (C.A. 5); certiorari denied 318 U.S. 772; Reliance 
Storage & Insp. Co. v. Hubbard, 50 F. Supp. 1012 (W.D. Va.); Walling v. 
Fox-Pelletier Detective Agency, 4 W.H. Cases 452 (W.D. Tenn. 1944); 8 
Labor Cases (CCH) par. 62, 219; McComb v. Russell Co., 9 W.H. Cases 258 
(D. Miss. 1949), 17 Labor Cases (CCH) par. 65, 519.
    \41\ Mornford v. Andrews, 151 F. 2d 511 (C.A. 5); Hargis v. Wabash 
R. Co. 163 F. 2d 607 (C.A. 7); Walling v. Atlantic Greyhound Corp., 61 
F. Supp. 992 (E.D. S.C.); Rouch v. Continental Oil Co., 55 F. Supp. 315 
(D. Kans.); see also Williams v. Jacksonville Terminal Co., 315 U.S. 
386.
---------------------------------------------------------------------------

    (c) On the other hand, work which is less immediately related to the 
functioning of instrumentalities of commerce than is the case in the 
foregoing examples may be too remote from interstate or foreign commerce 
to establish coverage on the ground that the employee performing it is 
``engaged in commerce.'' This has been held true, for example, of a cook 
preparing meals for workmen who are repairing tracks over which 
interstate trains operate, \42\ and of a porter caring for washrooms and 
lockers in a garage which is not an instrumentality of commerce, where 
trucks used both in intrastate and interstate commerce are serviced. 
\43\
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    \42\ McLeod v. Threlkeld, 319 U.S. 491.
    \43\ Skidmore v. John J. Casale, Inc., 160 F. 2d 527, certiorari 
denied 331 U.S. 812 (use in interstate commerce of trucks serviced was 
from 10 to 25 percent of total use).
---------------------------------------------------------------------------

    (d) There are other situations in which employees are engaged ``in 
commerce'' and therefore within the coverage of the Act because they 
contribute directly to the movement of commerce by providing goods or 
facilities to be used or consumed by instrumentalities of commerce in 
the direct furtherance of their activities of transportation, 
communication, transmission, or other movement in interstate or foreign 
commerce. Thus, for example, employees are considered engaged ``in 
commerce'' where they provide to railroads, radio stations, airports, 
telephone exchanges, or other similar instrumentalities of commerce such 
things as electric energy, \44\ steam, fuel, or water, which are 
required for the movement of the commerce carried

[[Page 354]]

by such instrumentalities. \45\ Such work is ``so related to the actual 
movement of commerce as to be considered an essential and indispensable 
part thereof, and without which it would be impeded or impaired.'' \46\
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    \44\ New Mexico Public Service Co. v. Engel, 145 F. 2d 636 (C.A. 
10); Walling v. Connecticut Co., 154 F. 2d 552 (C.A. 2).
    \45\ Such employees would also be covered as engaged in the 
production of goods for commerce. See Lewis v. Florida Power & Light 
Co., 154 F. 2d 751 (C.A. 5); Walling v. Connecticut Co., 154 F. 2d 552 
(C.A. 2); also Sec. 776.21(b).
    \46\ New Mexico Public Service Co. v. Engel, 145 F. 2d 636, 640 
(C.A. 10).
---------------------------------------------------------------------------



Sec. 776.12  Employees traveling across State lines.

    Questions are frequently asked as to whether the fact that an 
employee crosses State lines in connection with his employment brings 
him within the Act's coverage as an employee ``engaged in commerce.'' 
Typical of the employments in which such questions arise are those of 
traveling service men, traveling buyers, traveling construction crews, 
collectors, and employees of such organizations as circuses, carnivals, 
road shows, and orchestras. The area of coverage in such situations 
cannot be delimited by any exact formula, since questions of degree are 
necessarily involved. If the employee transports material or equipment 
or other persons across State lines or within a particular State as a 
part of an interstate movement, it is clear of course, that he is 
engaging in commerce. \47\ And as a general rule, employees who are 
regularly engaged in traveling across State lines in the performance of 
their duties (as distinguished from merely going to and from their homes 
or lodgings in commuting to a work place) are engaged in commerce and 
covered by the Act. \48\ On the other hand, it is equally plain that an 
employee who, in isolated or sporadic instances, happens to cross a 
State line in the course of his employment, which is otherwise 
intrastate in character, is not, for that sole reason, covered by the 
Act. Nor would a man who occasionally moves to another State in order to 
pursue an essentially local trade or occupation there become an employee 
``engaged in commerce'' by virtue of that fact alone. Doubtful questions 
arising in the area between the two extremes must be resolved on the 
basis of the facts in each individual case.
---------------------------------------------------------------------------

    \47\ The employee may, however, be exempt from the overtime 
provisions of the Act under section 13(b)(1). See part 792 of this 
chapter.
    \48\ Reck v. Zarmocay, 264 App. Div. 520, 36 N.Y.S. 2d 394; Colbeck 
v. Dairyland Creamery Co., 17 N.W. 2d 262 (S. Ct. S.D.).
---------------------------------------------------------------------------



Sec. 776.13  Commerce crossing international boundaries.

    Under the Act, as amended, an employee engaged in ``trade commerce, 
transportation, transmission, or communication'' between any State and 
any place outside thereof is covered by the Act regardless of whether 
the ``place outside'' is another State or is a foreign country or is 
some other place. Before the amendment to section 3(b) which became 
effective January 25, 1950, employees whose work related solely to the 
flow of commerce into a State from places outside it which were not 
``States'' as defined in the Act were not employees engaged in 
``commerce'' for purposes of the Act, although employees whose work was 
concerned with the flow of commerce out of the State to such places were 
so engaged. \49\ This placed employees of importers in a less favorable 
position under the Act than the employees of exporters. This inequality 
was removed by the amendment to section 3(b). \50\ Accordingly, 
employees performing work in connection with the importation of goods 
from foreign countries are engaged ``in commerce'' and covered by the 
Act, as amended. The coverage of such employees, as of those performing 
work in connection with the exportation of goods to foreign countries, 
is determined by the same principles as in the case of employees whose 
work is connected with goods procured from or sent to other States.
---------------------------------------------------------------------------

    \49\ The definition of ``commerce'' previously referred to commerce 
``from any State to any place outside thereof.'' The amendment 
substituted ``between'' for ``from'' and ``and'' for ``to'' in this 
clause.
    \50\ H. Mgrs. St., 1949, pp. 13, 14.

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[[Page 355]]

          Engaging in ``The Production of Goods for Commerce''



Sec. 776.14  Elements of ``production'' coverage.

    Sections 6 and 7 of the Act, as has been noted, cover not only 
employees who are engaged ``in commerce'' as explained above, but also 
``each'' and ``any'' employee who is engaged in the ``production'' of 
``goods'' for ``commerce''. What employees are so engaged can be 
determined only by references to the very comprehensive definitions 
which Congress has supplied to make clear what is meant by 
``production'', by ``goods,'' and by ``commerce'' as those words are 
used in sections 6 and 7. In the light of these definitions, there are 
three interrelated elements of coverage to be considered in determining 
whether an employee is engaged in the production of goods for commerce: 
(a) There must be ``production''; (b) such production must be of 
``goods''; (c) such production of goods must be ``for commerce''; all 
within the meaning of the Act. \51\ The three elements of ``production'' 
coverage are discussed in order in the sections following.
---------------------------------------------------------------------------

    \51\ These elements need not be considered if the employee would be 
covered in any event because engaged ``in commerce'' under the 
principles discussed in preceding sections of this part.
---------------------------------------------------------------------------



Sec. 776.15  ``Production.''

    (a) The statutory provisions. The activities constituting 
``production'' within the meaning of the phrase ``engaged in * * * 
production of goods for commerce'' are defined in the Act \52\ as 
follows:
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    \52\ Act, section 3(j). This definition is also applicable in 
determining coverage of the child labor provisions of the Act. See part 
4 of this title.

    Produced means produced, manufactured, mined, handled, or in any 
other manner worked on in any State; and for the purposes of this Act an 
employee shall be deemed to have been engaged in the production of goods 
if such employee was employed in producing, manufacturing, mining, 
handling, transporting, or in any other manner working on such goods, or 
in any closely related process or occupation directly essential to the 
---------------------------------------------------------------------------
production thereof, in any State.


The Act bars from interstate commerce ``any'' goods in the production of 
which ``any'' employee was employed in violation of the minimum-wage or 
overtime-pay provisions, \53\ and provides that in determining, for 
purposes of this provision, whether an employee was employed in the 
production of such goods:
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    \53\ Act, section 15(a)(1). The only exceptions are stated in the 
section itself, which provides that ``it shall be unlawful for any 
person--(1) to transport, offer for transportation, ship, deliver, or 
sell in commerce, or to ship, deliver, or sell with knowledge that 
shipment or delivery or sale thereof in commerce is intended, any goods 
in the production of which any employee was employed in violation of 
section 6 or section 7, or in violation of any regulation or order of 
the Administrator issued under section 14; except that no provision of 
this Act shall impose any liability upon any common carrier for the 
transportation in commerce in the regular course of its business of any 
goods not produced by such common carrier, and no provision of this Act 
shall excuse any common carrier from its obligation to accept any goods 
for transportation; and except that any such transportation, offer, 
shipment, delivery, or sale of such goods by a purchaser who acquired 
them in good faith in reliance on written assurance from the producer 
that the goods were produced in compliance with the requirements of the 
Act, and who acquired such goods for value without notice of any such 
violation, shall not be deemed unlawful;''

* * * proof that any employee was employed in any place of employment 
where goods shipped or sold in commerce were produced, within ninety 
days prior to the removal of the goods from such place of employment, 
shall be prima facie evidence that such employee was engaged in the 
production of such goods. \54\
---------------------------------------------------------------------------

    \54\ Act, sec. 15(b).

    (b) General scope of ``production'' coverage. The statutory 
provisions quoted in paragraph (a) of this section, show that for 
purposes of the Act, wherever goods are being produced for interstate or 
foreign commerce, the employees who are covered as ``engaged in the 
production'' of such goods, include, in

[[Page 356]]

general, all those whose work may fairly be said to be a part of their 
employer's production of such goods, \55\ and include those whose work 
is closely related and directly essential thereto, \56\ whether employed 
by the same or a different employee. (See Sec. Sec. 776.17 to 776.19.) 
Typically, but not exclusively, this includes that large group of 
employees engaged in mines, oil fields, quarries, and manufacturing, 
processing, or distributing plants where goods are produced for 
commerce. The employees covered as engaged in ``production'' are not 
limited, however, to those engaged in actual physical work on the 
product itself or to those in the factories, mines, warehouses, or other 
place of employment where goods intended for commerce are being 
produced. If the requisite relationship to production of such goods is 
present, an employee is covered, regardless of whether his work brings 
him into actual contact with such goods or into the establishments where 
they are produced, and even though his employer may be someone other 
than the producer of the goods for commerce. \57\ As explained more 
fully in the sections following, the Act's ``production'' coverage 
embraces many employees who serve productive enterprises in capacities 
which do not involve working directly on goods produced but which are 
nevertheless closely related and directly essential to successful 
operations in producing goods for interstate or foreign commerce. And as 
a general rule, in conformity with the provisions of the Act quoted in 
paragraph (a) of this section, an employee will be considered to be 
within the general coverage of the wage and hours provisions if he is 
working in a place of employment where goods sold or shipped in 
interstate commerce or foreign commerce are being produced, unless the 
employer maintains the burden of establishing that the employee's 
functions are so definitely segregated from such production that they 
should not be regarded as closely related and directly essential 
thereto. \58\
---------------------------------------------------------------------------

    \55\ Borden Co. v. Borella, 325 U.S. 679; Armour & Co. v. Wantock, 
323 U.S. 126. See also paragraph (c) of this section.
    \56\ Kirschbaum v. Walling, 316 U.S. 517; Roland Electrical Co. v. 
Walling, 326 U.S. 657; H. Mgrs. St., 1949, p. 14; Sen. St. 1949 Cong. 
Rec. p. 15372.
    \57\ Borden Co. v. Borella, 325 U.S. 679; Roland Electrical Co. v. 
Walling. 326 U.S. 657; Kirschbaum v. Walling, 316 U.S. 517; Walton v. 
Southern Package Corp. 320 U.S. 540.
    \58\ Guess v. Montague, 140 F. 2d 500 (C.A. 4). Cf. Armour & Co. v. 
Wantock, 323 U.S. 126.
---------------------------------------------------------------------------



Sec. 776.16  Employment in ``producing, * * * or in any other manner 
working on'' goods.

    (a) Coverage in general. Employees employed in ``producing, 
manufacturing, mining, handling, or in any other manner working on'' 
goods (as defined in the Act, including parts or ingredients thereof) 
for interstate or foreign commerce are considered actually engaged in 
the ``production'' of such goods, within the meaning of the Act. Such 
employees have been within the general coverage of the wage and hours 
provisions since enactment of the Act in 1938, and remain so under the 
Fair Labor Standards Amendments of 1949. \59\
---------------------------------------------------------------------------

    \59\ H. Mgrs. St., 1949, p. 14; Sen. St., 1949 Cong. Rec., p. 15372.
---------------------------------------------------------------------------

    (b) Activities constituting actual ``production'' under statutory 
definition. It will be noted that the actual productive work described 
in this portion of the definition of ``produced'' includes not only the 
work involved in making the products of mining, manufacturing, or 
processing operations, but also includes ``handling, transporting, or in 
any other manner working on'' goods. This is so, regardless of whether 
the goods are to be further processed or are so-called ``finished 
goods.'' The Supreme Court has stated that this language of the 
definition brings within the scope of the term ``production,'' as used 
in the Act, ``every step in putting the subject to commerce in a state 
to enter commerce,'' including ``all steps, whether manufacture or not, 
which lead to readiness for putting goods into the stream of commerce,'' 
and ``every kind of incidental operation preparatory to putting goods 
into the stream of commerce.'' \60\
---------------------------------------------------------------------------

    \60\ Western Union Tel. Co. v. Lenroot, 323 U.S. 490. See, to the 
same effect, Walling v. Friend, 156 F. 2d 429 (C.A. 8); Walling v. 
Commet Carriers, 151 F. 2d 107 (C.A. 2); Phillips v. Star Overall Dry 
Cleaning Laundry Co., 149 F. 2d 416 (C.A. 2); certiorari denied 327 U.S. 
780; Walling v. Griffin Cartage Co., 62 F. Supp. 396, affirmed in 153 F. 
2d 587 (C.A. 6). For examples, see paragraphs (c) and (d) of this 
section. Employees who are not engaged in the actual production 
Activities described in section 3(j) of the Act are not engaged in 
``production'' unless their work is ``closely related'' and ``directly 
essential'' to such production. See Sec. Sec. 776.17-776.19.


[[Page 357]]



However, where employees of a common carrier, by handling or working on 
goods, accomplish the interstate transit or movement in commerce itself, 
such handling or working on the goods is not ``production.'' The 
employees in that event are covered only under the phrase ``engaged in 
commerce.'' \61\
---------------------------------------------------------------------------

    \61\ Western Union Tel. Co. v. Lenroot, 323 U.S. 490. For examples, 
see paragraph (c) of this section.
---------------------------------------------------------------------------

    (c) Physical labor. It is clear from the principles stated in 
paragraphs (a) and (b) of this section, that employees in shipping 
rooms, warehouses, distribution yards, grain elevators, etc., who sort, 
screen, grade, store, pack, label, address or otherwise handle or work 
on goods in preparation for shipment of the goods out of the State are 
engaged in the production of goods for commerce within the meaning of 
the Act. \62\ The same has been held to be true of employees doing such 
work as handling ingredients (scrap iron) of steel used in building 
ships which will move in commerce; \63\ handling and caring for 
livestock at stockyards where the livestock are destined for interstate 
shipment as such \64\ or as meat products; \65\ handling or transporting 
containers to be used in shipping products interstate; \66\ 
transporting, within a single State, oil to a refinery \67\ or lumber to 
a mill, \68\ where products of the refinery or mill will be sent out of 
the State; transporting parts or ingredients of other types of goods or 
the finished goods themselves between processors, manufacturers, and 
storage places located in a single State, where goods so transported 
will leave the State in the same or an altered form; \69\ and repairing 
or otherwise working on ships, \70\ vehicles, \71\ machinery, \72\ 
clothing, \73\ or other goods which may be expected to move in 
interstate commerce.
---------------------------------------------------------------------------

    \62\ McComb v. Wyandotte Furn. Co., 169 F. 2d 766 (C.A. 8); Walling 
v. Mutual Wholesale Food & Supply Co., 141 F. 2d 331 (C.A. 8); West 
Kentucky Coal Co. v. Walling, 153 F. 2d 582 (C.A. 6); Walling v. Home 
Loose Leaf Tobacco Warehouse Co., 51 F. Supp. 914 (E.D. Ky.); Walling v. 
Yeakley, 3 W.H. Cases 27, modified and affirmed in 140 F. 2d 830 (C.A. 
10); Shain v. Armour & Co., 50 F. Supp. 907 (W.D. Ky.); Walling v. 
McCracken County Peach Growers Assn., 50 F. Supp. 900 (W.D. Ky). See 
also Clyde v. Broderick, 144 F. 2d 348 (C.A. 10).
    \63\ Bracey v. Luray, 138 F. 2d 8 (C.A. 4).
    \64\ Walling v. Friend, 156 F. 2d 429 (C.A. 8).
    \65\ Fleming v. Swift & Co., 41 F. Supp. 825, affirmed in 131 F. 2d 
249 (C.A. 7); McComb v. Benz Co., 9 W.H. Cases 277 (S.D. Ind.).
    \66\ Walling v. Villaume Box & Lbr. Co., 58 F. Supp. 150 (D. Minn.).
    \67\ Mid-Continent Pipe Line Co. v. Hargrave, 129 F. 2d 655 (C.A. 
10); Boling v. R. J. Allison Co., Inc., 4 W.H. Cases 500 (N.D. Okla.).
    \68\ Hanson v. Lagerstrom, 133 F. 2d 120 (C.A. 8).
    \69\ Walling v. Griffin Cartage Co., 62 F. Supp. 696, affirmed in 
153 F. 2d 587 (C.A. 6); Walling v. Comet Carriers, 151 F. 2d 107 (C.A. 
2).
    \70\ Slover v. Walthen, 140 F. 2d 258 (C.A. 4).
    \71\ Hertz Drivurself Stations v. United States, 150 F. 2d 923 (C.A. 
8); Walling v. Armbruster, 51 F. Supp. 166 (W.D. Ark.); McComb v. 
Weller, 9. W.H. Cases 53 (W.D. Tenn.), 17 Labor Cases (CCH) par. 65, 
332; Walling v. Strum & Sons, 6 W.H. Cases 131 (D. N.J.), 11 Labor Cases 
(CCH) par. 63, 249.
    \72\ Engebretson v. Albrecht, 150 F. 2d 602 (C.A. 7); Guess v. 
Montague, 140 F. 2d 500 (C.A. 4).
    \73\ Walling v. Belikoff, 147 F. 2d 1008 (C.A. 2); Campbell v. 
Zavelo, 243 Ala. 361, 10 So. 2d 29; Phillips v. Star Overall Dry 
Cleaning Laundry Co., 149 F. 2d 416 (C.A. 2), certiorari denied 327 U.S. 
780.


These examples are, of course, illustrative rather than exhaustive. Some 
of them relate to situations in which the handling or working on goods 
for interstate or foreign commerce may constitute not only ``production 
for commerce'' but also engaging ``in commerce'' because the activities 
are so closely related to commerce as to be for all practical purposes a 
part of it. \74\ However, as noted in paragraph (b) of this section, 
handling or working on goods constitutes engagement in ``commerce'' only 
and not engagement in ``production'' of the goods when it is done by 
employees of a common carrier and is itself the means whereby interstate 
transit or movement of the goods by the carrier is accomplished. Thus,

[[Page 358]]

employees of a telegraph company preparing messages for interstate 
transmission, television cameramen photographing sports or news events 
for simultaneous viewing at television receiving sets in other State, 
and railroad train crews or truck drivers hauling goods from one State 
to another are not engaged in the ``production'' of goods by virtue of 
such activities, but are covered by the Act only as employees ``engaged 
in commerce.''
---------------------------------------------------------------------------

    \74\ Slover v. Walthen, 140 F. 2d 258 (C.A. 4); Hertz Drivurself 
Stations v. United States, 150 F. 2d 923 (C.A. 8); Engebretson v. 
Albrecht, 150 F. 2d 602 (C.A. 7); Walling v. Strum & Sons, 6 W.H. Cases 
131 (D. N.J.).
---------------------------------------------------------------------------

    (d) Nonmanual work. The ``production'' described by the phrase 
``producing * * * or in any other manner working on'' goods includes not 
only the manual, physical labor involved in processing and working on 
the tangible products of a producing enterprise, but equally the 
administration, planning, management, and control of the various 
physical processes together with the accompanying accounting and 
clerical activities. \75\ An enterprise producing goods for commerce 
does not accomplish the actual production of such goods solely with 
employees performing physical labor on them. Other employees may be 
equally important in actually producing the goods, such as employees who 
conceive and direct policies of the enterprise; employees who dictate, 
control, and coordinate the steps involved in the physical production of 
goods; employees who maintain detailed and meticulous supervision of 
productive activities; and employees who direct the purchase of raw 
materials and supplies, the methods of production, the amounts to be 
produced, the quantity and character of the labor, the safety measures, 
the budgeting and financing, the labor policies, and the maintenance of 
the plants and equipment. (For regulations governing exemption from the 
wage and hours provisions of employees employed in a bona fide 
executive, administrative, or professional capacity, see part 541 of 
this chapter.) Employees who perform these and similar activities are an 
integral part of the coordinated productive pattern of a modern 
industrial organization. The Supreme Court of the United States has held 
that from a productive standpoint and for purposes of the Act the 
employees who perform such activities ``are actually engaged in the 
production of goods for commerce just as much as are those who process 
and work on the tangible products'' in the manufacturing plant or other 
producing facilities of the enterprise. \76\
---------------------------------------------------------------------------

    \75\ Borden Co. v. Borella, 325 U.S. 679; Hertz Drivurself Stations. 
v. United States, 150 F. 2d 923 (C.A. 8); Callus v. 10 E. 40th St. 
Bldg., 146 F. 2d 438 (C.A. 2), reversed on other grounds in 325 U.S. 
578.
    \76\ Borden Co. v. Borella, 325 U.S. 679, 683.
---------------------------------------------------------------------------



Sec. 776.17  Employment in a ``closely related process or occupation
directly essential to'' production of goods.

    (a) Coverage in general. Employees who are not actually ``producing 
* * * or in any other manner working on'' goods for commerce are, 
nevertheless, engaged in the ``production'' of such goods within the 
meaning of the Act and therefore within its general coverage if they are 
employed ``in any closely related process or occupation directly 
essential to the production thereof, in any State.'' \77\ Prior to the 
Fair Labor Standards Amendments of 1949, this was true of employees 
engaged ``in any process or occupation necessary to the production'' of 
goods for commerce. The amendments deleted the word ``necessary'' and 
substituted the words ``closely related'' and ``directly essential'' 
contained in the present law. The words ``directly essential'' were 
adopted by the Conference Committee in lieu of the word 
``indispensable'' contained in the amendments as first passed by the 
House of Representatives. Under the amended language, an employee is 
covered if the process or occupation in which he is employed is both 
``closely related'' and ``directly essential'' to the production of 
goods for interstate or foreign commerce.
---------------------------------------------------------------------------

    \77\ If coverage of an employee is determined to exist on either 
basis, it is, of course, not necessary to determine whether the employee 
would also be covered on the other ground. See Warren-Bradshaw Drilling 
Co. v. Hall, 124 F. 2d 42 (C.A. 5), affirmed in 317 U.S. 88.

The legislative history shows that the new language in the final clause 
of section 3(j) of the Act is intended to narrow, and to provide a more 
precise guide to, the scope of its coverage with respect to employees 
(engaged neither

[[Page 359]]

``in commerce'' nor in actually ``producing or in any other manner 
working on'' goods for commerce) whose coverage under the Act formerly 
depended on whether their work was ``necessary'' to the production of 
goods for commerce. Some employees whose work might meet the 
``necessary'' test are now outside the coverage of the Act because their 
work is not ``closely related'' and ``directly essential'' to such 
production; others, however, who would have been excluded if the 
indispensability of their work to production had been made the test, 
---------------------------------------------------------------------------
remain within the coverage under the new language. \78\

The scope of coverage under the ``closely related'' and ``directly 
essential'' language is discussed in the paragraphs following. In the 
light of explanations provided by managers of the legislation in 
Congress \78\ including expressions of their intention to leave 
undisturbed the areas of coverage established under court decisions 
containing similar language, \79\ this new language should provide a 
more definite guide to the intended coverage under the final clause of 
section 3(j) than did the earlier ``necessary'' test. However, while the 
coverage or noncoverage of many employees may be determined with 
reasonable certainty, no precise line for inclusion or exclusion may be 
drawn; there are bound to be borderline problems of coverage under the 
new language which cannot be finally determined except by authoritative 
decisions of the courts.
---------------------------------------------------------------------------

    \78\ H. Mgrs. St., 1949, p. 14; Sen. St., 1949 Cong. Rec. p. 15372; 
Statement of the Chairman of the Committee on Education and Labor 
explaining the conference agreement to the House of Representatives, 
1949 Cong. Rec., p. 15135; colloquy between Representatives McConnell 
and Javits, 1949 Cong. Rec., p. 15129; of statements of Representative 
Barden (1949 Cong. Rec. p. 15131), Representative Brehm (1949 Cong. Rec. 
p. 15132), and Senator Taft (1950 Cong. Rec., p. A-1162).
    \79\ See Kirschbaum Co. v. Walling, 316 U.S. 517.
---------------------------------------------------------------------------

    (b) Meaning of ``closely related'' and ``directly essential''. The 
terms ``closely related'' and ``directly essential'' are not susceptible 
of precise definition; as used in the Act they together describe a 
situation in which, under all the facts and circumstances, the process 
or occupation in which the employee is employed bears a relationship to 
the production of goods for interstate or foreign commerce: (1) Which 
may reasonably be considered close, as distinguished from remote or 
tenuous, and (2) in which the work of the employee directly aids 
production in a practical sense by providing something essential to the 
carrying on in an effective, efficient, and satisfactory manner of an 
employer's operations in producing such goods. \80\
---------------------------------------------------------------------------

    \80\ See H. Mgrs. St. 1949, pp. 14, 15; Sen. St., 1949 Cong. Rec., 
p. 15372; cf. Kirschbaum Co. v. Walling, 316 U.S. 517.


Not all activities that are ``closely related'' to production will be 
``directly essential'' to it, nor will all activities ``directly 
essential'' to production meet the ``closely related'' test. For 
example, employees employed by an employer in an enterprise, or portion 
thereof, which is devoted to the production of goods for interstate or 
foreign commerce will, as a general rule, be considered engaged in work 
``closely related'' to such production, but some such employees may be 
outside the coverage of the Act because their work is not ``directly 
essential'' to production of the goods. (For a discussion of this point 
and specific illustration, see Sec. 776.18(b).) Similarly, there are 
some situations in which an employee performing work ``directly 
essential'' to production by an employer other than his own may not be 
covered because the kind of work and the circumstances under which it is 
performed show the employee's activities to be so much a part of an 
essentially local business operated by his employer that it would be 
unrealistic to consider them ``closely related'' to the productive 
activities of another. (For a more detailed discussion and specific 
illustrations see Sec. 776.19.)
    (c) Determining whether activities are ``closely related'' and 
``directly essential''. (1) The close relationship of an activity to 
production, which may be tested by a wide variety of relevant factors, 
is to be distinguished from its direct essentiality to production, which 
is dependent solely on considerations of need or

[[Page 360]]

function of the activity in the productive enterprise. The words 
``directly essential'' refer only to the relationship of the employee's 
work to production. Work ``directly essential'' to production remains so 
no matter whose employee does it and regardless of the nature or purpose 
of the employer's business. It seems clear, on the other hand, that the 
criteria for determining whether a process or occupation is ``closely 
related'' to production cannot be limited to those which show its 
closeness in terms of need or function. \81\ It may also be important to 
ascertain, for instance, whether the activity of the employee bears a 
relationship to production which is close in terms either of the place 
or the time of its performance, or in terms of the purposes with which 
the activity is performed by the particular employer through the 
employee, or in terms of relative directness or indirectness of the 
activity's effect in relation to such production, or in terms of 
employment within or outside the productive enterprise. (Examples of the 
application of these principles may be found in Sec. Sec. 776.18 and 
776.19.)
---------------------------------------------------------------------------

    \81\ Of course, if the need of function of the activity in 
production is such that the tie between them is both close and immediate 
(cf. Kirschbaum Co. v. Walling, 316 U.S. 517), as for example, where an 
employee is employed to repair electric motors which are used in 
factories in the production of goods for commerce, this fact may be 
sufficient to show both the direct essentiality and the close 
relationship of the employee's work to production. See Roland Electrical 
Co. v. Walling, 326 U.S. 657. See also Sec. 776.19 and H. Mgrs. St., 
1949, pp. 14, 15.
---------------------------------------------------------------------------

    (2) The determination of whether an activity is closely or only 
remotely related to production may thus involve consideration of such 
factors, among others, as the contribution which the activity makes to 
the production; who performs the activity; where, when and how it is 
performed in relation to the production to which it pertains; whether 
its performance is with a view to aiding production or for some 
different purpose; how immediate or delayed its effect on production is; 
the number and nature of any intervening operations or processes between 
the activity and the production in question; and, in an appropriate 
case, the characteristics and purposes of the employer's business. \82\ 
Moreover, in some cases where particular work ``directly essential'' to 
production is performed by an employer other than the producer the 
degree of such essentiality may be a significant factor in determining 
whether the work is also ``closely related'' to such production. (See 
Sec. 776.19.) No one of the factors listed in this paragraph is 
necessarily controlling, and other factors may assume importance. Some 
may have more significance than others in particular cases, depending 
upon the facts. They are merely useful guides for determining whether 
the total situation in respect to a particular process or occupation 
demonstrates the requisite ``close and immediate tie'' \83\ to the 
production of goods for interstate or foreign commerce. It is the sum of 
the factors relevant to each case that determines whether the particular 
activity is ``closely related'' to such production. The application of 
the principles in this paragraph is further explained and illustrated in 
Sec. Sec. 776.18 and 776.19.
---------------------------------------------------------------------------

    \82\ Cf. Kirschbaum Co. v. Walling, 316 U.S. 517; 10 E. 40th St. 
Bldg. v. Callus, 325 U.S. 578; Schulte Co. v. Gangi, 328 U.S. 108; 
Borden Co. v. Borella, 325 U.S. 679; Armour & Co. v. Wantock, 323 U.S. 
126.
    \83\ See Kirschbaum Co. v. Walling, 316 U.S. 517.
---------------------------------------------------------------------------

    (3) In determining whether an activity is ``directly essential'' to 
production, a practical judgment is required as to whether, in terms of 
the function and need of such activity in successful production 
operations, it is ``essential'' and ``directly'' so to such operations. 
These are questions of degree; even ``directly'' essential activities 
(for example, machinery repair, custodial, and clerical work in a 
producing plant) (for other examples, see Sec. Sec. 776.18(a) and 
776.19) will vary in the degree of their essentiality and in the 
directness of the aid which they provide to production. An activity may 
be ``directly essential'' without being indispensable in the sense that 
it cannot be done without; yet some activities which, in a long chain of 
causation, might be indispensable to production, such as the manufacture 
of brick for a new factory, or even the construction of the new

[[Page 361]]

factory itself, are not ``directly'' essential. \84\ An activity which 
provides something essential to meet the immediate needs of production, 
as, for example, the manufacture of articles like machinery or tools or 
dies for use in the production of goods for commerce (see Sec. 
776.19(b)) will, however, be no less ``directly'' essential because 
intervening activities must be performed in the distribution, 
transportation, and installation of such products before they can be 
used in production. \85\ The application of the principles in this 
paragraph is further explained and illustrated in Sec. Sec. 776.18 and 
776.19.
---------------------------------------------------------------------------

    \84\ Cf. 10 E. 40th St. Bldg. v. Callus, 325 U.S. 578; Sen. St. 95 
Cong. Rec., October 19, 1949, at 15372.
    \85\ See Walling v. Hamner, 64 F. Supp. 690 (W.D. Va.).
---------------------------------------------------------------------------



Sec. 776.18  Employees of producers for commerce.

    (a) Covered employments illustrated. Some illustrative examples of 
the employees employed by a producer of goods for interstate or foreign 
commerce who are or are not engaged in the ``production'' of such goods 
within the meaning of the Act have already been given. Among the other 
employees of such a producer, doing work in connection with his 
production of goods for commerce, who are covered because their work, if 
not actually a part of such production, is ``closely related'' and 
``directly essential'' to it, \86\ are such employees as bookkeepers, 
stenographers, clerks, accountants and auditors, employees doing 
payroll, timekeeping and time study work, draftsmen, inspectors, testers 
and research workers, industrial safety men, employees in the personnel, 
labor relations, advertising, promotion, and public relations activities 
of the producing enterprise, work instructors, and other office and 
white collar workers; employees maintaining, servicing, repairing or 
improving the buildings, \87\ machinery, equipment, vehicles, or other 
facilities used in the production of goods for commerce, \88\ and such 
custodial and protective employees as watchmen, guards, firemen, 
patrolmen, caretakers, stockroom workers, and warehousemen; and 
transportation workers bringing supplies, materials, or equipment to the 
producer's premises, removing slag or other waste materials therefrom, 
or transporting materials or other goods, or performing such other 
transportation activities, as the needs of production may require. These 
examples are intended as illustrative, rather than exhaustive of the 
group of employees of a producer who are ``engaged in the production'' 
of goods for commerce, within the meaning of the Act, and who are 
therefore entitled to its wage and hours benefits unless specifically 
exempted by some provision of the Act.
---------------------------------------------------------------------------

    \86\ See H. Mgrs. St., 1949, p. 14; Sen. St., 1949 Cong. Rec., p. 
15372. See also Borden Co. v. Borella, 325 U.S. 679.
    \87\ No distinction of economic or statutory significance can be 
drawn between such work in a building where the production of goods is 
carried on physically and in one where such production is administered, 
managed, and controlled. Borden Co. v. Borella, 324 U.S. 679.
    \88\ Such mechanics and laborers as machinists, carpenters, 
electricians, plumbers, steamfitters, plasters, glaziers, painters, 
metal workers, bricklayers, hod carriers, roofers, stationary engineers, 
their apprentices and helpers, elevator starters and operators, 
messengers, janitors, charwomen, porters, handy men, and other 
maintenance workers would come within this category.
---------------------------------------------------------------------------

    (b) Employments not directly essential to production distinguished. 
Employees of a producer of goods for commerce are not covered as engaged 
in such production if they are employed solely in connection with 
essentially local activities which are undertaken by the employer 
independently of his productive operations or at most as a dispensable, 
collateral incident to them and not with a view to any direct function 
which the activities serve in production. It is clear, for example, that 
an employee would not be covered merely because he works as a domestic 
servant in the home of an employer whose factory produces goods for 
commerce, even though he is carried on the factory payroll. To 
illustrate further, a producer may engage in essentially local 
activities as a landlord, restauranteur, or merchant in order to utilize 
the opportunity for separate and additional profit from such ventures or 
to provide a convenient means

[[Page 362]]

of meeting personal needs of his employees. Employees exclusively 
employed in such activities of the producer are not engaged in work 
``closely related'' and ``directly essential'' to his production of 
goods for commerce merely because they provide residential, eating, or 
other living facilities for his employees who are engaged in the 
production of such goods. \89\ Such employees are to be distinguished 
from employees like cooks, cookees, and bull cooks in isolated lumber 
camps or mining camps, where the operation of a cookhouse may in fact be 
``closely related'' and ``directly essential'' or, indeed, indispensable 
to the production of goods for commerce. \90\
---------------------------------------------------------------------------

    \89\ H. Mgrs. St., 1949, pp. 14, 15; see also Brogan v. National 
Surety Co., 246 U.S. 257. Cf. Sen. St., 1949 Cong. Rec., p. 15372.
    \90\ See Brogan v. National Surety Co., 246 U.S. 257; Consolidated 
Timber Co. v. Womack, 132 F. 2d 101 (C.A. 9); Hanson v. Lagerstrom, 133 
F. 2d 120 (C.A. 8); cf. H. Mgrs. St., 1949, pp. 14, 15 and Sen. St., 
1949 Cong. Rec., p. 15372.


Some specific examples of the application of these principles may be 
helpful. Such services as watching, guarding, maintaining or repairing 
the buildings, facilities, and equipment used in the production of goods 
for commerce are ``directly essential'' as well as ``closely related'' 
to such production as it is carried on in modern industry. \91\ But such 
services performed with respect to private dwellings tenanted by 
employees of the producer, as in a mill village, would not be ``directly 
essential'' to production merely because the dwellings were owned by the 
producer and leased to his employees. \92\ Similarly, employees of the 
producer or of an independent employer who are engaged only in 
maintaining company facilities for entertaining the employer's 
customers, or in providing food, refreshments, or recreational 
facilities, including restaurants, cafeterias, and snack bars, for the 
producer's employees in a factory, or in operating a children's nursery 
for the convenience of employees who leave young children there during 
working hours, would not be doing work ``directly essential'' to the 
production of goods for commerce. \93\
---------------------------------------------------------------------------

    \91\ H. Mgrs. St., 1949, p. 14; Sen. St., 1949 Cong. Rec., p. 15372; 
Kirschbaum v. Walling, 316 U.S. 517; Borden Co. v. Borella, 325 U.S. 
679; Walton v. Southern Package Corp. 320 U.S. 540; Armour & Co. v. 
Wantock, 325 U.S. 126.
    \92\ H. Mgrs. St., 1949, pp. 14, 15; Morris v. Beaumont Mfg. Co., 84 
F. Supp. 909 (W.D. S.C.); cf. Wilson v. Reconstruction Finance Corp., 
158 F. 2d 564 (C.A. 5), certiorari denied, 331 U.S. 810. Cf. Brogan v. 
National Surety Co., 246 U.S. 257; Consolidated Timber Co. v. Womack, 
132 F. 2d 101 (C.A. 9); Hanson v. Lagerstrom, 133 F. 2d 120 (C.A. 8).
    \93\ Cf. H. Mgrs. St., 1949, pp. 14, 15.
---------------------------------------------------------------------------



Sec. 776.19  Employees of independent employers meeting needs of 
producers for commerce.

    (a) General statement. (1) If an employee of a producer of goods for 
commerce would not, while performing particular work, be ``engaged in 
the production'' of such goods for purposes of the Act under the 
principles heretofore stated, an employee of an independent employer 
performing the same work on behalf of the producer would not be so 
engaged. Conversely, as shown in the paragraphs following, the fact that 
employees doing particular work on behalf of such a producer are 
employed by an independent employer rather than by the producer will not 
take them outside the coverage of the Act if their work otherwise 
qualifies as the ``production'' of ``goods'' for ``commerce.''
    (2) Of course, in view of the Act's definition of ``goods'' as 
including ``any part or ingredient'' of goods (see Sec. 776.20 (a), 
(c)), employees of an independent employer providing other employers 
with materials or articles which become parts or ingredients of goods 
produced by such other employers for commerce are actually employed by a 
producer of goods for commerce and their coverage under the Act must be 
considered in the light of this fact. For example, an employee of such 
an independent employer who handles or in any manner works on the goods 
which become parts or ingredients of such other producer's goods is 
engaged in actual production of goods (parts of ingredients) for 
commerce, and the question of his coverage is determined by this fact 
without reference to whether his work is ``closely related'' and 
``directly essential'' to the production by the other employer of the 
goods in

[[Page 363]]

which such parts or ingredients are incorporated. So also, if the 
employee is not engaged in the actual production of such parts or 
ingredients, his coverage will depend on whether as an employee of a 
producer of goods for commerce, his work is ``closely related'' and 
``directly essential'' to the production of the parts or ingredients, 
rather than on the principles applicable in determining the coverage of 
employees of an independent employer who does not himself produce the 
goods for commerce. \94\
---------------------------------------------------------------------------

    \94\ Bracey v. Luray, 138 F. 2d 8 (C.A. 4); Walling v. Peoples 
Packing Co., 132 F. 2d 236 (C.A. 10), certiorari denied 318 U.S. 774; 
Mid-Continent Pipe Line Co. v. Hargrave, 129 F. 2d 655 (C.A. 10); 
Walling v. W. D. Haden Co., 153 F. 2d 196 (C.A. 5).
---------------------------------------------------------------------------

    (3) Where the work of an employee would be ``closely related'' and 
``directly essential'' to the production of goods for commerce if he 
were employed by a producer of the goods, the mere fact that the 
employee is employed by an independent employer will not justify a 
different answer. \95\ This does not necessarily mean that such work in 
every case will remain ``closely related'' to production when performed 
by employees of an independent employer. It will, of course, be as 
``directly essential'' to production in the one case as in the other. 
(See Sec. 776.17(c)). But in determining whether an employee's work is 
``closely'' or only remotely related to the production of goods for 
commerce by an employer other than his own, the nature and purpose of 
the business in which he is employed and in the course of which he 
performs the work may sometimes become important.
---------------------------------------------------------------------------

    \95\ See Kirschbaum Co. v. Walling, 316 U.S. 517; Roland Electrical 
Co. v. Walling, 326 U.S. 657; Farmers Reservoir Co. v. McComb, 337 U.S. 
755; H. Mgrs. St., 1949, p. 14. See also Sen. St., 1949 Cong. Rec., p. 
15372.

Such factors may prove decisive in particular situations where the 
employee's work, although ``directly essential'' to the production of 
goods by someone other than his employer, is not far from the borderline 
between those activities which are ``directly essential'' and those 
which are not. In such a situation, it may appear that his performance 
of the work is so much a part of an essentially local business carried 
on by his employer without any intent or purpose of aiding production of 
goods for commerce by others that the work, as thus performed, may not 
reasonably be considered ``closely related'' to such production. \96\ In 
other situations, however, where the degree to which the work is 
directly essential to production by the producer is greater the fact 
that the independent employer is engaged in a business having local 
aspects may not be sufficient to negate a close relationship between his 
employees' work and such production. \97\ And it seems clear that where 
the independent employer operates a business which, unlike that of the 
ordinary local merchant, is directed to providing producers with 
materials or services directly essential to the production of their 
goods for commerce, the activities of such a business may be found to be 
``closely related'' to such production. \98\ In such event, all the 
employees of the independent employer whose work is part of his 
integrated effort to meet such needs of producers are covered as engaged 
in work closely related and directly essential to production of goods 
for commerce. \99\
---------------------------------------------------------------------------

    \96\ M. Mgrs. St., 1949, pp. 14, 15, 10 E. 40th St. Bldg. Co. v. 
Callus, 325 U.S. 578.
    \97\ H. Mgrs. St., 1949, p. 14; Kirschbaum Co. v. Walling, 316 U.S. 
517; Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88.
    \98\ See H. Mgrs. St., p. 14, and 10 E. 40th St. Bldg. Co. v. 
Callus, 325 U.S. 578.
    \99\ Kirschbaum Co. v. Walling, 316 U.S. 517 (Stationary engineers 
and firemen, watchmen, elevator operators, electricians, carpenters, 
carpenters' helper, engaged in maintaining and servicing loft building 
for producers); Roland Electrical Co. v. Walling, 326 U.S. 657 (foremen, 
trouble shooters, mechanics, helpers, and office employees of company 
selling and servicing electric motors, generators, and equipment for 
commercial and industrial firms); Meeker Coop. Light & Power Assn. v. 
Phillips, 158 F. 2d 698 (C.A. 8) (outside employees and office employees 
of light and power company serving producers); Walling v. New Orleans 
Private Patrol Service, 57 F. Supp. 143 (E. D. La.) (guards, watchmen, 
and office employees of company providing patrol service for producers); 
Walling v. Thompson, 65 F. Supp. 686 (S.D. Cal.) (installation and 
service men, shopmen, bookkeeper, salesman, dispatcher of company 
supplying burglar alarm service to producers).
    In H. Mgrs. St., 1949, p. 14 it is said, ``Employees engaged in such 
maintenance, custodial and clerical work will remain subject to the Act, 
notwithstanding they are employed by an independent employer performing 
such work on behalf of the manufacturer, mining company, or other 
producer for commerce. All such employees perform activities that are 
closely related and directly essential to the production of goods for 
commerce.''

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[[Page 364]]

    (b) Extent of coverage under ``closely related'' and ``directly 
essential'' clause illustrated. In paragraphs (b)(1) to (5) of this 
section, the principles discussed above are illustrated by reference to 
a number of typical situations in which goods or services are provided 
to producers of goods for commerce by the employees of independent 
employers. These examples are intended not only to answer questions as 
to coverage in the particular situations discussed, but to provide added 
guideposts for determining whether employees in other situations are 
doing work closely related and directly essential to such production.
    (1) Many local merchants sell to local customers within the same 
State goods which do not become a part or ingredient (as to parts or 
ingredients, see Sec. 776.20(c)) of goods produced by any of such 
customers. Such a merchant may sell to his customers, including 
producers for commerce, such articles, for example, as paper towels, or 
record books, or paper clips, or filing cabinets, or automobiles and 
trucks, or paint, or hardware, not specially designed for use in the 
production of other goods.

Where such a merchant's business is essentially local in nature, selling 
its goods to the usual miscellany of local customers without any 
particular intent or purpose of aiding production of other goods for 
commerce by such customers, the local merchant's employees are not doing 
work both ``closely related'' and ``directly essential'' to production, 
so as to bring them within the reach of the Act, merely ``because some 
of the customers * * * are producing goods for interstate [or foreign] 
commerce.'' \1\ Therefore, if they do not otherwise engage ``in 
commerce'' (see Sec. Sec. 776.8 to 776.13) or in the ``production'' of 
goods for commerce, they are not covered by the Act.
---------------------------------------------------------------------------

    \1\ H. Mgrs. St., 1949, pp. 14, 15.

In such a situation, moreover, even where the work done by the employees 
is ``directly essential'' to such production by their employer's 
customers, it may not meet the ``closely related'' test. But the more 
directly essential to the production of goods for commerce such work is, 
the more likely it is that a close and immediate tie between it and such 
production exists which will be sufficient, notwithstanding the local 
aspect of the employer's business, to bring the employees within the 
coverage of the Act on the ground that their work is ``closely related'' 
as well as ``directly essential'' to production by the employer's 
---------------------------------------------------------------------------
customers.

Such a close and immediate tie with production exists, for example, 
where the independent employer, through his employees, supplies 
producers of goods for commerce with things as directly essential to 
production as electric motors or machinery or machinery parts for use in 
producing the goods of a manufacturer, for mining operations, or for 
production of oil, or for other production operations or the power, 
water, or fuel required in such production operations, to mention a few 
typical examples. \2\ The fact that these needs of producers are 
supplied through the agency of businesses having certain local aspects 
cannot alter the obvious fact that the employees of such businesses who 
supply these needs are doing work both ``closely related'' and 
``directly essential'' to production by the employer's customers. As the 
United States Supreme Court has stated: ``Such sales and services must 
be immediately available to * * * [the

[[Page 365]]

customers] or their production will stop.'' \3\
---------------------------------------------------------------------------

    \2\ See H. Mgrs. St., 1949, p. 14; Sen. St., 95 Cong. Rec., October 
19, 1949, at 15372; Statement of the Chairman of the Committee on 
Education and Labor explaining the conference agreement to the House of 
Representatives, 1949 Cong. Rec., p. 15135; Roland Electrical Co. v. 
Walling, 326 U.S. 657; Reynolds v. Salt River Valley Water Users Assn., 
143 F. 2d 863 (C.A. 9); Meeker Coop. Light & Power Assn. v. Phillips, 
158 F. 2d 698 (C.A. 8); Walling v. Hammer, 64 F. Supp. 690 (W.D. Va.); 
Holland v. Amoskeag Machine Co., 44 F. Supp. 884 (D. N.H.); Princeton 
Mining Co. v. Veach, 63 N.E. 2d 306 (Ind. App.).
    \3\ Roland Electrical Co. v. Walling, 326 U.S. 657, 664.

It should be noted that employees of independent employers providing 
such essential goods and services to producers will not be removed from 
coverage because an unsegregated portion of their work is performed for 
customers other than producers of goods for commerce. For example, 
employees of public utilities, furnishing gas, electricity or water to 
firms within the State engaged in manufacturing, mining, or otherwise 
producing goods for commerce, are subject to the Act notwithstanding 
such gas, electricity or water is also furnished to consumers who do not 
produce goods for commerce. \4\
---------------------------------------------------------------------------

    \4\ Meeker Coop. Light & Power Assn. v. Phillips, 158 F. 2d 698 
(C.A. 8); H. Mgrs. St., 1949, p. 14. For another illustration see H. 
Mgrs. St., 1949, p. 26, with reference to industrial laundries.
---------------------------------------------------------------------------

    (2) On similar principles, employees of independent employers 
providing to manufacturers, mining companies, or other producers such 
goods used in their production of goods for commerce as tools and dies, 
patterns, designs, or blueprints are engaged in work ``closely related'' 
as well as ``directly essential'' to the production of the goods for 
commerce; \5\ the same is true of employees of an independent employer 
engaged in such work as producing and supplying to a steel mill, sand 
meeting the mill's specifications for cast shed, core, and molding sands 
used in the production by the mill of steel for commerce. \6\ Another 
illustration of such covered work, according to managers of the bill in 
Congress, is that of employees of industrial laundry and linen supply 
companies serving the needs of customers engaged in manufacturing or 
mining goods for commerce. \7\
---------------------------------------------------------------------------

    \5\ H. Mgrs. St., 1949, p. 14; Sen. St., 1949 Cong. Rec., p. 15372.
    \6\ Walling v. Amidon, 153 F. 2d 159 (C.A. 10); Sen. St., 95 Cong. 
Rec., October 19, 1949, at 15372.
    \7\ H. Mgrs. St., 1949, p. 26; Sen. St., 95 Cong. Rec., October 19, 
1949, at 15372. See also Koerner v. Associated Linen Laundry Suppliers, 
270 App. Div. 986, 62 N.Y.S. 2d 774.


On the other hand, the legislative history makes it clear that employees 
of a ``local architectural firm'' are not brought within the coverage of 
the Act by reason of the fact that their activities ``include the 
preparation of plans for the alteration of buildings within the State 
which are used to produce goods for interstate commerce.'' Such 
activities are not ``directly essential'' enough to the production of 
goods in the buildings to establish the required close relationship 
between their performance and such production when they are performed by 
employees of such a ``local'' firm. \8\ Of course, this result is even 
more apparent where the activities of the employees of such a ``local'' 
business may not be viewed as ``directly essential'' to production. It 
is clear, for example, that Congress did not believe ``employees of an 
independently owned and operated restaurant'' should be brought under 
the coverage of the Act because the restaurant is ``located in a 
factory.'' To establish coverage on ``production'' grounds, an employee 
must be ``shown to have a closer and more direct relationship to the 
producing * * * activity'' than this. \9\
---------------------------------------------------------------------------

    \8\ H. Mgrs. St., 1949, p. 15. See also McComb v. Turpin, 81 F. 
Supp. 86, 1948 (D. Md.).
    \9\ H. Mgrs. St., 1949, p. 14. Cf. Bayer v. Courtemanche, 76 F. 
Supp. 193 (D. Conn.). See also Sec. 776.18(b).
---------------------------------------------------------------------------

    (3) Some further examples may help to clarify the line to be drawn 
in such cases. The work of employees constructing a dike to prevent the 
flooding of an oil field producing oil for commerce would clearly be 
work not only ``directly essential'' but also ``closely related'' to the 
production of the oil. However, employees of a materialman quarrying, 
processing, and transporting stone to the construction site for use in 
the dike would be doing work too far removed from production of the oil 
to be considered ``closely related'' thereto. \10\ Similarly, the sale 
of sawmill equipment to a producer of mine props which are in turn sold 
to mines within the same State producing coal for commerce is too remote 
from production of the coal to be considered

[[Page 366]]

``closely related'' thereto, but production of the mine props, like the 
manufacture of tools, dies, or machinery for use in producing goods for 
commerce, has such a close and immediate tie with production of the 
goods for commerce that it meets the ``closely related'' (as well as the 
``directly essential'') test. \11\
---------------------------------------------------------------------------

    \10\ See E. C. Schroeder Co. v. Clifton, 153 F. 2d 385 (C.A. 10) 
(opinion of Judge Phillips) and H. Mgrs. St., 1949, p. 15.
    \11\ See Wailing v. Hamner, 64 F. Supp. 690 (W.D. Va.), and 
statement of the Chairman of the Committee on Education and Labor 
explaining the conference agreement to the House of Representatives, 
1949 Cong. Rec., p. 15135.
---------------------------------------------------------------------------

    (4) A further illustration of the distinction between work that is, 
and work that is not, ``closely related'' to the production of goods for 
commerce may be found in situations involving activities which are 
directly essential to the production by farmers of farm products which 
are shipped in commerce. Employees of an employer furnishing to such 
farmers, within the same State, water for the irrigation of their crops, 
power for use in their agricultural production for commerce, or seed 
from which the crops grow, are engaged in work ``closely related'' as 
well as ``directly essential'' to the production of goods for commerce. 
\12\ On the other hand, it is apparent from the legislative history that 
Congress did not regard, as ``closely related'' to the production of 
farm products for commerce, the activities of employees in a local 
fertilizer plant producing fertilizer for use by farmers within the same 
State to improve the productivity of the land used in growing such 
products. \13\ Fertilizer is ordinarily thought to be assimilated by the 
soil rather than by the crop and, in the ordinary case, may be 
considered less directly essential to production of farm products than 
the water or seed, without which such production would not be possible. 
Probably the withdrawal from coverage of such employees (who were held 
``necessary'' to production of goods for commerce under the Act prior to 
the 1949 amendments \14\) rests wholly or in part on the principles 
stated in paragraph (a)(3) of this section and paragraph (b)(1) of this 
section. Heretofore the Department has taken the position that producing 
or supplying feed for poultry and livestock to be used by farmers within 
the State in the production of poultry or cattle for commerce was 
covered. The case of Mitchell v. Garrard Mills \15\ has reached a 
contrary conclusion as to a local producer of such feed in a situation 
where all of the feed was sold to farmers and dealers for use 
exclusively within the State. For the time being, and until further 
clarification from the courts, the Divisions will not assert the 
position that coverage exists under the factual situation which existed 
in this case.
---------------------------------------------------------------------------

    \12\ See Farmers Reservoir Co. v. McComb, 337 U.S. 755; Reynolds v. 
Salt River Valley Water Users Assn., 143 F. 2d 863 (C.A. 9); Meeker 
Coop. Light & Power Assn. v. Phillips, 158 F. 2d 698 (C.A. 8).
    Reference should be made to section 13 (a) (6) of the Act providing 
an exemption from the wage and hours provisions for employees employed 
in agriculture and for certain employees of nonprofit and sharecrop 
irrigation companies.
    \13\ H. Mgrs. St. 1949, p. 15.
    \14\ McComb v. Super-A Fertilizer Works, 165 F. 2d 824 (C.A. 1).
    \15\ 241 F. 2d 249 (C.A. 6).
---------------------------------------------------------------------------

    (5) Managers of the legislation in Congress stated that all 
maintenance, custodial, and clerical employees of manufacturers, mining 
companies, and other producers of goods for commerce perform activities 
that are both ``closely related'' and ``directly essential'' to the 
production of goods for commerce, and that the same is true of employees 
of an independent employer performing such maintenance, custodial, and 
clerical work ``on behalf of'' such producers.


Typical of the employees in this covered group are those repairing or 
maintaining the machinery or buildings used by the producer in his 
production of goods for commerce and employees of a watchman or guard or 
patrol or burglar alarm service protecting the producer's premises. \16\ 
On the other hand, the House managers of the bill made it clear that 
employees engaged in cleaning windows or cutting grass at the plant of a 
producer of goods for

[[Page 367]]

commerce were not intended to be included as employees doing work 
``closely related'' to production on ``on behalf of'' the producer where 
they were employed by a ``local window-cleaning company'' or a ``local 
independent nursery concern,'' merely because the customers of the 
employer happen to include producers of goods for commerce. \17\ A 
similar view was expressed with respect to employees of a ``local 
exterminator service firm'' working wholly within the State 
exterminating pests in private homes, in a variety of local 
establishments, ``and also in buildings within the State used to produce 
goods for interstate commerce.'' \17\
---------------------------------------------------------------------------

    \16\ See H. Mgrs. St., 1949, p. 14; Sen. St. 1949 Cong. Rec. p. 
15372; Kirschbaum Co. v. Walling, 316 U.S. 517; Roland Electrical Co. v. 
Walling, 326 U.S. 657; Walling v. Sondock, 132 F. 2d 77 (C.A. 5); 
Holland v. Amoskeag Machine Co., 44 F. Supp. 884 (D.N.H.).
    \17\ H. Mgrs. St., 1949, page 15.

[15 FR 2925, May 17, 1950, as amended at 22 FR 9692, Dec. 4, 1957]



Sec. 776.20  ``Goods.''

    (a) The statutory provision. An employee is covered by the wage and 
hours provisions of the Act if he is engaged in the ``production'' (as 
explained in Sec. Sec. 776.15 through 776.19) ``for commerce'' (as 
explained in Sec. 776.21) of anything defined as ``goods'' in section 
3(i) of the Act. This definition is:

    Goods means goods (including ships and marine equipment), wares, 
products, commodities, merchandise, or articles or subjects of commerce 
of any character, or any part or ingredient thereof, but does not 
include goods after their delivery into the actual physical possession 
of the ultimate consumer thereof other than a producer, manufacturer, or 
processor thereof.

    (b) ``Articles or subjects of commerce of any character.'' It will 
be observed that ``goods'' as defined in the Act are not limited to 
commercial goods or articles of trade, or, indeed, to tangible property, 
but include ``articles or subjects of commerce of any character 
(emphasis supplied). \18\ It is well settled that things such as 
``ideas, * * * orders, and intelligence'' are ``subjects of commerce.'' 
Telegraphic messages have, accordingly, been held to be ``goods'' within 
the meaning of the Act. \19\ Other articles or subjects of commerce 
which fall within the definition of ``goods'' include written materials 
such as newspapers, magazines, brochures, pamphlets, bulletins, and 
announcements; \20\ written reports, fiscal and other statements and 
accounts, correspondence, lawyers' briefs and other documents; \21\ 
advertising, motion picture, newspaper and radio copy, artwork and 
manuscripts for publication; \22\ sample books; \23\ letterheads, 
envelopes, shipping tags, labels, check books, blank books, book covers, 
advertising circulars and candy wrappers. \24\ Insurance policies are 
``goods''

[[Page 368]]

within the meaning of the Act; \25\ so are bonds, stocks, bills of 
exchange, bills of lading, checks, drafts, negotiable notes and other 
commercial paper. \26\ ``Goods'' includes gold; \27\ livestock; \28\ 
poultry and eggs; \29\ vessels; \30\ vehicles; \31\ aircraft; \32\ 
garments being laundered or rented; \33\ ice; \34\ containers, as, for 
example, cigar boxes or wrapping paper and packing materials for other 
goods shipped in commerce; \35\ electrical energy or power, gas, etc.; 
\36\ and by-products, \37\ to mention only a few illustrations of the 
articles or subjects of ``trade, commerce, transportation, transmission, 
or communication among the several States, or between any State and any 
place outside thereof'' which the Act refers to as ``goods.'' The Act's 
definitions do not, however, include as ``goods'' such things as dams, 
river improvements, highways and viaducts, or railroad lines. \38\
---------------------------------------------------------------------------

    \18\ As pointed out in Lenroot v. Western Union Tel. Co., 141 F. 2d 
400 (C.A. 2), the legislative history shows that the definition was 
originally narrower, and that subjects of commerce were added by a 
Senate amendment.
    \19\ Western Union Tel. Co. v. Lenroot 323 U.S. 490.
    \20\ Mabee v. White Plains Pub. Co., 327 U.S. 178; Yunker v. Abbye 
Employment Agency, 32 N.Y.S. 2d 715; Berry v. 34 Irving Place Corp., 52 
F. Supp. 875 (S.D. N.Y.); Ullo v. Smith, 62 F. Supp. 757, affirmed in 
177 F. 2d 101 (C.A. 2); see also opinion of the four dissenting justices 
in 10 E. 40th St. Bldg. v. Callus, 325 U.S. at p. 586.
    Waste paper collected for shipment in commerce is goods. See Fleming 
v. Schiff, 1 W.H. Cases 893 (D. Colo.), 15 Labor Cases (CCH) par. 
60,864.
    \21\ Phillips v. Meeker Coop. Light & Power Asso., 63 F. Supp. 733, 
affirmed in 158 F. 2d 698 (C.A. 8); Lofther v. First Nat. Bank of 
Chicago, 48 F. Supp. 692 (N.D. Ill.) See also Rausch v. Wolf, 72 F. 
Supp. 658 (N.D. Ill). There are other cases (e.g., Kelly v. Ford, Bacon 
& Davis, 162 F. 2d 555 (C.A. 3) and Bozant v. Bank of New York, 156 F. 
2d 787 (C.A. 2) which suggest that such things are ``goods'' only when 
they are articles of trade. Although the Supreme Court has not settled 
the question, such a view appears contrary to the express statutory 
definitions of ``goods'' and ``commerce''.
    \22\ Robert v. Henry Phipps Estate, 156 F. 2d 958 (C.A. 2); Baldwin 
v. Emigrant Industrial Sav. Bank, 150 F. 2d 524 (C.A. 2), certiorari 
denied 326 U.S. 757; Bittner v. Chicago Daily News Ptg. Co., 4 W.H. 
Cases 837 (N.D. Ill.), 29 Labor Cases (CCH) par. 62,479; Schinck v. 386 
Fourth Ave. Corp., 49 N.Y.S. 2d 872.
    \23\ Walling v. Higgins, 47 F. Supp. 856 (E.D. Pa.).
    \24\ McAdams v. Connelly, 8 W.H. Cases 498 (W.D. Ark.), 16 Labor 
Cases (CCH) par. 64,963; Walling v. Lacy, 51 F. Supp. 1002 (D. Colo.); 
Tobin v. Grant 8 W.H. Cases 361 (N.D. Calif.). See also Walling v. 
Sieving, 5 W.H. Cases 1009 (N.D. Ill.), 11 Labor Cases (CCH) par. 
63,098.
    \25\ Darr v. Mutual Life Ins. Co., 169 F. 2d 262 (C.A. 2), 
certiorari denied 335 U.S. 871.
    \26\ Bozant v. Bank of New York, 156 F. 2d 787 (C.A. 2).
    \27\ Walling v. Haile Gold Mines, 136 F. 2d 102 (C.A. 4); Fox v. 
Summit King Mines, 143 F. 2d 926 (C.A. 9).
    \28\ Walling v. Friend, 156 F. 2d 429 (C.A. 8).
    \29\ Walling v. DeSoto Creamery & Produce Co., 51 F. Supp. 938 (D. 
Minn).
    \30\ Slover v. Wathen, 140 F. 2d 258 (C.A. 4).
    \31\ Hertz Drivurself Stations v. United States, 150 F. 2d 923 (C.A. 
8).
    \32\ Jackson v. Northwest Airlines, 75 F. Supp. 32 (D. Minn.).
    \33\ Phillips v. Star Overall Dry Cleaning Laundry Co., 149 F. 2d 
416 (C.A. 2).
    \34\ Hamlet Ice Co. v. Fleming, 127 F. 2d 165 (C.A. 4); Atlantic Co. 
v. Walling, 131 F. 2d 518 (C.A. 5).
    \35\ Enterprise Box Co. v. Fleming, 125 F. 2d 897 (C.A. 5), 
certiorari denied, 316 U.S. 704; Fleming v. Schiff, 1 W.H. Cases 883 (D. 
Colo.), 5 Labor Cases (CCH) par. 60,864.
    \36\ Walling v. Connecticut Co.; 62 F. Supp. 733 (D. Conn.), 
affirmed 154 F. 2d 552 (C.A. 2).
    \37\ Walling v. Peoples Packing Co., 132 F. 2d 236 (C.A. 10), 
certiorari denied 318 U.S. 774.
    \38\ Engebretsen v. Albrecht, 150 F. 2d 602 (C.A. 7); Kenny v. 
Wigton-Abbott Corp., 80 F. Supp. 489 (D. N.J.).
---------------------------------------------------------------------------

    (c) ``Any part or ingredient.'' Section 3(i) draws no distinction 
between goods and their ingredients and in fact defines goods to mean 
``goods'' * * * or any part or ingredient thereof.'' The fact that goods 
are processed or changed in form by several employers before going into 
interstate or foreign commerce does not affect the character of the 
original product as ``goods'' produced for commerce. Thus, if a garment 
manufacturer sends goods to an independent contractor within the State 
to have them sewn, after which he further processes and ships them in 
interstate commerce, the division of the production functions between 
the two employees does not alter the fact that the employees of the 
independent contractor are actually producing (``working on'') the 
``goods'' (parts or ingredients of goods) which enter the channels of 
commerce. \39\
---------------------------------------------------------------------------

    \39\ Schulte Co. v. Gangi, 328 U.S. 108.

Similarly, if a manufacturer of buttons sells his products within the 
State to a manufacturer of shirts, who ships the shirts in interstate 
commerce, the employees of the button manufacturer would be engaged in 
the production of goods for commerce; or, if a lumber manufacturer sells 
his lumber locally to a furniture manufacturer who sells furniture in 
interstate commerce, the employees of the lumber manufacturer would 
likewise come within the scope of the Act. Any employee who is engaged 
in the ``production'' (as explained in Sec. 776.15) of any part or 
ingredient of goods produced for trade, commerce, transportation, 
transmission, or communication among the several States or between any 
State and any place outside thereof is engaged in the production of 
``goods'' for commerce within the meaning of the Act. \40\
---------------------------------------------------------------------------

    \40\ Roland Electrical Co. v. Walling, 326 U.S. 657; Bracy v. Luray, 
138 F. 2d 8 (C.A. 4); Walling v. W. J. Haden Co., 153 F. 2d 196 (C.A. 
5); Mid-Continent Pipe Line Co. v. Hargrave, 129 F. 2d 655 (C.A. 10); 
Boiling v. Allison, 4 W. H. Cases 500 (N.D. Okla.); Hanson v. 
Lagerstrom, 133 F. 2d 120 (C.A. 8); Walling v. Comet Carriers, 151 F. 2d 
107 (C.A. 2); Walling v. Griffin Cartage Co., 62 F. Supp. 396, affirmed 
in 153 F. 2d 587 (C.A. 6); Walling v. Kerr, 47 F. Supp. 852 (E.D. Pa.).
---------------------------------------------------------------------------

    (d) Effect of the exclusionary clause. The exclusionary clause in 
the definition that excepts ``goods after their delivery into the actual 
physical possession of the ultimate consumer thereof other than a 
producer, manufacturer, or processor thereof,'' is intended to protect 
ultimate consumers other than

[[Page 369]]

producers, manufacturers, or processors of the goods in question \41\ 
from the ``hot goods'' provisions of section 15(a)(1) of the Act. \42\ 
Section 15(a)(1) makes it unlawful for any person ``to transport * * * 
(or * * * ship * * * in commerce * * * any goods'' produced in violation 
of the wage and hours standards established by the Act. (Exceptions are 
made subject to specified conditions for common carriers and for certain 
purchasers acting in good faith reliance on written statements of 
compliance. See footnote 53 to Sec. 776.15(a).) By defining ``goods'' 
in section 3(i) so as to exclude goods after their delivery into the 
actual physical possession of the ultimate consumer (other than a 
producer, manufacturer, or processor thereof) Congress made it clear 
that it did not intend to hold the ultimate consumer as a violator of 
section 15(a)(1) if he should transport ``hot goods'' across a State 
line. \43\ Thus, if a person purchases a pair of shoes for himself from 
a retail store \44\ and carries the shoes across a State line, the 
purchaser is not guilty of a violation of section 15(a)(1) if the shoes 
were produced in violation of the wage or hours provisions of the 
statute. But the fact that goods produced for commerce lose their 
character as ``goods'' after they come into the actual physical 
possession of an ultimate consumer who does not further process or work 
on them, does not affect their character as ``goods'' while they are 
still in the actual physical possession of the producer, manufacturer or 
processor who is handling or working on them with the intent or 
expectation that they will subsequently enter interstate or foreign 
commerce. \45\ Congress clearly did not intend to permit an employer to 
avoid the minimum wage and maximum hours standards of the Act by making 
delivery within the State into the actual physical possession of the 
ultimate consumer who transports or ships the goods outside of the 
State. Thus, employees engaged in building a boat for delivery to the 
purchaser at the boatyard are considered within the coverage of the Act 
if the employer, at the time the boat is being built, intends, hopes, or 
has reason to believe that the purchase will sail it outside the State. 
\46\
---------------------------------------------------------------------------

    \41\ Southern Advance Bag & Paper Co. v. United States, 183 F. 2d 
449 (C.A. 5); Phillips v. Star Overall Dry Cleaning Laundry Co, 149 F. 
2d 485 (C.A. 2), certiorari denied 327 U.S. 780.
    \42\ Jackson v. Northwest Airlines, 70 F. Supp. 501.
    \43\ Hamlet Ice Co. v. Fleming, 127 F. 2d 165 (C.A. 4), certiorari 
denied 317 U.S. 634.
    \44\ Note that the retail or service establishment exemption in 
section 13(a)(2) does not protect the retail store from a violation of 
the ``hot goods'' provision if it sells in interstate commerce goods 
produced in violation of section 6 or 7.
    \45\ See cases cited above in footnotes 41, 42, 43, this section.
    \46\ Walling v. Lowe, 5 W.H. Cases (S.D. Fla.), 10 Labor Cases (CCH) 
63,033. See also Walling v. Armbruster, 51 F. Supp. 166 (W.D. Ark.); 
Joshua Hendy Corp. v. Mills, 169 F. 2d 898 (C.A. 9); St. Johns River 
Shipbuilding Co. v. Adams, 164 F. 2d 1012 S. (C.A. 5).
---------------------------------------------------------------------------



Sec. 776.21  ``For'' commerce.

    (a) General principles. As has been made clear previously, where 
``goods'' (as defined in the Act) are produced ``for commerce,'' every 
employee engaged in the ``production'' (as explained in Sec. Sec. 
776.15 through 776.19) of such goods (including any part or ingredient 
thereof) is within the general coverage of the wage and hours provisions 
of the Act. Goods are produced for ``commerce'' if they are produced for 
``trade, commerce, transporation, transmission, or communication among 
the several States or between any State and any place outside thereof.'' 
\47\ Goods are produced ``for'' such commerce where the employer 
intends, hopes, expects, or has reason to believe that the goods or any 
unsegregated part of them will move (in the same or in an altered form 
or as a part or ingredient of other goods) in such interstate or foreign 
commerce. \48\ If such movement of the goods in commerce can be 
reasonably anticipated by the employer when his employees perform work 
defined in the Act as ``production'' of such goods, it makes no 
difference whether he himself, or a subsequent owner or possessor of the 
goods, put the goods in interstate or foreign

[[Page 370]]

commerce. \49\ The fact that goods do move in interstate or foreign 
commerce is strong evidence that the employer intended, hoped, expected, 
or had reason to believe that they would so move.
---------------------------------------------------------------------------

    \47\ Fair Labor Standards Act, section 3(b).
    \48\ United States v. Darby, 312 U.S. 100; Warren-Bradshaw Drilling 
Co. v. Hall, 371 U.S. 88; Schulte Co. v. Gangi, 328 U.S. 108.
    \49\ Schulte Co. v. Gangi, 328 U.S. 108; Warren-Bradshaw Drilling 
Co. v. Hall, 417 U.S. 88. See paragraph (d) of this section.


Although it is generally well understood that goods are produced ``for'' 
commerce if they are produced for movement in commerce to points outside 
the State, questions have been raised as to whether work done on goods 
may constitute production ``for'' commerce even though the goods do not 
ultimately leave the State. As is explained more fully in the paragraphs 
following, there are certain situations in which this may be true, 
either under the principles above stated (see paragraph (c) of this 
section), or because it appears that the goods are produced ``for'' 
commerce in the sense that they are produced for use directly in the 
furtherance, within the particular State, of the actual movement to, 
from, or across such State or interstate or foreign commerce. (See 
paragraph (b) of this section).
    (b) Goods produced for direct furtherance of interstate movement. 
(1) The Act's definition of ``commerce,'' as has been seen, describes a 
movement, among the several States or between any State and any outside 
place, of trade, commerce, transportation, transmission, or 
communication.'' Whenever goods are produced ``for'' such movement, such 
goods are produced ``for commerce,'' whether or not there is any 
expectation or reason to anticipate that the particular goods will leave 
the State. \50\
---------------------------------------------------------------------------

    \50\ Fleming v. Atlantic Co., 40 F. Supp. 654, affirmed in 131 F. 2d 
518 (C.A. 5).
---------------------------------------------------------------------------

    (2) The courts have held that particular goods are produced ``for'' 
commerce when they are produced with a view to their use, whether within 
or without the State, in the direct furtherance of the movement of 
interstate or foreign commerce. Thus, it is well settled that ice is 
produced ``for'' commerce when it is produced for use by interstate rail 
or motor carriers in the refrigeration or cooling of the equipment in 
which the interstate traffic actually moves, even though the particular 
ice may melt before the equipment in which it is placed leaves the 
State. \51\ The goods (ice) produced for such use ``enter into the very 
means of transportation by which the burdens of traffic are borne.'' 
\52\ The same may be said of electrical energy produced and sold within 
a single State for such uses as lighting and operating signals on 
railroads and at airports to guide interstate traffic, lighting and 
operating radio stations transmitting programs interstate, and lighting 
and message transmission of telephone and telegraph companies. \53\ 
Similar principles would apply to the production of fuel or water for 
use in the operation of railroads with which interstate and foreign 
commerce is carried on; the production of radio or television scripts 
which provide the basis for programs transmitted interstate; the 
production of telephone and telegraph poles for use in the necessary 
repair, maintenance, or improvement of interstate communication systems; 
the production of crushed rock, ready-mixed concrete, cross-ties, 
concrete culvert pipe, bridge timbers, and similar items for use in the 
necessary repair, maintenance, or improvement of railroad roadbeds and 
bridges which serve as the instrumentalities over which interstate 
traffic moves.
---------------------------------------------------------------------------

    \51\ Hamlet Ice Co. v. Fleming, 127 F. 2d 165 (C.A. 4), certiorari 
denied 317 U.S. 634; Atlantic Co. v. Walling, 131 F. 2d 518 (C.A. 5); 
Chapman v. Home Ice Co.; 136 F. 2d 353 (C.A. 6) certiorari denied 320 
U.S. 761; Southern United Ice Co. v. Hendrix, 153 F. 2d 689 (C.A. 6); 
Hansen v. Salinas Valley Ice Co., 62 Cal. App. 357, 144 F. 2d 896.
    \52\ Hamlet Ice Co. v. Fleming, 127 F. 2d 165 (C.A. 4).
    \53\ Lewis v. Florida Power & Light Co., 154 F. 2d 751 (C.A. 5); see 
also Walling v. Connecticut Co., 154 F. 2d 552 (C.A. 2).


Similarly, in the case of highways, pipe lines, and waterways which 
serve as instrumentalities of interstate and foreign commerce, the 
production of goods for use in the direct furtherance of the movement of 
commerce thereon would be the production of goods ``for

[[Page 371]]

commerce.'' The production of materials \54\ for use in the necessary 
maintenance, repair, or improvement of the instrumentality so that the 
flow of commerce will not be impeded or impaired is an example of this. 
Thus, stone or ready-mixed concrete, crushed rock, sand, gravel, and 
similar materials for bridges or dams; like materials or bituminous 
aggregate or oil for road surfacing; concrete or galvanized pipe for 
road drainage; bridge planks and timbers; paving blocks; and other such 
materials may be produced ``for'' commerce even though they do not leave 
the State.
---------------------------------------------------------------------------

    \54\ Walling v. Staffen, 5 W.H. Cases 1002 (W.D. N.Y.), 11 Labor 
Cases (CCH) par. 63, 102; McCombs v. Carter, 8 W.H. Cases 498 (E.D. 
Va.), 16 Labor Cases (CCH) par. 64, 964. Contra, McComb v. Trimmer, 85 
F. Supp. 565 (D. N.J.). Cf. Engebretson v. Albrecht, 150 F. 2d 602 (C.A. 
7).
---------------------------------------------------------------------------

    (3) This does not, however, necessarily mean that the production of 
such materials within a State is always production ``for'' commerce when 
the materials are used in the same State for the maintenance, repair, or 
improvement of highways or other instrumentalities carrying interstate 
traffic. In determining whether the production is actually ``for'' 
commerce in a situation where there is no reason to believe that the 
goods will leave the State, a practical judgment is required. Some 
illustrations may be helpful.

On the one hand, there are situations where there is little room for 
doubt that the goods are produced ``for'' commerce in the sense that the 
goods are intended for the direct furtherance of the movement of 
commerce over the instrumentalities of transportation and communication. 
The most obvious illustration is that of special-purpose goods such as 
cross-ties for railroads, telephone or telegraph poles, or concrete pipe 
designed for highway use. Another illustration is sand and gravel for 
highway repair or reconstruction which is produced from a borrow pit 
opened expressly for that purpose, or from the pits of an employer whose 
business operations are conducted wholly or in the substantial part with 
the intent or purpose of filling highway contracts. (The fact that a 
substantial portion of the employer's gross income is derived from 
supplying such materials for highway repair and reconstruction would be 
one indication that a substantial part of his business is directed to 
the purpose of meeting such needs of commerce.)

On the other hand, there are situations where materials or other goods 
used in maintaining, repairing, or reconstructing instrumentalities of 
commerce are produced and supplied by local materialmen under 
circumstances which may require the conclusion that the goods are not 
produced ``for'' commerce. Thus, a materialman may be engaged in an 
essentially local business serving the usual miscellany of local 
customers, without any substantial part of such business being directed 
to meeting the needs of highway repair or reconstruction. If, on 
occasion, he happens to produce or supply some materials which are used 
within the State to meet such highway needs, and he does so as a mere 
incident of his essentially local business, the Administrator will not 
consider that his employees handling or working on such materials are 
producing goods ``for'' commerce. This is, rather, a typically local 
activity of the kind the Act was not intended to cover. The same may be 
said of the production of ice by an essentially local ice plant where 
the only basis of coverage is the delivery of ice for the water cooler 
in the community railroad station. The employees producing ice in the 
ice plant for local use would not by reason of this be covered as 
engaged in the production of goods ``for'' commerce.

Other illustrations might be given but these should emphasize the 
essential distinction which must be kept in mind. Borderline cases will, 
of course, arise. In each such case the facts must be examined and a 
determination made as to whether or not the goods may fairly be viewed 
as produced ``for'' use in the direct furtherance of the movement of 
interstate or foreign commerce, and thus ``for'' commerce.
    (c) Controlling effect of facts at time ``production'' occurs. (1) 
Whether employees are engaged in the production of goods ``for'' 
commerce depends upon circumstances as they exist at the time the goods 
are being produced, not upon

[[Page 372]]

some subsequent event. Thus, if a lumber manufacturer produces lumber to 
fill an out-of-State order, the employees working on the lumber are 
engaged in the production of goods for commerce and within the coverage 
of the Act's wage and hours provisions, even though the lumber does not 
ultimately leave the State because it is destroyed by fire before it can 
be shipped. Similarly, employees drilling for oil which the employer 
expects to leave the State either as crude oil or refined products are 
engaged in the production of goods for commerce while the drilling 
operations are going on and are entitled to be paid on that basis 
notwithstanding some of the wells drilled may eventually prove to be dry 
holes. \55\
---------------------------------------------------------------------------

    \55\ Culver v. Bell & Loffland, 146 F. 2d 29 (C.A. 9); see also 
Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 88.
---------------------------------------------------------------------------

    (2) On the other hand, if the lumber manufacturer first mentioned 
produces lumber to fill the order of a local contractor in the 
expectation that it will be used to build a schoolhouse within the 
State, the employees producing the lumber are not engaged in the 
production of goods ``for'' commerce and are not covered by the Act. 
This would remain true notwithstanding the contractor subsequently goes 
bankrupt and the lumber is sold to a purchaser who moves it to another 
State; the status of the employees for purposes of coverage cannot in 
this situation, any more than in the others, be retroactively changed by 
the subsequent event.
    (d) Goods disposed of locally to persons who place them in commerce. 
It is important to remember that if, at the time when employees engage 
in activities which constitute ``production of goods'' within the 
meaning of the Act, their employer intends, hopes, expects, or has 
reason to believe that such goods will be taken or sent out of the State 
by a subsequent purchaser or other person into whose possession the 
goods will come, this is sufficient to establish that such employees are 
engaged in the production of such goods ``for'' commerce and covered by 
the Act. Whether the producer passes title to the goods to another 
within the State is immaterial. \56\ The goods are produced ``for'' 
commerce in such a situation whether they are purchased f.o.b. the 
factory and are taken out of the State by the purchaser, or whether they 
are sold within the State to a wholesaler or retailer or manufacturer or 
processor who in turn sells them, either in the same form or after 
further processing, in interstate or foreign commerce. The same is true 
where the goods worked on by the producer's employees are not owned by 
the producer and are returned, after the work is done, to the possession 
of the owner who takes or sends them out of the State. \57\ Similarly, 
employees are engaged in the production of goods ``for'' commerce when 
they are manufacturing, handling, working on, or otherwise engaging in 
the production of boxes, barrels, bagging, crates, bottles, or other 
containers, wrapping or packing material which their employer has reason 
to believe will be used to hold the goods of other producers which will 
be sent out of the State in such containers or wrappings. It makes no 
difference that such other producers are located in the same State and 
that the containers are sold and delivered to them there. \58\
---------------------------------------------------------------------------

    \56\ Hamlet Ice Co. v. Fleming, 127 F. 2d 165 (C.A. 4). certiorari 
denied 317 U.S. 634; Bracey v. Luray, 138 F. 2d 8 (C.A. 4).
    \57\ Schulte Co. v. Gangi, 328 U.S. 108; Warren-Bradshaw Drilling 
Co. v. Hall, 317 U.S. 88; Walling v. Kerr, 47 F. Supp. 852 (E.D. Pa.).
    \58\ Enterprise Box Co. v. Fleming, 125 F. 2d 897 (C.A. 5), 
certiorari denied 316 U.S. 704; Dize v. Maddrix, 144 F. 2d 584 (C.A. 4), 
affirmed 324 U.S. 697; Walling v. Burch, 5 W. H. Cases 323 (S.D. Ga.); 9 
Labor Cases (CCH) par. 62, 613; Fleming v. Schiff, 1 W.H. Cases 893 (D. 
Colo.), 5 Labor Cases (CCH) par. 60, 864.
    It should be noted that where empty containers are purchased, 
loaded, or transported within a single State as a part of their 
movement, as empty containers, out of the State, an employee engaged in 
such purchasing, loading, or transporting operations is covered by the 
Act as engaged ``in commerce.'' Atlantic Co. v. Weaver, 150 F. 2d 843 
(C.A. 4); Klotz v. Ippolito, 40 F. Supp. 422 (S.D. Tex.); Orange Crush 
Bottling Co. v. Tuggle, 70 Ga. App. 144, 27 S.E. 2d 769.
---------------------------------------------------------------------------



                     Subpart B_Construction Industry

    Source: 21 FR 5439, July 20, 1956, unless otherwise noted.

[[Page 373]]



Sec. 776.22  Subpart limited to individual employee coverage.

    This subpart, which was adopted before the amendments of 1961 and 
1966 to the Fair Labor Standards Act, is limited to discussion of the 
traditional general coverage of employees employed in activities of the 
character performed in the construction industry, which depends on 
whether such employees are, individually, ``engaged in commerce or in 
the production of goods for commerce'' within the meaning of the Act. 
The 1961 and 1966 amendments broadened coverage by extending it to other 
employees of the construction industry on an ``enterprise'' basis, as 
explained in Sec. 776.22a. Employees covered under the principles 
discussed in this subpart remain covered under the Act as amended; 
however, an employee who would not be individually covered under the 
principles discussed in this subpart may now be subject to the Act if he 
is employed in an enterprise engaged in covered construction as defined 
in the amendments.

[35 FR 5543, Apr. 3, 1970]

                           Enterprise Coverage



Sec. 776.22a  Extension of coverage to employment in certain enterprises.

    Whether or not individually covered on the traditional basis, an 
employee is covered on an ``enterprise'' basis by the Act as amended in 
1961 and 1966 if he is ``employed in an enterprise engaged in commerce 
or in the production of goods for commerce'' as defined in section 3 
(r), (s), of the Act. ``Enterprise'' is defined generally by section 
3(r) to mean ``the related activities performed (either through unified 
operation or common control) by any person or persons for a common 
business purpose, and includes all such activities whether performed in 
one or more establishments or by one or more corporate or other 
organizational units.'' If an ``enterprise'' as thus defined is an 
``enterprise engaged in commerce or in the production of goods for 
commerce'' as defined and described in section 3(s) of the Act as 
amended, any employee employed in such enterprise is subject to the 
provisions of the Act to the same extent as if he were individually 
engaged ``in commerce or in the production of goods for commerce'', 
unless specifically exempt, section 3(s), insofar as pertinent to the 
construction industry, reads as follows:

    Enterprise engaged in commerce or in the production of goods for 
commerce means an enterprise which has employees engaged in commerce or 
in the production of goods for commerce, including employees handling, 
selling, or otherwise working on goods that have been moved in or 
produced for commerce by any person, and which:

                                * * * * *

    (3) Is engaged in the business of construction or reconstruction, or 
both.


Questions of ``enterprise coverage'' in the construction industry which 
are not answered in published statements of the Department of Labor may 
be addressed to the Administrator of the Wage and Hour Division, 
Department of Labor, Washington, DC 20210, or assistance may be 
requested from any of the Regional or District Offices of the Division.

[35 FR 5543, Apr. 3, 1970]

        Individual Employee Coverage in the Construction Industry



Sec. 776.22b  Guiding principles.

    (a) Scope of bulletin and general coverage statement. This subpart 
contains the opinions of the Administrator of the Wage and Hour Division 
with respect to the applicability of the Fair Labor Standards Act to 
employees engaged in the building and construction industry. The 
provisions of the Act expressly make its application dependent on the 
character of an employee's activities, that is, on whether he is engaged 
``in commerce'' or in the ``production of goods for commerce including 
any closely related process or occupation directly essential to such 
production.'' Under either of the two prescribed areas of covered work, 
coverage cannot be determined by a rigid or technical formula. The 
United States Supreme Court has said of both phases that coverage must 
be given ``a liberal construction'' determined ``by practical 
considerations, not by technical

[[Page 374]]

conceptions.'' \1\ The Court has specifically rejected the technical 
``new construction'' concept, as a reliable test for determining 
coverage under this Act. \2\
---------------------------------------------------------------------------

    \1\ Mitchell v. Vollmer & Co., 349 U.S. 427; Kirschbaum Co. v. 
Walling, 316 U.S. 517; Alstate Construction Co. v. Durkin, 345 U.S. 13.
    \2\ Mitchell v. Vollmer & Co., ante.


So far as construction work specifically is concerned, the courts have 
cast the relevant tests for determining the scope of ``in commerce'' 
coverage in substantially similar language as they have used in 
construing the ``production'' phase of coverage. Thus the Act applies to 
construction work which is so intimately related to the functioning of 
interstate commerce as to be, in practical effect, a part of it, as well 
as to construction work which has a close and immediate tie with the 
process of production. \3\
---------------------------------------------------------------------------

    \3\ Mitchell v. Vollmer & Co., ante; Cf. Armour & Co. v. Wantock, 
323 U.S. 126.
---------------------------------------------------------------------------

    (b) Engagement in commerce. The United States Supreme Court has held 
that the ``in commerce'' phase of coverage extends ``throughout the 
farthest reaches of the channels of interstate commerce,'' and covers 
not only construction work physically in or on a channel or 
instrumentality of interstate commerce but also construction work ``so 
directly and vitally related to the functioning of an instrumentality or 
facility of interstate commerce as to be, in practical effect, a part of 
it, rather than isolated, local activity.'' \4\
---------------------------------------------------------------------------

    \4\ Mitchell v. Vollmer & Co., ante; Walling v. Jacksonville Paper 
Co., 317 U.S. 564; Overstreet v. North Shore Corp., 318 U.S. 125.
---------------------------------------------------------------------------

    (c) Production of goods for commerce. The ``production'' phase of 
coverage includes ``any closely related process or occupation directly 
essential'' to production of goods for commerce. An employee need not be 
engaged in activities indispensable to production in order to be 
covered. Conversely, even indispensable or essential activities, in the 
sense of being included in the long line of causation which ultimately 
results in production of finished goods, may not be covered. The work 
must be both closely related and directly essential to the covered 
production. \5\
---------------------------------------------------------------------------

    \5\ Armour & Co. v. Wantock, ante; Kirschbaum v. Walling, 316 U.S. 
417; Cf. 10 E. 40th St. Co. v. Callus, 325 U.S. 578.
---------------------------------------------------------------------------

    (d) State and national authority. Consideration must also be given 
to the relationship between state and national authority because 
Congress intended ``to leave local business to the protection of the 
State.'' \6\ Activities which superficially appear to be local in 
character, when isolated, may in fact have the required close or 
intimate relationship with the area of commerce to which the Act 
applies. The courts have stated that a project should be viewed as a 
whole in a realistic way and not broken down into its various phases so 
as to defeat the purposes of the Act. \7\
---------------------------------------------------------------------------

    \6\ Walling v. Jacksonville Paper Co., ante; Kirschbaum v. Walling, 
ante; Phillips Co. v. Walling, 324 U.S. 490, 497.
    \7\ Walling v. Jacksonville Paper Co., ante; Bennett v. V. P. Loftis 
Co., 167 F. (2d) 286 (C.A.4); Tobin v. Pennington-Winter Const. Co., 198 
F. (2d) 334 (C.A.10), certiorari denied 345 U.S. 915; See General 
Coverage Bulletin, Sec. Sec. 776.19 (a), (b), and 776.21(b).
---------------------------------------------------------------------------

    (e) Interpretations. In his task of distinguishing covered from non-
covered employees the Administrator will be guided by authoritative 
court decisions. To the extent that prior administrative rulings, 
interpretations, practices and enforcement policies relating to 
employees in the construction industry are inconsistent or in conflict 
with the principles stated in this subpart, they are hereby rescinded 
and withdrawn.

[21 FR 5439, July 20, 1956. Redesignated at 35 FR 5543, Apr. 3, 1970]



Sec. 776.23  Employment in the construction industry.

    (a) In general. The same principles for determining coverage under 
the Fair Labor Standards Act generally apply to employees in the 
building and construction industry. As in other situations, it is the 
employee's activities rather than the employer's business which is the 
important consideration, and it is immaterial if the employer is an 
independent contractor who performs the construction work for or on 
behalf of a firm which is engaged in

[[Page 375]]

interstate commerce or in the production of goods for such commerce. \8\
---------------------------------------------------------------------------

    \8\ Mitchell v. Joyce Agency, 348 U.S. 945, affirming 110 F. Supp. 
918; Fleming v. Sondeck, 132 F. (2d) 77 (C.A. 5), certiorari denied 318 
U.S. 772; Kirschbaum v. Walling, ante; Walling v. McCrady Construction 
Co., 156 F. (2d) 932. certiorari denied 329 U.S. 785; Mitchell v. Brown 
Engineering Co., 224 F. (2d) 359 (C.A. 8), certiorari denied 350 U.S. 
875; Chambers Construction Co. and L. H. Chambers v. Mitchell, decided 
June 5, 1965 (C.A. 8).
---------------------------------------------------------------------------

    (b) On both covered and non-covered work. If the employee is engaged 
in both covered and non-covered work during the workweek he is entitled 
to the benefits of the Act for the entire week regardless of the amount 
of covered activities which are involved. The covered activities must, 
however, be regular or recurring rather than isolated, sporadic or 
occasional. \9\
---------------------------------------------------------------------------

    \9\ See General Coverage Bulletin, Sec. Sec. 776.2 and 776.4
---------------------------------------------------------------------------

    (c) On covered construction projects. All employees who are employed 
in connection with construction work which is closely or intimately 
related to the functioning of existing instrumentalities and channels of 
interstate commerce or facilities for the production of goods for such 
commerce are within the scope of the Act. Closely or intimately related 
construction work includes the maintenance, repair, reconstruction, 
redesigning, improvement, replacement, enlargement or extension of a 
covered facility. \10\ If the construction project is subject to the 
Act, all employees who participate in the integrated effort are covered, 
including not only those who are engaged in work at the site of the 
construction such as mechanics, laborers, handymen, truckdrivers, 
watchmen, guards, timekeepers, inspectors, checkers, surveyors, payroll 
workers, and repair men, but also office, clerical, bookkeeping, 
auditing, promotional, drafting, engineering, custodial and stock room 
employees. \11\
---------------------------------------------------------------------------

    \10\ Walling v. McCrady Const. Co., 156 F. (2d) 932, certiorari 
denied 329 U.S. 785; Chambers Construction Co. and L. H. Chambers v. 
Mitchell, decided June 5, 1956 (C.A. 8); Tobin v. Pennington-Winter 
Const. Co. ante; Mitchell v. Vollmer & Co., ante.
    \11\ Mitchell v. Brown Engineering Co., ante; Chambers Construction 
Co. and L. H. Chambers v. Mitchell, ante; Ritch v. Puget Sound Bridge & 
Dredging Co., 156 F. (2d) 334 (C.A. 9).
---------------------------------------------------------------------------

    (d) On non-covered construction projects. (1) A construction project 
maybe purely local and, therefore, not covered, but some individual 
employees may nonetheless be covered on independent ground by reason of 
their interstate activities. Under the principle that coverage depends 
upon the particular activities of the employee and not on the nature of 
the business of the employer, individual employees engaged in interstate 
activities are covered even though their activities may be performed in 
connection with a non-covered construction project. Thus, the Act is 
applicable to employees who are regularly engaged in ordering or 
procuring materials and equipment from outside the State or receiving, 
unloading, checking, watching or guarding such goods while they are 
still in transit. For example, laborers on a non-covered construction 
project who regularly unload materials and equipment from vehicles or 
railroad cars which are transporting such articles from other States are 
performing covered work. \12\
---------------------------------------------------------------------------

    \12\ Clyde v. Broderick, 144 F. (2d) 348 (C.A. 10); Durnil v. J. E. 
Dunn Construction Co. 186 F (2d) 27 (C.A. 8), Donahue v. George A. 
Fuller Co., 104 F. Supp. 145; Cf. Mitchell v. Royal Baking Co., 219 F. 
(2d) 532 (C.A. 5).
---------------------------------------------------------------------------

    (2) Similarly, employees who regularly use instrumentalities of 
commerce, such as the telephone, telegraph and mails for interstate 
communication are within the scope of the Act, as are employees who are 
regularly engaged in preparing, handling, or otherwise working on goods 
which will be sent to other States. This includes the preparation of 
plans, orders, estimates, accounts, reports and letters for interstate 
transmittal.



Sec. 776.24  Travel in connection with construction projects.

    The Act also applies to employees who regularly travel across State 
lines in the performance of their duties, even though the construction 
project itself

[[Page 376]]

is not covered. \13\ If an employee regularly transports persons, 
materials, or equipment between jobs across State lines, or to a covered 
project, even within the State, as part of his duties for the 
contractor, he would be covered. As in other situations, the Act would 
not apply if crossing State lines or transporting persons, materials or 
equipment by the employee was isolated or sporadic rather than regular 
and recurring. Also, ordinary home-to-work travel, even across State 
lines, is not covered.
---------------------------------------------------------------------------

    \13\ Reck v. Zarmacay, 264 App. Div. 520, 36 N.Y.S. (2d) 394; 
Colbeck v. Dairyland Creamery Co., 17 N.W. (2d) 262 (S. Ct. S.D.).
---------------------------------------------------------------------------



Sec. 776.25  Regular and recurring activities as basis of coverage.

    Regular and recurring may mean a very small amount and is not to be 
determined by volume or percentages. Coverage depends on the character 
rather than the volume of the employee's activities. For example, if an 
employee in the course of his duties regularly engages in covered work 
even though the covered work constitutes only a small part of his 
duties, he would be covered in any week when he performs such covered 
work. \14\
---------------------------------------------------------------------------

    \14\ Walling v. Jacksonville Paper Co., ante; Mabee v. White Plains 
Publishing Co., 327 U.S. 178.
---------------------------------------------------------------------------



Sec. 776.26  Relationship of the construction work to the covered facility.

    Unless the construction work is physically or functionally 
integrated or closely identified with an existing covered facility it is 
not regarded as covered construction because it is not closely enough 
related to or integrated with the production of goods for commerce or 
the engagement in commerce. For this reason the erection, maintenance or 
repair of dwellings, apartments, hotels, churches and schools are not 
covered projects. \15\ Similarly the construction of a separate, wholly 
new, factory building, not constructed as an integral part or as an 
improvement of an existing covered production plant, is not covered (Cf. 
Sec. 776.27(c)). Coverage of any construction work, whether new or 
repair work, depends upon how closely integrated it is with, and how 
essential it is to the functioning of, existing covered facilities. 
Neither the mere fact that the construction is ``new construction'' nor 
the fact that it is physically separated from an existing covered plant, 
is determinative. Moreover, the court decisions make it clear that the 
construction project itself need not be actually employed in commerce or 
in the production of goods for commerce during the time of its 
construction in order to be covered. \16\ Such factors may be considered 
in determining whether as a practical matter the work is directly and 
vitally related to the functioning of the covered facility but would not 
be decisive.
---------------------------------------------------------------------------

    \15\ Cf. Sec. 776.18(b).
    \16\ Mitchell v. Vollmer, ante; Bennett v. V. P. Loftis Co., ante; 
Mitchell v. Chambers Const. Co., 214 F. (2d) 515 (C.A. 10); Walling v. 
McCrady Const. Co., ante; Tobin v. Pennington-Winter Const. Co., 198 F. 
(2d) 334 (C.A. 5), certiorari denied, 345 U.S. 915.
---------------------------------------------------------------------------



Sec. 776.27  Construction which is related to covered production.

    (a) Existing production establishments. (1) Covered production 
facilities within the concept of the Act include mines, oil wells, 
banks, manufacturing, packing and processing plants, filtration, sewage 
treatment, electric power and water plants, shipyards, warehouses in 
which goods are broken down, packed or handled preparatory to being sent 
in interstate commerce, and similar establishments.
    (2) The repair or maintenance of a covered production unit is 
essential for its continued operation and has a close and immediate tie 
with the production of goods for commerce. \17\ The Act is also 
applicable to other construction which is an integral part of a covered 
production unit, such as the replacement, enlargement, reconstruction, 
extension or other improvement of the premises, the buildings, the 
machinery, tools and dies and other equipment. Functionally such work is 
like maintenance and repair and is necessary for the continued, 
efficient and effective operation of the facility as a unit. Thus the 
construction of new appurtenances of a covered production establishment 
such as parking aprons, access roads, railroad spurs, drainage ditches, 
storm,

[[Page 377]]

waste and sanitary sewers or adjacent integrated buildings is subject to 
the Act. Similarly, the Act applies to the installation of telephone, 
electric, gas and water lines, machinery and other equipment on the 
premises of such a facility.
---------------------------------------------------------------------------

    \17\ Kirschbaum Co. v. Walling, ante; Walling v. McCrady Const. Co., 
ante.
---------------------------------------------------------------------------

    (3) On the other hand, the production and furnishings, within the 
State, of construction materials, such as sand, gravel, brick and other 
construction materials produced for general local use, is not covered 
even if the producer also supplies such materials to construction 
companies which use them within the State in the repair, maintenance or 
improvement of facilities for the production of goods for commerce. 
Employees of the materialman in such a situation would not have such a 
close and immediate tie to the production of goods for commerce as to be 
considered ``closely related'' and ``directly essential'' to such 
production. \18\
---------------------------------------------------------------------------

    \18\ See General Coverage Bulletin, Sec. 776.19(b)(3); but see 
Sec. 776.19 (b) (1), (2) and (3); on coverage of furnishing materials 
``specially designed'', or meeting particular specifications, for use in 
production of particular kinds of goods for commerce; and paragraph (d) 
of this section, on coverage of producing and furnishing materials for 
use in construction work on instrumentalities of commerce.
---------------------------------------------------------------------------

    (b) Utilities which serve production establishments. The Act applies 
to employees of public utilities which furnish gas, electricity, water 
or fuel to firms engaged within the same State in manufacturing, 
processing, producing, or mining goods for commerce. \19\ Construction 
work performed upon the plant and facilities of such a utility is 
covered as in the case of any other covered production establishment. 
\20\ The extension of the lines or other facilities of a covered utility 
for the first time to the premises of an establishment which produces 
goods for commerce would be subject to the Act, because such extension 
is simply an improvement or enlargement of an existing covered utility. 
\21\ Furthermore, the maintenance or repair of the wires, pipes, or 
other conduits of a covered utility which serves business and 
manufacturing as well as residential areas would also be within the Act. 
On the other hand, extension or repair of lines or other facilities 
serving only residential areas would not be covered unless the 
electricity, gas, fuel, or water comes from out of the State.
---------------------------------------------------------------------------

    \19\ House Manager's Statement, 1949 Amendments.
    \20\ See decisions cited in footnotes 10 and 11, of this subpart.
    \21\ Meeker Cooperative Light & Power Ass'n v. Phillips, 158 F. (2d) 
698 (C.A. 8); Cf. New Mexico Public Service Co. v. Engel, 145 F. (2d) 
636 (C.A. 10); Lewis v. Florida Power & Light Co., 154 F. (2d) 75 (C.A. 
5).
---------------------------------------------------------------------------

    (c) New construction which is not integrated with existing 
production facilities. (1) Construction of a new factory building, even 
though its use for interstate production upon completion may be 
contemplated, will not ordinarily be considered covered. However, if the 
new building is designed as a replacement of or an addition or an 
improvement to, an existing interstate production facility, its 
construction will be considered subject to the Act.
    (2) If the new building, though not physically attached to an 
existing plant which produces goods for commerce, is designed to be an 
integral part of the improved, expanded or enlarged plant, the 
construction, like maintenance and repair, it would be subject to the 
Act. \22\
---------------------------------------------------------------------------

    \22\ Walling v. McCrady Const. Co., ante.
---------------------------------------------------------------------------

    (d) Production of materials for use in construction work on 
interstate instrumentalities. (1) The Act applies to employees who are 
engaged, at the job site or away from it, in the production of goods to 
be used within the State for the maintenance, repair, extension, 
enlargement, improvement, replacement or reconstruction of an 
instrumentality of interstate commerce. The goods need not go out of the 
State since the Act applies to the production of goods ``for'' commerce, 
including for use in commerce, and is not limited to ``production of 
goods for transportation in commerce,'' that is, to be sent across State 
lines. \23\
---------------------------------------------------------------------------

    \23\ Alstate Construction Co. v. Durkin, 345 U.S. 13; Tobin v. 
Johnson, 198 F. (2d) 130 (C.A. 8); Mitchell v. Emulsified Asphalt 
Products Co., 222 F. (2) 913 (C.A. 6).
---------------------------------------------------------------------------

    (2) The Act would also apply to the production of such items as 
electricity, fuel or water, for use in the operation of railroads or 
other instrumentalities

[[Page 378]]

of commerce. \24\ Therefore, as in the case of other production units, 
the maintenance, repair or other improvement of the premises or 
buildings or the appurtenances, including the machinery, tools and dies 
and equipment, of the facilities which are used to produce such goods, 
are subject to the Act.
---------------------------------------------------------------------------

    \24\ Sections 776.19(b)(2) and 776.21. See also paragraph (b) of 
this section.
---------------------------------------------------------------------------

    (3) Coverage also extends to employees who produce sand, gravel, 
asphalt, cement, crushed rock, railroad ties, pipes, conduits, wires, 
concrete pilings and other materials which are to be used in the 
construction of instrumentalities which serve as the means for the 
interstate movement of goods or persons.
    (4) This does not mean, however, that in every case where employees 
produce such materials which are used within the State in the 
maintenance, repair, or reconstruction of an instrumentality of 
commerce, the production of such materials is necessarily considered as 
production ``for'' commerce. A material supply company may be engaged in 
an independent business which is essentially local in nature, selling 
its materials to the usual miscellany of local customers without any 
particular intent or purpose of supplying materials for the maintenance, 
repair, or reconstruction of instrumentalities of commerce, and without 
any substantial portion of its business being directed to such specific 
uses. Employees of such an ``essentially local business'' are not 
covered by the Act merely because as an incident to its essentially 
local business, the company, on occasion, happens to produce or supply 
some materials which are used within the State to meet the needs of 
instrumentalities of commerce. \25\
---------------------------------------------------------------------------

    \25\ See Sec. Sec. 776.19 (a) and (b) and 776.21(b)(3). See also 
cases cited in footnote 22 of this subpart.
---------------------------------------------------------------------------



Sec. 776.28  Covered preparatory activities.

    (a) Before production begins. (1) The United States Supreme Court 
has held that the Act is applicable to employees of a company which was 
engaged in preliminary oil well drilling, even though the holes were 
drilled to a specified depth which was short of where the oil was 
expected to be found. \26\ The Act would also apply to drilling 
operations even though no oil was discovered. \27\ Laborers employed in 
erecting drilling rigs would also be covered. \28\ Other preparatory 
work before drilling begins in an oil field, such as staking oil claims, 
surveying, clearing the land, assembling materials and equipment, 
erecting sheds, derricks or dikes would also be within the scope of the 
Act. \29\ Preliminary work such as the foregoing has the requisite close 
and immediate tie with the production of goods for commerce to be within 
the coverage of the Act.
---------------------------------------------------------------------------

    \26\ Warren-Bradshaw Drilling Co. v. Hall, 317 U.S. 8.
    \27\ Culver v. Bell & Loffland, 146 F. (2d) 20.
    \28\ Devine v. Levy, 39 F. Supp. 44.
    \29\ Straughn v. Schlumberger Well Surveying Corp., 72 F. Supp. 511.
---------------------------------------------------------------------------

    (2) Similarly, coverage extends to employees engaged in the 
installation of machinery to be used in covered production in a new 
factory building, even though the construction of the building itself 
may not have been subject to the Act. Such installation is considered to 
be a preliminary production activity rather than simply part of the 
construction of the building.
    (3) If the construction project is subject to the Act, preliminary 
activities, such as surveying, clearing, draining and leveling the land, 
erecting necessary buildings to house materials and equipment, or the 
demolition of structures in order to begin building the covered 
facility, are subject to the Act. \30\
---------------------------------------------------------------------------

    \30\ Coverage of preparation of plans and designs is discussed in 
Sec. 776.19(b) (2).
---------------------------------------------------------------------------

    (b) Facilities used in aid of the covered construction. The 
installation of facilities, and the repair and maintenance of trucks, 
tools, machinery and other equipment to be used by a contractor in the 
furtherance of his covered construction work, are activities subject to 
the Act.



Sec. 776.29  Instrumentalities and channels of interstate commerce.

    (a) Typical examples. Instrumentalities and channels which serve as 
the media for the movement of goods and persons in interstate commerce 
or for

[[Page 379]]

interstate communications include railroads, highways, city streets; 
telephone, gas, electric and pipe line systems; radio and television 
broadcasting facilities; rivers, canals and other waterways; airports; 
railroad, bus, truck or steamship terminals; freight depots, bridges, 
ferries, bays, harbors, docks, wharves, piers; ships, vehicles and 
aircraft which are regularly used in interstate commerce. \31\
---------------------------------------------------------------------------

    \31\ General coverage bulletin, Sec. 776.11.
---------------------------------------------------------------------------

    (b) General character of an instrumentality of interstate commerce. 
(1) An instrumentality of interstate commerce need not stretch across 
State lines but may operate within a particular State as a link in a 
chain or system of conduits through which interstate commerce moves. 
\32\ Obvious examples of such facilities are railroad terminals, 
airports which are components of a system of air transportation, bridges 
and canals. A facility may be used for both interstate and intrastate 
commerce but when it is so used it is nonetheless an interstate 
instrumentality. Such double use does not exclude construction employees 
from being engaged in commerce.
---------------------------------------------------------------------------

    \32\ Mitchell v. Vollmer, ante; Bennett. v. V. P. Loftis, 167 F. 
(2d) 286 (C.A. 4); Overstreet v. North Shore Corp., ante; Rockton & Rion 
R. R. v. Walling, 146 F. (2d) 111, certiorari denied 324 U.S. 880; 
National Labor Relations Board v. Central Missouri Tel. Co., 115 F. (2d) 
563 (C.A. 8).
---------------------------------------------------------------------------

    (2) The term instrumentality of interstate commerce may refer to one 
unit or the entire chain of facilities. An instrumentality such as a 
railroad constitutes a system or network of facilities by which the 
interstate movement of goods and persons is accomplished. Each segment 
of the network is integrally connected with the whole and must be viewed 
as part of the system as a whole, not as an isolated local unit.
    (3) A construction project which changes the interstate system as a 
whole, or any of its units, would have a direct bearing on the flow of 
interstate commerce throughout the network. Thus, the new construction 
of an alternate route or an additional unit which alters the system or 
any segment of it, would have such a direct and vital relationship to 
the functioning of the instrumentality of interstate commerce as to be, 
in practical effect, a part of such commerce rather than isolated local 
activity. For example, such construction as the maintenance, repair, 
replacement, expansion, enlargement, extension, reconstruction, 
redesigning, or other improvement, of a railroad system as a whole, or 
of any part of it, would have a close and intimate relationship with the 
movement of goods and persons across State lines. All such construction, 
therefore, is subject to the Act.
    (4) The same would be true with respect to other systems of 
interstate transportation or communication such as roads, waterways, 
airports, pipe, gas and electric lines, and ship, bus, truck, telephone 
and broadcasting facilities. Consequently, construction projects for 
lengthening, widening, deepening, relocating, redesigning, replacing and 
adding new, substitute or alternate facilities; shortening or 
straightening routes or lines; providing cutoffs, tunnels, trestles, 
causeways, overpasses, underpasses and bypasses are subject to the Act. 
Furthermore, the fact that such construction serves another purpose as 
well as the improvement of the interstate facility, or that the 
improvement to the interstate facility was incidental to other non-
covered work, would not exclude it from the Act's coverage. \33\
---------------------------------------------------------------------------

    \33\ Tobin v. Pennington-Winter Const. Co., ante; Oklahoma v. 
Atkinson Co., 313 U.S. 508; Cuascut v. Standard Dredging Corp., 94 F. 
Supp. 197.
---------------------------------------------------------------------------

    (c) Examples of construction projects which are subject to the Act. 
Coverage extends to employees who are engaged on such work as repairing 
or replacing abutments and superstructures on a washed out railroad 
bridge; \34\ replacing an old highway bridge with a new one at a 
different location; \35\ removing an old railroad bridge and partially 
rebuilding a new one; repairing a railroad roundhouse, signal tower, and 
storage building; relocating portions of a county road; erecting new 
bridges with new approaches in different locations from

[[Page 380]]

the old ones; widening a city street; relocating, improving or extending 
interstate telephone facilities including the addition of new conduits 
and new trunk lines. \36\ Also within the scope of the Act are employees 
who are engaged in the construction, maintenance and repair of ships, 
barges and other vessels used for interstate commerce, including those 
belonging to the Government, \37\ and facilities used in the production 
and transmission of electric, fuel, water, steam and other powers to 
instrumentalities of interstate commerce. \38\
---------------------------------------------------------------------------

    \34\ Pedersen v. J. F. Fitzgerald, 318 U.S. 740.
    \35\ Bennett v. V. P. Loftis Co., 167 F. (2d) 286 (C.A. 4).
    \36\ Walling v. McCrady Const. Co., ante.
    \37\ Divins v. Hazeltine Electronics Corp., 163 F. (2d) 100 (C.A. 
2); Cf. Walling v. Haile Gold Mines, Inc., 136 F. (2d) 102 (C.A. 4).
    \38\ New Mexico Public Service Co. v. Engel, ante; Lewis v. Florida 
Light & Power Co., ante; Mitchell v. Mercer Water Co., 208 F. (2d) 900 
(C.A. 3); Mitchell v. Brown Engineering Co., ante.
---------------------------------------------------------------------------

    (d) Construction of new facilities. (1) In a case before the United 
States Supreme Court, the question was presented whether the Act applied 
to the construction of a new canal at some distance from the one then in 
use. The new canal was to be an alternate route for entering the 
Mississippi River and would relieve traffic congestion in the existing 
canal. The latter would continue in operation but could not be widened 
because of its location in a highly developed industrial section of New 
Orleans. The Court in holding the construction of the new canal to be 
within the coverage of the Act stated that the new construction was as 
intimately related to the improvement of navigation on the Gulf 
Intercoastal Waterway as dredging in the existing canal would be and 
that the project was ``part of the redesigning of an existing facility 
of interstate commerce.'' \39\ Thus the construction of a new facility 
in a network of instrumentalities of interstate commerce, in order to 
serve the system, or to function as an alternate route, or to relieve 
traffic congestion in another unit, or to replace an outmoded facility, 
is subject to the Act.
---------------------------------------------------------------------------

    \39\ Mitchell v. Vollmer & Co., ante; see also Bennett v. V. P. 
Loftis, ante.
---------------------------------------------------------------------------

    (2) Similarly, the construction of a new unit, such as a new airport 
which is an addition to the entire interstate system of air 
transportation although not physically attached to any other unit, 
would, as a practical matter, necessarily expand, promote and facilitate 
the movement of interstate commerce over the airway system, and 
consequently, would be subject to the Act. In such a situation the 
interstate system, although composed of physically separate local units, 
is, as a whole, the instrumentality of commerce which is improved. In 
most cases such an addition would also directly enhance, improve or 
replace some particular nearby unit in the interstate network. The new 
addition would thus relieve traffic congestion and facilitate the 
interstate movement of commerce over the existing instrumentality as a 
whole, as well as at the particular nearby units. The same principle 
would apply to highways, turnpikes and similar systems of interstate 
facilities.
    (3) In like manner, the reconstruction, extension or expansion of a 
small unit in a system of interstate facilities, such as the enlargement 
of a small airport which is regularly used for interstate travel or 
transportation, is covered, regardless of the relative sizes of the 
original unit and the new one. The construction in such situations 
facilitates and improves the interstate commerce served by, and is 
directly related to the continued, efficient and effective operation of, 
both the particular original unit and the interstate system as a whole. 
Also, the construction of facilities such as hangars, repair shops and 
the like at a covered airport, which are ``directly and vitally related 
to the functioning'' of the instrumentality of commerce, would be 
subject to the Act. \40\
---------------------------------------------------------------------------

    \40\ Mitchell v. Vollmer & Co., ante.
---------------------------------------------------------------------------

    (e) Construction on waterways. Courts have consistently held that 
the engagement in interstate commerce includes the maintenance, repair 
or improvement of navigable waterways even when the construction work is 
performed on the non-navigable parts of the instrumentality such as at 
the

[[Page 381]]

headwaters and watersheds or in tributary streams. \41\
---------------------------------------------------------------------------

    \41\ Tobin v. Pennington-Winter Const. Co., ante; Oklahoma v. 
Atkinson Co., ante; United States v. Appalachian Power Co., 311 U.S. 
426.


Construction which improves rivers and waterways serving as 
instrumentalities of interstate commerce includes dredging; the 
building, maintenance, repair, replacement, reconstruction, improvement, 
or enlargement of dikes, revetments, levees, harbor facilities, 
retaining walls, channels, berths, piers, wharves, canals, dams, 
reservoirs and similar projects; also the removal of debris and other 
impediments in the waterway and flood control work in general. \42\
---------------------------------------------------------------------------

    \42\ Walling v. Patton-Tulley Transportation Co., 134 F. (2d) 945 
(C.A. 6); Ritch v. Puget Sound Bridge & Dredging Co., 156 F. (2d) 334.

The Act applies to construction work which increases the navigability of 
a waterway, protects it from floods or otherwise improves or maintains 
its use as an instrumentality of interstate commerce. The courts have 
held that a program for controlling floods is inseparably related to the 
stabilization and maintenance of the navigable channel of the river, 
since levees, dams, dikes and like structures, which hold back the 
waters in time of flood, at the same time confine a more efficient body 
of water during other periods by increasing its velocity and scouring 
and deepening its channels. \43\
---------------------------------------------------------------------------

    \43\ Tobin v. Pennington-Winter Const. Co., ante; Tobin v. Ramey, 
206 F. (2d) 505 (C.A. 5) certiorari denied, sub nom Hughes Construction 
Co. v. Secretary of Labor, 346 U.S. 925; Jackson v. U.S., 230 U.S. 1.
---------------------------------------------------------------------------

    (1) Flood control work in non-navigable parts of a waterway. Both 
Congress and the courts have considered that watersheds and headwaters 
are keys to the control of floods on navigable streams and that the 
control over the non-navigable parts of a river is essential for the 
prevention of overflows on the navigable portions. It is also well 
settled that in order to control floods on a navigable stream it is 
necessary to take flood control measures on its tributaries.
    (2) Basis of coverage. (i) The construction of a levee, dam or other 
improvement in any part of a river or its tributaries for the purpose of 
preventing floods or aiding navigation must be considered as an integral 
part of a single comprehensive project for improvement of the river 
system. Even though a particular levee or dike, by itself, may not 
effect an improvement, the courts have made it clear that the combined 
effect of a chain of such structures serves as the basis for determining 
coverage. The construction of a particular river structure may, 
therefore, be subject to the Act simply because it is part of a 
comprehensive system of structures, whose combined effect will achieve 
the improvement of the navigable channel. Thus, it has been held that 
site clearance work in the construction of a multiple-purpose dam on a 
non-navigable stream is covered by the Act where the work is an integral 
part of a comprehensive system for the control of floods and the 
betterment of navigation on the Arkansas and Mississippi Rivers. \44\ 
Similarly, the enlargement of a set-back levee, located from two to six 
miles from the banks of the Mississippi, was held to be covered because 
it was part of the Mississippi leveee system even though the set-back 
levee, when viewed separately, was not directly related to the 
functioning of the Mississippi as an instrumentality of commerce. \45\
---------------------------------------------------------------------------

    \44\ Tobin v. Pennington-Winter Const. Co., ante.
    \45\ Tobin v. Ramey, 205 F. (2d) 606, rehearing denied 206 F. (2d) 
505 (C.A. 5) certiorari denied, sub nom Hughes Construction Co. v. 
Secretary of Labor, 346 U.S. 925.
---------------------------------------------------------------------------

    (ii) The principle involved applies also to other instrumentalities 
of interstate commerce. As in the case of covered waterway projects, 
individual additions or improvements to other instrumentalities of 
interstate commerce may for coverage purposes be considered as part of a 
whole program rather than separately. The Act will apply to the 
construction in such situations if the unit, considered by itself or as 
part of a larger program, promotes the efficient or effective operation 
of the instrumentality of interstate commerce.
    (3) Construction of wharves, piers and docks. The Act also applies 
to the construction of new piers, wharves, docks and other facilities if 
they are integrated with the interstate commerce

[[Page 382]]

functions of an existing harbor. Similarly, the new construction of such 
facilities in other locations along the waterway is subject to the Act 
if they are regularly used by vessels carrying goods or persons in 
interstate commerce.
    (f) Highways, county roads and city streets--(1) Typical examples. 
As a generic term highways includes bridges, underpasses, overpasses, 
bypasses, county roads, access roads, city streets and alternate roads, 
draw bridges, toll bridges, toll roads and turnpikes, but does not 
include roads or parking facilities on privately owned land and which 
are not for use by the general public for interstate traffic.
    (2) Basis of coverage. The general rules for determining the 
coverage of employees engaged in the construction of other 
instrumentalities of interstate commerce apply to highway construction 
work. The United States Supreme Court has stated that in applying the 
Act to highway construction as to other coverage problems, practical 
rather than technical constructions are decisive. \46\ After the Court 
remanded the Overstreet case to the district court, the latter held that 
the employees engaged in maintaining and repairing the facilities 
regularly used and available for interstate commerce were engaged in 
commerce, regardless of the extent of the interstate traffic. \47\ The 
court recognized that although the amount of the interstate commerce in 
the Overstreet case was very small it was regular and recurring and not 
occasional nor incidental. Thus, under the authoritative decision a 
percentage test is not regarded as a practical guide for ascertaining 
whether a particular facility is an instrumentality of interstate 
commerce. \48\ Employees who are engaged in the repair, maintenance, 
extension, enlargement, replacement, reconstruction, redesigning or 
other improvement of such a road are subject to the Act. The fact that 
the road is owned or controlled by the State or Federal Government or by 
any subdivision thereof would not affect the applicability of the Act. 
The same would be true if State or Federal funds were used to finance 
the construction. It should be noted, however, that if the employees are 
actually employees of a State, or a political subdivision thereof, they 
are excepted from coverage of the Act under section 3(d).
---------------------------------------------------------------------------

    \46\ Overstreet v. North Shore Corp., ante.
    \47\ 52 F. Supp. 503.
    \48\ North Shore Corp. v. Barnett, 143 F. (2d) 172 (C.A. 5); Schmidt 
v. Peoples Telephone Union of Maryville, Mo., 138 F. (2d) 13 (C.A. 8).
---------------------------------------------------------------------------

    (3) City streets. The construction, reconstruction or repair of a 
city street, whether residential or not, which is part of an interstate 
highway or which directly connects with any interstate highway is so 
closely related to the interstate commerce moving on the existing 
highway as to be a part of it. Construction of other streets, which are 
not a part of a public road building program and are constructed on 
private property as a part of a new residential development, will not be 
considered covered until further clarification from the courts.
    (4) New highway construction. Although a number of appellate court 
decisions have held that the construction of new highways is not within 
the coverage of the Act, these decisions relied upon the technical ``new 
construction'' concept which the United States Supreme Court has 
subsequently held to be inapplicable as the basis for determining 
coverage under this Act. \49\ Under the principles now established by 
that Court's decision, which require determination of coverage on the 
basis of realistic, practical considerations, the construction of new 
expressways and highways that will connect with an interstate highway 
system is so ``related to the functioning of an instrumentality or 
facility of interstate commerce as to be, in practical effect, a part of 
it, rather than isolated, local activity.'' \50\ Such highways and 
expressways not only are so designed as

[[Page 383]]

necessarily to become a part of or additions to an existing interstate 
highway system, but their construction is plainly of a national rather 
than a local character, as evidenced by the Federal financial 
contribution to their construction. And neither the fact that they are 
not dedicated to interstate use during their construction, nor the fact 
that they will constitute alternate routes rather than replacement of 
existing road, constitute sufficient basis, under the controlling court 
decisions, for excluding them from the coverage of the Act. \51\ 
Accordingly, unless and until authoritative court decision in the future 
hold otherwise, the construction of such new highways and expressways 
will be regarded as covered.
---------------------------------------------------------------------------

    \49\ Compare Mitchell v. Vollmer, ante, with Koepfie v. Garavaglia, 
200 F. (2d) 191 (C.A. 6); Moss v. Gillioz Const. Co., 206 F. (2d) 819 
(C.A. 10); and Van Klaveren v. Killian House, 210 F. (2d) 510 (C.A. 5). 
The Vollmer decision specifically rejected the applicability of the 
decision construing the Federal Employer's Liability Act, on which the 
cited appellate court decision relied.
    \50\ Mitchell v. Vollmer, ante; Walling v. Jacksonville Paper Co., 
ante; and Overstreet v. North Shore Corp., ante.
    \51\ Mitchell v. Vollmer & Co., ante; Tobin v. Pennington-Winter 
Const. Co., 198 F. (2d) 334, certiorari denied 345 U.S. 915; and Bennett 
v. V. P. Loftis Co., 167 F. (2d) 286.
---------------------------------------------------------------------------



Sec. 776.30  Construction performed on temporarily idle facilities.

    The Act applies to work on a covered interstate instrumentality or 
production facility even though performed during periods of temporary 
non-use or idleness. \52\ The courts have held the Act applicable to 
performance of construction work upon a covered facility even though the 
use of the facility was temporarily interrupted or discontinued. \53\ It 
is equally clear that the repair or maintenance of a covered facility 
(including its machinery, tools, dies, and other equipment) though 
performed during the inactive or dead season, is subject to the Acts. 
\54\
---------------------------------------------------------------------------

    \52\ Walton v. Southern Package Corp., 320 U.S. 540; Slover v. 
Wathen & Co., 140 F. (2d) 258 (C.A. 4); Bodden v. McCormick Shipping 
Corp., 188 F. (2d) 733; and Russell Co. v. McComb, 187 F. (2d) 524 (C.A. 
5).
    \53\ Pedersen v. J. F. Fitzgerald Construction Co., ante; Bennett v. 
V. P. Loftis, ante; Walling v. McCrady Const. Co., ante; and Bodden v. 
McCormick Shipping Corp., 188 F. (2d) 733.
    \54\ Maneja v. Waialua Agricultural Co., 349 U.S. 254; Bowie v. 
Gonzalez, 117 F. (2d) 11; Weaver v. Pittsburgh Steamship Co., 153 F. 
(2d) 597, certiorari denied 328 U.S. 858; Walling v. Keensburg Steamship 
Co., 462 F. (2d) 405.
---------------------------------------------------------------------------



PART 778_OVERTIME COMPENSATION--Table of Contents



                    Subpart A_General Considerations

Sec.
778.0 Introductory statement.
778.1 Purpose of interpretative bulletin.
778.2 Coverage and exemptions not discussed.
778.3 Interpretations made, continued, and superseded by this part.
778.4 Reliance on interpretations.
778.5 Relation to other laws generally.
778.6 Effect of Davis-Bacon Act.
778.7 Effect of Service Contract Act of 1965.

                 Subpart B_The Overtime Pay Requirements

                              Introductory

778.100 The maximum-hours provisions.
778.101 Maximum nonovertime hours.
778.102 Application of overtime provisions generally.
778.103 The workweek as the basis for applying section 7(a).
778.104 Each workweek stands alone.
778.105 Determining the workweek.
778.106 Time of payment.

   Principles for Computing Overtime Pay Based on the ``Regular Rate''

778.107 General standard for overtime pay.
778.108 The ``regular rate''.
778.109 The regular rate is an hourly rate.
778.110 Hourly rate employee.
778.111 Pieceworker.
778.112 Day rates and job rates.
778.113 Salaried employees--general.
778.114 Fixed salary for fluctuating hours.
778.115 Employees working at two or more rates.
778.116 Payments other than cash.
778.117 Commission payments--general.
778.118 Commission paid on a workweek basis.
778.119 Deferred commission payments--general rules.
778.120 Deferred commission payments not identifiable as earned in 
          particular workweeks.
778.121 Commission payments--delayed credits and debits.
778.122 Computation of overtime for commission employees on established 
          basic rate.

    Subpart C_Payments That May Be Excluded From the ``Regular Rate''

                        The Statutory Provisions

778.200 Provisions governing inclusion, exclusion, and crediting of 
          particular payments.

[[Page 384]]

                  Extra Compensation Paid for Overtime

778.201 Overtime premiums--general.
778.202 Premium pay for hours in excess of a daily or weekly standard.
778.203 Premium pay for work on Saturdays, Sundays, and other ``special 
          days''.
778.204 ``Clock pattern'' premium pay.
778.205 Premiums for weekend and holiday work--example.
778.206 Premiums for work outside basic workday or workweek--examples.
778.207 Other types of contract premium pay distinguished.

                                 Bonuses

778.208 Inclusion and exclusion of bonuses in computing the ``regular 
          rate''.
778.209 Method of inclusion of bonus in regular rate.
778.210 Percentage of total earnings as bonus.
778.211 Discretionary bonuses.
778.212 Gifts, Christmas and special occasion bonuses.
778.213 Profit-sharing, thrift, and savings plans.
778.214 Benefit plans; including profit-sharing plans or trusts 
          providing similar benefits.
778.215 Conditions for exclusion of benefit-plan contributions under 
          section 7(e)(4).

                      Payments Not for Hours Worked

778.216 The provisions of section 7(e)(2) of the Act.
778.217 Reimbursement for expenses.
778.218 Pay for certain idle hours.
778.219 Pay for foregoing holidays and vacations.
778.220 ``Show-up'' or ``reporting'' pay.
778.221 ``Call-back'' pay.
778.222 Other payments similar to ``call-back'' pay.
778.223 Pay for non-productive hours distinguished.
778.224 ``Other similar payments''.

            Talent Fees in the Radio and Television Industry

778.225 Talent fees excludable under regulations.

                       Subpart D_Special Problems

                              Introductory

778.300 Scope of subpart.

                 Change in the Beginning of the Workweek

778.301 Overlapping when change of workweek is made.
778.302 Computation of overtime due for overlapping workweeks.

                     Additional Pay for Past Period

778.303 Retroactive pay increases.

                 How Deductions Affect the Regular Rate

778.304 Amounts deducted from cash wages--general.
778.305 Computation where particular types of deductions are made.
778.306 Salary reductions in short workweeks.
778.307 Disciplinary deductions.

                     Lump Sum Attributed to Overtime

778.308 The overtime rate is an hourly rate.
778.309 Fixed sum for constant amount of overtime.
778.310 Fixed sum for varying amounts of overtime.
778.311 Flat rate for special job performed in overtime hours.

                        ``Task'' Basis of Payment

778.312 Pay for task without regard to actual hours.
778.313 Computing overtime pay under the Act for employees compensated 
          on task basis.
778.314 Special situations.

       Effect of Failure To Count or Pay for Certain Working Hours

778.315 Payment for all hours worked in overtime workweek is required.
778.316 Agreements or practices in conflict with statutory requirements 
          are ineffective.
778.317 Agreements not to pay for certain nonovertime hours.
778.318 Productive and nonproductive hours of work.

           Effect of Paying for But Not Counting Certain Hours

778.319 Paying for but not counting hours worked.
778.320 Hours that would not be hours worked if not paid for.

          Reduction in Workweek Schedule With No Change in Pay

778.321 Decrease in hours without decrease in pay--general.
778.322 Reducing the fixed workweek for which a salary is paid.
778.323 Effect if salary is for variable workweek.
778.324 Effect on hourly rate employees.
778.325 Effect on salary covering more than 40 hours' pay.
778.326 Reduction of regular overtime workweek without reduction of 
          take-home pay.
778.327 Temporary or sporadic reduction in schedule.
778.328 Plan for gradual permanent reduction in schedule.
778.329 Alternating workweeks of different fixed lengths.

[[Page 385]]

                            Prizes as Bonuses

778.330 Prizes or contest awards generally.
778.331 Awards for performance on the job.
778.332 Awards for activities not normally part of employee's job.
778.333 Suggestion system awards.

          Subpart E_Exceptions From the Regular Rate Principles

            Computing Overtime Pay on an ``Established'' Rate

778.400 The provisions of section 7(g)(3) of the Act.
778.401 Regulations issued under section 7(g)(3).

           Guaranteed Compensation Which Includes Overtime Pay

778.402 The statutory exception provided by section 7(f) of the Act.
778.403 Constant pay for varying workweeks including overtime is not 
          permitted except as specified in section 7(f).
778.404 Purposes of exemption.
778.405 What types of employees are affected.
778.406 Nonovertime hours as well as overtime hours must be irregular if 
          section 7(f) is to apply.
778.407 The nature of the section 7(f) contract.
778.408 The specified regular rate.
778.409 Provision for overtime pay.
778.410 The guaranty under section 7(f).
778.411 Sixty-hour limit on pay guaranteed by contract.
778.412 Relationship between amount guaranteed and range of hours 
          employee may be expected to work.
778.413 Guaranty must be based on rates specified in contract.
778.414 ``Approval'' of contracts under section 7(f).

   Computing Overtime Pay on the Rate Applicable to the Type of Work 
           Performed in Overtime Hours (Secs. 7(g)(1) and (2))

778.415 The statutory provisions.
778.416 Purpose of provisions.
778.417 General requirements of section 7(g).
778.418 Pieceworkers.
778.419 Hourly workers employed at two or more jobs.
778.420 Combined hourly rates and piece rates.
778.421 Offset hour for hour.

              Subpart F_Pay Plans Which Circumvent the Act

               Devices To Evade the Overtime Requirements

778.500 Artificial regular rates.
778.501 The ``split-day'' plan.

                             Pseudo-Bonuses

778.502 Artificially labeling part of the regular wages a ``bonus''.
778.503 Pseudo ``percentage bonuses''.

                         Subpart G_Miscellaneous

778.600 Veterans' subsistence allowances.
778.601 Special overtime provisions available for hospital and 
          residential care establishments under section 7(j).
778.602 Special overtime provisions under section 7(b).
778.603 Special overtime provisions for certain employees receiving 
          remedial education under section 7(q).

    Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201 et seq. Section 
778.200 also issued under Pub. L. 106-202, 114 Stat. 308 (29 U.S.C. 
207(e) and (h)).

    Source: 33 FR 986, Jan. 26, 1968, unless otherwise noted.



                    Subpart A_General Considerations



Sec. 778.0  Introductory statement.

    The Fair Labor Standards Act, as amended, hereinafter referred to as 
the Act, is a Federal statute of general application which establishes 
minimum wage, overtime pay, child labor, and equal pay requirements that 
apply as provided in the Act. All employees whose employment has the 
relationship to interstate or foreign commerce which the Act specifies 
are subject to the prescribed labor standards unless specifically 
exempted from them. Employers having such employees are required to 
comply with the Act's provisions in this regard unless relieved 
therefrom by some exemption in the Act. Such employers are also required 
to comply with specified recordkeeping requirements contained in part 
516 of this chapter. The law authorizes the Department of Labor to 
investigate for compliance and, in the event of violations, to supervise 
the payment of unpaid wages or unpaid overtime compensation owing to any 
employee. The law also provides for enforcement in the courts.



Sec. 778.1  Purpose of interpretative bulletin.

    This part 778 constitutes the official interpretation of the 
Department of Labor with respect to the meaning and

[[Page 386]]

application of the maximum hours and overtime pay requirements contained 
in section 7 of the Act. It is the purpose of this bulletin to make 
available in one place the interpretations of these provisions which 
will guide the Secretary of Labor and the Administrator in the 
performance of their duties under the Act unless and until they are 
otherwise directed by authoritative decisions of the courts or conclude, 
upon reexamination of an interpretation, that it is incorrect. These 
official interpretations are issued by the Administrator on the advice 
of the Solicitor of Labor, as authorized by the Secretary (Reorg. Pl. 6 
of 1950, 64 Stat. 1263; Gen. Ord. 45A, May 24, 1950, 15 FR 3290).



Sec. 778.2  Coverage and exemptions not discussed.

    This part 778 does not deal with the general coverage of the Act or 
various specific exemptions provided in the statute, under which certain 
employees within the general coverage of the wage and hours provisions 
are wholly or partially excluded from the protection of the Act's 
minimum-wage and overtime-pay requirements. Some of these exemptions are 
self-executing; others call for definitions or other action by the 
Administrator. Regulations and interpretations relating to general 
coverage and specific exemptions may be found in other parts of this 
chapter.



Sec. 778.3  Interpretations made, continued, and superseded by this part.

    On and after publication of this part in the Federal Register, the 
interpretations contained therein shall be in effect and shall remain in 
effect until they are modified, rescinded or withdrawn. This part 
supersedes and replaces the interpretations previously published in the 
Federal Register and Code of Federal Regulations as part 778 of this 
chapter. Prior opinions, rulings and interpretations and prior 
enforcement policies which are not inconsistent with the interpretations 
in this part or with the Fair Labor Standards Act as amended are 
continued in effect; all other opinions, rulings, interpretations, and 
enforcement policies on the subjects discussed in the interpretations in 
this part are rescinded and withdrawn. Questions on matters not fully 
covered by this part may be addressed to the Administrator of the Wage 
and Hour Division, U.S. Department of Labor, Washington, DC 20210, or to 
any Regional Office of the Division.

[46 FR 7309, Jan. 23, 1981]



Sec. 778.4  Reliance on interpretations.

    The interpretations of the law contained in this part 778 are 
official interpretations which may be relied upon as provided in section 
10 of the Portal-to-Portal Act of 1947 (61 Stat. 84).



Sec. 778.5  Relation to other laws generally.

    Various Federal, State, and local laws require the payment of 
minimum hourly, daily or weekly wages different from the minimum set 
forth in the Fair Labor Standards Act, and the payment of overtime 
compensation computed on bases different from those set forth in the 
Fair Labor Standards Act. Where such legislation is applicable and does 
not contravene the requirements of the Fair Labor Standards Act, nothing 
in the act, the regulations or the interpretations announced by the 
Administrator should be taken to override or nullify the provisions of 
these laws. Compliance with other applicable legislation does not excuse 
noncompliance with the Fair Labor Standards Act. Where a higher minimum 
wage than that set in the Fair Labor Standards Act is applicable to an 
employee by virtue of such other legislation, the regular rate of the 
employee, as the term is used in the Fair Labor Standards Act, cannot be 
lower than such applicable minimum, for the words ``regular rate at 
which he is employed'' as used in section 7 must be construed to mean 
the regular rate at which he is lawfully employed.



Sec. 778.6  Effect of Davis-Bacon Act.

    Section 1 of the Davis-Bacon Act (46 Stat. 1494, as amended; 40 
U.S.C. 276a) provides for the inclusion of certain fringe benefits in 
the prevailing wages that are predetermined by the Secretary of Labor, 
under that Act and related statutes, as minimum wages for laborers and 
mechanics employed by

[[Page 387]]

contractors and subcontractors performing construction activity on 
Federal and federally assisted projects. Laborers and mechanics 
performing work subject to such predetermined minimum wages may, if they 
work overtime, be subject to overtime compensation provisions of other 
laws which may apply concurrently to them, including the Fair Labor 
Standards Act. In view of this fact, specific provision was made in the 
Davis-Bacon Act for the treatment of such predetermined fringe benefits 
in the computation of overtime compensation under other applicable 
statutes including the Fair Labor Standards Act. The application of this 
provision is discussed in Sec. 5.32 of this title, which should be 
considered together with the interpretations in this part 778 in 
determining any overtime compensation payable under the Fair Labor 
Standards Act to such laborers and mechanics in any workweek when they 
are subject to fringe benefit wage determinations under the Davis-Bacon 
and related acts.



Sec. 778.7  Effect of Service Contract Act of 1965.

    The McNamara-O'Hara Service Contract Act of 1965, which provides for 
the predetermination and the specification in service contracts entered 
into by the Federal Government or the District of Columbia, of the 
minimum wages and fringe benefits to be received by employees of 
contractors and subcontractors employed in work on such contracts, 
contains the following provision:

    Sec. 6. In determining any overtime pay to which such service 
employees are entitled under any Federal law, the regular or basic 
hourly rate of pay of such an employee shall not include any fringe 
benefit payments computed hereunder which are excluded from the regular 
rate under the Fair Labor Standards Act by provisions of section 7(e)* 
thereof. (*Subsection designation changed in text from section 7(d) to 
7(e) to conform with the relettering enacted by the Fair Labor Standards 
Amendments of 1966.)


Where the fringe benefits specified in such a service contract are 
furnished to an employee, the above provision permits exclusion of such 
fringe benefits from the employee's regular rate of pay under the Fair 
Labor Standards Act pursuant to the rules and principles set forth in 
subpart C of this part 778. However, the McNamara-O'Hara Act permits an 
employer to discharge his obligation to provide the specified fringe 
benefits by furnishing any equivalent combinations of bona fide fringe 
benefits or by making equivalent or differential payments in cash. 
Permissible methods of doing this are set forth in part 4 of this title, 
subpart B. If the employer furnishes equivalent benefits or makes cash 
payments, or both, to an employee as therein authorized, the amounts 
thereof, to the extent that they operate to discharge the employer's 
obligation under the McNamara-O'Hara Act to furnish such specified 
fringe benefits, may be excluded pursuant to such Act from the 
employee's regular or basic rate of pay in computing any overtime pay 
due the employee under the Fair Labor Standards Act, pursuant to the 
rule provided in Sec. 4.55 of this title. This means that such 
equivalent fringe benefits or cash payments which are authorized under 
the McNamara-O'Hara Act to be provided in lieu of the fringe benefits 
specified in determinations issued under such Act are excludable from 
the regular rate in applying the overtime provisions of the Fair Labor 
Standards Act if the fringe benefits specified under the McNamara-O'Hara 
Act would be so excludable if actually furnished. This is true 
regardless of whether the equivalent benefits or payments themselves 
meet the requirements of section 7(e) of the Fair Labor Standards Act 
and subpart C of this part 778.



                 Subpart B_The Overtime Pay Requirements

                              Introductory



Sec. 778.100  The maximum-hours provisions.

    Section 7(a) of the Act deals with maximum hours and overtime 
compensation for employees who are within the general coverage of the 
Act and are not specifically exempt from its overtime pay requirements. 
It prescribes the maximum weekly hours of work permitted for the 
employment of such employees in any workweek without extra compensation 
for overtime,

[[Page 388]]

and a general overtime rate of pay not less than one and one-half times 
the employee's regular rate which the employee must receive for all 
hours worked in any workweek in excess of the applicable maximum hours. 
The employment by an employer of an employee in any work subject to the 
Act in any workweek brings these provisions into operation. The employer 
is prohibited from employing the employee in excess of the prescribed 
maximum hours in such workweek without paying him the required extra 
compensation for the overtime hours worked at a rate meeting the 
statutory requirement.



Sec. 778.101  Maximum nonovertime hours.

    As a general standard, section 7(a) of the Act provides 40 hours as 
the maximum number that an employee subject to its provisions may work 
for an employer in any workweek without receiving additional 
compensation at not less than the statutory rate for overtime. Hours 
worked in excess of the statutory maximum in any workweek are overtime 
hours under the statute; a workweek no longer than the prescribed 
maximum is a nonovertime workweek under the Act, to which the pay 
requirements of section 6 (minimum wage and equal pay) but not those of 
section 7(a) are applicable.

[46 FR 7309, Jan. 23, 1981]



Sec. 778.102  Application of overtime provisions generally.

    Since there is no absolute limitation in the Act (apart from the 
child labor provisions and regulations thereunder) on the number of 
hours that an employee may work in any workweek, he may work as many 
hours a week as he and his employer see fit, so long as the required 
overtime compensation is paid him for hours worked in excess of the 
maximum workweek prescribed by section 7(a). The Act does not generally 
require, however, that an employee be paid overtime compensation for 
hours in excess of eight per day, or for work on Saturdays, Sundays, 
holidays or regular days of rest. If no more than the maximum number of 
hours prescribed in the Act are actually worked in the workweek, 
overtime compensation pursuant to section 7(a) need not be paid. Nothing 
in the Act, however, will relieve an employer of any obligation he may 
have assumed by contract or of any obligation imposed by other Federal 
or State law to limit overtime hours of work or to pay premium rates for 
work in excess of a daily standard or for work on Saturdays, Sundays, 
holidays, or other periods outside of or in excess of the normal or 
regular workweek or workday. (The effect of making such payments is 
discussed in Sec. Sec. 778.201 through 778.207 and 778.219.)

[46 FR 7309, Jan. 23, 1981]



Sec. 778.103  The workweek as the basis for applying section 7(a).

    If in any workweek an employee is covered by the Act and is not 
exempt from its overtime pay requirements, the employer must total all 
the hours worked by the employee for him in that workweek (even though 
two or more unrelated job assignments may have been performed), and pay 
overtime compensation for each hour worked in excess of the maximum 
hours applicable under section 7(a) of the Act. In the case of an 
employee employed jointly by two or more employers (see part 791 of this 
chapter), all hours worked by the employee for such employers during the 
workweek must be totaled in determining the number of hours to be 
compensated in accordance with section 7(a). The principles for 
determining what hours are hours worked within the meaning of the Act 
are discussed in part 785 of this chapter.



Sec. 778.104  Each workweek stands alone.

    The Act takes a single workweek as its standard and does not permit 
averaging of hours over 2 or more weeks. Thus, if an employee works 30 
hours one week and 50 hours the next, he must receive overtime 
compensation for the overtime hours worked beyond the applicable maximum 
in the second week, even though the average number of hours worked in 
the 2 weeks is 40. This is true regardless of whether the employee works 
on a standard or swing-shift schedule and regardless of whether he is 
paid on a daily, weekly, biweekly, monthly or other basis. The rule is 
also applicable to pieceworkers

[[Page 389]]

and employees paid on a commission basis. It is therefore necessary to 
determine the hours worked and the compensation earned by pieceworkers 
and commission employees on a weekly basis.



Sec. 778.105  Determining the workweek.

    An employee's workweek is a fixed and regularly recurring period of 
168 hours--seven consecutive 24-hour periods. It need not coincide with 
the calendar week but may begin on any day and at any hour of the day. 
For purposes of computing pay due under the Fair Labor Standards Act, a 
single workweek may be established for a plant or other establishment as 
a whole or different workweeks may be established for different 
employees or groups of employees. Once the beginning time of an 
employee's workweek is established, it remains fixed regardless of the 
schedule of hours worked by him. The beginning of the workweek may be 
changed if the change is intended to be permanent and is not designed to 
evade the overtime requirements of the Act. The proper method of 
computing overtime pay in a period in which a change in the time of 
commencement of the workweek is made, is discussed in Sec. Sec. 778.301 
and 778.302.



Sec. 778.106  Time of payment.

    There is no requirement in the Act that overtime compensation be 
paid weekly. The general rule is that overtime compensation earned in a 
particular workweek must be paid on the regular pay day for the period 
in which such workweek ends. When the correct amount of overtime 
compensation cannot be determined until some time after the regular pay 
period, however, the requirements of the Act will be satisfied if the 
employer pays the excess overtime compensation as soon after the regular 
pay period as is practicable. Payment may not be delayed for a period 
longer than is reasonably necessary for the employer to compute and 
arrange for payment of the amount due and in no event may payment be 
delayed beyond the next payday after such computation can be made. Where 
retroactive wage increases are made, retroactive overtime compensation 
is due at the time the increase is paid, as discussed in Sec. 778.303. 
For a discussion of overtime payments due because of increases by way of 
bonuses, see Sec. 778.209.

   Principles for Computing Overtime Pay Based on the ``Regular Rate''



Sec. 778.107  General standard for overtime pay.

    The general overtime pay standard in section 7(a) requires that 
overtime must be compensated at a rate not less than one and one-half 
times the regular rate at which the employee is actually employed. The 
regular rate of pay at which the employee is employed may in no event be 
less than the statutory minimum. (The statutory minimum is the specified 
minimum wage applicable under section 6 of the Act, except in the case 
of workers specially provided for in section 14 and workers in Puerto 
Rico, the Virgin Islands, and American Samoa who are covered by wage 
orders issued pursuant to section 8 of the Act.) If the employee's 
regular rate of pay is higher than the statutory minimum, his overtime 
compensation must be computed at a rate not less than one and one-half 
times such higher rate. Under certain conditions prescribed in section 7 
(f), (g), and (j), the Act provides limited exceptions to the 
application of the general standard of section 7(a) for computing 
overtime pay based on the regular rate. With respect to these, see 
Sec. Sec. 778.400 through 778.421 and 778.601 and part 548 of this 
chapter. The Act also provides, in section 7(b), (i), (k) and (m) and in 
section 13, certain partial and total exemptions from the application of 
section 7(a) to certain employees and under certain conditions. 
Regulations and interpretations concerning these exemptions are outside 
the scope of this part 778 and reference should be made to other 
applicable parts of this chapter.

[46 FR 7309, Jan. 23, 1981]



Sec. 778.108  The ``regular rate''.

    The ``regular rate'' of pay under the Act cannot be left to a 
declaration by the parties as to what is to be treated as the regular 
rate for an employee; it must be drawn from what happens under the 
employment contract (Bay Ridge Operating Co. v. Aaron, 334 U.S.

[[Page 390]]

446). The Supreme Court has described it as the hourly rate actually 
paid the employee for the normal, nonovertime workweek for which he is 
employed--an ``actual fact'' (Walling v. Youngerman-Reynolds Hardwood 
Co., 325 U.S. 419). Section 7(e) of the Act requires inclusion in the 
``regular rate'' of ``all remuneration for employment paid to, or on 
behalf of, the employee'' except payments specifically excluded by 
paragraphs (1) through (7) of that subsection. (These seven types of 
payments, which are set forth in Sec. 778.200 and discussed in 
Sec. Sec. 778.201 through 778.224, are hereafter referred to as 
``statutory exclusions.'') As stated by the Supreme Court in the 
Youngerman-Reynolds case cited above: ``Once the parties have decided 
upon the amount of wages and the mode of payment the determination of 
the regular rate becomes a matter of mathematical computation, the 
result of which is unaffected by any designation of a contrary `regular 
rate' in the wage contracts.''



Sec. 778.109  The regular rate is an hourly rate.

    The ``regular rate'' under the Act is a rate per hour. The Act does 
not require employers to compensate employees on an hourly rate basis; 
their earnings may be determined on a piece-rate, salary, commission, or 
other basis, but in such case the overtime compensation due to employees 
must be computed on the basis of the hourly rate derived therefrom and, 
therefore, it is necessary to compute the regular hourly rate of such 
employees during each workweek, with certain statutory exceptions 
discussed in Sec. Sec. 778.400 through 778.421. The regular hourly rate 
of pay of an employee is determined by dividing his total remuneration 
for employment (except statutory exclusions) in any workweek by the 
total number of hours actually worked by him in that workweek for which 
such compensation was paid. The following sections give some examples of 
the proper method of determining the regular rate of pay in particular 
instances: (The maximum hours standard used in these examples is 40 
hours in a workweek).



Sec. 778.110  Hourly rate employee.

    (a) Earnings at hourly rate exclusively. If the employee is employed 
solely on the basis of a single hourly rate, the hourly rate is the 
``regular rate.'' For overtime hours of work the employee must be paid, 
in addition to the straight time hourly earnings, a sum determined by 
multiplying one-half the hourly rate by the number of hours worked in 
excess of 40 in the week. Thus a $12 hourly rate will bring, for an 
employee who works 46 hours, a total weekly wage of $588 (46 hours at 
$12 plus 6 at $6). In other words, the employee is entitled to be paid 
an amount equal to $12 an hour for 40 hours and $18 an hour for the 6 
hours of overtime, or a total of $588.
    (b) Hourly rate and bonus. If the employee receives, in addition to 
the earnings computed at the $12 hourly rate, a production bonus of $46 
for the week, the regular hourly rate of pay is $13 an hour (46 hours at 
$12 yields $552; the addition of the $46 bonus makes a total of $598; 
this total divided by 46 hours yields a regular rate of $13). The 
employee is then entitled to be paid a total wage of $637 for 46 hours 
(46 hours at $13 plus 6 hours at $6.50, or 40 hours at $13 plus 6 hours 
at $19.50).

[76 FR 18857, Apr. 5, 2011]



Sec. 778.111  Pieceworker.

    (a) Piece rates and supplements generally. When an employee is 
employed on a piece-rate basis, the regular hourly rate of pay is 
computed by adding together total earnings for the workweek from piece 
rates and all other sources (such as production bonuses) and any sums 
paid for waiting time or other hours worked (except statutory 
exclusions). This sum is then divided by the number of hours worked in 
the week for which such compensation was paid, to yield the 
pieceworker's ``regular rate'' for that week. For overtime work the 
pieceworker is entitled to be paid, in addition to the total weekly 
earnings at this regular rate for all hours worked, a sum equivalent to 
one-half this regular rate of pay multiplied by the number of hours 
worked in excess of 40 in the week. (For an alternative method of 
complying with the overtime requirements of the Act as

[[Page 391]]

far as pieceworkers are concerned, see Sec. 778.418.) Only additional 
half-time pay is required in such cases where the employee has already 
received straight-time compensation at piece rates or by supplementary 
payments for all hours worked. Thus, for example, if the employee has 
worked 50 hours and has earned $491 at piece rates for 46 hours of 
productive work and in addition has been compensated at $8.00 an hour 
for 4 hours of waiting time, the total compensation, $523.00, must be 
divided by the total hours of work, 50, to arrive at the regular hourly 
rate of pay--$10.46. For the 10 hours of overtime the employee is 
entitled to additional compensation of $52.30 (10 hours at $5.23). For 
the week's work the employee is thus entitled to a total of $575.30 
(which is equivalent to 40 hours at $10.46 plus 10 overtime hours at 
$15.69).
    (b) Piece rates with minimum hourly guarantee. In some cases an 
employee is hired on a piece-rate basis coupled with a minimum hourly 
guaranty. Where the total piece-rate earnings for the workweek fall 
short of the amount that would be earned for the total hours of work at 
the guaranteed rate, the employee is paid the difference. In such weeks 
the employee is in fact paid at an hourly rate and the minimum hourly 
guaranty is the regular rate in that week. In the example just given, if 
the employee was guaranteed $11 an hour for productive working time, the 
employee would be paid $506 (46 hours at $11) for the 46 hours of 
productive work (instead of the $491 earned at piece rates). In a week 
in which no waiting time was involved, the employee would be owed an 
additional $5.50 (half time) for each of the 6 overtime hours worked, to 
bring the total compensation up to $539 (46 hours at $11 plus 6 hours at 
$5.50 or 40 hours at $11 plus 6 hours at $16.50). If the employee is 
paid at a different rate for waiting time, the regular rate is the 
weighted average of the 2 hourly rates, as discussed in Sec. 778.115.

[76 FR 18857, Apr. 5, 2011]



Sec. 778.112  Day rates and job rates.

    If the employee is paid a flat sum for a day's work or for doing a 
particular job, without regard to the number of hours worked in the day 
or at the job, and if he receives no other form of compensation for 
services, his regular rate is determined by totaling all the sums 
received at such day rates or job rates in the workweek and dividing by 
the total hours actually worked. He is then entitled to extra half-time 
pay at this rate for all hours worked in excess of 40 in the workweek.



Sec. 778.113  Salaried employees--general.

    (a) Weekly salary. If the employee is employed solely on a weekly 
salary basis, the regular hourly rate of pay, on which time and a half 
must be paid, is computed by dividing the salary by the number of hours 
which the salary is intended to compensate. If an employee is hired at a 
salary of $350 and if it is understood that this salary is compensation 
for a regular workweek of 35 hours, the employee's regular rate of pay 
is $350 divided by 35 hours, or $10 an hour, and when the employee works 
overtime the employee is entitled to receive $10 for each of the first 
40 hours and $15 (one and one-half times $10) for each hour thereafter. 
If an employee is hired at a salary of $375 for a 40-hour week the 
regular rate is $9.38 an hour.
    (b) Salary for periods other than workweek. Where the salary covers 
a period longer than a workweek, such as a month, it must be reduced to 
its workweek equivalent. A monthly salary is subject to translation to 
its equivalent weekly wage by multiplying by 12 (the number of months) 
and dividing by 52 (the number of weeks). A semimonthly salary is 
translated into its equivalent weekly wage by multiplying by 24 and 
dividing by 52. Once the weekly wage is arrived at, the regular hourly 
rate of pay will be calculated as indicated above. The regular rate of 
an employee who is paid a regular monthly salary of $1,560, or a regular 
semimonthly salary of $780 for 40 hours a week, is thus found to be $9 
per hour. Under regulations of the Administrator, pursuant to the 
authority given to him in section 7(g)(3) of the Act, the parties may 
provide that the regular rates shall be determined by dividing the 
monthly salary by the number of working days in the month and then by 
the number of hours of the normal or regular workday. Of course, the 
resultant rate in

[[Page 392]]

such a case must not be less than the statutory minimum wage.

[46 FR 7310, Jan. 23, 1981, as amended at 76 FR 18857, Apr. 5, 2011]



Sec. 778.114  Fixed salary for fluctuating hours.

    (a) An employee employed on a salary basis may have hours of work 
which fluctuate from week to week and the salary may be paid him 
pursuant to an understanding with his employer that he will receive such 
fixed amount as straight time pay for whatever hours he is called upon 
to work in a workweek, whether few or many. Where there is a clear 
mutual understanding of the parties that the fixed salary is 
compensation (apart from overtime premiums) for the hours worked each 
workweek, whatever their number, rather than for working 40 hours or 
some other fixed weekly work period, such a salary arrangement is 
permitted by the Act if the amount of the salary is sufficient to 
provide compensation to the employee at a rate not less than the 
applicable minimum wage rate for every hour worked in those workweeks in 
which the number of hours he works is greatest, and if he receives extra 
compensation, in addition to such salary, for all overtime hours worked 
at a rate not less than one-half his regular rate of pay. Since the 
salary in such a situation is intended to compensate the employee at 
straight time rates for whatever hours are worked in the workweek, the 
regular rate of the employee will vary from week to week and is 
determined by dividing the number of hours worked in the workweek into 
the amount of the salary to obtain the applicable hourly rate for the 
week. Payment for overtime hours at one-half such rate in addition to 
the salary satisfies the overtime pay requirement because such hours 
have already been compensated at the straight time regular rate, under 
the salary arrangement.
    (b) The application of the principles above stated may be 
illustrated by the case of an employee whose hours of work do not 
customarily follow a regular schedule but vary from week to week, whose 
total weekly hours of work never exceed 50 hours in a workweek, and 
whose salary of $600 a week is paid with the understanding that it 
constitutes the employee's compensation, except for overtime premiums, 
for whatever hours are worked in the workweek. If during the course of 4 
weeks this employee works 40, 37.5, 50, and 48 hours, the regular hourly 
rate of pay in each of these weeks is $15.00, $16.00, $12.00, and 
$12.50, respectively. Since the employee has already received straight-
time compensation on a salary basis for all hours worked, only 
additional half-time pay is due. For the first week the employee is 
entitled to be paid $600; for the second week $600.00; for the third 
week $660 ($600 plus 10 hours at $6.00 or 40 hours at $12.00 plus 10 
hours at $18.00); for the fourth week $650 ($600 plus 8 hours at $6.25, 
or 40 hours at $12.50 plus 8 hours at $18.75).
    (c) The ``fluctuating workweek'' method of overtime payment may not 
be used unless the salary is sufficiently large to assure that no 
workweek will be worked in which the employee's average hourly earnings 
from the salary fall below the minimum hourly wage rate applicable under 
the Act, and unless the employee clearly understands that the salary 
covers whatever hours the job may demand in a particular workweek and 
the employer pays the salary even though the workweek is one in which a 
full schedule of hours is not worked. Typically, such salaries are paid 
to employees who do not customarily work a regular schedule of hours and 
are in amounts agreed on by the parties as adequate straight-time 
compensation for long workweeks as well as short ones, under the 
circumstances of the employment as a whole. Where all the legal 
prerequisites for use of the ``fluctuating workweek'' method of overtime 
payment are present, the Act, in requiring that ``not less than'' the 
prescribed premium of 50 percent for overtime hours worked be paid, does 
not prohibit paying more. On the other hand, where all the facts 
indicate that an employee is being paid for his overtime hours at a rate 
no greater than that which he receives for nonovertime hours, compliance 
with

[[Page 393]]

the Act cannot be rested on any application of the fluctuating workweek 
overtime formula.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7310, Jan. 23, 1981; 76 
FR 18857, Apr. 5, 2011]



Sec. 778.115  Employees working at two or more rates.

    Where an employee in a single workweek works at two or more 
different types of work for which different nonovertime rates of pay (of 
not less than the applicable minimum wage) have been established, his 
regular rate for that week is the weighted average of such rates. That 
is, his total earnings (except statutory exclusions) are computed to 
include his compensation during the workweek from all such rates, and 
are then divided by the total number of hours worked at all jobs. 
Certain statutory exceptions permitting alternative methods of computing 
overtime pay in such cases are discussed in Sec. Sec. 778.400 and 
778.415 through 778.421.



Sec. 778.116  Payments other than cash.

    Where payments are made to employees in the form of goods or 
facilities which are regarded as part of wages, the reasonable cost to 
the employer or the fair value of such goods or of furnishing such 
facilities must be included in the regular rate. (See part 531 of this 
chapter for a discussion as to the inclusion of goods and facilities in 
wages and the method of determining reasonable cost.) Where, for 
example, an employer furnishes lodging to his employees in addition to 
cash wages the reasonable cost or the fair value of the lodging (per 
week) must be added to the cash wages before the regular rate is 
determined.

[46 FR 7310, Jan. 23, 1981]



Sec. 778.117  Commission payments--general.

    Commissions (whether based on a percentage of total sales or of 
sales in excess of a specified amount, or on some other formula) are 
payments for hours worked and must be included in the regular rate. This 
is true regardless of whether the commission is the sole source of the 
employee's compensation or is paid in addition to a guaranteed salary or 
hourly rate, or on some other basis, and regardless of the method, 
frequency, or regularity of computing, allocating and paying the 
commission. It does not matter whether the commission earnings are 
computed daily, weekly, biweekly, semimonthly, monthly, or at some other 
interval. The fact that the commission is paid on a basis other than 
weekly, and that payment is delayed for a time past the employee's 
normal pay day or pay period, does not excuse the employer from 
including this payment in the employee's regular rate.

[36 FR 4981, Mar. 16, 1971]



Sec. 778.118  Commission paid on a workweek basis.

    When the commission is paid on a weekly basis, it is added to the 
employee's other earnings for that workweek (except overtime premiums 
and other payments excluded as provided in section 7(e) of the Act), and 
the total is divided by the total number of hours worked in the workweek 
to obtain the employee's regular hourly rate for the particular 
workweek. The employee must then be paid extra compensation at one-half 
of that rate for each hour worked in excess of the applicable maximum 
hours standard.



Sec. 778.119  Deferred commission payments--general rules.

    If the calculation and payment of the commission cannot be completed 
until sometime after the regular pay day for the workweek, the employer 
may disregard the commission in computing the regular hourly rate until 
the amount of commission can be ascertained. Until that is done he may 
pay compensation for overtime at a rate not less than one and one-half 
times the hourly rate paid the employee, exclusive of the commission. 
When the commission can be computed and paid, additional overtime 
compensation due by reason of the inclusion of the commission in the 
employee's regular rate must also be paid. To compute this additional 
overtime compensation, it is necessary, as a general rule, that the 
commission be apportioned back over the workweeks of the period during 
which it was earned. The employee must then receive additional overtime 
compensation for each week

[[Page 394]]

during the period in which he worked in excess of the applicable maximum 
hours standard. The additional compensation for that workweek must be 
not less than one-half of the increase in the hourly rate of pay 
attributable to the commission for that week multipled by the number of 
hours worked in excess of the applicable maximum hours standard in that 
workweek.



Sec. 778.120  Deferred commission payments not identifiable as earned
in particular workweeks.

    If it is not possible or practicable to allocate the commission 
among the workweeks of the period in proportion to the amount of 
commission actually earned or reasonably presumed to be earned each 
week, some other reasonable and equitable method must be adopted. The 
following methods may be used:
    (a) Allocation of equal amounts to each week. Assume that the 
employee earned an equal amount of commission in each week of the 
commission computation period and compute any additional overtime 
compensation due on this amount. This may be done as follows:
    (1) For a commission computation period of 1 month, multiply the 
commission payment by 12 and divide by 52 to get the amount of 
commission allocable to a single week. If there is a semimonthly 
computation period, multiply the commission payment by 24 and divide by 
52 to get each week's commission. For a commission computation period of 
a specific number of workweeks, such as every 4 weeks (as distinguished 
from every month) divide the total amount of commission by the number of 
weeks for which it represents additional compensation to get the amount 
of commission allocable to each week.
    (2) Once the amount of commission allocable to a workweek has been 
ascertained for each week in which overtime was worked, the commission 
for that week is divided by the total number of hours worked in that 
week, to get the increase in the hourly rate. Additional overtime due is 
computed by multiplying one-half of this figure by the number of 
overtime hours worked in the week. A shorter method of obtaining the 
amount of additional overtime compensation due is to multiply the amount 
of commission allocable to the week by the decimal equivalent of the 
fraction

 Overtime hours

 ----------------

 Total hours x 2


A coefficient table (WH-134) has been prepared which contains the 
appropriate decimals for computing the extra half-time due.

    Examples: (i) If there is a monthly commission payment of $416, the 
amount of commission allocable to a single week is $96 ($416x12=$4,992/
52=$96). In a week in which an employee who is due overtime compensation 
after 40 hours works 48 hours, dividing $96 by 48 gives the increase to 
the regular rate of $2. Multiplying one-half of this figure by 8 
overtime hours gives the additional overtime pay due of $8. The $96 may 
also be multiplied by 0.083 (the appropriate decimal shown on the 
coefficient table) to get the additional overtime pay due of $8.
    (ii) An employee received $384 in commissions for a 4-week period. 
Dividing this by 4 gives him a weekly increase of $96. Assume that he is 
due overtime compensation after 40 hours and that in the 4-week period 
he worked 44, 40, 44 and 48 hours. He would be due additional 
compensation of $4.36 for the first and third week ($96/44=$2.18/
2=$1.09x4 overtime hours=$4.36), no extra compensation for the second 
week during which no overtime hours were worked, and $8 for the fourth 
week, computed in the same manner as weeks one and three. The additional 
overtime pay due may also be computed by multiplying the amount of the 
weekly increase by the appropriate decimal on the coefficient table, for 
each week in which overtime was worked.

    (b) Allocation of equal amounts to each hour worked. Sometimes, 
there are facts which make it inappropriate to assume equal commission 
earnings for each workweek. For example, the number of hours worked each 
week may vary significantly. In such cases, rather than following the 
method outlined in paragraph (a) of this section, it is reasonable to 
assume that the employee earned an equal amount of commission in each 
hour that he worked during the commission computation period. The amount 
of the commission payment should be divided by the number of hours 
worked in the period in

[[Page 395]]

order to determine the amount of the increase in the regular rate 
allocable to the commission payment. One-half of this figure should be 
multiplied by the number of statutory overtime hours worked by the 
employee in the overtime workweeks of the commission computation period, 
to get the amount of additional overtime compensation due for this 
period.

    Example: An employee received commissions of $192 for a commission 
computation period of 96 hours, including 16 overtime hours (i.e., two 
workweeks of 48 hours each). Dividing the $192 by 96 gives a $2 increase 
in the hourly rate. If the employee is entitled to overtime after 40 
hours in a workweek, he is due an additional $16 for the commission 
computation period, representing an additional $1 for each of the 16 
overtime hours.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7310, Jan. 23, 1981]



Sec. 778.121  Commission payments--delayed credits and debits.

    If there are delays in crediting sales or debiting returns or 
allowances which affect the computation of commissions, the amounts paid 
to the employee for the computation period will be accepted as the total 
commission earnings of the employee during such period, and the 
commission may be allocated over the period from the last commission 
computation date to the present commission computation date, even though 
there may be credits or debits resulting from work which actually 
occurred during a previous period. The hourly increase resulting from 
the commission may be computed as outlined in the preceding paragraphs.



Sec. 778.122  Computation of overtime for commission employees on 
established basic rate.

    Overtime pay for employees paid wholly or partly on a commission 
basis may be computed on an established basic rate, in lieu of the 
method described above. See Sec. 778.400 and part 548 of this chapter.



    Subpart C_Payments That May Be Excluded From the ``Regular Rate''

                        The Statutory Provisions



Sec. 778.200  Provisions governing inclusion, exclusion, and crediting
of particular payments.

    (a) Section 7(e). This subsection of the Act provides as follows:

    As used in this section the ``regular rate'' at which an employee is 
employed shall be deemed to include all remuneration for employment paid 
to, or on behalf of, the employee, but shall not be deemed to include:
    (1) Sums paid as gifts; payments in the nature of gifts made at 
Christmas time or on other special occasions, as a reward for service, 
the amounts of which are not measured by or dependent on hours worked, 
production, or efficiency; [discussed in Sec. 778.212].
    (2) Payments made for occasional periods when no work is performed 
due to vacation, holiday, illness, failure of the employer to provide 
sufficient work, or other similar cause; reasonable payments for 
traveling expenses, or other expenses, incurred by an employee in the 
furtherance of his employer's interests and properly reimbursable by the 
employer; and other similar payments to an employee which are not made 
as compensation for his hours of employment; [discussed in Sec. Sec. 
778.216 through 778.224].
    (3) Sums paid in recognition of services performed during a given 
period if either, (a) both the fact that payment is to be made and the 
amount of the payment are determined at the sole discretion of the 
employer at or near the end of the period and not pursuant to any prior 
contract, agreement, or promise causing the employee to expect such 
payments regularly; or (b) the payments are made pursuant to a bona fide 
profit-sharing plan or trust or bona fide thrift or savings plan, 
meeting the requirements of the Secretary of Labor set forth in 
appropriate regulations which he shall issue, having due regard among 
other relevant factors, to the extent to which the amounts paid to the 
employee are determined without regard to hours of work, production, or 
efficiency; or (c) the payments are talent fees (as such talent fees are 
defined and delimited by regulations of the Secretary) paid to 
performers, including announcers, on radio and television programs; 
[discussed in Sec. Sec. 778.208 through 778.215 and 778.225].
    (4) Contributions irrevocably made by an employer to a trustee or 
third person pursuant to a bona fide plan for providing old-age, 
retirement, life, accident, or health insurance or similar benefits for 
employees; [discussed in Sec. Sec. 778.214 and 778.215].

[[Page 396]]

    (5) Extra compensation provided by a premium rate paid for certain 
hours worked by the employee in any day or workweek because such hours 
are hours worked in excess of eight in a day or in excess of the maximum 
workweek applicable to such employee under subsection (a) or in excess 
of the employee's normal working hours or regular working hours, as the 
case may be; [discussed in Sec. Sec. 778.201 and 778.202].
    (6) Extra compensation provided by a premium rate paid for work by 
the employee on Saturdays, Sundays, holidays, or regular days of rest, 
or on the sixth or seventh day of the workweek, where such premium rate 
is not less than one and one-half times the rate established in good 
faith for like work performed in nonovertime hours on other days; or 
[discussed in Sec. Sec. 778.203, 778.205, and 778.206].
    (7) Extra compensation provided by a premium rate paid to the 
employee, in pursuance of an applicable employment contract or 
collective bargaining agreement, for work outside of the hours 
established in good faith by the contract or agreement as the basic, 
normal, or regular workday (not exceeding eight hours) or workweek (not 
exceeding the maximum workweek applicable to such employee under 
subsection (a)), where such premium rate is not less than one and one-
half times the rate established in good faith by the contract or 
agreement for like work performed during such workday or workweek; 
[discussed in Sec. Sec. 778.201 and 778.206].
    (8) Any value or income derived from employer-provided grants or 
rights provided pursuant to a stock option, stock appreciation right, or 
bona fide employee stock purchase program which is not otherwise 
excludable under any of paragraphs (a)(1) through (a)(7) of this section 
if--
    (i) Grants are made pursuant to a program, the terms and conditions 
of which are communicated to participating employees either at the 
beginning of the employee's participation in the program or at the time 
of the grant;
    (ii) In the case of stock options and stock appreciation rights, the 
grant or right cannot be exercisable for a period of at least 6 months 
after the time of grant (except that grants or rights may become 
exercisable because of an employee's death, disability, retirement, or a 
change in corporate ownership, or other circumstances permitted by 
regulation), and the exercise price is at least 85 percent of the fair 
market value of the stock at the time of grant;
    (iii) Exercise of any grant or right is voluntary; and
    (iv) Any determinations regarding the award of, and the amount of, 
employer-provided grants or rights that are based on performance are--
    (A) Made based upon meeting previously established performance 
criteria (which may include hours of work, efficiency, or productivity) 
of any business unit consisting of at least 10 employees or of a 
facility, except that, any determinations may be based on length of 
service or minimum schedule of hours or days of work; or
    (B) Made based upon the past performance (which may include any 
criteria) of one or more employees in a given period so long as the 
determination is in the sole discretion of the employer and not pursuant 
to any prior contract.
    (b) Section 7(h). This subsection of the Act provides as follows:

    (1) Except as provided in paragraph (2), sums excluded from the 
regular rate pursuant to subsection (e) shall not be creditable toward 
wages required under section 6 or overtime compensation required under 
this section.
    (2) Extra compensation paid as described in paragraphs (5), (6), and 
(7) of subsection (e) of this section shall be creditable toward 
overtime compensation payable pursuant to this section.

    (c) Only the statutory exclusions are authorized. It is important to 
determine the scope of these exclusions, since all remuneration for 
employment paid to employees which does not fall within one of these 
seven exclusionary clauses must be added into the total compensation 
received by the employee before his regular hourly rate of pay is 
determined.

[33 FR 986, Jan. 26, 1968, as amended at 76 FR 18858, Apr. 5, 2011]

                  Extra Compensation Paid for Overtime



Sec. 778.201  Overtime premiums--general.

    (a) Certain premium payments made by employers for work in excess of 
or outside of specified daily or weekly standard work periods or on 
certain special days are regarded as overtime premiums. In such case, 
the extra compensation provided by the premium rates need not be 
included in the employee's regular rate of pay for the purpose of 
computing overtime compensation due under section 7(a) of the Act. 
Moreover, under section 7(h) this extra compensation may be credited 
toward the overtime payments required by the Act.
    (b) The three types of extra premium payments which may thus be 
treated as overtime premiums for purposes of

[[Page 397]]

the Act are outlined in section 7(e) (5), (6), and (7) of the Act as set 
forth in Sec. 778.200(a). These are discussed in detail in the sections 
following.
    (c) Section 7(h) of the Act specifically states that the extra 
compensation provided by these three types of payments may be credited 
toward overtime compensation due under section 7(a) for work in excess 
of the applicable maximum hours standard. No other types of remuneration 
for employment may be so credited.



Sec. 778.202  Premium pay for hours in excess of a daily or weekly standard.

    (a) Hours in excess of 8 per day or statutory weekly standard. Many 
employment contracts provide for the payment of overtime compensation 
for hours worked in excess of 8 per day or 40 per week. Under some 
contracts such overtime compensation is fixed at one and one-half times 
the base rate; under others the overtime rate may be greater or less 
than one and one-half times the base rate. If the payment of such 
contract overtime compensation is in fact contingent upon the employee's 
having worked in excess of 8 hours in a day or in excess of the number 
of hours in the workweek specified in section 7(a) of the Act as the 
weekly maximum, the extra premium compensation paid for the excess hours 
is excludable from the regular rate under section 7(e)(5) and may be 
credited toward statutory overtime payments pursuant to section 7(h) of 
the Act. In applying these rules to situations where it is the custom to 
pay employees for hours during which no work is performed due to 
vacation, holiday, illness, failure of the employer to provide 
sufficient work, or other similar cause, as these terms are explained in 
Sec. Sec. 778.216 to 778.224, it is permissible (but not required) to 
count these hours as hours worked in determining the amount of overtime 
premium pay, due for hours in excess of 8 per day or the applicable 
maximum hours standard, which may be excluded from the regular rate and 
credited toward the statutory overtime compensation.
    (b) Hours in excess of normal or regular working hours. Similarly, 
where the employee's normal or regular daily or weekly working hours are 
greater or less than 8 hours and 40 hours respectively and his contract 
provides for the payment of premium rates for work in excess of such 
normal or regular hours of work for the day or week (such as 7 in a day 
or 35 in a week) the extra compensation provided by such premium rates, 
paid for excessive hours, is a true overtime premium to be excluded from 
the regular rate and it may be credited toward overtime compensation due 
under the Act.
    (c) Premiums for excessive daily hours. If an employee whose maximum 
hours standard is 40 hours is hired at the rate of $5.75 an hour and 
receives, as overtime compensation under his contract, $6.25 per hour 
for each hour actually worked in excess of 8 per day (or in excess of 
his normal or regular daily working hours), his employer may exclude the 
premium portion of the overtime rate from the employee's regular rate 
and credit the total of the extra 50-cent payments thus made for daily 
overtime hours against the overtime compensation which is due under the 
statute for hours in excess of 40 in that workweek. If the same contract 
further provided for the payment of $6.75 for hours in excess of 12 per 
day, the extra $1 payments could likewise be credited toward overtime 
compensation due under the Act. To qualify as overtime premiums under 
section 7(e)(5), the daily overtime premium payments must be made for 
hours in excess of 8 hours per day or the employee's normal or regular 
working hours. If the normal workday is artificially divided into a 
``straight time'' period to which one rate is assigned, followed by a 
so-called ``overtime'' period for which a higher ``rate'' is specified, 
the arrangement will be regarded as a device to contravene the statutory 
purposes and the premiums will be considered part of the regular rate. 
For a fuller discussion of this problem, see Sec. 778.501.
    (d) Hours in excess of other statutory standard. Where payment at 
premium rates for hours worked in excess of a specified daily or weekly 
standard is made pursuant to the requirements of another applicable 
statute, the extra compensation provided by such premium rates will be 
regarded as a true overtime premium.

[[Page 398]]

    (e) Premium pay for sixth or seventh day worked. Under section 
7(e)(6) and 7(h), extra premium compensation paid pursuant to contract 
or statute for work on the sixth or seventh day worked in the workweek 
is regarded in the same light as premiums paid for work in excess of the 
applicable maximum hours standard or the employee's normal or regular 
workweek.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7311, Jan. 23, 1981)



Sec. 778.203  Premium pay for work on Saturdays, Sundays, and 
other ``special days''.

    Under section 7(e)(6) and 7(h) of the Act, extra compensation 
provided by a Premium rate of at least time and one-half which is paid 
for work on Saturdays, Sundays, holidays, or regular days of rest or on 
the sixth or seventh day of the workweek (hereinafter referred to as 
``special days'') may be treated as an overtime premium for the purposes 
of the Act. If the premium rate is less than time and one-half, the 
extra compensation provided by such rate must be included in determining 
the employee's regular rate of pay and cannot be credited toward 
statutory overtime due, unless it qualifies as an overtime premium under 
section 7(e)(5).
    (a) ``Special days'' rate must be at least time and one-half to 
qualify as overtime premium: The premium rate must be at least ``one and 
one-half times the rate established in good faith for like work 
performed in nonovertime hours on other days.'' Where an employee is 
hired on the basis of a salary for a fixed workweek or at a single 
hourly rate of pay, the rate paid for work on ``special days'' must be 
at least time and one-half his regular hourly rate in order to qualify 
under section 7(e)(6). If the employee is a pieceworker or if he works 
at more than one job for which different hourly or piece rates have been 
established and these are bona fide rates applicable to the work when 
performed during nonovertime hours, the extra compensation provided by a 
premium rate of at least one and one-half times either (1) the bona fide 
rate applicable to the type of job the employee performs on the 
``special days'', or (2) the average hourly earnings in the week in 
question, will qualify as an overtime premium under this section. (For a 
fuller discussion of computation on the average rate, see Sec. 778.111; 
on the rate applicable to the job, see Sec. Sec. 778.415 through 
778.421; on the ``established'' rate, see Sec. 778.400.)
    (b) Bona fide base rate required. The statute authorizes such 
premiums paid for work on ``special days'' to be treated as overtime 
premiums only if they are actually based on a ``rate established in good 
faith for like work performed in nonovertime hours on other days.'' This 
phrase is used for the purpose of distinguishing the bona fide 
employment standards contemplated by section 7(e)(6) from fictitious 
schemes and artificial or evasive devices as discussed in Subpart F of 
this part. Clearly, a rate which yields the employee less than time and 
one-half the minimum rate prescribed by the Act would not be a rate 
established in good faith.
    (c) Work on the specified ``special days'': To qualify as an 
overtime premium under section 7(e)(6), the extra compensation must be 
paid for work on the specified days. The term ``holiday'' is read in its 
ordinary usage to refer to those days customarily observed in the 
community in celebration of some historical or religious occasion. A day 
of rest arbitrarily granted to employees because of lack of work is not 
a ``holiday'' within the meaning of this section, nor is it a ``regular 
day of rest.'' The term ``regular day of rest'' means a day on which the 
employee in accordance with his regular prearranged schedule is not 
expected to report for work. In some instances the ``regular day of 
rest'' occurs on the same day or days each week for a particular 
employee; in other cases, pursuant to a swing shift schedule, the 
schedule day of rest rotates in a definite pattern, such as 6 days work 
followed by 2 days of rest. In either case the extra compensation 
provided by a premium rate for work on such scheduled days of rest (if 
such rate is at least one and one-half times the bona fide rate 
established for like work during nonovertime hours on other days) may be 
treated as an overtime premium and thus need not be included in 
computing

[[Page 399]]

the employee's regular rate of pay and may be credited toward overtime 
payments due under the Act.
    (d) Payment of premiums for work performed on the ``special day'': 
To qualify as an overtime premium under section 7(e)(6), the premium 
must be paid because work is performed on the days specified and not for 
some other reason which would not qualify the premium as an overtime 
premium under section 7(e)(5), (6), or (7). (For examples distinguishing 
pay for work on a holiday from idle holiday pay, see Sec. 778.219.) 
Thus a premium rate paid to an employee only when he received less than 
24 hours' notice that he is required to report for work on his regular 
day of rest is not a premium paid for work on one of the specified days; 
it is a premium imposed as a penalty upon the employer for failure to 
give adequate notice to compensate the employee for the inconvenience of 
disarranging his private life. The extra compensation is not an overtime 
premium. It is part of his regular rate of pay unless such extra 
compensation is paid the employee on infrequent and sporadic occasions 
so as to qualify for exclusion under section 7(e)(2) in which event it 
need not be included in computing his regular rate of pay, as explained 
in Sec. 778.222.



Sec. 778.204  ``Clock pattern'' premium pay.

    (a) Overtime premiums under section 7(e)(7). Where a collective 
bargaining agreement or other applicable employment contract in good 
faith establishes certain hours of the day as the basic, normal, or 
regular workday (not exceeding 8 hours) or workweek (not exceeding the 
maximum hours standard applicable under section 7(a)) and provides for 
the payment of a premium rate for work outside such hours, the extra 
compensation provided by such premium rate will be treated as an 
overtime premium if the premium rate is not less than one and one-half 
times the rate established in good faith by the contract or agreement 
for like work performed during the basic, normal or regular workday or 
workweek.
    (b) Premiums for hours outside established working hours. To qualify 
as an overtime premium under section 7(e)(7) the premium must be paid 
because the work was performed during hours ``outside of the hours 
established * * * as the basic * * * workday or workweek'' and not for 
some other reason. Thus, if the basic workday is established in good 
faith as the hours from 8 a.m. to 5 p.m. a premium of time and one-half 
paid for hours between 5 p.m. and 8 a.m. would qualify as an overtime 
premium. However, where the contract does not provide for the payment of 
a premium except for work between midnight and 6 a.m. the premium would 
not qualify under this section since it is not a premium paid for work 
outside the established workday but only for certain special hours 
outside the established workday, in most instances because they are 
undesirable hours. Similarly, where payments of premium rates for work 
are made after 5 p.m. only if the employee has not had a meal period or 
rest period, they are not regarded as overtime premiums; they are 
premiums paid because of undesirable working conditions.
    (c) Payment in pursuance of agreement. Premiums of the type which 
section 7(e)(7) authorizes to be treated as overtime premiums must be 
paid ``in pursuance of an applicable employment contract or collective 
bargaining agreement,'' and the rates of pay and the daily and weekly 
work periods referred to must be established in good faith by such 
contract or agreement. Although as a general rule a collective 
bargaining agreement is a formal agreement which has been reduced to 
writing, an employment contract for purposes of section 7(e)(7) may be 
either written or oral. Where there is a written employment contract and 
the practices of the parties differ from its provisions, it must be 
determined whether the practices of the parties have modified the 
contract. If the practices of the parties have modified the written 
provisions of the contract, the provisions of the contract as modified 
by the practices of the parties will be controlling in determining 
whether the requirements of section 7(e)(7) are satisfied. The 
determination as to the existence of the requisite provisions in an 
applicable oral employment contract will necessarily be based on all the 
facts, including those showing the terms of

[[Page 400]]

the oral contract and the actual employment and pay practices 
thereunder.



Sec. 778.205  Premiums for weekend and holiday work--example.

    The application of section 7(e)(6) may be illustrated by the 
following example: Suppose an agreement of employment calls for the 
payment of $7.50 an hour for all hours worked on a holiday or on Sunday 
in the operation of machines by operators whose maximum hours standard 
is 40 hours and who are paid a bona fide hourly rate of $5 for like work 
performed during nonovertime hours on other days. Suppose further that 
the workweek of such an employee begins at 12:01 a.m. Sunday, and in a 
particular week he works a schedule of 8 hours on Sunday and on each day 
from Monday through Saturday, making a total of 56 hours worked in the 
workweek. Tuesday is a holiday. The payment of $320 to which the 
employee is entitled under the employment agreement will satisfy the 
requirements of the Act since the employer may properly exclude from the 
regular rate the extra $20 paid for work on Sunday and the extra $20 
paid for holiday work and credit himself with such amount against the 
statutory overtime premium required to be paid for the 16 hours worked 
over 40.

[46 FR 7311, Jan. 23, 1981]



Sec. 778.206  Premiums for work outside basic workday or workweek--examples.

    The effect of section 7(e)(7) where ``clock pattern'' premiums are 
paid may be illustrated by reference to provisions typical of the 
applicable collective bargaining agreements traditionally in effect 
between employers and employees in the longshore and stevedoring 
industries. These agreements specify straight time rates applicable 
during the hours established in good faith under the agreement as the 
basic, normal, or regular workday and workweek. Under one such 
agreement, for example, such workday and workweek are established as the 
first 6 hours of work, exclusive of mealtime, each day, Monday through 
Friday, between the hours of 8 a.m. and 5 p.m. Under another typical 
agreement, such workday and workweek are established as the hours 
between 8 a.m. and 12 noon and between 1 p.m. and 5 p.m., Monday through 
Friday. Work outside such workday and workweek is paid for at premium 
rates not less than one and one-half times the bona fide straight-time 
rates applicable to like work when performed during the basic, normal, 
or regular workday or workweek. The extra compensation provided by such 
premium rates will be excluded in computing the regular rate at which 
the employees so paid are employed and may be credited toward overtime 
compensation due under the Act. For example, if an employee is paid $5 
an hour under such an agreement for handling general cargo during the 
basic, normal, or regular workday and $7.50 per hour for like work 
outside of such workday, the extra $2.50 will be excluded from the 
regular rate and may be credited to overtime pay due under the Act. 
Similarly, if the straight time rate established in good faith by the 
contract should be higher because of handling dangerous or obnoxious 
cargo, recognition of skill differentials, or similar reasons, so as to 
be $7.50 an hour during the hours established as the basic or normal or 
regular workday or workweek, and a premium rate of $11.25 an hour is 
paid for the same work performed during other hours of the day or week, 
the extra $3.75 may be excluded from the regular rate of pay and may be 
credited toward overtime pay due under the Act. Similar principles are 
applicable where agreements following this general pattern exist in 
other industries.

[46 FR 7311, Jan. 23, 1981]



Sec. 778.207  Other types of contract premium pay distinguished.

    (a) Overtime premiums are those defined by the statute. The various 
types of contract premium rates which provide extra compensation 
qualifying as overtime premiums to be excluded from the regular rate 
(under section 7(e) (5), (6), and (7) and credited toward statutory 
overtime pay requirements (under section 7(h)) have been described in 
Sec. Sec. 778.201 through 778.206. The plain wording of the statute 
makes it clear that extra compensation provided by

[[Page 401]]

premium rates other than those described cannot be treated as overtime 
premiums. Wherever such other premiums are paid, they must be included 
in the employee's regular rate before statutory overtime compensation is 
computed; no part of such premiums may be credited toward statutory 
overtime pay.
    (b) Nonovertime premiums. The Act requires the inclusion in the 
regular rate of such extra premiums as nightshift differentials (whether 
they take the form of a percent of the base rate or an addition of so 
many cents per hour) and premiums paid for hazardous, arduous or dirty 
work. It also requires inclusion of any extra compensation which is paid 
as an incentive for the rapid performance of work, and since any extra 
compensation in order to qualify as an overtime premium must be provided 
by a premium rate per hour, except in the special case of pieceworkers 
as discussed in Sec. 778.418, lump sum premiums which are paid without 
regard to the number of hours worked are not overtime premiums and must 
be included in the regular rate. For example, where an employer pays 8 
hours' pay for a particular job whether it is performed in 8 hours or in 
less time, the extra premium of 2 hours' pay received by an employee who 
completes the job in 6 hours must be included in his regular rate. 
Similarly, where an employer pays for 8 hours at premium rates for a job 
performed during the overtime hours whether it is completed in 8 hours 
or less, no part of the premium paid qualifies as overtime premium under 
sections 7(e) (5), (6), or (7). (For a further discussion of this and 
related problems, see Sec. Sec. 778.308 to 778.314.)

                                 Bonuses



Sec. 778.208  Inclusion and exclusion of bonuses in computing the
``regular rate.''

    Section 7(e) of the Act requires the inclusion in the regular rate 
of all remuneration for employment except eight specified types of 
payments. Among these excludable payments are discretionary bonuses, 
gifts and payments in the nature of gifts on special occasions, 
contributions by the employer to certain welfare plans and payments made 
by the employer pursuant to certain profit-sharing, thrift and savings 
plans. These are discussed in Sec. Sec. 778.211 through 778.214. 
Bonuses which do not qualify for exclusion from the regular rate as one 
of these types must be totaled in with other earnings to determine the 
regular rate on which overtime pay must be based. Bonus payments are 
payments made in addition to the regular earnings of an employee. For a 
discussion on the bonus form as an evasive bookkeeping device, see 
Sec. Sec. 778.502 and 778.503.

[33 FR 986, Jan. 26, 1968, as amended at 76 FR 18858, Apr. 5, 2011]



Sec. 778.209  Method of inclusion of bonus in regular rate.

    (a) General rules. Where a bonus payment is considered a part of the 
regular rate at which an employee is employed, it must be included in 
computing his regular hourly rate of pay and overtime compensation. No 
difficulty arises in computing overtime compensation if the bonus covers 
only one weekly pay period. The amount of the bonus is merely added to 
the other earnings of the employee (except statutory exclusions) and the 
total divided by total hours worked. Under many bonus plans, however, 
calculations of the bonus may necessarily be deferred over a period of 
time longer than a workweek. In such a case the employer may disregard 
the bonus in computing the regular hourly rate until such time as the 
amount of the bonus can be ascertained. Until that is done he may pay 
compensation for overtime at one and one-half times the hourly rate paid 
by the employee, exclusive of the bonus. When the amount of the bonus 
can be ascertained, it must be apportioned back over the workweeks of 
the period during which it may be said to have been earned. The employee 
must then receive an additional amount of compensation for each workweek 
that he worked overtime during the period equal to one-half of the 
hourly rate of pay allocable to the bonus for that week multiplied by 
the number of statutory overtime hours worked during the week.
    (b) Allocation of bonus where bonus earnings cannot be identified 
with particular workweeks. If it is impossible to

[[Page 402]]

allocate the bonus among the workweeks of the period in proportion to 
the amount of the bonus actually earned each week, some other reasonable 
and equitable method of allocation must be adopted. For example, it may 
be reasonable and equitable to assume that the employee earned an equal 
amount of bonus each week of the period to which the bonus relates, and 
if the facts support this assumption additional compensation for each 
overtime week of the period may be computed and paid in an amount equal 
to one-half of the average hourly increase in pay resulting from bonus 
allocated to the week, multiplied by the number of statutory overtime 
hours worked in that week. Or, if there are facts which make it 
inappropriate to assume equal bonus earnings for each workweek, it may 
be reasonable and equitable to assume that the employee earned an equal 
amount of bonus each hour of the pay period and the resultant hourly 
increase may be determined by dividing the total bonus by the number of 
hours worked by the employee during the period for which it is paid. The 
additional compensation due for the overtime workweeks in the period may 
then be computed by multiplying the total number of statutory overtime 
hours worked in each such workweek during the period by one-half this 
hourly increase.



Sec. 778.210  Percentage of total earnings as bonus.

    In some instances the contract or plan for the payment of a bonus 
may also provide for the simultaneous payment of overtime compensation 
due on the bonus. For example, a contract made prior to the performance 
of services may provide for the payment of additional compensation in 
the way of a bonus at the rate of 10 percent of the employee's straight-
time earnings, and 10 percent of his overtime earnings. In such 
instances, of course, payments according to the contract will satisfy in 
full the overtime provisions of the Act and no recomputation will be 
required. This is not true, however, where this form of payment is used 
as a device to evade the overtime requirements of the Act rather than to 
provide actual overtime compensation, as described in Sec. Sec. 778.502 
and 778.503.



Sec. 778.211  Discretionary bonuses.

    (a) Statutory provision. Section 7(e) (3)(a) of the Act provides 
that the regular rate shall not be deemed to include ``sums paid in 
recognition of services performed during a given period if * * * (a) 
both the fact that payment is to be made and the amount of the payment 
are determined at the sole discretion of the employer at or near the end 
of the period and not pursuant to any prior contract, agreement, or 
promise causing the employee to expect such payments regularly * * *''. 
Such sums may not, however, be credited toward overtime compensation due 
under the Act.
    (b) Discretionary character of excluded bonus. In order for a bonus 
to qualify for exclusion as a discretionary bonus under section 
7(e)(3)(a) the employer must retain discretion both as to the fact of 
payment and as to the amount until a time quite close to the end of the 
period for which the bonus is paid. The sum, if any, to be paid as a 
bonus is determined by the employer without prior promise or agreement. 
The employee has no contract right, express or implied, to any amount. 
If the employer promises in advance to pay a bonus, he has abandoned his 
discretion with regard to it. Thus, if an employer announces to his 
employees in January that he intends to pay them a bonus in June, he has 
thereby abandoned his discretion regarding the fact of payment by 
promising a bonus to his employees. Such a bonus would not be excluded 
from the regular rate under section 7(e)(3)(a). Similarly, an employer 
who promises to sales employees that they will receive a monthly bonus 
computed on the basis of allocating 1 cent for each item sold whenever, 
is his discretion, the financial condition of the firm warrants such 
payments, has abandoned discretion with regard to the amount of the 
bonus though not with regard to the fact of payment. Such a bonus would 
not be excluded from the regular rate. On the other hand, if a bonus 
such as the one just described were paid without prior contract, promise 
or announcement and the decision as to the fact and amount

[[Page 403]]

of payment lay in the employer's sole discretion, the bonus would be 
properly excluded from the regular rate.
    (c) Promised bonuses not excluded. The bonus, to be excluded under 
section 7(e)(3)(a), must not be paid ``pursuant to any prior contract, 
agreement, or promise.'' For example, any bonus which is promised to 
employees upon hiring or which is the result of collective bargaining 
would not be excluded from the regular rate under this provision of the 
Act. Bonuses which are announced to employees to induce them to work 
more steadily or more rapidly or more efficiently or to remain with the 
firm are regarded as part of the regular rate of pay. Attendance 
bonuses, individual or group production bonuses, bonuses for quality and 
accuracy of work, bonuses contingent upon the employee's continuing in 
employment until the time the payment is to be made and the like are in 
this category. They must be included in the regular rate of pay.



Sec. 778.212  Gifts, Christmas and special occasion bonuses.

    (a) Statutory provision. Section 7(e)(1) of the Act provides that 
the term ``regular rate'' shall not be deemed to include ``sums paid as 
gifts; payments in the nature of gifts made at Christmas time or on 
other special occasions, as a reward for service, the amounts of which 
are not measured by or dependent on hours worked, production, or 
efficiency * * *''. Such sums may not, however, be credited toward 
overtime compensation due under the Act.
    (b) Gift or similar payment. To qualify for exclusion under section 
7(e)(1) the bonus must be actually a gift or in the nature of a gift. If 
it is measured by hours worked, production, or efficiency, the payment 
is geared to wages and hours during the bonus period and is no longer to 
be considered as in the nature of a gift. If the payment is so 
substantial that it can be assumed that employees consider it a part of 
the wages for which they work, the bonus cannot be considered to be in 
the nature of a gift. Obviously, if the bonus is paid pursuant to 
contract (so that the employee has a legal right to the payment and 
could bring suit to enforce it), it is not in the nature of a gift.
    (c) Application of exclusion. If the bonus paid at Christmas or on 
other special occasion is a gift or in the nature of a gift, it may be 
excluded from the regular rate under section 7(e)(1) even though it is 
paid with regularity so that the employees are led to expect it and even 
though the amounts paid to different employees or groups of employees 
vary with the amount of the salary or regular hourly rate of such 
employees or according to their length of service with the firm so long 
as the amounts are not measured by or directly dependent upon hours 
worked, production, or efficiency. A Christmas bonus paid (not pursuant 
to contract) in the amount of two weeks' salary to all employees and an 
equal additional amount for each 5 years of service with the firm, for 
example, would be excludable from the regular rate under this category.



Sec. 778.213  Profit-sharing, thrift, and savings plans.

    Section 7(e)(3)(b) of the Act provides that the term ``regular 
rate'' shall not be deemed to include ``sums paid in recognition of 
services performed during a given period if * * * the payments are made 
pursuant to a bona fide profit-sharing plan or trust or bona fide thrift 
or savings plan, meeting the requirements of the Secretary of Labor set 
forth in appropriate regulations * * *''. Such sums may not, however, be 
credited toward overtime compensation due under the Act. The regulations 
issued under this section are parts 547 and 549 of this chapter. 
Payments in addition to the regular wages of the employee, made by the 
employer pursuant to a plan which meets the requirements of the 
regulations in part 547 or 549 of this chapter, will be properly 
excluded from the regular rate.



Sec. 778.214  Benefit plans; including profit-sharing plans or trusts
providing similar benefits.

    (a) Statutory provision. Section 7(e)(4) of the Act provides that 
the term ``regular rate'' shall not be deemed to include: 
``contributions irrevocably made by an employer to a trustee or third 
person pursuant to a bona fide plan for providing old age, retirement, 
life, accident, or health insurance or

[[Page 404]]

similar benefits for employees * * *.'' Such sums may not, however, be 
credited toward overtime compensation due under the Act.
    (b) Scope and application of exclusion generally. Plans for 
providing benefits of the kinds described in section 7(e)(4) are 
referred to herein as ``benefit plans''. It is section 7(e)(4) which 
governs the status for regular rate purposes of any contributions made 
by an employer pursuant to a plan for providing the described benefits. 
This is true irrespective of any other features the plan may have. Thus, 
it makes no difference whether or not the benefit plan is one financed 
out of profits or one which by matching employee contributions or 
otherwise encourages thrift or savings. Where such a plan or trust is 
combined in a single program (whether in one or more documents) with a 
plan or trust for providing profit-sharing payments to employees, the 
profit-sharing payments may be excluded from the regular rate if they 
meet the requirements of the Profit-Sharing Regulations, part 549 of 
this chapter, and the contributions made by the employer for providing 
the benefits described in section 7(e)(4) of the Act may be excluded 
from the regular rate if they meet the tests set forth in Sec. 778.215. 
Advance approval by the Department of Labor is not required.
    (c) Tests must be applied to employer contributions. It should be 
emphasized that it is the employer's contribution made pursuant to the 
benefit plan that is excluded from or included in the regular rate 
according to whether or not the requirements set forth in Sec. 778.215 
are met. If the contribution is not made as provided in section 7(e)(4) 
or if the plan does not qualify as a bona fide benefit plan under that 
section, the contribution is treated the same as any bonus payment which 
is part of the regular rate of pay, and at the time the contribution is 
made the amount thereof must be apportioned back over the workweeks of 
the period during which it may be said to have accrued. Overtime 
compensation based upon the resultant increases in the regular hourly 
rate is due for each overtime hour worked during any workweek of the 
period. The subsequent distribution of accrued funds to an employee on 
account of severance of employment (or for any other reason) would not 
result in any increase in his regular rate in the week in which the 
distribution is made.
    (d) Employer contributions when included in fringe benefit wage 
determinations under Davis-Bacon Act. As noted in Sec. 778.6 where 
certain fringe benefits are included in the wage predeterminations of 
the Secretary of Labor for laborers and mechanics performing contract 
work subject to the Davis-Bacon Act and related statutes, the provisions 
of Public Law 88-349 discussed in Sec. 5.32 of this title should be 
considered together with the interpretations in this part 778 in 
determining the excludability of such fringe benefits from the regular 
rate of such employees. Accordingly, reference should be made to Sec. 
5.32 of this title as well as to Sec. 778.215 for guidance with respect 
to exclusion from the employee's regular rate of contributions made by 
the employer to any benefit plan if, in the workweek or workweeks 
involved, the employee performed work as a laborer or mechanic subject 
to a wage determination made by the Secretary pursuant to part 1 of this 
title, and if fringe benefits of the kind represented by such 
contributions constitute a part of the prevailing wages required to be 
paid such employee in accordance with such wage determination.
    (e) Employer contributions or equivalents pursuant to fringe benefit 
determinations under Service Contract Act of 1965. Contributions by 
contractors and subcontractors to provide fringe benefits specified 
under the McNamara-O'Hara Service Contract Act of 1965, which are of the 
kind referred to in section 7(e)(4), are excludable from the regular 
rate under the conditions set forth in Sec. 778.215. Where the fringe 
benefit contributions specified under such Act are so excludable, 
equivalent benefits or payments provided by the employer in satisfaction 
of his obligation to provide the specified benefits are also excludable 
from the regular rate if authorized under part 4 of this title, subpart 
B, pursuant to the McNamara-O'Hara Act, and their exclusion therefrom is 
not dependent on whether such equivalents, if separately considered,

[[Page 405]]

would meet the requirements of Sec. 778.215. See Sec. 778.7.

[33 FR 986, Jan. 26, 1968, as amended at 36 FR 4699, Mar. 11, 1971]



Sec. 778.215  Conditions for exclusion of benefit-plan contributions
under section 7(e)(4).

    (a) General rules. In order for an employer's contribution to 
qualify for exclusion from the regular rate under section 7(e)(4) of the 
Act the following conditions must be met:
    (1) The contributions must be made pursuant to a specific plan or 
program adopted by the employer, or by contract as a result of 
collective bargaining, and communicated to the employees. This may be 
either a company-financed plan or an employer-employee contributory 
plan.
    (2) The primary purpose of the plan must be to provide 
systematically for the payment of benefits to employees on account of 
death, disability, advanced age, retirement, illness, medical expenses, 
hospitalization, and the like.
    (3) In a plan or trust, either:
    (i) The benefits must be specified or definitely determinable on an 
actuarial basis; or
    (ii) There must be both a definite formula for determining the 
amount to be contributed by the employer and a definite formula for 
determining the benefits for each of the employees participating in the 
plan; or
    (iii) There must be both a formula for determining the amount to be 
contributed by the employer and a provision for determining the 
individual benefits by a method which is consistent with the purposes of 
the plan or trust under section 7(e)(4) of the Act.
    (iv) Note: The requirements in paragraphs (a)(3) (ii) and (iii) of 
this section for a formula for determining the amount to be contributed 
by the employer may be met by a formula which requires a specific and 
substantial minimum contribution and which provides that the employer 
may add somewhat to that amount within specified limits; provided, 
however, that there is a reasonable relationship between the specified 
minimum and maximum contributions. Thus, formulas providing for a 
minimum contribution of 10 percent of profits and giving the employer 
discretion to add to that amount up to 20 percent of profits, or for a 
minimum contribution of 5 percent of compensation and discretion to 
increase up to a maximum of 15 percent of compensation, would meet the 
requirement. However, a plan which provides for insignificant minimum 
contributions and permits a variation so great that, for all practical 
purposes, the formula becomes meaningless as a measure of contributions, 
would not meet the requirements.
    (4) The employer's contributions must be paid irrevocably to a 
trustee or third person pursuant to an insurance agreement, trust or 
other funded arrangement. The trustee must assume the usual fiduciary 
responsibilities imposed upon trustees by applicable law. The trust or 
fund must be set up in such a way that in no event will the employer be 
able to recapture any of the contributions paid in nor in any way divert 
the funds to his own use or benefit. (It should also be noted that in 
the case of joint employer-employee contributory plans, where the 
employee contributions are not paid over to a third person or to a 
trustee unaffiliated with the employer, violations of the Act may result 
if the employee contributions cut into the required minimum or overtime 
rates. See part 531 of this chapter.) Although an employer's 
contributions made to a trustee or third person pursuant to a benefit 
plan must be irrevocably made, this does not prevent return to the 
employer of sums which he had paid in excess of the contributions 
actually called for by the plan, as where such excess payments result 
from error or from the necessity of marking payments to cover the 
estimated cost of contributions at a time when the exact amount of the 
necessary contributions under the plan is not yet ascertained. For 
example, a benefit plan may provide for definite insurance benefits for 
employees in the event of the happening of a specified contingency such 
as death, sickness, accident, etc., and may provide that the cost of 
such definite benefits, either in full or any balance in excess of 
specified employee contributions, will be borne by the employer. In such 
a case the return by the

[[Page 406]]

insurance company to the employer of sums paid by him in excess of the 
amount required to provide the benefits which, under the plan, are to be 
provided through contributions by the employer, will not be deemed a 
recapture or diversion by the employer of contributions made pursuant to 
the plan.
    (5) The plan must not give an employee the right to assign his 
benefits under the plan nor the option to receive any part of the 
employer's contributions in cash instead of the benefits under the plan: 
Provided, however, That if a plan otherwise qualified as a bona fide 
benefit plan under section 7(e)(4) of the Act, it will still be regarded 
as a bona fide plan even though it provides, as an incidental part 
thereof, for the payment to an employee in cash of all or a part of the 
amount standing to his credit (i) at the time of the severance of the 
employment relation due to causes other than retirement, disability, or 
death, or (ii) upon proper termination of the plan, or (iii) during the 
course of his employment under circumstances specified in the plan and 
not inconsistent with the general purposes of the plan to provide the 
benefits described in section 7(e)(4) of the Act.
    (b) Plans under section 401(a) of the Internal Revenue Code. Where 
the benefit plan or trust has been approved by the Bureau of Internal 
Revenue as satisfying the requirements of section 401(a) of the Internal 
Revenue Code in the absence of evidence to the contrary, the plan or 
trust will be considered to meet the conditions specified in paragraphs 
(a)(1), (4), and (5) of this section.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7312, Jan. 23, 1981]

                      Payments not for Hours Worked



Sec. 778.216  The provisions of section 7(e)(2) of the Act.

    Section 7(e)(2) of the Act provides that the term ``regular rate'' 
shall not be deemed to include ``payments made for occasional periods 
when no work is performed due to vacation, holiday, illness, failure of 
the employer to provide sufficient work, or other similar cause; 
reasonable payments for traveling expenses, or other expenses, incurred 
by an employee in the furtherance of his employer's interests and 
properly reimbursable by the employer; and other similar payments to an 
employee which are not made as compensation for his hours of employment 
* * *.'' However, since such payments are not made as compensation for 
the employee's hours worked in any workweek, no part of such payments 
can be credited toward overtime compensation due under the Act.



Sec. 778.217  Reimbursement for expenses.

    (a) General rule. Where an employee incurs expenses on his 
employer's behalf or where he is required to expend sums solely by 
reason of action taken for the convenience of his employer, section 
7(e)(2) is applicable to reimbursement for such expenses. Payments made 
by the employer to cover such expenses are not included in the 
employee's regular rate (if the amount of the reimbursement reasonably 
approximates the expenses incurred). Such payment is not compensation 
for services rendered by the employees during any hours worked in the 
workweek.
    (b) Illustrations. Payment by way of reimbursement for the following 
types of expenses will not be regarded as part of the employee's regular 
rate:
    (1) The actual amount expended by an employee in purchasing 
supplies, tools, materials, or equipment on behalf of his employer.
    (2) The actual or reasonably approximate amount expended by an 
employee in purchasing, laundering or repairing uniforms or special 
clothing which his employer requires him to wear.
    (3) The actual or reasonably approximate amount expended by an 
employee, who is traveling ``over the road'' on his employer's business, 
for transportation (whether by private car or common carrier) and living 
expenses away from home, other travel expenses, such as taxicab fares, 
incurred while traveling on the employer's business.
    (4) ``Supper money'', a reasonable amount given to an employee, who 
ordinarily works the day shift and can ordinarily return home for 
supper, to

[[Page 407]]

cover the cost of supper when he is requested by his employer to 
continue work during the evening hours.
    (5) The actual or reasonably approximate amount expended by an 
employee as temporary excess home-to-work travel expenses incurred (i) 
because the employer has moved the plant to another town before the 
employee has had an opportunity to find living quarters at the new 
location or (ii) because the employee, on a particular occasion, is 
required to report for work at a place other than his regular workplace.

The foregoing list is intended to be illustrative rather than 
exhaustive.
    (c) Payments excluding expenses. It should be noted that only the 
actual or reasonably approximate amount of the expense is excludable 
from the regular rate. If the amount paid as ``reimbursement'' is 
disproportionately large, the excess amount will be included in the 
regular rate.
    (d) Payments for expenses personal to the employee. The expenses for 
which reimbursement is made must in order to merit exclusion from the 
regular rate under this section, be expenses incurred by the employee on 
the employer's behalf or for his benefit or convenience. If the employer 
reimburses the employee for expenses normally incurred by the employee 
for his own benefit, he is, of course, increasing the employee's regular 
rate thereby. An employee normally incurs expenses in traveling to and 
from work, buying lunch, paying rent, and the like. If the employer 
reimburses him for these normal everyday expenses, the payment is not 
excluded from the regular rate as ``reimbursement for expenses.'' 
Whether the employer ``reimburses'' the employee for such expenses or 
furnishes the facilities (such as free lunches or free housing), the 
amount paid to the employee (or the reasonable cost to the employer or 
fair value where facilities are furnished) enters into the regular rate 
of pay as discussed in Sec. 778.116. See also Sec. 531.37(b) of this 
chapter.



Sec. 778.218  Pay for certain idle hours.

    (a) General rules. Payments which are made for occasional periods 
when the employee is not at work due to vacation, holiday, illness, 
failure of the employer to provide sufficient work, or other similar 
cause, where the payments are in amounts approximately equivalent to the 
employee's normal earnings for a similar period of time, are not made as 
compensation for his hours of employment. Therefore, such payments may 
be excluded from the regular rate of pay under section 7(e)(2) of the 
Act and, for the same reason, no part of such payments may be credited 
toward overtime compensation due under the Act.
    (b) Limitations on exclusion. This provision of section 7(e)(2) 
deals with the type of absences which are infrequent or sporadic or 
unpredictable. It has no relation to regular ``absences'' such as lunch 
periods nor to regularly scheduled days of rest. Sundays may not be 
workdays in a particular plant, but this does not make them either 
``holidays'' or ``vacations,'' or days on which the employee is absent 
because of the failure of the employer to provide sufficient work. The 
term holiday is read in its ordinary usage to refer to those days 
customarily observed in the community in celebration of some historical 
or religious occasion; it does not refer to days of rest given to 
employees in lieu of or as an addition to compensation for working on 
other days.
    (c) Failure to provide work. The term ``failure of the employer to 
provide sufficient work'' is intended to refer to occasional, 
sporadically recurring situations where the employee would normally be 
working but for such a factor as machinery breakdown, failure of 
expected supplies to arrive, weather conditions affecting the ability of 
the employee to perform the work and similarly unpredictable obstacles 
beyond the control of the employer. The term does not include reduction 
in work schedule (as discussed in Sec. Sec. 778.321 through 778.329), 
ordinary temporary layoff situations, or any type of routine, recurrent 
absence of the employee.
    (d) Other similar cause. The term ``other similar cause'' refers to 
payments made for periods of absence due to factors like holidays, 
vacations, sickness, and failure of the employer to provide work. 
Examples of ``similar

[[Page 408]]

causes'' are absences due to jury service, reporting to a draft board, 
attending a funeral of a family member, inability to reach the workplace 
because of weather conditions. Only absences of a nonroutine character 
which are infrequent or sporadic or unpredictable are included in the 
``other similar cause'' category.



Sec. 778.219  Pay for foregoing holidays and vacations.

    (a) Sums payable whether employee works or not. As explained in 
Sec. 778.218, certain payments made to an employee for periods during 
which he performs no work because of a holiday or vacation are not 
required to be included in the regular rate because they are not 
regarded as compensation for working. Suppose an employee who is 
entitled to such a paid idle holiday or paid vacation foregoes his 
holiday or vacation and performs work for the employer on the holiday or 
during the vacation period. If, under the terms of his employment, he is 
entitled to a certain sum as holiday or vacation pay, whether he works 
or not, and receives pay at his customary rate (or higher) in addition 
for each hour that he works on the holiday or vacation day, the certain 
sum allocable to holiday or vacation pay is still to be excluded from 
the regular rate. It is still not regarded as compensation for hours of 
work if he is otherwise compensated at his customary rate (or at a 
higher rate) for his work on such days. Since it is not compensation for 
work it may not be credited toward overtime compensation due under the 
Act. Two examples in which the maximum hours standard is 40 hours may 
serve to illustrate this principle:
    (1) An employee whose rate of pay is $5 an hour and who usually 
works a 6-day 48-hour week is entitled, under his employment contract, 
to a week's paid vacation in the amount of his usual straight-time 
earnings--$240. He foregoes his vacation and works 50 hours in the week 
in question. He is owed $250 as his total straight-time earnings for the 
week, and $240 in addition as his vacation pay. Under the statute he is 
owed an additional $25 as overtime premium (additional half-time) for 
the 10 hours in excess of 40. His regular rate of $5 per hour has not 
been increased by virtue of the payment of $240 vacation pay, but no 
part of the $240 may be offset against the statutory overtime 
compensation which is due. (Nothing in this example is intended to imply 
that the employee has a statutory right to $240 or any other sum as 
vacation pay. This is a matter of private contract between the parties 
who may agree that vacation pay will be measured by straight-time 
earnings for any agreed number of hours or days, or by total normal or 
expected take-home pay for the period or that no vacation pay at all 
will be paid. The example merely illustrates the proper method of 
computing overtime for an employee whose employment contract provides 
$240 vacation pay.)
    (2) An employee who is entitled under his employment contract to 8 
hours' pay at his rate of $5 an hour for the Christmas holiday, foregoes 
his holiday and works 9 hours on that day. During the entire week he 
works a total of 50 hours. He is paid under his contract, $250 as 
straight-time compensation for 50 hours plus $40 as idle holiday pay. He 
is owed, under the statute, an additional $25 as overtime premium 
(additional half-time) for the 10 hours in excess of 40. His regular 
rate of $5 per hour has not been increased by virtue of the holiday pay 
but no part of the $40 holiday pay may be credited toward statutory 
overtime compensation due.
    (b) Premiums for holiday work distinguished. The example in 
paragraph (a)(2) of this section should be distinguished from a 
situation in which an employee is entitled to idle holiday pay under the 
employment agreement only when he is actually idle on the holiday, and 
who, if he foregoes his holiday also, under his contract, foregoes his 
idle holiday pay.
    (1) The typical situation is one in which an employee is entitled by 
contract to 8 hours' pay at his rate of $5 an hour for certain named 
holidays when no work is performed. If, however, he is required to work 
on such days, he does not receive his idle holiday pay. Instead he 
receives a premium rate of $7.50 (time and one-half) for each hour 
worked on the holiday. If he worked 9 hours on the holiday and a total 
of 50 hours for the week, he would be owed,

[[Page 409]]

under his contract, $67.50 (9x$7.50) for the holiday work and $205 for 
the other 41 hours worked in the week, a total of $272.50. Under the 
statute (which does not require premium pay for a holiday) he is owed 
$275 for a workweek of 50 hours at a rate of $5 an hour. Since the 
holiday premium is one and one-half times the established rate for 
nonholiday work, it does not increase the regular rate because it 
qualifies as an overtime premium under section 7(e)(6), and the employer 
may credit it toward statutory overtime compensation due and need pay 
the employee only the additional sum of $2.50 to meet the statutory 
requirements. (For a discussion of holiday premiums see Sec. 778.203.)
    (2) If all other conditions remained the same but the contract 
called for the payment of $10 (double time) for each hour worked on the 
holiday, the employee would receive, under his contract $90 (9x$10) for 
the holiday work in addition to $205 for the other 41 hours worked, a 
total of $295. Since this holiday premium is also an overtime premium 
under section 7(e)(6), it is excludable from the regular rate and the 
employer may credit it toward statutory overtime compensation due. 
Because the total thus paid exceeds the statutory requirements, no 
additional compensation is due under the Act. In distinguishing this 
situation from that in the example in paragraph (a)(2) of this section, 
it should be noted that the contract provisions in the two situations 
are different and result in the payment of different amounts. In example 
(2) the employee received a total of $85 attributable to the holiday: 8 
hours' idle holiday pay at $5 an hour, due him whether he worked or not, 
and $45 pay at the nonholiday rate for 9 hours' work on the holiday. In 
the situation discussed in this paragraph the employee received $90 pay 
for working on the holiday--double time for 9 hours of work. Thus, 
clearly, all of the pay in this situation is paid for and directly 
related to the number of hours worked on the holiday.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7312, Jan. 23, 1981]



Sec. 778.220  ``Show-up'' or ``reporting'' pay.

    (a) Applicable principles. Under some employment agreements, an 
employee may be paid a minimum of a specified number of hours' pay at 
the applicable straight time or overtime rate on infrequent and sporadic 
occasions when, after reporting to work at his scheduled starting time 
on a regular work day or on another day on which he has been scheduled 
to work, he is not provided with the expected amount of work. The 
amounts that may be paid under such an agreement over and above what the 
employee would receive if paid at his customary rate only for the number 
of hours worked are paid to compensate the employee for the time wasted 
by him in reporting for work and to prevent undue loss of pay resulting 
from the employer's failure to provide expected work during regular 
hours. One of the primary purposes of such an arrangement is to 
discourage employers from calling their employees in to work for only a 
fraction of a day when they might get full-time work elsewhere. Pay 
arrangements of this kind are commonly referred to as ``show-up'' or 
``reporting'' pay. Under the principles and subject to the conditions 
set forth in subpart B of this part and Sec. Sec. 778.201 through 
778.207, that portion of such payment which represents compensation at 
the applicable rates for the straight time or overtime hours actually 
worked, if any, during such period may be credited as straight time or 
overtime compensation, as the case may be, in computing overtime 
compensation due under the Act. The amount by which the specified number 
of hours' pay exceeds such compensation for the hours actually worked is 
considered as a payment that is not made for hours worked. As such, it 
may be excluded from the computation of the employee's regular rate and 
cannot be credited toward statutory overtime compensation due him.
    (b) Application illustrated. To illustrate, assume that an employee 
entitled to overtime pay after 40 hours a week whose workweek begins on 
Monday and who is paid $5 an hour reports for work on Monday according 
to schedule and is sent home after being given only 2 hours of work. He 
then

[[Page 410]]

works 8 hours each day on Tuesday through Saturday, inclusive, making a 
total of 42 hours for the week. The employment agreement covering the 
employees in the plant, who normally work 8 hours a day, Monday through 
Friday, provides that an employee reporting for scheduled work on any 
day will receive a minimum of 4 hours' work or pay. The employee thus 
receives not only the $10 earned in the 2 hours of work on Monday but an 
extra 2 hours' ``show-up'' pay, or $10 by reason of this agreement. 
However, since this $10 in ``show-up'' pay is not regarded as 
compensation for hours worked, the employee's regular rate remains $5 
and the overtime requirements of the Act are satisfied if he receives, 
in addition to the $210 straight-time pay for 42 hours and the $10 
``show-up'' payment, the sum of $5 as extra compensation for the 2 hours 
of overtime work on Saturday.

[46 FR 7312, Jan. 23, 1981]



Sec. 778.221  ``Call-back'' pay.

    (a) General. In the interest of simplicity and uniformity, the 
principles discussed in Sec. 778.220 are applied also with respect to 
typical minimum ``call-back'' or ``call-out'' payments made pursuant to 
employment agreements. Typically, such minimum payments consist of a 
specified number of hours' pay at the applicable straight time or 
overtime rates which an employee receives on infrequent and sporadic 
occasions when, after his scheduled hours of work have ended and without 
prearrangement, he responds to a call from his employer to perform extra 
work.
    (b) Application illustrated. The application of these principles to 
call-back payments may be illustrated as follows: An employment 
agreement provides a minimum of 3 hours' pay at time and one-half for 
any employee called back to work outside his scheduled hours. The 
employees covered by the agreement, who are entitled to overtime pay 
after 40 hours a week, normally work 8 hours each day, Monday through 
Friday, inclusive, in a workweek beginning on Monday, and are paid 
overtime compensation at time and one-half for all hours worked in 
excess of 8 in any day or 40 in any workweek. Assume that an employee 
covered by this agreement and paid at the rate of $5 an hour works 1 
hour overtime or a total of 9 hours on Monday, and works 8 hours each on 
Tuesday through Friday, inclusive. After he has gone home on Friday 
evening he is called back to perform an emergency job. His hours worked 
on the call total 2 hours and he receives 3 hours' pay at time and one-
half, or $22.50, under the call-back provision, in addition to $200 for 
working his regular schedule and $7.50 for overtime worked on Monday 
evening. In computing overtime compensation due this employee under the 
Act, the 43 actual hours (not 44) are counted as working time during the 
week. In addition to $215 pay at the $5 rate for all these hours, he has 
received under the agreement a premium of $2.50 for the 1 overtime hour 
on Monday and of $5 for the 2 hours of overtime work on the call, plus 
an extra sum of $7.50 paid by reason of the provision for minimum call-
back pay. For purposes of the Act, the extra premiums paid for actual 
hours of overtime work on Monday and on the Friday call (a total of 
$7.50) may be excluded as true overtime premiums in computing his 
regular rate for the week and may be credited toward compensation due 
under the Act, but the extra $7.50 received under the call-back 
provision is not regarded as paid for hours worked; therefore, it may be 
excluded from the regular rate, but it cannot be credited toward 
overtime compensation due under the Act. The regular rate of the 
employee, therefore, remains $5, and he has received an overtime premium 
of $2.50 an hour for 3 overtime hours of work. This satisfies the 
requirements of section 7 of the Act. The same would be true, of course, 
if in the foregoing example, the employee was called back outside his 
scheduled hours for the 2-hour emergency job on another night of the 
week or on Saturday or Sunday, instead of on Friday night.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7313, Jan. 23, 1981]

[[Page 411]]



Sec. 778.222  Other payments similar to ``call-back'' pay.

    The principles discussed in Sec. Sec. 778.220 and 778.221 are also 
applied with respect to certain types of extra payments which are 
similar to call-back pay, such as: (a) Extra payments made to employees, 
on infrequent and sporadic occasions, for failure to give the employee 
sufficient notice to report for work on regular days of rest or during 
hours outside of his regular work schedule; and (b) extra payments made, 
on infrequent and sporadic occasions, solely because the employee has 
been called back to work before the expiration of a specified number of 
hours between shifts or tours of duty, sometimes referred to as a ``rest 
period.'' The extra payment, over and above the employee's earnings for 
the hours actually worked at his applicable rate (straight time or 
overtime, as the case may be), is considered as a payment that is not 
made for hours worked.



Sec. 778.223  Pay for non-productive hours distinguished.

    Under the Act an employee must be compensated for all hours worked. 
As a general rule the term ``hours worked'' will include: (a) All time 
during which an employee is required to be on duty or to be on the 
employer's premises or at a prescribed workplace and (b) all time during 
which an employee is suffered or permitted to work whether or not he is 
required to do so. Thus, working time is not limited to the hours spent 
in active productive labor, but includes time given by the employee to 
the employer even though part of the time may be spent in idleness. Some 
of the hours spent by employees, under certain circumstances, in such 
activities as waiting for work, remaining ``on call'', traveling on the 
employer's business or to and from workplaces, and in meal periods and 
rest periods are regarded as working time and some are not. The 
governing principles are discussed in part 785 of this chapter 
(interpretative bulletin on ``hours worked'') and part 790 of this 
chapter (statement of effect of Portal-to-Portal Act of 1947). To the 
extent that these hours are regarded as working time, payment made as 
compensation for these hours obviously cannot be characterized as 
``payments not for hours worked.'' Such compensation is treated in the 
same manner as compensation for any other working time and is, of 
course, included in the regular rate of pay. Where payment is ostensibly 
made as compensation for such of these hours as are not regarded as 
working time under the Act, the payment is nevertheless included in the 
regular rate of pay unless it qualifies for exclusion from the regular 
rate as one of a type of ``payments made for occasional periods when no 
work is performed due to * * * failure of the employer to provide 
sufficient work, or other similar cause'' as discussed in Sec. 778.218 
or is excludable on some other basis under section 7(e)(2). For example, 
an employment contract may provide that employees who are assigned to 
take calls for specific periods will receive a payment of $5 for each 8-
hour period during which they are ``on call'' in addition to pay at 
their regular (or overtime) rate for hours actually spent in making 
calls. If the employees who are thus on call are not confined to their 
homes or to any particular place, but may come and go as they please, 
provided that they leave word where they may be reached, the hours spent 
``on call'' are not considered as hours worked. Although the payment 
received by such employees for such ``on call'' time is, therefore, not 
allocable to any specific hours of work, it is clearly paid as 
compensation for performing a duty involved in the employee's job and is 
not of a type excludable under section 7(e)(2). The payment must 
therefore be included in the employee's regular rate in the same manner 
as any payment for services, such as an attendance bonus, which is not 
related to any specific hours of work.

[46 FR 7313, Jan. 23, 1981]



Sec. 778.224  ``Other similar payments''.

    (a) General. The preceding sections have enumerated and discussed 
the basic types of payments for which exclusion from the regular rate is 
specifically provided under section 7(e)(2) because they are not made as 
compensation for hours of work. Section 7(e) (2) also authorizes 
exclusion from the regular rate of ``other similar payments to an 
employee which are not made as

[[Page 412]]

compensation for his hours of employment.'' Since a variety of 
miscellaneous payments are paid by an employer to an employee under 
peculiar circumstances, it was not considered feasible to attempt to 
list them. They must, however, be ``similar'' in character to the 
payments specifically described in section 7(e)(2). It is clear that the 
clause was not intended to permit the exclusion from the regular rate of 
payments such as bonuses or the furnishing of facilities like board and 
lodging which, though not directly attributable to any particular hours 
of work are, nevertheless, clearly understood to be compensation for 
services.
    (b) Examples of other excludable payments. A few examples may serve 
to illustrate some of the types of payments intended to be excluded as 
``other similar payments'':
    (1) Sums paid to an employee for the rental of his truck or car.
    (2) Loans or advances made by the employer to the employee.
    (3) The cost to the employer of conveniences furnished to the 
employee such as parking space, restrooms, lockers, on-the-job medical 
care and recreational facilities.

            Talent Fees in the Radio and Television Industry



Sec. 778.225  Talent fees excludable under regulations.

    Section 7(e)(3) provides for the exclusion from the regular rate of 
``talent fees (as such talent fees are defined and delimited by 
regulations of the Secretary) paid to performers, including announcers, 
on radio and television programs.'' Regulations defining ``talent fees'' 
have been issued as part 550 of this chapter. Payments which accord with 
this definition are excluded from the regular rate.



                       Subpart D_Special Problems

                              Introductory



Sec. 778.300  Scope of subpart.

    This subpart applies the principles of computing overtime to some of 
the problems that arise frequently.

                 Change in the Beginning of the Workweek



Sec. 778.301  Overlapping when change of workweek is made.

    As stated in Sec. 778.105, the beginning of the workweek may be 
changed for an employee or for a group of employees if the change is 
intended to be permanent and is not designed to evade the overtime 
requirements of the Act. A change in the workweek necessarily results in 
a situation in which one or more hours or days fall in both the ``old'' 
workweek as previously constituted and the ``new'' workweek. Thus, if 
the workweek in the plant commenced at 7 a.m. on Monday and it is now 
proposed to begin the workweek at 7 a.m. on Sunday, the hours worked 
from 7 a.m. Sunday to 7 a.m. Monday will constitute both the last hours 
of the old workweek and the first hours of the newly established 
workweek.



Sec. 778.302  Computation of overtime due for overlapping workweeks.

    (a) General rule. When the beginning of the workweek is changed, if 
the hours which fall within both ``old'' and ``new'' workweeks as 
explained in Sec. 778.301 are hours in which the employee does no work, 
his statutory compensation for each workweek is, of course, determinable 
in precisely the same manner as it would be if no overlap existed. If, 
on the other hand, some of the employee's working time falls within 
hours which are included in both workweeks, the Department of Labor, as 
an enforcement policy, will assume that the overtime requirements of 
section 7 of the Act have been satisfied if computation is made as 
follows:
    (1) Assume first that the overlapping hours are to be counted as 
hours worked only in the ``old'' workweek and not in the new; compute 
straight time and overtime compensation due for each of the 2 workweeks 
on this basis and total the two sums.
    (2) Assume now that the overlapping hours are to be counted as hours 
worked only in the new workweek and not in the old, and complete the 
total computation accordingly.
    (3) Pay the employee an amount not less than the greater of the 
amounts computed by methods (1) and (2).

[[Page 413]]

    (b) Application of rule illustrated. Suppose that, in the example 
given in Sec. 778.301, the employee, who receives $5 an hour and is 
subject to overtime pay after 40 hours a week, worked 5 hours on Sunday, 
March 7, 1965. Suppose also that his last ``old'' workweek commenced at 
7 a.m. on Monday, March 1, and he worked 40 hours March 1 through March 
5 so that for the workweek ending March 7 he would be owed straight time 
and overtime compensation for 45 hours. The proposal is to commence the 
``new'' workweek at 7 a.m. on March 7. If in the ``new'' workweek of 
Sunday, March 7, through Saturday, March 13, the employee worked a total 
of 40 hours, including the 5 hours worked on Sunday, it is obvious that 
the allocation of the Sunday hours to the old workweek will result in 
higher total compensation to the employee for the 13-day period. He 
should, therefore, be paid $237.50 (40x$5+5x$7.50) for the period of 
March 1 through March 7, and $175 (35x$5) for the period of March 8 
through March 13.
    (c) Nonstatutory obligations unaffected. The fact that this method 
of compensation is permissible under the Fair Labor Standards Act when 
the beginning of the workweek is changed will not alter any obligation 
the employer may have under his employment contract to pay a greater 
amount of overtime compensation for the period in question.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7314, Jan. 23, 1981]

                     Additional Pay for Past Period



Sec. 778.303  Retroactive pay increases.

    Where a retroactive pay increase is awarded to employees as a result 
of collective bargaining or otherwise, it operates to increase the 
regular rate of pay of the employees for the period of its 
retroactivity. Thus, if an employee is awarded a retroactive increase of 
10 cents per hour, he is owed, under the Act, a retroactive increase of 
15 cents for each overtime hour he has worked during the period, no 
matter what the agreement of the parties may be. A retroactive pay 
increase in the form of a lump sum for a particular period must be 
prorated back over the hours of the period to which it is allocable to 
determine the resultant increases in the regular rate, in precisely the 
same manner as a lump sum bonus. For a discussion of the method of 
allocating bonuses based on employment in a prior period to the 
workweeks covered by the bonus payment, see Sec. 778.209.

                 How Deductions Affect the Regular Rate



Sec. 778.304  Amounts deducted from cash wages--general.

    (a) The word ``deduction'' is often loosely used to cover reductions 
in pay resulting from several causes:
    (1) Deductions to cover the cost to the employer of furnishing 
``board, lodging or other facilities,'' within the meaning of section 
3(m) of the Act.
    (2) Deductions for other items such as tools and uniforms which are 
not regarded as ``facilities.''
    (3) Deductions authorized by the employee (such as union dues) or 
required by law (such as taxes and garnishments).
    (4) Reductions in a fixed salary paid for a fixed workweek in weeks 
in which the employee fails to work the full schedule.
    (5) Deductions for disciplinary reasons.
    (b) In general, where such deductions are made, the employee's 
``regular rate'' is the same as it would have been if the occasion for 
the deduction had not arisen. Also, as explained in part 531 of this 
chapter, the requirements of the Act place certain limitations on the 
making of some of the above deductions.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7314, Jan. 23, 1981]



Sec. 778.305  Computation where particular types of deductions are made.

    The regular rate of pay of an employee whose earnings are subject to 
deductions of the types described in paragraphs (a)(1), (2), and (3) of 
Sec. 778.304 is determined by dividing his total compensation (except 
statutory exclusions) before deductions by the total hours worked in the 
workweek. (See also Sec. Sec. 531.36-531.40 of this chapter.)

[[Page 414]]



Sec. 778.306  Salary reductions in short workweeks.

    (a) The reductions in pay described in Sec. 778.304(a)(4) are not, 
properly speaking, ``deductions'' at all. If an employee is compensated 
at a fixed salary for a fixed workweek and if this salary is reduced by 
the amount of the average hourly earnings for each hour lost by the 
employee in a short workweek, the employee is, for all practical 
purposes, employed at an hourly rate of pay. This hourly rate is the 
quotient of the fixed salary divided by the fixed number of hours it is 
intended to compensate. If an employee is hired at a fixed salary of 
$200 for a 40-hour week, his hourly rate is $5. When he works only 36 
hours he is therefore entitled to $180. The employer makes a 
``deduction'' of $20 from his salary to achieve this result. The regular 
hourly rate is not altered.
    (b) When an employee is paid a fixed salary for a workweek of 
variable hours (or a guarantee of pay under the provisions of section 
7(f) of the Act, as discussed in Sec. Sec. 778.402 through 778.414), 
the understanding is that the salary or guarantee is due the employee in 
short workweeks as well as in longer ones and ``deductions'' of this 
type are not made. Therefore, in cases where the understanding of the 
parties is not clearly shown as to whether a fixed salary is intended to 
cover a fixed or a variable workweek the practice of making 
``deductions'' from the salary for hours not worked in short weeks will 
be considered strong, if not conclusive, evidence that the salary covers 
a fixed workweek.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7314, Jan. 23, 1981]



Sec. 778.307  Disciplinary deductions.

    Where deductions as described in Sec. 778.304(a)(5) are made for 
disciplinary reasons, the regular rate of an employee is computed before 
deductions are made, as in the case of deductions of the types in 
paragraphs (a) (1), (2), and (3) of Sec. 778.304. Thus where 
disciplinary deductions are made from a piece-worker's earnings, the 
earnings at piece rates must be totaled and divided by the total hours 
worked to determine the regular rate before the deduction is applied. In 
no event may such deductions (or deductions of the type described in 
Sec. 778.304(a)(2)) reduce the earnings to an average below the 
applicable minimum wage or cut into any part of the overtime 
compensation due the employee. For a full discussion of the limits 
placed on such deductions, see part 531 of this chapter. The principles 
set forth therein with relation to deductions have no application, 
however, to situations involving refusal or failure to pay the full 
amount of wages due. See part 531 of this chapter; also Sec. 778.306. 
It should be noted that although an employer may penalize an employee 
for lateness subject to the limitations stated above by deducting a half 
hour's straight time pay from his wages, for example, for each half 
hour, or fraction thereof of his lateness, the employer must still count 
as hours worked all the time actually worked by the employee in 
determining the amount of overtime compensation due for the workweek.

[46 FR 7314, Jan. 23, 1981]

                     Lump Sum Attributed to Overtime



Sec. 778.308  The overtime rate is an hourly rate.

    (a) Section 7(a) of the Act requires the payment of overtime 
compensation for hours worked in excess of the applicable maximum hours 
standard at a rate not less than one and one-half times the regular 
rate. The overtime rate, like the regular rate, is a rate per hour. 
Where employees are paid on some basis other than an hourly rate, the 
regular hourly rate is derived, as previously explained, by dividing the 
total compensation (except statutory exclusions) by the total hours of 
work for which the payment is made. To qualify as an overtime premium 
under section 7(e)(5), (6), or (7), the extra compensation for overtime 
hours must be paid pursuant to a premium rate which is likewise a rate 
per hour (subject to certain statutory exceptions discussed in 
Sec. Sec. 778.400 through 778.421).
    (b) To qualify under section 7(e)(5), the overtime rate must be 
greater than the regular rate, either a fixed amount per hour or a 
multiple of the nonovertime rate, such as one and one-third, one and 
one-half or two times

[[Page 415]]

that rate. To qualify under section 7(e) (6) or (7), the overtime rate 
may not be less than one and one-half times the bonafide rate 
established in good faith for like work performed during nonovertime 
hours. Thus, it may not be less than time and one-half but it may be 
more. It may be a standard multiple greater than one and one-half (for 
example, double time); or it may be a fixed sum of money per hour which 
is, as an arithmetical fact, at least one and one-half times the 
nonovertime rate for example, if the nonovertime rate is $5 per hour, 
the overtime rate may not be less than $7.50 but may be set at a higher 
arbitrary figure such as $8 per hour.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7314, Jan. 23, 1981]



Sec. 778.309  Fixed sum for constant amount of overtime.

    Where an employee works a regular fixed number of hours in excess of 
the statutory maximum each workweek, it is, of course, proper to pay 
him, in addition to his compensation for nonovertime hours, a fixed sum 
in any such week for his overtime work, determined by multiplying his 
overtime rate by the number of overtime hours regularly worked.



Sec. 778.310  Fixed sum for varying amounts of overtime.

    A premium in the form of a lump sum which is paid for work performed 
during overtime hours without regard to the number of overtime hours 
worked does not qualify as an overtime premium even though the amount of 
money may be equal to or greater than the sum owed on a per hour basis. 
For example, an agreement that provides for the payment of a flat sum of 
$75 to employees who work on Sunday does not provide a premium which 
will qualify as an overtime premium, even though the employee's straight 
time rate is $5 an hour and the employee always works less than 10 hours 
on Sunday. Likewise, where an agreement provides for the payment for 
work on Sunday of either the flat sum of $75 or time and one-half the 
employee's regular rate for all hours worked on Sunday, whichever is 
greater, the $75 guaranteed payment is not an overtime premium. The 
reason for this is clear. If the rule were otherwise, an employer 
desiring to pay an employee a fixed salary regardless of the number of 
hours worked in excess of the applicable maximum hours standard could 
merely label as overtime pay a fixed portion of such salary sufficient 
to take care of compensation for the maximum number of hours that would 
be worked. The Congressional purpose to effectuate a maximum hours 
standard by placing a penalty upon the performance of excessive overtime 
work would thus be defeated. For this reason, where extra compensation 
is paid in the form of a lump sum for work performed in overtime hours, 
it must be included in the regular rate and may not be credited against 
statutory overtime compensation due.

[46 FR 7314, Jan. 23, 1981]



Sec. 778.311  Flat rate for special job performed in overtime hours.

    (a) Flat rate is not an overtime premium. The same reasoning applies 
where employees are paid a flat rate for a special job performed during 
overtime hours, without regard to the time actually consumed in 
performance. (This situation should be distinguished from ``show-up'' 
and ``call-back'' pay situations discussed in Sec. Sec. 778.220 through 
778.222 and from payment at a rate not less than one and one-half times 
the applicable rate to pieceworkers for work performed during overtime 
hours, as discussed in Sec. Sec. 778.415 through 778.421). The total 
amount paid must be included in the regular rate; no part of the amount 
may be credited toward statutory overtime compensation due.
    (b) Application of rule illustrated. It may be helpful to give a 
specific example illustrating the result of paying an employee on the 
basis under discussion.
    (1) An employment agreement calls for the payment of $5 per hour for 
work during the hours established in good faith as the basic workday or 
workweek; it provides for the payment of $7.50 per hour for work during 
hours outside the basic workday or workweek. It further provides that 
employees doing a special task outside the

[[Page 416]]

basic workday or workweek shall receive 6 hours' pay at the rate of 
$7.50 per hour (a total payment of $45) regardless of the time actually 
consumed in performance. The applicable maximum hours standard is 40 
hours in a workweek.
    (2) Suppose an employee under such an agreement works the following 
schedule:

------------------------------------------------------------------------
                                      M    T      W     T    F    S    S
------------------------------------------------------------------------
Hours within basic workday.........    8    8       7    8    8    0   0
Pay under contract.................  $40  $40     $35  $40  $40    0   0
Hours outside basic workday........    2    2       1    0    0    4   0
                                          \1\
Pay under contract.................  $15  $45   $7.50    0    0  $30   0
------------------------------------------------------------------------
\1\ Hours spent in the performance of special work.

    (3) To determine the regular rate, the total compensation (except 
statutory exclusions) must be divided by the total number of hours 
worked. The only sums to be excluded in this situation are the extra 
premiums provided by a premium rate (a rate per hour) for work outside 
the basic workday and workweek, which qualify for exclusion under 
section 7(e)(7) of the Act, as discussed in Sec. 778.204. The $15 paid 
on Monday, the $7.50 paid on Wednesday and the $30 paid on Saturday are 
paid pursuant to rates which qualify as premium rates under section 
7(e)(7) of the Act. The total extra compensation (over the straight time 
pay for these hours) provided by these premium rates is $17.50. The sum 
of $17.50 should be subtracted from the total of $292.50 due the 
employee under the employment agreement. No part of the $45 payment for 
the special work performed on Tuesday qualifies for exclusion. The 
remaining $275 must thus be divided by 48 hours to determine the regular 
rate--$5.73 per hour. The employee is owed an additional one-half this 
rate under the Act for each of 8 overtime hours worked--$22.92. The 
extra compensation in the amount of $17.50 payable pursuant to contract 
premium rates which qualify as overtime premiums may be credited toward 
the $22.92 owed as statutory overtime premiums. No part of the $45 
payment may be so credited. The employer must pay the employee an 
additional $5.42 as statutory overtime pay--a total of $297.92 for the 
week.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7315, Jan. 23, 1981]

                        ``Task'' Basis of Payment



Sec. 778.312  Pay for task without regard to actual hours.

    (a) Under some employment agreements employees are paid according to 
a job or task rate without regard to the number of hours consumed in 
completing the task. Such agreements take various forms but the two most 
usual forms are the following:
    (1) It is determined (sometimes on the basis of a time study) that 
an employee (or group) should complete a particular task in 8 hours. 
Upon the completion of the task the employee is credited with 8 
``hours'' of work though in fact he may have worked more or less than 8 
hours to complete the task. At the end of the week an employee entitled 
to statutory overtime compensation for work in excess of 40 hours is 
paid at an established hourly rate for the first 40 of the ``hours'' so 
credited and at one and one-half times such rate for the ``hours'' so 
credited in excess of 40. The number of ``hours'' credited to the 
employee bears no necessary relationship to the number of hours actually 
worked. It may be greater or less. ``Overtime'' may be payable in some 
cases after 20 hours of work; in others only after 50 hours or any other 
number of hours.
    (2) A similar task is set up and 8 hours' pay at the established 
rate is credited for the completion of the task in 8 hours or less. If 
the employee fails to complete the task in 8 hours he is paid at the 
established rate for each of the first 8 hours he actually worked. For 
work in excess of 8 hours or after the task is completed (whichever 
occurs first) he is paid one and one-half times the established rate for 
each such hour worked. He is owed overtime compensation under the Act 
for hours worked in the workweek in excess of 40 but is paid his weekly 
overtime compensation at the premium rate for the hours in excess of 40 
actual or ``task'' hours (or combination thereof) for which he received 
pay at the established rate. ``Overtime'' pay under this

[[Page 417]]

plan may be due after 20 hours of work, 25 or any other number up to 40.
    (b) These employees are in actual fact compensated on a daily rate 
of pay basis. In plans of the first type, the established hourly rate 
never controls the compensation which any employee actually receives. 
Therefore, the established rate cannot be his regular rate. In plans of 
the second type the rate is operative only for the slower employees who 
exceed the time allotted to complete the task; for them it operates in a 
manner similar to a minimum hourly guarantee for piece workers, as 
discussed in Sec. 778.111. On such days as it is operative it is a 
genuine rate; at other times it is not.
    (c) Since the premium rates (at one and one-half times the 
established hourly rate) are payable under both plans for hours worked 
within the basic or normal workday (if one is established) and without 
regard to whether the hours are or are not in excess of 8 per day or 40 
per week, they cannot qualify as overtime premiums under section 7(e) 
(5), (6), or (7) of the Act. They must therefore be included in the 
regular rate and no part of them may be credited against statutory 
overtime compensation due. Under plans of the second type, however, 
where the pay of an employee on a given day is actually controlled by 
the established hourly rate (because he fails to complete the task in 
the 8-hour period) and he is paid at one and one-half times the 
established rate for hours in excess of 8 hours actually worked, the 
premium rate paid on that day will qualify as an overtime premium under 
section 7(e)(5).



Sec. 778.313  Computing overtime pay under the Act for employees 
compensated on task basis.

    (a) An example of the operation of a plan of the second type 
discussed in Sec. 778.312 may serve to illustrate the effects on 
statutory overtime computations of payment on a task basis. Assume the 
following facts: The employment agreement establishes a basic hourly 
rate of $5 per hour, provides for the payment of $7.50 per hour for 
overtime work (in excess of the basic workday or workweek) and defines 
the basic workday as 8 hours, and the basic workweek as 40 hours, Monday 
through Friday. It further provides that the assembling of a machine 
constitutes a day's work. An employee who completes the assembling job 
in less than 8 hours will be paid 8 hours' pay at the established rate 
of $5 per hour and will receive pay at the ``overtime'' rate for hours 
worked after the completion of the task. An employee works the following 
hours in a particular week:

----------------------------------------------------------------------------------------------------------------
                                                             M       T       W       T       F       S       S
----------------------------------------------------------------------------------------------------------------
Hours spent on task.....................................       6       7       7       9  8\1/2\       6       0
Day's pay under contract................................     $40     $40     $40     $40     $40     $60       0
Additional hours........................................       2       0       2       0   \1/2\       0       0
Additional pay under contract...........................     $15       0     $15   $7.50   $7.50       0       0
----------------------------------------------------------------------------------------------------------------

    (b) In the example in paragraph (a) of this section the employee has 
actually worked a total of 48 hours and is owed under the contract a 
total of $305 for the week. The only sums which can be excluded as 
overtime premiums from this total before the regular rate is determined 
are the extra $2.50 payments for the extra hour on Thursday and Friday 
made because of work actually in excess of 8 hours. The payment of the 
other premium rates under the contract is either without regard to 
whether or not the hours they compensated were in excess of a bona fide 
daily or weekly standard or without regard to the number of overtime 
hours worked. Thus only the sum of $5 is excluded from the total. The 
remaining $300 is divided by 48 hours to determine the regular rate--
$6.25 per hour. One-half this rate is due under the Act as extra 
compensation for each of the 8 overtime hours--$25. The $5 payment under 
the contract for actual excess hours may be credited and the balance--
$20--is owed in addition to the $305 due under the contract.

[46 FR 7315, Jan. 23, 1981]

[[Page 418]]



Sec. 778.314  Special situations.

    There may be special situations in which the facts demonstrate that 
the hours for which contract overtime compensation is paid to employees 
working on a ``task'' or ``stint'' basis actually qualify as overtime 
hours under section 7(e)(5), (6), or (7). Where this is true, payment of 
one and one-half times an agreed hourly rate for ``task'' or ``stint'' 
work may be equivalent to payment pursuant to agreement of one and one-
half time a piece rate. The alternative methods of overtime pay 
computation permitted by section 7(g)(1) or (2), as explained in 
Sec. Sec. 778.415 through 778.421 may be applicable in such a case.

       Effect of Failure To Count or Pay for Certain Working Hours



Sec. 778.315  Payment for all hours worked in overtime workweek 
is required.

    In determining the number of hours for which overtime compensation 
is due, all hours worked (see Sec. 778.223) by an employee for an 
employer in a particular workweek must be counted. Overtime 
compensation, at a rate not less than one and one-half times the regular 
rate of pay, must be paid for each hour worked in the workweek in excess 
of the applicable maximum hours standard. This extra compensation for 
the excess hours of overtime work under the Act cannot be said to have 
been paid to an employee unless all the straight time compensation due 
him for the nonovertime hours under his contract (express or implied) or 
under any applicable statute has been paid.



Sec. 778.316  Agreements or practices in conflict with statutory 
requirements are ineffective.

    While it is permissible for an employer and an employee to agree 
upon different base rates of pay for different types of work, it is 
settled under the Act that where a rate has been agreed upon as 
applicable to a particular type of work the parties cannot lawfully 
agree that the rate for that work shall be lower merely because the work 
is performed during the statutory overtime hours, or during a week in 
which statutory overtime is worked. Since a lower rate cannot lawfully 
be set for overtime hours it is obvious that the parties cannot lawfully 
agree that the working time will not be paid for at all. An agreement 
that only the first 8 hours of work on any days or only the hours worked 
between certain fixed hours of the day or only the first 40 hours of any 
week will be counted as working time will clearly fail of its evasive 
purpose. An announcement by the employer that no overtime work will be 
permitted, or that overtime work will not be compensated unless 
authorized in advance, will not impair the employee's right to 
compensation for work which he is actually suffered or permitted to 
perform.



Sec. 778.317  Agreements not to pay for certain nonovertime hours.

    An agreement not to compensate employees for certain nonovertime 
hours stands on no better footing since it would have the same effect of 
diminishing the employee's total overtime compensation. An agreement, 
for example, to pay an employee whose maximum hours standard for the 
particular workweek is 40 hours, $5 an hour for the first 35 hours, 
nothing for the hours between 35 and 40 and $7.50 an hour for the hours 
in excess of 40 would not meet the overtime requirements of the Act. 
Under the principles set forth in Sec. 778.315, the employee would have 
to be paid $25 for the 5 hours worked between 35 and 40 before any sums 
ostensibly paid for overtime could be credited toward overtime 
compensation due under the Act. Unless the employee is first paid $5 for 
each nonovertime hour worked, the $7.50 per hour payment purportedly for 
overtime hours is not in fact an overtime payment.

[46 FR 7315, Jan. 23, 1981]



Sec. 778.318  Productive and nonproductive hours of work.

    (a) Failure to pay for nonproductive time worked. Some agreements 
provide for payment only for the hours spent in productive work; the 
work hours spent in waiting time, time spent in travel on the employer's 
behalf or similar nonproductive time are not made compensable and in 
some cases are neither counted nor compensated. Payment

[[Page 419]]

pursuant to such an agreement will not comply with the Act; such 
nonproductive working hours must be counted and paid for.
    (b) Compensation payable for nonproductive hours worked. The parties 
may agree to compensate nonproductive hours worked at a rate (at least 
the minimum) which is lower than the rate applicable to productive work. 
In such a case, the regular rate is the weighted average of the two 
rates, as discussed in Sec. 778.115 and the employee whose maximum 
hours standard is 40 hours is owed compensation at his regular rate for 
all of the first 40 hours and at a rate not less than one and one-half 
times this rate for all hours in excess of 40. (See Sec. 778.415 for 
the alternative method of computing overtime pay on the applicable 
rate.) In the absence of any agreement setting a different rate for 
nonproductive hours, the employee would be owed compensation at the 
regular hourly rate set for productive work for all hours up to 40 and 
at a rate at least one and one-half times that rate for hours in excess 
of 40.
    (c) Compensation attributable to both productive and nonproductive 
hours. The situation described in paragraph (a) of this section is to be 
distinguished from one in which such nonproductive hours are properly 
counted as working time but no special hourly rate is assigned to such 
hours because it is understood by the parties that the other 
compensation received by the employee is intended to cover pay for such 
hours. For example, while it is not proper for an employer to agree with 
his pieceworkers that the hours spent in down-time (waiting for work) 
will not be paid for or will be neither paid for nor counted, it is 
permissible for the parties to agree that the pay the employees will 
earn at piece rates is intended to compensate them for all hours worked, 
the productive as well as the nonproductive hours. If this is the 
agreement of the parties, the regular rate of the pieceworker will be 
the rate determined by dividing the total piecework earnings by the 
total hours worked (both productive and nonproductive) in the workweek. 
Extra compensation (one-half the rate as so determined) would, of 
course, be due for each hour worked in excess of the applicable maximum 
hours standard.

           Effect of Paying for But Not Counting Certain Hours



Sec. 778.319  Paying for but not counting hours worked.

    In some contracts provision is made for payment for certain hours, 
which constitute working time under the Act, coupled with a provision 
that these hours will not be counted as working time. Such a provision 
is a nullity. If the hours in question are hours worked, they must be 
counted as such in determining whether more than the applicable maximum 
hours have been worked in the workweek. If more hours have been worked, 
the employee must be paid overtime compensation at not less than one and 
one-half times his regular rate for all overtime hours. A provision that 
certain hours will be compensated only at straight time rates is 
likewise invalid. If the hours are actually hours worked in excess of 
the applicable maximum hours standard, extra half-time compensation will 
be due regardless of any agreement to the contrary.



Sec. 778.320  Hours that would not be hours worked if not paid for.

    In some cases an agreement provides for compensation for hours spent 
in certain types of activities which would not be regarded as working 
time under the Act if no compensation were provided. Preliminary and 
postliminary activities and time spent in eating meals between working 
hours fall in this category. The agreement of the parties to provide 
compensation for such hours may or may not convert them into hours 
worked, depending on whether or not it appears from all the pertinent 
facts that the parties have agreed to treat such time as hours worked. 
Except for certain activity governed by the Portal-to-Portal Act (see 
paragraph (b) of this section), the agreement of the parties will be 
respected, if reasonable.
    (a) Parties have agreed to treat time as hours worked. Where the 
parties have reasonably agreed to include as hours worked time devoted 
to activities of the type described above, payments for

[[Page 420]]

such hours will not have the mathematical effect of increasing or 
decreasing the regular rate of an employee if the hours are compensated 
at the same rate as other working hours. The requirements of section 
7(a) of the Act will be considered to be met where overtime compensation 
at one and one-half times such rate is paid for the hours so compensated 
in the workweek which are in excess of the statutory maximum.
    (b) Parties have agreed not to treat time as hours worked. Under the 
principles set forth in Sec. 778.319, where the payments are made for 
time spent in an activity which, if compensable under contract, custom, 
or practice, is required to be counted as hours worked under the Act by 
virtue of Section 4 of the Portal-to-Portal Act of 1947 (see parts 785 
and 790 of this chapter), no agreement by the parties to exclude such 
compensable time from hours worked would be valid. On the other hand, in 
the case of time spent in activity which would not be hours worked under 
the Act if not compensated and would not become hours worked under the 
Portal-to-Portal Act even if made compensable by contract, custom, or 
practice, the parties may reasonably agree that the time will not be 
counted as hours worked. Activities of this type include eating meals 
between working hours. Where it appears from all the pertinent facts 
that the parties have agreed to exclude such activities from hours 
worked, payments for such time will be regarded as qualifying for 
exclusion from the regular rate under the provisions of section 7(e)(2), 
as explained in Sec. Sec. 778.216 to 778.224. The payments for such 
hours cannot, of course, qualify as overtime premiums creditable toward 
overtime compensation under section 7(h) of the Act.

[46 FR 7315, Jan. 23, 1981]

          Reduction in Workweek Schedule With No Change in Pay



Sec. 778.321  Decrease in hours without decreasing pay--general.

    Since the regular rate of pay is the average hourly rate at which an 
employee is actually employed, and since this rate is determined by 
dividing his total remuneration for employment (except statutory 
exclusions) for a given workweek by the total hours worked in that 
workweek for which such remuneration was paid, it necessarily follows 
that if the schedule of hours is reduced while the pay remains the same, 
the regular rate has been increased.



Sec. 778.322  Reducing the fixed workweek for which a salary is paid.

    If an employee whose maximum hours standard is 40 hours was hired at 
a salary of $200 for a fixed workweek of 40 hours, his regular rate at 
the time of hiring was $5 per hour. If his workweek is later reduced to 
a fixed workweek of 35 hours while his salary remains the same, it is 
the fact that it now takes him only 35 hours to earn $200, so that he 
earns his salary at the average rate of $5.71 per hour. His regular rate 
thus becomes $5.71 per hour; it is no longer $5 an hour. Overtime pay is 
due under the Act only for hours worked in excess of 40, not 35, but if 
the understanding of the parties is that the salary of $200 now covers 
35 hours of work and no more, the employee would be owed $5.71 per hour 
under his employment contract for each hour worked between 35 and 40. He 
would be owed not less than one and one-half times $5.71 ($8.57) per 
hour, under the statute, for each hour worked in excess of 40 in the 
workweek. In weeks in which no overtime is worked only the provisions of 
section 6 of the Act, requiring the payment of not less than the 
applicable minimum wage for each hour worked, apply so that the 
employee's right to receive $5.71 per hour is enforceable only under his 
contract. However, in overtime weeks the Administrator has the duty to 
insure the payment of at least one and one-half times the employee's 
regular rate of pay for hours worked in excess of 40 and this overtime 
compensation cannot be said to have been paid until all straight time 
compensation due the employee under the statute or his employment 
contract has been paid. Thus if the employee works 41 hours in a 
particular week, he is owed his salary for 35 hours--$200, 5 hours' pay 
at $5.71 per hour for the 5 hours between 35 and 40--$28.55, and 1 
hour's pay at $8.57 for the 1 hour in excess of

[[Page 421]]

40--$8.57, or a total of $237.12 for the week.

[46 FR 7316, Jan. 23, 1981]



Sec. 778.323  Effect if salary is for variable workweek.

    The discussion in the prior section sets forth one result of 
reducing the workweek from 40 to 35 hours. It is not either the 
necessary result or the only possible result. As in all cases of 
employees hired on a salary basis, the regular rate depends in part on 
the agreement of the parties as to what the salary is intended to 
compensate. In reducing the customary workweek schedule to 35 hours the 
parties may agree to change the basis of the employment arrangement by 
providing that the salary which formerly covered a fixed workweek of 40 
hours now covers a variable workweek up to 40 hours. If this is the new 
agreement, the employee receives $200 for workweeks of varying lengths, 
such as 35, 36, 38, or 40 hours. His rate thus varies from week to week, 
but in weeks of 40 hours or over, it is $5 per hour (since the agreement 
of the parties is that the salary covers up to 40 hours and no more) and 
his overtime rate, for hours in excess of 40, thus remains $7.50 per 
hour. Such a salary arrangement presumably contemplates that the salary 
will be paid in full for any workweek of 40 hours or less. The employee 
would thus be entitled to his full salary if he worked only 25 or 30 
hours. No deductions for hours not worked in short workweeks would be 
made. (For a discussion of the effect of deductions on the regular rate, 
see Sec. Sec. 778.304 to 778.307.)

[46 FR 7316, Jan. 23, 1981; 46 FR 33516, June 30, 1981]



Sec. 778.324  Effect on hourly rate employees.

    A similar situation is presented where employees have been hired at 
an hourly rate of pay and have customarily worked a fixed workweek. If 
the workweek is reduced from 40 to 35 hours without reduction in total 
pay, the average hourly rate is thereby increased as in Sec. 778.322. 
If the reduction in work schedule is accompanied by a new agreement 
altering the mode of compensation from an hourly rate basis to a fixed 
salary for a variable workweek up to 40 hours, the results described in 
Sec. 778.323 follow.



Sec. 778.325  Effect on salary covering more than 40 hours' pay.

    The same reasoning applies to salary covering straight time pay for 
a longer workweek. If an employee whose maximum hours standard is 40 
hours was hired at a fixed salary of $275 for 55 hours of work, he was 
entitled to a statutory overtime premium for the 15 hours in excess of 
40 at the rate of $2.50 per hour (half-time) in addition to his salary, 
and to statutory overtime pay of $7.50 per hour (time and one-half) for 
any hours worked in excess of 55. If the scheduled workweek is later 
reduced to 50 hours, with the understanding between the parties that the 
salary will be paid as the employee's nonovertime compensation for each 
workweek of 55 hours or less, his regular rate in any overtime week of 
55 hours or less is determined by dividing the salary by the number of 
hours worked to earn it in that particular week, and additional half-
time, based on that rate, is due for each hour in excess of 40. In weeks 
of 55 hours or more, his regular rate remains $5 per hour and he is due, 
in addition to his salary, extra compensation of $2.50 for each hour 
over 40 but not over 55 and full time and one-half, or $7.50, for each 
hour worked in excess of 55. If, however, the understanding of the 
parties is that the salary now covers a fixed workweek of 50 hours, his 
regular rate is $5.50 per hour in all weeks. This assumes that when an 
employee works less than 50 hours in a particular week, deductions are 
made at a rate of $5.50 per hour for the hours not worked.

[46 FR 7316, Jan. 23, 1981]



Sec. 778.326  Reduction of regular overtime workweek without reduction
of take-home pay.

    The reasoning applied in the foregoing sections does not, of course, 
apply to a situation in which the former earnings at both straight time 
and overtime are paid to the employee for the reduced workweek. Suppose 
an employee was hired at an hourly rate of $5 an hour and regularly 
worked 50 hours, earning $275 as his total straight time and overtime 
compensation, and

[[Page 422]]

the parties now agree to reduce the workweek to 45 hours without any 
reduction in take-home pay. The parties in such a situation may agree to 
an increase in the hourly rate from $5 per hour to $6 so that for a 
workweek of 45 hours (the reduced schedule) the employee's straight time 
and overtime earnings will be $285. The parties cannot, however, agree 
that the employee is to receive exactly $285 as total compensation 
(including overtime pay) for a workweek varying, for example, up to 50 
hours, unless he does so pursuant to contracts specifically permitted in 
section 7(f) of the Act, as discussed in Sec. Sec. 778.402 through 
778.414. An employer cannot otherwise discharge his statutory obligation 
to pay overtime compensation to an employee who does not work the same 
fixed hours each week by paying a fixed amount purporting to cover both 
straight time and overtime compensation for an ``agreed'' number of 
hours. To permit such a practice without proper statutory safeguards 
would result in sanctioning the circumvention of the provisions of the 
Act which require that an employee who works more than 40 hours in any 
workweek be compensated, in accordance with express congressional 
intent, at a rate not less than one and one-half times his regular rate 
of pay for the burden of working long hours. In arrangements of this 
type, no additional financial pressure would fall upon the employer and 
no additional compensation would be due to the employee under such a 
plan until the workweek exceeded 50 hours.

[46 FR 7316, Jan. 23, 1981]



Sec. 778.327  Temporary or sporadic reduction in schedule.

    (a) The problem of reduction in the workweek is somewhat different 
where a temporary reduction is involved. Reductions for the period of a 
dead or slow season follow the rules announced above. However, reduction 
on a more temporary or sporadic basis presents a different problem. It 
is obvious that as a matter of simple arithmetic an employer might adopt 
a series of different rates for the same work, varying inversely with 
the number of overtime hours worked in such a way that the employee 
would earn no more than his straight time rate no matter how many hours 
he worked. If he set the rate at $6 per hour for all workweeks in which 
the employee worked 40 hours or less, approximately $5.93 per hour for 
workweeks of 41 hours, approximately $5.86 for workweeks of 42 hours, 
approximately $5.45 for workweeks of 50 hours, and so on, the employee 
would always receive (for straight time and overtime at these ``rates'') 
$6 an hour regardless of the number of overtime hours worked. This is an 
obvious bookkeeping device designed to avoid the payment of overtime 
compensation and is not in accord with the law. See Walling v. Green 
Head Bit & Supply Co., 138 F. 2d 453. The regular rate of pay of this 
employee for overtime purposes is, obviously, the rate he earns in the 
normal nonovertime week--in this case, $6 per hour.
    (b) The situation is different in degree but not in principle where 
employees who have been at a bona fide $6 rate usually working 50 hours 
and taking home $330 as total straight time and overtime pay for the 
week are, during occasional weeks, cut back to 42 hours. If the employer 
raises their rate to $7.65 for such weeks so that their total 
compensation is $328.95 for a 42-hour week the question may properly be 
asked, when they return to the 50-hour week, whether the $6 rate is 
really their regular rate. Are they putting in 8 additional hours of 
work for that extra $1.05 or is their ``regular'' rate really now $7.65 
an hour since this is what they earn in the short workweek? It seems 
clear that where different rates are paid from week to week for the same 
work and where the difference is justified by no factor other than the 
number of hours worked by the individual employee--the longer he works 
the lower the rate--the device is evasive and the rate actually paid in 
the shorter or nonovertime week is his regular rate for overtime 
purposes in all weeks.

[46 FR 7317, Jan. 23, 1981; 46 FR 33516, June 30, 1981]



Sec. 778.328  Plan for gradual permanent reduction in schedule.

    In some cases, pursuant to a definite plan for the permanent 
reduction of the normal scheduled workweek from

[[Page 423]]

say, 48 hours to 40 hours, an agreement is entered into with a view to 
lessening the shock caused by the expected reduction in take-home wages. 
The agreement may provide for a rising scale of rates as the workweek is 
gradually reduced. The varying rates established by such agreement will 
be recognized as bona fide in the weeks in which they are respectively 
operative provided that (a) the plan is bona fide and there is no effort 
made to evade the overtime requirements of the Act; (b) there is a clear 
downward trend in the duration of the workweek throughout the period of 
the plan even though fluctuations from week-to-week may not be 
constantly downward; and (c) the various rates are operative for 
substantial periods under the plan and do not vary from week-to-week in 
accordance with the number of hours which any particular employee or 
group happens to work.



Sec. 778.329  Alternating workweeks of different fixed lengths.

    In some cases an employee is hired on a salary basis with the 
understanding that his weekly salary is intended to cover the fixed 
schedule of hours (and no more) and that this fixed schedule provides 
for alternating workweeks of different fixed lengths. For example, many 
offices operate with half staff on Saturdays and, in consequence, 
employees are hired at a fixed salary covering a fixed working schedule 
of 7 hours a day Monday through Friday and 5 hours on alternate 
Saturdays. The parties agree that extra compensation is to be paid for 
all hours worked in excess of the schedule in either week at the base 
rate for hours between 35 and 40 in the short week and at time and one-
half such rate for hours in excess of 40 in all weeks. Such an 
arrangement results in the employee's working at two different rates of 
pay--one thirty-fifth of the salary in short workweeks and one-fourtieth 
of the salary in the longer weeks. If the provisions of such a contract 
are followed, if the nonovertime hours are compensated in full at the 
applicable regular rate in each week and overtime compensation is 
properly computed for hours in excess of 40 at time and one-half the 
rate applicable in the particular workweek, the overtime requirements of 
the Fair Labor Standards Act will be met. While this situation bears 
some resemblance to the one discussed in Sec. 778.327 there is this 
significant difference; the arrangement is permanent, the length of the 
respective workweeks and the rates for such weeks are fixed on a 
permanent-schedule basis far in advance and are therefore not subject to 
the control of the employer and do not vary with the fluctuations in 
business. In an arrangement of this kind, if the employer required the 
employee to work on Saturday in a week in which he was scheduled for 
work only on the Monday through Friday schedule, he would be paid at his 
regular rate for all the Saturday hours in addition to his salary.

                            Prizes as Bonuses



Sec. 778.330  Prizes or contest awards generally.

    All compensation (except statutory exclusions) paid by or on behalf 
of an employer to an employee as remuneration for employment must be 
included in the regular rate, whether paid in the form of cash or 
otherwise. Prizes are therefore included in the regular rate if they are 
paid to an employee as remuneration for employment. If therefore it is 
asserted that a particular prize is not to be included in the regular 
rate, it must be shown either that the prize was not paid to the 
employee for employment, or that it is not a thing of value which is 
part of wages.



Sec. 778.331  Awards for performance on the job.

    Where a prize is awarded for the quality, quantity or efficiency of 
work done by the employee during his customary working hours at his 
normal assigned tasks (whether on the employer's premises or elsewhere) 
it is obviously paid as additional remuneration for employment. Thus 
prizes paid for cooperation, courtesy, efficiency, highest production, 
best attendance, best quality of work, greatest number of overtime hours 
worked, etc., are part of the regular rate of pay. If the prize is paid 
in cash, the amount paid must be allocated (for the method of allocation 
see Sec. 778.209) over the period during which

[[Page 424]]

it was earned to determine the resultant increase in the average hourly 
rate for each week of the period. If the prize is merchandise, the cost 
to the employer is the sum which must be allocated. Where the prize is 
either cash or merchandise, with the choice left the employee, the 
amount to be allocated is the amount (or the cost) of the actual prize 
he accepts.



Sec. 778.332  Awards for activities not normally part of employee's job.

    (a) Where the prize is awarded for activities outside the customary 
working hours of the employee, beyond the scope of his customary duties 
or away from the employer's premises, the question of whether the 
compensation is remuneration for employment will depend on such factors 
as the amount of time, if any, spent by the employee in competing, the 
relationship between the contest activities and the usual work of the 
employee, whether the competition involves work usually performed by 
other employees for employers, whether an employee is specifically urged 
to participate or led to believe that he will not merit promotion or 
advancement unless he participates.
    (b) By way of example, a prize paid for work performed in obtaining 
new business for an employer would be regarded as remuneration for 
employment. Although the duties of the employees who participate in the 
contest may not normally encompass this type of work, it is work of a 
kind normally performed by salesmen for their employers, and the time 
spent by the employee in competing for such a prize (whether 
successfully or not) is working time and must be counted as such in 
determining overtime compensation due under the Act. On the other hand a 
prize or bonus paid to an employee when a sale is made by the company's 
sales representative to a person whom he recommended as a good sales 
prospect would not be regarded as compensation for services if in fact 
the prize-winner performed no work in securing the name of the sales 
prospect and spent no time on the matter for the company in any way.



Sec. 778.333  Suggestion system awards.

    The question has been raised whether awards made to employees for 
suggestions submitted under a suggestion system plan are to be regarded 
as part of the regular rate. There is no hard and fast rule on this 
point as the term ``suggestion system'' has been used to describe a 
variety of widely differing plans. It may be generally stated, however, 
that prizes paid pursuant to a bona fide suggestion system plan may be 
excluded from the regular rate at least in situations where it is the 
fact that:
    (a) The amount of the prize has no relation to the earnings of the 
employee at his job but is rather geared to the value to the company of 
the suggestion which is submitted; and
    (b) The prize represents a bona fide award for a suggestion which is 
the result of additional effort or ingenuity unrelated to and outside 
the scope of the usual and customary duties of any employee of the class 
eligible to participate and the prize is not used as a substitute for 
wages; and
    (c) No employee is required or specifically urged to participate in 
the suggestion system plan or led to believe that he will not merit 
promotion or advancement (or retention of his existing job) unless he 
submits suggestions; and
    (d) The invitation to employees to submit suggestions is general in 
nature and no specific assignment is outlined to employees (either as 
individuals or as a group) to work on or develop; and
    (e) There is no time limit during which suggestions must be 
submitted; and
    (f) The employer has, prior to the submission of the suggestion by 
an employee, no notice or knowledge of the fact that an employee is 
working on the preparation of a suggestion under circumstances 
indicating that the company approved the task and the schedule of work 
undertaken by the employee.

[[Page 425]]



          Subpart E_Exceptions From the Regular Rate Principles

            Computing Overtime Pay on an ``Established'' Rate



Sec. 778.400  The provisions of section 7(g)(3) of the Act.

    Section 7(g)(3) of the Act provides the following exception from the 
provisions of section 7(a):

    (g) No employer shall be deemed to have violated subsection (a) by 
employing any employee for a workweek in excess of the maximum workweek 
applicable to such employee under such subsection if, pursuant to an 
agreement or understanding arrived at between the employer and the 
employee before performance of the work, the amount paid to the employee 
for the number of hours worked by him in such workweek in excess of the 
maximum workweek applicable to such employee under such subsection:

                                * * * * *

    (3) is computed at a rate not less than one and one-half times the 
rate established by such agreement or understanding as the basic rate to 
be used in computing overtime compensation thereunder: Provided, That 
the rate so established shall be authorized by regulation by the 
Secretary of Labor as being substantially equivalent to the average 
hourly earnings of the employee, exclusive of overtime premiums, in the 
particular work over a representative period of time; and if (1) the 
employee's average hourly earnings for the workweek exclusive of 
payments described in paragraphs (1) through (7) of subsection (e) are 
not less than the minimum hourly rate required by applicable law, and 
(ii) extra overtime compensation is properly computed and paid on other 
forms of additional pay required to be included in computing the regular 
rate.



Sec. 778.401  Regulations issued under section 7(g)(3).

    Regulations issued pursuant to section 7(g) (3) of the Act are 
published as Part 548 of this chapter. Payments made in conformance with 
these regulations satisfy the overtime pay requirements of the Act.

           Guaranteed Compensation Which Includes Overtime Pay



Sec. 778.402  The statutory exception provided by section 7(f) of the Act.

    Section 7(f) of the Act provides the following exception from the 
provisions of section 7(a):

    (f) No employer shall be deemed to have violated subsection (a) by 
employing any employee for a workweek in excess of the maximum workweek 
applicable to such employee under subsection (a) if such employee is 
employed pursuant to a bona fide individual contract, or pursuant to an 
agreement made as a result of collective bargaining by representatives 
of employees, if the duties of such employee necessitate irregular hours 
of work, and the contract or agreement (1) specifies a regular rate of 
pay of not less than the minimum hourly rate provided in subsection (a) 
or (b) of section 6 (whichever may be applicable) and compensation at 
not less than one and one-half times such rate for all hours worked in 
excess of such maximum workweek, and (2) provides a weekly guaranty of 
pay for not more than 60 hours based on the rates so specified.



Sec. 778.403  Constant pay for varying workweeks including overtime is 
not permitted except as specified in section 7(f).

    Section 7(f) is the only provision of the Act which allows an 
employer to pay the same total compensation each week to an employee who 
works overtime and whose hours of work vary from week to week. (See in 
this connection the discussion in Sec. Sec. 778.207, 778.321-778.329, 
and 778.308-778.315.) Unless the pay arrangements in a particular 
situation meet the requirements of section 7(f) as set forth, all the 
compensation received by the employee under a guaranteed pay plan is 
included in his regular rate and no part of such guaranteed pay may be 
credited toward overtime compensation due under the Act. Section 7(f) is 
an exemption from the overtime provisions of the Act. No employer will 
be exempt from the duty of computing overtime compensation for an 
employee under section 7(a) unless the employee is paid pursuant to a 
plan which actually meets all the requirements of the exemption. These 
requirements will be discussed separately in the ensuing sections.

[[Page 426]]



Sec. 778.404  Purposes of exemption.

    The exception to the requirements of section 7(a) provided by 
section 7(f) of the Act is designed to provide a means whereby the 
employer of an employee whose duties necessitate irregular hours of work 
and whose total wages if computed solely on an hourly rate basis would 
of necessity vary widely from week to week, may guarantee the payment, 
week-in, week-out, of at least a fixed amount based on his regular 
hourly rate. Section 7(f) was proposed and enacted in 1949 with the 
stated purpose of giving express statutory validity, subject to 
prescribed limitations, to a judicial ``gloss on the Act'' by which an 
exception to the usual rule as to the actual regular rate had been 
recognized by a closely divided Supreme Court as permissible with 
respect to employment in such situations under so-called ``Belo'' 
contracts. See McComb v. Utica Knitting Co., 164 F. 2d 670, rehearing 
denied 164 F. 2d 678 (C.A. 2); Walling v. A. H. Belo Co., 316 U.S. 624; 
Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17; 95 Cong. 
Rec. 11893, 12365, 14938, A2396, A5233, A5476. Such a contract affords 
to the employee the security of a regular weekly income and benefits the 
employer by enabling him to anticipate and control in advance at least 
some part of his labor costs. A guaranteed wage plan also provides a 
means of limiting overtime computation costs so that wide leeway is 
provided for working employees overtime without increasing the cost to 
the employer, which he would otherwise incur under the Act for working 
employees in excess of the statutory maximum hours standard. Recognizing 
both the inherent advantages and disadvantages of guaranteed wage plans, 
when viewed in this light, Congress sought to strike a balance between 
them which would, on the one hand, provide a feasible method of 
guaranteeing pay to employees who needed this protection without, on the 
other hand, nullifying the overtime requirements of the Act. The 
provisions of section 7(f) set forth the conditions under which, in the 
view of Congress, this may be done. Plans which do not meet these 
conditions were not thought to provide sufficient advantage to the 
employee to justify Congress in relieving employers of the overtime 
liability section 7(a).



Sec. 778.405  What types of employees are affected.

    The type of employment agreement permitted under section 7(f) can be 
made only with (or by his representatives on behalf of) an employee 
whose ``duties * * * necessitate irregular hours of work.'' It is clear 
that no contract made with an employee who works a regularly scheduled 
workweek or whose schedule involves alternating fixed workweeks will 
qualify under this subsection. Even if an employee does in fact work a 
variable workweek, the question must still be asked whether his duties 
necessitate irregular hours of work. The subsection is not designed to 
apply in a situation where the hours of work vary from week to week at 
the discretion of the employer or the employee, nor to a situation where 
the employee works an irregular number of hours according to a 
predetermined schedule. The nature of the employee's duties must be such 
that neither he nor his employer can either control or anticipate with 
any degree of certainty the number of hours he must work from week to 
week. Furthermore, for the reasons set forth in Sec. 778.406, his 
duties must necessitate significant variations in weekly hours of work 
both below and above the statutory weekly limit on nonovertime hours. 
Some examples of the types of employees whose duties may necessitate 
irregular hours of work would be outside buyers, on-call servicemen, 
insurance adjusters, newspaper reporters and photographers, propmen, 
script girls and others engaged in similar work in the motion picture 
industry, firefighters, troubleshooters and the like. There are some 
employees in these groups whose hours of work are conditioned by factors 
beyond the control of their employer or themselves. However, the mere 
fact that an employee is engaged in one of the jobs just listed, for 
example, does not mean that his duties necessitate irregular hours. It 
is always a question of fact whether the particular employee's duties do 
or do not necessitate irregular hours. Many employees not listed here 
may qualify. Although office employees would not ordinarily

[[Page 427]]

qualify, some office employees whose duties compel them to work variable 
hours could also be in this category. For example, the confidential 
secretary of a top executive whose hours of work are irregular and 
unpredictable might also be compelled by the nature of her duties to 
work variable and unpredictable hours. This would not ordinarily be true 
of a stenographer or file clerk, nor would an employee who only rarely 
or in emergencies is called upon to work outside a regular schedule 
qualify for this exemption.



Sec. 778.406  Nonovertime hours as well as overtime hours must be 
irregular if section 7(f) is to apply.

    Any employment in which the employee's hours fluctuate only in the 
overtime range above the maximum workweek prescribed by the statute 
lacks the irregularity of hours for which the Supreme Court found the 
so-called ``Belo'' contracts appropriate and so fails to meet the 
requirements of section 7(f) which were designed to validate, subject to 
express statutory limitations, contracts of a like kind in situations of 
the type considered by the Court (see Sec. 778.404). Nothing in the 
legislative history of section 7(f) suggests any intent to suspend the 
normal application of the general overtime provisions of section 7(a) in 
situations where the weekly hours of an employee fluctuate only when 
overtime work in excess of the prescribed maximum weekly hours is 
performed. Section 7(a) was specifically designed to deal with such a 
situation by making such regular resort to overtime more costly to the 
employer and thus providing an inducement to spread the work rather than 
to impose additional overtime work on employees regularly employed for a 
workweek of the maximum statutory length. The ``security of a regular 
weekly income'' which the Supreme Court viewed as an important feature 
of the ``Belo'' wage plan militating against a holding that the 
contracts were invalid under the Act is, of course, already provided to 
employees who regularly work at least the maximum number of hours 
permitted without overtime pay under section 7(a). Their situation is 
not comparable in this respect to employees whose duties cause their 
weekly hours to fluctuate in such a way that some workweeks are short 
and others long and they cannot, without some guarantee, know in advance 
whether in a particular workweek they will be entitled to pay for the 
regular number of hours of nonovertime work contemplated by section 
7(a). It is such employees whose duties necessitate ``irregular hours'' 
within the meaning of section 7(f) and whose ``security of a regular 
weekly income'' can be assured by a guarantee under that section which 
will serve to increase their hourly earnings in short workweeks under 
the statutory maximum hours. It is this benefit to the employee that the 
Supreme Court viewed, in effect, as a quid pro quo which could serve to 
balance a relaxation of the statutory requirement, applicable in other 
cases, that any overtime work should cost the employer 50 percent more 
per hour. In the enactment of section 7(f), as in the enactment of 
section 7(b) (1) and (2), the benefits that might inure to employees 
from a balancing of long workweeks against short workweeks under 
prescribed safeguards would seem to be the reason most likely to have 
influenced the legislators to provide express exemptions from the strict 
application of section 7(a). Consequently, where the fluctuations in an 
employee's hours of work resulting from his duties involve only overtime 
hours worked in excess of the statutory maximum hours, the hours are not 
``irregular'' within the purport of section 7(f) and a payment plan 
lacking this factor does not qualify for the exemption. (See Goldberg v. 
Winn-Dixie Stores (S.D. Fla.), 15 WH Cases 641; Wirtz v. Midland Finance 
Co. (N.D. Ga.), 16 WH Cases 141; Trager v. J. E. Plastics Mfg. Co. 
(S.D.N.Y.), 13 WH Cases 621; McComb v. Utica Knitting Co., 164 F. 2d 
670; Foremost Dairies v. Wirtz, 381 F. 2d 653 (C.A. 5).)



Sec. 778.407  The nature of the section 7(f) contract.

    Payment must be made ``pursuant to a bona fide individual contract 
or pursuant to an agreement made as a result

[[Page 428]]

of collective bargaining by representatives of employees.'' It cannot be 
a onesided affair determinable only by examination of the employer's 
books. The employee must not only be aware of but must have agreed to 
the method of compensation in advance of performing the work. Collective 
bargaining agreements in general are formal agreements which have been 
reduced to writing, but an individual employment contract may be either 
oral or written. While there is no requirement in section 7(f) that the 
agreement or contract be in writing, it is certainly desirable to reduce 
the agreement to writing, since a contract of this character is rather 
complicated and proof both of its existence and of its compliance with 
the various requirements of the section may be difficult if it is not in 
written form. Furthermore, the contract must be ``bona fide.'' This 
implies that both the making of the contract and the settlement of its 
terms were done in good faith.



Sec. 778.408  The specified regular rate.

    (a) To qualify under section 7(f), the contract must specify ``a 
regular rate of pay of not less than the minimum hourly rate provided in 
subsection (a) or (b) of section 6 (whichever may be applicable).'' The 
word ``regular'' describing the rate in this provision is not to be 
treated as surplusage. To understand the nature of this requirement it 
is important to consider the past history of this type of agreement in 
the courts. In both of the two cases before it, the Supreme Court found 
that the relationship between the hourly rate specified in the contract 
and the amount guaranteed was such that the employee in a substantial 
portion of the workweeks of the period examined by the court worked 
sufficient hours to earn in excess of the guaranteed amount and in those 
workweeks was paid at the specified hourly rate for the first 40 hours 
and at time and one-half such rate for hours in excess of 40 (Walling v. 
A. H. Belo Company, 316 U.S. 624, and Walling v. Halliburton Oil Well 
Cementing Company, 331 U.S.17). The fact that section 7(f) requires that 
a contract, to qualify an employee for exemption under section 7(f), 
must specify a ``regular rate,'' indicates that this criterion of these 
two cases is still important.
    (b) The regular rate of pay specified in the contract may not be 
less than the applicable minimum rate. There is no requirement, however, 
that the regular rate specified be equal to the regular rate at which 
the employee was formerly employed before the contract was entered into. 
The specified regular rate may be any amount (at least the applicable 
minimum wage) which the parties agree to and which can reasonably be 
expected to be operative in controlling the employee's compensation.
    (c) The rate specified in the contract must also be a ``regular'' 
rate which is operative in determining the total amount of the 
employee's compensation. Suppose, for example, that the compensation of 
an employee is normally made up in part by regular bonuses, commissions, 
or the like. In the past he has been employed at an hourly rate of $5 
per hour in addition to which he has received a cost-of-living bonus of 
$7 a week and a 2-percent commission on sales which averaged $70 per 
week. It is now proposed to employ him under a guaranteed pay contract 
which specifies a rate of $5 per hour and guarantees $200 per week, but 
he will continue to receive his cost-of-living bonus and commissions in 
addition to the guaranteed pay. Bonuses and commissions of this type 
are, of course, included in the ``regular rate'' as defined in section 
7(e). It is also apparent that the $5 rate specified in the contract is 
not a ``regular rate'' under the requirements of section 7(f) since it 
never controls or determines the total compensation he receives. For 
this reason, it is not possible to enter into a guaranteed pay agreement 
of the type permitted under section 7(f) with an employee whose regular 
weekly earnings are made up in part by the payment of regular bonuses 
and commissions of this type. This is so because even in weeks in which 
the employee works sufficient hours to exceed, at his hourly rate, the 
sum guaranteed, his total compensation is controlled by the bonus and 
the amount of commissions earned as well as by the hourly rate.
    (d) In order to qualify as a ``regular rate'' under section 7(f) the 
rate specified in the contract together with the

[[Page 429]]

guarantee must be the actual measure of the regular wages which the 
employee receives. However, the payment of extra compensation, over and 
above the guaranteed amount, by way of extra premiums for work on 
holidays, or for extraordinarily excessive work (such as for work in 
excess of 16 consecutive hours in a day, or for work in excess of 6 
consecutive days of work), year-end bonuses and similar payments which 
are not regularly paid as part of the employee's usual wages, will not 
invalidate a contract which otherwise qualifies under section 7(f).

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7317, Jan. 23, 1981]



Sec. 778.409  Provision for overtime pay.

    The section 7(f) contract must provide for compensation at not less 
than one and one-half times the specified regular rate for all hours 
worked in excess of the applicable maximum hours standard for the 
particular workweek. All excessive hours, not merely those covered by 
the guarantee, must be compensated at one and one-half times (or a 
higher multiple) of the specified regular rate. A contract which 
guaranteed a weekly salary of $169, specified a rate of $3.60 per hour, 
and provided that not less than one and one-half times such rate would 
be paid only for all hours up to and including 46\2/3\ hours would not 
qualify under this section. The contract must provide for payment at 
time and one-half (or more) for all hours in excess of the applicable 
maximum hours standard in any workweek. A contract may provide a 
specific overtime rate greater than one and one-half times the specified 
rate, for example, double time. If it does provide a specific overtime 
rate it must provide that such rate will be paid for all hours worked in 
excess of the applicable maximum hours standard.

[46 FR 7317, Jan. 23, 1981]



Sec. 778.410  The guaranty under section 7(f).

    (a) The statute provides that the guaranty must be a weekly 
guaranty. A guaranty of monthly, semimonthly, or biweekly pay (which 
would allow averaging wages over more than one workweek) does not 
qualify under this paragraph. Obviously guarantees for periods less than 
a workweek do not qualify. Whatever sum is guaranteed must be paid in 
full in all workweeks, however short in which the employee performs any 
amount of work for the employer. The amount of the guaranty may not be 
subject to proration or deduction in short weeks.
    (b) The contract must provide a guaranty of pay. The amount must be 
specified. A mere guaranty to provide work for a particular number of 
hours does not qualify under this section.
    (c) The pay guaranteed must be ``for not more than 60 hours based on 
the rate so specified.''



Sec. 778.411  Sixty-hour limit on pay guaranteed by contract.

    The amount of weekly pay guaranteed may not exceed compensation due 
at the specified regular rate for the applicable maximum hours standard 
and at the specified overtime rate for the additional hours, not to 
exceed a total of 60 hours. Thus, if the maximum hours standard is 40 
hours and the specified regular rate is $5 an hour the weekly guaranty 
cannot be greater than $350. This does not mean that an employee 
employed pursuant to a guaranteed pay contract under this section may 
not work more than 60 hours in any week; it means merely that pay in an 
amount sufficient to compensate for a greater number of hours cannot be 
covered by the guaranteeed pay. If he works in excess of 60 hours he 
must be paid, for each hour worked in excess of 60, overtime 
compensation as provided in the contract, in addition to the guaranteed 
amount.

[46 FR 7317, Jan. 23, 1981]



Sec. 778.412  Relationship between amount guaranteed and range of
hours employee may be expected to work.

    While the guaranteed pay may not cover more than 60 hours, the 
contract may guarantee pay for a lesser number of hours. In order for a 
contract to qualify as a bona fide contract for an employee whose duties 
necessitate irregular hours of work, the number of hours for which pay 
is guaranteed must

[[Page 430]]

bear a reasonable relation to the number of hours the employee may be 
expected to work. A guaranty of pay for 60 hours to an employee whose 
duties necessitate irregular hours of work which can reasonably be 
expected to range no higher than 50 hours would not qualify as a bona 
fide contract under this section. The rate specified in such a contract 
would be wholly fictitious and therefore would not be a ``regular rate'' 
as discussed above. When the parties enter into a guaranteed pay 
contract, therefore, they should determine, as far as possible, the 
range of hours the employee is likely to work. In deciding the amount of 
the guaranty they should not choose a guaranty of pay to cover the 
maximum number of hours which the employee will be likely to work at any 
time but should rather select a figure low enough so that it may 
reasonably be expected that the rate will be operative in a significant 
number of workweeks. In both Walling v. A. H. Belo Co., 316 U.S. 624 and 
Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17 the court 
found that the employees did actually exceed the number of hours (60 and 
84 respectively) for which pay was guaranteed on fairly frequent 
occasions so that the hourly rate stipulated in the contract in each 
case was often operative and did actually control the compensation 
received by the employees. In cases where the guaranteed number of hours 
has not been exceeded in a significant number of workweeks, this fact 
will be weighed in the light of all the other facts and circumstances 
pertinent to the agreement before reaching a conclusion as to its effect 
on the validity of the pay arrangement. By a periodic review of the 
actual operation of the contract the employer can determine whether a 
stipulated contract rate reasonably expected by the parties to be 
operative in a significant number of workweeks is actually so operative 
or whether adjustments in the contract are necessary to ensure such an 
operative rate.



Sec. 778.413  Guaranty must be based on rates specified in contract.

    The guaranty of pay must be ``based on the rate so specified,'' in 
the contract. If the contract specifies a regular rate of $5 and an 
overtime rate of $7.50 and guarantees pay for 50 hours and the maximum 
hours standard is 40 hours, the amount of the guaranty must be $275, if 
it is to be based on the rates so specified. A guaranty of $290 in such 
a situation would not, obviously, be based on the rates specified in the 
contract. Moreover, a contract which provides a variety of different 
rates for shift differentials, arduous or hazardous work, stand-by time, 
piece-rate incentive bonuses, commissions or the like in addition to a 
specified regular rate and a specified overtime rate with a guaranty of 
pay of, say, $290 from all sources would not qualify under this section, 
since the guaranty of pay in such a case is not based on the regular and 
overtime rates specified in the contract.

[46 FR 7318, Jan. 23, 1981]



Sec. 778.414  ``Approval'' of contracts under section 7(f).

    (a) There is no requirement that a contract, to qualify under 
section 7(f), must be approved by the Secretary of Labor or the 
Administrator. The question of whether a contract which purports to 
qualify an employee for exemption under section 7(f) meets the 
requirements is a matter for determination by the courts. This 
determination will in all cases depend not merely on the wording of the 
contract but upon the actual practice of the parties thereunder. It will 
turn on the question of whether the duties of the employee in fact 
necessitate irregular hours, whether the rate specified in the contract 
is a ``regular rate''--that is, whether it was designed to be actually 
operative in determining the employee's compensation--whether the 
contract was entered into in good faith, whether the guaranty of pay is 
in fact based on the regular and overtime rates specified in the 
contract. While the Administrator does have the authority to issue an 
advisory opinion as to whether or not a pay arrangement accords with the 
requirements of section 7(f) he can do so only if he has knowledge of 
these facts.
    (b) As a guide to employers, it may be helpful to describe a fact 
situation in which the making of a guaranteed salary contract would be 
appropriate

[[Page 431]]

and to set forth the terms of a contract which would comply, in the 
circumstances described, with the provisions of section 7(f).

    Example: An employee is employed as an insurance claims adjuster; 
because of the fact that he must visit claimants and witnesses at their 
convenience, it is impossible for him or his employer to control the 
hours which he must work to perform his duties. During the past 6 months 
his weekly hours of work have varied from a low of 30 hours to a high of 
58 hours. His average workweek for the period was 48 hours. In about 80 
percent of the workweeks he worked less than 52 hours. It is expected 
that his hours of work will continue to follow this pattern. The parties 
agree upon a regular rate of $5 per hour. In order to provide for the 
employee the security of a regular weekly income the parties further 
agree to enter into a contract which provides a weekly guaranty of pay. 
If the applicable maximum hours standard is 40 hours, guaranty of pay 
for a workweek somewhere between 48 hours (his average week) and 52 
would be reasonable. In the circumstances described the following 
contract would be appropriate.
    The X Company hereby agrees to employ John Doe as a claims adjuster 
at a regular hourly rate of pay of $5 per hour for the first 40 hours in 
any workweek and at the rate of $7.50 per hour for all hours in excess 
of 40 in any workweek, with a guarantee that John Doe will receive, in 
any week in which he performs any work for the company, the sum of $275 
as total compensation, for all work performed up to and including 50 
hours in such workweek.

    (c) The situation described in paragraph (b) of this section is 
merely an example and nothing herein is intended to imply that contracts 
which differ from the example will not meet the requirements of section 
7(f).

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7318, Jan. 23, 1981]

   Computing Overtime Pay on the Rate Applicable to the Type of Work 
          Performed in Overtime Hours (Secs. 7(g) (1) and (2))



Sec. 778.415  The statutory provisions.

    Sections 7(g) (1) and (2) of the Act provide:

    (g) No employer shall be deemed to have violated subsection (a) by 
employing any employee for a workweek in excess of the maximum workweek 
applicable to such employee under such subsection if, pursuant to an 
agreement or understanding arrived at between the employer and the 
employee before performance of the work, the amount paid to the employee 
for the number of hours worked by him in such workweek in excess of the 
maximum workweek applicable to such employee under such subsection:
    (1) In the case of an employee employed at piece rates, is computed 
at piece rates not less than one and one-half times the bona fide piece 
rates applicable to the same work when performed during nonovertime 
hours; or
    (2) In the case of an employee performing two or more kinds of work 
for which different hourly or piece rates have been established, is 
computed at rates not less than one and one-half times such bona fide 
rates applicable to the same work when performed during nonovertime 
hours;

                                * * * * *

and if (i) the employee's average hourly earnings for the workweek 
exclusive of payments described in paragraphs (1) through (7) of 
subsection (e) are not less than the minimum hourly rate required by 
applicable law, and (ii) extra overtime compensation is properly 
computed and paid on other forms of additional pay required to be 
included in computing the regular rate.



Sec. 778.416  Purpose of provisions.

    The purpose of the provisions set forth in Sec. 778.415 is to 
provide an exception from the requirement of computing overtime pay at 
not less than one and one-half times the regular rate for hours worked 
in excess of the applicable maximum hours standard for a particular 
workweek and to allow, under specified conditions, a simpler method of 
computing overtime pay for employees paid on the basis of a piece rate, 
or at a variety of hourly rates or piece rates, or a combination 
thereof. This provision is not designed to exclude any group of 
employees from the overtime benefits of the Act. The intent of the 
provision is merely to simplify the method of computation while insuring 
the receipt by the affected employees of substantially the same amount 
of overtime compensation.



Sec. 778.417  General requirements of section 7(g).

    The following general requirements must be met in every case before 
the overtime computation authorized under section 7(g)(1) or (2) may be 
utilized.

[[Page 432]]

    (a) First, in order to insure that the method of computing overtime 
pay permitted in this section will not in any circumstances be seized 
upon as a device for avoiding payment of the minimum wage due for each 
hour, the requirement must be met that employee's average hourly 
earnings for the workweek (exclusive of overtime pay and of all other 
pay which is excluded from the regular rate) are not less than the 
minimum. This requirement insures that the employer cannot pay 
subminimum nonovertime rates with a view to offsetting part of the 
compensation earned during the overtime hours against the minimum wage 
due for the workweek.
    (b) Second, in order to insure that the method of computing overtime 
pay permitted in this section will not be used to circumvent or avoid 
the payment of proper overtime compensation due on other sums paid to 
employees, such as bonuses which are part of the regular rate, the 
section requires that extra overtime compensation must be properly 
computed and paid on other forms of additional pay required to be 
included in computing the regular rate.



Sec. 778.418  Pieceworkers.

    (a) Under section 7(g)(1), an employee who is paid on the basis of a 
piece rate for the work performed during nonovertime hours may agree 
with his employer in advance of the performance of the work that he 
shall be paid at a rate not less than one and one-half times this piece 
rate for each piece produced during the overtime hours. No additional 
overtime pay will be due under the Act provided that the general 
conditions discussed in Sec. 778.417 are met and:
    (1) The piece rate is a bona fide rate;
    (2) The overtime hours for which the overtime rate is paid qualify 
as overtime hours under section 7(e) (5), (6), or (7);
    (3) The number of overtime hours for which such overtime piece rate 
is paid equals or exceeds the number of hours worked in excess of the 
applicable maximum hours standard for the particular workweek; and
    (4) The compensation paid for the overtime hours is at least equal 
to pay at one and one-half times the applicable minimum rate for the 
total number of hours worked in excess of the applicable maximum hours 
standard.
    (b) The piece rate will be regarded as bona fide if it is the rate 
actually paid for work performed during the nonovertime hours and if it 
is sufficient to yield at least the minimum wage per hour.
    (c) If a pieceworker works at two or more kinds of work for which 
different straight time piece rates have been established, and if by 
agreement he is paid at a rate not less than one and one-half whichever 
straight time piece rate is applicable to the work performed during the 
overtime hours, such piece rate or rates must meet all the tests set 
forth in this section and the general tests set forth in Sec. 778.417 
in order to satisfy the overtime requirements of the Act under section 
7(g) (2).



Sec. 778.419  Hourly workers employed at two or more jobs.

    (a) Under section 7(g)(2) an employee who performs two or more 
different kinds of work, for which different straight time hourly rates 
are established, may agree with his employer in advance of the 
performance of the work that he will be paid during overtime hours at a 
rate not less than one and one-half times the hourly nonovertime rate 
established for the type of work he is performing during such overtime 
hours. No additional overtime pay will be due under the act provided 
that the general requirements set forth in Sec. 778.417 are met and;
    (1) The hourly rate upon which the overtime rate is based in a bona 
fide rate;
    (2) The overtime hours for which the overtime rate is paid qualify 
as overtime hours under section 7(e) (5), (6), or (7); and
    (3) The number of overtime hours for which the overtime rate is paid 
equals or exceeds the number of hours worked in excess of the applicable 
maximum hours standard.
    (b) An hourly rate will be regarded as a bona fide rate for a 
particular kind of work it is equal to or greater than the applicable 
minimum rate therefor and if it is the rate actually paid for such work 
when performed during nonovertime hours.

[[Page 433]]



Sec. 778.420  Combined hourly rates and piece rates.

    Where an employee works at a combination of hourly and piece rates, 
the payment of a rate not less than one and one-half times the hourly or 
piece rate applicable to the type of work being performed during the 
overtime hours will meet the overtime requirements of the Act if the 
provisions concerning piece rates (as discussed in Sec. 778.418) and 
those concerning hourly rates (as discussed in Sec. 778.419) are 
respectively met.



Sec. 778.421  Offset hour for hour.

    Where overtime rates are paid pursuant to statute or contract for 
hours in excess of 8 in a day, or in excess of the applicable maximum 
hours standard, or in excess of the employees' normal working hours or 
regular working hours (as under section 7(e)(5) or for work on ``special 
days'' (as under section 7(e)(6), or pursuant to an applicable 
employment agreement for work outside of the hours established in good 
faith by the agreement as the basic, normal, or regular workday (not 
exceeding 8 hours) or workweek (not exceeding the applicable maximum 
hours standard) (under section 7(e) (7), the requirements of section 
7(g) (1) and 7(g)(2) will be met if the number of such hours during 
which overtime rates were paid equals or exceeds the number of hours 
worked in excess of the applicable maximum hours standard for the 
particular workweek. It is not necessary to determine whether the total 
amount of compensation paid for such hours equals or exceeds the amount 
of compensation which would be due at the applicable rates for work 
performed during the hours after the applicable maximum in any workweek.



              Subpart F_Pay Plans Which Circumvent the Act

               Devices To Evade the Overtime Requirements



Sec. 778.500  Artificial regular rates.

    (a) Since the term regular rate is defined to include all 
remuneration for employment (except statutory exclusions) whether 
derived from hourly rates, piece rates, production bonuses or other 
sources, the overtime provisions of the act cannot be avoided by setting 
an artificially low hourly rate upon which overtime pay is to be based 
and making up the additional compensation due to employees by other 
means. The established hourly rate is the ``regular rate'' to an 
employee only if the hourly earnings are the sole source of his 
compensation. Payment for overtime on the basis of an artificial 
``regular'' rate will not result in compliance with the overtime 
provisions of the Act.
    (b) It may be helpful to describe a few schemes that have been 
attempted and to indicate the pitfalls inherent in the adoption of such 
schemes. The device of the varying rate which decreases as the length of 
the workweek increases has already been discussed in Sec. Sec. 778.321 
through 778.329. It might be well, however, to re-emphasize that the 
hourly rate paid for the identical work during the hours in excess of 
the applicable maximum hours standard cannot be lower than the rate paid 
for the nonovertime hours nor can the hourly rate vary from week to week 
inversely with the length of the workweek. It has been pointed out that, 
except in limited situations under contracts which qualify under section 
7(f), it is not possible for an employer lawfully to agree with his 
employees that they will receive the same total sum, comprising both 
straight time and overtime compensation, in all weeks without regard to 
the number of overtime hours (if any) worked in any workweek. The result 
cannot be achieved by the payment of a fixed salary or by the payment of 
a lump sum for overtime or by any other method or device.
    (c) Where the employee is hired at a low hourly rate supplemented by 
facilities furnished by the employer, bonuses (other than those excluded 
under section 7(e)), commissions, pay ostensibly (but not actually) made 
for idle hours, or the like, his regular rate is not the hourly rate but 
is the rate determined by dividing his total compensation from all these 
sources in any workweek by the number of hours worked in the week. 
Payment of overtime compensation based on the hourly rate alone in such 
a situation would not meet the overtime requirements of the Act.

[[Page 434]]

    (d) One scheme to evade the full penalty of the Act was that of 
setting an arbitrary low hourly rate upon which overtime compensation at 
time and one-half would be computed for all hours worked in excess of 
the applicable maximum hours standard; coupled with this arrangement was 
a guarantee that if the employee's straight time and overtime 
compensation, based on this rate, fell short, in any week, of the 
compensation that would be due on a piece-rate basis of x cents per 
piece, the employee would be paid on the piece-rate basis instead. The 
hourly rate was set so low that it never (or seldom) was operative. This 
scheme was found by the Supreme Court to be violative of the overtime 
provisions of the Act in the case of Walling v. Youngerman-Reynolds 
Hardwood Co., 325 U.S. 427. The regular rate of the employee involved 
was found to be the quotient of total piece-rate earnings paid in any 
week divided by the total hours worked in such week.
    (e) The scheme is no better if the employer agrees to pay straight 
time and overtime compensation on the arbitrary hourly rates and to make 
up the difference between this total sum and the piece-rate total in the 
form of a bonus to each employee. (For further discussion of the 
refinements of this plan, see Sec. Sec. 778.502 and 778.503.)



Sec. 778.501  The ``split-day'' plan.

    (a) Another device designed to evade the overtime requirements of 
the Act was a plan known as the ``Poxon'' or ``split-day'' plan. Under 
this plan the normal or regular workday is artificially divided into two 
portions one of which is arbitrarily labeled the ``straight time'' 
portion of the day and the other the ``overtime'' portion. Under such a 
plan, an employee who would ordinarily command an hourly rate of pay 
well in excess of the minimum for his work is assigned a low hourly rate 
(often the minimum) for the first hour (or the first 2 or 4 hours) of 
each day. This rate is designated as the regular rate: ``time and one-
half'' based on such rate is paid for each additional hour worked during 
the workday. Thus, for example, an employee is arbitrarily assigned an 
hourly rate of $5 per hour under a contract which provides for the 
payment of so-called ``overtime'' for all hours in excess of 4 per day. 
Thus, for the normal or regular 8-hour day the employee would receive 
$20 for the first 4 hours and $30 for the remaining 4 hours; and a total 
of $50 for 8 hours. (This is exactly what he would receive at the 
straight time rate of $6.25 per hour.) On the sixth 8-hour day the 
employee likewise receives $50 and the employer claims to owe no 
additional overtime pay under the statute since he has already 
compensated the employee at ``overtime'' rates for 20 hours of the 
workweek.
    (b) Such a division of the normal 8-hour workday into 4 straight 
time hours and 4 overtime hours is purely fictitious. The employee is 
not paid at the rate of $5 an hour and the alleged overtime rate of 
$7.50 per hour is not paid for overtime work. It is not geared either to 
hours ``in excess of the employee's normal working hours or regular 
working hours'' (section 7(e)(5) or for work ``outside of the hours 
established in good faith * * * as the basic, normal, or regular 
workday'' (section 7(e) (7)) and it cannot therefore qualify as an 
overtime rate. The regular rate of pay of the employee in this situation 
is $6.25 per hour and he is owed additional overtime compensation, based 
on this rate, for all hours in excess of the applicable maximum hours 
standard. This rule was settled by the Supreme Court in the case of 
Walling v. Helmerich & Payne, 323 U.S. 37, and its validity has been 
reemphasized by the definition of the term ``regular rate'' in section 
7(e) of the Act as amended.

[46 FR 7318, Jan. 23, 1981; 46 FR 33516, June 30, 1981]

                             Pseudo-Bonuses



Sec. 778.502  Artificially labeling part of the regular wages a ``bonus''.

    (a) The term ``bonus'' is properly applied to a sum which is paid as 
an addition to total wages usually because of extra effort of one kind 
or another, or as a reward for loyal service or as a gift. The term is 
improperly applied if it is used to designate a portion of regular wages 
which the employee is entitled to receive under his regular wage 
contract.

[[Page 435]]

    (b) For example, if an employer has agreed to pay an employee $300 a 
week without regard to the number of hours worked, the regular rate of 
pay of the employee is determined each week by dividing the $300 salary 
by the number of hours worked in the week. The situation is not altered 
if the employer continues to pay the employee, whose applicable maximum 
hours standard is 40 hours, the same $300 each week but arbitrarily 
breaks the sum down into wages for the first 40 hours at an hourly rate 
of $4.80 an hour, overtime compensation at $7.20 per hour and labels the 
balance a ``bonus'' (which will vary from week to week, becoming smaller 
as the hours increase and vanishing entirely in any week in which the 
employee works 55 hours or more). The situation is in no way bettered if 
the employer, standing by the logic of his labels, proceeds to compute 
and pay overtime compensation due on this ``bonus'' by prorating it back 
over the hours of the workweek. Overtime compensation has still not been 
properly computed for this employee at his regular rate.
    (c) An illustration of how the plan works over a 3-week period may 
serve to illustrate this principle more clearly:
    (1) In the first week the employee whose applicable maximum hours 
standard is 40 hours, works 40 hours and receives $300. The books show 
he has received $192 (40 hoursx$4.80 an hour) as wages and $108 as 
bonus. No overtime has been worked so no overtime compensation is due.
    (2) In the second week he works 45 hours and receives $300. The 
books show he has received $192 for the first 40 hours and $36 (5 
hoursx$7.20 an hour) for the 5 hours over 40, or a total of $228 as 
wages, and the balance as a bonus of $72. Overtime compensation is then 
computed by the employer by dividing $72 by 45 hours to discover the 
average hourly increase resulting from the bonus--$1.60 per hour--and 
half this rate is paid for the 5 overtime hours--$4. This is improper. 
The employee's regular rate in this week is $6.67 per hour. He is owed 
$316.85 not $304.
    (3) In the third week the employee works 50 hours and is paid $300. 
The books show that the employee received $192 for the first 40 hours 
and $72 (10 hoursx$7.20 per hour) for the 10 hours over 40, for a total 
of $264 and the balance as a bonus of $36. Overtime pay due on the 
``bonus'' is found to be $3.60. This is improper. The employee's regular 
rate in this week is $6 and he is owed $330, not $303.60.
    (d) Similar schemes have been devised for piece-rate employees. The 
method is the same. An employee is assigned an arbitrary hourly rate 
(usually the minimum) and it is agreed that his straight-time and 
overtime earnings will be computed on this rate but that if these 
earnings do not amount to the sum he would have earned had his earnings 
been computed on a piece-rate basis of ``x'' cents per piece, he will be 
paid the difference as a ``bonus.'' The subterfuge does not serve to 
conceal the fact that this employee is actually compensated on a piece-
rate basis, that there is no bonus and his regular rate is the quotient 
of piece-rate earnings divided by hours worked (Walling v. Youngerman-
Reynolds Hardwood Company, 325 U.S. 419).
    (e) The general rule may be stated that wherever the employee is 
guaranteed a fixed or determinable sum as his wages each week, no part 
of this sum is a true bonus and the rules for determining overtime due 
on bonuses do not apply.

[33 FR 986, Jan. 26, 1968; 33 FR 3172, Feb. 20, 1968, as amended at 46 
FR 7318, Jan. 23, 1981]



Sec. 778.503  Pseudo ``percentage bonuses.''

    As explained in Sec. 778.210 of this part, a true bonus based on a 
percentage of total wages--both straight time and overtime wages--
satisfies the Act's overtime requirements, if it is paid 
unconditionally. Such a bonus increases both straight time and overtime 
wages by the same percentage, and thereby includes proper overtime 
compensation as an arithmetic fact. Some bonuses, however, although 
expressed as a percentage of both straight time and overtime wages, are 
in fact a sham. Such bonuses, like the bonuses described in Sec. 
778.502 of this part, are generally separated out of a fixed weekly wage 
and usually decrease in amount in direct proportion to increases in the 
number of hours worked in a week in excess of

[[Page 436]]

40. The hourly rate purportedly paid under such a scheme is artificially 
low, and the difference between the wages paid at the hourly rate and 
the fixed weekly compensation is labeled a percentage of wage ``bonus.''

    Example: An employer's wage records show an hourly rate of $5.62 per 
hour, and an overtime rate of one and one-half times that amount, or 
$8.43 per hour. In addition, the employer pays an alleged percentage of 
wage bonus on which no additional overtime compensation is paid:

Week 1--40 hours worked:
  40 hours at $5.62 per hour..................................   $224.80
  Percentage of total earnings bonus at 33.45% of $224.80.....     75.20
                                                               ---------
 Total........................................................    300.00
                                                               =========
Week 2--43 hours worked:
  40 hours at $5.62 per hour..................................    224.80
  3 hours at $8.43 per hour...................................     25.29
                                                               ---------
 Subtotal.....................................................    250.09
                                                               =========
Percentage of total earnings bonus at 19.96% of $250.09.......     49.91
                                                               ---------
 Total........................................................    300.00
                                                               =========
Week 3--48 hours worked:
  40 hours at $5.62 per hour..................................    224.80
  8 hours at $8.43 per hour...................................     67.44
                                                               ---------
 Subtotal.....................................................    292.24
Percentage of total earnings bonus at 2.66% of $292.24........      7.76
                                                               ---------
 Total........................................................    300.00
 


This employee is in fact being paid no overtime compensation at all. The 
records in fact reveal that the employer pays exactly $300 per week, no 
matter how many hours the employee works. The employee's regular rate is 
$300 divided by the number of hours worked in the particular week, and 
his overtime compensation due must be computed as shown in Sec. 
778.114.

[46 FR 7319, Jan. 23, 1981]



                         Subpart G_Miscellaneous



Sec. 778.600  Veterans' subsistence allow- ances.

    Subsistence allowances paid under Public Law 346 (commonly known as 
the G.I. bill of rights) to a veteran employed in on-the-job training 
program work may not be used to offset the wages to which he is entitled 
under the Fair Labor Standards Act. The subsistence allowances provided 
by Public Law 346 for payment to veterans are not paid as compensation 
for services rendered to an employer nor are they intended as subsidy 
payments for such employer. In order to qualify as wages under either 
section 6 or section 7 of the Act, sums paid to an employee must be paid 
by or on behalf of the employer. Since veterans' subsistence allowances 
are not so paid, they may not be used to make up the minimum wage or 
overtime pay requirements of the Act nor are they included in the 
regular rate of pay under section 7.



Sec. 778.601  Special overtime provisions available for hospital and 
residential care establishments under section 7(j).

    (a) The statutory provision. Section 7(j) of the Act provides, for 
hospital and residential care establishment employment, under prescribed 
conditions, an exemption from the general requirement of section 7(a) 
that overtime compensation be computed on a workweek basis. It permits a 
14-day period to be established for the purpose of computing overtime 
compensation by an agreement or understanding between an employer 
engaged in the operation of a hospital or residential care 
establishment, and any of his employees employed in connection 
therewith. The exemption provided by section 7(j) applies:

if, pursuant to an agreement or understanding arrived at between the 
employer and employee before performance of the work, a work period of 
14 consecutive days is accepted in lieu of the workweek of 7 consecutive 
days for purposes of overtime computation and if, for his employment in 
excess of 8 hours in any workday and in excess of 80 hours in such 14-
day period, the employee receives compensation at a rate not less than 
one and one-half times the regular rate at which he is employed.

    (b) Conditions for application of exemption. As conditions for use 
of the 14-day period in lieu of the workweek in computing overtime, 
section 7(j) requires, first, an agreement or understanding between the 
employer and the employee before performance of the work that such 
period is to be used, and second, the payment to the employee of 
overtime compensation at a rate not less than one and one-half times his 
regular rate for all hours worked in excess of eight in any workday 
within such period and in excess of 80 during the period as a whole.

[[Page 437]]

    (c) The agreement or understanding. The agreement or understanding 
between the employer and employee to use the 14-day period for computing 
overtime must be entered into before the work to which it is intended to 
apply is performed. It may be arrived at directly with the employee or 
through his representative. It need not be in writing, but if it is not, 
a special record concerning it must be kept as required by part 516 of 
this chapter. The 14-day period may begin at any hour of any day of the 
week; it need not commence at the beginning of a calendar day. It 
consists of 14 consecutive 24-hour periods, at the end of which a new 
14-day period begins. The election to use the 14-day period in lieu of 
the workweek must, like selection of an employee's workweek (Sec. 
778.105) be with the intent to use such period permanently or for a 
substantial period of time. Changes from such period to the workweek and 
back again to take advantage of less onerous overtime pay liabilities 
with respect to particular work schedules under one system than under 
the other are not permissible.
    (d) Payment for overtime under the special provisions. If the 
parties have the necessary agreement or understanding to use the 14-day 
period, computation of overtime pay on the workweek basis as provided in 
section 7(a) is not required so long as the employee receives overtime 
compensation at a rate not less than one and one-half times his regular 
rate of pay ``for his employment in excess of 8 hours in any workday and 
in excess of 80 hours in such 14-day period.'' Such compensation is 
required for all hours in such period in excess of eight in any workday 
or workdays therein which are worked by the employee, whether or not 
more than 80 hours are worked in the period. The first workday in the 
period, for purposes of this computation, begins at the same time as the 
14-day period and ends 24 hours later. Each of the 13 consecutive 24-
hour periods following constitutes an additional workday of the 14-day 
period. Overtime compensation at the prescribed time and one-half rate 
is also required for all hours worked in excess of 80 in the 14-day 
period, whether or not any daily overtime is worked during the first 80 
hours. However, under the provisions of section 7(h) and 7(e)(5) of the 
Act, any payments at the premium rate for daily overtime hours within 
such period may be credited toward the overtime compensation due for 
overtime hours in excess of 80.
    (e) Use of 14-day period in lieu of workweek. Where the 14-day 
period is used as authorized in section 7(j), such period is used in 
lieu of the workweek in computing the regular rate of pay of employees 
to whom it applies (i.e., those of the hospital's or residential care 
establishment's employees with whom the employer has elected to enter 
into the necessary agreement or understanding as explained in paragraph 
(c) of this section). With this exception, the computation of the 
regular rate and the application of statutory exclusions therefrom is 
governed by the general principles set forth in this part 778.

[33 FR 986, Jan. 26, 1968, as amended at 46 FR 7319, Jan. 23, 1981; 46 
FR 33516, June 30, 1981]



Sec. 778.602  Special overtime provisions under section 7(b).

    (a) Daily and weekly overtime standards. The general overtime pay 
requirements of the Act provide for such pay only when the number of 
hours worked exceeds the standard specified for the workweek; no 
overtime compensation on a daily basis is required. However, section 7 
of the Act, in subsection (b), provides certain partial exemptions from 
the general overtime provisions, each of which is conditioned upon the 
payment to the employee of overtime compensation at a rate not less than 
one and one-half times his regular rate of pay for his hours worked in 
the workweek in excess of daily, as well as weekly, standards specified 
in the subsection. Under these provisions, when an employee works in 
excess of both the daily and weekly maximum hours standards in any 
workweek for which such an exemption is claimed, he must be paid at such 
overtime rate for all hours worked in the workweek in excess of the 
applicable daily maximum or in excess of the applicable weekly maximum, 
whichever number of hours is greater. Thus, if his total hours of work 
in the workweek which are in excess of the daily maximum are 10, and

[[Page 438]]

his hours in excess of the weekly maximum are 8, overtime compensation 
is required for 10 hours, not 8.
    (b) Standards under section 7(b). The partial exemptions provided by 
section 7(b) apply to an employee under the conditions specified in 
clause (1), (2), or (3) of the subsection ``if such employee receives 
compensation for employment in excess of 12 hours in any workday, or for 
employment in excess of 56 hours in any workweek, as the case may be, at 
a rate not less than one and one-half times the regular rate at which he 
is employed.'' As an example, suppose an employee is employed under the 
other conditions specified for an exemption under section 7(b) at an 
hourly rate of $5.20 and works the following schedule:

------------------------------------------------------------------------
                 Hours                   M   T   W   T   F   S   S  Tot.
------------------------------------------------------------------------
Worked................................  14   9  10  15  12   8   0   68
------------------------------------------------------------------------
Number of overtime hours: Daily, 5 (hours over 12); weekly, 12 (hours
  over 56).


Since the weekly overtime hours are greater, the employee is entitled to 
pay for 12 hours at $7.80 an hour (1\1/2\x$5.20), a total of $93.60 for 
the overtime hours, and to pay at his regular rate for the remaining 56 
hours (56x$5.20) in the amonut of $291.20 or a total of $384.80 for the 
week. If the employee had not worked the 8 hours on Saturday, his total 
hours worked in the week would have been 60, of which five were daily 
overtime hours, and there would have been no weekly overtime hours under 
the section 7(b) standard. For such a schedule the employee would be 
entitled to 5 hours of overtime pay at time and one-half (5x1\1/
2\x$5.20=$39) plus the pay at his regular rate for the remaining 55 
hours (55x$5.20=$286), making a total of $325 due him for the week.

[33 FR 986, Jan. 26, 1968, as amended at 34 FR 144, Jan. 4, 1969; 46 FR 
7319, Jan. 23, 1981]



Sec. 778.603  Special overtime provisions for certain employees 
receiving remedial education under section 7(q).

    Section 7(q) of the Act, enacted as part of the 1989 Amendments, 
provides an exemption from the overtime pay requirements for time spent 
by certain employees who are receiving remedial education. The exemption 
provided by section 7(q), as implemented by these regulations, allows 
any employer to require that an employee spend up to 10 hours in the 
aggregate in any workweek in remedial education without payment of 
overtime compensation provided that the employee lacks a high school 
diploma or educational attainment at the eighth-grade level; the 
remedial education is designed to provide reading and other basic skills 
at an eighth-grade level or below, or to fulfill the requirements for a 
high school diploma or General Educational Development (GED) 
certificate; and the remedial education does not include job-specific 
training. Employees must be compensated at their regular rate of pay for 
the time spent receiving such remedial education. The employer must 
maintain a record of the hours that an employee is engaged each workday 
and each workweek in receiving remedial education, and the compensation 
paid each pay period for the time so engaged, as described in 29 CFR 
516.34. The remedial education must be conducted during discrete periods 
of time set aside for such a program, and, to the maximum extent 
practicable, away from the employee's normal work station. An employer 
has the burden to establish compliance with all applicable requirements 
of this special overtime provision as set forth in section 7(q) of the 
Act and in this section of the regulations. Section 7(q) is solely an 
exemption from the overtime provisions of section 7(a) of the Act. It is 
not an exemption from the requirements of any other law that regulates 
employment practices, including the standards that are used to select 
individuals for employment. An employer creating a remedial education 
program pursuant to section 7(q) should be mindful not to violate other 
applicable requirements. See, for example, title VII of the Civil Rights 
Act of 1964, as amended, 42 U.S.C. 2000e et seq.; Executive Order 11246, 
as amended, 3 CFR part 339 (1964-1965 Compilation), reprinted in 42 
U.S.C. 2000e note; the Rehabilitation Act of 1973, as amended, 29 U.S.C. 
701 et seq.; and the Uniform Guidelines on Employee Selection Procedures 
published at 41 CFR part 60-3.

[56 FR 61101, Nov. 29, 1991]

[[Page 439]]



PART 779_THE FAIR LABOR STANDARDS ACT AS APPLIED TO RETAILERS OF
GOODS OR SERVICES--Table of Contents



                            Subpart A_General

                              Introductory

Sec.
779.0 Purpose of interpretative bulletin.
779.1 General scope of the Act.
779.2 Previous and new coverage.
779.3 Pay standards for employees subject to previous coverage of the 
          Act.
779.4 Pay standards for newly covered employment.
779.5 Matters discussed in this part.
779.6 Matters discussed in other interpretative bulletins.

                       Interpretations of the Law

779.7 Significance of official interpretations.
779.8 Basic support for interpretations.
779.9 Reliance on interpretations.
779.10 Interpretations made, continued, and superseded by this part.

                         Some Basic Definitions

779.11 General statement.
779.12 Commerce.
779.13 Production.
779.14 Goods.
779.15 Sale and resale.
779.16 State.
779.17 Wage and wage payments to tipped employees.
779.18 Regular rate.
779.19 Employer, employee, and employ.
779.20 Person.
779.21 Enterprise.
779.22 Enterprise engaged in commerce or in the production of goods for 
          commerce.
779.23 Establishment.
779.24 Retail or service establishment.

 Subpart B_Employment to Which the Act May Apply: Basic Principles and 
                           Individual Coverage

                           General Principles

779.100 Basic coverage in general.
779.101 Guiding principles for applying coverage and exemption 
          provisions.
779.102 Scope of this subpart.

Employees Engaged in Commerce or in the Production of Goods for Commerce

779.103 Employees ``engaged in commerce.''
779.104 Employees ``engaged in the production of goods for commerce.''
779.105 Employees engaged in activities ``closely related'' and 
          ``directly essential'' to the production of goods for 
          commerce.
779.106 Employees employed by an independent employer.
779.107 Goods defined.
779.108 Goods produced for commerce.
779.109 Amount of activities which constitute engaging in commerce or in 
          the production of goods for commerce.
779.110 Employees in retailing whose activities may bring them under the 
          Act.
779.111 Buyers and their assistants.
779.112 Office employees.
779.113 Warehouse and stock room employees.
779.114 Transportation employees.
779.115 Watchmen and guards.
779.116 Custodial and maintenance employees.
779.117 Salesmen and sales clerks.
779.118 Employees providing central services for multi-unit 
          organizations.
779.119 Exempt occupations.

  Subpart C_Employment to Which the Act May Apply; Enterprise Coverage

                      Enterprise; the Business Unit

779.200 Coverage expanded by 1961 and 1966 amendments.
779.201 The place of the term ``enterprise'' in the Act.
779.202 Basic concepts of definition.
779.203 Distinction between ``enterprise,'' ``establishment,'' and 
          ``employer.''
779.204 Common types of ``enterprise.''

                           Related Activities

779.205 Enterprise must consist of ``related activities.''
779.206 What are ``related activities.''
779.207 Related activities in retail operations.
779.208 Auxiliary activities which are ``related activities.''
779.209 Vertical activities which are ``related activities.''
779.210 Other activities which may be part of the enterprise.
779.211 Status of activities which are not ``related.''

                         Common Business Purpose

779.212 Enterprise must consist of related activities performed for a 
          ``common business purpose.''
779.213 What is a common business purpose.
779.214 ``Business'' purpose.

                   Unified Operation or Common Control

779.215 General scope of terms.
779.216 Statutory construction of the terms.
779.217 ``Unified operation'' defined.
779.218 Methods to accomplish ``unified operation.''

[[Page 440]]

779.219 Unified operation may be achieved without common control or 
          common ownership.
779.220 Unified operation may exist as to separately owned or controlled 
          activities which are related.
779.221 ``Common control'' defined.
779.222 Ownership as factor.
779.223 Control where ownership vested in individual or single 
          organization.
779.224 Common control in other cases.

      Leased Departments, Franchise and Other Business Arrangements

779.225 Leased departments.
779.226 Exception for an independently owned retail or service 
          establishment under certain franchise and other arrangements.
779.227 Conditions which must be met for exception.
779.228 Types of arrangements contemplated by exception.
779.229 Other arrangements.
779.230 Franchise and other arrangements.
779.231 Franchise arrangements which do not create a larger enterprise.
779.232 Franchise or other arrangements which create a larger 
          enterprise.
779.233 Independent contractors performing work ``for'' an enterprise.
779.234 Establishments whose only regular employees are the owner or 
          members of his immediate family.
779.235 Other ``enterprises.''

                           Covered Enterprises

779.236 In general.
779.237 Enterprise engaged in commerce or in the production of goods for 
          commerce.
779.238 Engagement in described activities determined on annual basis.
779.239 Meaning of ``engaged in commerce or in the production of goods 
          for commerce.''

  Employees Handling, Selling, or Otherwise Working on Goods That Have 
          Been Moved In or Produced for Commerce by Any Person

779.240 Employees ``handling * * * or otherwise working on goods.''
779.241 Selling.
779.242 Goods that ``have been moved in'' commerce.
779.243 Goods that have been ``produced for commerce by any person.''

                        Covered Retail Enterprise

779.244 ``Covered enterprises'' of interest to retailers of goods or 
          services.
779.245 Conditions for coverage of retail or service enterprises.

                 Interstate Inflow Test Under Prior Act

779.246 Inflow test under section 3(s)(1) of the Act prior to 1966 
          amendments.
779.247 ``Goods'' defined.
779.248 Purchase or receive ``goods for resale.''
779.249 Goods which move or have moved across State lines.
779.250 Goods that have not lost their out-of-State identity.
779.251 Goods that have lost their out-of-State identity.
779.252 Not in deliveries from the reselling establishment.
779.253 What is included in computing the total annual inflow volume.

              The Gasoline Service Establishment Enterprise

779.254 Summary of coverage and exemptions prior to and following the 
          1966 amendments.
779.255 Meaning of ``gasoline service establishment.''
779.256 Conditions for enterprise coverage of gasoline service 
          establishments.
779.257 Exemption applicable to gasoline service establishments under 
          the prior Act.

           Annual Gross Volume of Sales Made or Business Done

779.258 Sales made or business done.
779.259 What is included in annual gross volume.
779.260 Trade-in allowances.

                              Excise Taxes

779.261 Statutory provision.
779.262 Excise taxes at the retail level.
779.263 Excise taxes not at the retail level.
779.264 Excise taxes separately stated.

                       Computing the Annual Volume

779.265 Basis for making computations.
779.266 Methods of computing annual volume of sales or business.
779.267 Fluctuations in annual gross volume affecting enterprise 
          coverage and establishment exemptions.
779.268 Grace period of 1 month for computation.
779.269 Computations for a new business.

    Subpart D_Exemptions for Certain Retail or Service Establishments

                           General Principles

779.300 Purpose of subpart.
779.301 Statutory provisions.

                  ``Establishment'' Basis of Exemptions

779.302 Exemptions depend on character of establishment.

[[Page 441]]

779.303 ``Establishment'' defined; distinguished from ``enterprise'' and 
          ``business.''
779.304 Illustrations of a single establishment.
779.305 Separate establishments on the same premises.
779.306 Leased departments not separate establishments.
779.307 Meaning and scope of ``employed by'' and ``employee of.''
779.308 Employed within scope of exempt business.
779.309 Employed ``in'' but not ``by.''
779.310 Employees of employers operating multi-unit businesses.
779.311 Employees working in more than one establishment of same 
          employer.

          Statutory Meaning of Retail or Service Establishment

779.312 ``Retail or service establishment'', defined in section 
          13(a)(2).
779.313 Requirements summarized.

       Making Sales of Goods and Services ``Recognized As Retail''

779.314 ``Goods'' and ``services'' defined.
779.315 Traditional local retail or service establishments.
779.316 Establishments outside ``retail concept'' not within statutory 
          definition; lack first requirement.
779.317 Partial list of establishments lacking ``retail concept.''
779.318 Characteristics and examples of retail or service 
          establishments.
779.319 A retail or service establishment must be open to general 
          public.
779.320 Partial list of establishments whose sales or service may be 
          recognized as retail.
779.321 Inapplicability of ``retail concept'' to some types of sales or 
          services of an eligible establishment.

         ``Recognized'' As Retail ``In the Particular Industry''

779.322 Second requirement for qualifying as a ``retail or service 
          establishment.''
779.323 Particular industry.
779.324 Recognition ``in.''
779.325 Functions of the Secretary and the courts.
779.326 Sources of information.
779.327 Wholesale sales.
779.328 Retail and wholesale distinguished.
779.329 Effect of type of customer and type of goods or services.

                        Sales Not Made For Resale

779.330 Third requirement for qualifying as a ``retail or service 
          establishment.''
779.331 Meaning of sales ``for resale.''
779.332 Resale of goods in an altered form or as parts or ingredients of 
          other goods or services.
779.333 Goods sold for use as raw materials in other products.
779.334 Sales of services for resale.
779.335 Sales of building materials for residential or farm building 
          construction.
779.336 Sales of building materials for commercial property 
          construction.

            General Tests of Exemption Under Section 13(a)(2)

779.337 Requirements of exemption summarized.
779.338 Effect of 1961 and 1966 amendments.

                       Sales Made Within the State

779.339 More than 50 percent intrastate sales required.
779.340 Out-of-State customers.
779.341 Sales ``made within the State'' and ``engagement in commerce'' 
          distinguished.

      Computing Annual Dollar Volume and Combination of Exemptions

779.342 Methods of computing annual volume of sales.
779.343 Combinations of exemptions.

  Engaging in Manufacturing and Processing Activities; Section 13(a)(4)

779.345 Exemption provided in section 13(a)(4).
779.346 Requirements for exemption summarized.
779.347 Exemption limited to ``recognized retail establishment''; 
          factories not exempt.
779.348 Goods must be made at the establishment which sells them.
779.349 The 85-percent requirement.
779.350 The section 13(a)(4) exemption does not apply to service 
          establishments.

   Engaging in Contract Telegraph Agency Operations; Section 13(a)(11)

779.351 Exemption provided.
779.352 Requirements for exemption.

    Classification of Sales and Establishments in Certain Industries

779.353 Basis for classification.

                  Lumber and Building Materials Dealers

779.354 Who may qualify as exempt 13(a)(2) or 13(a)(4) establishments.
779.355 Classification of lumber and building materials sales.
779.356 Application of exemptions to employees.

[[Page 442]]

                              Coal Dealers

779.357 May qualify as exempt 13(a)(2) establishments; classification of 
          coal sales.

                    Ice Manufacturers and Ice Dealers

779.358 May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

              Liquefied-Petroleum-Gas and Fuel Oil Dealers

779.359 May qualify as exempt 13(a)(2) establishments.
779.360 Classification of liquefied-petroleum-gas sales.
779.361 Classification of other fuel oil sales.

                              Feed Dealers

779.362 May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

                            Monument Dealers

779.363 May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

                        Frozen-Food Locker Plants

779.364 May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

                     Automotive Tire Establishments

779.365 May qualify as exempt 13(a)(2) or 13(a)(4) establishments.
779.366 Recapping or retreading tires for sale.

                          Commercial Stationers

779.367 Commercial stationers may qualify as exempt 13(a)(2) 
          establishments.
779.368 Printing and engraving establishments not recognized as retail.

                              Funeral Homes

779.369 Funeral home establishments may qualify as exempt 13(a)(2) 
          establishments.

                               Cemeteries

779.370 Cemeteries may qualify as exempt 13(a)(2) establishments.

 Automobile, Truck and Farm Implement Sales and Services, and Trailer, 
                         Boat and Aircraft Sales

779.371 Some automobile, truck, and farm implement establishments may 
          qualify for exemption under section 13(a)(2).
779.372 Nonmanufacturing establishments with certain exempt employees 
          under section 13(b)(10).

  Other Establishments for Which Special Exceptions or Exemptions Are 
                                Provided

779.381 Establishments within special exceptions or exemptions.

                            Hotels and Motels

779.382 May qualify as exempt 13(a)(2) establishments.
779.383 ``Hotel'' and ``motel'' exemptions under section 13(b)(8).

                         Motion Picture Theaters

779.384 May qualify as exempt establishments.

            Seasonal Amusement or Recreational Establishments

779.385 May qualify as exempt establishments.

   Restaurants and Establishments Providing Food and Beverage Service

779.386 Restaurants may qualify as exempt 13(a) (2) establishments.
779.387 ``Restaurant'' exemption under section 13(b) (8).
779.388 Exemption provided for food or beverage service employees.

Subpart E_Provisions Relating to Certain Employees of Retail or Service 
                             Establishments

                           General Principles

779.400 Purpose of subpart.

   Executive, Administrative, and Professional Employees and Outside 
                                Salesmen

779.401 Statutory provision.
779.402 ``Executive'' and ``administrative'' employees defined.
779.403 Administrative and executive employees in covered enterprises 
          employed in other than retail or service establishments.
779.404 Other section 13(a)(1) employees employed in covered 
          enterprises.

               Students, Learners, and Handicapped Workers

779.405 Statutory provisions.
779.406 ``Student-learners.''
779.407 Learners other than ``student-learners.''
779.408 ``Full-time students.''
779.409 Handicapped workers.

            Employees Compensated Principally by Commissions

779.410 Statutory provision.
779.411 Employee of a ``retail or service establishment.''
779.412 Compensation requirements for overtime pay exemption under 
          section 7(i).
779.413 Methods of compensation of retail store employees.

[[Page 443]]

779.414 Types of employment in which this overtime pay exemption may 
          apply.
779.415 Computing employee's compensation for the representative period.
779.416 What compensation ``represents commissions.''
779.417 The ``representative period'' for testing employee's 
          compensation.
779.418 Grace period for computing portion of compensation representing 
          commissions.
779.419 Dependence of the section 7(i) overtime pay exemption upon the 
          level of the employee's ``regular rate'' of pay.
779.420 Recordkeeping requirements.
779.421 Basic rate for computing overtime compensation of nonexempt 
          employees receiving commissions.

     Subpart F_Other Provisions Which May Affect Retail Enterprises

                                 General

779.500 Purpose of subpart.

                          Equal Pay Provisions

779.501 Statutory provisions.

                         Child Labor Provisions

779.502 Statutory provisions; regulations in Part 1500 of this title.
779.503 The retailer and section 12(a).
779.504 The retailer and section 12(c).
779.505 ``Oppressive child labor'' defined.
779.506 Sixteen-year minimum.
779.507 Fourteen-year minimum.
779.508 Eighteen-year minimum.

            Driver or Driver's Helper Making Local Deliveries

779.509 Statutory provision.
779.510 Conditions that must be met for section 13(b) (11) exemption.
779.511 ``Finding by Secretary.''

                     Records to be Kept by Employers

779.512 The recordkeeping regulations.
779.513 Order and form of records.
779.514 Period for preserving records.
779.515 Regulations should be consulted.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended; 75 Stat. 65; Sec. 
29(B), Pub. L. 93-259, 88 Stat. 55; 29 U.S.C. 201-219.

    Source: 35 FR 5856, Apr. 9, 1970, unless otherwise noted.



                            Subpart A_General

                              Introductory



Sec. 779.0  Purpose of interpretative bulletin.

    It is the purpose of this part to provide an official statement of 
the views of the Department of Labor with respect to the application and 
meaning of those provisions of the Fair Labor Standards Act, hereinafter 
referred to as the Act, which govern rights and obligations of employees 
and employers in the various enterprises in which retail sales of goods 
or services are made. The application of the Act to employment in such 
enterprises was greatly broadened by amendments effective September 3, 
1961. The Act's application was extended to employment in additional 
retail and service enterprises by the Fair Labor Standards Amendments of 
1966, effective February 1, 1967. Under the amended Act, there are many 
employees employed by retail or service establishments and in 
enterprises having such establishments engaged in the retail selling of 
goods or services who must be employed in compliance with its 
provisions. It is an objective of this part to make available in one 
place, for the guidance of those who may be concerned with the 
provisions of the law, the official interpretations of these provisions 
by which the Department of Labor will be guided in carrying out its 
responsibilities under the Act.



Sec. 779.1  General scope of the Act.

    The Fair Labor Standards Act of 1938, as amended, is a Federal 
statute of general application which establishes minimum wage, maximum 
hours, overtime pay, equal pay, and child labor requirements that apply 
as provided in the Act. Employers and employees in enterprises in which 
retail sales of goods or services are made need to know how the Act 
applies to employment in these enterprises so that they may understand 
their rights and obligations under the law. All employees whose 
employment has the relationship to interstate or foreign commerce which 
the Act specifies are subject to the prescribed labor standards unless

[[Page 444]]

specifically exempted from them. Employers having such employees are 
required to comply with the Act's provisions in this regard and with 
specified recordkeeping requirements contained in Part 516 of this 
chapter. The law authorizes the Department of Labor to investigate for 
compliance and, in the event of violations, to supervise the payment of 
unpaid minimum wages or unpaid overtime compensation owing to any 
employee. The law also provides for enforcement in the courts.



Sec. 779.2  Previous and new coverage.

    Under the Act as amended in 1966, an employer may have some 
employees subject to its minimum wages, maximum hours, overtime pay, 
equal pay, or child labor provisions who would be covered by such 
provisions under the prior law even if the amendments had not been 
enacted, and other employees whose coverage under such provisions was 
provided for the first time by the 1966 amendments. As explained in 
subparts B and C such provisions of the amended Act may apply to an 
employee by reason of the activities in which he is individually 
engaged, or because he is employed in an enterprise whose activities 
satisfy the conditions prescribed in the law prior to the amendments. On 
the other hand, such provisions of the amended Act may apply to an 
employee solely because he is employed in an enterprise whose activities 
satisfy only the conditions provided in the Act as it was amended in 
1966. Previously covered employment in retail and service enterprise is 
subject to different monetary standards than newly covered employment in 
such enterprises until February 1, 1971. On and after that date, every 
such employee subject to the minimum wage provisions will be entitled to 
not less than $1.60 an hour. However, beginning February 1, 1969, every 
such employee subject to the overtime provisions is entitled to overtime 
pay for all hours worked in excess of 40 in a workweek at a rate not 
less than one and one-half times his regular rate of pay. During the 
period for which different minimum wage provisions were made applicable, 
beginning with the effective date of the 1966 amendments on February 1, 
1967, and ending on January 31, 1971, a lower minimum wage rate is 
authorized for employees in employment brought under the minimum wage 
provisions of the Act for the first time by the amendments than for 
those subject to the minimum wage provisions under the prior Act. Also, 
in the period beginning with the effective date of the amendments and 
ending on January 31, 1969, employees in employment brought under the 
overtime pay provisions for the first time by the amendments could be 
employed for a longer workweek without overtime pay, as specified in the 
Act. Accordingly, employers who do not wish to pay aIl covered employees 
for employment during such periods the minimum wages and overtime pay 
required for employment covered under the prior provisions will need to 
identify those employees who are covered under the prior provisions and 
those who are covered under the new provisions when wages are computed 
and paid under the Act.



Sec. 779.3  Pay standards for employees subject to previous coverage
of the Act.

    Before the 1966 amendments, the Act applied, as it still applies, to 
employees individually engaged in interstate or foreign commerce or in 
the production of goods for such commerce, and to employees in certain 
enterprises, including enterprises in which retail sales of goods or 
services are made. The tests by which coverage based on the employee's 
individual activities is determined were not changed by the 1966 
amendments and are described in subpart B of this part. An employee in 
an enterprise whose activities satisfy the conditions prescribed in the 
law prior to the 1966 amendments (discussed in subpart C) is covered 
under the present Act. Any employee whose employment satisfies the tests 
by which individual or enterprise coverage is determined under the Act 
prior to the 1966 amendments and who would not have come within some 
exemption in the law prior to the amendments is subject to the monetary 
provisions prescribed in the law for previously covered employees and is 
entitled to a minimum wage of at least $1.40 an hour beginning February 
1, 1967, and not less than $1.60 an hour beginning February 1, 1968, 
unless

[[Page 445]]

expressly exempted by some provision of the amended Act. (In each 
instance where there is an increase in the minimum wage, the new minimum 
wage rate becomes effective 12:01 a.m., on the date indicated.) Such an 
employee is also entitled to overtime pay for hours worked in excess of 
40 in any workweek at a rate not less than one and one-half times his 
regular rate of pay. (Minimum wage rates in Puerto Rico, the Virgin 
Islands, and American Samoa are governed by special provisions of the 
Act. Information on these rates is available at any office of the Wage 
and Hour Division.)



Sec. 779.4  Pay standards for newly covered employment.

    There are many employees of retailers as well as other employees who 
would not be subject to the minimum wage or overtime pay provisions of 
the Act as it was prior to the 1966 amendments, either because of their 
individual activities or because of the activities of the enterprise in 
which they are employed, but who are brought under the minimum wage or 
overtime provisions, or both, for the first time by the changed 
enterprise coverage provisions or changes in exemptions, or both, which 
were enacted as part of the amendments and made effective February 1, 
1967. The following pay standards apply to this newly covered 
employment, unless a specific exemption has been retained or provided in 
the amendments; such employees must be paid not less than the minimum 
wages for hours worked and not less than one and one-half times their 
regular rates of pay for overtime, as shown in the following schedule:

------------------------------------------------------------------------
               Minimum wage                          Beginning
------------------------------------------------------------------------
$1.00 an hour............................  February 1, 1967.
$1.15 an hour............................  February 1, 1968.
$1.30 an hour............................  February 1, 1969.
$1.45 an hour............................  February 1, 1970.
$1.60 an hour............................  February 1, 1971 and
                                            thereafter.
------------------------------------------------------------------------


In each instance where there is an increase in the minimum wage, the new 
minimum wage rate becomes effective 12:01 a.m., on the date indicated. 
(Minimum wage rates for newly covered employees in Puerto Rico, the 
Virgin Islands, and American Samoa are set by wage order under special 
industry committee procedures. Information on these rates and their 
effective dates may be obtained at any office of the Wage and Hour 
Division.)

------------------------------------------------------------------------
               Overtime pay                          Beginning
------------------------------------------------------------------------
After 44 hours in a workweek.............  Feb. 1, 1967.
After 42 hours in a workweek.............  Feb. 1, 1968.
After 40 hours in a workweek and           Feb. 1, 1969.
 thereafter.
------------------------------------------------------------------------


In each instance where a new overtime pay standard is applicable, it 
shall be effective as to any workweek beginning on or after the date 
indicated.



Sec. 779.5  Matters discussed in this part.

    This part discusses generally the provisions of the Act which govern 
its application to employers and employees in enterprises and 
establishments that make retail sales of goods or services. It discusses 
in some detail those provisions of the Act which refer specifically to 
such employers and employees and such enterprises or establishments. The 
criteria for determining the employments in which these employers and 
employees may be subject to the law are discussed in subparts B and C of 
this part and the criteria for exclusion from its provisions under 
specific exemptions are discussed in subpart D of this part. Other 
provisions of special interest to retailers and their employees are 
discussed in subparts E and F of this part.



Sec. 779.6  Matters discussed in other interpretative bulletins.

    Bulletins having general application to others subject to the law as 
well as to retailers and their employees have been issued on a number of 
subjects of general interest. These will be found in other parts of this 
chapter of the Code of Federal Regulations. Reference should be made to 
them for guidance on matters which they discuss in detail and which this 
part does not undertake to do. They include part 776 of this chapter, 
discussing general coverage, including the employer-employee 
relationship under the Act; part 531 of this chapter, discussing methods 
of payment of wages; part 778 of this chapter, discussing computation 
and payment of overtime compensation; part 785 of this chapter, 
discussing the calculation of hours worked; and part 800 of this

[[Page 446]]

chapter, discussing equal pay for equal work.

                       Interpretations of the Law



Sec. 779.7  Significance of official interpretations.

    The regulations in this part contain the official interpretations of 
the Department of Labor with respect to the application under described 
circumstances of the provisions of law which they discuss. These 
interpretations indicate the construction of the law which the Secretary 
of Labor and the Administrator believe to be correct and which will 
guide them in the performance of their duties under the Act unless and 
until they are otherwise directed by authoritative decisions of the 
courts or conclude, upon reexamination of an interpretation, that it is 
incorrect.



Sec. 779.8  Basic support for interpretations.

    The ultimate decisions on interpretations of the Act are made by the 
courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
bulletin are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (Reorg. Pl. 6 of 1950, 64 Stat. 1263; Gen. 
Ord. 45A, May 24, 1950; 15 FR 3290). As included in the regulations in 
this part, these interpretations are believed to express the intent of 
the law as reflected in its provisions as constructed by the courts and 
evidenced by its legislative history. References to pertinent 
legislative history are made in this part where it appears that they 
will contribute to a better understanding of the interpretations.



Sec. 779.9  Reliance on interpretations.

    The interpretations of the law contained in this part are official 
interpretations which may be relied upon as provided in section 10 of 
the Portal-to-Portal Act of 1947. In addition, the Supreme Court has 
recognized that such interpretations of the Act ``provide a practical 
guide to employers and employees as to how the office representing the 
public interest in its enforcement will seek to apply it'' and 
``constitute a body of experience and informed judgment to which courts 
and litigants may properly resort for guidance.'' Further, as stated by 
the Court: ``Good administration of the Act and good judicial 
administration alike require that the standards of public enforcement 
and those for determining private rights shall be at variance only where 
justified by very good reasons.'' (Skidmore v. Swift, 323 U.S. 134.) 
Some of the interpretations in subpart D of this part relating to the 
scope of the exemption provided for retail or service establishments are 
interpretations of this exemption as it appeared in the original Act 
before amendment in 1949 and 1961, which have remained unchanged because 
they were consistent with the amendments. These interpretations may be 
said to have Congressional sanction because ``When Congress amended the 
Act in 1949 it provided that pre-1949 rulings and interpretations by the 
Administrator should remain in effect unless inconsistent with the 
statute as amended. 63 Stat. 920.'' (Mitchell v. Kentucky Finance Co., 
359 U.S. 290.)



Sec. 779.10  Interpretations made, continued, and superseded by this part.

    On and after publication of this part in the Federal Register, the 
interpretations contained therein shall be in effect and shall remain in 
effect until they are modified, rescinded, or withdrawn. This part 
supersedes and replaces the interpretations previously published in the 
Federal Register and Code of Federal Regulations as part 779 of this 
chapter. Prior opinions, rulings and interpretations and prior

[[Page 447]]

enforcement policies which are not inconsistent with the interpretations 
in this part or with the Fair Labor Standards Act as amended by the Fair 
Labor Standards Amendments of 1961 are continued in effect; all other 
opinions, rulings, interpretations, and enforcement policies on the 
subjects discussed in the interpretations in this part are rescinded and 
withdrawn. The interpretations in this part provide statements of 
general principles applicable to the subjects discussed and 
illustrations of the application of these principles to situations that 
frequently arise. They do not and cannot refer specifically to every 
problem which may be met by retailers in the application of the Act. The 
omission to discuss a particular problem in this part or in 
interpretations supplementing it should not be taken to indicate the 
adoption of any position by the Secretary of Labor or the Administrator 
with respect to such problem or to constitute an administrative 
interpretation or practice or enforcement policy. Questions on matters 
not fully covered by this part may be addressed to the Administrator of 
the Wage and Hour Division, U.S. Department of Labor, Washington, DC 
20210, or to any Regional or District Office of the Division.

                         Some Basic Definitions



Sec. 779.11  General statement.

    The meaning and application of the provisions of law discussed in 
this part depend in large degree on the definitions of terms used in 
these provisions. The Act itself defines some of these terms. Others 
have been defined and construed in decisions of the courts. In the 
following sections some of these basic definitions are set forth for 
ready reference in connection with the part's discussion of the various 
provisions in which they appear. Some of these definitions and their 
application are considered in detail in other interpretative bulletins. 
The application of the others is considered in the sections of this part 
where the particular provisions containing the defined terms are 
discussed.



Sec. 779.12  Commerce.

    Commerce as used in the Act includes interstate and foreign 
commerce. It is defined in section 3(b) of the Act to mean ``trade, 
commerce, transportation, transmission or communication among the 
several States or between any State and any place outside thereof.'' 
(For the definition of ``State'' see Sec. 779.16.) The application of 
this definition and the kinds of activities which it includes are 
discussed at length in the interpretative bulletin on general coverage 
of the Act, part 776 of this chapter.



Sec. 779.13  Production.

    To understand the meaning of ``production'' of goods for commerce as 
used in the Act it is necessary to refer to the definition in section 
3(j) of the term ``produced.'' A detailed discussion of the application 
of the term as defined is contained in the interpretative bulletin on 
general coverage of the Act, part 776 of this chapter. Section 3(j) 
provides that ``produced'' as used in the Act ``means produced, 
manufactured, mined, handled, or in any other manner worked on in any 
State; and for the purposes of this Act an employee shall be deemed to 
have been engaged in the production of goods if such employee was 
employed in producing, manufacturing, mining, handling, transporting, or 
in any other manner working on such goods, or in any closely related 
process or occupation directly essential to the production thereof, in 
any State.'' (For the definition of ``State,'' see Sec. 779.16.)



Sec. 779.14  Goods.

    The definition in section 3(i) of the Act states that goods, as used 
in the Act, means ``goods (including ships and marine equipment), wares, 
products, commodities, merchandise, or articles or subjects of commerce 
of any character, or any part or ingredient thereof, but does not 
include goods after their delivery into the actual physical possession 
of the ultimate consumer thereof other than a producer, manufacturer, or 
processor thereof.'' The interpretative bulletin on general coverage of 
the Act, part 776 of this chapter, contains a detailed discussion of

[[Page 448]]

the application of this definition and what is included in it.



Sec. 779.15  Sale and resale.

    (a) Section 3(k) of the Act provides that ``Sale'' or ``sell'', as 
used in the Act, ``includes any sale, exchange, contract to sell, 
consignment for sale, shipment for sale, or other disposition.'' Since 
``goods'', as defined, includes any part or ingredient of goods (see 
Sec. 779.14), a ``resale'' of goods includes their sale in a different 
form than when first purchased or sold, such as the sale of goods of 
which they have become a component part (Arnold v. Kanowsky, 361 U.S. 
388). The Act, in section 3(n), provides one exception to this rule by 
declaring that ``resale'', as used in the Act, ``shall not include the 
sale of goods to be used in residential or farm building construction, 
repair, or maintenance: Provided, That the sale is recognized as a bona 
fide retail sale in the industry.'' A resale of goods is not confined to 
resale of the goods as such, but under section 3(k) may include an 
``other disposition'' of the goods in which they are disposed of in a 
transaction of a different kind; thus the sale by a restaurant to an 
airline of prepared meals to be served in flight to passengers whose 
tickets entitle them to a ``complimentary'' meal is a sale of goods 
``for resale''. (Mitchell v. Sherry Corine Corp., 264 F 2d 831 (C.A. 4), 
cert. denied 360 U.S. 934.)
    (b) In construing section 3(s)(1) of the Act as it was prior to the 
1966 amendments it should be noted that section 3(n) of the prior Act 
defined ``resale'' by declaring that this term, ``except as used in 
subsection (s)(1), shall not include the sale of goods to be used in 
residential or farm building construction, repair, or maintenance: 
Provided, That the sale is recognized as a bona fide retail sale in the 
industry.'' Thus, although section 3(n) of the prior Act also provided 
the one exception to the meaning of ``resale'', it made clear that the 
exception was inapplicable in determining under section 3(s)(1) of the 
prior Act, ``if such enterprise purchases or receives goods for resale 
that move or have moved across State lines (not in deliveries from the 
reselling establishment) which amount in total volume to $250,000 or 
more''. The application of the inflow test under section 3(s) (1) of the 
prior Act is discussed fully in subpart C of this part.



Sec. 779.16  State.

    As used in the Act, State means ``any State of the United States or 
the District of Columbia or any Territory or possession of the United 
States'' (Act, section 3(c)). The application of this definition in 
determining questions of coverage under the Act's definition of 
``commerce'' and ``produced'' (see Sec. Sec. 779.12, 779.13) is 
discussed in the interpretative bulletin on general coverage, part 776 
of this chapter. This definition is also important in determining 
whether goods ``for resale'' purchased or received by an enterprise move 
or have moved across State lines within the meaning of former section 
3(s)(1) of the Act (prior to the 1966 amendments) and whether sales of 
goods or services are ``made within the State'' within the meaning of 
the retail or service establishment exemption in section 13(a)(2), as 
discussed in subpart D of this part.



Sec. 779.17  Wage and wage payments to tipped employees.

    Section 3(m) of the Act provides that as used in the Act, ``wage'' 
paid to any employee:

    includes the reasonable cost, as determined by the Secretary of 
Labor, to the employer of furnishing such employee with board, lodging, 
or other facilities, if such board, lodging or other facilities are 
customarily furnished by such employer to his employees: Provided, That 
the cost of board, lodging, or other facilities shall not be included as 
a part of the wage paid to any employee to the extent it is excluded 
therefrom under the terms of a bona fide collective-bargaining agreement 
applicable to the particular employee: Provided further, That the 
Secretary is authorized to determine the fair value of such board, 
lodging, or other facilities for defined classes of employees and in 
defined areas, based on average cost to the employer or to groups of 
employers similarly situated, or average value to groups of employees, 
or other appropriate measures of fair value. Such evaluations, where 
applicable and pertinent, shall be used in lieu of actual measure of 
cost in determining the wage paid to any employee. In determining the 
wage of a tipped employee, the amount paid such employee by his employer 
shall be deemed to be increased on account of tips by an amount 
determined by the employer, but not by an

[[Page 449]]

amount in excess of 50 per centum of the applicable minimum wage rate, 
except that in the case of an employee who (either himself or acting 
through his representative) shows to the satisfaction of the Secretary 
that the actual amount of tips received by him was less than the amount 
determined by the employer as the amount by which the wage paid him was 
deemed to be increased under this sentence, the amount paid such 
employee by his employer shall be deemed to have been increased by such 
lesser amount.


As explained in part 531 of this chapter, section 3(m) of the Act 
governs the payment of wages required by the Act, including payment in 
other than cash and in tips. Part 531 of this chapter contains the 
regulations under which the reasonable cost or fair value of such 
facilities furnished may be computed for inclusion as part of wages 
required by the Act. Section 3(m) provides a method for determining the 
wage of a ``tipped employee'' and this term as defined in section 3(t) 
of the Act ``means any employee engaged in an occupation in which he 
customarily and regularly receives more than $20 a month in tips''. 
Regulations under which wage credits are permitted on account of tips 
paid to ``tipped employees'' are also contained in part 531 of this 
chapter.



Sec. 779.18  Regular rate.

    As explained in the interpretative bulletin on overtime 
compensation, part 778 of this chapter, employees subject to the 
overtime pay provisions of the Act must generally receive for their 
overtime work in any workweek as provided in the Act not less than one 
and one-half times their regular rates of pay. Section 7(e) of the Act 
defines ``regular rate'' in the following language:

    (e) As used in this section the regular rate at which an employee is 
employed shall be deemed to include all remuneration for employment paid 
to, or on behalf of, the employee, but shall not be deemed to include:
    (1) Sums paid as gifts; payments in the nature of gifts made at 
Christmas time or on other special occasions, as a reward for service, 
the amounts of which are not measured by or dependent on hours worked, 
production, or efficiency;
    (2) Payments made for occasional periods when no work is performed 
due to vacation, holiday, illness, failure of the employer to provide 
sufficient work, or other similar cause; reasonable payments for 
traveling expenses or other expenses, incurred by an employee in the 
furtherance of his employer's interests and properly reimbursable by the 
employer; and other similar payments to an employee which are not made 
as compensation for his hours of employment;
    (3) Sums paid in recognition of services performed during a given 
period if either, (a) both the fact that payment is to be made and the 
amount of the payment are determined at the sole discretion of the 
employer at or near the end of the period and not pursuant to any prior 
contract, agreement, or promise causing the employee to expect such 
payments regularly; or (b) the payments are made pursuant to a bona fide 
profit-sharing plan or trust or bona fide thrift or savings plan, 
meeting the requirements of the Secretary of Labor set forth in 
appropriate regulation which he shall issue, having due regard among 
other relevant factors, to the extent to which the amounts paid to the 
employee are determined without regard to hours of work, production, or 
efficiency; or (c) the payments are talent fees (as such talent fees are 
defined and delimited by regulations of the Secretary) paid to 
performers, including announcers, on radio and television programs;
    (4) Contributions irrevocably made by an employer to a trustee or 
third person pursuant to a bona fide plan for providing old age, 
retirement, life, accident, or health insurance or similar benefits for 
employees;
    (5) Extra compensation provided by a premium rate paid for certain 
hours worked by the employee in any day or workweek because such hours 
are hours worked in excess of eight in a day or in excess of the maximum 
workweek applicable to such employee under subsection (a) or in excess 
of the employee's normal working hours or regular working hours, as the 
case may be;
    (6) Extra compensation provided by a premium rate paid for work by 
the employee on Saturdays, Sundays, holidays, or regular days of rest, 
or on the sixth or seventh day of the workweek, where such premium rate 
is not less than one and one-half times the rate established in good 
faith for like work performed in nonovertime hours on other days; or
    (7) Extra compensation provided by a premium rate paid to the 
employee, in pursuance of an applicable employment contract or 
collective-bargaining agreement, for work outside of the hours 
established in good faith by the contract or agreement as the basic, 
normal, or regular workday (not exceeding 8 hours) or workweek (not 
exceeding the maximum workweek applicable to such employee under 
subsection (a), where such premium rate is not less than one and one-
half times the rate established in good faith by the contract or 
agreement for like work performed during such workday or workweek.


[[Page 450]]



This definition, which is discussed at length in part 778 of this 
chapter, also governs the computation of ``regular rate'' for purposes 
of the special overtime exemption of certain commission employees of 
retail or service establishments which is contained in section 7(i) of 
the Act and is discussed in subpart E of this part.



Sec. 779.19  Employer, employee, and employ.

    The Act's major provisions impose certain requirements and 
prohibitions on every ``employer'' subject to their terms. The 
employment by an ``employer'' of an ``employee'' is, to the extent 
specified in the Act, made subject to minimum wage and overtime pay 
requirements and to prohibitions against the employment of oppressive 
child labor. The Act provides its own definitions of ``employer,'' 
``employee'', and ``employ'', under which ``economic reality'' rather 
than ``technical concepts'' determines whether there is employment 
subject to its terms (Goldberg v. Whitaker House Cooperative, 366 U.S. 
28; United States v. Silk, 331 U.S. 704; Rutherford Food Corp. v. 
McComb, 331 U.S. 722). An ``employer'', as defined in section 3(d) of 
the Act, ``includes any person acting directly or indirectly in the 
interest of an employer in relation to an employee but shall not include 
the United States or any State or political subdivision of a State 
(except with respect to employees of a State or a political subdivision 
thereof, employed (a) in a hospital, institution, or school referred to 
in the last sentence of subsection (r) of this section, or (b) in the 
operation of a railway or carrier referred to in such sentence), or any 
labor organization (other than when acting as an employer), or anyone 
acting in the capacity of officer or agent of such labor organization''. 
An ``employee'', as defined in section 3(e) of the Act, ``includes any 
individual employed by an employer'' (except that the term is further 
qualified for purposes of counting man-days of employment by an employer 
in agriculture). ``Employ'', as used in the Act, is defined in section 
3(g) to include ``to suffer or permit to work''. It should be noted, as 
explained in the interpretative bulletin on general coverage, part 776 
of this chapter, that in appropriate circumstances two or more employers 
may be jointly responsible for compliance with the statutory 
requirements applicable to employment of a particular employee. It 
should also be noted that ``employer'', ``enterprise'', and 
``establishment'' are not synonymous terms, as used in the Act. An 
employer may have an enterprise with more than one establishment, or he 
may have more than one enterprise, in which he employs employees within 
the meaning of the Act. Also, there may be different employers who 
employ employees in a particular establishment or enterprise.



Sec. 779.20  Person.

    As used in the Act (including the definition of ``enterprise'' set 
forth in Sec. 779.21), ``person'' is defined as meaning ``an 
individual, partnership, association, corporation, business trust, legal 
representative, or any organized group of persons.'' (Act, section 
3(a).)



Sec. 779.21  Enterprise.

    (a) Section 3(r) of the Act provides, in pertinent part that 
``enterprise'' as used in the Act:

    means the related activities performed (either through unified 
operation or common control) by any person or persons for a common 
business purpose, and includes all such activities whether performed in 
one or more establishments or by one or more corporate or other 
organizational units including departments of an establishment operated 
through leasing arrangements, but shall not include the related 
activities performed for such enterprise by an independent contractor: 
Provided, That, within the meaning of this subsection, a retail or 
service establishment which is under independent ownership shall not be 
deemed to be so operated or controlled as to be other than a separate 
and distinct enterprise by reason of any arrangement, which includes, 
but is not necessarily limited to, an agreement, (a) that it will sell, 
or sell only, certain goods specified by a particular manufacturer, 
distributor, or advertiser, or (b) that it will join with other such 
establishments in the same industry for the purpose of the collective 
purchasing, or (c) that it will have the exclusive right to sell the 
goods or use the brand name of a manufacturer, distributor, or 
advertiser within a specified area, or by reason of the fact that it 
occupies premises leased to it by a person who also leases premises to 
other retail or service establishments * * *


[[Page 451]]



The scope and application of this definitional language is discussed in 
subpart C of this part.
    (b) The 1966 amendments added two clauses to the above language of 
the definition to make it clear that ``the activities performed by any 
person or persons'' will be regarded as performed for a business purpose 
if they are performed:

    (1) In connection with the operation of a hospital, an institution 
primarily engaged in the care of the sick, the aged, the mentally ill or 
defective who reside on the premises of such institution, a school for 
mentally or physically handicapped or gifted children, an elementary or 
secondary school, or an institution of higher education (regardless of 
whether or not such hospital, institution, or school is public or 
private or operated for profit or not for profit); or
    (2) In connection with the operation of a street, suburban, or 
interurban electric railway, or local trolley or motorbus carrier, if 
the rates and services of such railway or carrier are subject to 
regulation by a State or local agency (regardless of whether or not such 
railway or carrier is public or private or operated for profit or not 
for profit).


A discussion of the scope and application of this added language is 
contained in part 776 of this chapter.



Sec. 779.22  Enterprise engaged in commerce or in the production of 
goods for commerce.

    The portions of the former and present definitions of ``enterprise 
engaged in commerce or in the production of goods for commerce'' 
(contained in section 3(s) of the Act prior to the 1966 amendments and 
as amended in 1966) which are important to a determination of the 
application of provisions of the Act to employees employed by retailers 
generally and by certain retail or service establishments are as 
follows:

Previous coverage (prior to the 1966 amendments):

    (s) Enterprise engaged in commerce or in the production of goods for 
commerce means any of the following in the activities of which employees 
are so engaged, including employees handling, selling, or otherwise 
working on goods that have been moved in or produced for commerce by any 
person:
    (1) Any such enterprise which has one or more retail or service 
establishments if the annual gross volume of sales of such enterprise is 
not less than $1 million, exclusive of excise taxes at the retail level 
which are separately stated and if such enterprise purchases or receives 
goods for resale that move or have moved across State lines (not in 
deliveries from the reselling establishment) which amount in total 
annual volume to $250,000 or more;

                                * * * * *

    (5) Any gasoline service establishment if the annual gross volume of 
sales of such establishment is not less than $250,000, exclusive of 
excise taxes at the retail level which are separately stated:
    Provided, That an establishment shall not be considered to be an 
enterprise engaged in commerce or in the production of goods for 
commerce, or a part of an enterprise engaged in commerce or in the 
production of goods for commerce, and the sales of such establishment 
shall not be included for the purpose of determining the annual gross 
volume of sales of any enterprise for the purpose of this subsection, if 
the only employees of such establishment are the owner thereof or 
persons standing in the relationship of parent, spouse, or child of such 
owner.


New coverage (beginning with the 1966 amendments):

    (s) Enterprise engaged in commerce or in the production of goods for 
commerce means an enterprise which has employees engaged in commerce or 
in the production of goods for commerce, including employees handling, 
selling, or otherwise working on goods that have been moved in or 
produced for commerce by any person, and which:
    (1) During the period February 1, 1967, through January 31, 1969, is 
an enterprise whose annual gross volume of sales made or business done 
is not less than $500,000 (exclusive of excise taxes at the retail level 
which are separately stated) or is a gasoline service establishment 
whose annual gross volume of sales is not less than $250,000 (exclusive 
of excise taxes at the retail level which are separately stated), and 
beginning February 1, 1969, is an enterprise whose annual gross volume 
of sales made or business done is not less than $250,000 (exclusive of 
excise taxes at the retail level which are separately stated);

                                * * * * *

    (4) Is engaged in the operation of a hospital, an institution 
primarily engaged in the care of the sick, the aged, the mentally ill or 
defective who reside on the premises of such institution, a school for 
mentally or physically handicapped or gifted children, an elementary or 
secondary school, or an institution of higher education (regardless of 
whether or not such hospital, institution, or

[[Page 452]]

school is public or private or operated for profit or not for profit).
    Any establishment which has as its only regular employees the owner 
thereof or the parent, spouse, child, or other member of the immediate 
family of such owner shall not be considered to be an enterprise engaged 
in commerce or in the production of goods for commerce or a part of such 
an enterprise, and the sales of such establishment shall not be included 
for the purpose of determining the annual gross volume of sales of any 
enterprise for the purpose of this subsection.



Sec. 779.23  Establishment.

    As used in the Act, the term establishment, which is not specially 
defined therein, refers to a ``distinct physical place of business'' 
rather than to ``an entire business or enterprise'' which may include 
several separate places of business. This is consistent with the meaning 
of the term as it is normally used in business and in government, is 
judicially settled, and has been recognized in the Congress in the 
course of enactment of amendatory legislation (Phillips v. Walling, 324 
U.S. 490; Mitchell v. Bekins Van & Storage Co., 352 U.S. 1027; 95 Cong. 
Rec. 12505, 12579, 14877; H. Rept. No. 1453, 81st Cong., 1st Sess., p. 
25). As appears more fully elsewhere in this part, this is the meaning 
of the term as used in sections 3(r), 3(s), 6(d), 7(i), 13(a), 13(b), 
and 14 of the Act.



Sec. 779.24  Retail or service establishment.

    In the 1949 amendments to the Act, the term ``retail or service 
establishment'', which was not previously defined in the law, was given 
a special definition for purposes of the Act. The legislative history of 
the 1961 and the 1966 amendments to the Act, which use the same term in 
a number of provisions relating to coverage and exemptions, indicates 
that no different meaning was intended by the term ``retail or service 
establishment'' as used in the new provisions from that already 
established by the Act's definition. On the contrary, the existing 
definition was reenacted in section 13(a)(2) of the Act as amended in 
1961 and 1966 as follows: ``A `retail or service establishment' shall 
mean an establishment 75 per centum of whose annual dollar volume of 
sales of goods or services (or of both) is not for resale and is 
recognized as retail sales or services in the particular industry''. The 
application of this definition, which has had much judicial construction 
since its original enactment, is considered at length in subpart D of 
this part. As is apparent from the quoted language, not every 
establishment which engages in retail selling of goods or services will 
constitute a ``retail or service establishment'' within the meaning of 
the Act.



 Subpart B_Employment to Which the Act May Apply: Basic Principles and 
                           Individual Coverage

                           General Principles



Sec. 779.100  Basic coverage in general.

    Except as otherwise provided in specific exemptions, the minimum 
wage, maximum hours, overtime pay, equal pay, and child labor provisions 
of the Act have applied and continue to apply subsequent to the 1966 
amendments to employees who are individually engaged in interstate 
commerce or in the production of goods for such commerce as these terms 
are defined in the Act and to employees in certain enterprises described 
in the amended section 3(s) which were covered under section 3(s) of the 
Act prior to the amendments. Through the broadening of the definition of 
a covered enterprise the Act's coverage was extended to additional 
employees because of their employment in certain enterprises beginning 
February 1, 1967, and in certain other enterprises beginning February 1, 
1969. Such covered enterprises are described in section 3(s) as 
enterprises engaged in commerce or in the production of goods for 
commerce and further described in sections 3(s) (1) through (4) of the 
amended Act. A detailed discussion of the coverage of employees in those 
enterprises covered under the prior and amended Act of interest to the 
retail industry is contained in subpart C of this part. The employer 
must comply with the minimum wage and overtime requirements of the Act 
with respect to all employees who are covered either because they are 
individually engaged in interstate or foreign commerce or in the 
production of goods for such commerce, or because of their employment in 
an enterprise covered under the

[[Page 453]]

prior or amended enterprise definition of the Act, except those who may 
be denied one or both of these benefits by virtue of some specific 
exemption provision of the Act. Of special interest to the retailer in a 
covered enterprise is the exemption from the minimum wage and overtime 
provisions for certain small retail or service establishments of such 
enterprise. This exemption is applicable under the conditions and 
subject to exceptions stated in section 13(a) (2) of the Act to any 
retail or service establishment which has an annual dollar volume of 
sales of less than $250,000 (exclusive of certain excise taxes) even if 
the establishment is a part of an enterprise that is covered by the Act. 
This exemption and other exemptions of particular interest to retailers 
and their employees are discussed in subparts D and E of this part. The 
child labor provisions as they apply to retail or service businesses are 
discussed in subpart F of this part.



Sec. 779.101  Guiding principles for applying coverage and exemption
provisions.

    It is clear that Congress intended the Fair Labor Standards Act to 
be broad in its scope. ``Breadth of coverage is vital to its mission.'' 
(Powell v. U.S. Cartridge Co., 339 U.S. 497.) An employer who claims an 
exemption under the Act has the burden of showing that it applies. 
(Walling v. General Industries Co., 330 U.S. 545; Mitchell v. Kentucky 
Finance Co., 359 U.S. 290; Fleming v. Hawkeye Pearl Button Co., 113 F. 
2d 52.) Conditions specified in the language of the Act are ``explicit 
prerequisites to exemption.'' (Arnold v. Kanowsky, 361 U.S. 388.) ``The 
details with which the exemptions in this Act have been made preclude 
their enlargement by implication.'' (Addison v. Holly Hill, 322 U.S. 60; 
Maneja v. Waialua, 349 U.S. 254.) Exemptions provided in the Act ``are 
to be narrowly construed against the employer seeking to assert them'' 
and their application limited to those who come plainly and unmistakably 
within their terms and spirit; this restricted or narrow construction of 
the exemptions is necessary to carry out the broad objectives for which 
the Act was passed. (Phillips v. Walling, 324 U.S. 490; Mitchell v. 
Kentucky Finance Co., supra; Arnold v. Kanowsky, supra; Calaf v. 
Gonzalez, 127 F. 2d 934; Bowie v. Gonzalez, 117 F. 2d 11; Mitchell v. 
Stinson, 217 F. 2d 210; Fleming v. Hawkeye Pearl Button Co., 113 F. 2d 
52.)



Sec. 779.102  Scope of this subpart.

    The Act has applied since 1938 and continues to apply to all 
employees, not specifically exempted, who are engaged: (a) In interstate 
or foreign commerce or (b) in the production of goods for such commerce, 
which is defined to include any closely related process or occupation 
directly essential to such production. (See Sec. Sec. 779.12-779.16 for 
definitions governing the scope of this coverage.) Prior to the 1961 
amendments a retailer was not generally concerned with the coverage 
provisions as they applied to his individual employees because retail or 
service establishments ordinarily were exempt. However, in some cases 
such coverage was applicable as where employees were employed in central 
offices of warehouses of retail chain store systems and, therefore, were 
not exempt. (See Sec. 779.118.) Some exemptions for retail or service 
establishments were narrowed as a result of the 1961 amendments and 
further revised or eliminated by the 1966 amendments effective February 
1, 1967. Therefore, discussion of the individual coverage provisions of 
the Act is pertinent and this subpart will discuss briefly the 
principles of such coverage with particular reference to employment in 
the retail or service trades. A more comprehensive discussion with 
respect to employees engaged in commerce or in the production of goods 
for commerce may be found in part 776 of this chapter, the general 
coverage bulletin.

Employees Engaged in Commerce or in the Production of Goods for Commerce



Sec. 779.103  Employees ``engaged in commerce.''

    Employees are ``engaged in commerce'' within the meaning of the Act 
when they are performing work involving or related to the movement of 
persons or things (whether tangibles or intangibles, and including 
information and intelligence) among the several States or between any 
State and any

[[Page 454]]

place outside thereof. (The statutory definition of commerce is 
contained in section 3(b) of the Act and is set forth in Sec. 779.12.) 
The courts have made it clear that this includes every employee employed 
in the channels of such commerce or in activities so closely related to 
this commerce, as to be considered a part of it as a practical matter. 
(Court cases are cited in the discussion of this term in Sec. Sec. 
776.9-776.13 of this chapter). Typically, but not exclusively, employees 
engaged in interstate or foreign commerce include employees in 
distributing industries, such as wholesaling or retailing, who sell, 
handle or otherwise work on goods moving in interstate commerce as well 
as workers who order, receive, pack, ship, or keep records of such 
goods; clerical and other workers who regularly use the mails, telephone 
or telegraph for interstate communication; and employees who regularly 
travel across State lines while working.



Sec. 779.104  Employees ``engaged in the production of goods for commerce.''

    The activities constituting ``production'' within the meaning of the 
phrase ``engaged in * * * the production of goods for commerce'' are 
defined in section 3(j) of the Act. (The statutory definition is set 
forth in Sec. 779.13.) The handling or otherwise working on goods 
intended for shipment out of the State, directly or indirectly, in 
engagement in the ``production'' of goods for commerce. Thus, employees 
in retail stores who sell, pack, or otherwise work on goods which are to 
be shipped or delivered outside of the State are engaged in the 
production of goods for commerce. Typically, but not exclusively, 
employees engaged in the production of goods for interstate or foreign 
commerce, include those who work in manufacturing, processing and 
distributing establishments, including wholesale or retail 
establishments, that produce goods for interstate or foreign commerce. 
This includes everyone, including office, management, sales and shipping 
personnel, and maintenance, custodial and protective employees, whether 
they are employed by the producer or an intermediary. Employees may be 
covered even if their employer does not ship his goods directly in such 
commerce. The goods may leave the State through another firm. The 
workers may produce goods which become a part or ingredient of goods 
shipped in interstate or foreign commerce by another firm. Also covered 
are workers who are engaged in a closely related process or occupation 
directly essential to such production. (See Sec. 779.105.)



Sec. 779.105  Employees engaged in activities ``closely related'' 
and ``directly essential'' to the production of goods for commerce.

    Some employees are covered because their work, although not actually 
a part of such production, is ``closely related'' and ``directly 
essential'' to it. This group of employees includes bookkeepers, 
stenographers, clerks, accountants and auditors and other office and 
white collar workers, and employees doing payroll, timekeeping and time 
study work for the producer of goods; employees in the personnel, labor 
relations, advertising, promotion, and public relations activities of 
the producing enterprise; work instructors for the producer; employees 
maintaining, servicing, repairing or improving the buildings, machinery, 
equipment, vehicles or other facilities used in the production of goods 
for commerce, and such custodial and protective employees as watchmen, 
guards, firemen, patrolmen, caretakers, stockroom workers, and 
warehousemen; and transportation workers bringing supplies, materials, 
or equipment to the producer's premises, removing waste materials 
therefrom, or transporting materials or other goods, or performing such 
other transportation activities, as the needs of production may require. 
These examples are illustrative, rather than exhaustive, of the group of 
employees of a producer who are ``engaged in the production of goods for 
commerce'' by reason of performing activities closely related and 
directly essential to such production.



Sec. 779.106  Employees employed by an independent employer.

    Where the work of an employee would be closely related and directly 
essential to the production of goods for commerce if he were employed by 
a

[[Page 455]]

producer of the goods, the mere fact that the employee is employed by an 
independent employer will not justify a different answer. (See 
Sec. Sec. 776.17(c) and 776.19 of this chapter.)



Sec. 779.107  Goods defined.

    The term goods is defined in section 3(i) of the Act and has a well 
established meaning under the Act since it has been contained in the 
statute from the date of its enactment in 1938. A comprehensive 
statement of the meaning of the term ``goods'' is contained in part 776 
of this chapter, which also cites the court cases in which the term was 
construed. The statutory definition of ``goods'' is set forth in Sec. 
779.14. It will be observed that the term ``goods'' includes any part or 
ingredient of the goods. Also that ``goods'' as defined in the Act are 
not limited to commercial goods, or articles of trade, or, indeed, to 
tangible property, but include ``articles or subjects of commerce of any 
character.'' Thus telegraphic messages have been held to be ``goods'' 
within the meaning of the Act (Western Union Tel. Co. v. Lenroot, 323 
U.S. 490). Some of the ``articles or subjects of commerce'' which fall 
within the definition of ``goods'' include written materials such as 
newspapers, magazines, brochures, pamphlets, bulletins, and 
announcements; written reports, fiscal and other statements and 
accounts, correspondence, and other documents; advertising, motion 
pictures, newspaper and radio copy; art work and manuscripts for 
publication; sample books, letterheads, envelopes, shipping tags, 
labels, checkbooks, blankbooks, book covers, advertising circulars, and 
wrappers and other packaging materials.



Sec. 779.108  Goods produced for commerce.

    Goods are ``produced for commerce'' if they are ``produced, 
manufactured, mined, handled or in any other manner worked on'' in any 
State for sale, trade, transportation, transmission, shipment or 
delivery, to any place outside thereof. Goods are produced for commerce 
where the producer intends, hopes, expects, or has reason to believe 
that the goods or any unsegregated part of them will move (in the same 
or in an altered form or as a part or ingredient of other goods) in 
interstate or foreign commerce. If such movement of the goods in 
commerce can reasonably be anticipated by the producer when the goods 
are produced, it makes no difference whether he himself or the person to 
whom the goods are transferred puts the goods in interstate or foreign 
commerce. The fact that goods do move in interstate or foreign commerce 
is strong evidence that the producer intended, hoped, expected, or had 
reason to believe that they would so move. Goods produced to serve the 
movement of interstate commerce within the same State are also produced 
for commerce within the meaning of the Act, as explained in part 776 of 
this chapter.



Sec. 779.109  Amount of activities which constitute engaging in 
commerce or in the production of goods for commerce.

    The Act makes no distinction as to the percentage, volume, or amount 
of activities of either the employee or the employer which constitute 
engaging in commerce or in the production of goods for commerce. 
However, an employee whose in-commerce or production activities are 
isolated, sporadic, or occasional and involve only insubstantial amounts 
of goods will not be considered ``engaged in commerce or in the 
production of goods for commerce'' by virtue of that fact alone. The law 
is settled that every employee whose activities in commerce or in the 
production of goods for commerce, even though small in amount are 
regular and recurring, is considered ``engaged in commerce or in the 
production of goods for commerce''.



Sec. 779.110  Employees in retailing whose activities may bring 
them under the Act.

    The discussion in Sec. Sec. 779.103 to 779.109 included general 
reference to types of employees in the retail or service field whose 
individual activities constitute engagement in interstate or foreign 
commerce or in the production of goods for such commerce within the 
meaning of the Act. There are many classes of employees customarily 
employed by retail or service establishments or enterprises whose 
individual activities

[[Page 456]]

ordinarily constitute engagement in commerce or in the production of 
goods for commerce within the meaning of the Act. The groups of 
employees discussed in the following Sec. Sec. 779.111 to 779.118, are 
illustrative only. There are other employees whose activities may be 
covered; also there are other activities performed by the groups 
discussed which would result in individual coverage under the Act.



Sec. 779.111  Buyers and their assistants.

    Buyers and their assistants, employed by retail businesses, as a 
regular part of their duties, generally travel across State lines, or 
use the mails, telegraph, or telephone for interstate communication to 
order goods; or they regularly send or receive, across State lines, 
written reports, messages or other documents. These activities of such 
employees constitute engagement ``in commerce'' within the meaning of 
the Act.



Sec. 779.112  Office employees.

    Similarly office employees of retail businesses who regularly and 
recurrently check records of and make payments for goods shipped to 
their employer from outside of the State, or regularly and recurrently 
keep records of or otherwise work on the accounts of their employer's 
out-of-State customers, or who regularly and recurrently prepare or mail 
letters, checks, reports or other documents to out-of-State points, are 
engaged both in commerce and in the production of goods for commerce 
within the meaning of the Act. Likewise, timekeepers who regularly and 
recurrently prepare and maintain payrolls for and pay employees who are 
engaged in commerce or in the production of goods for commerce are 
themselves engaged in covered activities.



Sec. 779.113  Warehouse and stock room employees.

    Warehouse and stock room employees of retail businesses who 
regularly and recurrently engage in the loading or unloading of goods 
moving in commerce, or who regularly and recurrently handle, pack or 
otherwise work on goods that are destined to out-of-State points are 
engaged in covered activities.



Sec. 779.114  Transportation employees.

    Transportation employees of retail businesses, such as truck drivers 
or truck drivers' helpers, who regularly and recurrently cross State 
lines to make deliveries or to pick up goods for their employer; or who 
regularly and recurrently pick up at rail heads, air, bus or other such 
terminals goods originating out of State, or deliver to such terminals 
goods destined to points out of State; and dispatchers who route, plan 
or otherwise control such out-of-State deliveries and pick ups, are 
engaged in interstate commerce within the meaning of the Act.



Sec. 779.115  Watchmen and guards.

    Watchmen or guards employed by retail businesses who protect the 
warehouses, workshops, or store premises where goods moving in 
interstate or foreign commerce are kept or where goods are produced for 
such commerce, are covered under the Act.



Sec. 779.116  Custodial and maintenance employees.

    Custodial and maintenance employees who perform maintenance and 
custodial work on the machinery, equipment, or premises where goods 
regularly are produced for commerce or from which goods are regularly 
shipped in interstate commerce are engaged in covered activities.



Sec. 779.117  Salesmen and sales clerks.

    A salesman or a sales clerk who regularly and recurrently takes 
orders for, or sells, or selects merchandise for delivery to points 
outside the State or which are to be shipped or delivered to a customer 
from a point outside the State, i.e. drop shipments; or who wraps, 
packs, addresses or otherwise prepares goods for out-of-State shipments 
is performing covered activities.



Sec. 779.118  Employees providing central services for multi-unit
organizations.

    Employees providing central services for a multiunit organization 
may be engaged both ``in commerce'' and ``in the production of goods for 
commerce''

[[Page 457]]

within the meaning of the Act. For example, employees engaged in work 
relating to the coordinated purchasing, warehousing and distribution 
(and in the administrative and clerical work relating to such 
activities) for various retail units of a chain are covered under the 
Act. (See Phillips Co. v. Walling, 324 U.S. 490; Walling v. Jacksonville 
Paper Co., 317 U.S. 564, affirming, 128 F. 2d 935 (CA-5); Mitchell v. C. 
& P. Stores, 286 F. 2d 109 (CA-5); Mitchell v. E. G. Shinner & Co., 
Inc., 221 F. 2d 260 (CA-7); Donovan v. Shell Oil Co., 168 F. 2d 776 (CA-
8).) In addition, employees who regularly and recurrently correspond and 
maintain records of activities of out-of-State stores and such employees 
as traveling auditors, inventory men, window display men, etc., who 
regularly travel from State to State in the performance of their duties 
are covered under the Act. (See Mitchell v. Kroger Co., 248 F. 2d 935 
(CA-8).)



Sec. 779.119  Exempt occupations.

    Of course, it should be noted that although employees may be engaged 
in commerce or in the production of goods for commerce within the 
meaning of the Act, they may be exempt from the Act's minimum wage or 
overtime provisions (or both). For a complete list of such exemptions 
the Act should be consulted. Those exemptions, however, which are of 
particular interest to employers and employees in the retail field are 
discussed in subparts D, E, and F of this part.



  Subpart C_Employment to Which the Act May Apply; Enterprise Coverage

                      Enterprise; the Business Unit



Sec. 779.200  Coverage expanded by 1961 and 1966 amendments.

    The 1961 amendments for the first time since the enactment of the 
Fair Labor Standards Act of 1938 provided that all employees in a 
particular business unit are covered by the Act. Prior to the 1961 
amendments each employee's coverage depended on whether that employee's 
activities were in commerce or constituted the production of goods for 
commerce. All employees employed in an ``enterprise'' described in 
section 3(s)(1) through (5) of the Act as it was amended in 1961 and 
section 3(s)(1) through (4) of the Act as amended in 1966 are also 
covered. Thus, it is necessary to consider the meaning of the term 
``enterprise'' as used in the Act.



Sec. 779.201  The place of the term ``enterprise'' in the Act.

    The term ``enterprise'' is defined in section 3(r) of the Act and, 
wherever used in the Act, is governed by this definition. (Sec. 
779.21(a) provides that portion of the definition of ``enterprise'' 
which is pertinent with respect to retail and service enterprises.) The 
term is a key in determining the applicability of the Act to these 
businesses. The ``enterprise'' is the unit for determining whether the 
conditions of section 3(s)(1) through (5) of the prior Act and section 
3(s)(1) through (4) of the amended Act, including, where applicable, the 
requisite dollar volume are met. The ``enterprise'' is also the unit for 
determining which employees not individually covered by the Act are 
entitled to the minimum wage, overtime, and equal pay benefits, and to 
the child labor protection, under sections 6, 7, and 12 of the Act. In 
general, if the ``enterprise'' comes within any of the categories 
described in section 3(s)(1) through (5) of the prior Act or section 
3(s)(1) through (4) of the amended Act, all employees employed in the 
``enterprise'' are covered by the Act and, regardless of their duties, 
are entitled to the Act's benefits unless a specific exemption applies.



Sec. 779.202  Basic concepts of definition.

    Under the definition, the ``enterprise'' consists of ``the related 
activities performed * * * for a common business purpose.'' All of the 
activities comprising the enterprise must be ``related.'' Activities 
serving a single business purpose may be related, although different, 
but other activities which are not related are not included in the 
enterprise. The definition makes clear that the enterprise includes all 
such related activities which are performed through ``unified 
operation'' or ``common control.'' This is true even if they

[[Page 458]]

are performed by more than one person, or in more than one 
establishment, or by more than one corporate or other organizational 
unit. Specifically included, as a part of the enterprise, are 
departments of an establishment operated through leasing arrangements. 
On the other hand, the definition excludes from the ``enterprise'' 
activities only performed ``for'' the enterprise rather than as a part 
of it by an independent contractor even if they are related to the 
activities of the enterprise. Also, it makes clear that a truly 
independent retail or service establishment does not become a part of a 
larger enterprise merely because it enters into certain types of 
franchise or collective purchasing arrangements or because it has a 
common landlord with other such retail establishments.



Sec. 779.203  Distinction between ``enterprise,'' ``establishment,
'' and ``employer.''

    The coverage, exemption and other provisions of the Act depend, in 
part, on the scope of the terms employer, establishment, or enterprise. 
As explained more fully in part 776 of this chapter, these terms are not 
synonymous. The term employer has been defined in the Act since its 
inception and has a well established meaning. As defined in section 
3(d), it includes, with certain stated exceptions, any person acting 
directly or indirectly in the interest of an employer in relation to an 
employee. (See Sec. 779.19.) The term establishment means a distinct 
physical place of business rather than an entire business or enterprise. 
(See Sec. 779.23.) The term enterprise was not used in the Act prior to 
the 1961 amendments, but the careful definition and the legislative 
history of the 1961 and 1966 amendments provide guidance as to its 
meaning and application. As defined in the Act, the term enterprise is 
roughly descriptive of a business rather than of an establishment or of 
an employer although on occasion the three may coincide. The enterprise 
may consist of a single establishment (see Sec. 779.204(a)) which may 
be operated by one or more employers; or it may be composed of a number 
of establishments which may be operated by one or more employers (see 
Sec. 779.204(b)). The enterprise is not necessarily coextensive with 
the entire business activities of an employer; a single employer may 
operate more than one enterprise (see Sec. 779.204(c)). The Act treats 
as separate enterprises different businesses which are unrelated to each 
other even if they are operated by the same employer.



Sec. 779.204  Common types of ``enterprise.''

    (a) The single establishment business. In the simplest type of 
organization--the entire business ordinarily is one enterprise. The 
entire business activity of the single owner-employer may be performed 
in one establishment, as in the typical independently owned and 
controlled retail store. In that case the establishment and the 
enterprise are one and the same. All of the activities of the store are 
``related'' and are performed for a single business purpose and there is 
both unified operation and common control. The entire business is the 
unit for applying the statutory tests. If the coverage tests are met, 
all of the employees employed by the establishment are employed in the 
enterprise and will be entitled to the benefits of the Act unless 
otherwise exempt.
    (b) The multiunit business. In many cases, as in the typical chain 
of retail stores, one company conducts its single business in a number 
of establishments. All of the activities ordinarily are related and 
performed for one business purpose, the single company which owns the 
chain also controls the entire business, and the entire business is a 
single enterprise. The dollar volume of the entire business from all of 
its establishments is added together to determine whether the requisite 
dollar volume tests are met. If the coverage tests are met, all of the 
employees employed in the business will be entitled to the benefits of 
the Act unless otherwise exempt.
    (c) Complex business organizations. In complex retail and service 
organizations, questions may arise as to whether certain activities are 
a part of a particular enterprise. In some cases one employer may 
operate several separate enterprises; in others, several employers may 
conduct their business activities in such a manner that they are

[[Page 459]]

part of a single enterprise. The answer, in each case, as to whether or 
not the ``enterprise'' includes certain activities will depend upon 
whether the particular activities are ``related'' to the business 
purpose of such enterprise and whether they are performed with its other 
activities through ``unified operation'' or ``common control,'' or 
whether, on the other hand, they are performed for a separate and 
distinct business purpose. As the Senate Report states,

    related activities conducted by separate business entities will be 
considered a part of the same enterprise where they are joined either 
through unified operation or common control into a unified business 
system or economic unit to serve a common business purpose.

(S. Rept. 145, 87th Cong., 1st Sess., p. 41; see also H. Rept. 1366, 
89th Cong., 2d Sess., p. 9.) Sec. Sec. 779.205 through 779.211 discuss 
the terms of the definition and may aid in making these determinations.

                           Related Activities



Sec. 779.205  Enterprise must consist of ``related activities.''

    The enterprise must consist of certain ``related activities'' 
performed for a common business purpose; activities which are not 
``related'' are not a part of the enterprise even if performed by the 
same employer. Moreover, even if activities are ``related'' they may be 
excluded from the enterprise if they are performed only ``for'' the 
enterprise and not as a part of it by an independent contractor. This is 
discussed separately in Sec. 779.206.



Sec. 779.206  What are ``related activities.''

    (a) The Senate Report on the 1961 amendments states as follows, with 
respect to the meaning of related activities:
    Within the meaning of this term, activities are ``related'' when 
they are the same or similar, such as those of the individual retail or 
service stores in a chain, or departments of an establishment operated 
through leasing arrangements. They are also ``related'' when they are 
auxiliary and service activities such as central office and warehousing 
activities and bookkeeping, auditing, purchasing, advertising and other 
services. Likewise, activities are ``related'' when they are part of a 
vertical structure such as the manufacturing, warehousing, and retailing 
of a particular product or products under unified operation or common 
control for a common business purpose. (Senate Report No. 145, 87th 
Cong., 1st Sess., Page 41.)


Thus, activities will be regarded as ``related'' when they are the same 
or similar or when they are auxiliary or service activities such as 
warehousing, bookkeeping, purchasing, advertising, including, generally, 
all activities which are necessary to the operation and maintenance of 
the particular business. So also, all activities which are performed as 
a part of the unified business operation will be ``related,'' including, 
in appropriate cases, the manufacturing, warehousing, and distribution 
of its goods, the repair and maintenance of its equipment, machinery and 
its premises, and all other activities which are performed for the 
common business purpose of the enterprise. The Senate Report on the 1966 
amendments makes it plain that related, even if somewhat different, 
business activities can frequently be part of the same enterprise, and 
that activities having a reasonable connection with the major purpose of 
an enterprise would be considered related. (Senate Report No. 1487, 89th 
Cong., 2d Sess., Page 7.) A more comprehensive discussion of ``related 
activities'' will be found in part 776 of this chapter.
    (b) Generally, the answer to the question whether particular 
activities are ``related'' or not, will depend in each case upon whether 
the activities serve a business purpose common to all the activities of 
the enterprise, or whether they serve a separate and unrelated business 
purpose. For example, where a company operates retail or service 
establishments, and also engages in a separate and unrelated 
construction business, the construction activities will not be 
``related'' and will constitute a separate enterprise if they are 
conducted independently and apart from the retail operations. Where, 
however, the retail and construction activities are conducted for a 
common business purpose, they may be ``related,'' and if they are 
performed through unified operation or common control, they will be a 
part of a single enterprise. Thus, a retail store enterprise may engage 
in construction activities as an additional outlet for

[[Page 460]]

building materials which it sells, or otherwise to serve its retail 
operations. It may act as its own contractor in constructing or 
reconstructing its own stores and related facilities. In such a case, 
the construction activities will be ``related'' activities. Other 
examples may also be cited. The answer in each case will necessarily 
depend upon all the facts.



Sec. 779.207  Related activities in retail operations.

    In the case of an enterprise which has one or more retail or service 
establishments, all of the activities which are performed for the 
furtherance of the common business purpose of operating the retail or 
service establishments are ``related activities.'' It is not material 
that the enterprise sells different goods or provides different 
services, or that it operates separate retail or service establishments. 
As stated in the definition, the enterprise includes all related 
activities whether performed ``in one or more establishments.'' Since 
the activities performed by one retail or service establishment are the 
``same or similar'' to the activities performed by another, they are, as 
such, ``related activities.'' (See Senate Report No. 145, 87th Cong. 1st 
Sess. p. 41.) For example, in operations of a single retailing business 
a drug store may sell a large variety of different products, and a 
grocery store may sell clothing and furniture and other goods. Clearly 
all of these activities are ``related.'' Similarly it is clear that all 
activities of a department store are ``related activities,'' even if the 
store sells a great variety of different types of goods and services and 
even if, as in some cases, the departmentalized business is conducted in 
more than one location, as where the department selling garden supplies 
or electrical appliances is located on separate premises. Whether on the 
same premises or at separate locations, the activities involved in 
retail selling of goods or services, of any type, are related activities 
and they will be considered one enterprise where they are performed, 
through unified operation or common control, for a common business 
purpose.



Sec. 779.208  Auxiliary activities which are ``related activities.''

    As stated in Senate Report No. 145, 87th Congress, 1st Session, 
cited in Sec. 779.206, auxiliary and service activities, such as 
central office and warehousing activities and bookkeeping, auditing, 
purchasing, advertising and other similar services, also are ``related 
activities.'' When such activities are performed through unified 
operation or common control, for a common business purpose, they will be 
included in the enterprise. The following are some additional examples 
of auxiliary activities which are ``related activities'' and which may 
be included in the enterprise:
    (a) Credit rating and collection services;
    (b) Promotional activities including advertising, sign painting, 
display services, stamp redemptions, and prize contests;
    (c) Maintenance and repair services of plant machinery and equipment 
including painting, decorating, and similar services;
    (d) Store or plant engineering, site location and related survey 
activities;
    (e) Detective, guard, watchmen, and other protective services;
    (f) Delivery services;
    (g) The operation of employee or customer parking lots;
    (h) The recruitment, hiring and training activities, and other 
managerial services;
    (i) Recreational and health facilities for customers or employees 
including eating and drinking facilities (note that employees primarily 
engaged in certain food service activities in retail establishments may 
be exempt from the overtime provisions under section 13(b)(18) of the 
Act if the specific conditions are met; see Sec. 779.388);
    (j) The operation of employee benefit and insurance plans; and
    (k) Repair and alteration services on goods for sale or sold to 
customers.



Sec. 779.209  Vertical activities which are ``related activities.''

    (a) The Senate Report also states (see Sec. 779.206 that activities 
are ``related'' when they are ``part of a vertical structure such as the 
manufacturing,

[[Page 461]]

warehousing, and retailing of a particular product or products.'' Where 
such activities are performed through unified operation or common 
control for a common business purpose they will be regarded as a part of 
the enterprise.
    (b) Whether activities are vertically ``related'' activities and 
part of a single enterprise, or whether they constitute separate 
businesses are separate enterprises, depends upon the facts in each 
case. In all of these cases of so-called ``vertical operations,'' the 
determination whether the activities are ``related,'' depends upon the 
extent to which the various business activities, such as a wholesaling 
and retailing or manufacturing and retailing, are interrelated and 
interdependent and are performed to serve a business objective common to 
all. The mere fact that they are under common ownership is not, by 
itself, sufficient to bring them within the same enterprise. Thus, where 
a manufacturing business is carried on separately from and wholly 
independently of a retail business, with neither serving the business 
purpose of the other, they are separate businesses even if they are 
under common ownership. However, where the manufacturing operations are 
performed in substantial part for the purpose of distributing the goods 
through the retail stores, or the retail outlet serves to carry out a 
business purpose of the manufacturing plant, retailing and manufacturing 
will be ``related'' activities and performed for a ``common business 
purpose,'' and they will be a single enterprise if they are performed 
through unified operations or common control.
    (c) In these cases of ``vertical operations'' a practical judgment 
will be required to determine whether the activities are maintained and 
operated as separate and distinct businesses with different objectives 
or whether they, in fact, constitute a single integrated business 
enterprise. The answer necessarily will depend upon all the facts in 
each case.



Sec. 779.210  Other activities which may be part of the enterprise.

    (a) An enterprise may perform certain activities that appear 
entirely foreign to its principal business but which may be a part of 
the enterprise because of the manner in which they are performed. In 
some cases these activities may be a very minor and incidental part of 
its business operations. For example a retail store may accept payments 
of utility bills, provide a notarial service, sell stamps, bus and 
theater tickets, or travellers' checks, etc. These and other activities 
may be entirely different from the enterprise's principal business but 
they may be performed on the same premises and by the same employees or 
otherwise under such circumstances as to be a part of the enterprise.
    (b) Sometimes such activities are performed as an adjunct to the 
principal business to create good will or to attract customers. In other 
cases, the businessman may engage in them primarily for the additional 
revenue. Some such foreign activities may be conducted in a more 
elaborate manner, as where the enterprise operates a bus stop or a post 
office substation as an adjunct to a principal business such as a hotel 
or a retail store. Where in such a case the activities are performed in 
a physically separate ``establishment'' (see Sec. Sec. 779.303-779.308) 
from the other business activities of the enterprise and are 
functionally operated as a separate business, separately controlled, 
with separate employees, separate records, and a distinct business 
objective of its own, they may constitute a separate enterprise. Where, 
however, such activities are intermingled with the other activities of 
the enterprise and have a reasonable connection to the same business 
purpose they will be a part of the enterprise.



Sec. 779.211  Status of activities which are not ``related.''

    Activities which are not related even if performed by the same 
employer are not included as a part of the enterprise. The receipts from 
the unrelated activities will not be counted toward the annual dollar 
volume of sales or business under section 3(s) and the employees 
performing such unrelated activities will not be covered merely because 
they work for the same employer. Common ownership standing alone does 
not bring unrelated activities within the

[[Page 462]]

scope of the same enterprise. If, for example, one individual owns or 
controls a bank, a filing station, and a factory, the mere fact of 
common ownership will not make them one enterprise. However, if it 
appears that there is a reasonable relationship of all the activities to 
a single business purpose a different conclusion might be warranted. 
Activities which are not ``related'' will be treated separately for 
purposes of the tests contained in section 3(s)(1) through (5) of the 
prior Act and section 3(s)(1) through (4) of the amended Act. For 
example, in the case where a single company operates retail grocery 
stores and also engages in an unrelated business of constructing homes, 
one ``enterprise'' for purposes of section 3(s)(1) of both the prior and 
the amended Act will consist of the retail grocery stores and any 
activities related to them, and home construction activities will 
constitute a separate enterprise. The latter will not be included in 
determining whether the retail business enterprise meets the conditions 
of section 3(s)(1), and the construction employees will not be covered 
merely because the retail business is covered. The construction business 
will be considered separately under section 3(s)(4) of the poor Act and 
section 3(s)(3) of the amended Act.

                         Common Business Purpose



Sec. 779.212  Enterprise must consist of related activities performed 
for a ``common business purpose.''

    The related activities described in section 3(r) as included in the 
statutory enterprise are those performed for a ``common business 
purpose.'' (See the comprehensive discussion in 29 CFR part 776.) The 
term ``common business purpose'' as used in the definition does not have 
a narrow concept and is not intended to be limited to a single business 
establishment or a single type of business. As pointed out above, 
retailing, wholesaling and manufacturing may, under certain 
circumstances be engaged in for a ``common business purpose.'' (See 
Sec. 779.209.) An example was also cited where retailing and 
construction were performed for a common business purpose. (See Sec. 
779.206.) On the other hand, it is clear that even a single individual 
or corporation may perform activities for different business purposes. 
(See Sec. 779.211.) Thus the reports of the House of Representatives 
cite, as an example of this, the case of a single company which owns 
several retail apparel stores and is also engaged in the lumbering 
business. It concludes that these activities are not part of a single 
enterprise. (H. Rept. 75, 87th Cong.,1st Sess., p. 7 and H. Rept. 1366, 
89th Cong. 2d Sess., p. 9.)



Sec. 779.213  What is a common business purpose.

    Generally, the term ``common business purpose'' will encompass 
activities whether performed by one person or by more than one person, 
or corporation, or other business organization, which are directed to 
the same business objective or to similar objectives in which the group 
has an interest. The scope of the term ``enterprise'' encompasses a 
single business entity as well as a unified business system which 
performs related activities for a common business purpose. What is a 
``common business purpose'' in any particular case involves a practical 
judgment based on the facts in the light of the statutory provisions and 
the legislative intent. The answer ordinarily will be readily apparent 
from the facts. The facts may show that the activities are related to a 
single business objective or that they are so operated or controlled as 
to form a part of a unified business system which is directed to a 
single business objective. In such cases, it will follow that they are 
performed for a common business purpose. Where, however, the facts show 
that the activities are not performed as a part of such enterprise but 
for an entirely separate and unrelated business, they will be considered 
performed for a different business purpose and will not be a part of 
that enterprise. The application of these principles is considered in 
more detail in part 776 of this chapter.



Sec. 779.214  ``Business'' purpose.

    The activities described in section 3(r) are included in an 
enterprise only when they are performed for a ``business'' purpose. 
Activities of eleemosynary, religious, or educational organization may 
be performed for a business

[[Page 463]]

purpose. Thus, where such organizations engage in ordinary commercial 
activities, such as operating a printing and publishing plant, the 
business activities will be treated under the Act the same as when they 
are performed by the ordinary business enterprise. (See Mitchell v. 
Pilgrims Holiness Church Corp., 210 F. 2d 879 (CA-7); cert. den. 347 
U.S. 1013.) However, the nonprofit educational, religious, and 
eleemosynary activities will not be included in the enterprise unless 
they are of the types which the last sentence of section 3(r), as 
amended in 1966, declares shall be deemed to be performed for a business 
purpose. Such activities were not regarded as performed for a business 
purpose under the prior Act and are not so considered under the Act as 
it was amended in 1966 except for those activities listed in the last 
sentence of amended section 3(r). (See Sec. 779.21.)

                   Unified Operation or Common Control



Sec. 779.215  General scope of terms.

    (a) Under the definition related activities performed for a common 
business purpose will be a part of the enterprise when they are 
performed either through ``unified operation'' or ``common control.'' It 
should be noted that these conditions are stated in the alternative. 
Thus if it is established that the described activities are performed 
through ``common control,'' it is unnecessary to show that they are also 
performed through ``unified operation,'' although frequently both 
conditions may exist.
    (b) Under the definition the terms ``unified operation'' and 
``common control'' refer to the performance of the ``related 
activities.'' They do not refer to the ownership of the activities. 
Although ownership may be a significant factor in determining control 
(see Sec. 779.222), the related activities will be a part of the 
enterprise even if they are not under common ownership, so long as they 
are performed for a common business purpose through unified operation or 
common control. Further, under the definition the terms ``unified 
operation'' and ``common control'' refer to the performance only of the 
particular related activities and not to other activities which may be 
performed by the various persons, corporations, or other business 
organizations, comprising the enterprise. Thus where two or more 
individual or business organizations perform certain of their activities 
through unified operation or common control, these activities will be 
part of a single enterprise, assuming of course they are related 
activities performed for a common business purpose. Finally, the 
definition in section 3(r) makes clear that the described activities may 
be performed through unified operation or common control ``in one or 
more establishments or by one or more corporate or other organizational 
units.'' The Senate Report on the 1966 amendments makes the following 
comment with respect to this:

    Also, the operations through substantial ownership or control of a 
number of firms engaged in similar types of business activities 
constitute, in the committee's view, related activities performed 
through unified operation or common control within the meaning of the 
definition of enterprise. The fact the firms are independently 
incorporated or physically separate or under the immediate direction of 
local management, as in Wirtz v. Hardin, 16 Wage Hour Cases 722 (N.D. 
Ala.), is not determinative of this question. (Sen. Rept. No. 1487, 89th 
Congress, 2nd session, page 7.)


But where, as in the case of a retail store owned by a partnership and 
another store owned by one of the partners providing similar goods or 
services, it appears that the activities of the separate stores have no 
functional interdependence and that they are separately conducted to 
serve the business purpose of the partnership on the one hand and the 
business purpose of the individual on the other hand, the requirement of 
performance ``through common control'' of ``related activities'' for a 
``common business purpose'' may not be sufficiently met.



Sec. 779.216  Statutory construction of the terms.

    The terms ``unified operation'' and ``common control'' do not have a 
fixed legal or technical meaning. As used in the definition, these and 
other terms must be given an interpretation consistent with the 
Congressional intention to be ascertained from the context in which they 
are used, the legislation

[[Page 464]]

of which they form a part, and the legislative history. In extending 
coverage of the Act on an ``enterprise'' basis, the Congress intended, 
by the 1961 and 1966 amendments to cover, among others, business 
organizations and chain store systems which may perform their related 
activities through complex business arrangements or business structures, 
whether they perform their activities for a common business purpose 
through unified operation or through the retention or exercise of 
control. For these reasons, the definition of the term ``enterprise'' is 
stated in broad general terms. This legislative intent is evidenced both 
by the statements in the Committee Reports and by the definition itself, 
particularly the broad references to the inclusion in the ``enterprise'' 
of ``all such activities'' whether performed ``in one or more 
establishments'' or ``by one or more corporate or other organizational 
units.'' When the Act was amended in 1966 the Congress further broadened 
coverage by redefining an enterprise engaged in commerce or in the 
production of goods for commerce in section 3(s). (See Sec. 779.22.) 
Where the Congress intended to exclude certain arrangements or 
activities from the ``enterprise'' it did so by specific provision under 
the prior and amended Act.



Sec. 779.217  ``Unified operation'' defined.

    Webster defines the word ``unify'' to mean ``to cause to be one; to 
make into a unit; to unite.'' The pertinent definition of ``operation'' 
is a method or way of operating, working or functioning. Since the term 
``unified operation'' has reference to the method of performing the 
related activities, it means combining, uniting, or organizing their 
performance so that they are in effect a single business unit or an 
organized business system which is an economic unit directed to the 
accomplishment of a common business purpose. The term ``unified 
operation'' thus includes a business which may consist of separate 
segments but which is conducted or operated as a unit or as a single 
business for a common business purpose.



Sec. 779.218  Methods to accomplish ``unified operation.''

    There are many instances where several establishments, persons, 
corporations, or other business organizations, join together to perform 
some or all of their activities as a unified business or business 
system. They may accomplish such unification through agreements, 
franchises, grants, leases, or other arrangements which have the effect 
of aligning or integrating the activities of one company with the 
activities of others so that they constitute a single business or 
unified business system. Whether in any particular case the activities 
are performed through ``unified operation'' and have the effect of 
creating a single enterprise, will depend upon all the facts, including 
the manner in which the activities are performed, the agreements and 
arrangements which govern their performance, and the other relationships 
between the parties, considered in the light of the statutory provision 
and the legislative intent. (cf Wirtz v. Wornom's Pharmacy (E.D. Va.), 
18 WH Cases 289, 365; 57 Labor Cases 32,006, 32,030.)



Sec. 779.219  Unified operation may be achieved without common control
or common ownership.

    The performance of related activities through ``unified operation'' 
to serve a common business purpose may be achieved without common 
control and without common ownership. In particular cases ownership or 
control of the related activities may be factors to be considered, along 
with all facts and circumstances, in determining whether the activities 
are performed through ``unified operation.'' It is clear from the 
definition that if the described activities are performed through 
unified operation they will be part of the enterprise whether they are 
performed by one company or by more than one corporate or other 
organizational unit. The term ``unified operation'' has reference 
particularly to enterprises composed of a number of separate companies 
as is clear in the quotation from the Senate Report in Sec. 779.215. 
Where the related activities are performed by a single company, or under 
other single ownership, they will ordinarily be performed through 
``common control,''

[[Page 465]]

and the question of whether they are also performed through unified 
operation will not need to be decided. (Wirtz v. Barnes Grocer Co., 398 
F. 2d 718 (C.A. 8).)



Sec. 779.220  Unified operation may exist as to separately owned or 
controlled activities which are related.

    Whether there is unified operation of related activities will thus 
be of concern primarily in those cases where the related activities are 
separately owned or controlled but where, through arrangement, agreement 
or otherwise, they are so performed as to constitute a unified business 
system organized for a common business purpose. For example, a group of 
separately incorporated, separately owned companies, may agree to 
conduct their activities in such manner as to be for all intents and 
purposes a single business system except for the fact that the ownership 
and control of the individual segments of the business are retained, in 
part or in whole, by the individual companies comprising the unified 
business system. The various units may operate under a single trade 
name; construct their establishment to appear identical; use identical 
equipment; sell generally the same goods or provide the same type of 
services, and, in some cases, at uniform standardized prices; and in 
other respects appear to the persons utilizing their services or 
purchasing their goods as being the same business. They also may arrange 
for group purchasing and warehousing; for advertising as a single 
business; and for standardization of their records, as well as their 
credit, employment, and other business policies and practices. In such 
circumstances the activities may well be performed through ``unified 
operation'' sufficient to consider all of the related activities 
performed by the group of units as constituting one enterprise, despite 
the separate ownership of the various segments and despite the fact that 
the individual units or segments may retain control as to some or all of 
their own activities. That this is in accord with the congressional 
intent is plain, since where the Congress intended that such 
arrangements shall not bring a group of certain individual retail or 
service establishments into a single enterprise, provision to accomplish 
such exception was specifically included. (See Sec. 779.226, discussing 
the proviso in section 3(r) with respect to certain franchise and other 
specified arrangements entered into between independently owned retail 
or service establishments and other businesses.)



Sec. 779.221  ``Common control'' defined.

    Under the definition the ``enterprise'' includes all related 
activities performed through ``common control'' for a common business 
purpose. The word ``control'' may be defined as the act of fact of 
controlling; power or authority to control; directing or restraining 
domination. ``Control'' thus includes the power or authority to control. 
In relation to the performance of the described activities, the 
``control,'' referred to in the definition in section 3(r) includes the 
power to direct, restrict, regulate, govern, or administer the 
performance of the activities. ``Common'' control includes the sharing 
of control and it is not limited to sole control or complete control by 
one person or corporation. ``Common'' control therefore exists where the 
performance of the described activities are controlled by one person or 
by a number of persons, corporations, or other organizational units 
acting together. This is clearly supported by the definition which 
specifically includes in the ``enterprise'' all such activities whether 
performed by ``one or more corporate or other organizational units.'' 
The meaning of ``common control'' is discussed comprehensively in part 
776 of this chapter.



Sec. 779.222  Ownership as factor.

    As pointed out in Sec. 779.215 ``unified operation'' and ``common 
control'' do not refer to the ownership of the described activities but 
only to their performance. It is clear, however, that ownership may be 
an important factor in determining whether the activities are performed 
through ``unified operation or common control.'' Thus common control may 
exist where there is common ownership. Where the right to control, one 
of the prerogatives of ownership, exists, there may be sufficient 
``control'' to meet the requirements of

[[Page 466]]

the statute. Ownership, or sufficient ownership to exercise control, 
will be regarded as sufficient to meet the requirement of ``common 
control.'' Where there is such ownership, it is immaterial that some 
segments of the related activities may operate on a semiautonomous 
basis, superficially free of actual control, so long as the power to 
exercise control exists through such ownership. (See Wirtz v. Barnes 
Grocer Co., 398 F. 2d 718 (C.A. 8).) For example, a parent corporation 
may operate a chain of retail or service establishments which, for 
business reasons, may be divided into several geographic units. These 
units may have certain autonomy as to purchasing, marketing, labor 
relations, and other matters. They may be separately incorporated, and 
each unit may maintain its own records, including records of its profits 
or losses. All the units together, in such a case, will constitute a 
single enterprise with the parent corporation. They would constitute a 
single business organization under the ``common control'' of the parent 
corporation so long as they are related activities performed for a 
common business purpose. The common ownership in such cases provides the 
power to exercise the ``control'' referred to in the definition. It is 
clear from the Act and the legislative history that the Congress did not 
intend that such a chain organization should escape the effects of the 
law with respect to any segment of its business merely by separately 
incorporating or otherwise dividing the related activities performed for 
a common business purpose.



Sec. 779.223  Control where ownership vested in individual or single 
organization.

    Ownership, sufficient to exercise ``control,'' of course, exists 
where total ownership is vested in a single person, family unit, 
partnership, corporation, or other single business organization. 
Ownership sufficient to exercise ``control'' exist also where there is 
more than 50 percent ownership of voting stock. (See West v. Wal-Mart, 
264 F. Supp. 168 (W.D. Ark.).) But ``control'' may exist with much more 
limited ownership, and, in certain cases exists in the absence of any 
ownership. The mere ownership of stock in a corporation does not by 
itself establish the existence of the ``control'' referred to in the 
definition. The question whether the ownership in a particular case 
includes the right to exercise the requisite ``control'' will 
necessarily depend upon all the facts in the light of the statutory 
provisions.



Sec. 779.224  Common control in other cases.

    (a) As stated in Sec. 779.215 ``common control'' may exist with or 
without ownership. The actual control of the performance of the related 
activities is sufficient to establish the ``control'' referred to in the 
definition. In some cases an owner may actually relinquish his control 
to another, or by agreement or other arrangement, he may so restrict his 
right to exercise control as to abandon the control or to share the 
control of his business activities with other persons or corporations. 
In such a case, the activities may be performed under ``common 
control.'' In other cases, the power to control may be reserved through 
agreement or arrangement between the parties so as to vest the control 
of the activities of one business in the hands of another.
    (b) Activities are considered to be performed under ``common 
control'' even if, because of the particular methods of operation, the 
power to control is only seldom used, as where the business has been in 
operation for a long time without change in methods of operation and 
practically no actual direction is necessary; also common control may 
exist where the control, although rarely visibly exercised, is evidenced 
by the fact that mere suggestions are adopted readily by the business 
being controlled.
    (c) In the retail industry, particularly, there are many instances 
where, for business reasons, related activities performed by separate 
companies are so unified or controlled as to constitute a single 
enterprise. A common example, specifically named in the definition, is 
the leased department. This and other examples are discussed in 
Sec. Sec. 779.225 through 779.235.

[[Page 467]]

      Leased Departments, Franchise and Other Business Arrangements



Sec. 779.225  Leased departments.

    (a) As stated in section 3(r) of the enterprise includes 
``departments of an establishment operated through leasing 
arrangements.'' This statutory provision is based on the fact that 
ordinarily the activities of such leased departments are related to the 
activities of the establishment in which they are located, and they are 
performed for a common business purpose either through ``unified 
operation'' or ``common control.'' A general discussion will be found in 
part 776 of this chapter.
    (b) In the ordinary case, a retail or service establishment may 
control many of the operations of a leased department therein and unify 
its operation with its own. Thus, they may operate under a common trade 
name: The host establishment may determine, or have the power to 
determine, the leased department's space location, the type of 
merchandise it will sell, its pricing policy, its hours of operation and 
some or all of its hiring, firing and other personnel policies; 
advertising, adjustment and credit operations, may be unified, and 
insurance, taxes, and other matters may be included as a part of the 
total operations of the establishment. Some or all of these and other 
functions, which are the normal prerogatives of an independent 
businessman, may be controlled or unified with the store's other 
activities in such a way as to constitute a single enterprise under the 
Act.
    (c) Since the definition specifically includes in the 
``enterprise,'' for the purpose of this Act, ``departments of an 
establishment operated through leasing arrangements,'' any such 
department will be considered a part of the host establishment's 
enterprise in the absence of special facts and circumstances warranting 
a different conclusion.
    (d) Whether, in a particular case, the relationship is such as to 
constitute the lessee's operation to be a separate establishment of a 
different enterprise rather than a ``leased department'' of the host 
establishment as described in the definition, will depend upon all the 
facts including the agreements and arrangements between the parties as 
well as the manner in which the operations are conducted. If, for 
example, the facts show that the lessee occupies a physically separate 
space with (or even without) a separate entrance, and operates under a 
separate name, with his own separate employees and records, and in other 
respects conducts his business independently of the lessor's, the lessee 
may be operating a separate establishment or place of business of his 
own and the relationship of the parties may be only that of landlord and 
tenant. In such a case, the lessee's operation will not be regarded as a 
``leased department'' and will not be included in the same enterprise 
with the lessor.
    (e) The employees of a leased department would not be covered on an 
enterprise basis if such leased department is located in an 
establishment which is not itself a covered enterprise or part of a 
covered enterprise. Likewise, the applicability of exemptions for 
certain retail or service establishments from the Act's minimum wage or 
overtime pay provisions, or both, to employees of a leased department 
would depend upon the character of the establishment in which the leased 
department is located. Other sections of this subpart discuss the 
coverage of leased retail and service departments in more detail while 
subpart D of this part explains how exemptions for certain retail and 
service establishments apply to leased department employees.



Sec. 779.226  Exception for an independently owned retail or service 
establishment under certain franchise and other arrangements.

    While certain franchise and other arrangements may operate to bring 
the one to whom the franchise is granted into another enterprise (see 
Sec. 779.232), section 3(r) contains a specific exception for certain 
arrangements entered into by a retail or service establishment which is 
under independent ownership. The specific exception in section 3(r) 
reads as follows:

    Provided, That, within the meaning of this subsection, a retail or 
service establishment which is under independent ownership shall not be 
deemed to be so operated or controlled as to be other than a separate 
and distinct enterprise by reason of any arrangement, which includes, 
but is not necessarily

[[Page 468]]

limited to, an agreement, (1) that it will sell, or sell only, certain 
goods specified by a particular manufacturer, distributor, or 
advertiser, (2) that it will join with other such establishments in the 
same industry for the purpose of collective purchasing, or (3) that it 
will have the exclusive right to sell the goods or use the brand name of 
a manufacturer, distributor, or advertiser within a specified area, or 
by reason of the fact that it occupies premises leased to it by a person 
who also leases premises to other retail or service establishments.



Sec. 779.227  Conditions which must be met for exception.

    This exception, in accordance with its specific terms, will apply to 
exclude an establishment from enterprise coverage only if the following 
conditions are met:
    (a) The establishment must be a ``retail or service establishment'' 
as this term is defined in section 13(a)(2) of the Act (see discussion 
of this term in Sec. Sec. 779.312 and 779.313); and
    (b) The retail or service establishment must not be an 
``enterprise'' which is large enough to come within the scope of section 
3(s) of the Act; and
    (c) The retail or service establishment must be under independent 
ownership.



Sec. 779.228  Types of arrangements contemplated by exception.

    If the retail or service establishment meets the requirements in 
paragraphs (a) through (c) of Sec. 779.227, it may enter into the 
following arrangements without becoming a part of the larger enterprise, 
that is, without losing its status as a ``separate and distinct 
enterprise'' to which section 3(s) would not otherwise apply:
    (a) Any arrangement, whether by agreement, franchise or otherwise, 
that it will sell, or sell only certain goods specified by a particular 
manufacturer, distributor, or advertiser.
    (b) Any such arrangement that it will have the exclusive right to 
sell the goods or use the brand name of a manufacturer, distributor, or 
advertiser within a specified area.
    (c) Any such arrangement by which it will join with other similar 
retail or service establishments in the same industry for the purpose of 
collective purchasing. Where an agreement for ``collective purchasing'' 
is involved, further requirements are imposed, namely, that all of the 
other establishments joining in the agreement must be retail or service 
establishments under independent ownership, and that all of the 
establishments joining in the collective purchasing arrangement must be 
``in the same industry.'' This has reference to such arrangements by a 
group of grocery stores, or by some other trade group in the retail 
industry.
    (d) Any arrangement whereby the establishment's premises are leased 
from a person who also leases premises to other retail or service 
establishments. In connection with this rental arrangement, the Senate 
Report cites as an example the retail establishment which rents its 
premises from a shopping center operator (S. Rept. 145, 87th Cong., 1st 
Sess., p. 41). It is clear that this exception was not intended to apply 
to the usual leased department in an establishment, which is 
specifically included within the larger enterprise under the definition 
of section 3(r). (See discussion under Sec. 779.225.)



Sec. 779.229  Other arrangements.

    With respect to those arrangements specifically described in the 
proviso contained in the definition, an independently owned retail or 
service establishment will not be considered to be other than a separate 
and distinct enterprise, if other arrangements the establishment makes 
do not have the effect of bringing the establishment within a larger 
enterprise. Whether or not other arrangements have such an effect will 
necessarily depend upon all the facts. The Senate Report makes the 
following observations with respect to this:

    Thus the mere fact that a group of independently owned and operated 
stores join together to combine their purchasing activities or to run 
combined advertising will not for these reasons mean that their 
activities are performed through unified operation or common control and 
they will not for these reasons be considered a part of the same 
``enterprise.'' This is also the case in food retailing because of the 
great extent to which local independent food store operators have joined 
together in many phases of their business. While maintaining their 
stores as independently owned units, they have affiliated

[[Page 469]]

together not just for the purchasing of merchandise, but also for 
providing numerous other services such as (1) central warehousing; (2) 
advertising; (3) sales promotions; (4) managerial advice; (5) store 
engineering; (6) accounting systems; (7) site locations; and (8) 
hospitalization and life insurance protection. (S. Rept. 145, 87th 
Cong., 1st Sess., p. 42.)


The report continues with the following observations:

    Whether such arrangements bring the establishment within the 
franchisor's, lessor's, or grantor's ``enterprise'' is a question to be 
determined on all the facts. The facts may show that the arrangements 
reserve the necessary right of control in the grantor or unify the 
operations among the separate ``franchised'' establishments so as to 
create an economic unity of related activities for a common business 
purpose. In that case, the ``franchised'' establishment will be 
considered a part of the same ``enterprise.'' For example, whether a 
franchise, lease, or other contractual arrangement between a distributor 
and a retail dealer has the effect of bringing the dealer's 
establishments within the enterprise of the distributor will depend upon 
the terms of the agreements and the related facts concerning the 
relationship between the parties.
    There may be a number of different types of arrangements established 
in such cases. The key in each case may be found in the answer to the 
question, ``Who receives the profits, suffers the losses, sets the wages 
and working conditions of employees, or otherwise manages the business 
in those respects which are the common attributes of an independent 
businessman operating a business for profit?''
    For instance, a bona fide independent automobile dealer will not be 
considered a part of the enterprise of the automobile manufacturer or of 
the distributor. Likewise, the same result will also obtain with respect 
to the independent components of a shopping center.
    In all of these cases if it is found on the basis of all the facts 
and circumstances that the arrangements are so restrictive as to 
products, prices, profits, or management as to deny the ``franchised'' 
establishment the essential prerogatives of the ordinary independent 
businessman, the establishment, the dealer, or concessionaire will be 
considered an integral part of the related activities of the enterprise 
which grants the franchise, right, or concession. (S. Rept. 145, 87th 
Cong., 1st Sess., p. 42.)


Thus, there may be a number of different types of arrangements 
established in such cases, and the determination as to whether the 
arrangements create a larger ``enterprise'' will necessarily depend on 
all the facts. Some arrangements which do not create a larger enterprise 
and some which do are discussed in Sec. Sec. 779.230 through 779.235.



Sec. 779.230  Franchise and other arrangements.

    (a) There are many different and complex arrangements by which 
businesses may join to perform their activities for a common purpose. A 
general discussion will be found in part 776 of this chapter. The 
quotation in Sec. 779.229 from the Senate Report shows that Congress 
recognized that some franchise, lease, or other arrangements have the 
effect of creating a larger enterprise and whether they do or not 
depends on the facts. The facts may show that the arrangements are so 
restrictive as to deprive the individual establishment of those 
prerogatives which are the essential attributes of an independent 
business. (Compare Wirtz v. Lunsford, 404 F. 2d, 693 (C.A. 6).) An 
establishment through such arrangements may transfer sufficient 
``control'' so that it becomes in effect a unit in a unified chain 
operation. In such cases the result of the arrangement will be to create 
a larger enterprise composed of the various segments, including the 
establishment which relinquishes its control.
    (b) The term ``franchise'' is not susceptible of precise definition. 
The extent to which a businessman relinquishes the control of his 
business or the extent to which a franchise results in the performance 
of the activities through unified operation or common control depends 
upon the terms of the contract and the other relationships between the 
parties. Ultimately the determination of the precise scope of such 
arrangements which result in creating larger enterprises rests with the 
courts.



Sec. 779.231  Franchise arrangements which do not create a larger enterprise.

    (a) While it is clear that in every franchise a businessman 
surrenders some rights, it equally is clear that every franchise does 
not create a larger

[[Page 470]]

enterprise. In the ordinary case a franchise may involve no more than an 
agreement to sell the particular product of the one granting the 
franchise. It may also prohibit the sale of a competing product. Such 
arrangements, standing alone, do not deprive the individual businessman 
of his ``control'' so as to bring him into a larger enterprise with the 
one granting the franchise.
    (b) The portion of the Senate Report quoted in the Sec. 779.229 
cites a ``bona fide independent automobile dealer'' as an example of 
such a franchise arrangement. (It is recognized that salesmen, 
mechanics, and partsmen primarily engaged in selling or servicing 
automobiles, trucks, trailers, farm implements, or aircraft, employed by 
nonmanufacturing establishments primarily engaged in the business of 
selling such vehicles to ultimate purchasers are specifically exempt 
from the overtime pay provisions under section 13(b)(10) of the Act. 
Section 779.372 discusses the exemption provided by section 13(b)(10) 
and its application whether or not the establishment meets the Act's 
definition of a retail or service establishment. The automobile dealer 
is used here only as an example of the type of franchise arrangement 
which, within the intent of the Congress, does not result in creating a 
larger enterprise.) The methods of operation of the independent 
automobile dealer are widely known. While he operates under a franchise 
to sell a particular make of automobile and also may be required to 
stock certain parts and to maintain specified service facilities, it is 
clear that he retains the control of the management of his business in 
those respects which characterize an independent businessman. He 
determines the prices for which he sells his merchandise. Even if prices 
are suggested by the manufacturer, it is well known that the dealer 
exercises wide discretion in this respect, free of control by the 
manufacturer or distributor. Also the automobile dealer retains control 
with respect to the management of his business, the determination of his 
employment practices, the operation of his various departments, and his 
business policies. The type of business in which he is engaged leaves 
him wide latitude for the exercise of his judgment and for decisions 
with respect to important aspects of his business upon which its success 
or failure depends. On the basis of these considerations, it is evident 
why the independent automobile dealer was cited as an example of the 
type of franchise which does not create a larger enterprise encompassing 
the dealer, the manufacturer or the distributor. Similar facts will lead 
to the same conclusion in other such arrangements.



Sec. 779.232  Franchise or other arrangements which create a larger 
enterprise.

    (a) In other instances, franchise arrangements do result in bringing 
a dealer's business into a larger enterprise with the one granting the 
franchise. Where the franchise arrangement results in vesting control 
over the operations of the dealer's business in the one granting the 
franchise, the result is to place the dealer in a larger enterprise with 
the one granting the franchise. Where there are multiple units to which 
such franchises have been granted, the several dealers are considered to 
be subject to the common control of the one granting the franchise and 
all would be included in the same larger enterprise.
    (b) It is not possible to lay down specific rules to determine 
whether a franchise or other agreement is such that a single enterprise 
results because all the facts and circumstances must be examined in the 
light of the definition of the term ``enterprise'' as discussed above in 
this subpart. However, the following example illustrates a franchising 
company and independently owned retail establishments which would 
constitute a single enterprise:
    (1) The franchisor had developed a system of retail food store 
operations, built up a large volume of buying power, formulated rules 
and regulations for the successful operation of stores together 
constituting a system which for many years proved in practice to be of 
commercial value to the separate stores; and
    (2) The franchisor desired to extend its business through the 
operation of associated franchise stores, by responsible persons in 
various localities to act as limited agents, and to be parts

[[Page 471]]

of the system, to the end that the advantages of and the profits from 
the business could be enjoyed by those so associated as well as by the 
franchisor; and
    (3) The stores were operated under the franchise as part of the 
general system and connected with the home office of the franchisor from 
which general administrative jurisdiction was exercised over all 
franchised stores, wherever located; and
    (4) The stores operated under the franchise agreement were always 
subject to the general administrative jurisdiction of the franchisor and 
agreed to comply with it; and
    (5) The stores operated under the franchise agreed to install 
appliances, fixtures, signs, etc. according to plans and specifications 
provided by the franchisor and to purchase their merchandise through the 
franchisor except to the extent that the latter may authorize local 
purchase of certain items; and
    (6) The stores operated under the franchise agreed to participate in 
special promotions, sales and advertising as directed by the franchisor, 
to attend meetings of franchise store operators and to pay a fee to the 
franchisor at the rate of one-half of 1 percent of total gross sales 
each month for the privileges to them and the advantages and profits 
derived from operating a local unit of the franchisor's system; and
    (7) The franchisor under the franchise agreement had the right to 
place on a prohibited list any merchandise which it considered 
undesirable for sale in a franchise store, and the stores operated 
pursuant to the franchise agreed to immediately discontinue sale of any 
such blacklisted merchandise.
    (c) It is clear from the facts and circumstances surrounding this 
franchise arrangement described in paragraph (b) of this section that 
the operators of the franchised establishments are denied the essential 
prerogatives of the ordinary independent businessman because of 
restrictions as to products, prices, profits and management. The last 
paragraph of the Senate Report quoted in Sec. 779.229 makes clear that 
in such cases the franchised establishment, dealer, or concessionaire 
will be considered an integral part of the related activities of the 
enterprise which grants the franchise, right, or concession.



Sec. 779.233  Independent contractors performing work ``for'' an 
enterprise.

    (a) The definition in section 3(r) specifically provides that the 
``enterprise'' shall not include ``the related activities performed for 
such enterprise by an independent contractor.'' This exclusion will 
apply where the related activities are performed ``for'' the enterprise 
and if such activities are performed by ``an independent contractor.'' 
This provision is discussed generally in part 776 of this chapter.
    (b) The Senate Report in referring to this exception states as 
follows:

    It does not include the related activities performed for such an 
enterprise by an independent contractor, such as an independent 
accounting firm or sign service or advertising company, * * * (S. Rept. 
No. 145, 87th Cong., 1st Sess., p. 40).


The term ``independent contractor'' as used in section 3(r) has 
reference to an independent business which performs services for other 
businesses as an established part of its own business activities. The 
term ``independent contractor'' as used in 3(r) thus has reference to an 
independent business which is a separate ``enterprise,'' and which deals 
in the ordinary course of its own business operations, at arms length, 
with the enterprises for which it performs services.
    (c) There are many instances in industry where one business performs 
activities for separate businesses without becoming a part of a larger 
enterprise. In addition to the examples cited in the Report they may 
include such services as repairs, window cleaning, transportation, 
warehousing, collection services, and many others. The essential test in 
each case will be whether such services are performed ``for'' the 
enterprise by an independent, separate enterprise, or whether the 
related activities are performed for a common purpose through unified 
operation or common control. In the latter case the activities will be 
considered performed ``by'' the enterprise, rather than ``for'' the 
enterprise, and will be a part of the enterprise. The distinction in the 
ordinary case will be readily apparent from

[[Page 472]]

the facts. In those cases where questions arise a determination must be 
made on the basis of all the facts in the light of the statute and the 
legislative history.



Sec. 779.234  Establishments whose only regular employees are the 
owner or members of his immediate family.

    Section 3(s) provides that any ``establishment which has as its only 
regular employees the owner thereof or the parent, spouse, child, or 
other member of the immediate family of such owner'' shall not be 
considered to be an ``enterprise'' as described in section 3(r) or a 
part of any other enterprise. Further the sales of such establishment 
are not included for the purpose of determining the annual gross volume 
of sales of any enterprise for the purpose of section 3(s). The term 
``other member of the immediate family of such owner'' is considered to 
include relationships such as brother, sister, grandchildren, 
grandparents, and in-laws but not distant relatives from separate 
households. The 1966 amendments extended the exception to include family 
operated establishments which only employ persons other than members of 
the immediate family infrequently, irregularly, and sporadically. (See 
general discussion in part 776 of this chapter.)



Sec. 779.235  Other ``enterprises.''

    No attempt has been made in the discussion of the term 
``enterprise,'' to consider every possible situation which may, within 
the meaning of section 3(r), constitute an ``enterprise'' under the Act. 
The discussion is designed to explain and illustrate the application of 
the term in some cases; in others, the discussion may serve as a guide 
in applying the criteria of the definition to the particular fact 
situation. A more complete discussion is contained in part 776 of this 
chapter.

                           Covered Enterprises



Sec. 779.236  In general.

    Sections 779.201 through 779.235 discuss the various criteria for 
determining what business unit or units constitute an ``enterprise'' 
within the meaning of the Act. Sections 779.237 through 779.245 discuss 
the criteria for determining what constitutes a ``covered enterprise'' 
under the Act with respect to the conditions for coverage of those 
enterprises in which retail sale of goods or services are made. As 
explained in Sec. Sec. 779.2 through 779.4, previously covered 
employment in retail and service enterprises will be subject to 
different monetary standards than newly covered employment in such 
enterprises until February 1, 1971. For this reason the enterprise 
coverage provisions of both the prior and the amended Act are discussed 
in the following sections of this subpart.



Sec. 779.237  Enterprise engaged in commerce or in the production 
of goods for commerce.

    Under section 3(s) the ``enterprise'' to be covered must be an 
``enterprise engaged in commerce or in the production of goods for 
commerce.'' This is defined in section 3(s) as follows:

    Enterprise engaged in commerce or in the production of goods for 
commerce means an enterprise which has employees engaged in commerce or 
in the production of goods for commerce, including employees handling, 
selling or otherwise working on goods that have been moved in or 
produced for commerce by any person * * *.


In order for an enterprise to come within the coverage of the Act, it 
must, therefore, be established that the enterprise has some employees 
who are:
    (a) Engaged in commerce or in the production of goods for commerce, 
including
    (b) Employees handling, selling or otherwise working on goods that 
have been moved in or produced for commerce by any person.

The legislative history of the 1966 amendments does not indicate a 
difference between the meaning of the above wording and the wording used 
in the prior Act. (See Sec. 779.22.) For a complete discussion of the 
employees who come within the quoted language see subpart B of the 
Interpretative Bulletin on general coverage, part 776 of this chapter.

[[Page 473]]



Sec. 779.238  Engagement in described activities determined on
annual basis.

    As set forth in the preceding section an enterprise to be a 
``covered enterprise'' must have at least some employees engaged in 
certain described activities. This requirement will be determined on an 
annual basis in order to give full effect to the intent of Congress. 
Thus, it is not necessary that the enterprise have two or more employees 
engaged in the named activities every week. An enterprise described in 
section 3(s)(1) or (5) of the prior Act or in section 3(s)(1) of the Act 
as it was amended in 1966 will be considered to have employees engaged 
in commerce or in the production of goods for commerce, including the 
handling, selling or otherwise working on goods that have been moved in 
or produced for commerce by any person, if during the annual period 
which it uses in calculating its annual sales for purposes of the other 
conditions of these sections, it regularly and recurrently has at least 
two or more employees engaged in such activities. On the other hand, it 
is plain that an enterprise that has employees engaged in such 
activities only in isolated or sporadic occasions, will not meet this 
condition.



Sec. 779.239  Meaning of ``engaged in commerce or in the production 
of goods for commerce.''

    The term ``engaged in commerce or in the production of goods for 
commerce,'' as used in section 3(s) of the Act in reference to employees 
who are so engaged is the same as the term which has been used in the 
Act for many years. The statutory definitions of these terms are set 
forth in Sec. Sec. 779.12 through 779.16. The interpretative bulletin 
on general coverage part 776 of this chapter) contains the Division's 
interpretations as to which employees are ``engaged in commerce or in 
the production of goods for commerce.'' These interpretations are 
equally applicable under section 3(s) in determining which employees are 
``engaged in commerce or in the production of goods for commerce'' 
within the meaning of this section. A brief discussion of the guiding 
principles of retail or service establishments are ``engaged in commerce 
or in the production of goods for commerce'' is set forth in subpart B 
of this part.

  Employees Handling, Selling, or Otherwise Working on Goods That Have 
          Been Moved in or Produced for Commerce by Any Person



Sec. 779.240  Employees ``handling * * * or otherwise working on goods.''

    (a) ``Goods'' upon which the described activities are performed. 
Employees will be considered to be handling, selling, or otherwise 
working on goods within the meaning of section 3(s) if they engage in 
the described activities on ``goods'' which ``have been moved in or 
produced for commerce by any person.'' They may be handling or working 
on such goods which the enterprise does not sell. The term ``goods'' is 
defined in section 3(i) of the Act. The definition is explained in Sec. 
779.107 and discussed comprehensively in part 776 of this chapter. As 
defined in section 3(i) of the Act, the term includes any part or 
ingredient of ``goods'' and, in general, includes ``articles or subjects 
of commerce of any character.'' Thus the term ``goods,'' as used in 
section 3(s), includes all goods which have been moved in or produced 
for commerce, such as stock-in-trade, or raw materials that have been 
moved in or produced for commerce.
    (b) ``Handling * * * or otherwise working on goods.'' The term 
``handling * * * or otherwise working on goods'' used in section 3(s) is 
substantially the same as the term used since 1938 in section 3(j) of 
the Act. Both terms will therefore be considered to have essentially the 
same meaning. (See part 776 of this chapter, the interpretative bulletin 
on the general coverage of the Act.) Thus, the activities encompassed in 
the term ``handling or in any other manner working on goods'' in section 
3(s) are the same as the activities, encompassed in the similar term in 
section 3(j), by which goods are ``produced'' within the meaning of the 
Act. In general, the term ``handling * * * or otherwise working on 
goods'' includes employees who sort, screen, grade, store, pack, label, 
address, transport, deliver, print, type, or otherwise handle or work on 
the goods. The same will be true of employees who handle or work

[[Page 474]]

on ``any part of ingredient of the goods'' referred to in the discussion 
of the term ``goods'' in Sec. 779.107. An employee will be considered 
engaged in ``handling * * * or otherwise working on goods,'' within the 
meaning of section 3(s), only if he performs the described activities on 
goods that ``have been moved in or produced for commerce by any 
person.'' This requirement is discussed in Sec. Sec. 779.242 and 
779.243.



Sec. 779.241  Selling.

    The statutory definition of the term ``sale'' or ``sell'' is quoted 
in Sec. 779.15. As long as the employee in any way participates in the 
sale of the goods he will be considered to be ``selling'' the goods, 
whether he physically handles them or not. Thus, if the employee 
performs any work that, in a practical sense is an essential part of 
consummating the ``sale'' of the particular goods, he will be considered 
to be ``selling'' the goods. ``Selling'' goods, under section 3(s) has 
reference only to goods which ``have been moved in or produced for 
commerce by any person,'' as discussed in Sec. Sec. 779.242 and 
779.243.



Sec. 779.242  Goods that ``have been moved in'' commerce.

    For the purpose of section 3(s), goods will be considered to ``have 
been moved * * * in commerce'' when they have moved across State lines 
before they are handled, sold, or otherwise worked on by the employees. 
It is immaterial in such a case that the goods may have ``come to rest'' 
within the meaning of the term ``in commerce'' as interpreted in other 
respects, before they are handled, sold, or otherwise worked on by the 
employees in the enterprise. Such movement in commerce may take place 
before they have reached the enterprise, or within the enterprise, such 
as from a warehouse of the enterprise in one State to a retail store of 
the same enterprise located in another State. Thus, employees will be 
considered to be ``handling, selling, or otherwise working on goods that 
have been moved in * * * commerce'' where they are engaged in the 
described activities on ``goods'' that have moved across State lines at 
any time in the course of business, such as from the manufacturer to the 
distributor, or to the ``enterprise,'' or from one establishment to 
another within the ``enterprise.'' See the general discussion in part 
776 of this chapter.



Sec. 779.243  Goods that have been ``produced for commerce by any person.''

    An employee will be considered to be handling, selling, or otherwise 
working on goods that have been ``produced for commerce by any person'' 
within the meaning of section 3(s), if he is performing the described 
activities with respect to goods which have been ``produced for 
commerce'' within the meaning of the Act. The term ``produced'' is 
defined in section 3(j) of the Act and, as explained above, has a well-
established meaning under the existing law. (See Sec. 779.104 and part 
776 of this chapter.) The word as it is used in the context of the 
phrase ``goods * * * produced for commerce by any person'' in section 
3(s) has the same meaning as in 3(j). Therefore, where goods are 
considered ``produced for commerce'' within the meaning of section 3(j) 
of the Act they also will be considered ``produced for commerce'' within 
the meaning of section 3(s). A discussion of when goods are produced for 
commerce within the meaning of section 3(j) is contained in Sec. 
779.108. Of course, within the meaning of section 3(s), the goods will 
be considered ``produced for commerce'' when they are so produced ``by 
any person.''

                        Covered Retail Enterprise



Sec. 779.244  ``Covered enterprises'' of interest to retailers of 
goods or services.

    Retailers of goods or services are primarily concerned with the 
enterprises described in sections 3(s)(1) and 3(s)(5) of the prior Act 
and section 3(s)(1) of the Act as amended in 1966. Although section 
3(s)(1) of the prior Act (under the 1961 amendments) had exclusive 
application to the retail and service industry, section 3(s)(1) of the 
Act as amended in 1966 may apply to any enterprise. This part is 
concerned only with retail or service establishments and enterprises. 
Enterprises described in clauses (2), (3), and (4) of section 3(s) are 
discussed herein only with respect

[[Page 475]]

to the application to them of provisions relating to retail or service 
establishments. Coverage of such enterprises and the application of 
section 3(s)(1) of the amended Act to enterprises generally are 
discussed in part 776 of this chapter. The statutory definitions of 
enterprises of interest to retailers under the prior Act and the Act as 
amended in 1966 are quoted in Sec. 779.22.



Sec. 779.245  Conditions for coverage of retail or service enterprises.

    (a) Retail or service enterprises may be covered under section 
3(s)(1) of the prior Act or section 3(s)(1) of the amended Act although 
the latter is not limited to retail or service enterprises. A retail or 
service enterprise will be a covered enterprise under section 3(s)(1) of 
the amended Act if both the following conditions are met:
    (1) The enterprise is ``an enterprise engaged in commerce or in the 
production of goods for commerce.'' This requirement, which is discussed 
in Sec. Sec. 779.237 through 779.243, applies to all covered 
enterprises under the provisions of both the prior and the amended Act; 
and,
    (2) During the period February 1, 1967, through January 31, 1969, 
the enterprise has an annual gross volume of sales made or business 
done, exclusive of excise taxes at the retail level which are separately 
stated, of at least $500,000; or on and after February 1, 1969, the 
enterprise has an annual gross volume of sales made or business done of 
at least $250,000, exclusive of excise taxes at the retail level which 
are separately stated.
    (b) A retail or service enterprise will be covered under section 
3(s)(1) of the Act prior to the amendments if all four of the following 
conditions are met:
    (1) The enterprise is ``an enterprise engaged in commerce or in the 
production of goods for commerce'' as explained above in paragraph 
(a)(1) of this section and,
    (2) The enterprise has one or more ``retail or service 
establishments'' (the statutory definition of the term ``retail or 
service establishment'' is contained in Sec. 779.24 and discussed in 
subpart D of this part) and,
    (3) The enterprise has an annual gross volume of sales of $1 million 
or more, exclusive of excise taxes at the retail level which are 
separately stated and,
    (4) The enterprise ``purchases or receives goods for resale that 
move or have moved across State lines (not in deliveries from the 
reselling establishment) which amount in total annual volume to $250,000 
or more.'' (This requirement is discussed in Sec. Sec. 779.246 through 
779.253.)
    (c) Sections 779.258 through 779.260 discuss the meaning of ``annual 
gross volume of sales made or business done'' and Sec. Sec. 779.261 
through 779.264 discuss what excise taxes may be excluded from the 
annual gross volume. Sections 779.265 through 779.269 discuss the method 
of computing the annual gross volume where it is necessary to determine 
monetary obligations to employees under the Act.

                 Interstate Inflow Test Under Prior Act



Sec. 779.246  Inflow test under section 3(s)(1) of the Act prior 
to 1966 amendments.

    To come within the scope of section 3(s)(1) of the prior Act, the 
enterprise, in addition to the other conditions, must purchase or 
receive goods for resale that move or have moved across State lines (not 
in deliveries from the reselling establishment) which amount in total 
annual volume to $250,000 or more. To meet this condition, it must be 
shown that (a) the enterprise purchases or receives goods for resale 
(Sec. 779.248), (b) that such goods move or have moved across State 
lines (Sec. 779.249), and (c) that such purchases and receipts amount 
in total annual volume to $250,000 or more (Sec. 779.253). Enterprises 
which do not meet this test may be covered under section 3(s)(1) of the 
present Act, which contains no interstate inflow requirement.



Sec. 779.247  ``Goods'' defined.

    The term ``goods'' as used in section 3(s) of the prior and amended 
Act is defined in section 3(i) of the Act. The statutory definition is 
quoted in Sec. 779.14, and is discussed in detail in part 776 of this 
chapter.

[[Page 476]]



Sec. 779.248  Purchase or receive ``goods for resale.''

    (a) Goods will be considered purchased or received ``for resale'' 
for purposes of the inflow test contained in section 3(s)(1) of the 
prior Act if they are purchased or received with the intention of being 
resold. This includes goods, such as stock in trade which is purchased 
or received by the enterprise for resale in the ordinary course of 
business. It does not include machinery, equipment, supplies, and other 
goods which the enterprise purchases to use in conducting its business. 
This is true even if such capital goods or other equipment, which the 
enterprise originally purchased for use in conducting its business, are 
at some later date actually resold. The distinction is to be found in 
whether the goods are purchased or received by the enterprise with the 
intention of reselling them in the same form or after further processing 
or manufacturing, or whether they are purchased with the intent of being 
consumed or used by the enterprise itself in the performance of its 
activities.
    (b) Goods, such as raw materials or ingredients, are considered 
purchased or received by the enterprise ``for resale,'' even if such 
goods are purchased or received for the purpose of being processed or 
used as parts or ingredients in the manufacture of other goods which the 
enterprise intends to sell. For example, where the enterprise purchases 
flour for use in baking bread or pastries for sale, the goods will be 
considered to have been purchased ``for resale.'' It is immaterial 
whether the goods will be resold by the enterprise at retail or at 
wholesale.



Sec. 779.249  Goods which move or have moved across State lines.

    In order to be included in the annual dollar volume for purposes of 
this test, the goods which the enterprise purchases or receives for 
resale must be goods that ``move or have moved across the State lines.'' 
Goods which have not moved across State lines before they are resold by 
the enterprise will not be included. The movement to which the phrase 
``move or have moved'' has reference is that movement which the goods 
follow in their journey to the enterprise or within the enterprise to 
the establishment which sells the goods. Thus, if goods have moved 
across State lines at some stage in the flow of trade before they are 
actually sold by the enterprise, they will be considered to have moved 
across State lines. It is not material that the goods may have ``come to 
rest'' at some time before they are purchased or received and sold by 
the enterprise; nor is it material that some time may have elapsed 
between the time the goods have moved across State lines and the time 
they are purchased or received and sold by the enterprise. It is 
sufficient if at any time such goods have moved across State lines in 
the ordinary course of trade before resale by the enterprise. Much of 
the goods purchased by retailers are produced from a local intrastate 
supplier. In many instances these goods may have been stored at the 
supplier's establishment for some time. However, as long as the 
particular goods purchased have moved across State lines at some stage 
in the flow of trade to the retailer, they would have to be included in 
determining whether or not the enterprise has purchased or received for 
resale such out-of-State goods amounting to $250,000.



Sec. 779.250  Goods that have not lost their out-of-State identity.

    Goods which are purchased or received by the enterprise from within 
the State will be considered goods which ``have moved across State 
lines'' if they have previously been moved across State lines and have 
not lost their identity as out-of-State goods before they are purchased 
or received by the enterprise. Also goods which have been assembled 
within the State after they were moved across State lines but before 
they are purchased or received by the enterprise will still be regarded 
as goods which ``have moved across State lines.'' Such goods are still 
identifiable as goods brought into the State. This is also true in 
certain cases where goods are processed to some extent without losing 
their identity as out-of-State goods. For example, out-of-State 
furniture or television sets which are put together within the State, or 
milk from outside the State which is pasteurized and bottled within

[[Page 477]]

the State, before being purchased or received by the enterprise, are 
goods which ``have moved across State lines.'' They have already moved 
across State lines and they retain their out-of-State identity, despite 
the assembly or processing within the State.



Sec. 779.251  Goods that have lost their out-of-State identity.

    (a) Goods which are purchased or received by the enterprise within 
the State will not be considered goods which have ``moved across State 
lines'' if the goods, although they came from outside the State, had 
been processed or manufactured so as to have lost their identity as out-
of-State goods before they are purchased or received by the enterprise. 
This assumes, of course, that the goods so manufactured or processed do 
not move across State lines before they are sold by the enterprise. Thus 
where an enterprise buys bread baked within the State which does not 
move across State lines before it is resold by the enterprise, the bread 
is not ``goods, which have moved across State lines'' even if the flour 
and other ingredients came from outside the State. The same conclusion 
will follow, under the same circumstances, where clothing is 
manufactured from out-of-State fabrics.
    (b) In those cases where goods are composed in part of goods which 
have, and in part of goods which have not, moved across State lines, the 
entire product will be considered as goods which have moved across State 
lines, if, as a practical matter, it substantially consists of goods 
which are identifiable as out-of-State goods. Whether goods have been so 
changed as to have lost their out-of-State identity is question which 
will depend upon all the facts in a particular case.



Sec. 779.252  Not in deliveries from the reselling establishment.

    Goods which move across State lines only in the course of deliveries 
from the reselling establishment of the enterprise are not included as 
goods which ``move or have moved across State lines.'' Thus, goods 
delivered by the enterprise to its customers outside of the State are 
not, for that reason, considered goods which ``move or have moved across 
State lines.'' The purpose of the provision excepting ``deliveries from 
the reselling establishment'' is to limit the test to goods which flow 
into the enterprise and to exclude those goods which only cross State 
lines when they flow out of the enterprise as an incident of the sale of 
such goods by the enterprise. In other words, this is an inflow test and 
not an outflow test.



Sec. 779.253  What is included in computing the total annual inflow volume.

    The goods which the establishment purchases or receives for resale 
that move or have moved across State lines must ``amount in total annual 
volume to $250,000 or more.'' It will be noted that taxes are not 
excluded in measuring this annual dollar volume. Thus, the total cost to 
the enterprise of such goods will be included in calculating the 
$250,000. This will include all taxes and other charges which the 
enterprise must pay for such goods. Generally, all charges will be 
included in the invoice of the goods. But whether included in the 
invoice or not, the total amount which the enterprise is required to pay 
for such goods, including charges for transportation, insurance, 
delivery, storage and any other will be included in computing the 
$250,000. The dollar volume of the goods purchased or received by the 
enterprise is the ``annual'' volume. The method of calculating the 
annual dollar volume is explained in Sec. 779.266.

              The Gasoline Service Establishment Enterprise



Sec. 779.254  Summary of coverage and exemptions prior to and following
the 1966 amendments.

    The ordinary gasoline service establishment is a covered enterprise 
under the Act if it has an annual gross volume of sales made or business 
done of not less than $250,000 a year, exclusive of excise taxes at the 
retail level which are separately stated, and meets the other tests of 
section 3(s)(5) of the prior Act and section 3(s)(1) of the amended Act. 
Beginning February 1, 1969, enterprise coverage extends to any gasoline 
service establishment in an enterprise which has an annual gross volume 
in

[[Page 478]]

such amount, even if the establishment's annual gross volume is less. 
However, a gasoline service establishment with gross sales of less than 
$250,000, exclusive of excise taxes at the retail level which are 
separately stated, may qualify for the minimum wage and overtime pay 
exemption provided in section 13(a)(2) of the Act if it meets the 
requirements of that section. Section 779.313 summarizes the 
requirements. An overtime pay exemption, which was repealed by the 1966 
amendments, existed until February 1, 1967, for employees of ordinary 
gasoline service establishments under the prior Act. Thus, nonexempt 
employees of a covered gasoline service establishment enterprise are 
subject to the minimum wage standards for previously covered employment 
and the overtime pay requirements for newly covered employment as listed 
below:

------------------------------------------------------------------------
               Minimum wage:                          Beginning
------------------------------------------------------------------------
$1.40 an hour.............................  February 1, 1967.
$1.60 an hour.............................  February 1, 1968 and
                                             thereafter.
 
            Overtime pay after:
 
44 hours in a workweek....................  February 1, 1967.
42 hours in a workweek....................  February 1, 1968.
40 hours in a workweek....................  February 1, 1969 and
                                             thereafter.
------------------------------------------------------------------------


The particular considerations affecting coverage and exemptions are 
discussed in subsequent sections. The statutory language contained in 
section 3(s)(5) of the prior Act and 3(s)(1) of the amended Act may be 
found in Sec. 779.22.



Sec. 779.255  Meaning of ``gasoline service establishment.''

    (a) A gasoline service station or establishment is one which is 
typically a physically separate place of business engaged primarily 
(``primarily'' meaning 50 percent or more) in selling gasoline and 
lubricating oils to the general public at the station or establishment. 
It may also sell other merchandise or perform minor repair work as an 
incidental part of the business. (See S. Rept. 145, 87th Cong., first 
session, p. 32.) No difference in application of the terms ``gasoline 
service establishment'' and ``gasoline service station'' was intended by 
Congress (see Senate Report cited above) and both carry the same 
meaning.
    (b) Under section 3(s)(5) of the prior Act and until February 1, 
1969, under section 3(s)(1) of the amended Act, the covered enterprise 
is always a single establishment--a gasoline service establishment, even 
though such establishment may be a part of some larger enterprise for 
purposes of other provisions of the ``enterprise'' coverage of the new 
amendments. As noted above this term refers to what is commonly known as 
a gasoline service station, a separate ``establishment.'' What 
constitutes a separate establishment is discussed in Sec. Sec. 779.303 
through 779.306. While receipts from incidental sales and services are 
included and counted in determining the establishment's annual gross 
volume of sales for purposes of enterprise coverage, the establishment's 
primary source of receipts must be from the sale of gasoline and 
lubricating oils. (See Senate Report cited above.) An establishment 
which derives the greater part of its income from the sales of goods 
other than gasoline or lubricating oils will not be considered a 
``gasoline service establishment.'' The mere fact that an establishment 
has a gasoline pump as an incidental part of other business activities 
in which it is principally engaged does not constitute it ``a gasoline 
service establishment'' within the meaning and for the purposes of these 
sections.



Sec. 779.256  Conditions for enterprise coverage of gasoline service
establishments.

    (a) The requirement that the enterprise must be ``an enterprise 
engaged in commerce or in the production of goods for commerce'' is 
discussed in Sec. Sec. 779.237 through 779.243. Those sections explain 
which employees are engaged in commerce or in the production of goods 
for commerce, including employees handling, selling, or otherwise 
working on goods that have been moved in or produced for commerce by any 
person. In connection with the discussion in those sections as it 
concerns employees of gasoline service establishments, it should be 
noted that as a general rule such employees normally are ``engaged in 
commerce or in the production of goods for commerce''

[[Page 479]]

within the meaning of the Act. For example, gasoline filling station 
employees servicing motor vehicles used in interstate transportation or 
in the production of goods for commerce have always been regarded as 
being ``engaged in commerce or in the production of goods for commerce'' 
within the meaning of the Act. Such employees will also be considered as 
engaged in handling, selling or otherwise working on goods that have 
been moved in or produced for commerce by any person, if the gasoline or 
lubricating oils or the other goods with respect to which they perform 
the described activities have come from outside the State in which the 
establishment is located.
    (b) For periods before February 1, 1969, a gasoline service 
establishment was within the scope of the enterprise coverage provisions 
of the Act only if its annual gross volume of sales was not less than 
$250,000, exclusive of excise taxes at the retail level which are 
separately stated. Until such date, a gasoline service establishment 
which did not have such an annual gross volume of sales was not a 
covered enterprise, and enterprise coverage did not extend to it by 
virtue of the fact that it is an establishment of an enterprise which 
meets coverage tests of section 3(s). In determining whether the 
establishment has the requisite annual gross volume of sales the 
receipts from all sales of the establishment are included without 
limitation to the receipts from sales of gasoline and lubricating oil. 
In computing the annual gross volume of sales the gross receipts from 
all types of sales during a 12-month period are included. These gross 
receipts are measured by the price paid by the purchaser of the goods or 
services sold by the establishment (Sen. Rept. 1487, 89th Cong. second 
session p. 7). Thus, where the establishment sells gasoline for an oil 
company on commission, annual gross volume is based on the retail sale 
price and not on the smaller amount retained or received as commissions. 
A further discussion of what sales are included in the annual gross 
volume is contained in Sec. Sec. 779.258 through 779.260.
    (c) In computing the annual gross volume of sales, excise taxes at 
the retail level which are separately stated are not counted. A 
discussion of the excise taxes which may be excluded under this 
provision is contained in Sec. Sec. 779.261 through 779.264. Whether 
the particular taxes are ``excise taxes at the retail level'' depends 
upon the facts in each case. If the taxes are ``excise taxes at the 
retail level'' they will be excludable only if they are ``separately 
stated.'' Where a gasoline station posts a sign on or alongside the 
gasoline pumps indicating that a certain amount per gallon is for a 
specific excise tax, this will meet the requirement of being 
``separately stated''. The method of calculating annual gross volume of 
sales is explained in greater detail in Sec. Sec. 779.265 through 
779.269.



Sec. 779.257  Exemption applicable to gasoline service establishments 
under the prior Act.

    Section 13(b)(8) of the prior Act (before the 1966 amendments) 
contained an exemption from the overtime pay requirements for ``any 
employee of a gasoline service station''. This exemption was applicable 
prior to February 1, 1967, without regard to the annual gross volume of 
sales of the gasoline service station by which the employee was 
employed. The removal of this exemption by the 1966 amendments brought 
non-exempt employees of covered gasoline service stations within the 
purview of the overtime requirements of the Act for the first time.

           Annual Gross Volume of Sales Made or Business Done



Sec. 779.258  Sales made or business done.

    The Senate Report on the 1966 amendments reaffirmed the intent to 
measure the ``dollar volume of sales or business'' including ``the gross 
receipts or gross business'' to determine whether an enterprise is 
covered. This concept was first expressed in the Senate Report on the 
1961 amendment (S. Rept. No. 145, 87th Congress, first session, p. 38). 
The phrase ``business done'' added by the 1966 amendments to section 
3(s) merely reflects with more clarity the economic test of business 
size expressed in the prior Act in terms of ``annual gross volume of 
sales'' and conforms the language of the Act with the Congressional view 
expressed in the

[[Page 480]]

legislative history of the 1961 amendments. Thus, the annual gross 
volume of an enterprise must include any business activity in which it 
engages which can be measured on a dollar basis irrespective of whether 
the enterprise is tested under the prior or amended Act. The Senate 
Report on the 1966 amendments states:

    The intent to measure the ``dollar volume of sales or business'' 
including the ``gross receipts or gross business'' in determining 
coverage of such an enterprise was expressed in the Senate report above 
cited at page 38. The addition of the term ``business done'' to the 
statutory language should make this intent abundantly plain for the 
future and remove any possible reason for misapprehension. The annual 
gross volume of sales made or business done by an enterprise, within the 
meaning of section 3(s), will thus continue to include both the gross 
dollar volume of the sales (as defined in sec. 3(k)) which it makes, as 
measured by the price paid by the purchaser for the property or service 
sold to him (exclusive of any excise taxes at the retail level which are 
separately stated), and the gross dollar volume of any other business 
activity in which the enterprise engages which can be similarly measured 
on a dollar basis. This would include, for example, such activity by an 
enterprise as making loans or renting or leasing property of any kind. 
(S. Rept. No. 1487, 89th Congress, second session, pp. 7-8.)



Sec. 779.259  What is included in annual gross volume.

    (a) The annual gross volume of sales made or business done of an 
enterprise consists of its gross receipts from all types of sales made 
and business done during a 12-month period. The gross volume of sales 
made or business done means the gross dollar volume (not limited to 
income) derived from all sales and business transactions including, for 
example, gross receipts from service, credit, or other similar charges. 
Credits for goods returned or exchanged and rebates and discounts, and 
the like, are not ordinarly included in the annual gross volume of sales 
or business. The gross volume of sales or business includes the receipts 
from sales made or business done by the retail or service establishments 
of the enterprise as well as the sales made or business done by any 
other establishments of the enterprise, exclusive of the internal 
transactions between them. Gross volume is measured by the price paid by 
the purchaser for the property or service sold to him, as stated in the 
Senate Committee Report (Sec. 779.258). It is not measured by profit on 
goods sold or commissions on sales made for others. The dollar value of 
sales or business of the entire enterprise in all establishments is 
added together to determine whether the applicable dollar test is met. 
The fact that one or more of the retail or service establishments of the 
enterprise may have less than $250,000 in annual dollar volume and may 
meet the other requirements for exemption from the pay provisions of the 
Act under section 13(a)(2), does not exclude the dollar volume of sales 
or business of that establishment from the annual gross volume of the 
enterprise. However, the dollar volume of an establishment derived from 
transactions with other establishments in the same enterprise does not 
ordinarily constitute part of the annual gross volume of the enterprise 
as a whole. The computation of the annual gross volume of sales or 
business of the enterprise is made ``exclusive of excise taxes at the 
retail level which are separately stated''. The taxes which may be 
excluded are discussed in Sec. Sec. 779.261 through 779.264. The 
methods of calculating the annual gross volume of sales of an enterprise 
are set forth in Sec. Sec. 779.265 through 779.269.
    (b) In the ordinary case the functions of a leased department are 
controlled or unified in such a way that it is included in the 
establishment and therefore in the enterprise in which it is located, as 
discussed in Sec. 779.225. The applicability of enterprise coverage and 
certain exemptions to such a leased department depends upon the 
enterprise coverage and the exemption status of the establishment in 
which the leased department is located. The annual gross volume of such 
a leased department is included in the annual gross volume of the 
establishment in which it is located as well as in the annual gross 
volume of the enterprise of which such establishment is a part.
    (c) Likewise, where franchise or other arrangements result in the 
creation of a larger enterprise by means of operational restrictions so 
that the establishment, dealer, or concessionaire

[[Page 481]]

is an integral part of the related activities of the enterprise which 
grants the franchise, right, or concession, as discussed in Sec. Sec. 
779.229 and 779.232, it will follow that the annual gross volume of 
sales made or business done of such an enterprise includes the dollar 
volume of sales or business of each related establishment dealer, or 
concessionaire.



Sec. 779.260  Trade-in allowances.

    Where merchandise is taken in trade when a sale is made, the annual 
gross volume of sales or business will include the gross amount of the 
sale before deduction of the allowance on such trade-in merchandise. 
This is so even though an overallowance or excessive value is allowed on 
the trade-in merchandise. In turn, when the trade-in merchandise is sold 
the amount of the sale will be included in the annual gross volume.

                              Excise Taxes



Sec. 779.261  Statutory provision.

    Sections 3(s)(1) and 13(a)(2) of the amended Act as well as sections 
3(s)(1), 3(s)(2), 3(s)(5), and 13(a)(2)(iv) of the prior Act provide for 
the exclusion of ``excise taxes at the retail level which are separately 
stated'' in computing the gross annual volume of sales or business or 
the annual dollar volume of sales for purposes of certain of the 
provisions contained in those sections. The Senate Committee report 
states as follows with respect to this provision:

* * * in determining whether the enterprise or establishment, as the 
case may be, has the requisite annual dollar volume of sales, excise 
taxes will not be counted if they are taxes that are collected at the 
retail level and are separately identified in the price charged the 
customer for the goods or services at the time of the sale. Excise taxes 
which are levied at the manufacturer's, wholesaler's, or other 
distributive level will not be excluded in calculating the dollar volume 
of sales nor will excise taxes be excluded in cases where the customer 
is charged a single price for the merchandise or services and the taxes 
are not separately identified when the sale is made. (S. Rept., 145, 
87th Cong., first session, p. 39.)


In applying the above rules to determine annual gross volume of sales or 
business under section 3(s) or annual dollar volume of sales for 
purposes of the $250,000 test under section 13(a)(2), excise taxes which 
(a) are levied at the retail level and (b) are separately stated and 
identified in the charge to the customer at the time of sale need not be 
included in the calculation of the gross or dollar volume of sales. 
Excise taxes which are levied at the manufacturer's, wholesaler's or 
other distributive level will not, ordinarily, be excluded in 
calculating the volume of sales, nor will excise taxes, even if levied 
at the retail level, be excluded in cases where the customer is charged 
a single price for the merchandise or services and the taxes are not 
separately identified when the sale is made. Excise taxes will be 
excludable whether they are levied by the Federal, State, or local 
government provided that the tax is ``levied at the retail level'' and 
``separately stated''.



Sec. 779.262  Excise taxes at the retail level.

    (a) Federal excise taxes are imposed at the retail level on highway 
vehicle fuels other than gasoline under the provisions of 26 U.S.C. 
4041. Such excise taxes are levied at the retail level on any liquid 
fuel sold for use, or used in a diesel-powered highway vehicle. A 
similar tax is imposed on the sale of such special motor fuels as 
benzene and liquefied petroleum gas when used as a motor fuel. To the 
extent that these taxes are separately stated to the customer, they may 
be excluded from gross volume of sales. The extent to which State taxes 
are levied at the retail level, and thus excludable when separately 
stated, depends, of course, upon the law of the State concerned. 
However, as a general rule, State, county, and municipal sales taxes are 
levied at the retail level, and to the extent that they are separately 
stated, may be excluded. All State excise taxes on gasoline are, for 
purposes of section 3(s), taxes levied at the retail level, which, if 
separately stated, may be excluded.
    (b) The circumstances surrounding the levying and collection of the 
Federal excise taxes on gasoline, tires, and inner tubes reflect that, 
although they are listed under the title of ``Manufacturers Excise 
Taxes,'' they are, in practical operation, taxes ``at the retail

[[Page 482]]

level.'' Federal excise taxes on gasoline, tires, and inner tubes, when 
``separately stated,'' may therefore be excluded in computing the annual 
gross volume of an enterprise for the purpose of determining coverage 
under section 3(s)(1) of the Act and section 13(a)(2) for purposes of 
applying the $250,000 test for determining the retail and service 
establishment exemption of an establishment in a covered enterprise.



Sec. 779.263  Excise taxes not at the retail level.

    There are also a wide variety of taxes levied at the manufacturer's 
or distributor's level and not at the retail level. It should be noted, 
however, that the circumstances surrounding the levying and collection 
of taxes must be carefully considered. The facts concerning the levying 
and collection of Federal excise taxes on alcoholic beverages and 
tobacco reflect that such taxes are upon the manufacture of these 
products and that they are neither levied nor collected at the retail 
level and thus are not excludable. However, in some cases the 
circumstances may reflect that despite the fact that such taxes may be 
levied upon the manufacturer or distributor, nevertheless they may be, 
in practical operation, taxes at the retail level and may be so regarded 
for the purpose of this provision.



Sec. 779.264  Excise taxes separately stated.

    A tax is separately stated where it clearly appears that it has been 
added to the sales price as a separate, identifiable amount, even though 
there was no invoice or sales slip. In the absence of a sales slip or 
invoice, the amount of the tax may either be separately stated orally at 
the time of sale, or visually by means of a poster or other sign 
reasonable designed to inform the purchaser that the amount of the tax, 
either as a stated sum per unit or measured by the gross amount of the 
sale, or as a percentage of the price, is included in the sales price. A 
sign on a gasoline pump indicating in cents per gallon the amount of 
State and Federal highway fuel excise taxes is an example of 
``separately stated'' taxes.

                       Computing The Annual Volume



Sec. 779.265  Basis for making computations.

    The annual gross dollar volume of sales made or business done of an 
enterprise or establishment consists of the gross receipts from all of 
its sales or its volume of business done during a 12-month period. Where 
a computation of the annual gross volume is necessary to determine 
monetary obligations to employees under the Act whether in an enterprise 
which has one or more retail or service establishments, or in any 
establishment in such enterprise, or in any gasoline service 
establishment, it must be based on the most recent prior experience 
which it is practicable to use. This was recognized in the Congress when 
the legislation was under consideration. (S. Rept. No. 145, 87th Cong., 
first session, p. 38 discusses in detail the calculation of the annual 
gross volume.) When gross receipts of an enterprise show that the annual 
dollar volume of sales made or business done meets the statutory tests 
for coverage and nonexemption, the employer must comply with the Act's 
monetary provisions from that time on or until such time as the tests 
are not met. (See Sec. 779.266.)



Sec. 779.266  Methods of computing annual volume of sales or business.

    (a) No computations of annual gross dollar volume are necessary to 
determine coverage or exemption in those enterprises in which the gross 
receipts regularly derived each year from the business are known by the 
employers to be substantially in excess or substantially under the 
minimum dollar volume specified in the applicable provision of the Act. 
Also, where the enterprise or establishment, during the portion of its 
current income tax year up to the end of the current payroll period, has 
already had a gross volume of sales or business in excess of the dollar 
amount specified in the statute, it is plain that its annual dollar 
volume currently is in excess of the statutory amount, and that the Act 
applies accordingly. The computation described

[[Page 483]]

in paragraph (b) of this section, therefore need not be made. Nor is it 
required where the enterprise or establishment has not yet in such 
current year exceeded the statutory amount in its gross volume of sales 
or business, if it has had, in the most recently ended year used by it 
for income tax purposes, a gross volume of sales made and business done 
in excess of the amount specified in the Act. In such event, the 
enterprise or establishment will be deemed to have an annual gross 
volume in excess of the statutory amount unless the employer 
establishes, through use of the method set forth in paragraph (b) of 
this section, an annual gross volume of sales made or business done 
which is less than the amount specified in the Act. The method described 
in paragraph (b) of this section shall be used, as intended by the 
Congress (see S. Rept. 145, 87th Cong. first session, p. 38), for 
computation of annual dollar volume in all cases when such a computation 
becomes necessary in order to determine the applicability of provisions 
of the Act.
    (b) In order to determine, when there may be doubt, whether an 
enterprise or establishment has an annual gross volume of sales made or 
business done in excess of the amount specified in the statute, and 
analysis will be made at the beginning of each quarter-year so that the 
employer will know whether or not the dollar volume tests have been met 
for the purpose of complying with the law in the workweeks ending in the 
current quarter-year. The total of the gross receipts from all its sales 
or business during a 12-month period which immediately precedes the 
quarter-year being tested will be the basis for analysis. When it is 
necessary to make a determination for enterprises or establishments 
which are operated on a calendar year basis for income tax or sales or 
other accounting purposes the quarter-year periods tested will coincide 
with the calendar quarters (January 1-March 31; April 1-June 30; July 1-
September 30; October 1-December 31). On the other hand, where 
enterprises or establishments are operated on a fiscal year basis, which 
consists of an annual period different from the calendar year, the four 
quarters of the fiscal period will be used in lieu of calendar quarters 
in computing the annual volume. Once either basis has been adopted it 
must be used in making subsequent calculations. The sales records 
maintained as a result of the accounting procedures used for tax or 
other business purposes may be utilized in computing the annual dollar 
volume provided the same accounting procedure is used consistently and 
that such procedure accurately reflects the annual volume of sales or 
business.



Sec. 779.267  Fluctuations in annual gross volume affecting enterprise
coverage and establishment exemptions.

    It is possible that the analysis performed at the beginning of each 
quarter to determine the applicability of the monetary provisions of the 
Act may reveal changes in the annual gross volume or other determinative 
factors which result in the enterprise or establishment meeting or 
ceasing to meet one or more of the tests for enterprise coverage or 
establishment exemption. Thus, enterprise coverage may result where the 
annual volume increases from an amount under to an amount over $250,000. 
Also, an enterprise having an annual gross volume of more than $1 
million and meeting the requirements for a covered retail enterprise 
under the prior Act on the basis of previous sales analyses may fall 
below $1 million when the annual gross volume is computed at the 
beginning of the quarter being tested and as a result qualify only as a 
newly covered enterprise for the current quarter under the amended Act. 
Similarly, an enterprise previously subject to new coverage pay 
standards, having an annual gross volume of more than $250,000 but less 
than $1 million on the basis of previous sales analyses, may increase 
its annual gross volume to $1 million or more when recomputed at the 
beginning of the quarter being tested. It will thus become for the 
current quarter an enterprise in which employees are subject to the pay 
standards for employment covered under the Act prior to the amendments, 
provided that it meets the other conditions as discussed in Sec. 
779.245.

[[Page 484]]



Sec. 779.268  Grace period of 1 month for computation.

    Where it is not practicable to compute the annual gross volume of 
sales or business under paragraph (b) of Sec. 779.266 in time to 
determine obligations under the Act for the current quarter, an 
enterprise or establishment may use a 1-month grace period. If this 1-
month grace period is used, the computations made under this section 
will determine its obligations under the Act for the 3-month period 
commencing 1 month after the end of the preceding calendar or fiscal 
quarter. Once adopted the same basis must be used for each successive 3-
month period.



Sec. 779.269  Computations for a new business.

    When a new business is commenced the employer will necessarily be 
unable for a time to determine its annual dollar volume on the basis of 
a full 12-month period as described above. In many cases it is readily 
apparent that the enterprise or establishment will or will not have the 
requisite annual dollar volume specified in the Act. For example, where 
the new business consists of a large department store, or a supermarket, 
it may be clear from the outset that the business will meet the annual 
dollar volume tests so as to be subject to the requirements of the Act. 
In other cases, where doubt exists, the gross receipts of the new 
business during the first quarter year in which it has been in operation 
will be taken as representative of its annual dollar volume, in applying 
the annual volume tests of sections 3(s) and 13(a)(2), for purposes of 
determining its obligations under the Act in workweeks falling in the 
following quarter year period. Similarly, for purposes of determining 
its obligations under the Act in workweeks falling within ensuing 
quarter year periods, the gross receipts of the new business for the 
completed quarter year periods will be taken as representative of its 
annual dollar volume in applying the annual volume tests of the Act. 
After the new business has been in operation for a full calendar or 
fiscal year, the analysis can be made by the method described in 
paragraph (b) of Sec. 779.266 with use of the grace period described in 
Sec. 779.268, if necessary.



    Subpart D_Exemptions for Certain Retail or Service Establishments

                           General Principles



Sec. 779.300  Purpose of subpart.

    Subpart C of this part has discussed the various criteria for 
determining coverage under the Act of employers and employees in 
enterprises and establishments that make retail sales of goods and 
services. This subpart deals primarily with the exemptions from the 
Act's minimum wage and overtime provisions found in section 13(a) (2), 
(4), (11), and 13(b)(18) for employees of retail or service 
establishments. Also discussed are some exemptions for special 
categories of establishments engaged in retailing goods or services, 
which do not require for exemption that the particular establishment be 
a retail or service establishment as defined in the Act. If all the 
requirements set forth in any of these exemptions are met, to the extent 
provided therein the employer is relieved from complying with the 
minimum wage and/or overtime provisions of the Act even though his 
employees are engaged in interstate or foreign commerce or in the 
production of goods for such commerce or employed in covered 
enterprises.



Sec. 779.301  Statutory provisions.

    (a) Section 13(a) (2), (4), (11), and section 13(b)(18) of the Act, 
as amended, grant exemption from the minimum wage provisions of section 
6 and the maximum hours provisions of section 7 as follows:
    (1) Section 13(a)(2) exempts from minimum wages and overtime pay:

    Any employee employed by any retail or service establishment (except 
an establishment or employee engaged in laundering, cleaning, or 
repairing clothing or fabrics or an establishment engaged in the 
operation of a hospital, institution, or school described in section 
3(s)(4), if more than 50 per centum of such establishment's annual 
dollar volume of sales of goods or services is made within the State in 
which the establishment is located, and such establishment is not in an 
enterprise described in section 3(s) or such establishment has an annual 
dollar volume of sales which is less than $250,000 (exclusive of excise 
taxes at the retail level which are separately stated). A ``retail or 
service establishment'' shall mean an establishment 75

[[Page 485]]

per centum of whose annual dollar volume of sales of goods or services 
(or of both) is not for resale and is recognized as retail sales or 
services in the particular industry.

    (2) Section 13(a)(4) exempts from minimum wages and overtime pay:

    Any employee employed by an establishment which qualifies as an 
exempt retail establishment under clause (2) of this sub-section and is 
recognized as a retail establishment in the particular industry 
notwithstanding that such establishment makes or processes at the retail 
establishment the goods that it sells: Provided, That more than 85 per 
centum of such establishment's annual dollar volume of sales of goods so 
made or processed is made within the State in which the establishment is 
located.

    (3) Section 13(a)(11) exempts from minimum wages and overtime pay:

    Any employee or proprietor in a retail or service establishment 
which qualifies as an exempt retail or service establishment under 
clause (2) of this subsection with respect to whom the provisions of 
sections 6 and 7 would not otherwise apply, engaged in handling 
telegraphic messages for the public under an agency or contract 
arrangement with a telegraph company where the telegraph message revenue 
of such agency does not exceed $500 a month.

    (4) Section 13(b)(18) exempts from overtime pay only:

    Any employee of a retail or service establishment who is employed 
primarily in connection with the preparation or offering of food or 
beverages for human consumption, either on the premises, or by such 
services as catering, banquet, box lunch, or curb or counter service, to 
the public, to employees, or to members or guests of members of clubs.

    (b) Sections 13(a)(2), (4), (13), (19), and (20) of the prior Act 
granted exemptions from both the minimum wage provisions of section 6 
and the maximum hours provisions of section 7 as follows:
    (1) Section 13(a)(2) exempted:

    Any employee employed by any retail or service establishment, more 
than 50 per centum of which establishment's annual dollar volume of 
sales of goods or services is made within the state in which the 
establishment is located, if such establishment--
    (i) Is not in an enterprise described in section 3(s), or
    (ii) Is in such an enterprise and is a hotel, motel or restaurant, 
or motion picture theater; or is an amusement or recreational 
establishment that operates on a seasonal basis, or
    (iii) Is in such an enterprise and is a hospital, or an institution 
which is primarily engaged in the care of the sick, the aged, the 
mentally ill or defective, residing on the premises of such institution, 
or a school for physically or mentally handicapped or gifted children, 
or
    (iv) Is in such an enterprise and has an annual dollar volume of 
sales (exclusive of excise taxes at the retail level which are 
separately stated) which is less than $250,000.

A ``retail or service establishment'' shall mean an establishment 75 per 
centum of whose annual dollar volume of sales of goods or services (or 
both) is not for resale and is recognized as retail sales or services in 
the particular industry.

    (2) Section 13(a)(4) provided the same exemption as it now does.
    (3) Section 13(a)(13) provided the same exemption as section 
13(a)(11) of the present Act.
    (4) Section 13(a)(19) exempted:

    Any employee of a retail or service establishment which is primarily 
engaged in the business of selling automobiles, trucks, or farm 
implements.

    (5) Section 13(a)(20) exempted those employees who are now exempt 
from the overtime provisions only under section 13(b)(18) of the present 
Act.
    (c) Employees who were exempt from the minimum wage and overtime pay 
requirements under a provision of the prior Act set forth in paragraph 
(b) of this section, but are no longer exempt from one or both of such 
requirements under the present Act must be paid minimum wages or 
overtime pay, as the case may be, in accordance with the pay standards 
provided for newly covered employment, in any workweek when they perform 
work within the individual or enterprise coverage of the Act.

                  ``Establishment'' Basis of Exemptions



Sec. 779.302  Exemptions depend on character of establishment.

    Some exemptions depend on the character of the establishment by 
which an employee is employed. These include the ``retail or service 
establishment'' exemptions in sections 13(a) (2), (4), and (11) and the 
exemptions available to the establishments of the character specified in 
sections 13(a) (3), (9), and

[[Page 486]]

13(b)(8) (first part). Therefore, if the establishment meets the tests 
enumerated in these sections, employees ``employed by'' that 
establishment are generally exempt from sections 6 and 7. (See 
Sec. Sec. 779.307 to 779.309 discussing ``employed by.'') Other 
exemptions establish two criteria, the character of the establishment 
and the nature of the conditions of the employment of the particular 
employee. Such exemptions are set forth in section 13(b)(8) (second 
part), and section 13(b)(18) and (19). To determine whether the 
exemptions of these sections apply it is necessary to determine both 
that the establishment meets the enumerated tests and that the employee 
is engaged in the enumerated activities or employed under the conditions 
specified. Thus, under section 13(b)(18) some of the employees of a 
given employer may be exempt from the overtime pay requirements (but not 
the minimum wage) of the Act, while others may not.



Sec. 779.303  ``Establishment'' defined; distinguished from 
``enterprise'' and ``business.''

    As previously stated in Sec. 779.23, the term establishment as used 
in the Act means a distinct physical place of business. The 
``enterprise,'' by reason of the definition contained in section 3(r) of 
the Act and the tests enumerated in section 3(s) of the Act, may be 
composed of a single establishment. The term ``establishment,'' however, 
is not synonymous with the words ``business'' or ``enterprise'' when 
those terms are used to describe multiunit operations. In such a 
multiunit operation some of the establishments may qualify for 
exemption, others may not. For example, a manufacturer may operate a 
plant for production of its goods, a separate warehouse for storage and 
distribution, and several stores from which its products are sold. Each 
such physically separate place of business is a separate establishment. 
In the case of chain store systems, branch stores, groups of independent 
stores organized to carry on business in a manner similar to chain store 
systems, and retail outlets operated by manufacturing or distributing 
concerns, each separate place of business ordinarily is a separate 
establishment.



Sec. 779.304  Illustrations of a single establishment.

    (a) The unit store ordinarily will constitute the establishment 
contemplated by the exemptions. The mere fact that a store is 
departmentalized will not alter the rule. For example, the typical large 
department store carries a wide variety of lines which ordinarily are 
segregated or departmentalized not only as to location within the store, 
but also as to operation and records. Where such departments are 
operated as integral parts of a unit, the departmentalized unit taken as 
a whole ordinarily will be considered to be the establishment 
contemplated by the exemptions, even if there is diversity of ownership 
of some of the departments, such as leased departments.
    (b) Some stores, such as bakery or tailor shops, may produce goods 
in a back room and sell them in the adjoining front room. In such cases 
if there is unity of ownership and if the back room and the front room 
are operated by the employer as a single store, the entire premises 
ordinarily will be considered to be a single establishment for purposes 
of the tests of the exemption, notwithstanding the fact that the two 
functions of making and selling the goods, are separated by a partition 
or a wall. (See H. Mgrs. St., 1949, p. 27.)



Sec. 779.305  Separate establishments on the same premises.

    Although, as stated in the preceding section, two or more 
departments of a business may constitute a single establishment, two or 
more physically separated portions of a business though located on the 
same premises, and even under the same roof in some circumstances may 
constitute more than one establishment for purposes of exemptions. In 
order to effect such a result physical separation is a prerequisite. In 
addition, the physically separated portions of the business also must be 
engaged in operations which are functionally separated from each other. 
Since there is no such functional separation between activities of 
selling goods or services at retail, the Act recognizes that food 
service activities of such retail or service establishments as 
drugstores, department stores, and bowling alleys are not performed by a

[[Page 487]]

separate establishment which ``is'' a ``restaurant'' so as to qualify 
for the overtime exemption provided in section 13(b)(8) and accordingly 
provides a separate overtime exemption in section 13(b)(18) for 
employees employed by any ``retail or service establishments'' in such 
activities in order to equalize the application of the Act between 
restaurant establishments and retail or service establishments of other 
kinds which frequently compete with them for customers and labor. (See 
Sen. Rept. 1487, 89th Cong. first session, p. 32.) For retailing and 
other functionally unrelated activities performed on the same premises 
to be considered as performed in separate establishments, a distinct 
physical place of business engaged in each category of activities must 
be identifiable. The retail portion of the business must be distinct and 
separate from and unrelated to that portion of the business devoted to 
other activities. For example, a firm may engage in selling groceries at 
retail and at the same place of business be engaged in an unrelated 
activity, such as the incubation of chicks for sale to growers. The 
retail grocery portion of the business could be considered as a separate 
establishment for purposes of the exemption, if it is physically 
segregated from the hatchery and has separate employees and separate 
records. In other words, the retail portion of an establishment would be 
considered a separate establishment from the unrelated portion for the 
purpose of the exemption if (a) It is physically separated from the 
other activities; and (b) it is functionally operated as a separate unit 
having separate records, and separate bookkeeping; and (c) there is no 
interchange of employees between the units. The requirement that there 
be no interchange of employees between the units does not mean that an 
employee of one unit may not occasionally, when circumstances require 
it, render some help in the other units or that one employee of one unit 
may not be transferred to work in the other unit. The requirement has 
reference to the indiscriminate use of the employee in both units 
without regard to the segregated functions of such units.



Sec. 779.306  Leased departments not separate establishments.

    It does not follow from the principles discussed in Sec. 779.305 
that leased departments engaged in the retail sale of goods or services 
in a departmentalized store are separate establishments. To the 
contrary, it is only in rare instances that such leased departments 
would be separate establishments for purposes of the exemptions. For 
example, take a situation where the departmentalized retail store, 
having leased departments, controls the space location, determines the 
type of goods that may be sold, determines the pricing policy, bills the 
customers, passes on customers' credit, receives payments due, handles 
complaints, determines the personnel policies, and performs other 
functions as well. In such situations the leased department is an 
integral part of the retail store and considered to be such by the 
customers. It is clear that such departments are not separate 
establishments but rather a part of the retail store establishment and 
will be considered as such for purposes of the exemptions. The same 
result may follow in the case of leased departments engaged in the 
retail sale of goods or services in a departmentalized store where all 
or most of the departments are leased or otherwise individually owned, 
but which operate under one common trade name and hold themselves out to 
the public as one integrated business unit.



Sec. 779.307  Meaning and scope of ``employed by'' and ``employee of.''

    Section 13(a)(2) as originally enacted in 1938 exempted any employee 
``engaged in'' any retail or service establishment. The 1949 amendments 
to that section, however, as contained in section 13(a)(2) and (4) 
exempted any employee ``employed by'' any establishment described in 
those exemptions. The 1961 and 1966 amendments retained the ``employed 
by'' language of these exemptions. Thus, where it is found that any of 
those exemptions apply to an establishment owned or operated by the 
employer the employees ``employed by'' that establishment of the 
employer are exempt from the minimum wage and overtime provisions of the 
Act without regard to whether such

[[Page 488]]

employees perform their activities inside or outside the establishment. 
Thus, such employees as collectors, repair and service men, outside 
salesmen, merchandise buyers, consumer survey and promotion workers, and 
delivery men actually employed by an exempt retail or service 
establishment are exempt from the minimum wage and overtime provisions 
of the Act although they may perform the work of the establishment away 
from the premises. As used in section 13 of the Act, the phrases 
``employee of'' and ``employed by'' are synonymous.



Sec. 779.308  Employed within scope of exempt business.

    In order to meet the requirement of actual employment ``by'' the 
establishment, an employee, whether performing his duties inside or 
outside the establishment, must be employed by his employer in the work 
of the exempt establishment itself in activities within the scope of its 
exempt business. (See Davis v. Goodman Lumber Co., 133 F. 2d 52 (CA-4) 
(holding section 13(a)(2) exemption inapplicable to employees working in 
manufacturing phase of employer's retail establishment); Wessling v. 
Carroll Gas Co., 266 F. Supp. 795 (N.D. Iowa); Oliveira v. Basteiro, 18 
WH Cases 668 (S.D. Texas). See also, Northwest Airlines v. Jackson, 185 
F. 2d 74 (CA-8); Walling v. Connecticut Co., 154 F. 2d 522 (CA-2) 
certiorari denied, 329 U.S. 667; and Wabash Radio Corp. v. Walling, 162 
F. 2d 391 (CA-6).)



Sec. 779.309  Employed ``in'' but not ``by.''

    Since the exemptions by their terms apply to the employees 
``employed by'' the exempt establishment, it follows that those 
exemptions will not extend to other employees who, although actually 
working in the establishment and even though employed by the same person 
who is the employer of all under section 3(d) of the Act, are not 
``employed by'' the exempt establishment. Thus, traveling auditors, 
manufacturers' demonstrators, display-window arrangers, sales 
instructors, etc., who are not ``employed by'' an exempt establishment 
in which they work will not be exempt merely because they happen to be 
working in such an exempt establishment, whether or not they work for 
the same employer. (Mitchell v. Kroger Co., 248 F. 2d 935 (CA-8).) For 
example, if the manufacturer sends one of his employees to demonstrate 
to the public in a customer's exempt retail establishment the products 
which he has manufactured, the employee will not be considered exempt 
under section 13(a)(2) since he is not employed by the retail 
establishment but by the manufacturer. The same would be true of an 
employee of the central offices of a chain-store organization who 
performs work for the central organization on the premises of an exempt 
retail outlet of the chain (Mitchell v. Kroger Co., supra.)



Sec. 779.310  Employees of employers operating multi-unit businesses.

    (a) Where the employer's business operations are conducted in more 
than one establishment, as in the various units of a chain-store system 
or where branch establishments are operated in conjunction with a main 
store, the employer is entitled to exemption under section 13(a)(2) or 
(4) for those of his employees in such business operations, and those 
only, who are ``employed by'' an establishment which qualifies for 
exemption under the statutory tests. For example, the central office or 
central warehouse of a chain-store operation even though located on the 
same premises as one of the chain's retail stores would be considered a 
separate establishment for purposes of the exemption, if it is 
physically separated from the area in which the retail operations are 
carried on and has separate employees and records. (Goldberg v. Sunshine 
Department Stores, 15 W.H. Cases 169 (CA-5) Mitchell v. Miller Drugs, 
Inc., 255 F. 2d 574 (CA-1); Walling v. Goldblatt Bros., 152 F. 2d 475 
(CA-7).)
    (b) Under this test, employees in the warehouse and central offices 
of chainstore systems have not been exempt prior to, and their nonexempt 
status is not changed by, the 1961 amendments. Typically, chain-store 
organizations are merchandising institutions of a hybrid retail-
wholesale nature, whose wholesale functions are performed through their 
warehouses and central offices and similar establishments which 
distribute to or serve the various retail outlets. Such central

[[Page 489]]

establishments clearly cannot qualify as exempt establishments. (A. H. 
Phillips, Inc. v. Walling, 324 U.S. 490; Mitchell v. C & P Stores, 286 
F. 2d 109 (CA-5).) The employees working there are not ``employed by'' 
any single exempt establishment of the business; they are, rather, 
``employed by'' an organization of a number of such establishments. 
Their status obviously differs from that of employees of an exempt 
retail or service establishment, working in a warehouse operated by and 
servicing such establishment exclusively, who are exempt as employees 
``employed by'' the exempt establishment regardless of whether or not 
the warehouse operation is conducted in the same building as the selling 
or servicing activities.



Sec. 779.311  Employees working in more than one establishment of same employer.

    (a) An employee who is employed by an establishment which qualifies 
as an exempt establishment under section 13(a)(2) or (4) is exempt from 
the minimum wage and overtime requirements of the Act even though his 
employer also operates one or more establishments which are not exempt. 
On the other hand, it may be stated as a general rule that if such an 
employer employs an employee in the work of both exempt and nonexempt 
establishments during the same workweek, the employee is not ``employed 
by'' an exempt establishment during such workweek. It is recognized, 
however, that employees performing an insignificant amount of such 
incidental work or performing work sporadically for the benefit of 
another establishment of their employer nevertheless, are ``employed 
by'' their employer's retail establishment. For example, there are 
situations where an employee of an employer in order to discharge 
adequately the requirements of his job for the exempt establishment by 
which he is employed incidentally or sporadically may be called upon to 
perform some work for the benefit of another establishment. For example, 
an elevator operator employed by a retail store, in performance of his 
regular duties for the store incidentally may carry personnel who have a 
central office or warehouse function. Similarly, a maintenance man 
employed by such store incidentally may perform work which is for the 
benefit of the central office or warehouse activities. Also, a sales 
clerk employed in a retail store in one of its sales departments 
sporadically may be called upon to release some of the stock on hand in 
the department for the use of another store.
    (b) The application of the principles discussed in Sec. 779.310 and 
in paragraph (a) of this section would not preclude the applicability of 
the exemption to the employee whose duties require him to spend part of 
his week in one exempt retail establishment and the balance of the week 
in another of his employer's exempt retail establishments; provided that 
his work in each of the establishments will qualify him as ``employed'' 
by such a retail establishment at all times within the individual week. 
As an example, a shoe clerk may sell shoes for part of a week in one 
exempt retail establishment of his employer and in another of his 
employer's exempt retail establishments for the remainder of the 
workweek. In that entire workweek he would be considered to be employed 
by an exempt retail establishment. In such a situation there is no 
central office or warehouse concept, nor is the employee considered as 
performing services for the employer's business organization as a whole 
since there is no period during the week in which the employee is not 
``employed by'' a single exempt retail establishment.

          Statutory Meaning of Retail or Service Establishment



Sec. 779.312  ``Retail or service establishment'', defined in section 13(a)(2).

    The 1949 amendments to the Act defined the term ``retail or service 
establishment'' in section 13(a)(2). That definition was retained in 
section 13(a)(2) as amended in 1961 and 1966 and is as follows:

A ``retail or service establishment'' shall mean an establishment 75 per 
centum of whose annual dollar volume of sales of goods or services (or 
of both) is not for resale and is recognized as retail sales or services 
in the particular industry.


It is clear from the legislative history of the 1961 amendments to the 
Act that

[[Page 490]]

no different meaning was intended by the term ``retail or service 
establishment'' from that already established by the Act's definition, 
wherever used in the new provisions, whether relating to coverage or to 
exemption. (See S. Rept. 145, 87th Cong., first session p. 27; H.R. 75, 
87th Cong., first session p. 9.) The legislative history of the 1949 
amendments and existing judicial pronouncements regarding section 
13(a)(2) of the Act, therefore, will offer guidance to the application 
of this definition.



Sec. 779.313  Requirements summarized.

    The statutory definition of the term ``retail or service 
establishment'' found in section 13(a)(2), clearly provides that an 
establishment to be a ``retail or service establishment'': (a) Must 
engage in the making of sales of goods or services; and (b) 75 percent 
of its sales of goods or services, or of both, must be recognized as 
retail in the particular industry; and (c) not over 25 percent of its 
sales of goods or services, or of both, may be sales for resale. These 
requirements are discussed below in Sec. Sec. 779.314 through 779.341.

       Making Sales of Goods and Services ``Recognized as Retail''



Sec. 779.314  ``Goods'' and ``services'' defined.

    The term ``goods'' is defined in section 3(i) of the Act and has 
been discussed above in Sec. 779.14. The Act, however, does not define 
the term ``services.'' The term ``services,'' therefore, must be given a 
meaning consistent with its usage in ordinary speech, with the context 
in which it appears and with the legislative history of the exemption as 
it explains the scope, the purposes and the objectives of the exemption. 
Although in a very general sense every business might be said to perform 
a service it is clear from the context and the legislative history that 
all business establishments are not making sales of ``services'' of the 
type contemplated in the Act; that is, services rendered by 
establishments which are traditionally regarded as local retail service 
establishments such as the restaurants, hotels, barber shops, repair 
shops, etc. (See Sec. Sec. 779.315 through 779.320.) It is to these 
latter services only that the term ``service'' refers.



Sec. 779.315  Traditional local retail or service establishments.

    The term ``retail'' whether it refers to establishments or to the 
sale of goods or services is susceptible of various interpretations. 
When used in a specific law it can be defined properly only in terms of 
the purposes and objectives and scope of that law. In enacting the 
section 13(a)(2) exemption, Congress had before it the specific object 
of exempting from the minimum wage and overtime requirements of the Act 
employees employed by the traditional local retail or service 
establishment, subject to the conditions specified in the exemption. 
(See statements of Rep. Lucas, 95 Cong. Rec. pp. 11004 and 11116, and of 
Sen. Holland, 95 Cong. Rec. pp. 12502 and 12506.) Thus, the term 
``retail or service establishment'' as used in the Act denotes the 
traditional local retail or service establishment whether pertaining to 
the coverage or exemption provisions.



Sec. 779.316  Establishments outside ``retail concept'' not within
statutory definition; lack first requirement.

    The term ``retail'' is alien to some businesses or operations. For 
example, transactions of an insurance company are not ordinarily thought 
of as retail transactions. The same is true of an electric power company 
selling electrical energy to private consumers. As to establishments of 
such businesses, therefore, a concept of retail selling or servicing 
does not exist. That it was the intent of Congress to exclude such 
businesses from the term ``retail or service establishment'' is clearly 
demonstrated by the legislative history of the 1949 amendments and by 
the judicial construction given said term both before and after the 1949 
amendments. It also should be noted from the judicial pronouncements 
that a ``retail concept'' cannot be artificially created in an industry 
in which there is no traditional concept of retail selling or servicing. 
(95 Cong. Rec. pp. 1115, 1116, 12502, 12506, 21510, 14877, and 14889; 
Mitchell v. Kentucky Finance Co., 359 U.S. 290; Phillips Co. v. Walling, 
324 U.S. 490; Kirschbaum Co. v. Walling, 316 U.S.

[[Page 491]]

517; Durkin v. Joyce Agency, Inc., 110 F. Supp. 918 (N.D. Ill.) affirmed 
sub nom Mitchell v. Joyce Agency, Inc., 348 U.S. 945; Goldberg v. 
Roberts 291 F. 2d 532 (CA-9); Wirtz v. Idaho Sheet Metal Works, 335 F. 
2d 952 (CA-9), affirmed in 383 U.S. 190; Telephone Answering Service v. 
Goldberg, 290 F. 2d 529 (CA-1).) It is plain, therefore, that the term 
``retail or service establishment'' as used in the Act does not 
encompass establishments in industries lacking a ``retail concept''. 
Such establishments not having been traditionally regarded as retail or 
service establishments cannot under any circumstances qualify as a 
``retail or service establishment'' within the statutory definition of 
the Act, since they fail to meet the first requirement of the statutory 
definition. Industry usage of the term ``retail'' is not in itself 
controlling in determining when business transactions are retail sales 
under the Act. Judicial authority is quite clear that there are certain 
goods and services which can never be sold at retail. (Idaho Sheet Metal 
Works, Inc. v. Wirtz, 383 U.S. 190, 202, rehearing denied 383 U.S. 963; 
Wirtz v. Steepleton General Tire Company, Inc., 383 U.S. 190, 202, 
rehearing denied 383 U.S. 963.)



Sec. 779.317  Partial list of establishments lacking ``retail concept.''

    There are types of establishments in industries where it is not 
readily apparent whether a retail concept exists and whether or not the 
exemption can apply. It, therefore, is not possible to give a complete 
list of the types of establishments that have no retail concept. It is 
possible, however, to give a partial list of establishments to which the 
retail concept does not apply. This list is as follows:

Accounting firms.
Adjustment and credit bureaus and collection agencies (Mitchell v. 
Rogers d.b.a. Commercial Credit Bureau, 138 F. Supp. 214 (D. Hawaii); 
Mill v. United States Credit Bureau, 1 WH Cases 878, 5 Labor Cases par. 
60,992 (S.D.Calif.).
Advertising agencies including billboard advertising.
Air-conditioning and heating systems contractors.
Aircraft and aeronautical equipment; establishments engaged in the 
business of dealing in.
Airplane crop dusting, spraying and seeding firms.
Airports, airport servicing firms and fixed base operators.
Ambulance service companies.
Apartment houses.
Armored car companies.
Art; commercial art firms.
Auction houses (Fleming v. Kenton Whse., 41 F. Supp. 255).
Auto-wreckers' and junk dealers' establishments (Bracy v. Luray, 138 F. 
2d 8 (CA-4); Edwards v. South Side Auto Parts (Mo. App.) 180 SW 2d 1015. 
(These typically sell for resale.)
Automatic vending machinery; establishments engaged in the business of 
dealing in.
Banks (both commercial and savings).
Barber and beauty parlor equipment; establishments engaged in the 
business of dealing in.
Blacksmiths; industrial.
Blue printing and photostating establishments.
Booking agencies for actors and concert artists.
Bottling and bottling equipment and canning machinery; establishments 
engaged in the business of dealing in.
Broadcasting companies.
Brokers, custom house; freight brokers; insurance brokers, stock or 
commodity brokers.
Building and loan associations.
Building contractors.
Burglar alarms; establishments engaged in furnishing, installing and 
repairing for commercial establishments (Walling v. Thompson, 65 F. 
Supp. 686 (S.D. Calif.)).
Burial associations (Gilreath v. Daniel (C.A. 8), 19 WH Cases 370).
Butchers' equipment; establishments engaged in the business of dealing 
in.
Chambers of Commerce.
Chemical equipment; establishments engaged in the business of dealing 
in.
Clubs and fraternal organizations with a select or restricted 
membership.
Common and contract carriers; establishments engaged in providing 
services, fuel, equipment, or other goods or facilities for the 
operation of such carriers (Idaho Sheet Metal Works v. Wirtz, 383 U.S. 
190, rehearing denied 383 U.S. 963; Wirtz v. Steepleton General Tire 
Co., Inc. 383 U.S. 190, rehearing denied 383 U.S. 963; Boutell v. 
Whaling).
Common carrier stations and terminals.
Construction contractors.
Contract Post Offices.
Credit companies, including small loan and personal loan companies 
(Mitchell v. Kentucky Finance Co., 359 U.S. 290).
Credit rating agencies.
Dentists' offices.
Dentists supply and equipment establishments.

[[Page 492]]

Detective agencies.
Doctors' offices.
Dry cleaners (see 95 Cong. Rec., p. 12503 and Sec. 779.337 (b) of this 
part).
Drydock companies.
Drydock
Dye houses, commercial (Walling v. Kerr, 47 F. Supp. 852 (E.D. Pa)).
Duplicating, addressing, mailing, mail listings, and letter stuffing 
establishments (Goldberg v. Roberts d.b.a. Typing and Mailing Unlimited, 
15 WH Cases 100, 42 L.C. par. 31,126 (CA-9; Durkin v. Shone, 112 F. 
Supp. 375 (E.D. Tenn.); Hanzley v. Hooven Letters, 44 N.Y.S. 2d 398 
(City Ct. N.Y. 1943).
Educational institutions (for express exclusion see Sec. 779.337(b)).
Electric and gas utilities (Meeker Cooperative Light & Power Assn. v. 
Phillips, 158 F. 2d 698 (CA-8); New Mexico Public Service Co. v. Engel, 
145 F. 2d 636 (CA-10); Brown v. Minngas Co., 51 F. Supp. 363 (D. 
Minn.)).
Electric signs; establishments engaged in making, installing and 
servicing.
Elevators; establishments engaged in repairing (Cf. Muldowney v. Seaberg 
Elevator Co., 39 F. Supp. 275 (E.D.N.Y.)).
Employment Agencies (Yunker v. Abbye Employment Agency, Inc., 32 N.Y.S. 
2d 715 (N.Y.C. Munic. Ct. 1942)).
Engineering firms.
Factors.
Filling station equipment; establishments engaged in the business of 
dealing in.
Finance companies (Mitchell v. Kentucky Finance Co., 359 U.S. 290).
Flying schools.
Gambling establishments.
Geological surveys; firms engaged in making.
Heating and air conditioning systems contractors.
Hospital equipment (such as operating instruments, X-ray machines, 
operating tables, etc.); establishments engaged in the business of 
dealing in.
Insurance; mutual, stock and fraternal benefit, including insurance 
brokers, agents, and claims adjustment offices.
Income tax return preparers.
Investment counseling firms.
Jewelers' equipment; establishments engaged in the business of dealing 
in.
Job efficiency checking and rating; establishments engaged in the 
business of supplying.
Labor unions.
Laboratory equipment; establishments engaged in the business of dealing 
in.
Landscaping contractors.
Laundries (see 95 Cong. Rec. p. 12503 and Sec. 779.337 (b) of this 
part).
Laundry; establishments engaged in the business of dealing in commercial 
laundry equipment.
Lawyers' offices.
Legal concerns engaged in compiling and distributing information 
regarding legal developments.
License and legal document service firms.
Loan offices (see credit companies).
Loft buildings or office buildings, concerns engaged in renting and 
maintenance of (Kirschbaum v. Walling, 316 U.S. 517; Statement of 
Senator Holland, 95 Cong. Rec., p. 12505).
Machinery and equipment, including tools--establishments engaged in 
selling or servicing of construction, mining, manufacturing and 
industrial machinery, equipment and tools (Roland Electric Co. v. 
Walling, 326 U.S. 657; Guess v. Montaque, 140 F. 2d 500 (CA-4); cf. 
Walling v. Thompson, 65 F. Supp. 686 (S.D. Calif.)).
Magazine subscription agencies (Wirtz v. Keystone Serv. (C.A. 5), 418 F. 
2d 249).
Medical and dental clinics.
Medical and dental laboratories.
Medical and dental laboratory supplies; establishments engaged in the 
business of dealing in.
Messenger; firms engaged in furnishing commercial messenger service 
(Walling v. Allied Messenger Service, 47 F. Supp. 773 (S.D.N.Y.)).
Newspaper and magazine publishers.
Oil well drilling; companies engaged in contract oil well drilling.
Oil well surveying firms (Straughn v. Schlumberger Well Surveying Corp., 
72 F. Supp. 511 (S.D. Tex.)).
Packing companies engaged in slaughtering livestock (Walling v. Peoples 
Packing Co., 132 F. 2d 236 (CA-10)).
Painting contractors.
Pharmacists' supplies; establishments engaged in the business of dealing 
in.
Photography, commercial, establishments engaged in.
Plumbers' equipment; establishments engaged in the business of dealing 
in.
Plumbing contractors.
Press clipping bureaus.
Printers' and lithographers' supplies; establishments engaged in the 
business of dealing in.
Printing and binding establishments (Casa Baldridge, Inc. v. Mitchell, 
214 F. 2d 703 (CA-1)).
Protection and Shopping services for industry; establishments engaged in 
supplying (Durkin v. Joyce Agency, Inc., 110 F. Supp. 918 (N.D. Ill.) 
affirmed sub nom. Mitchell v. Joyce Agency, Inc., 348 U.S. 945).
Quarris (Walling v. Partee, 3 WH Cases 543, 7 Labor Cases, par. 61,721 
(M.D. Tenn.)).
Radio and television broadcasting stations and studios.
Ready-mix concrete suppliers.
Real estate companies.
Roofing contractors.

[[Page 493]]

Schools (except schools for mentally or physically handicapped or gifted 
children): (All now excluded, see Sec. 779.337(b)).
School supply distributors.
Security dealers.
Sheet metal contractors.
Ship equipment, commercial; establishments engaged in the business of 
dealing in.
Shopping analysts services.
Siding and insulation contractors.
Sign-painting shops.
Special trade contractors (construction industry).
Stamp and coupon redemption stores.
Statistical reporting, business and financial data; establishments 
engaged in furnishing.
Store equipment; establishments engaged in the business of dealing in.
Tax services.
Telegraph and cable companies.
Telephone companies; (Schmidt v. Peoples Telephone Union of Maryville, 
Mo., 138 F. 2d 13 (CA-8)).
Telephone answer service; establishments engaged in furnishing. 
(Telephone Answering Service v. Goldberg, 15 WH Cases 67, 4 L.C. par. 
31,104 (CA-1)).
Title and abstract companies.
Tobacco auction warehouses (Fleming v. Kenton Loose Leaf Tobacco 
Warehouse Co., 41 F. Supp. 255 (E.D. Ky.); Walling v. Lincoln Loose Leaf 
Warehouse Co., 59 F. Supp. 601 (E.D. Tenn.)).
Toll bridge companies.
Trade associations.
Transportation equipment, commercial; establishments engaged in the 
business of dealing in.
Transportation companies.
Travel agencies.
Tree removal firms.
Truck stop establishments (Idaho Sheet Metal Works, Inc., v. Wirtz, 383 
U.S. 190, rehearing denied 383 U.S. 963; Wirtz v. Steepleton General 
Tire Co., Inc., 383 U.S. 190, rehearing denied 383 U.S. 963).
Trust companies.
Undertakers' supplies; establishments engaged in the business of dealing 
in.
Wagers, establishments accepting, as business in which they are engaged.
Warehouse companies; commercial or industrial (Walling v. Public Quick 
Freezing and Cold Storage Co., 62 F. Supp. 924 (S.D. Fla.)).
Warehouses equipment and supplies; establishments engaged in the 
business of dealing in.
Waste removal contractors.
Watchmen, guards and detectives for industries; establishments engaged 
in supplying (Walling v. Sondock, 132 F. 2d 77 (CA-5); Walling v. 
Wattam, 3 WH Cases 726, 8 Labor Cases, par. 62,023 (W.D. Tenn., 1943); 
Walling v. Lum, 4 WH Cases 465, 8 Labor Cases, par. 62,185 (S.D. Miss., 
1944); Walling v. New Orleans Private Patrol Service 57 F. Supp. 143 
(E.D. La., 1944); Haley v. Central Watch Service, 4 WH Cases 158, 8 
Labor Cases, par. 62,002 (N.D. Ill., 1944)).
Water supply companies (Reynolds v. Salt River Valley Water Users Assn., 
143 F. 2d (863 (CA-9).)
Water well drilling contractors.
Window displays; establishments engaged in the business of dealing in.
Wrecking contractors.



Sec. 779.318  Characteristics and examples of retail or service 
establishments.

    (a) Typically a retail or service establishment is one which sells 
goods or services to the general public. It serves the everyday needs of 
the community in which it is located. The retail or service 
establishment performs a function in the business organization of the 
Nation which is at the very end of the stream of distribution, disposing 
in small quantities of the products and skills of such organization and 
does not take part in the manufacturing process. (See, however, the 
discussion of section 13(a)(4) in Sec. Sec. 779.346 to 779.350.) Such 
an establishment sells to the general public its food and drink. It 
sells to such public its clothing and its furniture, its automobiles, 
its radios and refrigerators, its coal and its lumber, and other goods, 
and performs incidental services on such goods when necessary. It 
provides the general public its repair services and other services for 
the comfort and convenience of such public in the course of its daily 
living. Illustrative of such establishments are: Grocery stores, 
hardware stores, clothing stores, coal dealers, furniture stores, 
restaurants, hotels, watch repair establishments, barber shops, and 
other such local establishments.
    (b) The legislative history of the section 13(a)(2) exemption for 
certain retail or service establishments shows that Congress also 
intended that the retail exemption extend in some measure beyond 
consumer goods and services to embrace certain products almost never 
purchased for family or noncommercial use. A precise line between such 
articles and those which can never be sold at retail cannot be drawn. 
But a few characteristics of items like small trucks and farm implements 
may offer some guidance; their use is very widespread as is that

[[Page 494]]

of consumer goods; they are often distributed in stores or showrooms by 
means not dissimilar to those used for consumer goods; and they are 
frequently used in commercial activities of limited scope. The list of 
strictly commercial items whose sale can be deemed retail is very small 
and a determination as to the application of the retail exemption in 
specific cases would depend upon the consideration of all the 
circumstances relevant to the situation. (Idaho Sheet Metal Works, Inc. 
v. Wirtz and Wirtz v. Steepleton General Tire Company, Inc., 383 U.S. 
190, 202, rehearing denied 383 U.S. 963.)

[35 FR 5856, Apr. 9, 1970, as amended at 36 FR 14466, Aug. 6, 1971]



Sec. 779.319  A retail or service establishment must be open to 
general public.

    The location of the retail or service establishment, whether in an 
industrial plant, an office building, a railroad depot, or a government 
park, etc., will make no difference in the application of the exemption 
and such an establishment will be exempt if it meets the tests of the 
exemption. Generally, however, an establishment, wherever located, will 
not be considered a retail or service establishment within the meaning 
of the Act, if it is not ordinarily available to the general consuming 
public. An establishment, however, does not have to be actually 
frequented by the general public in the sense that the public must 
actually visit it and make purchases of goods or services on the 
premises in order to be considered as available and open to the general 
public. A refrigerator repair service shop, for example, is available 
and open to the general public even if it receives all its orders on the 
telephone and performs all of its repair services on the premises of its 
customers.



Sec. 779.320  Partial list of establishments whose sales or service
may be recognized as retail.

Antique shops.
Auto courts.
Automobile dealers' establishments.
Automobile laundries.
Automobile repair shops.
Barber shops.
Beauty shops.
Bicycle shops.
Billiard parlors.
Book stores.
Bowling alleys.
Butcher shops.
Cafeterias.
Cemeteries.
China, glassware stores.
Cigar stores.
Clothing stores.
Coal yards.
Confectionery stores.
Crematories.
Dance halls.
Delicatessen stores.
Department stores.
Drapery stores.
Dress-suit rental establishments.
Drug stores.
Dry goods stores.
Embalming establishments.
Farm implement dealers.
Filling stations.
Floor covering stores.
Florists.
Funeral homes.
Fur repair and storage shops.
Fur shops.
Furniture stores.
Gift, novelty and souvenir shops.
Grocery stores.
Hardware stores.
Hosiery shops.
Hotels.
Household appliance stores.
Household furniture storage and moving establishments.
Household refrigerator service and repair shops.
Infants' wear shops.
Jewelry stores.
Liquor stores.
Luggage stores.
Lumber yards.
Masseur establishments.
Millinery shops.
Musical instrument stores and repair shops.
Newsstands.
Paint stores.
Public parking lots.
Photographic supply and camera shops.
Piano tuning establishments.
Public baths.
Public garages.
Recreational camps.
Reducing establishments.
Restaurants.
Roadside diners.
Scalp-treatment establishments.
Shoe repair shops.
Shoeshine parlors.
Sporting goods stores.
Stationery stores.
Taxidermists.
Theatres.
Tourist homes.
Trailer camps.

[[Page 495]]

Undertakers.
Variety shops.
Watch, clock and jewelry repair establishments.

[36 FR 14466, Aug. 6, 1971]



Sec. 779.321  Inapplicability of ``retail concept'' to some types of
sales or services of an eligible establishment.

    (a) Only those sales or services to which the retail concept applies 
may be recognized as retail sales of goods or services for purposes of 
the exemption. The fact that the particular establishment may have a 
concept of retailability, in that it makes sales of types which may be 
recognized as retail, is not determinative unless the requisite portion 
of its annual dollar volume is derived from particular sales of its 
goods and services which have a concept of retailability. Thus, the mere 
fact that an establishment is of a type noted in Sec. 779.320 does not 
mean that any particular sales of such establishment are within the 
retail concept. As to each particular sale of goods or services, an 
initial question that must be answered is whether the sales of goods or 
services of the particular type involved can ever be recognized as 
retail. The Supreme Court in Wirtz v. Steepleton General Tire Co., 383 
U.S. 190, confirmed the Department's position that (1) The concept of 
``retailability'' must apply to particular sales of the establishment, 
as well as the establishment or business as a whole, and (2) even as to 
the establishment whose sales are ``variegated'' and include retail 
sales, that nonetheless classification of particular sales of goods or 
services as ever coming within the concept of retailability must be 
made. Sales of some particular types of goods or services may be 
decisively classified as nonretail on the ground that such particular 
types of goods or services cannot ever qualify as retail whatever the 
terms of sale, regardless of the industry usage or classification.
    (b) An establishment is, therefore, not automatically exempt upon a 
finding that it is of the type to which the retail concept of selling or 
servicing is applicable; it must meet all the tests specified in the Act 
in order to qualify for exemption. Thus, for example, an establishment 
may be engaged in repairing household refrigerators, and in addition it 
may be selling and repairing manufacturing machinery for manufacturing 
establishments. The retail concept does not apply to the latter 
activities. In such case, the exemption will not apply if the annual 
dollar volume derived from the selling and servicing of such machinery, 
and from any other sales and services which are not recognized as retail 
sales or services, and from sales of goods or services for resale 
exceeds 25 percent of the establishment's total annual dollar volume of 
sales of goods or services.
    (c) Since there is no retail concept in the construction industry, 
gross receipts from construction activities of any establishment also 
engaged in retail selling must be counted as dollar volume from sales 
not recognized as retail in applying the percentage tests of section 
13(a)(2). Also, since construction and the distribution of goods are 
entirely dissimilar activities performed in industries traditionally 
recognized as wholly separate and distinct from each other, an employee 
engaged in construction activities is not employed within the scope of 
his employer's otherwise exempt retail business in any week in which the 
employee engages in such construction work, and is therefore (see Sec. 
779.308) not employed ``by'' a retail or service establishment within 
the meaning of the Act in such workweek.
    (d) Certain business establishments engage in the retail sale to the 
general public, as goods delivered to purchasers at a stipulated price, 
of items such as certain plumbing and heating equipment, electrical 
fixtures and supplies, and fencing and siding for residential 
installation. In addition to selling the goods they may also install, at 
an additional charge, the goods which are sold. Installation which is 
incidental to a retail sale (as distinguished from a construction or 
reconstruction contract to do a building alteration, or repair job at a 
contract price for materials and labor required, see Sec. 779.355(a)(1) 
is considered an exempt activity. By way of example, if the installation 
for the customer of such goods sold to him at retail requires only minor 
carpentry, plumbing or electrical work (as may be

[[Page 496]]

the case where ordinary plumbing fixtures, or household items such as 
stoves, garbage disposals, attic fans, or window air conditioners are 
being installed or replaced), or where only labor of the type required 
for the usual installation of chain link fences around a home or small 
business establishment is involved, will normally be considered as 
incidental to the retail sale of the goods involved (unless, of course, 
the transaction between the parties is for a construction job at an 
overall price for the job, involving no retail sale of goods as such). 
In determining whether such an installation is incidental to a retail 
sale or constitutes a nonretail construction activity, it is necessary 
to consider the general characteristics of the entire transaction. Where 
one or more of the following conditions are present, the installation 
will normally be considered a construction activity rather than 
incidental to a retail sale:
    (1) The cost to the purchaser of the installation in relation to the 
sale price of the goods is substantial;
    (2) The installation involves substantial structural changes, 
extensive labor, planning or the use of specialized equipment;
    (3) The goods are being installed in conjunction with the 
construction of a new home or other structure; or
    (4) The goods installed are of a specialized type which the general 
consuming public does not ordinarily have occasion to use.
    (e) An auxiliary employee of an exempt retail or service 
establishment performing clerical, maintenance, or custodial work in the 
exempt establishment which is related to the establishment's 
construction activities will, for enforcement purposes, be considered 
exempt in any workweek if no more than 20 percent of his time is spent 
in such work.

         ``Recognized'' as Retail ``in the Particular Industry''



Sec. 779.322  Second requirement for qualifying as a ``retail or 
service establishment.''

    If the business is one to which the retail concept is applicable 
then the second requirement for qualifying as a ``retail or service 
establishment'' within that term's statutory definition is that 75 
percent of the establishment's annual dollar volume must be derived from 
sales of goods or services (or of both) which are recognized as retail 
sales or services in the particular industry. Under the Act, this 
requirement is distinct from the requirement that 75 percent of annual 
dollar volume be from sales of goods or services ``not for resale'' 
(Sec. 779.329); many sales which are not for resale lack a retail 
concept and the fact that a sale is not for resale cannot establish that 
it is recognized as retail in a particular industry. (See Wirtz v. 
Steepleton General Tire Co., 383 U.S. 190.) To determine whether the 
sales or services of an establishment are recognized as retail sales or 
services in the particular industry, we must inquire into what is meant 
by the terms ``recognized'' and ``in the particular industry,'' and into 
the functions of the Secretary and the courts in determining whether the 
sales are recognized as retail in the industry.



Sec. 779.323  Particular industry.

    In order to determine whether a sale or service is recognized as a 
retail sale or service in the ``particular industry'' it is necessary to 
identify the ``particular'' industry to which the sale or service 
belongs. Some situations are clear and present no difficulty. The sale 
of clothes, for example, belongs to the clothing industry and the sale 
of ice belongs to the ice industry. In other situations, a sale or 
service is not so easily earmarked and a wide area of overlapping 
exists. Household appliances are sold by public utilities as well as by 
department stores and by stores specializing in the sale of such goods; 
and tires are sold by manufacturers' outlets, by independent tire 
dealers and by other types of outlets. In these cases, a fair 
determination as to whether a sale or service is recognized as retail in 
the ``particular'' industry may be made by giving to the term 
``industry'' its broad statutory definition as a ``group of industries'' 
and thus including all industries wherein a significant quantity of the 
particular product or service is sold. For example, in determining 
whether a sale of lumber is a retail sale, it is the recognition the 
sale of lumber occupies

[[Page 497]]

in the lumber industry generally which decides its character rather than 
the recognition such sales occupies in any branch of that industry.



Sec. 779.324  Recognition ``in.''

    The express terms of the statutory provision requires the 
``recognition'' to be ``in'' the industry and not ``by'' the industry. 
Thus, the basis for the determination as to what is recognized as retail 
``in the particular industry'' is wider and greater than the views of an 
employer in a trade or business, or an association of such employers. It 
is clear from the legislative history and judicial pronouncements that 
it was not the intent of this provision to delegate to employers in any 
particular industry the power to exempt themselves from the requirements 
of the Act. It was emphasized in the debates in Congress that while the 
views of an industry are significant and material in determining what is 
recognized as a retail sale in a particular industry, the determination 
is not dependent on those views alone. (See 95 Cong. Rec. pp. 12501, 
12502, and 12510; Wirtz v. Steepleton General Tire Co., 383 U.S. 190; 
Mitchell v. City Ice Co., 273 F. 2d 560 (CA-5); Durkin v. Casa Baldrich, 
Inc., 111 F. Supp. 71 (DCPR) affirmed 214 F. 2d 703 (CA-1); see also 
Aetna Finance Co. v. Mitchell, 247 F. 2d 190 (CA-1).) Such a 
determination must take into consideration the well-settled habits of 
business, traditional understanding and common knowledge. These involve 
the understanding and knowledge of the purchaser as well as the seller, 
the wholesaler as well as the retailer, the employee as well as the 
employer, and private and governmental research and statistical 
organizations. The understanding of all these and others who have 
knowledge of recognized classifications in an industry, would all be 
relevant in the determination of the question.



Sec. 779.325  Functions of the Secretary and the courts.

    It may be necessary for the Secretary in the performance of his 
duties under the Act, to determine in some instances whether a sale or 
service is recognized as a retail sale or particular industry. In the 
exceptional case where the determination cannot be made on the basis of 
common knowledge or readily accessible information, the Secretary may 
gather the information needed for the purpose of making such 
determinations. Available information on usage and practice in the 
industry is carefully considered in making such determinations, but the 
``word-usage of the industry'' does not have controlling force; the 
Secretary ``cannot be hamstrung by the terminology of a particular 
trade'' and possesses considerable discretion as the one responsible for 
the actual administration of the Act. (Wirtz v. Steepleton General Tire 
Co., 383 U.S. 190; and see 95 Cong. Rec. 12501-12502, 12510.) The 
responsibility for making final decisions, of course, rests with the 
courts. An employer disagreeing with the determinations of the Secretary 
and claiming exemption has the burden of proving in a court proceeding 
that the prescribed percentage of the establishment's sales or services 
are recognized as retail in the industry and that his establishment 
qualifies for the exemption claimed by him. (See Wirtz v. Steepleton, 
cited above, and 95 Cong. Rec. 12510.)



Sec. 779.326  Sources of information.

    In determining whether a sale or service is recognized as a retail 
sale or service in a particular industry, there are available to the 
Secretary a number of sources of information to aid him in arriving at a 
conclusion. These sources include: (a) The legislative history of the 
Act as originally enacted in 1938 and the legislative history of the 
1949, 1961, and 1966 amendments to the Act pertaining to those sections 
in which the term ``retail or service establishment'' is found, 
particularly in the section 13(a)(2) exemption; (b) the decisions of the 
courts during the intervening years; and (c) the Secretary's experience 
in the intervening years in interpreting and administering the Act. 
These sources of information enable the Secretary to lay down certain 
standards and criteria, as discussed in this subpart, for determining 
generally and in some cases specifically what sales or services are 
recognized as retail sales or services in particular industries.

[[Page 498]]



Sec. 779.327  Wholesale sales.

    A wholesale sale, of course, is not recognized as a retail sale. If 
an establishment derives more than 25 percent of its annual dollar 
volume from sales made at wholesale, it clearly cannot qualify as a 
retail and service establishment. It must be remembered, however, that 
what is a retail sale for purposes of a sales tax law is not necessarily 
a retail sale for purposes of the statutory definition of the term 
``retail or service establishment''. Similarly, a showing that sales of 
goods or services are not wholesale or are made to the ultimate consumer 
and are not for resale does not necessarily prove that such sales or 
services are recognized in the particular industry as retail. (Wirtz v. 
Steepleton General Tire Co., 388 U.S. 190.)



Sec. 779.328  Retail and wholesale distinguished.

    (a) The distinction between a retail sale and a wholesale sale is 
one of fact. Typically, retail sales are made to the general consuming 
public. The sales are numerous and involve small quantities of goods or 
services. Wholesale establishments usually exclude the general consuming 
public as a matter of established business policy and confine their 
sales to other wholesalers, retailers, and industrial or business 
purchasers in quantities greater than are normally sold to the general 
consuming public at retail. What constitutes a small quantity of goods 
depends, of course, upon the facts in the particular case and the 
quantity will vary with different commodities and in different trades 
and industries. Thus, a different quantity would be characteristic of 
retail sales of canned tomato juice, bed sheets, furniture, coal, etc. 
The quantity test is a well-recognized business concept. There are 
reasonably definite limits as to the quantity of a particular commodity 
which the general consuming public regularly purchases at any given time 
at retail and businessmen are aware of these buying habits. These buying 
habits set the standard for the quantity of goods which is recognized in 
an industry as the subject of a retail sale. Quantities which are 
materially in excess of such a standard are generally regarded as 
wholesale and not retail quantities.
    (b) The sale of goods or services in a quantity approximating the 
quantity involved in a normal wholesale transaction and as to which a 
special discount from the normal retail price is given is generally 
regarded as a wholesale sale in most industries. Whether the sale of 
such a quantity must always involve a discount in order to be considered 
a wholesale sale depends upon industry practice. If the practice in a 
particular industry is such that a discount from the normal retail price 
is not regarded in the industry as significant in determining whether 
the sale of a certain quantity is a wholesale sale, then the question of 
whether the sale of such a quantity will be considered a wholesale sale 
would be determined without reference to the price. In some industries, 
the sale of a small quantity at a discount may also be regarded as a 
wholesale sale, in which case it will be so treated for purposes of the 
exemption. Generally, as the Supreme Court has recognized (Wirtz v. 
Steepleton General Tire Co., 383 U.S. 1900), both the legislative 
history and common parlance suggest that ``the term retail becomes less 
apt as the quantity and the price discount increases in a particular 
transaction.''
    (c) In some cases, a purchaser contracts for the purchase of a large 
quantity of goods or services to be delivered or performed in smaller 
quantities or jobs from time to time as the occasion requires. In other 
cases, the purchaser instead of entering into a single contract for the 
entire amount of goods, or services, receives a series of regular 
deliveries of performances pursuant to a quotation, bid, estimate, or 
general business arrangement or understanding. In these situations, if 
the total quantity of goods or services which is sold is materially in 
excess of the total quantity of goods or services which might reasonably 
be purchased by a member of the general consuming public during the same 
period, it will be treated as a wholesale quantity for purposes of the 
statutory definition of the term ``retail or service establishment'', in 
the absence of clear evidence that under such circumstances such a

[[Page 499]]

quantity is recognized as a retail quantity in the particular industry. 
For example, if a food service firm contracts with a college to provide 
meals for the latter's boarding students for a term, in consideration of 
payment by the college of a stipulated sum based on the number of 
students registered or provided with meals, the services are being sold 
in a wholesale, rather than a retail quantity. If such a contract is 
entered into as a result of formal bids, as noted in paragraph (d) of 
this section, this would be an additional reason for nonrecognition of 
the transaction as a retail sale of such services.
    (d) Sales made pursuant to formal bid procedures, such as those 
utilized by the agencies of Federal, State, and local governments and 
oftentimes by commercial and industrial concerns involving the issuance 
by the buyer of a formal invitation to bid on certain merchandise or 
services for delivery in accordance with prescribed terms and 
specifications, are not recognized as retail sales.



Sec. 779.329  Effect of type of customer and type of goods or services.

    In some industries the type of goods or services sold or the type of 
purchaser of goods or services are determining factors in whether a sale 
or service is recognized as retail in the particular industry. In other 
industries a sale or service may be recognized as retail regardless of 
the type of goods or services sold or the type of customer. Where a sale 
is recognized as retail regardless of the type of customer, its 
character as such will not be affected by the character of the customer, 
with reference to whether he is a private individual or a business 
concern, or by the use the purchaser makes of the purchased commodity. 
For example, if the sale of a single automobile to anyone for any 
purpose is recognized as a retail sale in the industry, it will be 
considered as a retail sale for purposes of the exemption whether the 
customer be a private individual or an industrial concern or whether the 
automobile is used by the purchaser for pleasure purposes or for 
business purposes. If a sale of a particular quantity of coal is 
recognized in the industry as a retail sale, its character as such will 
not be affected by the fact that it is sold for the purpose of heating 
an office building as distinguished from a private dwelling. If the 
repair of a wash basin is recognized in the industry as a retail 
service, its character as such will not be affected by the fact that it 
is a wash basin in a factory building as distinguished from a wash basin 
in a private dwelling house. It must be remembered that these principles 
apply only to those sales of goods or services which have a retail 
concept, that is, where the subject matter is ``retailable.'' See Sec. 
779.321. The ``industry-recognition'' question as to whether such sales 
are recognized as retail in the industry has no relevancy if in fact the 
goods and services sold are not of a ``retailable'' character, as 
previously explained. If the subject of the sale does not come within 
the concept of retailable items contemplated by the statute, there can 
be no recognition in any industry of the sale of the goods or services 
as retail, for purposes of the Act, even though the nomenclature used by 
the industry members may put a retail label on the transaction. (See 
Wirtz v. Steepleton General Tire Co., 383 U.S. 190; Mitchell v. Kentucky 
Finance Co., 359 U.S. 290.)

                        Sales Not Made for Resale



Sec. 779.330  Third requirement for qualifying as a ``retail or 
service establishment.''

    The third requirement for qualifying as a ``retail or service 
establishment'' within that term's statutory definition is that 75 
percent of the retail or service establishment's annual dollar volume 
must be from sales of goods or of services (or of both) which are not 
made for resale. At least three-fourths of the total sales of goods or 
services (or of both) (measured by annual dollar volume) must not be 
made for resale. Except under the special provision in section 3(n) of 
the Act, discussed in Sec. 779.335, the requirement that 75 percent of 
the establishment's dollar volume be from sales of goods or services 
``not for resale'' is a separate test and a sale which ``for resale'' 
cannot be counted toward the required 75 percent even if it is 
recognized as retail in the particular industry. The prescribed 75 
percent must be from sales which are

[[Page 500]]

both not for resale and recognized as retail.



Sec. 779.331  Meaning of sales ``for resale.''

    Except with respect to a specific situation regarding certain 
building materials, the word ``resale'' is not defined in the Act. The 
common meaning of ``resale'' is the act of ``selling again.'' A sale is 
made for resale where the seller knows or has reasonable cause to 
believe that the goods or services will be resold, whether in their 
original form, or in an altered form, or as a part, component or 
ingredient of another article. Where the goods or services are sold for 
resale, it does not matter what ultimately happens to such goods or 
services. Thus, the fact that the goods are consumed by fire or no 
market is found for them, and are, therefore, never resold does not 
alter the character of the sale which is made for resale. Similarly, if 
at the time the sale is made, the seller has no knowledge or reasonable 
cause to believe that the goods are purchased for the purpose of resale, 
the fact that the goods later are actually resold is not controlling. In 
considering whether there is a sale of goods or services and whether 
such goods or services are sold for resale in any specific situation, 
the term ``sale'' includes, as defined in section 3(k) of the Act, ``any 
sale, exchange, contract to sell, consignment for sale, shipment for 
sale, or other disposition.'' Thus, under the definition sales by an 
establishment to a competitor are regarded as sales for resale even 
though made without profit. (Northwestern-Hanna Fuel Co. v. McComb, 166 
F. 2d 932 (CA-8).) Similarly, sales for distribution by the purchaser 
for business purposes are sales for resale under the ``other 
disposition'' language of the definition of ``sale'' even though 
distributed at no cost to the ultimate recipient. (See Mitchell v. 
Duplicate Photo Service, 13 WH Cases 71, 31 L.C. Par. 70,287 (S.D. Cal. 
1956) accord, Mitchell v. Sherry Corine Corporation, 264 F. 2d 831 (CA-
4) (sale of meals to airlines for distribution to their passengers).) It 
should be noted, however, that occasional transfer of goods from the 
stock of one retail or service establishment to relieve a shortage in 
another such establishment under the same ownership will not be 
considered as sales for resale.



Sec. 779.332  Resale of goods in an altered form or as parts or 
ingredients of other goods or services.

    Sale for resale includes the sale of goods which will be resold in 
their original form, in an altered form, or as a part or ingredient of 
another article. A sale of goods which the seller knows, or has 
reasonable cause to believe, will be resold after processing or 
manufacture is a sale for resale. Thus, sales of parts with the 
expectation that they will be incorporated in aircraft and that the 
aircraft will be sold clearly are sales for resale. (Arnold v. Ben 
Kanowsky, Inc., 361 U.S. 388.) Similarly, the sale of lumber to 
furniture or box factories, or the sale of textiles to clothing 
manufacturers, is a sale for resale even though the goods are resold in 
the form of furniture or clothing. The principle is also illustrated in 
cases where the article sold becomes a part or an ingredient of another, 
such as scrap metal in steel, dyes in fabrics, flour in bread and 
pastries, and salt in food or ice in beverages. (Mitchell v. Douglas 
Auto Parts Co., 11 WH Cases 807, 25 L.C. Par. 68, 119 (N.D. Ill., 
1954).) The fact that goods sold will be resold as a part of a service 
in which they are used or as a part of a building into which they are 
incorporated does not negate the character of the sale as one ``for 
resale.'' (Mitchell v. Furman Beauty Supply, 300 F. 2d 16 (CA-3); Mayol 
v. Mitchell, 280 F. 2d 477 (CA-1), cert. denied 364 U.S. 902; Goldberg 
v. Kleban Eng. Corp., 303 F. 2d 855 (CA-5).)



Sec. 779.333  Goods sold for use as raw materials in other products.

    Goods are sold for resale where they are sold for use as a raw 
material in the production of a specific product to be sold, such as 
sales of coal for the production of coke, coal gas, or electricity, or 
sales of liquefied-petroleum-gas for the production of chemicals or 
synthetic rubber. However, the goods are not considered sold for resale 
if sold for general industrial or commercial uses, such as coal for use 
in laundries, bakeries, nurseries, canneries, or for space heating, or 
ice for use by grocery stores or meat markets in cooling

[[Page 501]]

and preserving groceries and meat to be sold. Similarly, ice used for 
cooling soft drinks while in storage will not be considered sold for 
resale. On the other hand, ice or ice cubes sold for serving soft drinks 
or other beverages will be considered as sales for resale.



Sec. 779.334  Sales of services for resale.

    The same principles apply in the case of sales of services for 
resale. A sale of services where the seller knows or has reasonable 
cause to believe will be resold is a sale for resale. Where, for 
example, an establishment reconditions and repairs watches for retail 
jewelers who resell the services to their own customers, the services 
constitute a sale for resale. Where a garage repairs automobiles for a 
secondhand automobile dealer with the knowledge or reasonable cause to 
believe that the automobile on which the work is performed will be sold, 
the service performed by the garage is a sale for resale. The services 
performed by a dental laboratory in the making of artificial teeth for 
the dentist for the use of his patients is a sale of services (as well 
as of goods) for resale. The services of a fur repair and storage 
establishment performed for other establishments who sell these services 
to their own customers, constitute sales for resale. As in the case of 
the sale of goods, in certain circumstances, sales of services to a 
business for a specific use in performing a different service which such 
business renders to its own customers are in economic effect sales for 
resale as a part of the service that the purchaser in turn sells to his 
customers, even though such services are consumed in the process of 
performance of the latter service. For example, if a storage 
establishment uses mothproofing services in order to render satisfactory 
storage services for its customers, the sale of such mothproofing 
services to that storage establishment will be considered a sale for 
resale.



Sec. 779.335  Sales of building materials for residential or farm 
building construction.

    Section 3(n) of the Act, as amended, excludes from the category of 
sales for resale ``the sale of goods to be used in residential or farm 
building construction, repair or maintenance: Provided, That the sale is 
recognized as a bona fide retail sale in the industry.'' Under this 
section a sale of building materials to a building contractor or a 
builder for use in residential or farm building, repair or maintenance 
is not a sale for resale, provided, the sale is otherwise recognized as 
a bona fide retail sale in the industry. If the sale is not so 
recognized it will be considered a sale for resale. Thus, only bona fide 
retail sales of building materials to a building contractor or a builder 
for the uses described would be taken out of the category of sales for 
resale. (Sucrs. De A. Mayol & Co. v. Mitchell, 280 F. 2d 477 (CA-1); 
Elder v. Phillips & Buttroff Mfg. Co., 23 L.C. Par. 67,524 (Tenn., 
1958).) The legislative history of the amendment indicates that it is 
not the intent of its sponsors to remove from the category of sales for 
resale such sales, for example, as sales of lumber to a contractor to 
build a whole residential subdivision. (See 95 Cong. Rec. 12533-12535; 
Sen. St. ibid; 14877.)



Sec. 779.336  Sales of building materials for commercial property 
construction.

    Sales of building materials to a contractor or speculative builder 
for the construction, maintenance or repair of commercial property or 
any other property not excepted in section 3(n) of the Act, as explained 
above, will be considered as sales for resale. (See Sec. Sec. 779.332 
and 779.335.) Some employers who are dealers in building materials are 
also engaged in the business of building contractors or speculative 
builders. Building materials for the carrying on of the employer's 
contracting or speculative building business often are supplied by the 
employer himself from or through his building materials establishment. 
In the analysis of the sales of the building materials establishment for 
the purpose of determining the qualification of such establishment as a 
``retail or service establishment'' all transfers of stock made by the 
employer from or through his building materials establishment to his 
building business for the construction, maintenance or repair of 
commercial property or any other property not excepted in section 3 (n) 
of the Act will

[[Page 502]]

be considered as sales made by such establishment for resale.

            General Tests of Exemption Under Section 13(a)(2)



Sec. 779.337  Requirements of exemption summarized.

    (a) An establishment which is a ``retail or service establishment'' 
within the Act's statutory definition of that term (See discussion in 
Sec. Sec. 779.312 to 779.336) must, to qualify as an exempt retail or 
service establishment under section 13(a)(2) of the Act (See Sec. 
779.301), meet both of the following tests:
    (1) More than 50 percent of the retail or service establishment's 
total annual dollar volume of sales must be derived from sales of goods 
or services (or both) which are made within the State in which the 
establishment is located; and
    (2) Either:
    (i) The retail or service establishment must not be in an enterprise 
of the type described in section 3(s), or
    (ii) If the retail or service establishment is in an enterprise of 
the type described in 3(s), it has an annual volume of sales (exclusive 
of excise taxes at the retail level which are separately stated) of less 
than $250,000.
    (b) The language of the statute in section 13(a)(2) expressly 
excludes from the exemption an establishment or employee engaged in 
laundering, cleaning, or repairing clothing or fabrics or an 
establishment engaged in the operation of a hospital, institution, or 
school described in section 3(s)(4) of the Act. No exemption for these 
is provided under this section even if the establishment meets the tests 
set forth in paragraph (a) of this section. (See Sec. 779.338(b).) With 
respect to laundering and drycleaning establishments, which Congress 
found to lack a retail concept (See Sec. 779.317) and had provided with 
a separate exemption in former section 13(a)(3) of the Act, repealed by 
the 1966 amendments, this exclusion simply clarifies the congressional 
intent to cover employees in such work under section 3(s)(2) of the 
present Act and to make sure that no exemption under 13(a)(2) will be 
construed so as to defeat the purpose of repealing the prior special 
exemption.



Sec. 779.338  Effect of 1961 and 1966 amendments.

    (a) The 1961 amendments to the Fair Labor Standards Act narrowed the 
exemption for retail or service establishments by permitting section 
13(a)(2) to be applied only to an establishment which was not in a 
covered enterprise, or (if it was in such an enterprise) which had an 
annual gross volume of sales of less than $250,000 (exclusive of 
specified taxes). There were certain exemptions to this general 
principle. These exceptions were set out in section 13(a)(2)(ii) and 
(iii). The establishments enumerated therein were exempt whether or not 
they were in a covered enterprise and regardless of the annual dollar 
volume of sales. They were: Hotels, motels, restaurants, motion picture 
theaters, seasonally operated amusement or recreational establishments, 
hospitals, institutions primarily engaged in the care of the sick, the 
aged, the mentally ill or defective residing on the premises of the 
institution, and schools for physically or mentally handicapped or 
gifted children. These establishments were exempt if they met the basic 
50 percent in State sales test and the 75 percent retail sales test of 
section 13(a)(2). The 1966 amendments to the Act repealed sections 
13(a)(2)(ii) and (iii). Now to be exempt under section 13(a)(2) hotels, 
motels, and restaurants must meet the same tests as other retail or 
service establishments (see Sec. 779.337). Seasonal amusement or 
recreational establishments and motion picture theaters now have special 
exemptions from both the minimum wage and overtime pay provisions of the 
Act as provided by the 1966 amendments in sections 13(a)(3) and 13(a)(9) 
respectively.
    (b) Certain establishments which were previously exempt under 
section 13(a)(2) prior to the 1966 amendments have been specifically 
excluded from this exemption as a result of the amendments, even though 
they may still qualify as retail or service establishments under the 
definition of such an establishment in that section. These are 
hospitals, institutions primarily engaged in the care of the sick, the

[[Page 503]]

aged, the mentally ill or defective residing on the premises of the 
institution, and schools for physically or mentally handicapped or 
gifted children. However, such institutions have been recognized as 
having a retail concept and where the nature of their operations has not 
changed and where they otherwise satisfy the Act's definition of a 
``retail or service establishment'', certain food service employees 
employed by such institutions will be considered to be exempt from the 
Act's overtime pay provisions under section 13(b)(18), exemptions for 
their administrative or executive employees will not be defeated by 
nonexempt work occupying less than 40 percent of the employee's time, 
and full-time students may be employed in accordance with the special 
minimum wage provisions of section 14 of the Act and part 519 of this 
chapter.

                       Sales Made Within the State



Sec. 779.339  More than 50 percent intrastate sales required.

    The first test specified in section 13 (a)(2) is that more than 50 
percent of the sales of goods or of services (or of both) of a ``retail 
or service establishment'' (Measured by annual dollar volume) must be 
made ``within the State in which the establishment is located''. This 
limitation means that such establishment must be primarily engaged (more 
than 50 percent) in selling to or serving customers within its State. If 
the establishment is engaged to the extent of 50 percent or more in 
selling to or serving customers outside the State of its location, the 
requirement is not met and the establishment cannot qualify for 
exemption.



Sec. 779.340  Out-of-State customers.

    Whether the sale or service is made to an out-of-State customer is a 
question of fact. In order for a customer to be considered an out-of-
State customer, some specific relationship between him and the seller 
has to exist to indicate his out-of-State character. Sales made to the 
casual cash-and-carry customer of a retail or service establishment, 
who, for all practical purposes, is indistinguishable from the mass of 
customers who visit the establishment, are sales made within the State 
even though the seller knows or has reason to believe, because of his 
proximity to the State line or because he is frequented by tourists, 
that some of the customers who visit his establishment reside outside 
the State. If the customer is of that type, sales made to him are sales 
made within the State even if the seller knows in the particular 
instance that the customer resides outside the State. On the other hand, 
a sale is made to an out-of-State customer and, therefore, is not a sale 
made ``within the State'' in which the establishment is located, if 
delivery of the goods is made outside the State. It should be noted that 
sales of goods or services that are conditioned upon acceptance or 
rejection by an out-of-State source are interstates sales and not sales 
made within the State for purposes of section 13(a)(2). For example, a 
contract entered into in the State where the customer resides for the 
delivery of a magazine to the customer's residence, is an interstate 
sale if the contract must be approved by the out-of-State home office of 
the company publishing the magazine before it becomes effective.



Sec. 779.341  Sales ``made within the State'' and ``engagement in
commerce'' distinguished.

    Sales to customers located in the same State as the establishment 
are sales made ``within the State'' even though such sales may 
constitute engagement in interstate commerce as where the sale: (a) Is 
made pursuant to prior orders from customers for goods to be obtained 
from outside the State; (b) contemplates the purchase of goods from 
outside the State to fill a customer's order; or (c) is made to a 
customer for use in interstate commerce or in production of goods for 
such commerce.

      Computing Annual Dollar Volume and Combination of Exemptions



Sec. 779.342  Methods of computing annual volume of sales.

    The tests as to whether an establishment qualifies for exemption 
under section 13(a)(2) of the Act are specified in terms of the ``annual 
dollar volume of sales'' of goods or of services (or

[[Page 504]]

both) and percentages thereof. The ``annual dollar volume of sales'' of 
an establishment consists of the gross receipts from all sales of the 
establishment during a 12-month period. The methods of computing it for 
purposes of determining whether the establishment qualifies under the 
tests of the exemption are the same as the methods of calculating 
whether the annual gross volume of sales or business of an enterprise or 
an establishment meets the statutory dollar tests for coverage. These 
are discussed in Sec. Sec. 779.265 to 779.269. However, for purposes of 
the exemption tests the specified percentages are based on annual dollar 
volume before deduction of those taxes which are excluded in determining 
whether the $250,000 test is met. The exemption tests are in terms of 
the annual dollar volume of the establishment. This will include dollar 
volume from transactions with other establishments in the same 
enterprise, even though such transactions within an enterprise may not 
be part of the annual gross volume of the enterprise's sales made or 
business done (see Sec. 779.259).



Sec. 779.343  Combinations of exemptions.

    (a) An employee may be engaged in a particular workweek in two or 
more types of activities for each of which a specific exemption is 
provided by the Act. The combined work of the employee during such a 
workweek may not satisfy the requirements of either exemption. It is not 
the intent of the Act, however, that an exemption based on the 
performance of one exempt activity should be defeated by the performance 
of another activity which has been made the basis of an equivalent 
exemption under another provision of the Act. Thus, where an employee 
during a particular workweek is exclusively engaged in performing two or 
more activities to which different exemptions are applicable, each of 
which activities considered separately would be an exempt activity under 
the applicable exemption if it were the sole activity of the employee 
for the whole workweek in question, as a matter of enforcement policy 
the employee will be considered exempt during such workweek. If the 
scope of such exemptions is not the same, the exemption applicable to 
the employee will be equivalent to that provided by whichever exemption 
provision is more limited in scope.
    (b) In the case of an establishment which sells both goods and 
services at retail and which qualifies as an exempt establishment under 
section 13(a)(2), but cannot, as a whole, meet the tests of section 
13(a)(4) because it sells services as well as goods, a combination of 
section 13(a)(2) and 13(a)(4) exemptions may nevertheless be available 
for employees of the establishment who make or process, on the premises, 
goods which it sells. Such employees employed by an establishment which, 
as a whole, meets the tests set forth in section 13(a)(2), will be 
considered exempt under this combination exemption if the establishment, 
on the basis of all its activities other than sales of services, would 
meet the tests of section 13(a)(4).
    (c) Where two or more exemptions are applicable to an employee's 
work or employment during a workweek and where he may be exempt under a 
combination of exemptions stated above, the availability of a 
combination exemption will depend on whether the employee meets all the 
requirements of each exemption which it is sought to combine.

  Engaging in Manufacturing and Processing Activities; Section 13(a)(4)



Sec. 779.345  Exemption provided in section 13(a)(4).

    The section 13(a)(4) exemption (see Sec. 779.301) exempts any 
employee employed by a retail establishment which meets the requirements 
for exemption under section 13(a)(2), even though the establishment 
makes or processes on its own premises the goods that it sells, 
provided, that more than 85 percent of such establishment's annual 
dollar volume of sales of the goods so made or processed is made within 
the State in which the establishment is located, and other prescribed 
tests are met.



Sec. 779.346  Requirements for exemption summarized.

    An establishment to qualify for exemption under section 13(a)(4) 
must be

[[Page 505]]

an exempt retail establishment under section 13(a)(2); that is, 75 
percent of its annual dollar volume of sales of goods must not be for 
resale, 75 percent of its annual dollar volume of sales of goods must be 
recognized as retail in its industry, over 50 percent of its annual 
dollar volume of sales of goods must be made within the State in which 
the establishment is located, and its annual dollar volume of sales must 
be under $250,000. In addition, the establishment must meet the 
following three tests:
    (a) The establishment must be recognized as a retail establishment 
in the particular industry.
    (b) The goods which the exempt establishment makes or processes must 
be made or processed at the establishment which sells the goods.
    (c) More than 85 percent of the establishment's annual dollar volume 
of sales of the goods which it makes or processes must be made within 
the State in which the establishment is located. (See Act, section 
13(a)(2); H. Rept. No. 1453, 81st Cong. first session, p. 27; Arnold v. 
Ben Kanowsky, Inc., 361 U.S. 388.)



Sec. 779.347  Exemption limited to ``recognized retail establishment''
; factories not exempt.

    The section 13(a)(4) exemption requires the establishment to be 
recognized as a retail establishment in the particular industry. This 
test limits the exemption to retail establishments only, and excludes 
factories as such and establishments to which the retail concept does 
not apply. In other words this test requires that the establishment as a 
whole be recognized as a retail establishment although it makes or 
processes at the establishment the goods it sells. Typical of the 
establishment which may be recognized as retail establishments under the 
exemption are custom tailor shops, candy shops, ice cream parlors, 
bakeries, drug stores, optometrist establishments, retail ice plants and 
other local retail establishments which make or process the goods they 
sell and meet the other tests for exemption. Clearly factories as such 
are not ``recognized retail establishments'' and would not be eligible 
for this exemption. (See 95 Cong. Rec. pp. 11001, 11200, 11216, and 
14942.)



Sec. 779.348  Goods must be made at the establishment which sells them.

    (a) Further to make certain that the exemption applies to retail 
establishments only and not to factories, an additional requirement of 
the exemption is that the goods which the exempt establishment makes or 
processes must be made or processed at the establishment which sells the 
goods. The exemption does not apply to an establishment which makes or 
processes goods for sale to customers who will go to other places to buy 
them. Thus an establishment that makes or processes any goods which the 
employer will sell from another establishment, is not exempt. If the 
establishment making the goods does not sell such goods but makes them 
for the purpose of selling them at other establishments the 
establishment making the goods is a factory and not a retail 
establishment.
    (b) Where the making or processing of the goods takes place away 
from the selling establishment, the section 13(a)(4) requirement that 
both the making or processing and selling take place at the same 
establishment cannot be met. This will be true even though the place at 
which the goods are made or processed services the retail selling 
establishment exclusively. In such a situation, while the selling 
establishment may qualify for exemption under section 13(a)(2), the 
separate establishment at which the goods are made or processed will not 
be exempt. The latter is a manufacturing establishment. For example, a 
candy kitchen manufacturing candy for sale at separate retail outlets is 
a manufacturing establishment and not a retail establishment. (Fred 
Wolferman, Inc. v. Gustafson, 169 F. 2d 759 (CA-8.))
    (c) The fact that goods made or processed on the premises of a bona 
fide retail establishment are sold by the establishment through outside 
salesmen (as, for example, department store salesmen taking orders from 
housewives for draperies) will not defeat the exemption if otherwise 
applicable. On the other hand, in the case of a factory or similar 
establishment devoted to making or processing goods, the fact

[[Page 506]]

that its goods are sold at retail by outside salesmen provides no ground 
for recognizing the establishment as a retail establishment or 
qualifying it for exemption.



Sec. 779.349  The 85-percent requirement.

    The final requirement for the section 13(a)(4) exemption is that 
more than 85 percent of the establishment's sales of the goods it makes 
or processes, measured by annual dollar volume, must consist of sales 
made within the State in which the establishment is located. A retail 
establishment of the type intended to be exempt under this exemption may 
also sell goods which it does not make or process; the 85-percent 
requirement applies only to the sales of goods which are made or 
processed at the establishment. This must not be confused with the 
additional test which requires that the establishment, to be exempt, 
must derive more than 50 percent of its entire annual dollar volume of 
sales of goods from sales made within the State. (See Sec. 779.339.) In 
other words, more than 85 percent of the establishment's annual dollar 
volume of sales of goods made or processed at the establishment, and 
more than 50 percent of the establishment's total annual dollar volume 
of sales of all the goods sold by the establishment, must be derived 
from sales made within the State. An establishment will not lose an 
otherwise applicable exemption under section 13(a)(4) merely because 
some of its sales of goods made or processed at the establishment are 
sales for resale or are not recognized as retail sales in the particular 
industry. Sales for resale, such as wholesale sales, and other sales not 
recognized as retail sales in the industry, will be counted in the 25-
percent tolerance permitted by the exemption. (Cf. Arnold v. Ben 
Kanowsky, Inc., 361 U.S. 388.) Thus, for example, a bakery otherwise 
meeting the tests of 13(a)(4) making and selling baked goods on the 
premises nevertheless will qualify as an exempt retail establishment 
even though it engages in the sale of baked goods to grocery stores for 
resale if such sales, together with other sales not recognized as retail 
in the industry, do not exceed 25 percent of the total annual dollar 
volume of the establishment.



Sec. 779.350  The section 13(a)(4) exemption does not apply to service
establishments.

    The section 13(a)(4) exemption applies to retail establishments 
engaged in the selling of goods. It does not apply to service 
establishments. If the establishment is a service establishment, it must 
qualify under section 13(a)(2) in order to be exempt. A retail 
establishment selling goods, however, also may perform services 
incidental or necessary to the sale of such goods, such as a delivery 
service by a bakery store or installation of antennas by a radio dealer 
for his customers, without affecting the character of the establishment 
as a retail establishment qualified for exemption under section 
13(a)(4).

   Engaging in Contract Telegraph Agency Operations; Section 13(a)(11)



Sec. 779.351  Exemption provided.

    Section 13(a)(11) (See Sec. 779.301) exempts from sections 6 and 7 
of the Act any employee or proprietor who is engaged in handling 
telegraphic messages for the public in a retail or service establishment 
which qualifies as an exempt retail or service establishment under 
section 13(a)(2), if the conditions specified in section 13(a)(11) are 
met and the provisions of section 6 and 7 of the Act would not otherwise 
apply.



Sec. 779.352  Requirements for exemption.

    The requirements of the exemption are: (a) The establishment in 
which the employee or proprietor works must qualify as an exempt retail 
or service establishment under section 13(a)(2) of the Act; (b) the 
employee or proprietor must be engaged in handling telegraphic messages 
for the public pursuant to an agency or contract arrangement with a 
telegraph company; (c) such employee or proprietor must be one to whom 
the minimum wage and overtime pay provisions of the Act would not apply 
in the absence of such handling of telegraphic messages (See Western 
Union Tel. Co. v. McComb 165 F. 2d. 65 (CA-6), certiorari denied, 333 
U.S. 362); and (d) the exemption applies only where the telegraphic 
message revenue

[[Page 507]]

does not exceed $500 a month. For purposes of this exemption only, in 
determining whether a retail or service establishment meets the 
percentage tests contained in section 13(a)(2) of the Act, the receipts 
from the telegraphic message agency will not be included.

    Classification of Sales and Establishments in Certain Industries



Sec. 779.353  Basis for classification.

    The general principles governing the application of the 13(a)(2) and 
13(a)(4) exemptions are explained in detail earlier in the subpart. It 
is the purpose of the following sections to show how these principles 
apply to establishments in certain specific industries. In these 
industries the Divisions have made special studies, held hearings or 
consulted with representatives of industry and labor, to ascertain the 
facts. Based upon these facts the following determinations have been 
made as to which sales or establishments are, and which are not, 
recognized as retail in the particular industry.

                  Lumber and Building Materials Dealers



Sec. 779.354  Who may qualify as exempt 13(a)(2) or 13(a)(4) establishments.

    (a) Section 13(a)(2). An establishment engaged in selling lumber and 
building materials may qualify as an exempt retail or service 
establishment under section 13(a)(2) of the Act if it meets all the 
requirements of that exemption. It must appear that:
    (1) The establishment is not in an enterprise described in section 
3(s) of the Act or, if it is, its annual dollar volume of sales 
(exclusive of excise taxes at the retail level which are separately 
stated) is less than $250,000; and
    (2) More than 50 percent of the establishment's annual dollar volume 
of sales of goods or services is made within the State in which the 
establishment is located; and
    (3) 75 percent or more of the establishment's annual dollar volume 
of sales of goods or services (or of both) is made from sales which are 
not for resale and are recognized as retail sales of goods or services 
in the industry.

These requirements are further explained in Sec. Sec. 779.301 through 
779.343.
    (b) Section 13(a)(4). An establishment which makes or processes 
lumber and building materials which it sells may qualify as an exempt 
establishment under section 13(a)(4) of the Act if it meets all the 
requirements (see Arnold v. Kanowsky, 361 U.S. 388) of that exemption. 
It must appear that:
    (1) The establishment qualifies as an exempt retail establishment 
under section 13(a)(2) (see paragraph (a) of this section and Sec. 
779.350); and
    (2) The establishment is recognized as a retail establishment in the 
industry (see Sec. 779.347 and paragraph (c) of this section); and
    (3) The goods which such establishment makes or processes for sale 
are made or processed at the retail establishment which sells them (see 
Sec. 779.348); and
    (4) More than 85 percent of the annual dollar volume derived by the 
retail establishment from sales of goods so made or processed therein is 
made within the State in which the establishment is located (see 
Sec. Sec. 779.349, 779.339 through 779.341).
    (c) Establishments recognized as retail in the industry. An 
establishment which meets the requirements for exemption under section 
13(a)(4) which are stated in paragraphs (b)(1), (3), and (4) of this 
section is recognized as retail establishment in the industry within the 
meaning of paragraph (b)(2) of this section if its annual dollar volume 
of sales of goods made or processed at the establishment does not exceed 
50 percent of the annual dollar volume which it derives from sales that 
are recognized as retail and are not made for resale.
    (d) Establishments lacking a ``retail concept.'' The exemptions 
provided by sections 13(a)(2) and 13(a)(4) of the Act do not apply to 
establishments in an industry in which there is no traditional concept 
of retail selling or servicing (see Sec. 779.316), such as the 
establishment of a building contractor (see Sec. 779.317; Goldberg v. 
Dakota Flooring Co., 15 WH Cases 305), or a factory (see Sec. 779.347).

[[Page 508]]



Sec. 779.355  Classification of lumber and building materials sales.

    (a) General. In determining, for purposes of the section 13(a)(2) 
and (4) exemptions, whether 75 percent of the annual dollar volume of 
the establishment's sales which are not for resale and are recognized as 
retail in the industry, such sales will be considered to include all 
sales of lumber and building materials by the establishment which meet 
all the requirements for such classification as previously explained in 
this subpart, but will not be considered to include the transactions 
noted in paragraphs (b) and (c) of this section, which do not meet the 
statutory tests:
    (b) Transactions not recognized as retail sales. (See Sec. Sec. 
779.314 through 779.329.) Dollar volume derived from the following is 
not made from sales or services which are recognized as retail in the 
industry:
    (1) Contracts to build, maintain, or repair buildings or other 
structures, or sales of services involving performance of typical 
construction activity or any other work recognized as an activity of a 
contracting business rather than a function of a retail merchant;
    (2) Sales of lumber and building materials in which the seller 
agrees to install them for the purchaser, where the installation is not 
limited to services that are merely incidental to the sale and delivery 
of such materials but includes a substantial amount of activity such as 
construction work which is not recognized as retail (for example, sale 
and installation of roofing, siding, or insulation). A sale of such 
materials which would otherwise be recognized as retail (contracts 
described in paragraph (b)(1) of this section are outside this category) 
may be so recognized notwithstanding the installation agreement, 
however, to the extent that the sales value of the materials is 
segregated and separately identified in the transaction;
    (3) Sales in direct carload shipments; that is, where the materials 
are shipped direct in carload lots from the dealer's supplier to the 
dealer's customer;
    (4) Sales of specialized goods (some examples are logs, ties, 
pulpwood, telephone poles, and pilings). Such specialized items are of 
the type which the general consuming public does not ordinarily have 
occasion to use (cf. Sec. 779.318 and Mitchell v. Raines, 238 F. 2d 
186), and the sales of such items are not recognized as retail in the 
industry;
    (5) Sales made pursuant to formal bid procedures, such as those 
utilized by the Federal, State, and local governments and their 
agencies, involving the issuance by the buyer of a formal invitation to 
bid on certain merchandise for delivery in accordance with prescribed 
terms and specifications.
    (c) Sales for resale. (See Sec. Sec. 779.330-779.336.) Examples of 
sales which cannot be counted toward the required 75 percent because 
they are for resale include:
    (1) Sales of lumber and building materials sold to other dealers for 
resale in the same form;
    (2) Sales to industrial concerns for resale in any altered form or 
as a part or ingredient of other goods;
    (3) Sales to contractors or builders for use in the construction, 
repair, or maintenance of commercial or industrial structures or any 
other structures not specifically included in section 3(n) of the Act 
(Sucrs. de Mayal v. Mitchell, 280 F. 2d 477, certiorari denied 364 U.S. 
902; and see Arnold v. Kanowsky, 361 U.S. 388, 394, footnote 10, and 
Sec. Sec. 779.335-779.336);
    (4) Transfers of goods by an employer, who is a dealer in lumber and 
building materials and who also acts in the capacity of a building 
contractor or speculative builder, from or through his building 
materials establishment to his building business for the construction 
maintenance, or repair of commercial property or any other property not 
excepted in section 3(n) of the Act. (See Sec. 779.336.)



Sec. 779.356  Application of exemptions to employees.

    (a) Employees who may be exempt under sections 13(a)(2) and 
13(a)(4). These exemptions apply on an establishment basis (see 
Sec. Sec. 779.302-779.306). Accordingly, where an establishment of a 
dealer in lumber and building materials qualifies as an exempt retail or 
service establishment under section 13(a)(2) or as an exempt 
establishment under section 13(a)(4), as explained in

[[Page 509]]

Sec. 779.354, the exemption from the minimum wage and overtime pay 
requirements of the Act provided by such section will apply, subject to 
the limitations hereafter noted in this section, to all employees who 
are employed ``by'' such establishment (see Sec. Sec. 779.307-779.311) 
in activities within the scope of its business (Sec. 779.308) and who 
are not employed by the employer in performing central office or 
warehouse work of an organization operating several such establishments 
(Sec. 779.310; McComb v. W. E. Wright Co., 168 F. 2d 40, cert. denied 
335 U.S. 854). Neither exemption extends to employees employed in 
performing the work of a nonexempt establishment (Sec. 779.311) or such 
activities as construction work. Employees employed in making and 
processing of lumber and building materials for sale do not come within 
the section 13(a)(2) exemption; they are exempt only if employed by an 
establishment which qualifies as an exempt establishment under section 
13(a)(4) as explained in Sec. 779.354 and if their work in the making 
or processing of such materials is done at such establishment. How 
duties relating to the processing or manufacturing of such materials 
affect the application of these exemptions is discussed in further 
detail in paragraphs (b) and (c) of this section.
    (b) Processing and manufacturing activities. The performance, in an 
establishment which sells lumber and building materials at retail, of 
activities such as cutting lumber to a smaller size or dressing lumber 
in accordance with a customer's request or assembling window and door 
frames received in ``knocked-down'' condition, constitutes processing 
incidental to the sales of such materials. Such activities are not 
considered manufacturing and will not affect the applicability of the 
section 13(a)(2) exemption to the establishment or to the employees who 
perform them. However, whenever lumber is cut or dressed for sale, or 
fabricated products are manufactured for sale (for example, windows, 
door frames, benches, pig troughs, pallets, molding, sashes, cabinets, 
boxes), there is no exemption under section 13(a)(2). Employees 
performing such manufacturing activities at the establishment are exempt 
only if all the tests set forth in section 13(a)(4) are met (see pars. 
(b), (c), and (d) of Sec. 779.354). Employees engaged in such 
activities at a manufacturing plant, central yard, or other place not 
qualifying as an exempt establishment under section 13(a) (2) and (4) 
are not exempt.
    (c) Employees serving exempt and nonexempt operations. In lumber and 
building materials establishments which qualify for exemption under 
section 13(a)(2) but engage in some activities in which their employees 
are not exempt, such as construction or the making or processing of 
materials for sale where no exemption under section 13(a)(4) is 
applicable, there may be auxiliary employees of the establishment whose 
duties relate to both the exempt sales portion of the business and the 
non-exempt operations. For example, office workers may keep records of 
both the retail sales and construction or manufacturing activities; 
custodial workers may clean the entire premises, including portions 
devoted to nonexempt manufacturing; and warehousemen, messengers, and 
stock clerks may handle material for all departments, including material 
used in the nonexempt operations. These employees do not qualify for the 
exemption except when they are primarily engaged in the sales portion of 
the business and only incidentally perform clerical, custodial, or 
messenger service for the other operations. As an enforcement policy, 
such an employee will not be considered to be engaged in nonexempt 
activities which render him ineligible for exemption under section 
13(a)(2) if, in the particular workweek, an insubstantial amount of his 
time (20 percent or less) is allocable to the clerical, custodial, or 
messenger services performed by him which relate to such nonexempt 
operations of the employer.

                              Coal Dealers



Sec. 779.357  May qualify as exempt 13(a)(2) establishments; 
classification of coal sales.

    (a) General. A coal dealer's establishment may qualify as an exempt 
retail or service establishment under section 13(a)(2) of the Act if it 
meets all the requirements of that exemption. In determining for 
purposes of the 13(a)(2)

[[Page 510]]

exemption, whether 75 percent of the establishment's sales are 
recognized as retail in the particular industry, sales of coal to the 
consumer from a dealer's yard storage, where bulk is broken, are 
recognized as retail if they meet the requirements for such 
classification as previously explained in this subpart. It has been 
determined that the following sales do not meet such requirements and 
are not so recognized even if made from a dealer's yard storage:
    (1) Sales where the delivery is made by railroad car or cargo 
vessel.
    (2) Sales in a carload quantity or more for continuous delivery by 
truck from a dock, mine or public railroad facility.
    (3) Sales of coal at a wholesale price. A wholesale price is a price 
comparable to or lower than the establishment's price in sales described 
in paragraphs (a)(1) and (2) of this section or in sales to dealers (but 
not peddlers) for resale. If the establishment makes no such sales, the 
wholesale price is the price comparable to or lower than the price 
prevailing in the immediate area in sales described in paragraphs (a)(1) 
and (2) of this section or in sales to dealers (but not peddlers) for 
resale.
    (4) Sales of coal for use in the production of a specific product to 
be sold in which coal is an essential ingredient or the principal raw 
material, such as sales of coal for the production of coke, coal gas, 
coal tar, or electricity.
    (b) ``Sales for resale.'' In determining for purposes of the 
13(a)(2) exemption, whether 75 percent of the establishment's sales are 
not made for resale, ``sales for resale'' will include sales of coal to 
other dealers, to peddlers, and sales of coal for use in the production 
of a specific product to be sold, in which coal is an essential 
ingredient or the principal raw material, such as sales of coal for the 
production of coke, coal gas, coal tar, or electricity. This is 
distinguished from sales of coal for use in the general manufacturing or 
industrial process such as the use in laundries, bakeries, nurseries, 
canneries, etc., or for space heating, which are not sales made for 
resale.

                    Ice Manufacturers and Ice Dealers



Sec. 779.358  May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

    (a) An establishment engaged in selling ice may qualify as an exempt 
retail or service establishment under section 13(a)(2) of the Act if it 
meets all the requirements of that exemption. Similarly, an 
establishment making the ice it sells may qualify as an exempt 
establishment under section 13(a)(4) of the Act if it meets all the 
requirements of that exemption.
    (b) In determining whether the requirements of the 13(a)(2) 
exemption that 75 percent of the establishment's sales must not be made 
for resale and must be recognized as retail sales in the industry are 
met, sales of ice which meet all the requirements for such 
classification as previously explained in this subpart will be regarded 
as retail. The following sales have been determined not to qualify under 
the applicable tests for recognition as retail:
    (1) Sales for resale.
    (2) Sales of ice for icing railroad cars and for icing cargo trucks. 
However, sales of ice for the re-icing of cargo trucks are recognized as 
retail if such sales do not fall into the nonretail categories described 
in paragraphs (b) (4) and (5) of this section.
    (3) Sales of ice in railroad car lots.
    (4) Sales of ice of a ton or more.
    (5) Sales of ice at a price comparable to that charged by the 
establishment to dealers or, if no sales are made to dealers by the 
establishment, at a price comparable to or lower than the prevailing 
price to dealers in the area.
    (c) The legislative history indicates that iceplants making the ice 
they sell are among the establishments which may qualify as retail 
establishments under the section 13(a)(4) exemption. It appears that all 
iceplants which sell at retail are establishments of the same general 
type, permitting no separate classifications with respect to recognition 
as retail establishments. Any iceplant which meets the tests of section 
13(a)(2) will, therefore, be considered to be recognized as a retail 
establishment in the industry. Of course, the establishment must also 
meet all the other tests of section 13(a)(4) to qualify for the 
exemption.

[[Page 511]]

    (d) There are some iceplants which meet the section 13(a)(2) 
exemption requirements, but do not meet all of the section 13(a)(4) 
requirements. In such establishments, there may be some employees whose 
duties relate to both the sales portion of the business and the making 
or processing of ice. These employees will not qualify for exemption. 
However, in such establishment, there may be some employees who work 
primarily for the retail sales portion of the business and also perform 
incidental clerical, custodial, or messenger service for the 
manufacturing operation. For example, office workers may keep records of 
both the manufacturing activities and of the retail sales departments, 
maintenance workers may clean up in both parts of the establishment, and 
messengers may perform services for both activities. If these employees 
spend relatively little time in the work related to the ice 
manufacturing portion of the business, they will not, as an enforcement 
policy, be regarded as engaged in the making or processing of ice. Such 
an auxiliary employee will thus be exempt under section 13(a)(2) in any 
workweek in which an insubstantial amount of his time (20 percent or 
less) is allocable to the clerical, messenger, or custodial work of the 
ice manufacturing operations.

              Liquefied-Petroleum-Gas and Fuel Oil Dealers



Sec. 779.359  May qualify as exempt 13(a)(2) establishments.

    A liquefied-petroleum-gas or fuel oil dealer's establishment may 
qualify as an exempt retail or service establishment under section 
13(a)(2) of the Act if it meets all the requirements of that exemption. 
(It should be noted, however, that employees of certain enterprises 
engaged in the wholesale or bulk distribution of petroleum products may 
be partially exempt from the overtime provisions of the Act under 
section 7(b)(3). This overtime exemption is discussed in a separate 
bulletin, part 794 of this chapter. Liquefied-petroleum-gas means 
butane, propane and mixtures of butane and propane gases.



Sec. 779.360  Classification of liquefied-petroleum-gas sales.

    (a) General. In determining, under the 13(a)(2) exemption, whether 
75 percent of the establishment's sales are not for resale and are 
recognized as retail sales in the industry, sales to the ultimate 
consumer of liquefied-petroleum-gas, whether delivered in portable 
cylinders or in bulk to the customer's storage tanks, are recognized as 
retail in the industry if they meet all the requirements for such 
classification as previously explained in this subpart. The following 
are not recognized as retail:
    (1) Sales in single lot deliveries exceeding 1,000 gallons;
    (2) Sales made on a competitive bid basis (this term covers sales 
made pursuant to an invitation to bid, particularly sales to Federal, 
State and local governments; sales made in a like manner to commercial 
and industrial concerns and institutions are also included); and
    (3) Sales for use in the production of a specific product in which 
the gas is an essential ingredient or principal raw material, such as 
sales of liquefied-petroleum-gas for the production of chemicals and 
synthetic rubber; and
    (4) Sales of liquefied-petroleum-gas for use as truck or bus fuel 
and the repair and servicing of trucks and buses used in over-the-road 
commercial transportation (including parts and accessories for such 
vehicles).
    (b) Sales or repairs of tanks. Sales or repairs of tanks for the 
storage of liquefied-petroleum-gas are recognized as retail in the 
industry, except: (1) Any tank exceeding 1,000 gallons in capacity; (2) 
any tank sold or repaired on the basis described in paragraph (a) (2) of 
this section or for the purposes described in paragraph (a)(3) of this 
section; and (3) sales in quantity larger than involved in the ordinary 
sales to a farm or household customer.
    (c) Conversion units. Sales and installation of units for converting 
pumps, stoves, furnaces and other equipment and appliances to the use of 
liquefied-petroleum-gas, are recognized as retail sales except: (1) 
Sales of the installation of such conversion units which involve 
substantial modification of the appliance or equipment; (2) sales and 
installation of such units to be used in

[[Page 512]]

industrial machinery or equipment; (3) sales and installations made on 
the basis described in paragraph (a)(2) of this section or in quantity 
as described in Sec. 779.327; and (4) sales and installation of such 
units for vehicles mentioned in paragraph (a) (4) of this section.



Sec. 779.361  Classification of other fuel oil sales.

    (a) Sales of fuel oil (as differentiated from sales of butane and 
propane gases) are classified as retail and nonretail sales as follows:
    (1) Retail sales--all sales of grades No. 1, No. 2, and No. 3 of 
fuel oil direct to housholders for their own domestic uses;
    (2) Nonretail sales:
    (i) All sales of grades No. 4, No. 5, and No. 6 fuel oil as these 
heavy oils are ``special purpose'' goods to which the retail sales 
concept has no application (See Sec. 779.321);
    (ii) All sales for resale including such sales to peddlers and other 
dealers (See Sec. Sec. 779.331-779.334);
    (iii) All sales made pursuant to a formal invitation to bid (See 
Sec. 779.328(d)).
    (b) In some cases the retail or nonretail status of an establishment 
may turn on sales other than those listed above. In such cases all the 
facts relative to such sales shall be considered in arriving at a 
determination. The classification of such sales depends upon whether 
they are recognized as retail sales. In such cases particular attention 
shall be given to the quantities involved and the prices charged.

                              Feed Dealers



Sec. 779.362  May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

    (a) An establishment engaged in selling feed may qualify as an 
exempt retail or service establishment under section 13(a)(2) of the Act 
if it meets all the requirements of that exemption. Similarly an 
establishment making and processing the feed it sells may qualify as an 
exempt establishment under section 13(a)(4) of the Act if it meets all 
the requirements of that exemption.
    (b) In determining whether, under the 13(a)(2) exemption, 75 percent 
of the establishment's sales are not for resale and are recognized as 
retail sales in the industry, sales of feed to feeders will generally 
meet the requirements for such classification as previously explained in 
this subpart and will ordinarily be considered to be retail sales except 
for the following which do not meet the requirements and are not 
recognized as retail: Any sale of feed for shipment by railcar direct to 
the feeder; and sales made at a quantity discount which results in a 
price comparable to or lower than the establishment's price to dealers 
for resale or, if the establishment makes no sales to other dealers, at 
a price comparable to or lower than the price prevailing in the 
immediate area in sales by similar establishments to dealers for resale.
    (c) The custom grinding and mixing of feed (including the addition 
of supplements) for feeders from the grain they themselves bring in will 
be regarded as the performance of a service, and not the making or 
processing of goods for sale under section 13(a)(4). Such services are 
recognized as retail services in the industry and the revenue derived 
therefrom will be included with the retail receipts of the 
establishment.
    (d) Employees employed in the grinding and mixing of feed for sale 
(as distinguished from the grinding and mixing services discussed in 
paragraph (c) of this section) are engaged in the making or processing 
of goods and are therefore not exempt under section 13(a)(2). In order 
for these employees to be exempt, the establishment by which they are 
employed must meet all the requirements of section 13(a)(4), including 
the requirement that the establishment must be recognized as a retail 
establishment in the particular industry. The typical small feed mill 
engaged in selling goods to farmers appears to be recognized as retail 
in the industry. There are, of course, large mills which are essentially 
factories which are not so recognized. As an enforcement policy an 
establishment which qualifies for exemption under section 13(a)(2) will 
be considered to have met this requirement: (1) If less than 50 percent 
of its retail sales are composed of feed manufactured at the 
establishment; or (2) if its sales of feeds manufactured at

[[Page 513]]

the establishment do not exceed 2,000 tons a year. In determining these 
tests for the applicability of the exemption, the computation of the 
sales of feed manufactured will be made on an annual basis in the same 
manner as set forth in Sec. Sec. 779.265 through 779.269 for the 
computation of sales.

                            Monument Dealers



Sec. 779.363  May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

    (a) An establishment engaged in the sale of monuments and memorials 
may qualify as an exempt retail or service establishment under section 
13(a)(2) of the Act if it meets all the requirements of that exemption. 
Similarly, an establishment making or processing the monuments it sells 
may qualify as an exempt establishment under section 13(a)(4) of the Act 
if it meets all the requirements of that exemption.
    (b) Monument dealers' establishments may be roughly divided into 
four types;
    (1) Establishments which are engaged exclusively in selling 
monuments and memorials from designs. They receive their monuments from 
a manufacturer completely finished and lettered and they then erect the 
monuments.
    (2) Establishments which purchase finished monuments from 
manufacturers, display them, carve or sand-blast lettering or incidental 
decoration to order, and set them in cemeteries or elsewhere.
    (3) Establishments which purchase finished and semi-finished work. 
The semifinished work consists of sawed, steeled, or polished granite 
slabs or sand-rubbed marble. In such a case the establishments will cut 
ends, tops, or joints on dies and may shape a base.
    (4) Establishments which purchase stone in rough form and perform 
all the fabricating operations in their own plants. In such a case the 
establishments may saw or line-up the rough stones, machine surface and 
polish the stone and then perform the other operations necessary to 
complete the monument. They may finish the monuments for display or on 
special order and then erect them.
    (c) In determining whether, under the 13(a)(2) exemption, 75 percent 
of the establishment's sales are not for resale and are recognized as 
retail sales in the industry, the ordinary sale of a single tombstone or 
monument to the ultimate purchaser will be considered as a retail sale 
within the meaning of the exemption. If the monument dealer 
establishment meets all the tests of the 13(a)(2) exemption all 
employees employed by it will be exempt under that exemption except 
those employees who are engaged in the making or processing of the 
goods. However, carving or sandblasting of lettering or incidental 
decoration or erecting the monuments, is considered processing 
incidental to the making of retail sales and would not defeat the 
13(a)(2) exemption for employees performing such work. Employees who 
engage in processing semifinished or rough granite or marble or other 
stone into finished monuments such as the work performed in 
establishments described in paragraphs (b) (3) and (4) of this section 
are engaged in the making or processing of goods and are, for that 
reason, not exempt under section 13(a)(2). In order for those employees 
to be exempt the establishment by which they are employed must meet all 
the requirements of the 13(a)(4) exemption.
    (d) One of the requirements of the section 13(a)(4) exemption is 
that an establishment which makes or processes goods must be recognized 
as a retail establishment in the industry. Generally an establishment 
described in paragraph (b)(3) of this section which receives finished 
stock and in addition receives some semifinished work, including sawed, 
steeled, or polished granite slabs or sand-rubbed marble, etc., and 
performs such operations as cutting ends, tops, or joints on the dies, 
is a type of establishment which is recognized as a retail establishment 
in the industry. On the other hand, those establishments which 
characteristically engage in the sawing or lining up of rough stone, or 
in the machine surfacing and polishing of stone, such as the activities 
performed in an establishment described in paragraph (b)(4) of this 
section, are not recognized as retail establishments in the particular 
industry within the meaning of section 13(a)(4). Therefore, their 
employees who engage in such processing of

[[Page 514]]

monuments are not exempt under this section of the Act.

                        Frozen-Food Locker Plants



Sec. 779.364  May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

    (a) An establishment engaged in providing frozen-food locker service 
to farmers and other private individuals and rendering services thereto 
may qualify as an exempt retail or service establishment under section 
13(a)(2) of the Act if it meets all the requirements of that exemption. 
Similarly, a frozen-food locker plant which also engages in slaughtering 
and dressing livestock or poultry for sale may qualify as an exempt 
establishment under section 13(a)(4) of the Act if it meets all the 
requirements of that exemption.
    (b) Activities of frozen-food locker plants. Frozen-food locker 
plants provide locker service for the cold storage of frozen meats, 
fruits, and vegetables and engage in incidental activities such as the 
cutting of meat, cleaning, packaging or wrapping and quick freezing, of 
meats, fruits, or vegetables for such locker service. In such 
establishments lockers are rented principally to farmers and other 
private individuals for the purpose of storage by them of such goods for 
their own personal or family use. Storage space and related services may 
also be provided for business or commercial use such as to hotels, 
stores or restaurants, or to farmers or other customers who use it to 
store meat and other goods for future sale. Such locker plants may also 
engage in such activities as the custom slaughtering and dressing of 
livestock or poultry and the curing, smoking, or other processing of 
meat owned by farmers and other private individuals for storage by those 
customers either in their home freezers or in locker plants for the 
customers' personal or family use. The custom slaughtering or processing 
activities of such locker establishments may be performed on the 
premises of the establishments or at some location away from the 
establishment.
    (c) Classification of sales. In determining whether, under the 
13(a)(2) exemption, 75 percent of the establishment's sales are not for 
resale and are recognized as retail sales in the industry, the receipts 
from the locker service and the incidental activities mentioned in the 
first sentence of this section and from the slaughtering, dressing, or 
other processing of livestock or poultry performed for farmers and other 
private individuals for their own use, but not where the goods are to be 
sold to others by the customer, will be counted as receipts from sales 
of services recognized as retail in the industry. Receipts from 
commercial storage and activities incidental thereto and from the sale 
of hides, offal or other byproducts will be counted as receipts from 
sales of goods or services made for resale or which are not recognized 
as retail sales of goods or services in the industry.
    (d) Some locker plant establishments also include a meat market of 
the type which slaughters its own livestock or poultry (as distinguished 
from the slaughtering performed as a service to customers on the 
customers' own livestock) and processes such meat for sale by it to the 
general public. In performing such operations as the slaughtering, 
curing, and smoking of meat and the rendering of fats for sale, the 
establishment is making or processing goods that it sells and is not 
performing retail services for its customers. Employees engaged in these 
activities in such an establishment, therefore, are not exempt under 
section 13(a)(2) but may be exempt if the establishment meets the tests 
of a combination 13(a)(2)-13(a)(4) exemption in accordance with the 
principles stated in Sec. 779.343. As a general rule, such a meat 
market which slaughters its own livestock and sells its meat to the 
general public is a type of establishment which may be recognized as a 
retail establishment in the industry within the meaning of the 13(a)(4) 
exemption. Whether a particular establishment, however, is so recognized 
depends upon the facts of the case. It should be noted that where such 
slaughtering, curing or smoking is, for any reason, performed away from 
the premises of the establishment where the meat is sold, the employees 
engaged in such activities are not employees employed by a retail 
establishment which ``makes or processes at the retail establishment the 
goods that it

[[Page 515]]

sells'' within the meaning of the 13(a)(4) exemption and cannot, 
therefore, be exempt under that section.

                     Automotive Tire Establishments



Sec. 779.365  May qualify as exempt 13(a)(2) or 13(a)(4) establishments.

    (a) An establishment engaged in the selling of tires, tubes, 
accessories and of repair services on tires may qualify as an exempt 
retail or service establishment under section 13(a)(2) of the Act if it 
meets all the requirements of that exemption. Similarly, an 
establishment engaged in retreading or recapping tires may qualify as an 
exempt establishment under section 13(a)(4) of the Act if it meets all 
the requirements of that exemption.
    (b)(1) In determining whether, under the 13(a)(2) exemption, 75 
percent of the establishment's sales are not made for resale and are 
recognized as retail sales in the industry, sales other than those 
described hereinafter in the subparagraphs of this paragraph may be so 
counted if they meet all the requirements for such classification as 
previously explained in this subpart. Not eligible for inclusion in the 
requisite 75 percent are sales of goods that cannot be the subject of a 
retail sale because the goods are not of a ``retailable'' type or the 
sales of such goods lack the ``retail concept'' (see Sec. 779.321). Nor 
can sales for resale be counted toward the 75 percent. For example, 
sales of tires, tubes, accessories or services to garages, service 
stations, repair shops, tire dealers and automobile dealers, to be sold 
or to be used in reconditioning vehicles for sale are sales for resale. 
Further, the sales of tires, tubes, accessories and tire repair 
services, including retreading and recapping, which are described in the 
following paragraphs (b) (2) through (7), are not recognized as retail 
in the industry.
    (2) Sales made pursuant to a formal invitation to bid: Such sales 
are made under a procedure involving the issuance by the buyer of a 
formal invitation to bid on certain merchandise for delivery in 
accordance with prescribed terms and specifications. Sales to the 
Federal, State and local governments are typically made in this manner.
    (3) Sales to ``national accounts'' as known in the trades; that is, 
sales where delivery is made by the local tire dealer under a 
centralized pricing arrangement between the customer's national office 
and the tire manufacturer; payment may be made either to the local 
dealer or direct to the tire manufacturer under a centralized billing 
arrangement with the customer's national office.
    (4) Sales to fleet accounts at wholesale prices: As used in this 
section, a ``fleet account'' is a customer operating five or more 
automobiles or trucks for business purposes. Wholesale prices for tires, 
tubes, and accessories are prices equivalent to, or less than, those 
typically charged on sales for resale. If the establishment makes no 
sales of passenger car tires for resale, the wholesale price of such 
tires will be taken to be the price typically charged in the area on 
sales of passenger car tires for resale. If the establishment makes no 
sales of truck tires for resale, the wholesale price of such tires will 
be taken to be the price charged by the establishment on sales of truck 
tires to fleet accounts operating 10 or more commercial vehicles, or if 
the establishment makes no such sales, the wholesale price will be taken 
to be the price typically charged in the area on sales of truck tires to 
fleet accounts operating 10 or more commercial vehicles. (See Wirtz v. 
Steepleton General Tire, 383 U.S. 190, 202, rehearing denied 383 U.S. 
963.)
    (5) Sales of a tire rental service on a mileage basis known in the 
trade as ``mileage contracts'': This is a leasing arrangement under 
which a tire dealer agrees to provide and maintain tires or tubes for 
motor vehicles of a fleet account.
    (6) Sales of servicing and repair work performed under a fleet 
maintenance arrangement on tires for trucks and other automotive 
vehicles whereby the establishment undertakes to maintain the tires or 
tubes for a fleet account at a price below the prevailing retail price.
    (7) Sales, repair, recapping, or rental of truck or machinery tires 
suitable for use only on trucks or equipment of a

[[Page 516]]

specialized kind that cannot themselves be the subject of a retail sale 
because their lack of a concept of ``retailability'' as previously 
explained precludes the recognition of their sale as ``retail;'' to any 
industry.



Sec. 779.366  Recapping or retreading tires for sale.

    (a) Some automotive tire establishments engage in recapping and 
retreading work on tires which the establishment expects to sell in 
their reconditioned form. Such activities are not performed as a service 
for a customer but constitute manufacturing goods for sale. Employees 
performing such work may be exempt only if they are employed by an 
establishment which meets all the requirements of the 13(a)(4) 
exemption.
    (b) For purposes of meeting the retail recognition requirement of 
section 13(a)(4), an establishment engaged in retreading or recapping of 
tires which qualifies for exemption under section 13(a)(2) is recognized 
as a retail establishment in the industry if not more than 50 percent of 
the annual dollar volume of its sales resulting from its retreading and 
recapping operations comes from the sale of tires retreaded and recapped 
for sale.

                          Commercial Stationers



Sec. 779.367  Commercial stationers may qualify as exempt 13(a)(2)
establishments.

    (a) A commercial stationer's establishment may qualify as an exempt 
retail or service establishment under section 13(a)(2) of the Act if it 
meets all the requirements of that exemption. Where the establishment 
meets these requirements all employees employed by the establishment 
will be exempt, except any employees who are engaged in the making or 
processing of goods, such as printing and engraving. The commercial 
stationer ordinarily has a store on the street level located in the 
shopping section of the community where other stores are located and 
many people pass by. He has store clerks who sell over the counter to 
the consuming public and may have outside salesmen who sell to offices. 
He makes very few, if any, sales to other dealers for resale. He keeps 
in stock and displays the various items sold over the counter and by 
outside salesmen. The number of items in stock typically ranges from 
5,000 to 15,000. Primarily, items sold are stationery, pens, pencils, 
blotters, briefcases, calendars, clocks, greeting cards, thumbtacks, 
typewriter ribbons, carbon paper, paper clips, ink, commercial envelopes 
and typewriter paper, filing supplies and similar items. In addition he 
may also sell filing cabinets, office desks and chairs, other items of 
office furniture and supplies and equipment generally, as well as 
standard and portable typewriters and certain other small office 
machines.
    (b) In determining whether, under the 13(a)(2) exemption, 75 percent 
of the establishment's sales are recognized as retail sales, in the case 
of commercial stationery establishments which in general operate as 
described in Sec. 779.367(a), the sales made which are of 
``Retailable'' items and are not for resale will be recognized as retail 
if they meet the requirements for such classification as previously 
explained in this subpart. The following position is adopted for 
enforcement purposes: All sales other than for resale of stationery, 
office supplies and equipment, office furniture and office machinery 
commonly stocked by commercial stationers for sale to individual 
consumers as well as businesses, including typewriters, adding machines, 
small duplicating machines, checkwriters, and the like, will be 
considered to be retail except for the sales set out below:
    (1) Sales made on a competitive bid basis. This term covers sales 
made pursuant to an invitation to bid, particularly sales to Federal, 
State, and local governments; sales made in a like manner to commercial 
and industrial concerns and institutions are also included.
    (2) Sales made pursuant to a requirements contract or other 
contractual arrangement involving the sale of a large quantity of goods 
over a period of time with a substantially lower price structure for the 
individual deliveries than would prevail for the usual sales of the 
quantities delivered.

[[Page 517]]

    (3) Sales made at quantity discount of 30 percent or more from the 
price of the ordinary unit of sale.
    (4) Sales of school supplies to municipalities, boards of education, 
or schools in the same manner as the sales of school supply 
distributors.
    (5) Sales of job printing and engraving other than (i) sales of 
social printing and engraving and (ii) sales of printing and engraving 
of business envelopes, letterheads, and calling cards.
    (6) Sales of specialized machinery and equipment.



Sec. 779.368  Printing and engraving establishments not recognized 
as retail.

    (a) An establishment which is engaged in printing and engraving is 
not recognized as a retail establishment for purposes of section 
13(a)(4). Therefore, employees of a stationery establishment engaged in 
printing and/or engraving do not come within the exemption. This fact 
will not affect the exemption under section 13(a)(2) of employees of 
stationery establishments who are not engaged in printing or engraving.
    (b) In a combined stationery and printing or engraving establishment 
there are employees who operate the machines in the printing or 
engraving department and there may be other employees who also perform 
work primarily or exclusively for that department. There are in addition 
various employees in such combined establishments whose work relates to 
the stationery portion of the business but who also perform some work 
for the printing department. For example, office workers may keep 
records of both the printing plant and stationery department, 
maintenance workers may clean up in both departments; and warehousemen, 
messengers and stock clerks may handle material for both departments. In 
some establishments these workers spend relatively little time in the 
work of the printing department. As an enforcement policy an auxiliary 
employee will not be considered to be engaged in the making or 
processing of goods for purposes of the exemption under section 13(a)(2) 
in any workweek in which an insubstantial amount of his time (20 percent 
or less) is allocable to the clerical, messenger, or custodial work of 
the printing department.

                              Funeral Homes



Sec. 779.369  Funeral home establishments may qualify as exempt 13
(a)(2) establishments.

    (a) General. A funeral home establishment may qualify as an exempt 
retail or service establishment under section 13(a)(2) of the Act if it 
meets all the requirements of that section. Where the establishment 
meets these requirements generally all employees employed by the 
establishment will be exempt except any employees who perform any work 
in connection with burial insurance operations (see paragraph (b)) or 
who spend a substantial portion of their workweek in ambulance service 
operations, as described in paragraph (e) below.
    (b) Burial insurance operations. There is no retail concept 
applicable to the insurance business (see Sec. 779.317). Burial 
associations which enter into burial insurance contracts are generally 
regulated by the State and the regulations governing such associations 
are included in State statutes under Insurance. The contracts issued are 
very similar in form and content to ordinary life insurance policies. 
Income received from such operations is nonretail income and employees 
engaged in such work are not employed in work within the scope of the 
retail exemption (see Sec. 779.308).
    (c) Accommodation items. Amounts paid to funeral homes to cover the 
cost of ``accommodation'' items are part of the gross receipts of the 
establishment and are included in its annual gross volume of sales made 
or business done. Such items may include goods or services procured by 
the funeral home on behalf of the bereaved with or without profit but on 
its own credit or through cash payment by it, such as telegrams, long 
distance calls, newspaper notices, flowers, livery service, honoraria to 
participating personnel, transportation by common carrier, clothing for 
the deceased, and transcripts of necessary forms. For the purposes of 
determining the applicability of the retail or service establishment 
exemption, receipts of the funeral home in reimbursement for such 
services are considered derived

[[Page 518]]

from sales or services recognized as retail in the industry. Cash 
advances made as a convenience to a bereaved family are not included in 
computing the gross volume of sales made of business done when repaid. 
Of course, if interest is charged it would be included in the gross 
volume of sales and nonretail income.
    (d) Nonretail services. Calling for and preparing bodies and 
crematory service for other funeral homes, burial insurance operations, 
and ambulance or livery transportation service (as distinguished from 
the use of ambulances or other vehicles as a necessary part of the 
undertaking, funeral, or burial services of the establishment), are some 
examples of a funeral home providing goods or services which will be 
``resold'' or which are not recognized as retail.
    (e) Ambulance service. The typical ambulance service establishment, 
engaged exclusively or nearly so in providing a specialized form of 
transportation for sick, injured, aged, or handicapped persons, is a 
part or branch of the transportation industry. Since there is no 
traditional retail concept in the transportation industry, such 
ambulance service establishments cannot qualify for the section 13(a)(2) 
exemption (see Sec. 779.317). Income from the same typical ambulance 
services would be considered nonretail in applying the 25 percent 
tolerance for nonretail income in a funeral home. If an establishment 
engaged in a combination of funeral home and ambulance services meets 
all the tests for exemption under section 13(a)(2), as applied to the 
combined sales of both types of services, those of its employees who are 
engaged in the funeral home's activities and functions will be exempt as 
employees of a retail or service establishment. This exemption, however, 
does not apply to any employee regularly engaged in nonexempt ambulance 
transportation activities in any workweek when he devotes a substantial 
amount of his working time to such nonexempt work. More than 20 percent 
of the employee's working time in the workweek will, for enforcement 
purposes, be considered substantial.
    (f) Out-of-State sales. An arrangement with a funeral home to embalm 
and ship human remains to a point outside the State for burial is not a 
sale within the State. The reverse situation where an out-of-State 
funeral director ships the remains to a funeral home to arrange for 
local interment also is not a sale within the State.
    (g) Work for more than one establishment. Employees performing 
central office, supply, or warehouse functions for more than one funeral 
home establishment are not within the exemption (see Sec. 779.310). 
However, where certain mortuaries may operate more than one exempt 
establishment and where employees such as embalmers employed by an 
exempt funeral home may be called upon in a given workweek to perform 
for another exempt establishment or establishments in the same 
enterprise work which is a part of the funeral home services sold by 
that establishment or establishments to customers, such employees do not 
lose the exemption where at all times during the workweek the employee 
is employed by one or the other of such exempt establishments either 
inside or outside the establishment in the activities within the scope 
of its own exempt business (see Sec. 779.311(b)). In addition, where an 
establishment offering complete funeral home services also has outlying 
chapels where only the funeral services of the deceased persons are 
conducted, employees of the main establishment who are otherwise exempt 
do not lose the exemption by virtue of the activities which they may 
perform in connection with the funeral services held at the chapel. 
These activities are in such a case part of their employment by the 
exempt main establishment.

                               Cemeteries



Sec. 779.370  Cemeteries may qualify as exempt 13(a)(2) establishments.

    (a) General. A cemetery may qualify as an exempt retail or service 
establishment under section 13(a)(2) of the Act if it meets all the 
requirements of that section, including the requirement that the retail 
or service establishment be open to the general public. So long as a 
cemetery is open to any persons of

[[Page 519]]

a particular religion rather than merely the members of a specific 
organization or place of worship, it will be considered for enforcement 
purposes to be ``open to the general public.''
    (b) Annual dollar volume. As used in the Act, annual gross volume 
means the gross receipts from all the business activities of the 
establishment during a 12-month period (see Sec. Sec. 779.265 through 
779.269). Sums received from the following types of transactions are 
part of the annual gross volume of sales made or business done:
    (1) Sales of lots or plots.
    (2) Annual tax or assessment levied on lot owners, and
    (3) Gifts or bequests.

Interest from any trust funds for permanent or current maintenance is 
also included in the annual gross volume of sales made or business done. 
The allocation of the gross receipts to any trust funds or other 
accounts of the establishment does not affect the annual gross volume.
    (c) Nonretail sales or income. Sales of lots or plots to a burial 
society or a fraternal organization for the use of the members are sales 
for resale and as such may not be counted as part of the 75 percent of 
annual dollar volume of sales of goods or services which is not for 
resale and recognized as retail in the industry under section 13(a)(2). 
Such sales are counted as part of the annual gross volume in the period 
in which the transaction between the cemetery and the burial society or 
fraternal organization is completed. Any interest from trust funds or 
other investments also is not recognized as retail receipts under 
section 13(a)(2).

 Automobile, Truck and Farm Implement Sales and Services, and Trailer, 
                         Boat and Aircraft Sales



Sec. 779.371  Some automobile, truck, and farm implement 
establishments may qualify for exemption under section 13(a)(2).

    (a) General. The specific exemption from the provisions of sections 
6 and 7 of the Act that was provided in section 13(a)(19) prior to the 
1966 amendments for employees of a retail or service establishment which 
is primarily engaged in the business of selling automobiles, trucks, or 
farm implements was repealed. However, some such establishments may 
qualify for exemption from both the minimum wage and overtime pay 
provisions of the Act under section 13(a)(2) as retail or service 
establishments. These are establishments whose annual dollar volume is 
smaller than the amount specified in section 13(a)(2) or in section 
3(s)(1) and which meet all the other requirements of section 13(a)(2) 
(see Sec. 779.337). (Such establishments which do not qualify for 
exemption under section 13(a)(2) may have certain employees who are 
exempt only from the overtime pay provisions of the Act under section 
13(b)(10). Section 13(b)(10) is applicable not only to automobile, 
truck, and farm implement dealers but also to dealers in trailers, 
boats, and aircraft. The section 13(b)(10) exemption is discussed in 
Sec. 779.372 below.)
    (b) Application of the 75-percent test. In determining whether, 
under the section 13(a)(2) exemption, 75 percent of an automobile, 
truck, or farm implement establishment's sales of goods or services are 
not for resale and are recognized as retail, the requirements for such 
classification, including the existence of a retail concept, as 
explained previously in this subpart, and the specific applications in 
the industry of these requirements in accordance with the following 
principles, will govern the classification of sales made by such 
establishments. The sales of goods or services described in paragraph 
(c) of this section and in paragraphs (e)(1) through (5) of this section 
may not be counted toward the required 75 percent. Such sales do not 
qualify as retail because they either are for resale, are outside the 
retail concept, or have been determined to lack the requisite 
recognition as retail sales or services. Other sales of goods or 
services by the dealer can qualify if they meet the requirements 
previously explained.
    (c) Nonretail automobile and truck sales and servicing. None of the 
following sales of automobiles, trucks, automotive parts, accessories, 
servicing and repair work will be considered as retail:
    (1) Sales for resale. For example, sales of new or used automobiles 
and trucks, tires, accessories or services, to service

[[Page 520]]

stations, repair shops and automobile or truck dealers, where these 
establishments resell the various items or where they use them in 
repairing customers' vehicles or in reconditioning used cars for resale, 
are sales for resale. (Note that a ``sale'' for purposes of the Act need 
not be for profit under section 3(k) it includes any ``exchange * * * or 
other disposition''.) However, internal transfers of such items between 
departments within the dealer's establishment, such as transfers of 
parts from the parts department to the service department of an 
automobile dealer's establishment, will not be considered sales for 
resale. Such transfers from one department to another will be 
disregarded in computing the establishment's sales for determining the 
applicability of this exemption.
    (2) Sales made pursuant to a formal invitation to bid. Such sales 
are made under a procedure involving the issuance by the buyer of a 
formal invitation to bid on certain merchandise for delivery in 
accordance with prescribed terms and specifications. Sales to the 
Federal, State, and local governments are typically made in this manner.
    (3) Fleet sales. Sales in a fleet quantity for business purposes (a 
sale of five or more cars or trucks at a time, for example); and sales 
to fleet accounts as described in paragraphs (c)(3) (i) and (ii) of this 
section. (As here used, a ``fleet account'' is a customer operating five 
or more automobiles or trucks for business purposes.)
    (i) Automobiles and trucks. Sales and term leases of automobiles and 
trucks to national fleet accounts as designated by the various 
automotive manufacturers, at fleet discounts, and sales and term leases 
to other fleet accounts at discounts equivalent to those provided in 
sales to national fleet owners are not recognized as retail.
    (ii) Automotive parts and accessories. Sales of parts and 
accessories to fleet accounts at wholesale prices are not recognized as 
retail. Wholesale prices are prices equivalent to, or less than, those 
typically charged on sales for resale.
    (4) Sales and term leases of specialized heavy motor vehicles or 
bodies (16,000 pounds and over gross vehicle weight) and of tires, 
parts, and accessories designed for use on such specialized equipment. 
The following is a partial list illustrating the types of items of 
equipment not considered to qualify as subjects of retail sale:
    (i) Single unit trucks, including:

Armored (money carrying).
Buses (integral).
Coal.
Drilling.
Dump.
Hook and ladder (fire department).
Chemical wagons (fire department).
Garbage.
Mixer.
Refrigerator.
Special public utility.
Steel haulers.
Street-cleaning.
Tank.
Wrecker.

    (ii) Full trailers and semitrailers (tractors and semitrailer and 
truck and trailer combinations), including:

Auto carrier.
Coal.
Dump.
Garbage.
House carrier.
Low bed carry all.
Pole (lumber).
Refrigerator.
Tank.
Van.

    (5) Sales of servicing and repair work peculiar to the servicing and 
repair of specialized vehicles referred to in paragraph (c)(4) of this 
section, or performed under a fleet maintenance arrangement on trucks 
and other automotive vehicles whereby the establishment undertakes to 
maintain a customer's fleet at a price below the prevailing retail 
prices.
    (6) Sales to motor carriers of services, fuel, equipment, or other 
goods or facilities by establishments commonly referred to as truck 
stops. Such establishments, which are physically laid out and specially 
equipped to meet the highway needs of the motor transportation industry, 
offer a variety of services to truckers on a ``one-stop'' basis, and 
provide services principally to motor carriers and their crews. They are 
an integral part of the interstate transportation industry and are not

[[Page 521]]

within the traditional retail establishments (see paragraphs (c) (4) and 
(5) of this section).
    (7) Sales of diesel fuel (and LP gas) for use as truck or bus fuel 
and the repair and servicing of trucks and buses used in over-the-road 
commercial transportation (including parts and accessories for such 
vehicles) are specialized goods and services ``which can never be sold 
at retail * * * whatever the terms of the sale.'' (Idaho Sheet Metal 
Works, Inc. v. Wirtz, 383 U.S. 190, 202, rehearing denied 383 U.S. 963; 
Wirtz v. Steepleton General Tire Company, Inc., 383 U.S. 190, 202, 
rehearing denied 383 U.S. 963.) Sales of these items are nonretail 
whether made by truck stops or other establishments (see paragraphs (c) 
(4) and (5) of this section).
    (d) Nonspecialized truck parts, accessories and services. Sales of 
parts and accessories which are of the type used by small trucks engaged 
in local transportation or by farm vehicles and are not nonretail under 
paragraph (c)(6) of this section will be tested under paragraphs (b) and 
(c)(3) (ii) of this section, even when made on occasion for use in 
larger vehicles. Likewise, repairs and servicing of a minor nature (such 
as tire repair, battery recharging, cleaning of fuel lines, or minor 
electrical rewiring) performed on any type vehicle will be considered 
retail in nature unless nonretail under paragraph (c)(6) of this section 
or unless a fleet maintenance arrangement as in paragraph (c)(5) of this 
section is present.
    (e) Farm implement sales. Sales of farm machinery, such as equipment 
necessary for plowing, planting, thinning, weeding, fertilizing, 
irrigating, and harvesting of crops, and raising of livestock on the 
farm, and the repair work thereon, will be considered as retail (whether 
sold to farmers or nonfarmers) when they satisfy the tests referred to 
in paragraph (b) of this section. The following, which fail to satisfy 
these tests, must be classified as nonretail:
    (1) Sales for resale. For example, sales of new or used machinery, 
parts, accessories or services to service stations, repair shops and 
other dealers, where these establishments resell these items or where 
they use them in repairing customers' farm implements or in 
reconditioning used farm implements for resale, are sales for resale. 
However, this does not apply to internal transfers of such items between 
departments within the dealer's establishment. Transfers of parts from 
the parts department to the service department of a farm implement 
dealer's establishment will not be considered sales for resale, and will 
be disregarded in computing the establishment's sales for determining 
the applicability of the section 13(a)(2) exemption.
    (2) Sales made pursuant to formal invitation to bid. Such sales are 
made under a procedure involving the issuance by the buyer of a formal 
invitation to bid on certain merchandise for delivery in accordance with 
prescribed terms and specifications. Sales to Federal, State and local 
governments are typically made in this manner.
    (3) Sales of specialized equipment not ordinarily used by farmers, 
such as:

Bulldozers.
Scrapers.
Land levelers.
Graders.
Cotton ginning machinery.
Canning and packing equipment.

    (4) Sales of junk.
    (5) Sales of machinery or equipment which are sold ``installed'', 
where the installation involves construction work. Installations which 
require extensive planning, labor and use of specialized equipment 
ordinarily constitute construction work. In such cases the cost of 
installation ordinarily is substantial in relation to the cost of the 
goods installed.
    (f) Quantity sales to farmers. It should be noted that the concept 
of fleet sales discussed in paragraphs (c)(3) and (5) of this section is 
not applied to sales to farmers, even though the farmer uses five or 
more vehicles on his farm.
    (g) Particular activities which lack a retail concept. Any receipts 
derived from warehousing, construction, including water well drilling, 
or manufacturing activities performed by the automobile, truck, or farm 
implement dealer are not receipts from retail sales. These activities 
and the manufacturing of farm implements are not retail activities.

[35 FR 5856, Apr. 9, 1970, as amended at 76 FR 18858, Apr. 5, 2011]

[[Page 522]]



Sec. 779.372  Nonmanufacturing establishments with certain exempt
employees under section 13(b)(10).

    (a) General. A specific exemption from only the overtime pay 
provisions of section 7 of the Act is provided in section 13(b)(10) for 
certain employees of nonmanufacturing establishments engaged in the 
business of selling automobiles, trucks, farm implements, trailers, 
boats, or aircraft. Section 13(b)(10)(A) states that the provisions of 
section 7 shall not apply with respect to ``any salesman, partsman, or 
mechanic primarily engaged in selling or servicing automobiles, trucks, 
or farm implements, if he is employed by a nonmanufacturing 
establishment primarily engaged in the business of selling such vehicles 
or implements to ultimate purchasers.'' Section 13(b)(10)(B) states that 
the provisions of section 7 shall not apply with respect to ``any 
salesman primarily engaged in selling trailers, boats, or aircraft, if 
he is employed by a nonmanufacturing establishment primarily engaged in 
the business of selling trailers, boats, or aircraft to ultimate 
purchasers.'' This exemption will apply irrespective of the annual 
dollar volume of sales of the establishment or of the enterprise of 
which it is a part.
    (b) Character of establishment and employees exempted. (1) An 
establishment will qualify for this exemption if the following two tests 
are met:
    (i) The establishment must not be engaged in manufacturing; and
    (ii) The establishment must be primarily engaged in the business of 
selling automobiles, trucks, or farm implements to the ultimate 
purchaser for section 13(b)(10)(A) to apply. If these tests are met by 
an establishment the exemption will be available for salesmen, partsmen 
and mechanics, employed by the establishment, who are primarily engaged 
during the work week in the selling or servicing of the named items. 
Likewise, the establishment must be primarily engaged in the business of 
selling trailers, boats, or aircraft to the ultimate purchaser for the 
section 13(b)(10)(B) exemption to be available for salesmen employed by 
the establishment who are primarily engaged during the work week in 
selling these named items. An explanation of the term ``employed by'' is 
contained in Sec. Sec. 779.307 through 779.311. The exemption is 
intended to apply to employment by such an establishment of the 
specified categories of employees even if they work in physically 
separate buildings or areas, or even if, though working in the principal 
building of the dealership, their work relates to the work of physically 
separate buildings or areas, so long as they are employed in a 
department which is functionally operated as part of the dealership.
    (2) This exemption, unlike the former exemption in section 13(a)(19) 
of the Act prior to the 1966 amendments, is not limited to dealerships 
that qualify as retail or service establishments nor is it limited to 
establishments selling automobiles, trucks, and farm implements, but 
also includes dealers in trailers, boats, and aircraft.
    (c) Salesman, partsman, or mechanic. (1) As used in section 
13(b)(10)(A), a salesman is an employee who is employed for the purpose 
of and is primarily engaged in making sales or obtaining orders or 
contracts for sale of the automobiles, trucks, or farm implements that 
the establishment is primarily engaged in selling. As used in section 
13(b)(10)(B), a salesman is an employee who is employed for the purpose 
of and is primarily engaged in making sales or obtaining orders or 
contracts for sale of trailers, boats, or aircraft that the 
establishment is primarily engaged in selling. Work performed incidental 
to and in conjunction with the employee's own sales or solicitations, 
including incidental deliveries and collections, is regarded as within 
the exemption.
    (2) As used in section 13(b)(10)(A), a partsman is any employee 
employed for the purpose of and primarily engaged in requisitioning, 
stocking, and dispensing parts.
    (3) As used in section 13(b)(10)(A), a mechanic is any employee 
primarily engaged in doing mechanical work (such as get ready mechanics, 
automotive, truck, or farm implement mechanics, used car reconditioning 
mechanics, and wrecker mechanics) in the servicing of an automobile, 
truck or farm implement for its use and operation as such. This includes 
mechanical work required for safe operation,

[[Page 523]]

as an automobile, truck, or farm implement. The term does not include 
employees primarily performing such nonmechanical work as washing, 
cleaning, painting, polishing, tire changing, installing seat covers, 
dispatching, lubricating, or other nonmechanical work. Wrecker mechanic 
means a service department mechanic who goes out on a tow or wrecking 
truck to perform mechanical servicing or repairing of a customer's 
vehicle away from the shop, or to bring the vehicle back to the shop for 
repair service. A tow or wrecker truck driver or helper who primarily 
performs nonmechanical repair work is not exempt.
    (d) Primarily engaged. As used in section 13(b)(10), primarily 
engaged means the major part or over 50 percent of the salesman's, 
partsman's, or mechanic's time must be spent in selling or servicing the 
enumerated vehicles. As applied to the establishment, primarily engaged 
means that over half of the establishments annual dollar volume of sales 
made or business done must come from sales of the enumerated vehicles.

[35 FR 5856, Apr. 9, 1970, as amended at 38 FR 7549, Mar. 23, 1973; 76 
FR 18858, Apr. 5, 2011]

  Other Establishments for Which Special Exceptions or Exemptions Are 
                                Provided



Sec. 779.381  Establishments within special exceptions or exemptions.

    (a) As stated in Sec. 779.338, the special exceptions provided in 
the 1961 amendments for hotels, motels, restaurants, hospitals, 
institutions for the sick, the aged, the mentally ill or defective, and 
schools for physically or mentally handicapped or gifted children have 
been removed. Seasonally operated amusement or recreational 
establishments and motion picture theaters also no longer are 
specifically exempt under section 13(a)(2), but have specific exemptions 
set out for them in sections 13(a)(3) and 13(a)(9) of the Act as amended 
in 1966.
    (b) Hotels, motels, and restaurants continue to be eligible for 
exemption under section 13(a)(2), but must meet all the requirements of 
that section for exemption in the same manner as other retail or service 
establishments. However, a special overtime exemption is provided for 
such establishments, regardless of size, in the first part of section 
13(b)(8). Hospitals, residential care establishments, and schools for 
physically or mentally handicapped or gifted children are specifically 
excluded by the Act from consideration for exemption under section 
13(a)(2); however, residential care establishments are exempt from the 
overtime pay requirements of the Act under the second part of section 
13(b)(8) as long as overtime premium of not less than one and one-half 
times the employee's regular rate of pay is paid to him for time worked 
in excess of 48 hours in the workweek. In addition, section 7(j) of the 
amended Act provides a special overtime arrangement for hospital 
employees whereby overtime pay is due an employee after 8 hours in a day 
or 80 hours in a 14-day work period rather than on the basis of the 7-
day workweek as is normally required by the Act. This provision, though, 
requires an agreement or understanding on the part of both the employer 
and the employee prior to the performance of the work. See Sec. 778.601 
of this chapter.
    (c) The amendments of 1966 also repealed the exemption from both the 
minimum wage and overtime pay provisions which was in the Act for 
certain food service employees employed by retail or service 
establishments that were not exempt under section 13(a)(2). This 
exemption (formerly found in section 13(a)(20) is now an exemption from 
the overtime provisions only and is set out in section 13(b)(18). Those 
establishments now excluded by the Act from consideration for exemption 
under section 13(a)(2) (hospitals, residential care establishments, 
etc.) may utilize this exemption where they meet the Act's definition of 
retail or service establishment in the last sentence of section 13(a)(2) 
and the conditions set out in section 13(b)(18). Likewise, the special 
exemption for any employee of a retail or service establishment 
primarily engaged in the business of selling automobiles, trucks, or 
farm implements was repealed by the 1966 amendments. In its stead the 
overtime exemption set out in section 13(b)(10) and previously discussed 
in Sec. 779.372 was provided for certain employees of any

[[Page 524]]

nonmanufacturing establishment primarily engaged in the business of 
selling automobiles, trailers, trucks, farm implements, or aircraft to 
the ultimate consumer.
    (d) A special exemption from the overtime pay requirements is also 
included in the amended Act for bowling establishments which do not meet 
the tests under section 13(a)(2) for exemption as a retail or service 
establishment. Section 13(b)(19) states that the overtime pay 
requirements of the Act shall not apply with respect to ``any employee 
of a bowling establishment if such employee receives compensation for 
employment in excess of 48 hours in any workweek at a rate not less than 
one and one-half times the regular rate at which he is employed.'' 
Unlike the overtime pay exemption in section 13(b)(18), this exemption 
is not dependent upon the establishment meeting the definition of retail 
or service establishment.

                            Hotels and Motels



Sec. 779.382  May qualify as exempt 13(a)(2) establishments.

    A hotel or motel establishment may qualify as an exempt retail or 
service establishment under section 13(a)(2) of the Act. However, the 
establishment must meet all of the requirements of section 13(a)(2) (see 
Sec. 779.337). In determining whether an establishment is a retail or 
service establishment within the meaning of section 13(a)(2) the dollar 
volume received from the leasing or rental of space to other than 
transient members of the general public cannot be counted as derived 
from retail sales of goods or services. Therefore, receipts from tenants 
who are not transient guests (see Sec. 779.383(c)) must be included in 
the 25 percent tolerance provided for sales for resale or sales not 
recognized as retail.



Sec. 779.383  ``Hotel'' and ``motel'' exemptions under section 13(b)(8).

    (a) General. A hotel or motel establishment may qualify for 
exemption from the Act's overtime pay requirements, even if it is in an 
enterprise described in section 3(s) and is not exempt under section 
13(a)(2) because it exceeds the monetary test for exemption under that 
section. The first part of section 13(b)(8) provides that the overtime 
provisions of section 7 of the Act shall not apply with respect to ``any 
employee employed by an establishment which is a hotel, motel * * *.'' 
The 13(b)(8) exemption is applicable irrespective of the annual dollar 
volume of sales of a hotel or motel establishment or of the enterprise 
of which it is a part.
    (b) Definition of ``hotel''. The term hotel as used in section 
13(b)(8) means an establishment known to the public as a hotel, which is 
primarily engaged in providing lodging or lodging and meals for the 
general public. Included are hotels operated by membership organizations 
and open to the general public and apartment hotels which provide 
accommodations for transients. However, an establishment whose income is 
primarily from providing a permanent place of residence or from 
providing residential facilities complete with bedrooms and kitchen for 
leased periods longer than 3 months would not be considered a hotel 
within the meaning of the Act. An apartment or residential hotel is not 
considered a hotel for purposes of section 13(b)(8) unless more than 
half of its annual dollar volume is derived from providing transient 
guests representative of the general public with lodging or lodging and 
meals. (See paragraph (c) of this section.) Establishments in which 
lodging accommodations are not available to the public are not included. 
Also excluded from the category of hotels are rooming and boarding 
houses, and private residences commonly known as tourist homes. Resort 
or other hotels even if they operate seasonally are regarded as hotel. 
(See Cong. Rec., August 25, 1966, pages 19729-19732; Cong Rec., August 
26, 1966, pages 19907-19911.)
    (c) ``Transient guests''. In determining who are ``transient 
guests'' within the meaning of Sec. 779.382 and paragraph (b) of this 
section, as a general rule the Department of Labor would consider as 
transient a guest who is free to come and go as he pleases and who does 
not sojourn in the establishment for a specified time or permanently. A 
transient is one who is entertained from day to day without any express 
contract or

[[Page 525]]

lease and whose stay is indefinite although to suit his convenience it 
may extend for several weeks or a season.
    (d) Definition of ``motel''. The term motel as used in section 
13(b)(8) means an establishment which provides services similar to that 
of a ``hotel'' described in paragraph (b) of this section, but which 
caters mostly to the motoring public, providing it with motor car 
parking facilities either adjacent to the room or cabin rented or at 
some other easily accessible place. Included in the term ``motel'' are 
those establishments known to the public as motor hotels, motor lodges, 
motor courts, motor inns, tourist courts, tourist lodges and the like.
    (e) Hotel and motel establishments engaged in other activities. The 
primary function of a hotel or motel is to provide lodging facilities to 
the public. In addition, most hotels or motels provide food for their 
guests and many sell alcoholic beverages. These establishments also may 
engage in some minor revenue producing activities; such as, the 
operation of valet services offering cleaning and laundering service for 
the garments of their guests, news stands, hobby shops, the renting out 
of their public rooms for meetings, lectures, dances, trade exhibits and 
weddings. The exception provided for ``hotels'' and ``motels'' in 
section 13(b)(8) will not be defeated simply because a ``hotel'' or a 
``motel'' engages in all or some of these activities, if it is primarily 
engaged in providing lodging facilities, food and drink to the public.

                         Motion Picture Theaters



Sec. 779.384  May qualify as exempt establishments.

    Section 13(a)(9) of the Act as amended in 1966 exempts from the 
minimum wage and overtime pay requirements ``any employee employed by an 
establishment which is a motion picture theater.'' This exemption will 
be applicable irrespective of the annual dollar volume of sales of such 
establishment or of the enterprise of which it is a part. A motion 
picture theater may also qualify as an exempt retail or service 
establishment under section 13(a)(2) of the Act if the establishment 
meets all requirements of the exemption, discussed above in Sec. Sec. 
779.337 to 779.341. The term ``motion picture theater'' as used in 
section 13(a)(9) means a commercially operated theater primarily engaged 
in the exhibition of motion pictures with or without vaudeville 
presentations. It includes ``drive-in motion picture theaters'' commonly 
known as ``open air'' or ``drive-in'' theaters, but does not include 
such incidental exhibition of motion pictures as those offered to 
passengers on aircraft. ``Legitimate theaters'' primarily engaged in 
exhibiting stage productions are not ``motion picture theaters.''

            Seasonal Amusement or Recreational Establishments



Sec. 779.385  May qualify as exempt establishments.

    An amusement or recreational establishment operating on a seasonal 
basis may qualify as an exempt establishment under section 13(a)(3) of 
the Act, added by the 1966 amendments, even if it does not meet all the 
requirements of the 13(a)(2) exemption. Section 13(a)(3) exempts from 
the minimum wage and overtime pay requirements of the Act ``any employee 
employed by an establishment which is an amusement or recreational 
establishment, if (a) it does not operate for more than seven months in 
any calendar year or (b) during the preceding calendar year, its average 
receipts for any 6 months of the year were not more than 33 1/3 
percentum of its average receipts for the other 6 months of such year''. 
``Amusement or recreational establishments'' as used in section 13(a)(3) 
are establishments frequented by the public for its amusement or 
recreation and which are open for 7 months or less a year or which meet 
the seasonal receipts test provided in clause (B) of the exemption. 
Typical examples of such are the concessionaires at amusement parks and 
beaches. (S. Rept. 145, 87th Cong., first session, p. 28; H. Rept. 75, 
87th Cong., 1st Sess., p. 10.)

[[Page 526]]

   Restaurants and Establishments Providing Food And Beverage Service



Sec. 779.386  Restaurants may qualify as exempt 13(a)(2) establishments.

    (a) A restaurant may qualify as an exempt retail or service 
establishment under section 13(a)(2) of the Act. However, the 
establishment must meet all of the requirements of section 13(a)(2) (see 
Sec. 779.337). It should be noted that a separate exemption from the 
overtime pay provisions of the Act only is provided in section 13(b)(18) 
for certain food service employees employed by establishments other than 
restaurants if the establishment meets the definition of a retail or 
service establishment as defined in the last sentence of section 
13(a)(2). Privately owned and operated restaurants conducted as separate 
and independent business establishments in industrial plants, office 
buildings, government installations, hospitals, or colleges, such as 
were involved in McComb v. Factory Stores, 81 F. Supp. 403 (N.D. Ohio) 
continue to be exempt under section 13(a)(2) where the tests of the 
exemption are met (S. Rept. 145, 87th Cong., first session, p. 28; H. 
Rept. 75, 87th Cong., first session, p. 10). However, they would not be 
met if the food service is carried on as an activity of the larger, 
nonretail establishment in which the facility is located and there is no 
independent, separate and distinct place of business offering the 
restaurant service to individual customers from the general public, who 
purchase the meals selected by them directly from the establishment 
which serves them. An establishment serving meals to individuals, 
pursuant to a contract with an organization or person paying for such 
meals because the latter has assumed a contractual obligation to furnish 
them to the individuals concerned, is selling to such organization or 
firm, and the sales are for resale within the meaning of section 
13(a)(2). See also Sec. 779.387.



Sec. 779.387  ``Restaurant'' exemption under section 13(b) (8).

    (a) As amended in 1966, the Act, in section 13(b) (8), exempts from 
its overtime pay provisions ``any employee employed by an establishment 
which is a * * * restaurant''. The term restaurant as used in section 
13(b)(8) of the Act means an establishment which is primarily engaged in 
selling and serving to purchasers at retail prepared food and beverages 
for immediate consumption on the premises. This includes such 
establishments commonly known as lunch counters, refreshment stands, 
cafes, cafeterias, coffee shops, diners, dining rooms, lunch rooms, or 
tea rooms. The term ``restaurant'' does not include drinking 
establishments, such as bars or cocktail lounges, whose sales of 
alcoholic beverages exceed the receipts from sales of prepared foods and 
nonalcoholic beverages. Certain food or beverage service employees of 
establishments such as bars and cocktail lounges, however, may be exempt 
under section 13(b)(18).
    (b) Not all places where food is served for immediate consumption on 
the premises are ``restaurant'' establishments within the meaning of 
section 13(b)(8). Such service is sometimes provided as an incidental 
activity of an establishment of another kind, rather than by an 
establishment possessing the physical and functional characteristics of 
a separate place of business engaged in restaurant operations. In such 
event, the establishment providing the meal service is not an 
establishment ``which is'' a restaurant as section 13(b)(8) requires for 
exemption. Further, not every place which serves meals, even if it 
should qualify as a separate food service establishment, possesses the 
characteristics of a ``restaurant.'' The meals served by restaurants are 
characteristically priced, offered, ordered, and served for consumption 
by and paid for by the customer on an individual meal basis. A 
restaurant functions principally, and not merely incidentally, to meet 
the immediate needs and desires of the individual customer for 
refreshment at the particular time that he visits the establishment for 
the purpose. A separate transaction to accommodate these needs and 
desires takes place on the occasion of each such visit. A 
``restaurant'', therefore, is to be distinguished from an establishment 
offering meal service on a boarding or term basis or providing such 
service only as

[[Page 527]]

an incident to the operation of an enterprise of another kind and 
primarily to meet institutional needs for continuing meal service to 
persons whose continued presence is required for such operation. 
Accordingly, a boarding house is not a ``restaurant'' within the meaning 
of section 13(b)(8), nor are the dining facilities of a boarding school, 
college or university which serve its students and faculty, nor are the 
luncheon facilities provided for private and public day school students, 
nor are other institutional food service facilities providing long-term 
meal service to stable groups of individuals as an incident to 
institutional operations in a manner wholly dissimilar to the typical 
transactions between a restaurant and its customers.



Sec. 779.388  Exemption provided for food or beverage service employees.

    (a) A special exemption is provided in section 13(b)(18) of the Act 
for certain food or beverage service employees of retail or service 
establishments. This section excludes from the overtime pay provisions 
in section 7 of the Act, ``any employee of a retail or service 
establishment who is employed primarily in connection with the 
preparation or offering of food or beverages for human consumption, 
either on the premises, or by such services as catering, banquet, box 
lunch, or curb or counter service, to the public, to employees, or to 
members or guests of members of clubs.'' This is an employee exemption, 
intended to apply to employees engaged in the named activities for such 
establishments as ``drug stores, department stores, bowling alleys, and 
the like.'' (S. Rept. No. 1487, 89th Cong., second session, p. 32.)
    (b) The 13(b)(18) exemption will apply only if the following two 
tests are met:
    (1) The employee must be an employee of a retail or service 
establishment (as defined in section 13(a)(2) of the Act); and
    (2) The employee must be employed primarily in connection with the 
specified food or beverage service activities. If both of the above 
criteria are met, the employee is exempt from the overtime pay 
provisions of the Act.
    (c) The establishment by which the employee is employed must be a 
``retail or service establishment.'' This term is defined in section 
13(a)(2) of the Act and the definition is quoted in Sec. 779.24; the 
application of the definition is considered at length earlier in this 
subpart. In accordance with this definition, the establishment will be a 
``retail or service establishment'' for purposes of section 13(b) (18) 
if 75 percent or more of the establishment's annual dollar volume of 
sales of goods or services (or of both) is not for resale and is 
recognized as retail sales or services in the particular industry.
    (d) If the establishment comes within the above definition it is 
immaterial that the establishment is in an enterprise or part of an 
enterprise described in section 3(s). Thus section 13(b)(18) will be 
applicable regardless of the annual dollar volume of sales of the 
establishment or of the enterprise of which it is a part. It should also 
be noted that it is not required that the establishment make more than 
50 percent of its annual dollar volume of sales within the State in 
which it is located. The establishment by which the employee is 
employed, provided it qualifies as a ``retail or service 
establishment,'' may be a drug store, department store, cocktail lounge, 
night club, and the like.
    (e) This exemption does not apply to employees of the ordinary 
bakery or grocery store who handle, prepare or sell food or beverages 
for human consumption since such food or beverages are not prepared or 
offered for consumption ``on the premises, or by such services as 
catering, banquet, box lunch, or curb or counter service * * *.''
    (f) If the establishment by which the employee is employed is a 
``retail or service establishment,'' as explained above, he will be 
exempt under section 13(b)(18) provided he is employed primarily in 
connection with the preparation or offering of food or beverages for 
human consumption either on the premises, or by such services as 
catering, banquet, box lunch, or curb or counter service, to the public, 
to employees, or to members or guests of members of clubs. An employee 
employed in the actual preparation or serving of the food or beverages 
or in activities closely related and directly

[[Page 528]]

essential to the preparation and serving will be regarded as engaged in 
the described activities. The exemption, therefore, extends not only to 
employees actually cooking, packaging or serving food or beverages, but 
also to employees such as cashiers, hostesses, dishwashers, busboys, and 
cleanup men. Also, where the food or beverages are served away from the 
establishment, the exemption extends to employees of the retail or 
service establishment who make ready the serving place, serve the food, 
clean up, and transport the equipment, food and beverages to and from 
the serving place.
    (g) For the exemption to apply, the employee must be engaged 
``primarily'' in performing the described activities. A sales clerk in a 
drug store, department store or other establishment, who as an incident 
to his other duties, occasionally prepares or otherwise handles food or 
beverages for human consumption on the premises will not come within the 
scope of this exemption. The exemption is intended for employees who 
devote all or most of their time to the described food or beverage 
service activities. For administrative purposes this exemption will not 
be considered defeated for an employee in any workweek in which he 
devotes more than one-half of his time worked to such activities.



Subpart E_Provisions Relating to Certain Employees of Retail or Service 
                             Establishments

                           General Principles



Sec. 779.400  Purpose of subpart.

    The 1966 amendments to the Act changed certain existing provisions 
and added other provisions pertaining to exemptions from the 
requirements of sections 6 and 7 with respect to certain employees. This 
subpart deals with those exemptions provisions of interest to retail or 
service enterprises or establishments.

   Executive, Administrative, and Professional Employees and Outside 
                                Salesmen



Sec. 779.401  Statutory provision.

    Section 13(a)(1) of the Act provides that the provisions of sections 
6 and 7 shall not apply with respect to:

    Any employee employed in a bona fide executive, administrative, or 
professional capacity (including any employee employed in the capacity 
of academic administrative personnel or teacher in elementary or 
secondary schools), or in the capacity of outside salesman (as such 
terms are defined and delimited from time to time by regulations of the 
Secretary, subject to the provisions of the Administrative Procedure 
Act, except that an employee of a retail or service establishment shall 
not be excluded from the definition of employee employed in a bona fide 
executive or administrative capacity because of the number of hours in 
his workweek which he devotes to activities not directly or closely 
related to the performance of executive or administrative activities, if 
less than 40 per centum of his hours worked in the workweek are devoted 
to such activities).



Sec. 779.402  ``Executive'' and ``administrative'' employees defined.

    The terms ``executive'' and ``administrative'' as used in section 
13(a)(1) of the Act are defined and delimited in subpart A of part 541 
of this chapter and explained in subpart B of that part. These 
regulations are applicable under the amended section 13(a)(1) in 
determining which employees are bona fide executive or administrative 
employees. The clause that is enclosed in parentheses in section 
13(a)(1) and which reads ``including any employee employed in the 
capacity of academic administrative personnel for teacher in elementary 
or secondary schools'' was added by the 1966 amendments to the Act. This 
clause will not have any affect in the application of the regulations to 
retail or service establishments. The Act and the regulations point out 
the fact that an executive or administrative employee of a retail or 
service establishment may devote up to 40 percent of his hours worked in 
a workweek to activities which are not directly and closely related to 
the performance of executive or administrative activities and still 
qualify as a bona fide executive or administrative employee. However, in 
other types of

[[Page 529]]

establishments such a tolerance is limited to 20 percent, except where 
special provisions are made in part 541 of this chapter.



Sec. 779.403  Administrative and executive employees in covered 
enterprises employed in other than retail or service establishments.

    The up-to-40 percent tolerance for nonexecutive or nonadministrative 
duties discussed in the preceding section, does not apply to executive 
or administrative employees of an establishment other than a ``retail or 
service establishment.'' For example, an executive or administrative 
employee of a central office or a central warehouse of a chain store 
system is not an employee of a ``retail or service establishment,'' and 
therefore must still devote not more than 20 percent of his hours worked 
in a workweek to activities which are not directly and closely related 
to the performance of executive or administrative duties in order to 
qualify as a bona fide executive or administrative employee under 
section 13(a)(1), except where special provisions are made in the 
regulations issued under that section of the Act.



Sec. 779.404  Other section 13(a)(1) employees employed in covered 
enterprises.

    The ``professional'' employee or the ``outside salesman'' employed 
by a retail or service establishment in a covered enterprise, in order 
to qualify as a bona fide ``professional employee'' or as an ``outside 
salesman,'' must meet all the requirements set forth in the regulations 
issued and found in part 541, subpart A of this chapter, and further 
explained in subpart B thereof. The up-to-40 percent tolerance discussed 
in Sec. 779.403 for ``administrative and executive employees'' of a 
retail or service establishment does not apply to the ``professional 
employee'' or the ``outside salesman.''

               Students, Learners, and Handicapped Workers



Sec. 779.405  Statutory provisions.

    Section 13(a)(7) of the Act provides that the provisions of sections 
6 and 7 shall not apply to:
    Any employee to the extent that such employee is exempted by 
regulations, order, or certificate of the Secretary issued under section 
14.


Section 14 of the Act provides, in pertinent part, as follows:

        Learners, Apprentices, Students, and Handicapped Workers

    Sec. 14. (a) The Secretary of Labor, to the extent necessary in 
order to prevent curtailment of opportunities for employment, shall by 
regulations or by orders provide for the employment of learners, of 
apprentices, and of messengers employed primarily in delivering letters 
and messages, under special certificates issued pursuant to regulations 
of the Secretary, at such wages lower than the minimum wage applicable 
under section 6 and subject to such limitations as to time, number, 
proportion, and length of service as the Secretary shall prescribe.
    (b) The Secretary, to the extent necessary in order to prevent 
curtailment of opportunities for employment, shall by regulation or 
order provide for the employment of full-time students, regardless of 
age but in compliance with applicable child labor laws, on a part-time 
basis in retail or service establishments (not to exceed twenty hours in 
any workweek) or on a part-time or a full-time basis in such 
establishments during school vacations, under special certificates 
issued pursuant to regulations of the Secretary, at a wage rate not less 
than 85 per centum of the minimum wage applicable under section 6, 
except that the proportion of student hours of employment to total hours 
of employment of all employees in any establishment may not exceed (1) 
such proportion for the corresponding month of the 12-month period 
preceding May 1, 1961, (2) in the case of a retail or service 
establishment whose employees (other than employees engaged in commerce 
or in the production of goods for commerce) are covered by this Act for 
the first time on or after the effective date of the Fair Labor 
Standards Amendments of 1966, such proportion for the corresponding 
month of the 12-month period immediately prior to such date, or (3) in 
the case of a retail or service establishment coming into existence 
after May 1, 1961, or a retail or service establishment for which 
records of student hours worked are not available, a proportion of 
student hours of employment to total hours of employment of all 
employees based on the practice during the 12-month period preceding May 
1, 1961, in (A) similar establishments of the same employer in the same 
general metropolitan area in which the new establishment is located, (B) 
similar establishments of the same employer in the same or nearby 
counties if the new establishment is

[[Page 530]]

not in a metropolitan area, or (C) other establishments of the same 
general character operating in the community or the nearest comparable 
community. Before the Secretary may issue a certificate under this 
subsection he must find that such employment will not create a 
substantial probability of reducing the full-time employment 
opportunities of persons other than those employed under this 
subsection.

                                * * * * *

    (d)(1) Except as otherwise provided in paragraphs (2) and (3) of 
this subsection, the Secretary of Labor, to the extent necessary in 
order to prevent curtailment of opportunities for employment, shall by 
regulation or order provide for the employment under special 
certificates of individuals * * * whose earning or productive capacity 
is impaired by age or physical or mental deficiency or injury, at wages 
which are lower than the minimum wage applicable under section 6 of this 
Act but not less than 50 per centum of such wage and which are 
commensurate with those paid nonhandicapped workers in industry in the 
vicinity for essentially the same type, quality, and quantity of work.
    (2) The Secretary, pursuant to such regulations as he shall 
prescribe and upon certification of the State agency administering or 
supervising the administration of vocational rehabilitation services, 
may issue special certificates for the employment of--
    (A) handicapped workers engaged in work which is incidental to 
training or evaluation programs, and
    (B) multihandicapped individuals and other individuals whose earning 
capacity is so severly impaired that they are unable to engage in 
competitive employment,

at wages which are less than those required by this subsection and which 
are related to the worker's productivity.
    (3)(A) The Secretary may by regulation or order provide for the 
employment of handicapped clients in work activities centers under 
special certificates at wages which are less than the minimums 
applicable under section 6 of this Act or prescribed by paragraph (1) of 
this subsection and which constitute equitable compensation for such 
clients in work activities centers.
    (B) For purposes of this section, the term ``work activities 
centers'' shall mean centers planned and designed exclusively to provide 
therapeutic activities for handicapped clients whose physical or mental 
impairment is so severe as to make their productive capacity 
inconsequential.



Sec. 779.406  ``Student-learners''.

    (a) Applicable regulations. In accordance with section 14 of the Act 
regulations have been issued to provide for employment under special 
certificates of student-learners at wages lower than the minimum wage 
applicable under section 6 of the Act. These regulations are set forth 
in part 520 of this chapter and govern the issuance of special 
certificates for student-learners in covered employments generally as 
well as such employments in retail or service establishments.
    (b) Definitions. The regulations in Sec. 520.2 of this chapter 
define ``student-learners'' and ``bona fide vocational training 
program'' as follows:
    (1) A student-learner is defined as ``a student who is receiving 
instruction in an accredited school, college or university and who is 
employed on a part-time basis, pursuant to a bona fide vocational 
training program.''
    (2) A bona fide vocational training program is defined as ``one 
authorized and approved by a State board of vocational education or 
other recognized educational body and provides for part-time employment 
training which may be scheduled for a part of the workday or workweek, 
for alternating weeks or for other limited periods during the year, 
supplemented by and integrated with a definitely organized plan of 
instruction designed to teach technical knowledge and related industrial 
information given as a regular part of the student-learner's course by 
an accredited school, college or university.''



Sec. 779.407  Learners other than ``student-learners''.

    Regulations have been issued in accordance with the authority in 
section 14 of the Act to provide for employment under special 
certificates of learners at wages lower than the minimum wage applicable 
under section 6 of the Act. Part 522 of this chapter contains the 
general regulations for learners and those for learners in particular 
industries. General learner regulations are set forth in Sec. Sec. 
522.1 to 522.11 of this chapter.



Sec. 779.408  ``Full-time students''.

    The 1961 Amendments added to section 14 of the Act, the authority to 
issue special certificates for the employment of ``full-time students,'' 
under certain specified conditions, at wages lower than the minimum wage

[[Page 531]]

applicable under section 6. The student, to qualify for a special 
certificate must attend school full time and his employment must be 
outside of his school hours and his employment must be in a retail or 
service establishment. In addition, the student's employment must not be 
of the type ordinarily given to a full-time employee. ``The purpose of 
this provision,'' as made clear in the legislative history, ``is to 
provide employment opportunities for students who desire to work part 
time outside of their school hours without the displacement of adult 
workers'' (S. Rept. 145, 87th Cong., first session, p. 29). The 
application of this provision was amplified by the 1966 Amendments to 
provide for the employment of full-time students regardless of age but 
in compliance with applicable child labor laws in retail or service 
establishments and in agriculture (not to exceed 20 hours in any 
workweek) or on a part-time or a full-time basis during school vacations 
at a wage rate not less than 85 percent of the applicable minimum wage 
(H. Rept. 1366, 89th Cong., second session, pp. 34 and 35). Regulations 
authorizing the issuance of certificates under this provision of the Act 
are published in part 519 of this chapter.



Sec. 779.409  Handicapped workers.

    Regulations have been issued under the authority in section 14 of 
the Act to provide for employment under special certificate of 
handicapped workers at wages lower than the minimum wage applicable 
under section 6 of the Act. These regulations are set forth in part 524 
of this chapter. In these regulations handicapped workers are defined as 
individuals whose earning capacity is impaired by age or physical or 
mental deficiency or injury for the work they are to perform.

            Employees Compensated Principally by Commissions



Sec. 779.410  Statutory provision.

    Section 7 of the Act provides, in subsection (i):

    (i) No employer shall be deemed to have violated subsection (a) by 
employing any employee of a retail or service establishment for a 
workweek in excess of the applicable workweek specified therein, if (1) 
the regular rate of pay of such employee is in excess of one and one-
half times the minimum hourly rate applicable to him under section 6, 
and (2) more than half his compensation for a representative period (not 
less than 1 month) represents commissions on goods or services. In 
determining the proportion of compensation representing commissions, all 
earnings resulting from the application of a bona fide commission rate 
shall be deemed commissions on goods or services without regard to 
whether the computed commissions exceed the draw or guarantee.


There are briefly set forth in Sec. Sec. 779.411 to 779.421 some 
guiding principles for determining whether an employee's employment and 
compensation meet the conditions set forth in section 7(i).



Sec. 779.411  Employee of a ``retail or service establishment''.

    In order for an employee to come within the exemption from the 
overtime pay requirement provided by section 7(i) for certain employees 
receiving commissions, the employee must be employed by a retail or 
service establishment. The term ``retail or service establishment'' is 
defined in section 13(a)(2) of the Act. The definition is set forth in 
Sec. 779.24; its application is considered at length in subpart D of 
this part. As used in section 7(i), as in other provisions of the Act, 
the term ``retail or service establishment'' means an establishment 75 
per centum of whose annual dollar volume of sales of goods or services 
(or of both) is not for resale and is recognized as retail sales or 
services in the particular industry.



Sec. 779.412  Compensation requirements for overtime pay exemption 
under section 7(i).

    An employee of a ``retail or service establishment'' who is paid on 
a commission basis or whose pay includes compensation representing 
commissions need not be paid the premium compensation prescribed by 
section 7(a) for overtime hours worked in a workweek, provided the 
following conditions are met:
    (a) The ``regular rate'' of pay of such employee must be more than 
one and one-half times the minimum hourly rate applicable to him under 
section 6, and
    (b) More than half his compensation for a ``representative period'' 
(not less

[[Page 532]]

than one month) must represent commissions on goods or services.



Sec. 779.413  Methods of compensation of retail store employees.

    (a) Retail or service establishment employees are generally 
compensated (apart from any extra payments for overtime or other 
additional payments) by one of the following methods:
    (1) Straight salary or hourly rate: Under this method of 
compensation the employee receives a stipulated sum paid weekly, 
biweekly, semimonthly, or monthly or a fixed amount for each hour of 
work.
    (2) Salary plus commission: Under this method of compensation the 
employee receives a commission on all sales in addition to a base salary 
(see paragraph (a)(1) of this section).
    (3) Quota bonus: This method of compensation is similar to paragraph 
(a)(2) of this section except that the commission payment is paid on 
sales over and above a predetermined sales quota.
    (4) Straight commission without advances: Under this method of 
compensation the employee is paid a flat percentage on each dollar of 
sales he makes.
    (5) Straight commission with ``advances,'' ``guarantees,'' or 
``draws.'' This method of compensation is similar to paragraph (a)(4) of 
this section except that the employee is paid a fixed weekly, biweekly, 
semimonthly, or monthly ``advance,'' ``guarantee,'' or ``draw.'' At 
periodic intervals a settlement is made at which time the payments 
already made are supplemented by any additional amount by which his 
commission earnings exceed the amounts previously paid.
    (b) The above listing in paragraph (a) of this section which 
reflects the typical methods of compensation is not, of course, 
exhaustive of the pay practices which may exist in retail or service 
establishments. Although typically in retail or service establishments 
commission payments are keyed to sales, the requirement of the exemption 
is that more than half the employee's compensation represent commissions 
``on goods or services,'' which would include all types of commissions 
customarily based on the goods or services which the establishment 
sells, and not exclusively those measured by ``sales'' of these goods or 
services.



Sec. 779.414  Types of employment in which this overtime pay exemption 
may apply.

    Section 7(i) was enacted to relieve an employer from the obligation 
of paying overtime compensation to certain employees of a retail or 
service establishment paid wholly or in greater part on the basis of 
commissions. These employees are generally employed in so-called ``big 
ticket'' departments and those establishments or parts of establishments 
where commission methods of payment traditionally have been used, 
typically those dealing in furniture, bedding and home furnishings, 
floor covering, draperies, major appliances, musical instruments, radios 
and television, men's clothing, women's ready to wear, shoes, corsets, 
home insulation, and various home custom orders. There may be other 
segments in retailing where the proportionate amount of commission 
payments would be great enough for employees employed in such segments 
to come within the exemption. Each such situation will be examined, 
where exemption is claimed, to make certain the employees treated as 
exempt from overtime compensation under section 7(i) are properly within 
the statutory exclusion.



Sec. 779.415  Computing employee's compensation for the representative
period.

    (a) In determining for purposes of section 7(i) whether more than 
half of an employee's compensation ``represents commissions on goods or 
services'' it is necessary first to total all compensation paid to or on 
behalf of the employee as remuneration for his employment during the 
period. All such compensation in whatever form or by whatever method 
paid should be included, whether calculated on a time, piece, incentive 
or other basis, and amounts representing any board, lodging or other 
facilities furnished should be included in addition to cash payments, to 
the extent required by section 3(m) of the Act and part 531 of this 
chapter. Payments excludable from the

[[Page 533]]

employee's ``regular rate'' under section 7(e) may be excluded from this 
computation if, but only if, they are payments of a kind not made as 
compensation for his employment during the period. (See part 778 of this 
chapter.)
    (b) In computing the employee's total compensation for the 
representative period it will in many instances become clear whether 
more than half of it represents commissions. Where this is not clear, it 
will be necessary to identify and total all portions of the compensation 
which represent commissions on the goods or services that the retail or 
service establishment sells. In determining what compensation 
``represents commissions on goods or services'' it is clear that any 
portion of the compensation paid, as a weekly, biweekly, semimonthly, 
monthly, or other periodic salary, or as an hourly or daily rate of pay, 
does not ``represent commissions'' paid to the employee. On the other 
hand, it is equally clear that an employee paid entirely by commissions 
on the goods or services which the retail or service establishment sells 
will, in any representative period which may be chosen, satisfy the 
requirement that more than half of his compensation represents 
commissions. The same will be true of an employee receiving both salary 
and commission payments whose commissions always exceed the salary. If, 
on the other hand, the commissions paid to an employee receiving a 
salary are always a minor part of his total compensation it is clear 
that he will not qualify for the exemption provided by section 7(i).



Sec. 779.416  What compensation ``represents commissions.''

    (a) Employment arrangements which provide for a commission on goods 
or services to be paid to an employee of a retail or service 
establishment may also provide, as indicated in Sec. 779.413, for the 
payment to the employee at a regular pay period of a fixed sum of money, 
which may bear a more or less fixed relationship to the commission 
earnings which could be expected, on the basis of experience, for an 
average period of the same length. Such periodic payments, which are 
variously described in retail or service establishments as ``advances,'' 
``draws,'' or ``guarantees,'' are keyed to a time base and are usually 
paid at weekly or other fixed intervals which may in some instances be 
different from and more frequent than, the intervals for payment of any 
earnings computed exclusively on a commission basis. They are normally 
smaller in amount than the commission earnings expected for such a 
period and if they prove to be greater, a deduction of the excess amount 
from commission earnings for a subsequent period, if otherwise lawful, 
may or may not be customary under the employment arrangement. A 
determination of whether or to what extent such periodic payments can be 
considered to represent commissions may be required in those situations 
where the employment arrangement is that the employee will be paid the 
stipulated sum, or the commission earnings allocable to the same period, 
whichever is the greater amount. The stipulated sum can never represent 
commissions, of course, if it is actually paid as a salary. If, however, 
it appears from all the facts and circumstances of the employment that 
the stipulated sum is not so paid and that it actually functions as an 
integral part of a true commission basis of payment, then such 
compensation may qualify as compensation which ``represents commissions 
on goods or services'' within the meaning of clause (2) of the section 
7(i) exemption.
    (b) The express statutory language of section 7(i), as amended in 
1966, provides that ``In determining the proportion of compensation 
representing commissions, all earnings resulting from the application of 
a bona fide commission rate shall be deemed commissions on goods or 
services without regard to whether the computed commissions exceed the 
draw or guarantee'' which may be paid to the employee. Thus an employee 
who is paid a guarantee or draw against commissions computed in 
accordance with a bona fide commission payment plan or formula under 
which the computed commissions vary in accordance with the employee's 
performance on the job will qualify for exemption provided the 
conditions of 7(i)(1) are met as explained in Sec. 779.419. Under a 
bona fide commission

[[Page 534]]

plan all of the computed commissions will be counted as compensation 
representing commissions even though the amount of commissions may not 
equal or exceed the guarantee or draw in some workweeks. The exemption 
will also apply in the case of an employee who is paid a fixed salary 
plus an additional amount of earned commissions if the amount of 
commission payments exceeds the total amount of salary payments for the 
representative period.
    (c) A commission rate is not bona fide if the formula for computing 
the commissions is such that the employee, in fact, always or almost 
always earns the same fixed amount of compensation for each workweek (as 
would be the case where the computed commissions seldom or never equal 
or exceed the amount of the draw or guarantee). Another example of a 
commission plan which would not be considered as bona fide is one in 
which the employee receives a regular payment consituting nearly his 
entire earnings which is expressed in terms of a percentage of the sales 
which the establishment or department can always be expected to make 
with only a slight addition to his wages based upon a greatly reduced 
percentage applied to the sales above the expected quota.



Sec. 779.417  The ``representative period'' for testing employee's 
compensation.

    (a) Whether compensation representing commissions constitutes most 
of an employee's pay, so as to satisfy the exemption condition contained 
in clause (2) or section 7(i), must be determined by testing the 
employee's compensation for a ``representative period'' of not less than 
1 month. The Act does not define a representative period, but plainly 
contemplates a period which can reasonably be accepted by the employer, 
the employee, and disinterested persons as being truly representative of 
the compensation aspects of the employee's employment on which this 
exemption test depends. A representative period within the meaning of 
this exemption may be described generally as a period which typifies the 
total characteristics of an employee's earning pattern in his current 
employment situation, with respect to the fluctuations of the proportion 
of his commission earnings to his total compensation.
    (b) To this end the period must be as recent a period, of sufficient 
length (see paragraph (c) of this section) to fully and fairly reflect 
all such factors, as can practicably be used. Thus, as a general rule, 
if a month is long enough to reflect the necessary factors, the most 
recent month for which necessary computations can be made prior to the 
payday for the first workweek in the current month should be chosen. 
Similarly, if it is necessary to use a period as long as a calendar or 
fiscal quarter year to fully represent such factors, the quarterly 
period used should ordinarily be the one ending immediately prior to the 
quarter in which the current workweek falls. If a period longer than a 
quarter year is required in order to include all the factors necessary 
to make it fully and fairly representative of the current period of 
employment for purposes of section 7(i), the end of such period should 
likewise be at least as recent as the end of the quarter year 
immediately preceding the quarter in which the current workweek falls. 
Thus, in the case of a representative period of 6 months or of 1 year, 
recomputation each quarter would be required so as to include in it the 
most recent two quarter-years or four quarter-years, as the case may be. 
The quarterly recomputation would tend to insure that the period used 
reflects any gradual changes in the characteristics of the employment 
which could be important in determining the ratio between compensation 
representing commissions and other compensation in the current 
employment situation of the employee.
    (c) The representative period for determining whether more than half 
of an employee's compensation represents commissions cannot, under the 
express terms of section 7(i), be less than 1 month. The period chosen 
should be long enough to stabilize the measure of the balance between 
the portions of the employee's compensation which respectively represent 
commissions and other earnings, against purely seasonal or plainly 
temporary changes. Although the Act sets no upper limit on the

[[Page 535]]

length of the period, the statutory intent would not appear to be served 
by any recognition of a period in excess of 1 year as representative for 
purposes of this exemption. There would seem to be no employment 
situation in a retail or service establishment in which a period longer 
than a year would be needed to represent the seasonal and other 
fluctuations in commission compensation.
    (d) Accordingly, for each employee whose exemption is to be tested 
in any workweek under clause (2) of section 7(i), an appropriate 
representative period or a formula for establishing such a period must 
be chosen and must be designated and substantiated in the employer's 
records (see Sec. 516.16 of this chapter). When the facts change so 
that the designated period or the period established by the designated 
formula is no longer representative, a new representative period or 
formula therefor must be adopted which is appropriate and sufficient for 
the purpose, and designated and substantiated in the employer's records. 
Although the period selected and designated must be one which is 
representative with respect to the particular employee for whom 
exemption is sought, and the appropriateness of the representative 
period for that employee will always depend on his individual earning 
pattern, there may be situations in which the factors affecting the 
proportionate relationship between total compensation and compensation 
representing commissions will be substantially identical for a group or 
groups of employees in a particular occupation or department of a retail 
or service establishment or in the establishment as a whole. Where this 
can be demonstrated to be a fact, and is substantiated by pertinent 
information in the employer's records, the same representative period or 
formula for establishing such a period may properly be used for each of 
the similarly situated employees in the group.



Sec. 779.418  Grace period for computing portion of compensation 
representing commissions.

    Where it is not practicably possible for the employer to compute the 
commission earnings of the employee for all workweeks ending in a prior 
representative period in time to determine the overtime pay obligations, 
if any, for the workweek or workweeks immediately following, 1 month of 
grace may be used by the retail or service establishment. This month of 
grace will not change the length of the current period in which the 
prior period is used as representative. It will merely allow an interval 
of 1 month between the end of the prior period and the beginning of the 
current period in order to permit necessary computations for the prior 
period to be made. For example, assume that the representative period 
used is the quarter-year immediately preceding the current quarter, and 
commissions for the prior period cannot be computed in time to determine 
the overtime pay obligations for the workweeks included in the first pay 
period in the current quarter. By applying a month of grace, the next 
earlier quarterly period may be used during the first month of the 
current quarter; and the quarter-year immediately preceding the current 
quarter will then be used for all workweeks ending in a quarter-year 
period which begins 1 month after the commencement of the current 
quarter. Thus, a January 1-March 31 representative period may be used 
for purposes of section 7(i) in a quarterly period beginning May 1 and 
ending July 31, allowing the month of April for necessary commission 
computations for the representative period. Once this method of 
computation is adopted it must be used for each successive period in 
like manner. The prior period used as representative must, of course, as 
in other cases, meet all the requirements of a representative period as 
previously explained.



Sec. 779.419  Dependence of the section 7(i) overtime pay exemption 
upon the level of the employee's ``regular rate'' of pay.

    (a) If more than half of the compensation of an employee of a retail 
or service establishment for a representative period as previously 
explained represents commissions on goods or services, one additional 
condition must be met in order for the employee to be exempt under 
section 7(i) from the overtime pay requirement of section 7(a) of the 
Act in a workweek when his hours

[[Page 536]]

of work exceed the maximum number specified in section (a). This 
additional condition is that his ``regular rate'' of pay for such 
workweek must be more than one and one-half times the minimum hourly 
rate applicable to him from the minimum wage provisions of section 6 of 
the Act. If it is not more than one and one-half times such minimum 
rate, there is no overtime pay exemption for the employee in that 
particular workweek.
    (b) The meaning of the ``regular rate'' of pay under the Act is well 
established. As explained by the Supreme Court of the United States, it 
is ``the hourly rate actually paid the employee for the normal, 
nonovertime workweek for which he is employed'' and ``by its very nature 
must reflect all payments which the parties have agreed shall be 
received regularly during the workweek, exclusive of overtime 
payments.'' (Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419.) 
It is a rate per hour, computed for the particular workweek by a 
mathematical computation in which hours worked are divided into 
straight-time earnings for such hours to obtain the statutory regular 
rate (Overnight Motor Co. v. Missel, 316 U.S. 572). By definition (Act, 
section 7(e), the ``regular rate'' as used in section 7 of the Act 
includes ``all remuneration paid to, or on behalf of, the employee'' 
except payments expressly excluded by the seven numbered clauses of 
section 7(e). The computation of the regular rate for purposes of the 
Act is explained in part 778 of this chapter. The ``regular rate'' is 
not synonymous with the ``basic rate'' which may be established by 
agreement or understanding of the parties to the employment agreement 
under the provisions of section 7(g)(3) of the Act; that section, like 
section 7(i), merely provides an exemption from the general requirement 
of overtime compensation based on the regular rate contained in section 
7(a), if certain prescribed conditions are met (in section 7(g)(3) these 
include payment of overtime compensation on a basic rate established and 
authorized in accordance with its terms). The requirement of section 
7(i) with respect to the ``regular rate'' of pay of an employee who may 
come within the exemption which it provides is a simple one: ``the 
regular rate of pay of such employee,'' when employed ``for a workweek 
in excess of the applicable workweek specified'' in section 7(a), must 
be ``in excess of one and one-half times the minimum hourly rate 
applicable to him under section 6.'' The employee's ``regular rate'' of 
pay must be computed, in accordance with the principles discussed above, 
on the basis of his hours of work in that particular workweek and the 
employee's compensation attributable to such hours. The hourly rate thus 
obtained must be compared with the applicable minimum rate of pay of the 
particular employee under the provisions of section 6 of the Act. If the 
latter rate is $1.60 an hour, for example, then the employee's regular 
rate must be more than $2.40 an hour if the exemption is to apply.



Sec. 779.420  Recordkeeping requirements.

    The records which must be kept with respect to employees for whom 
the overtime pay exemption under section 7(i) is taken are specified in 
Sec. 516.16 of this chapter.



Sec. 779.421  Basic rate for computing overtime compensation of 
nonexempt employees receiving commissions.

    The overtime compensation due employees of a retail or service 
establishment who do not meet the exemption requirements of section 7(i) 
may be computed under the provisions of section 7(g)(3) of the Act if 
the employer and employee agree to do so under the conditions there 
provided. Section 7(g)(3) permits the use of a basic rate established, 
pursuant to agreement or understanding in advance of the work, in lieu 
of the regular rate for the purpose of computing overtime compensation. 
The use of such a basic rate for employees of a retail or service 
establishment compensated wholly or partly by commissions is authorized 
under the conditions set forth in part 548 of this chapter.

[[Page 537]]



     Subpart F_Other Provisions Which May Affect Retail Enterprises

                                 General



Sec. 779.500  Purpose of subpart.

    In Subpart A of this part, reference was made to a number of 
regulations which discuss provisions of the Act, such as general 
coverage, overtime compensation, joint employment, hours worked, and 
methods of payment of wages, which are applicable to others as well as 
to retailers and their employees. (See Sec. 779.6.) In addition to 
those provisions, the act contains other provisions of interest to 
retailers and their employees. It is the purpose of this subpart to 
focus attention on several of the more significant provisions in these 
categories.

                          Equal Pay Provisions



Sec. 779.501  Statutory provisions.

    Section 6(d) of the Act provides:

    (1) No employer having employees subject to any provisions of this 
section shall discriminate, within any establishment in which such 
employees are employed, between employees on the basis of sex by paying 
wages to employees in such establishment at a rate less than the rate at 
which he pays wages to employees of the opposite sex in such 
establishment for equal work on jobs the performance of which requires 
equal skill, effort, and responsibility, and which are performed under 
similar working conditions, except where such payment is made pursuant 
to (i) a seniority system; (ii) a merit system; (iii) a system which 
measures earnings by quantity or quality of production; or (iv) a 
differential based on any other factor other than sex: Provided, That an 
employer who is paying a wage rate differential in violation of this 
subsection shall not, in order to comply with the provisions of this 
subsection, reduce the wage rate of any employee.
    (2) No labor organization, or its agents, representing employees of 
an employer having employees subject to any provisions of this section 
shall cause or attempt to cause such an employer to discriminate against 
an employee in violation of paragraph (1) of this subsection.
    (3) For purposes of administration and enforcement, any amounts 
owing to any employee which have been withheld in violation of this 
subsection shall be deemed to be unpaid minimum wages or unpaid overtime 
compensation under this Act.
    (4) As used in this subsection, the term ``labor organization'' 
means any organization of any kind, or any agency or employee 
representation committee or plan, in which employees participate and 
which exists for the purpose, in whole or in part, of dealing with 
employers concerning grievances, labor disputes, wages, rates of pay, 
hours of employment, or conditions of work.

    Official interpretations of the Department of Labor with respect to 
the provisions of section 6(d) are found in part 800 of this chapter.

                         Child Labor Provisions



Sec. 779.502  Statutory provisions; regulations in part 1500 of this title.

    (a) The Act's prohibitions in relation to employment of child labor, 
which may have application to retailers, are found in section 12(a) and 
section 12(c). Section 12(a) reads as follows:

    No producer, manufacturer, or dealer shall ship or deliver for 
shipment in commerce any goods produced in an establishment situated in 
the United States in or about which within 30 days prior to the removal 
of such goods therefrom any oppressive child labor has been employed: 
Provided, That any such shipment or delivery for shipment of such goods 
by a purchaser who acquired them in good faith in reliance on written 
assurance from the producer, manufacturer, or dealer that the goods were 
produced in compliance with the requirements of this section, and who 
acquired such goods for value without notice of any such violation, 
shall not be deemed prohibited by this subsection and conviction of a 
defendant for the shipment or delivery for shipment of any goods under 
the conditions herein prohibited shall be a bar to any further 
prosecution against the same defendant for shipments or deliveries for 
shipment of any such goods before the beginning of said prosecution.

    Section 12(c) provides:

    No employer shall employ any oppressive child labor in commerce or 
in the production of goods for commerce or in any enterprise engaged in 
commerce or in the production of goods for commerce.

    (b) ``Oppressive child labor'' is defined by the Act, for purposes 
of the foregoing provisions, in the language set forth in Sec. 779.505.
    (c) Sections 570.1 to 570.129 of this chapter contain applicable 
regulations and a detailed discussion of the child labor provisions of 
the Act. Although

[[Page 538]]

those sections offer guidance for all including retailers, there are set 
forth in Sec. Sec. 779.503 through 779.508 pertinent provisions and a 
brief discussion of the standards which are of particular interest to 
those in the retail field.



Sec. 779.503  The retailer and section 12(a).

    Section 12(a) prohibits certain shipments or deliveries for shipment 
by ``producers,'' ``manufacturers'' ``or dealers.'' These terms having 
appeared in this section prior to the 1961 amendments are defined and 
described in Sec. 570.105 of this chapter, and said definitions remain 
unchanged. It should be noted that the term ``manufacturer'' as used in 
section 12(a) includes retailers who, in addition to retail selling, 
engage in such manufacturing activities as the making of slipcovers or 
curtains, the baking of bread, the making of candy, or the making of 
window frames. Further, the term ``dealers'' refers to anyone who deals 
in goods including persons engaged in buying, selling, trading, 
distributing, delivering, etc. ``Dealers,'' therefore, as used in 
section 12(a) include retailers. Therefore, where a retailer's business 
unit is covered under the Act and he is a producer, manufacturer or 
dealer within the meaning of this section, the retailer must comply with 
the requirements of section 12(a). If a retailer's business unit which 
is covered under the Act is exempt as a retail or service establishment 
under section 13 of the Act from the monetary requirements of the Act, 
the requirements of the child labor provisions must still be met. Thus, 
retail or service establishments, in covered enterprises, doing less 
than $250,000 annually, must comply with the child labor requirements 
even if they are exempt from minimum wage and overtime provisions under 
section 13(a)(2) of the Act.



Sec. 779.504  The retailer and section 12(c).

    Section 12(c) was amended in 1961 to prohibit the employment of 
oppressive child labor in any enterprise engaged in commerce or in the 
production of goods for commerce. Thus, employers in every enterprise 
which is covered under the Act must comply with section 12(c) of the 
child labor provisions of the Act. As stated in Sec. 779.503, 
compliance with this provision is necessary even though the employers in 
a particular establishment or establishments of a covered enterprise are 
exempt from the requirement of compensating employees in accordance with 
sections 6 and 7 of the Act.



Sec. 779.505  ``Oppressive child labor'' defined.

    Section 3(1) of the Act defines oppressive child labor as follows:

    ``Oppressive child labor'' means a condition of employment under 
which (1) any employee under the age of 16 years is employed by an 
employer (other than a parent or a person standing in place of a parent 
employing his own child or a child in his custody under the age of 16 
years in an occupation other than manufacturing or mining or an 
occupation found by the Secretary of Labor to be particularly hazardous 
for the employment of children between the ages of 16 and 18 years or 
detrimental to their health or well-being) in any occupation, or (2) any 
employee between the ages of 16 and 18 years is employed by an employer 
in any occupation which the Secretary of Labor shall find and by order 
declare to be particularly hazardous for the employment of children 
between such ages or detrimental to their health or well-being; but 
oppressive child labor shall not be deemed to exist by virtue of the 
employment in any occupation of any person with respect to whom the 
employer shall have on file an unexpired certificate issued and held 
pursuant to regulations of the Secretary of Labor certifying that such 
person is above the oppressive child labor age. The Secretary of Labor 
shall provide by regulation or by order that the employment of employees 
between the ages of 14 and 16 years in occupations other than 
manufacturing and mining shall not be deemed to constitute oppressive 
child labor if and to the extent that the Secretary of Labor determines 
that such employment is confined to periods which will not interfere 
with their schooling and to conditions which will not interfere with 
their health and well-being.



Sec. 779.506  Sixteen-year minimum.

    The Act sets a 16-year minimum for employment in manufacturing or 
mining occupations. Furthermore, this age minimum is applicable to 
employment in all other occupations unless otherwise provided by 
regulation or order issued by the Secretary.

[[Page 539]]



Sec. 779.507  Fourteen-year minimum.

    (a) Prohibited occupations. With respect to employment in 
occupations other than manufacturing and mining, the Secretary is 
authorized to issue regulations or orders lowering the age minimum to 14 
years where he finds that such employment is confined to periods which 
will not interfere with the minors' schooling and to conditions which 
will not interfere with their health and well-being. Pursuant to this 
authority, the Secretary permits the employment of 14- and 15-year-old 
children in a limited number of occupations where the work is performed 
outside school hours and is confined to other specified limits. Under 
the provisions of Child Labor Regulations, subpart C (Sec. Sec. 570.31 
through 570.38 of this chapter), employment of minors in this age group 
is not permitted in the following occupations:
    (1) Manufacturing, mining, or processing occupations including 
occupations requiring the performance of any duties in a workroom or 
workplace where goods are manufactured, mined, or otherwise processed;
    (2) Occupations involving the operation or tending of hoisting 
apparatus or of any power-driven machinery other than office machines;
    (3) The operation of motor vehicles or service as helpers on such 
vehicles;
    (4) Public messenger service;
    (5) Occupations declared to be particularly hazardous or detrimental 
to health or well-being by the Secretary;
    (6) Occupations in connection with (i) transportation of persons or 
property by rail, highway, air, water, pipeline, or other means; (ii) 
warehousing and storage; (iii) communications and public utilities; and 
(iv) construction (including demolition and repair). Office and sales 
work performed in connection with the occupations specified in this 
subparagraph is permitted if such work is not performed on trains or any 
other media of transportation or at the actual site of construction 
operations.
    (b) Permissible occupations; conditions. Employment of 14- and 15-
year-olds in all occupations other than those in paragraph (a) of this 
section is permitted by the regulation under certain conditions 
specified in the regulation. The permissible occupations for minors 
between 14 and 16 years of age in retail, food service, and gasoline 
service establishments are listed in Sec. 570.34. The periods and 
conditions of employment for such minors are set out in Sec. 570.35.



Sec. 779.508  Eighteen-year minimum.

    To protect young workers from hazardous employment, the Act provides 
for a minimum age of 18 years in occupations found and declared by the 
Secretary to be particularly hazardous or detrimental to health or well-
being of minors 16 and 17 years of age. These occupations may be found 
in Sec. Sec. 570.51 through 570.68 of this chapter. Of particular 
interest to retailers are Sec. Sec. 570.52, 570.58, 570.62 and 570.63 
of this chapter pertaining to the occupations of motor-vehicle driver 
and outside helper, and occupations involving the operation of power-
driven hoisting apparatus, bakery machines, and paper products machines.

            Driver or Driver's Helper Making Local Deliveries



Sec. 779.509  Statutory provision.

    Section 13(b)(11) exempts from the provisions of section 7 of the 
Act:

    Any employee employed as a driver or driver's helper making local 
deliveries, who is compensated for such employment on the basis of trip 
rates, or other delivery payment plan, if the Secretary shall find that 
such plan has the general purpose and effect of reducing hours worked by 
such employees to, or below, the maximum workweek applicable to them 
under section 7(a).


This is an exemption from the overtime pay requirements only.



Sec. 779.510  Conditions that must be met for section 13(b)(11) exemption.

    In order that an employee be exempt from the overtime provisions of 
the Act under section 13(b)(11) he must be employed as a driver or 
driver's helper making local deliveries, and, he must be compensated for 
such employment on a trip rate basis or other delivery payment plan, and 
such plan must be found by the Secretary to have the general purpose and 
effect of reducing the hours worked by the driver or driver's helper to, 
or below, the maximum workweek applicable to him under section 7(a) of 
the Act. If all the preceding

[[Page 540]]

conditions are not met the exemption is inapplicable.



Sec. 779.511  ``Finding by Secretary.''

    As stated in Sec. 779.510, before the section 13(b)(11) exemption 
may be claimed, the Secretary must find that the trip rate basis of 
compensation, or other delivery payment plan used to compensate a driver 
or a driver's helper making local deliveries, has the general purpose 
and effect of reducing the hours worked by these employees to, or below, 
the maximum workweek applicable to them under section 7(a) of the Act. 
The conditions under which such findings may be made, amended, or 
revoked, and the procedure for obtaining such a finding are set forth in 
the regulations in part 551 of this chapter.

                     Records to be Kept by Employers



Sec. 779.512  The recordkeeping regulations.

    Every employer who is subject to any of the provisions of the Act is 
required to maintain certain records. The recordkeeping requirements are 
set forth in regulations which have been published in subparts A and B 
of part 516 of this chapter. Subpart A contains the requirements 
applicable to all employers employing covered employees, including the 
general requirements relating to the posting of notices, the 
preservation and location of records and similar general provisions. 
Subpart A also contains the requirements relating to the records which 
must be kept for exempt executive, administrative, and professional 
employees and outside salesmen. Subpart B deals with information and 
data which must be kept with respect to employees who are subject to 
other exemptions and provisions of the Act.



Sec. 779.513  Order and form of records.

    No particular order or form of records is prescribed by the 
regulations. However, the records which the employer keeps must contain 
the information and data required by the specific sections of the 
regulations which are applicable. In addition, where the employer claims 
an exemption from the minimum wage or overtime or other requirements of 
the Act, he should also maintain those records which serve to support 
his claim for exemption, such as records of sales, purchases, and 
receipts.



Sec. 779.514  Period for preserving records.

    Basic records, such as payroll records, certificates issued or 
required under the Act, and employment agreements and other basic 
records must be preserved for at least 3 years. Supplementary records 
such as time and earnings cards or sheets, wage rate tables, work time 
schedules, or order, shipping and billing records, and similar records 
need be preserved for only 2 years.



Sec. 779.515  Regulations should be consulted.

    This discussion in subpart F of this part is intended only to 
indicate the general requirements of the recordkeeping regulations. Each 
employer subject to any provision of the Act should consult the 
regulations to determine what records he must maintain and the period 
for which they must be preserved.



PART 780_EXEMPTIONS APPLICABLE TO AGRICULTURE, PROCESSING OF 
AGRICULTURAL COMMODITIES, AND RELATED SUBJECTS UNDER THE FAIR

LABOR STANDARDS ACT--Table of Contents



                         Subpart A_Introductory

Sec.
780.0 Purpose of interpretative bulletins in this part.
780.1 General scope of the Act.
780.2 Exemptions from Act's requirements.
780.3 Exemptions discussed in this part.
780.4 Matters not discussed in this part.
780.5 Significance of official interpretations.
780.6 Basic support for interpretations.
780.7 Reliance on interpretations.
780.8 Interpretations made, continued, and superseded by this part.
780.9 Related exemptions are interpreted together.
780.10 Workweek standard in applying exemptions.
780.11 Exempt and nonexempt work during the same workweek.
780.12 Work exempt under another section of the Act.

[[Page 541]]

                 Subpart B_General Scope of Agriculture

                              Introductory

780.100 Scope and significance of interpretative bulletin.
780.101 Matters discussed in this subpart.
780.102 Pay requirements for agricultural employees.
780.103 ``Agriculture'' as defined by the Act.
780.104 How modern specialization affects the scope of agriculture.
780.105 ``Primary'' and ``secondary'' agriculture under section 3(f).

             Exemption For ``Primary'' Agriculture Generally

780.106 Employment in ``primary'' agriculture is farming regardless of 
          why or where work is performed.

                       Farming in All Its Branches

780.107 Scope of the statutory term.
780.108 Listed activities.
780.109 Determination of whether unlisted activities are ``farming.''

                  Cultivation and Tilliage of the Soil

780.110 Operations included in ``cultivation and tillage of the soil.''

                                Dairying

780.111 ``Dairying'' as a farming operation.

                Agricultural Or Horticultural Commodities

780.112 General meaning of ``agricultural or horticultural 
          commodities.''
780.113 Seeds, spawn, etc.
780.114 Wild commodities.
780.115 Forest products.
780.116 Commodities included by reference to the Agricultural Marketing 
          Act.

   ``Production, Cultivation, Growing, and Harvesting'' of Commodities

780.117 ``Production, cultivation, growing.''
780.118 ``Harvesting.''

       Raising of Livestock, Bees, Fur-Bearing Animals, or Poultry

780.119 Employment in the specified operations generally.
780.120 Raising of ``livestock.''
780.121 What constitutes ``raising'' of livestock.
780.122 Activities relating to race horses.
780.123 Raising of bees.
780.124 Raising of fur-bearing animals.
780.125 Raising of poultry in general.
780.126 Contract arrangements for raising poultry.
780.127 Hatchery operations.

  Practices Exempt Under ``Secondary'' Meaning of Agriculture Generally

780.128 General statement on ``secondary'' agriculture.
780.129 Required relationship of practices to farming operations.

                   Practices Performed ``By a Farmer''

780.130 Performance ``by a farmer'' generally.
780.131 Operations which constitute one a ``farmer.''
780.132 Operations must be performed ``by'' a farmer.
780.133 Farmers' cooperative as a ``farmer.''

                    Practices Performed ``On a Farm''

780.134 Performance ``on a farm'' generally.
780.135 Meaning of ``farm.''
780.136 Employment in practices on a farm.

               ``Such Farming Operations''--of the Farmer

780.137 Practices must be performed in connection with farmer's own 
          farming.
780.138 Application of the general principles.
780.139 Pea vining.
780.140 Place of performing the practice as a factor.

                ``Such Farming Operations''--On the Farm

780.141 Practices must relate to farming operations on the particular 
          farm.
780.142 Practices on a farm not related to farming operations.
780.143 Practices on a farm not performed for the farmer.

Performance of the Practice ``As an Incident to or in Conjunction With'' 
                         the Farming Operations

780.144 ``As an incident to or in conjunction with'' the farming 
          operations.
780.145 The relationship is determined by consideration of all relevant 
          factors.
780.146 Importance of relationship of the practice to farming generally.
780.147 Practices performed on farm products--special factors 
          considered.

      Practices Included When Performed as Provided in Section 3(f)

780.148 ``Any'' practices meeting the requirements will qualify for 
          exemption.
780.149 Named practices as well as others must meet the requirements.

                         Preparation for Market

780.150 Scope and limits of ``preparation for market.''
780.151 Particular operations on commodities.

[[Page 542]]

                      Specified Delivery Operations

780.152 General scope of specified delivery operations.
780.153 Delivery ``to storage.''
780.154 Delivery ``to market.''
780.155 Delivery ``to carriers for transportation to market.''

         Transportation Operations Not Mentioned in Section 3(f)

780.156 Transportation of farm products from the fields or farm.
780.157 Other transportation incident to farming.

        Other Unlisted Practices Which May Be Within Section 3(f)

780.158 Examples of other practices within section 3(f) if requirements 
          are met.
780.159 Forest products.

       Subpart C_Agriculture as It Relates to Specific Situations

                    Forestry or Lumbering Operations

780.200 Inclusion of forestry or lumbering operations in agriculture is 
          limited.
780.201 Meaning of ``forestry or lumbering operations.''
780.202 Subordination to farming operations is necessary for exemption.
780.203 Performance of operations on a farm but not by the farmer.
780.204 Number of employees engaged in operations not material.

                   Nursery and Landscaping Operations

780.205 Nursery activities generally.
780.206 Planting and lawn mowing.
780.207 Operations with respect to wild plants.
780.208 Forest and Christmas tree activities.
780.209 Packing, storage, warehousing, and sale of nursery products.

                           Hatchery Operations

780.210 The typical hatchery operations constitute ``agriculture.''
780.211 Contract production of hatching eggs.
780.212 Hatchery employees working on farms.
780.213 Produce business.
780.214 Feed sales and other activities.
780.215 Meaning of forestry or lumbering operations.
780.216 Nursery activities generally and Christmas tree production.
780.217 Forestry activities.

 Subpart D_Employment in Agriculture That Is Exempted From the Minimum 
        Wage and Overtime Pay Requirements Under Section 13(a)(6)

                          Statutory Provisions

780.300 Statutory exemptions in section 13(a) (6).
780.301 Other pertinent statutory provisions.
780.302 Basic conditions of section 13(a) (6) (A).
780.303 Exemption applicable on employee basis.
780.304 ``Employed by an employer.''
780.305 500 man-day provision.
780.306 Calendar quarter of the preceding calendar year defined.
780.307 Exemption for employer's immediate family.
780.308 Definition of immediate family.
780.309 Man-day exclusion.
780.310 Exemption for local hand harvest laborers.
780.311 Basic conditions of section 13(a) (6) (C).
780.312 ``Hand harvest laborer'' defined.
780.313 Piece rate basis.
780.314 Operations customarily * * * paid on a piece rate basis * * *.
780.315 Local hand harvest laborers.
780.316 Thirteen week provision.
780.317 Man-day exclusion.
780.318 Exemption for nonlocal minors.
780.319 Basic conditions of exemption.
780.320 Nonlocal minors.
780.321 Minors 16 years of age or under.
780.322 Is employed on the same farm as his parent or persons standing 
          in the place of his parent.
780.323 Exemption for range production of livestock.
780.324 Requirements for the exemption to apply.
780.325 Principally engaged.
780.326 On the range.
780.327 Production of livestock.
780.328 Meaning of livestock.
780.329 Exempt work.
780.330 Sharecroppers and tenant farmers.
780.331 Crew leaders and labor contractors.
780.332 Exchange of labor between farmers.

Subpart E_Employment in Agriculture of Irrigation That Is Exempted From 
          the Overtime Pay Requirements Under Section 13(b)(12)

780.400 Statutory provisions.
780.401 General explanatory statement.
780.402 The general guides for applying the exemption.
780.403 Employee basis of exemption under section 13(b) (12).

[[Page 543]]

780.404 Activities of the employer considered in some situations.

                        The Irrigation Exemption

780.405 Exemption is direct and does not mean activities are 
          agriculture.
780.406 Exemption is from overtime only.
780.407 System must be nonprofit or operated on a share-crop basis.
780.408 Facilities of system at least 90 percent of which was used for 
          agricultural purposes.
780.409 Employment ``in connection with the operation or maintenance'' 
          is exempt.

Subpart F_Employment or Agricultural Employees in Processing Shade-Grown 
Tobacco; Exemption From Minimum Wage and Overtime Pay Requirements Under 
                           Section 13(a) (14)

                              Introductory

780.500 Scope and significance of interpretative bulletin.
780.501 Statutory provision.
780.502 Legislative history of exemption.
780.503 What determines the application of the exemption.

                       Requirements for Exemption

780.504 Basic conditions of exemption.

                           Shade-Grown Tobacco

780.505 Definition of ``shade-grown tobacco.''
780.506 Dependence of exemption on shade-grown tobacco operations.
780.507 ``Such tobacco.''
780.508 Application of the exemption.
780.509 Agriculture.
780.510 ``Any agricultural employee.''
780.511 Meaning of ``agricultural employee.''
780.512 ``Employed in the growing and harvesting.''
780.513 What employment in growing and harvesting is sufficient.
780.514 ``Growing'' and ``harvesting.''

                            Exempt Processing

780.515 Processing requirements of section 13(a) (14).
780.516 ``Prior to the stemming process.''
780.517 ``For use as Cigar-wrapper tobacco.''
780.518 Exempt processing operations.
780.519 General scope of exempt operations.
780.520 Particular operations which may be exempt.
780.521 Other processing operations.
780.522 Nonprocessing employees.

  Subpart G_Employment in Agriculture and Livestock Auction Operations 
                  Under the Section 13(b)(13) Exemption

                              Introductory

780.600 Scope and significance of interpretative bulletin.
780.601 Statutory provision.
780.602 General explanatory statement.

                       Requirements for Exemption

780.603 What determines application of exemption.
780.604 General requirements.
780.605 Employment in agriculture.
780.606 Interpretation of term ``agriculture.''
780.607 ``Primarily employed'' in agriculture.
780.608 ``During his workweek.''
780.609 Workweek unit in applying the exemption.
780.610 Workweek exclusively in exempt work.
780.611 Workweek exclusively in agriculture.
780.612 Employment by a ``farmer.''
780.613 ``By such farmer.''
780.614 Definition of a farmer.
780.615 Raising of livestock.
780.616 Operations included in raising livestock.
780.617 Adjunct livestock auction operations.
780.618 ``His own account''--``in conjunction with other farmers.''
780.619 Work ``in connection with'' livestock auction operations.
780.620 Minimum wage for livestock auction work.

                           Effect of Exemption

780.621 No overtime wages in exempt week.

     Subpart H_Employment by Small Country Elevators Within Area of 
   Production; Exemption From Overtime Pay Requirements Under Section 
                                13(b)(14)

                              Introductory

780.700 Scope and significance of interpretative bulletin.
780.701 Statutory provision.
780.702 What determines application of the exemption.
780.703 Basic requirements for exemption.

         Establishment Commonly Recognized As A Country Elevator

780.704 Dependence of exemption on nature of employing establishment.
780.705 Meaning of ``establishment.''

[[Page 544]]

780.706 Recognition of character of establishment.
780.707 Establishments ``commonly recognized'' as country elevators.
780.708 A country elevator is located near and serves farmers.
780.709 Size and equipment of a country elevator.
780.710 A country elevator may sell products and services to farmers.
780.711 Exemption of mixed business applies only to country elevators.

              Employment of ``No More Than Five Employees''

780.712 Limitation of exemption to establishments with five or fewer 
          employees.
780.713 Determining the number of employees generally.
780.714 Employees employed ``in such operations'' to be counted.
780.715 Counting employees ``employed in the establishment.''

   Employees ``Employed * * * By'' The Country Elevator Establishment

780.716 Exemption of employees ``employed * * * by'' the establishment.
780.717 Determining whether there is employment ``by'' the 
          establishment.
780.718 Employees who may be exempt.
780.719 Employees not employed ``by'' the elevator establishment.

              Employment ``Within the Area of Production''

780.720 ``Area of production'' requirement of exemption.

                    Workweek Application of Exemption

780.721 Employment in the particular workweek as test of exemption.
780.722 Exempt workweeks.
780.723 Exempt and nonexempt employment.
780.724 Work exempt under another section of the Act.

Subpart I_Employment in Ginning of Cotton and Processing of Sugar Beets, 
   Sugar-Beet Molasses, Sugarcane, or Maple Sap Into Sugar or Syrup; 
    Exemption From Overtime Pay Requirements Under Section 13(b)(15)

                              Introductory

780.800 Scope and significance of interpretative bulletin.
780.801 Statutory provisions.
780.802 What determines application of the exemption.
780.803 Basic conditions of exemption; first part, ginning of cotton.

                      Ginning of Cotton for Market

780.804 ``Ginning'' of cotton.
780.805 Ginning of ``cotton.''
780.806 Exempt ginning limited to first processing.
780.807 Cotton must be ginned ``for market.''

                    Employees ``Engaged In'' Ginning

780.808 Who may qualify for the exemption generally.
780.809 Employees engaged in exempt operations.
780.810 Employees not ``engaged in'' ginning.

          County Where Cotton Is Grown in Commercial Quantities

780.811 Exemption dependent upon place of employment generally.
780.812 ``County.''
780.813 ``County where cotton is grown.''
780.814 ``Grown in commercial quantities.''
780.815 Basic conditions of exemption; second part, processing of sugar 
          beets, sugar-beet molasses, sugarcane, or maple sap.
780.816 Processing of specific commodities.
780.817 Employees engaged in processing.
780.818 Employees not engaged in processing.
780.819 Production must be of unrefined sugar or syrup.

  Subpart J_Employment in Fruit and Vegetable Harvest Transportation; 
    Exemption From Overtime Pay Requirements Under Section 13(b)(16)

                              Introductory

780.900 Scope and significance of interpretative bulletin.
780.901 Statutory provisions.
780.902 Legislative history of exemption.
780.903 General scope of exemption.
780.904 What determines the exemption.
780.905 Employers who may claim exemption.

                Exempt Operations on Fruits or Vegetables

780.906 Requisites for exemption generally.
780.907 ``Fruits or vegetables.''
780.908 Relation of employee's work to specified transportation.
780.909 ``Transportation.''
780.910 Engagement in transportation and preparation.
780.911 Preparation for transportation.
780.912 Exempt preparation.
780.913 Nonexempt preparation.
780.914 ``From the farm.''
780.915 ``Place of first processing.''
780.916 ``Place of * * * first marketing.''
780.917 ``Within the same State.''

[[Page 545]]

      Exempt Transportation of Fruit or Vegetable Harvest Employees

780.918 Requisites for exemption generally.
780.919 Engagement ``in transportation'' of harvest workers.
780.920 Workers transported must be fruit or vegetable harvest workers.
780.921 Persons ``employed or to be employed'' in fruit or vegetable 
          harvesting.
780.922 ``Harvesting'' of fruits or vegetables.
780.923 ``Between the farm and any point within the same State.''

 Subpart K_Employment of Homeworkers in Making Wreaths; Exemption From 
 Minimum Wage, Overtime Compensation, and Child Labor Provisions Under 
                              Section 13(d)

                              Introductory

780.1000 Scope and significance of interpretative bulletin.
780.1001 General explanatory statement.

                       Requirements for Exemption

780.1002 Statutory requirements.
780.1003 What determines the application of the exemption.
780.1004 General requirements.
780.1005 Homeworkers.
780.1006 In or about a home.
780.1007 Exemption is inapplicable if wreath-making is not in or about a 
          home.
780.1008 Examples of places not considered homes.
780.1009 Wreaths.
780.1010 Principally.
780.1011 Evergreens.
780.1012 Other evergreens.
780.1013 Natural evergreens.
780.1014 Harvesting.
780.1015 Other forest products.
780.1016 Use of evergreens and forest products.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended; 75 Stat. 65; 29 
U.S.C. 201-219. Pub. L. 105-78, 111 Stat. 1467.

    Source: 37 FR 12084, June 17, 1972, unless otherwise noted.



                         Subpart A_Introductory



Sec. 780.0  Purpose of interpretative bulletins in this part.

    It is the purpose of the interpretative bulletins in this part to 
provide an official statement of the views of the Department of Labor 
with respect to the application and meaning of the provisions of the 
Fair Labor Standards Act of 1938, as amended, which exempt certain 
employees from the minimum wage or overtime pay requirements, or both, 
when employed in agriculture or in certain related activities or in 
certain operations with respect to agricultural or horticultural 
commodities.



Sec. 780.1  General scope of the Act.

    The Fair Labor Standards Act is a Federal statute of general 
application which establishes minimum wage, overtime pay, equal pay, and 
child labor requirements that apply as provided in the Act. These 
requirements are applicable, except where exemptions are provided, to 
employees in those workweeks when they are engaged in interstate or 
foreign commerce or in the production of goods for such commerce or are 
employed in enterprises so engaged within the meaning of definitions set 
forth in the Act. Employers having such employees are required to comply 
with the Act's provisions in this regard unless relieved therefrom by 
some exemption in the Act, and with specified recordkeeping requirements 
contained in part 516 of this chapter. The law authorizes the Department 
of Labor to investigate for compliance and, in the event of violations, 
to supervise the payment of unpaid minimum wages or unpaid overtime 
compensation owing to any employee. The law also provides for 
enforcement in the courts.



Sec. 780.2  Exemptions from Act's requirements.

    The Act provides a number of specific exemptions from the general 
requirements described in Sec. 780.1. Some are exemptions from the 
overtime provisions only. Others are from the child labor provisions 
only. Several are exemptions from both the minimum wage and the overtime 
requirements of the Act. Finally, there are some exemptions from all 
three--minimum wage, overtime pay, and child labor requirements. An 
employer who claims an exemption under the Act has the burden of showing 
that it applies (Walling v. General Industries Co., 330 U.S. 545; 
Mitchell v. Kentucky Finance Co., 359 U.S. 290). Conditions specified in 
the language of the Act are ``explicit prerequisites to exemption'' 
(Arnold v. Kanowsky, 361 U.S. 388). ``The details with which the 
exemptions in this Act have been made

[[Page 546]]

preclude their enlargement by implication'' and ``no matter how broad 
the exemption, it is meant to apply only to'' the specified activities 
(Addison v. Holly Hill, 322 U.S. 607; Maneja v. Waialua, 349 U.S. 254). 
Exemptions provided in the Act ``are to be narrowly construed against 
the employer seeking to assert them'' and their application limited to 
those who come ``plainly and unmistakably within their terms and 
spirit'' (Phillips v. Walling, 334 U.S. 490; Mitchell v. Kentucky 
Finance Co., 359 U.S. 290; Arnold v. Kanowsky, 361 U.S. 388).



Sec. 780.3  Exemptions discussed in this part.

    (a) The specific exemptions which the Act provides for employment in 
agriculture and in certain operations more or less closely connected 
with the agricultural industry are discussed in this part 780. These 
exemptions differ substantially in their terms, scope, and methods of 
application. Each of them is therefore separately considered in a 
subpart of this part which, together with this subpart A, constitutes 
the official interpretative bulletin of the Department of Labor with 
respect to that exemption. Exemptions from minimum wages and overtime 
pay and the subparts in which they are considered include the section 
13(a)(6) exemptions for employees on small farms, family members, local 
hand harvest laborers, migrant hand harvest workers under 16, and range 
production employees discussed in subpart D of this part, and the 
section 13(a)(14) exemption for agricultural employees processing shade-
grown tobacco discussed in subpart F of this part.
    (b) Exemptions from the overtime pay provisions and the subparts in 
which these exemptions are discussed include the section 13(b)(12) 
exemption (agriculture and irrigation) discussed in subpart E of this 
part, the section 13(b)(13) exemption (agriculture and livestock auction 
operations) discussed in subpart G of this part, the section 13(b)(14) 
exemption (country elevators) discussed in subpart H of this part, the 
section 13(b)(15) exemption (cotton ginning and sugar processing) 
discussed in subpart I of this part, and the section 13(b)(16) exemption 
(fruit and vegetable harvest transportation) discussed in subpart J of 
this part.
    (c) An exemption in section 13(d) of the Act from the minimum wage, 
overtime pay, and child labor provisions for certain homeworkers making 
holly and evergreen wreaths is discussed in subpart K of this part.



Sec. 780.4  Matters not discussed in this part.

    The application of provisions of the Fair Labor Standards Act other 
than the exemptions referred to in Sec. 780.3 is not considered in this 
part 780. Interpretative bulletins published elsewhere in the Code of 
Federal Regulations deal with such subjects as the general coverage of 
the Act (part 776 of this chapter) and of the child labor provisions 
(subpart G of part 1500 of this title which includes a discussion of the 
exemption for children employed in agriculture outside of school hours), 
partial overtime exemptions provided for industries of a seasonal nature 
under sections 7(c) and 7(d) (part 526 of this chapter) and for 
industries with marked seasonal peaks of operations under section 7(d) 
(part 526 of this chapter), methods of payment of wages (part 531 of 
this chapter), computation and payment of overtime compensation (part 
778 of this chapter), and hours worked (part 785 of this chapter). 
Regulations on recordkeeping are contained in part 516 of this chapter 
and regulations defining exempt administrative, executive, and 
professional employees, and outside salesmen are contained in part 541 
of this chapter. Regulations and interpretations on other subjects 
concerned with the application of the Act are listed in the table of 
contents to this chapter. Copies of any of these documents may be 
obtained from any office of the Wage and Hour Division.



Sec. 780.5  Significance of official interpretations.

    The regulations in this part contain the official interpretations of 
the Department of Labor with respect to the application under described 
circumstances of the provisions of law which they discuss. These 
interpretations indicate the construction of the law which the Secretary 
of Labor and the Administrator believe to be correct

[[Page 547]]

and which will guide them in the performance of their duties under the 
Act unless and until they are otherwise directed by authoritative 
decisions of the courts or conclude, upon reexamination of an 
interpretation, that it is incorrect.



Sec. 780.6  Basic support for interpretations.

    The ultimate decisions on interpretations of the Act are made by the 
courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
bulletin are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (Reorg. Pl. 6 of 1950, 64 Stat. 1263; Gen. 
Ord. 45A, May 24, 1950; 15 FR 3290; Secretary's Order 13-71, May 4, 
1971, FR; Secretary's Order 15-71, May 4, 1971, FR). Interpretative 
rules under the Act as amended in 1966 are also authorized by section 
602 of the Fair Labor Standards Amendments of 1966 (80 Stat. 830), which 
provides: ``On and after the date of the enactment of this Act the 
Secretary is authorized to promulgate necessary rules, regulations, or 
orders with regard to the amendments made by this Act.'' As included in 
the regulations in this part, these interpretations are believed to 
express the intent of the law as reflected in its provisions and as 
construed by the courts and evidenced by its legislative history. 
References to pertinent legislative history are made in this bulletin 
where it appears that they will contribute to a better understanding of 
the interpretations.



Sec. 780.7  Reliance on interpretations.

    The interpretations of the law contained in this part are official 
interpretations which may be relied upon as provided in section 10 of 
the Portal-to-Portal Act of 1947. In addition, the Supreme Court has 
recognized that such interpretations of this Act ``provide a practical 
guide to employers and employees as to how the office representing the 
public interest in its enforcement will seek to apply it'' and 
``constitute a body of experience and informed judgment to which courts 
and litigants may properly resort for guidance.'' Further, as stated by 
the Court: ``Good administration of the Act and good judicial 
administration alike require that the standards of public enforcement 
and those for determining private rights shall be at variance only where 
justified by very good reasons.'' (Skidmore v. Swift, 323 U.S. 134). 
Some of the interpretations in this part are interpretations of 
exemption provisions as they appeared in the original Act before 
amendment in 1949, 1961, and 1966, which have remained unchanged because 
they are consistent with the amendments. These interpretations may be 
said to have congressional sanction because ``When Congress amended the 
Act in 1949 it provided that pre-1949 rulings and interpretations by the 
Administrator should remain in effect unless inconsistent with the 
statute as amended. 63 Stat. 920.'' (Mitchell v. Kentucky Finance Co., 
359 U.S. 290; accord, Maneja v. Waialua, 349 U.S. 254.)



Sec. 780.8  Interpretations made, continued, and superseded by this part.

    On and after publication of this part 780 in the Federal Register, 
the interpretations contained therein shall be in effect and shall 
remain in effect until they are modified, rescinded, or withdrawn. This 
part supersedes and replaces the interpretations previously published in 
the Federal Register and Code of Federal Regulations as this part 780. 
Prior opinions, rulings, and interpretations and prior enforcement 
policies which are not inconsistent with the interpretations in this 
part or with the Fair Labor Standards Act as amended by the Fair Labor 
Standards Amendments of 1966 are continued in

[[Page 548]]

effect; all other opinions, rulings, interpretations, and enforcement 
policies on the subjects discussed in the interpretations in this part 
are rescinded and withdrawn. The interpretations in this part provide 
statements of general principles applicable to the subjects discussed 
and illustrations of the application of these principles to situations 
that frequently arise. They do not and cannot refer specifically to 
every problem which may be met in the consideration of the exemptions 
discussed. The omission to discuss a particular problem in this part or 
in interpretations supplementing it should not be taken to indicate the 
adoption of any position by the Secretary of Labor or the Administrator 
with respect to such problem or to constitute an administrative 
interpretation or practice or enforcement policy. Questions on matters 
not fully covered by this bulletin may be addressed to the Administrator 
of the Wage and Hour Division, U.S. Department of Labor, Washington, DC 
20210, or to any Regional Office of the Division.



Sec. 780.9  Related exemptions are interpreted together.

    The interpretations contained in the several subparts of this part 
780 consider separately a number of exemptions which affect employees 
who perform activities in or connected with agriculture and its 
products. These exemptions deal with related subject matter and varying 
degrees of relationships between them were the subject of consideration 
in Congress before their enactment. Together they constitute an 
expression in some detail of existing Federal policy on the lines to be 
drawn in the industries connected with agriculture and agricultural 
products between those employees to whom the pay provisions of the Act 
are to be applied and those whose exclusion in whole or in part from the 
Act's requirements has been deemed justified. The courts have indicated 
that these exemptions, because of their relationship to one another, 
should be construed together insofar as possible so that they form a 
consistent whole. Consideration of the language and history of a related 
exemption or exemptions is helpful in ascertaining the intended scope 
and application of an exemption whose effect might otherwise not be 
clear (Addison v. Holly Hill, 322 U.S. 607; Maneja v. Waialua, 349 U.S. 
254; Bowie v. Gonzales (C.A. 1), 117 F. 2d 11). In the interpretations 
of the several exemptions discussed in the various subparts of this part 
780, effect has been given to these principles and each exemption has 
been considered in its relation to others in the group as well as to the 
combined effect of the group as a whole.



Sec. 780.10  Workweek standard in applying exemptions.

    The workweek is the unit of time to be taken as the standard in 
determining the applicability of an exemption. An employee's workweek is 
a fixed and regularly recurring period of 168 hours--seven consecutive 
24-hour periods. It need not coincide with the calendar week. If in any 
workweek an employee does only exempt work, he is exempt from the wage 
and hour provisions of the Act during that workweek, irrespective of the 
nature of his work in any other workweek or workweeks. An employee may 
thus be exempt in 1 workweek and not in the next. But the burden of 
effecting segregation between exempt and nonexempt work as between 
particular workweeks is upon the employer.



Sec. 780.11  Exempt and nonexempt work during the same workweek.

    Where an employee in the same workweek performs work which is exempt 
under one section of the Act and also engages in work to which the Act 
applies but is not exempt under some other section of the Act, he is not 
exempt that week, and the wage and hour requirements of the Act are 
applicable (see Mitchell v. Hunt, 263 F. 2d 913; Mitchell v. Maxfield, 
12 WH Cases 792 (S.D. Ohio), 29 Labor Cases 69, 781; Jordan v. Stark 
Bros. Nurseries, 45 F. Supp. 769; McComb v. Puerto Rico Tobacco 
Marketing Co-op Ass'n, 80 F. Supp. 953, affirmed 181 F. 2d 697; Walling 
v. Peacock Corp., 58 F. Supp. 880-883). On the other hand, an employee 
who performs exempt activities during a workweek will not lose the 
exemption by virtue of the fact that he performs other activities 
outside the scope of the exemption if

[[Page 549]]

the other activities are not covered by the Act.



Sec. 780.12  Work exempt under another section of the Act.

    The combination (tacking) of exempt work under one exemption with 
exempt work under another exemption is permitted. For instance, the 
overtime pay requirements are not considered applicable to an employee 
who does work within section 13(b)(12) for only part of a workweek if 
all of the covered work done by him during the remainder of the workweek 
is within one or more equivalent exemptions under other provisions of 
the Act. If the scope of such exemptions is not the same, however, the 
exemption applicable to the employee is equivalent to that provided by 
whichever exemption provision is more limited in scope. For instance, an 
employee who devotes part of a workweek to work within section 13(b)(12) 
and the remainder to work exempt under section 7(c) must receive the 
minimum wage and must be paid time and one-half for his overtime work 
during that week for hours over 10 a day or 50 a week, whichever 
provides the greater compensation. Each activity is tested separately 
under the applicable exemption as though it were the sole activity of 
the employee for the whole workweek in question. The availability of a 
combination exemption depends on whether the employee meets all the 
requirements of each exemption which is sought to combine.



                 Subpart B_General Scope of Agriculture

                              Introductory



Sec. 780.100  Scope and significance of interpretative bulletin.

    Subpart A of this part 780, this subpart B and subparts C, D, and E 
of this part together constitute the official interpretative bulletin of 
the Department of Labor with respect to the meaning and application of 
sections 3(f), 13(a)(6), and 13(b)(12) of the Fair Labor Standards Act 
of 1938, as amended. Section 3(f) defines ``agriculture'' as the term is 
used in the Act. Section 13(a)(6) provides exemption from the minimum 
wage and overtime pay provisions of the Act for certain employees 
employed in ``agriculture,'' as so defined. Section 13(b)(12) provides 
an overtime exemption for any employee employed in agriculture. As 
appears more fully in subpart A of this part 780, interpretations in 
this bulletin with respect to the provisions of the Act discussed are 
official interpretations upon which reliance may be placed and which 
will guide the Secretary of Labor and the Administrator in the 
performance of their duties under the Act.



Sec. 780.101  Matters discussed in this subpart.

    Section 3(f) defines ``agriculture'' as this term is used in the 
Act. Those principles and rules which govern the interpretation of the 
meaning and application of the Act's definition of ``agriculture'' in 
section 3(f) and of the terms used in it are set forth in this subpart 
B. Included is a discussion of the application of the definition in 
section 3(f) to the employees of farmers' cooperative associations. In 
addition, the official interpretations of section 3(f) of the Act and 
the terms which appear in it are to be taken into consideration in 
determining the meaning intended by the use of like terms in particular 
related exemptions which are provided by the Act.



Sec. 780.102  Pay requirements for agricultural employees.

    Section 6(a)(5) of the Act provides that any employee employed in 
agriculture must be paid at least $1.30 an hour beginning February 1, 
1969. However, there are certain exemptions provided in the Act for 
agricultural workers, as previously mentioned. (See Sec. Sec. 780.3 and 
780.4.)



Sec. 780.103  ``Agriculture'' as defined by the Act.

    Section 3(f) of the Act defines ``agriculture'' as follows:

    ``Agriculture'' includes farming in all its branches and among other 
things includes the cultivation and tillage of the soil, dairying, the 
production, cultivation, growing, and harvesting of any agricultural or 
horticultural commodities (including commodities defined as agricultural 
commodities in section 15(g) of the Agricultural Marketing Act, as 
amended), the raising of livestock,

[[Page 550]]

bees, fur-bearing animals, or poultry, and any practices (including any 
forestry or lumbering operations) performed by a farmer or on a farm as 
an incident to or in conjunction with such farming operations, including 
preparation for market, delivery to storage or to market or to carriers 
for transportation to market.



Sec. 780.104  How modern specialization affects the scope of agriculture.

    The effect of modern specialization on agriculture has been 
discussed by the U.S. Supreme Court as follows:

    Whether a particular type of activity is agricultural depends, in 
large measure, upon the way in which that activity is organized in a 
particular society. The determination cannot be made in the abstract. In 
less advanced societies the agricultural function includes many types of 
activity which, in others, are not agricultural. The fashioning of 
tools, the provision of fertilizer, the processing of the product, to 
mention only a few examples, are functions which, in some societies, are 
performed on the farm by farmers as part of their normal agricultural 
routine. Economic progress, however, is characterized by a progressive 
division of labor and separation of function. Tools are made by a tool 
manufacturer, who specializes in that kind of work and supplies them to 
the farmer. The compost heap is replaced by factory produced 
fertilizers. Power is derived from electricity and gasoline rather than 
supplied by the farmer's mules. Wheat is ground at the mill. In this way 
functions which are necessary to the total economic process of supplying 
an agricultural produce become, in the process of economic development 
and specialization, separate and independent productive functions 
operated in conjunction with the agricultural function but no longer a 
part of it. Thus the question as to whether a particular type of 
activity is agricultural is not determined by the necessity of the 
activity to agriculture nor by the physical similarity of the activity 
to that done by farmers in other situations. The question is whether the 
activity in the particular case is carried on as part of the 
agricultural function or is separately organized as an independent 
productive activity. The farmhand who cares for the farmer's mules or 
prepares his fertilizer is engaged in agriculture. But the maintenance 
man in a powerplant and the packer in a fertilizer factory are not 
employed in agriculture, even if their activity is necessary to farmers 
and replaces work previously done by farmers. The production of power 
and the manufacture of fertilizer are independent productive functions, 
not agriculture (see Farmers Reservoir Co. v. McComb, 337 U.S. 755 cf. 
Maneja v. Waialua, 349 U.S. 254).



Sec. 780.105  ``Primary'' and ``secondary'' agriculture under section 3(f).

    (a) Section 3(f) of the Act contains a very comprehensive definition 
of the term ``agriculture.'' The definition has two distinct branches 
(see Farmers Reservoir Co. v. McComb, 337 U.S. 755). One has relation to 
the primary meaning of agriculture; the other gives to the term a 
somewhat broader secondary meaning for purposes of the Act (NLRB v. Olaa 
Sugar Co., 242 F. 2d 714).
    (b) First, there is the primary meaning. This includes farming in 
all its branches. Listed as being included ``among other things'' in the 
primary meaning are certain specific farming operations such as 
cultivation and tillage of the soil, dairying the production, 
cultivation, growing and harvesting of any agricultural or horticultural 
commodities and the raising of livestock, bees, fur-bearing animals or 
poultry. If an employee is employed in any of these activities, he is 
engaged in agriculture regardless of whether he is employed by a farmer 
or on a farm. (Farmers Reservoir Co. v. McComb, supra; Holtville Alfalfa 
Mills v. Wyatt, 230 F. 2d 398.)
    (c) Then there is the secondary meaning of the term. The second 
branch includes operations other than those which fall within the 
primary meaning of the term. It includes any practices, whether or not 
they are themselves farming practices, which are performed either by a 
farmer or on a farm as an incident to or in conjunction with ``such'' 
farming operations (Farmers Reservoir Co. v. McComb, supra; NLRB v. Olaa 
Sugar Co., 242 F. 2d 714; Maneja v. Waialua, 349 U.S. 254).
    (d) Employment not within the scope of either the primary or the 
secondary meaning of ``agriculture'' as defined in section 3(f) is not 
employment in agriculture. In other words, employees not employed in 
farming or by a farmer or on a farm are not employed in agriculture.

[[Page 551]]

             Exemption for ``Primary'' Agriculture Generally



Sec. 780.106  Employment in ``primary'' agriculture is farming 
regardless of why or where work is performed.

    When an employee is engaged in direct farming operations included in 
the primary definition of ``agriculture,'' the purpose of the employer 
in performing the operations is immaterial. For example, where an 
employer owns a factory and a farm and operates the farm only for 
experimental purposes in connection with the factory, those employees 
who devote all their time during a particular workweek to the direct 
farming operations, such as the growing and harvesting of agricultural 
commodities, are considered as employed in agriculture. It is also 
immaterial whether the agricultural or horticultural commodities are 
grown in enclosed houses, as in greenhouses or mushroom cellars, or in 
an open field. Similarly, the mere fact that production takes place in a 
city or on industrial premises, such as in hatcheries, rather than in 
the country or on premises possessing the normal characteristics of a 
farm makes no difference (see Jordan v. Stark Brothers Nurseries, 45 F. 
Supp. 769; Miller Hatcheries v. Boyer, 131 F. 2d 283; Damutz v. 
Pinchbeck, 158 F. 2d 882).

                       Farming in All Its Branches



Sec. 780.107  Scope of the statutory term.

    The language ``farming in all its branches'' includes all 
activities, whether listed in the definition or not, which constitute 
farming or a branch thereof under the facts and circumstances.



Sec. 780.108  Listed activities.

    Section 3(f), in defining the practices included as ``agriculture'' 
in its statutory secondary meaning, refers to the activities 
specifically listed in the earlier portion of the definition (the 
``primary'' meaning) as ``farming'' operations. They may therefore be 
considered as illustrative of ``farming in all its branches'' as used in 
the definition.



Sec. 780.109  Determination of whether unlisted activities are ``farming.''

    Unlike the specifically enumerated operations, the phrase ``farming 
in all its branches'' does not clearly indicate its scope. In 
determining whether an operation constitutes ``farming in all its 
branches,'' it may be necessary to consider various circumstances such 
as the nature and purpose of the operations of the employer, the 
character of the place where the employee performs his duties, the 
general types of activities there conducted, and the purpose and 
function of such activities with respect to the operations carried on by 
the employer. The determination may involve a consideration of the 
principles contained in Sec. 780.104. For example, fish farming 
activities fall within the scope of the meaning of ``farming in all its 
branches'' and employers engaged in such operations would be employed in 
agriculture. On the other hand, so-called ``bird dog'' operations of the 
citrus fruit industry consisting of the purchase of fruit unsuitable for 
packing and of the transportation and sale of the fruit to canning 
plants do not qualify as ``farming'' and, consequently, employees 
engaged in such operations are not employed in agriculture. (See Chapman 
v. Durkin, 214 F. 2d 360 cert. denied 348 U.S. 897; Fort Mason Fruit Co. 
v. Durkin, 214 F. 2d 363 cert. denied, 348 U.S. 897.) However, employees 
gathering the fruit at the groves are considered agricultural workers 
because they are engaged in harvesting operations. (For exempt 
transportation, see subpart J of this part.)

                   Cultivation and Tillage of the Soil



Sec. 780.110  Operations included in ``cultivation and tillage of the soil.''

    ``Cultivation and tillage of the soil'' includes all the operations 
necessary to prepare a suitable seedbed, eliminate weed growth, and 
improve the physical condition of the soil. Thus, grading or leveling 
land or removing rock or other matter to prepare the ground for a proper 
seedbed or building terraces on farmland to check soil erosion are 
included. The application of water, fertilizer, or limestone to farmland 
is also included. (See in this connection

[[Page 552]]

Sec. Sec. 780.128 et seq. Also see Farmers Reservoir Co. v. McComb, 337 
U.S. 755.) Other operations such as the commercial production and 
distribution of fertilizer are not included within the scope of 
agriculture. (McComb v. Super-A Fertilizer Works, 165 F. 2d 824; Farmers 
Reservoir Co. v. McComb, 337 U.S. 755.)

                                Dairying



Sec. 780.111  ``Dairying'' as a farming operation.

    ``Dairying'' includes the work of caring for and milking cows or 
goats. It also includes putting the milk in containers, cooling it, and 
storing it where done on the farm. The handling of milk and cream at 
receiving stations is not included. Such operations as separating cream 
from milk, bottling milk and cream, or making butter and cheese may be 
considered as ``dairying'' under some circumstances, or they may be 
considered practices under the ``secondary'' meaning of the definition 
when performed by a farmer or on a farm, if they are not performed on 
milk produced by other farmers or produced on other farms. (See the 
discussions in Sec. Sec. 780.128 et seq.)

                Agricultural or Horticultural Commodities



Sec. 780.112  General meaning of ``agriculture or horticultural commodities.''

    Section 3(f) of the Act defines as ``agriculture'' the ``production, 
cultivation, growing, and harvesting'' of ``agricultural or 
horticultural commodities,'' and employees employed in such operations 
are engaged in agriculture. In general, within the meaning of the Act, 
``agricultural or horticultural commodities'' refers to commodities 
resulting from the application of agricultural or horticultural 
techniques. Insofar as the term refers to products of the soil, it means 
commodities that are planted and cultivated by man. Among such 
commodities are the following: Grains, forage crops, fruits, vegetables, 
nuts, sugar crops, fiber crops, tobacco, and nursery products. Thus, 
employees engaged in growing wheat, corn, hay, onions, carrots, sugar 
cane, seed, or any other agricultural or horticultural commodity are 
engaged in ``agriculture.'' In addition to such products of the soil, 
however, the term includes domesticated animals and some of their 
products such as milk, wool, eggs, and honey. The term does not include 
commodities produced by industrial techniques, by exploitation of 
mineral wealth or other natural resources, or by uncultivated natural 
growth. For example, peat humus or peat moss is not an agricultural 
commodity. Wirtz v. Ti Ti Peat Humus Co., 373 f(2d) 209 (C.A.4).



Sec. 780.113  Seeds, spawn, etc.

    Seeds and seedlings of agricultural and horticultural plants are 
considered ``agricultural or horticultural commodities.'' Thus, since 
mushrooms and beans are considered ``agricultural or horticultural 
commodities,'' the spawn of mushrooms and bean sprouts are also so 
considered and the production, cultivation, growing, and harvesting of 
mushroom spawn or bean sprouts is ``agriculture'' within the meaning of 
section 3(f).



Sec. 780.114  Wild commodities.

    Employees engaged in the gathering or harvesting of wild commodities 
such as mosses, wild rice, burls and laurel plants, the trapping of wild 
animals, or the appropriation of minerals and other uncultivated 
products from the soil are not employed in ``the production, 
cultivation, growing, and harvesting of agricultural or horticultural 
commodities.'' However, the fact that plants or other commodities 
actually cultivated by men are of a species which ordinarily grows wild 
without being cultivated does not preclude them from being classed as 
``agricultural or horticultural commodities.'' Transplanted branches 
which were cut from plants growing wild in the field or forest are 
included within the term. Cultivated blueberries are also included.



Sec. 780.115  Forest products.

    Trees grown in forests and the lumber derived therefrom are not 
``agricultural or horticultural commodities.'' Christmas trees, whether 
wild or planted, are also not so considered.

[[Page 553]]

It follows that employment in the production, cultivation, growing, and 
harvesting of such trees or timber products is not sufficient to bring 
an employee within section 3(f) unless the operation is performed by a 
farmer or on a farm as an incident to or in conjunction with his or its 
farming operations. On the latter point, see Sec. Sec. 780.160 through 
780.164 which discuss the question of when forestry or lumbering 
operations are incident to or in conjunction with farming operations so 
as to constitute ``agriculture.'' For a discussion of the exemption in 
section 13(a)(13) of the Act for certain forestry and logging operations 
in which not more than eight employees are employed, see part 788 of 
this chapter.

[74 FR 26014, May 29, 2009]



Sec. 780.116  Commodities included by reference to the Agricultural
Marketing Act.

    (a) Section 3(f) expressly provides that the term ``agricultural or 
horticultural commodities'' shall include the commodities defined as 
agricultural commodities in section 15(g) of the Agricultural Marketing 
Act, as amended (12 U.S.C. 1141-1141j). Section 15(g) of that Act 
provides: ``As used in this act, the term `agricultural commodity' 
includes, in addition to other agricultural commodities, crude gum 
(oleoresin) from a living tree, and the following products as processed 
by the original producers of the crude gum (oleoresin) from which 
derived: Gum spirits of turpentine, and gum resin, as defined in the 
Naval Stores Act, approved March 3, 1923'' (7 U.S.C. 91-99). As defined 
in the Naval Stores Act, `` `gum spirits of turpentine' means spirits of 
turpentine made from gum (oleoresin) from a living tree'' and `` `gum 
rosin' means rosin remaining after the distillation of gum spirits of 
turpentine.'' The production of these commodities is therefore within 
the definition of ``agriculture.''
    (b) Since the only oleoresin included within section 15(g) of the 
Agricultural Marketing Act is that derived from a living tree, the 
production of oleoresin from stumps or any sources other than living 
trees is not within section 3(f). If turpentine or rosin is produced in 
any manner other than the processing of crude gum from living trees, as 
by digging up pine stumps and grinding them or by distilling the 
turpentine with steam from the oleoresin within or extracted from the 
wood, the production of the turpentine or rosin is not included in 
section 3(f).
    (c) Similarly, the production of gum turpentine or gum rosin is not 
included when these are produced by anyone other than the original 
producer of the crude gum from which they are derived. Thus, if a 
producer of turpentine or rosin from oleoresin from living trees makes 
such products not only from oleoresin produced by him but also from 
oleoresin delivered to him by others, he is not producing a product 
defined as an agricultural commodity and employees engaged in his 
production operations are not agricultural employees. (For an 
explanation of the inclusion of the word ``production'' in section 3(f), 
see Sec. 780.117(b).) It is to be noted, however, that the production 
of gum turpentine and gum rosin from crude gum (oleoresin) derived from 
a living tree is included within section 3(f) when performed at a 
central still for and on account of the producer of the crude gum. But 
where central stills buy the crude gum they process and are the owners 
of the gum turpentine and gum rosin that are derived from such crude gum 
and which they market for their own account, the production of such gum 
turpentine and gum rosin is not within section 3(f).

   ``Production, Cultivation, Growing, and Harvesting'' of Commodities



Sec. 780.117  ``Production, cultivation, growing.''

    (a) The words ``production, cultivation, growing'' describe actual 
raising operations which are normally intended or expected to produce 
specific agricultural or horticultural commodities. The raising of such 
commodities is included even though done for purely experimental 
purposes. The ``growing'' may take place in growing media other than 
soil as in the case of hydroponics. The words do not include operations 
undertaken or conducted for purposes not concerned with obtaining any 
specific agricultural or horticultural commodity. Thus operations which 
are

[[Page 554]]

merely preliminary, preparatory or incidental to the operations whereby 
such commodities are actually produced are not within the terms 
``production, cultivation, growing''. For example, employees of a 
processor of vegetables who are engaged in buying vegetable plants and 
distributing them to farmers with whom their employer has acreage 
contracts are not engaged in the ``production, cultivation, growing'' of 
agricultural or horticultural commodities. The furnishing of mushroom 
spawn by a canner of mushrooms to growers who supply the canner with 
mushrooms grown from such spawn does not constitute the ``growing'' of 
mushrooms. Similarly, employees of the employer who is engaged in 
servicing insecticide sprayers in the farmer's orchard and employees 
engaged in such operations as the testing of soil or genetics research 
are not included within the terms. (However, see Sec. Sec. 780.128, et 
seq., for possible exemption on other grounds.) The word ``production,'' 
used in conjunction with ``cultivation, growing, and harvesting,'' 
refers, in its natural and unstrained meaning, to what is derived and 
produced from the soil, such as any farm produce. Thus, ``production'' 
as used in section 3(f) does not refer to such operations as the 
grinding and processing of sugarcane, the milling of wheat into flour, 
or the making of cider from apples. These operations are clearly the 
processing of the agricultural commodities and not the production of 
them (Bowie v. Gonzalez, 117 F. 2d 11).
    (b) The word ``production'' was added to the definition of 
``agriculture'' in order to take care of a special situation--the 
production of turpentine and gum rosins by a process involving the 
tapping of living trees. (See S. Rep. No. 230, 71st Cong., second sess. 
(1930); H.R. Rep. No. 2738, 75th Cong., third sess. p. 29 (1938).) To 
insure the inclusion of this process within the definition, the word 
``production'' was added to section 3(f) in conjunction with the words 
``including commodities defined as agricultural commodities in section 
15(g) of the Agricultural Marketing Act, as amended'' (Bowie v. 
Gonzalez, 117 F. 2d 11). It is clear, therefore, that ``production'' is 
not used in section 3(f) in the artificial and special sense in which it 
is defined in section 3(j). It does not exempt an employee merely 
because he is engaged in a closely related process or occupation 
directly essential to the production of agricultural or horticultural 
commodities. To so construe the term would render unnecessary the 
remainder of what Congress clearly intended to be a very elaborate and 
comprehensive definition of ``agriculture.'' The legislative history of 
this part of the definition was considered by the U.S. Supreme Court in 
reaching these conclusions in Farmers Reservoir Co. v. McComb, 337 U.S. 
755.



Sec. 780.118  ``Harvesting.''

    (a) The term ``Harvesting'' as used in section 3(f) includes all 
operations customarily performed in connection with the removal of the 
crops by the farmer from their growing position (Holtville Alfalfa Mills 
v. Wyatt, 230 F. 2d 398; NLRB v. Olaa Sugar Co., 242 F. 2d 714). 
Examples include the cutting of grain, the picking of fruit, the 
stripping of bluegrass seed, and the digging up of shrubs and trees 
grown in a nursery. Employees engaged on a plantation in gathering 
sugarcane as soon as it has been cut, loading it, and transporting the 
cane to a concentration point on the farm are engaged in ``Harvesting'' 
(Vives v. Serralles, 145 F. 2d 552).
    (b) The combining of grain is exempt either as harvesting or as a 
practice performed on a farm in conjunction with or as an incident to 
farming operations. (See in this connection Holtville Alfalfa Mills v. 
Wyatt, 230 F. 2d 398.) ``Harvesting'' does not extend to operations 
subsequent to and unconnected with the actual process whereby 
agricultural or horticultural commodities are severed from their 
attachment to the soil or otherwise reduced to possession. For example, 
the processing of sugarcane into raw sugar (Bowie v. Gonzalez, 117 F. 2d 
11, and see Maneja v. Waialua, 349 U.S. 254), or the vining of peas are 
not included. For a further discussion on vining employees, see Sec. 
780.139. While transportation to a concentration point on the farm may 
be included, ``harvesting'' never extends to transportation or other 
operations off the farm. Off-the-farm transportation can only be 
``agriculture'' when

[[Page 555]]

performed by the farmer as an incident to his farming operations 
(Chapman v. Durkin, 214 F. 2d 360 cert. denied 348 U.S. 897; Fort Mason 
Fruit Co. v. Durkin, 214 F. 2d 363 cert. denied 348 U.S. 897). For 
further discussion of this point, see Sec. Sec. 780.144 through 
780.147; Sec. Sec. 780.152 through 780.157.

       Raising of Livestock, Bees, Fur-bearing Animals, or Poultry



Sec. 780.119  Employment in the specified operations generally.

    Employees are employed in the raising of livestock, bees, fur-
bearing animals or poultry only if their operations relate to animals of 
the type named and constitute the ``raising'' of such animals. If these 
two requirements are met, it makes no difference for what purpose the 
animals are raised or where the operations are performed. For example, 
the fact that cattle are raised to obtain serum or virus or that chicks 
are hatched in a commercial hatchery does not affect the status of the 
operations under section 3(f).



Sec. 780.120  Raising of ``livestock.''

    The meaning of the term ``livestock'' as used in section 3(f) is 
confined to the ordinary use of the word and includes only domestic 
animals ordinarily raised or used on farms. That Congress did not use 
this term in its generic sense is supported by the specific enumeration 
of activities, such as the raising of fur-bearing animals, which would 
be included in the generic meaning of the word. The term includes the 
following animals, among others: Cattle (both dairy and beef cattle), 
sheep, swine, horses, mules, donkeys, and goats. It does not include 
such animals as albino and other rats, mice, guinea pigs, and hamsters, 
which are ordinarily used by laboratories for research purposes 
(Mitchell v. Maxfield, 12 WH Cases 792 (S.D. Ohio), 29 Labor Cases 68, 
781). Fish are not ``livestock'' (Dunkly v. Erich, 158 F. 2d 1), but 
employees employed in propagating or farming of fish may qualify for 
exemption under section 13(a)(6) or 13(b)(12) of the Act as stated in 
Sec. 780.109 as well as under section 13(a)(5), as explained in part 
784 of this chapter.



Sec. 780.121  What constitutes ``raising'' of livestock.

    The term ``raising'' employed with reference to livestock in section 
3(f) includes such operations as the breeding, fattening, feeding, and 
general care of livestock. Thus, employees exclusively engaged in 
feeding and fattening livestock in stock pens where the livestock 
remains for a substantial period of time are engaged in the ``raising'' 
of livestock. The fact that the livestock is purchased to be fattened 
and is not bred on the premises does not characterize the fattening as 
something other than the ``raising'' of livestock. The feeding and care 
of livestock does not necessarily or under all circumstances constitute 
the ``raising'' of such livestock, however. It is clear, for example, 
that animals are not being ``raised'' in the pens of stockyards or the 
corrals of meat packing plants where they are confined for a period of a 
few days while en route to slaughter or pending their sale or shipment. 
Therefore, employees employed in these places in feeding and caring for 
the constantly changing group of animals cannot reasonably be regarded 
as ``raising'' livestock (NLRB v. Tovrea Packing Co., 111 F. 2d 626, 
cert. denied 311 U.S. 668; Walling v. Friend, 156 F. 2d 429). Employees 
of a cattle raisers' association engaged in the publication of a 
magazine about cattle, the detection of cattle thefts, the location of 
stolen cattle, and apprehension of cattle thieves are not employed in 
raising livestock and are not engaged in agriculture.



Sec. 780.122  Activities relating to race horses.

    Employees engaged in the breeding, raising, and training of horses 
on farms for racing purposes are considered agricultural employees. 
Included are such employees as grooms, attendants, exercise boys, and 
watchmen employed at the breeding or training farm. On the other hand, 
employees engaged in the racing, training, and care of horses and other 
activities performed off the farm in connection with commercial racing 
are not employed in agriculture. For this purpose, a training track at a 
racetrack is not a farm. Where a farmer is engaged in both the raising 
and commercial racing of race horses, the

[[Page 556]]

activities performed off the farm by his employees as an incident to 
racing, such as the training and care of the horses, are not practices 
performed by the farmer in his capacity as a farmer or breeder as an 
incident to his raising operations. Employees engaged in the feeding, 
care, and training of horses which have been used in commercial racing 
and returned to a breeding or training farm for such care pending entry 
in subsequent races are employed in agriculture.



Sec. 780.123  Raising of bees.

    The term ``raising of * * * bees'' refers to all of those activities 
customarily performed in connection with the handling and keeping of 
bees, including the treatment of disease and the raising of queens.



Sec. 780.124  Raising of fur-bearing animals.

    (a) The term ``fur-bearing animals'' has reference to animals which 
bear fur of marketable value and includes, among other animals, rabbits, 
silver foxes, minks, squirrels, and muskrats. Animals whose fur lacks 
marketable value, such as albino and other rats, mice, guinea pigs, and 
hamsters, are not ``fur-bearing animals'' which within the meaning of 
section 3(f).
    (b) The term ``raising'' of fur-bearing animals includes all those 
activities customarily performed in connection with breeding, feeding 
and caring for fur-bearing animals, including the treatment of disease. 
Such treatment of disease has reference only to disease of the animals 
being bred and does not refer to the use of such animals or their fur in 
experimenting with disease or treating diseases in others. The fact that 
muskrats or other fur-bearing animals are propagated in open water or 
marsh areas rather than in pens does not prevent the raising of such 
animals from constituting the ``raising of fur-bearing animals.'' Where 
wild fur-bearing animals propagate in their native habitat and are not 
raised as above described, the trapping or hunting of such animals and 
activities incidental thereto are not included within section 3(f).



Sec. 780.125  Raising of poultry in general.

    (a) The term ``poultry'' includes domesticated fowl and game birds. 
Ducks and pigeons are included. Canaries and parakeets are not included.
    (b) The ``raising'' of poultry includes the breeding, hatching, 
propagating, feeding, and general care of poultry. Slaughtering, which 
is the antithesis of ``raising,'' is not included. To constitute 
``agriculture,'' slaughtering must come within the secondary meaning of 
the term ``agriculture.'' The temporary feeding and care of chickens and 
other poultry for a few days pending sale, shipment or slaughter is not 
the ``raising'' of poultry. However, feeding, fattening and caring for 
poultry over a substantial period may constitute the ``raising'' of 
poultry.



Sec. 780.126  Contract arrangements for raising poultry.

    Feed dealers and processors sometimes enter into contractual 
arrangements with farmers under which the latter agree to raise to 
marketable size baby chicks supplied by the former who also undertake to 
furnish all the required feed and possibly additional items. Typically, 
the feed dealer or processor retains title to the chickens until they 
are sold. Under such an arrangement, the activities of the farmers and 
their employees in raising the poultry are clearly within section 3(f). 
The activities of the feed dealer or processor, on the other hand, are 
not ``raising of poultry'' and employees engaged in them cannot be 
considered agricultural employees on that ground. Employees of the feed 
dealer or processor who perform work on a farm as an incident to or in 
conjunction with the raising of poultry on the farm are employed in 
``secondary'' agriculture (see Sec. Sec. 780.137 et seq. and Johnston 
v. Cotton Producers Assn., 244 F. 2d 553).



Sec. 780.127  Hatchery operations.

    Hatchery operations incident to the breeding of poultry, whether 
performed in a rural or urban location, are the ``raising of poultry'' 
(Miller Hatcheries v. Boyer, 131 F. 2d 283). The application of section 
3(f) to employees of hatcheries is further discussed in Sec. Sec. 
780.210 through 780.214.

[[Page 557]]

  Practices Exempt Under ``Secondary'' Meaning of Agriculture Generally



Sec. 780.128  General statement on ``secondary'' agriculture.

    The discussion in Sec. Sec. 780.106 through 780.127 relates to the 
direct farming operations which come within the ``primary'' meaning of 
the definition of ``agriculture.'' As defined in section 3(f) 
``agriculture'' includes not only the farming activities described in 
the ``primary'' meaning but also includes, in its ``secondary'' meaning, 
``any practices (including any forestry or lumbering operations) 
performed by a farmer or on a farm as an incident to or in conjunction 
with such farming operations, including preparation for market delivery 
to storage or to market or to carriers for transportation to market.'' 
The legislative history makes it plain that this language was 
particularly included to make certain that independent contractors such 
as threshers of wheat, who travel around from farm to farm to assist 
farmers in what is recognized as a purely agricultural task and also to 
assist a farmer in getting his agricultural goods to market in their raw 
or natural state, should be included within the definition of 
agricultural employees (see Bowie v. Gonzalez, 117 F. 2d 11; 81 Cong. 
Rec. 7876, 7888).



Sec. 780.129  Required relationship of practices to farming operations.

    To come within this secondary meaning, a practice must be performed 
either by a farmer or on a farm. It must also be performed either in 
connection with the farmer's own farming operations or in connection 
with farming operations conducted on the farm where the practice is 
performed. In addition, the practice must be performed ``as an incident 
to or in conjunction with'' the farming operations. No matter how 
closely related it may be to farming operations, a practice performed 
neither by a farmer nor on a farm is not within the scope of the 
``secondary'' meaning of ``agriculture.'' Thus, employees employed by 
commission brokers in the typical activities conducted at their 
establishments, warehouse employees at the typical tobacco warehouses, 
shop employees of an employer engaged in the business of servicing 
machinery and equipment for farmers, plant employees of a company 
dealing in eggs or poultry produced by others, employees of an 
irrigation company engaged in the general distribution of water to 
farmers, and other employees similarly situated do not generally come 
within the secondary meaning of ``agriculture.'' The inclusion of 
industrial operations is not within the intent of the definition in 
section 3(f), nor are processes that are more akin to manufacturing than 
to agriculture (see Bowie v. Gonzales, 117 F. 2d 11; Fleming v. Hawkeye 
Pearl Button Co., 113 F. 2d 52; Holtville Alfalfa Mills v. Wyatt, 230 F. 
2d 398; Maneja v. Waialua, 349 U.S. 254; Mitchell v. Budd, 350 U.S. 
473).

                   Practices Performed ``By a Farmer''



Sec. 780.130  Performance ``by a farmer'' generally.

    Among other things, a practice must be performed by a farmer or on a 
farm in order to come within the secondary portion of the definition of 
``agriculture.'' No precise lines can be drawn which will serve to 
delimit the term ``farmer'' in all cases. Essentially, however, the term 
is an occupational title and the employer must be engaged in activities 
of a type and to the extent that the person ordinarily regarded as a 
``farmer'' is engaged in order to qualify for the title. If this test is 
met, it is immaterial for what purpose he engages in farming or whether 
farming is his sole occupation. Thus, an employer's status as a 
``farmer'' is not altered by the fact that his only purpose is to obtain 
products useful to him in a non-farming enterprise which he conducts. 
For example, an employer engaged in raising nursery stock is a 
``farmer'' for purposes of section 3(f) even though his purpose is to 
supply goods for a separate establishment where he engages in the retail 
distribution of nursery products. The term ``farmer'' as used in section 
3(f) is not confined to individual persons. Thus an association, a 
partnership, or a corporation which engages in actual farming operations 
may be a ``farmer'' (see Mitchell v. Budd, 350 U.S. 473). This is so 
even

[[Page 558]]

where it operates ``what might be called the agricultural analogue of 
the modern industrial assembly line'' (Maneja v. Waialua, 349 U.S. 254).



Sec. 780.131  Operations which constitute one a ``farmer.''

    Generally, an employer must undertake farming operations of such 
scope and significance as to constitute a distinct activity, for the 
purpose of yielding a farm product, in order to be regarded as a 
``farmer.'' It does not necessarily follow, however, that any employer 
is a ``farmer'' simply because he engages in some actual farming 
operations of the type specified in section 3(f). Thus, one who merely 
harvests a crop of agricultural commodities is not a ``farmer'' although 
his employees who actually do the harvesting are employed in 
``agriculture'' in those weeks when exclusively so engaged. As a general 
rule, a farmer performs his farming operations on land owned, leased, or 
controlled by him and devoted to his own use. The mere fact, therefore, 
that an employer harvests a growing crop, even under a partnership 
agreement pursuant to which he provides credit, advisory or other 
services, is not generally considered to be sufficient to qualify the 
employer so engaged as a ``farmer.'' Such an employer would stand, in 
packing or handling the product, in the same relationship to the produce 
as if it were from the fields or groves of an independent grower. One 
who engaged merely in practices which are incidental to farming is not a 
``farmer.'' For example, a company which merely prepares for market, 
sells, and ships flowers and plants grown and cultivated on farms by 
affiliated corporations is not a ``farmer.'' The fact that one has 
suspended actual farming operations during a period in which he performs 
only practices incidental to his part or prospective farming operations 
does not, however, preclude him from qualifying as a ``farmer.'' One 
otherwise qualified as a farmer does not lose his status as such because 
he performs farming operations on land which he does not own or control, 
as in the case of a cattleman using public lands for grazing.



Sec. 780.132  Operations must be performed ``by'' a farmer.

    ``Farmer'' includes the employees of a farmer. It does not include 
an employer merely because he employs a farmer or appoints a farmer as 
his agent to do the actual work. Thus, the stripping of tobacco, i.e., 
removing leaves from the stalk, by the employees of an independent 
warehouse is not a practice performed ``by a farmer'' even though the 
warehouse acts as agent for the tobacco farmer or employs the farmer in 
the stripping operations. One who merely performs services or supplies 
materials for farmers in return for compensation in money or farm 
products is not a ``farmer.'' Thus, a person who provides credit and 
management services to farmers cannot qualify as a ``farmer'' on that 
account. Neither can a repairman who repairs and services farm machinery 
qualify as a ``farmer'' on that basis. Where crops are grown under 
contract with a person who provides a market, contributes counsel and 
advice, make advances and otherwise assists the grower who actually 
produces the crop, it is the grower and not the person with whom he 
contracts who is the farmer with respect to that crop (Mitchell v. 
Huntsville Nurseries, 267 F. 2d 286).



Sec. 780.133  Farmers' cooperative as a ``farmer.''

    (a) The phrase ``by a farmer'' covers practices performed either by 
the farmer himself or by the farmer through his employees. Employees of 
a farmers' cooperative association, however, are employed not by the 
individual farmers who compose its membership or who are its 
stockholders, but by the cooperative association itself. Cooperative 
associations whether in the corporate form or not, are distinct, 
separate entities from the farmers who own or compose them. The work 
performed by a farmers' cooperative association is not work performed 
``by a farmer'' but for farmers. Therefore, employees of a farmers' 
cooperative association are not generally engaged in any practices 
performed ``by a farmer'' within the meaning of section 3(f) (Farmers 
Reservoir Co. v. McComb, 337 U.S. 755; Goldberg v. Crowley Ridge Ass'n., 
295 F. 2d 7;

[[Page 559]]

McComb v. Puerto Rico Tobacco Marketing Co-op Ass'n., 80 F. Supp. 953, 
181 F. 2d 697). The legislative history of the Act supports this 
interpretation. Statutes usually cite farmers' cooperative associations 
in express terms if it is intended that they be included. The omission 
of express language from the Fair Labor Standards Act is significant 
since many unsuccessful attempts were made on the floor of Congress to 
secure special treatment for such cooperatives.
    (b) It is possible that some farmers' cooperative associations may 
themselves engage in actual farming operations to an extent and under 
circumstances sufficient to qualify as a ``farmer.'' In such case, any 
of their employees who perform practices as an incident to or in 
conjunction with such farming operations are employed in 
``agriculture.''

                    Practices Performed ``On a Farm''



Sec. 780.134  Performance ``on a farm'' generally.

    If a practice is not performed by a farmer, it must, among other 
things, be performed ``on a farm'' to come within the secondary meaning 
of ``agriculture'' in section 3(f). Any practice which cannot be 
performed on a farm, such as ``delivery to market,'' is necessarily 
excluded, therefore, when performed by someone other than a farmer (see 
Farmers Reservoir Co. v. McComb, 337 U.S. 755; Chapman v. Durkin, 214 F. 
2d 360, cert. denied 348 U.S. 897; Fort Mason Fruit Co. v. Durkin, 214 
F. 2d 363, cert. denied 348 U.S. 897). Thus, employees of an alfalfa 
dehydrator engaged in hauling chopped or unchopped alfalfa away from the 
farms to the dehydrating plant are not employed in a practice performed 
``on a farm.''



Sec. 780.135  Meaning of ``farm.''

    A ``farm'' is a tract of land devoted to the actual farming 
activities included in the first part of section 3(f). Thus, the 
gathering of wild plants in the woods for transplantation in a nursery 
is not an operation performed ``on a farm.'' (For a further discussion, 
see Sec. 780.207.) The total area of a tract operated as a unit for 
farming purposes is included in the ``farm,'' irrespective of the fact 
that some of this area may not be utilized for actual farming operations 
(see NLRB v. Olaa Sugar Co., 242 F. 2d 714; In re Princeville Canning 
Co., 14 WH Cases 641 and 762). It is immaterial whether a farm is 
situated in the city or in the country. However, a place in a city where 
no primary farming operations are performed is not a farm even if 
operated by a farmer (Mitchell v. Huntsville Nurseries, 267 F. 2d 286).



Sec. 780.136  Employment in practices on a farm.

    Employees engaged in building terraces or threshing wheat and other 
grain, employees engaged in the erection of silos and granaries, 
employees engaged in digging wells or building dams for farm ponds, 
employees engaged in inspecting and culling flocks of poultry, and 
pilots and flagmen engaged in the aerial dusting and spraying of crops 
are examples of the types of employees of independent contractors who 
may be considered employed in practices performed ``on a farm.'' Whether 
such employees are engaged in ``agriculture'' depends, of course, on 
whether the practices are performed as an incident to or in conjunction 
with the farming operations on the particular farm, as discussed in 
Sec. Sec. 780.141 through 780.147; that is, whether they are carried on 
as a part of the agricultural function or as a separately organized 
productive activity (Sec. Sec. 780.104 through 780.144). Even though an 
employee may work on several farms during a workweek, he is regarded as 
employed ``on a farm'' for the entire workweek if his work on each farm 
pertains solely to farming operations on that farm. The fact that a 
minor and incidental part of the work of such an employee occurs off the 
farm will not affect this conclusion. Thus, an employee may spend a 
small amount of time within the workweek in transporting necessary 
equipment for work to be done on farms. Field employees of a canner or 
processor of farm products who work on farms during the planting and 
growing season where they supervise the planting operations and consult 
with the grower on problems of cultivation are employed in practices 
performed ``on a farm'' so long as such

[[Page 560]]

work is done entirely on farms save for an incidental amount of 
reporting to their employer's plant. Other employees of the above 
employers employed away from the farm would not come within section 
3(f). For example, airport employees such as mechanics, loaders, and 
office workers employed by a crop dusting firm would not be agriculture 
employees (Wirtz v. Boyls dba Boyls Dusting and Spraying Service 230 F. 
Supp. 246, aff'd per curiam 352 F. 2d 63; Tobin v. Wenatchee Air 
Service, 10 WH Cases 680, 21 CCH Lab Cas. Paragraph 67,019 (E.D. 
Wash.)).

                ``Such Farming Operation''--of the Farmer



Sec. 780.137  Practices must be performed in connection with farmer's
own farming.

    ``Practices * * * performed by a farmer'' must be performed as an 
incident to or in conjunction with ``such farming operations'' in order 
to constitute ``agriculture'' within the secondary meaning of the term. 
Practices performed by a farmer in connection with his nonfarming 
operations do not satisfy this requirement (see Calaf v. Gonzalez, 127 
F. 2d 934; Mitchell v. Budd, 350 U.S. 473). Furthermore, practices 
performed by a farmer can meet the above requirement only in the event 
that they are performed in connection with the farming operations of the 
same farmer who performs the practices. Thus, the requirement is not met 
with respect to employees engaged in any practices performed by their 
employer in connection with farming operations that are not his own (see 
Farmers Reservoir Co. v. McComb, 337 U.S. 755; Mitchell v. Hunt, 263 F. 
2d 913; NLRB v. Olaa Sugar Co., 242 F. 2d 714; Mitchell v. Huntsville 
Nurseries, 267 F. 2d 286; Bowie v. Gonzalez, 117 F. 2d 11). The 
processing by a farmer of commodities of other farmers, if incident to 
or in conjunction with farming operations, is incidental to or in 
conjunction with the farming operations of the other farmers and not 
incidental to or in conjunction with the farming operations of the 
farmer doing the processing (Mitchell v. Huntsville Nurseries, supra; 
Farmers Reservoir Co. v. McComb, supra; Bowie v. Gonzalez, supra).



Sec. 780.138  Application of the general principles.

    Some examples will serve to illustrate the above principles. 
Employees of a fruit grower who dry or pack fruit not grown by their 
employer are not within section (f). This is also true of storage 
operations conducted by a farmer in connection with products grown by 
someone other than the farmer. Employees of a grower-operator of a 
sugarcane mill who transport cane from fields to the mill are not within 
section 3(f), where such cane is grown by independent farmers on their 
land as well as by the mill operator (Bowie v. Gonzalez, 117 F. 2d 11). 
Employees of a tobacco grower who strip tobacco (i.e., remove the leaves 
from the stalk) are not agricultural employees when performing this 
operation on tobacco not grown by their employer. On the other hand, 
where a farmer rents some space in a warehouse or packinghouse located 
off the farm and the farmer's own employees there engage in handling or 
packing only his own products for market, such operations by the farmers 
are within section 3(f) if performed as an incident to or in conjunction 
with his farming operations. Such arrangements are distinguished from 
those where the employees are not actually employed by the farmer. The 
fact that a packing shed is conducted by a family partnership, packing 
products exclusively grown on lands owned and operated by individuals 
constituting the partnership, does not alter the status of the packing 
activity. Thus, if in a particular case an individual farmer is engaged 
in agriculture, a family partnership which performs the same operations 
would also be engaged in agriculture. (Dofflemeyer v. NLRB, 206 F. 2d 
813.) However, an incorporated association of farmers that does not 
itself engage in farming operations is not engaged in agriculture though 
it processes at its packing shed produce grown exclusively by the farmer 
members of the association. (Goldberg v. Crowley Ridge and Fruit Growers 
Association, 295 F. 2d 7 (C.A. 8).)



Sec. 780.139  Pea vining.

    Vining employees of a pea vinery located on a farm, who vine only 
the peas

[[Page 561]]

grown on that particular farm, are engaged in agriculture. If they also 
vine peas grown on other farms, such operations could not be within 
section 3(f) unless the farmer-employer owns or operates the other farms 
and vines his own peas exclusively. However, the work of vining station 
employees in weeks in which the stations vine only peas grown by a 
canner on farms owned or leased by him is considered part of the canning 
operations. As such, the cannery operations, including the vining 
operations, are within section 3(f) only if the canners can crops which 
he grows himself and if the canning operations are subordinate to the 
farming operations.



Sec. 780.140  Place of performing the practice as a factor.

    So long as the farming operations to which a farmer's practice 
pertains are performed by him in his capacity as a farmer, the status of 
the practice is not necessarily altered by the fact that the farming 
operations take place on more than one farm or by the fact that some of 
the operations are performed off his farm (NLRB v. Olaa Sugar Co., 242 
F. 2d 714). Thus, where the practice is performed with respect to 
products of farming operations, the controlling consideration is whether 
the products were produced by the farming operations of the farmer who 
performs the practice rather than at what place or on whose land he 
produced them. Ordinarily, a practice performed by a farmer in 
connection with farming operations conducted on land which he owns or 
leases will be considered as performed in connection with the farming 
operations of such farmer in the absence of facts indicating that the 
farming operations are actually those of someone else. Conversely, a 
contrary conclusion will ordinarily be justified if such farmer is not 
the owner or a bona fide lessee of such land during the period when the 
farming operations take place. The question of whose farming operations 
are actually being conducted in cases where they are performed pursuant 
to an agreement or arrangement, not amounting to a bona fide lease, 
between the farmer who performs the practice and the landowner 
necessarily involves a careful scrutiny of the facts and circumstances 
surrounding the arrangement. Where commodities are grown on the farm of 
the actual grower under contract with another, practices performed by 
the latter on the commodities, off the farm where they were grown, 
relate to farming operations of the grower rather than to any farming 
operations of the contract purchaser. This is true even though the 
contract purports to lease the land to the latter, give him the title to 
the crop at all times, and confer on him the right to supervise the 
growing operations, where the facts as a whole show that the contract 
purchaser provides a farm market, cash advances, and advice and counsel 
but does not really perform growing operations (Mitchell v. Huntsville 
Nurseries, 267 F. 2d 286).

                ``Such Farming Operations''--On the Farm



Sec. 780.141  Practices must relate to farming operations on the 
particular farm.

    ``Practices * * * performed * * * on a farm'' must be performed as 
an incident to or in conjunction with ``such farming operations'' in 
order to constitute ``agriculture'' within the secondary meaning of the 
term. No practice performed with respect to farm commodities is within 
the language under discussion by reason of its performance on a farm 
unless all of such commodities are the products of that farm. Thus, the 
performance on a farm of any practice, such as packing or storing, which 
may be incidental to farming operations cannot constitute a basis for 
considering the employees engaged in agriculture if the practice is 
performed upon any commodities that have been produced elsewhere than on 
such farm (see Mitchell v. Hunt, 263 F. 2d 913). The construction by an 
independent contractor of granary on a farm is not connected with 
``such'' farming operations if the farmer for whom it is built intends 
to use the structure for storing grain produced on other farms. Nor is 
the requirement met with respect to employees engaged in any other 
practices performed on a farm, but not by a farmer, in connection with 
farming operations that are not conducted on that particular farm.

[[Page 562]]

The fact that such a practice pertains to farming operations generally 
or to those performed on a number of farms, rather than to those 
performed on the same farm only, is sufficient to take it outside the 
scope of the statutory language. Area soil surveys and genetics research 
activities, results of which are made available to a number of farmers, 
are typical of the practices to which this principle applies and which 
are not within section 3(f) under this provision.



Sec. 780.142  Practices on a farm not related to farming operations.

    Practices performed on a farm in connection with nonfarming 
operations performed on or off such farm do not meet the requirement 
stated in Sec. 780.141. For example, if a farmer operates a gravel pit 
on his farm, none of the practices performed in connection with the 
operation of such gravel pit would be within section 3(f). Whether or 
not some practices are performed in connection with farming operations 
conducted on the farm where they are performed must be determined with 
reference to the purpose of the farmer for whom the practice is 
performed. Thus, land clearing operations may or may not be connected 
with such farming operations depending on whether or not the farmer 
intends to devote the cleared land to farm use.



Sec. 780.143  Practices on a farm not performed for the farmer.

    The fact that a practice performed on a farm is not performed by or 
for the farmer is a strong indication that it is not performed in 
connection with the farming operations there conducted. Thus, where such 
an employer other than the farmer performs certain work on a farm solely 
for himself in furtherance of his own enterprise, the practice cannot 
ordinarily be regarded as performed in connection with farming 
operations conducted on the farm. For example, it is clear that the work 
of employees of a utility company in trimming and cutting trees for 
power and communications lines is part of a nonfarming enterprise 
outside the scope of agriculture. When a packer of vegetables or 
dehydrator of alfalfa buys the standing crop from the farmer, harvests 
it with his own crew of employees, and transports the harvested crop to 
his off-the-farm packing or dehydrating plant, the transporting and 
plant employees, who are not engaged in ``primary'' agriculture as are 
the harvesting employees (see NLRB v. Olaa Sugar Co., 242 F. 2d 714), 
are clearly not agricultural employees. Such an employer cannot 
automatically become an agricultural employer by merely transferring the 
plant operations to the farm so as to meet the ``on a farm'' 
requirement. His employees will continue outside the scope of 
agriculture if the packing or dehydrating is not in reality done for the 
farmer. The question of for whom the practices are performed is one of 
fact. In determining the question, however, the fact that prior to the 
performance of the packing or dehydrating operations, the farmer has 
relinquished title and divested himself of further responsibility with 
respect to the product, is highly significant.

Performance of the Practice ``As an Incident To or In Conjunction With'' 
                         the Farming Operations



Sec. 780.144  ``As an incident to or in conjunction with'' the farming
operations.

    In order for practices other than actual farming operations to 
constitute ``agriculture'' within the meaning of section 3(f) of the 
Act, it is not enough that they be performed by a farmer or on a farm in 
connection with the farming operations conducted by such farmer or on 
such farm, as explained in Sec. Sec. 780.129 through 780.143. They must 
also be performed ``as an incident to or in conjunction with'' these 
farming operations. The line between practices that are and those that 
are not performed ``as an incident to or in conjunction with'' such 
farming operations is not susceptible of precise definition. Generally, 
a practice performed in connection with farming operations is within the 
statutory language only if it constitutes an established part of 
agriculture, is subordinate to the farming operations involved, and does 
not amount to an independent business. Industrial operations (Holtville 
Alfalfa Mills v. Wyatt, 230 F. 2d 398) and processes that are more akin 
to manufacturing than to agriculture (Maneja v.

[[Page 563]]

Waialua, 349 U.S. 254; Mitchell v. Budd, 350 U.S. 473) are not included. 
This is also true when on-the-farm practices are performed for a farmer. 
As to when practices may be regarded as performed for a farmer, see 
Sec. 780.143.



Sec. 780.145  The relationship is determined by consideration of all
relevant factors.

    The character of a practice as a part of the agricultural activity 
or as a distinct business activity must be determined by examination and 
evaluation of all the relevant facts and circumstances in the light of 
the pertinent language and intent of the Act. The result will not depend 
on any mechanical application of isolated factors or tests. Rather, the 
total situation will control (Maneja v. Waialua, 349 U.S. 254; Mitchell 
v. Budd, 350 U.S. 473). Due weight should be given to any available 
criteria which may indicate whether performance of such a practice may 
properly be considered an incident to farming within the intent of the 
Act. Thus, the general relationship, if any, of the practice to farming 
as evidenced by common understanding, competitive factors, and the 
prevalence of its performance by farmers (see Sec. 780.146), and 
similar pertinent matters should be considered. Other factors to be 
considered in determining whether a practice may be properly regarded as 
incidental to or in conjunction with the farming operations of a 
particular farmer or farm include the size of the operations and 
respective sums invested in land, buildings and equipment for the 
regular farming operations and in plant and equipment for performance of 
the practice, the amount of the payroll for each type of work, the 
number of employees and the amount of time they spend in each of the 
activities, the extent to which the practice is performed by ordinary 
farm employees and the amount of interchange of employees between the 
operations, the amount of revenue derived from each activity, the degree 
of industrialization involved, and the degree of separation established 
between the activities. With respect to practices performed on farm 
products (see Sec. 780.147) and in the consideration of any specific 
practices (see Sec. Sec. 780.148-780.158 and 780.205-780.214), there 
may be special factors in addition to those above mentioned which may 
aid in the determination.



Sec. 780.146  Importance of relationship of the practice to 
farming generally.

    The inclusion of incidental practices in the definition of 
agriculture was not intended to include typical factory workers or 
industrial operations, and the sponsors of the bill made it clear that 
the erection and operation on a farm by a farmer of a factory, even one 
using raw materials which he grows, ``would not make the manufacturing * 
* * a farming operation'' (see 81 Cong. Rec. 7658; Maneja v. Waialua, 
349 U.S. 254). Accordingly, in determining whether a given practice is 
performed ``as an incident to or in conjunction with'' farming 
operations under the intended meaning of section 3(f), the nature of the 
practice and the circumstances under which it is performed must be 
considered in the light of the common understanding of what is 
agricultural and what is not, or the facts indicating whether 
performance of the practice is in competition with agricultural or with 
industrial operations, and of the extent to which such a practice is 
ordinarily performed by farmers incidentally to their farming operations 
(see Bowie v. Gonzales, 117 F. 2d 11; Calaf v. Gonzalez, 127 F. 2d 934; 
Vives v. Seralles, 145 F. 2d 552; Mitchell v. Hunt, 263 F. 2d 913; 
Holtville Alfalfa Mills v. Wyatt, 230 F. 2d 398; Mitchell v. Budd, 350 
U.S. 473; Maneja v. Waialua, supra). Such an inquiry would appear to 
have a direct bearing on whether a practice is an ``established'' part 
of agriculture. The fact that farmers raising a commodity on which a 
given practice is performed do not ordinarily perform such a practice 
has been considered a significant indication that the practice is not 
``agriculture'' within the secondary meaning of section 3(f) (Mitchell 
v. Budd, supra; Maneja v. Waialua, supra). The test to be applied is not 
the proportion of those performing the practice who produce the 
commodities on which it is performed but the proportion of those 
producing such commodities who perform the practice (Maneja v. Waialua, 
supra). In Mitchell v. Budd, supra, the U.S. Supreme Court

[[Page 564]]

found that the following two factors tipped the scales so as to take the 
employees of tobacco bulking plants outside the scope of agriculture: 
Tobacco farmers do not ordinarily perform the bulking operation; and, 
the bulking operation is a process which changes tobacco leaf in many 
ways and turns it into an industrial product.



Sec. 780.147  Practices performed on farm products--special factors
considered.

    In determining whether a practice performed on agricultural or 
horticultural commodities is incident to or in conjunction with the 
farming operations of a farmer or a farm, it is also necessary to 
consider the type of product resulting from the practice--as whether the 
raw or natural state of the commodity has been changed. Such a change 
may be a strong indication that the practice is not within the scope of 
agriculture (Mitchell v. Budd, 350 U.S. 473); the view was expressed in 
the legislative debates on the Act that it marks the dividing line 
between processing as an agricultural function and processing as a 
manufacturing operation (Maneja v. Waialua, 349 U.S. 254, citing 81 
Cong. Rec. 7659-7660, 7877-7879). Consideration should also be given to 
the value added to the product as a result of the practice and whether a 
sales organization is maintained for the disposal of the product. 
Seasonality of the operations involved in the practice would not be very 
helpful as a test to distinguish between operations incident to 
agriculture and operations of commercial or industrial processors who 
handle a similar volume of the same seasonal crop. But the length of the 
period during which the practice is performed might cast some light on 
whether the operations are conducted as a part of agriculture or as a 
separate undertaking when considered together with the amount of 
investment, payroll, and other factors. In some cases, the fact that 
products resulting from the practice are sold under the producer's own 
label rather than under that of the purchaser may furnish an indication 
that the practice is conducted as a separate business activity rather 
than as a part of agriculture.

      Practices Included When Performed as Provided in Section 3(f)



Sec. 780.148  ``Any'' practices meeting the requirements will
qualify for exemption.

    The language of section 3(f) of the Act, in defining the 
``secondary'' meaning of ``agriculture,'' provides that any practices 
performed by a farmer or on a farm as an incident to or in conjunction 
with such (his or its) farming operations are within the definition. The 
practices which may be exempt as ``agriculture'' if so performed are 
stated to include forestry or lumbering operations, preparation for 
market, and delivery to storage or to market or to carriers for 
transportation to market. The specification of these practices is 
illustrative rather than limiting in nature. The broad language of the 
definition clearly includes all practices thus performed and not merely 
those named (see Maneja v. Waialua, 349 U.S. 254).



Sec. 780.149  Named practices as well as others must meet 
the requirements.

    The specific practices named in section 3(f) must, like any others, 
be performed by a farmer or on a farm as an incident to or in 
conjunction with such farming operations, for this condition applies to 
``any'' practices brought within the secondary meaning of agriculture as 
defined in that section of the Act. Thus the preparation for market, by 
a farmer's employees on a farm of animals to be sold at a livestock 
auction is not within section 3(f) if animals from other farmers and 
other farms are also handled. The practice is not performed as an 
incident to or in conjunction with ``such'' farming operations, that is, 
the operations of the farmer by whom, or of the farm on which, the 
livestock is raised (Mitchell v. Hunt, 263 F. 2d 913).

                         Preparation for Market



Sec. 780.150  Scope and limits of ``preparation for market.''

    ``Preparation for market'' is also named as one of the practices 
which may be included in ``agriculture.'' The term includes the 
operations normally performed upon farm commodities to prepare them for 
the farmer's market. The farmer's market normally means

[[Page 565]]

the wholesaler, processor, or distributing agency to which the farmer 
delivers his products. ``Preparation for market'' clearly has reference 
to activities which precede ``delivery to market.'' It is not, however, 
synonymous with ``preparation for sale.'' The term must be treated 
differently with respect to various commodities. It is emphasized that 
``preparation for market,'' like other practices, must be performed ``by 
a farmer or on a farm as an incident to or in conjunction with such 
farming operations'' in order to be within section 3(f).



Sec. 780.151  Particular operations on commodities.

    Subject to the rules heretofore discussed, the following activities 
are, among others, activities that may be performed in the ``preparation 
for market'' of the indicated commodities and may come within section 
3(f):
    (a) Grain, seed, and forage crops. Weighing, binning, stacking, 
drying, cleaning, grading, shelling, sorting, packing, and storing.
    (b) Fruits and vegetables. Assembling, ripening, cleaning, grading, 
sorting, drying, preserving, packing, and storing. (See In the Matter of 
J. J. Crosetti, 29 LRRM 1353, 98 NLRB 268; In the Matter of Imperial 
Garden Growers, 91 NLRB 1034, 26 LRRM 1632; Lenroot v. Hazelhurst 
Mercantitle Co., 59 F. Supp. 595; North Whittier Heights Citrus Ass'n v. 
NLRB, 109 F.2d 76; Dofflemeyer v. NLRB, 206 F.2d 813.)
    (c) Peanuts and nuts (pecans, walnuts, etc.). Grading, cracking, 
shelling, cleaning, sorting, packing, and storing.
    (d) Eggs. Handling, cooling, grading, candling, and packing.
    (e) Wool. Grading and packing.
    (f) Dairy products. Separating, cooling, packing, and storing.
    (g) Cotton. Weighing, ginning, and storing cotton; hulling, 
delinting, cleaning, sacking, and storing cottonseed.
    (h) Nursery stock. Handling, sorting, grading, trimming, bundling, 
storing, wrapping, and packing. (See Jordan v. Stark Brothers Nurseries, 
45 F. Supp. 769; Mitchell v. Huntsville Nurseries, 267 F.2d 286.)
    (i) Tobacco. Handling, grading, drying, stripping from stalk, tying, 
sorting, storing, and loading.
    (j) Livestock. Handling and loading.
    (k) Poultry. Culling, grading, cooping, and loading.
    (l) Honey. Assembling, extracting, heating, ripening, straining, 
cleaning, grading, weighing, blending, packaging, and storing.
    (m) Fur. Removing the pelt, scraping, drying, putting on boards, and 
packing.

                      Specified Delivery Operations



Sec. 780.152  General scope of specified delivery operations.

    Employment in ``secondary'' agriculture, under section 3(f), 
includes employment in ``delivery to storage or to market or to carriers 
for transportation to market'' when performed by a farmer as an incident 
to or in conjunction with his own farming operations. To the extent that 
such deliveries may be accomplished without leaving the farm where the 
commodities delivered are grown, the exemption extends also to employees 
of someone other than the farmer who raised them if they are performing 
such deliveries for the farmer. However, normally such deliveries 
require travel off the farm, and where this is the case, only employees 
of a farmer engaged in making them can come within section 3(f). Such 
employees would not be engaged in agriculture in any workweek when they 
delivered commodities of other farmers, however, because such deliveries 
would not be performed as an incident to or in conjunction with ``such'' 
farming operations, as explained previously. If the ``delivery'' trip is 
within section 3(f) the necessary return trip to the farm is also 
included.



Sec. 780.153  Delivery ``to storage.''

    The term ``delivery to storage'' includes taking agricultural or 
horticultural commodities, dairy products, livestock, bees or their 
honey, fur-bearing animals or their pelts, or poultry to the places 
where they are to be stored or held pending preparation for or delivery 
to market. The fact that the commodities have been subjected to some 
other practice ``by a farmer or

[[Page 566]]

on a farm as an incident to or in conjunction with such farming 
operations'' does not preclude the inclusion of ``delivery to storage'' 
within section 3(f). The same is true with respect to ``delivery to 
market'' and ``delivery to carriers for transporation to market.''



Sec. 780.154  Delivery ``to market.''

    The term ``delivery * * * to market'' includes taking agricultural 
or horticultural commodities, dairy products, livestock, bees or their 
honey, fur-bearing animals or their pelts, or poultry to market. It 
ordinarily refers to the initial journey of the farmer's products from 
the farm to the market. The market referred to is the farmer's market 
which normally means the distributing agency, cooperative marketing 
agency, wholesaler or processor to which the farmer delivers his 
products. Delivery to market ends with the delivery of the commodities 
at the receiving platform of such a farmer's market (Mitchell v. Budd, 
350 U.S. 473). When the delivery involves travel off the farm (which 
would normally be the case) the delivery must be performed by the 
employees employed by the farmer in order to constitute an agricultural 
practice. Delivery by an independent contractor for the farmer or a 
group of farmers or by a ``bird-dog'' operator who has purchased the 
commodities on the farm from the farmer is not an agricultural practice 
(see Chapman v. Durkin, 214 F. 2d 360, cert. denied 348 U.S. 897; Fort 
Mason Fruit Co. v. Durkin, 214 F. 2d 363, cert. denied 348 U.S. 897). 
However, in the case of fruits or vegetables, the Act provides a special 
overtime pay exemption for intrastate transportation of the freshly 
harvested commodities from the farm to a place of first marketing or 
first processing, which may apply to employees engaged in such 
transportation regardless of whether they are employed by the farmer. 
See subpart J of this part 780, discussing the exemption provided by 
section 13(b)(16).



Sec. 780.155  Delivery ``to carriers for transportation to market.''

    The term ``delivery * * * to carriers for transportation to market'' 
includes taking agricultural or horticultural commodities, dairy 
products, livestock, bees or their honey, fur-bearing animals or their 
pelts, and poultry to any carrier (including carriers by truck, rail, 
water, etc.) for transportation by such carrier to market. The market 
referred to is the farmer's market which normally means the distributing 
agency, cooperative marketing agency, wholesaler, or processor to which 
the farmer delivers his products. As in the case of ``delivery to 
market,'' when it involves travel off the farm (as would normally be the 
case) the delivery must be performed by the farmer's own employees in 
order to constitute an agricultural practice. Employees of the carrier 
who transport to market the commodities which are delivered to it are 
not within the scope of agriculture.

         Transportation Operations Not Mentioned in Section 3(f)



Sec. 780.156  Transportation of farm products from the fields or farm.

    Transportation of farm products from the fields where they are grown 
or from the farm to other places may be within the ``secondary'' meaning 
of agriculture, regardless of whether the transportation is included as 
``delivery to storage or to market or to carriers for transportation to 
market'': Provided only, That it is performed by a farmer or on a farm 
as an incident to or in conjunction with the farming operations of that 
farmer or that farm. Of course, any transportation operations which are 
part of, and not subsequent to, the ``primary'' farming operations are 
also within section 3(f). These principles have been recognized by the 
courts in the following cases, among others: Maneja v. Waialua, 349 U.S. 
254; NLRB v. Olaa Sugar Co., 242 F. 2d 714; Bowie v. Gonzales, 117 F. 2d 
11; Calaf v. Gonzales, 127 F. 8d 934; Vives v. Serralles, 145 F. 2d 552; 
Holtville Alfalfa Mills v. Wyatt, 230 F. 2d 398. If not performed by the 
farmer, transportation beyond the limits of the farm is not within 
section 3(f), even when performed by a purchaser of the unharvested 
commodities who has harvested the crop. The scope of section 3(f) 
includes the harvesting employees but does not extend to the employees 
transporting the commodities off the farm (Chapman v. Durkin,

[[Page 567]]

214 F. 2d 360, cert. denied, 348 U.S. 897; Fort Mason Fruit Co. v. 
Durkin, 214 F. 2d 363, cert. denied, 348 U.S. 897).



Sec. 780.157  Other transportation incident to farming.

    (a) Transportation by a farmer or on a farm as an incident to or in 
conjunction with the farming operations of the farmer or of that farm is 
within the scope of agriculture even though things other than farm 
commodities raised by the farmer or on the farm are being transported. 
As previously indicated, transportation of commodities raised by other 
farmers or on other farms would not be within section 3(f). The 
definition of agriculture clearly covers the transportation by the 
farmer, as an incident to or in conjunction with his farming activities, 
of farm implements, supplies, and fieldworkers to and from the fields, 
regardless of whether such transportation involves travel on or off the 
farm and regardless of the method used. The Supreme Court of the United 
States so held in Maneja v. Waialua, 349 U.S. 254. Transportation of 
fieldworkers to or from the farm by persons other than the farmer does 
not come within section 3(f). However, under section 13(b)(16) of the 
Act, discussed in subpart J of this part 780, an overtime pay exemption 
is provided for transportation, whether or not performed by the farmer, 
of fruit or vegetable harvest workers to and from the farm, within the 
same State where the farm is located. In the case of transportation to 
the farm of materials or supplies, it seems clear that transportation to 
the farm by the farmer of materials and supplies for use in his farming 
operations, such as seed, animal or poultry feed, farm machinery or 
equipment, etc., would be incidental to the farmer's actual farming 
operations. Thus, truckdrivers employed by a farmer to haul feed to the 
farm for feeding pigs are engaged in ``agriculture.''
    (b) With respect to the practice of transporting farm products from 
farms to a processing establishment by employees of a person who owns 
both the farms and the establishment, such practice may or may not be 
incident to or in conjunction with the employer's farming operations 
depending on all the pertinent facts. For example, the transportation is 
clearly incidental to milling operations, rather than to farming, where 
the employees engaged in it are hired by the mill, carried on its 
payroll, do no agricultural work on the farms, and report for and end 
their daily duties at the mill where the transportation vehicles are 
kept (Calaf v. Gonzales, 127 F. 2d 934). On the other hand, a different 
result is reached where the facts show that the transportation workers 
are farm employees whose work is closely integrated with harvesting and 
other direct farming operations (NLRB v. Olaa Sugar Co., 242 F. 2d 714; 
and see Vives v. Serralles, 145 F. 2d 552). The method by which the 
transportation is accomplished is not material (Maneja v. Waialua, 349 
U.S. 254).

        Other Unlisted Practices Which May Be Within Section 3(f)



Sec. 780.158  Examples of other practices within section 3(f) 
if requirements are met.

    (a) As has been noted above, the term ``agriculture'' includes other 
practices performed by a farmer or on a farm as an incident to or in 
conjunction with the farming operations conducted by such farmer or on 
such farm in addition to the practices listed in section 3(f). The 
selling (including selling at roadside stands or by mail order and house 
to house selling) by a farmer and his employees of his agricultural 
commodities, dairy products, etc., is such a practice provided it does 
not amount to a separate business. Other such practices are office work 
and maintenance and protective work. Section 3(f) includes, for example, 
secretaries, clerks, bookkeepers, night watchmen, maintenance workers, 
engineers, and others who are employed by a farmer or on a farm if their 
work is part of the agricultural activity and is subordinate to the 
farming operations of such farmer or on such farm. (Damutz v. Pinchbeck, 
66 F. Supp. 667, aff'd. 158 F. 2d 882). Employees of a farmer who repair 
the mechanical implements used in farming, as a subordinate and 
necessary task incident to their employer's farming operations, are 
within section 3(f). It makes no difference that the work is done by a 
separate labor force in a repair shop maintained for the purpose,

[[Page 568]]

where the size of the farming operations is such as to justify it. Only 
employees engaged in the repair of equipment used in performing 
agricultural functions would be within section 3(f), however; employees 
repairing equipment used by the employer in industrial or other 
nonfarming activities would be outside the scope of agriculture. (Maneja 
v. Waialua, 349 U.S. 254.) The repair of equipment used by other farmers 
in their farming operations would not qualify as an agricultural 
practice incident to the farming operations of the farmer employing the 
repair workers.
    (b) The following are other examples of practices which may qualify 
as ``agriculture'' under the secondary meaning in section 3(f), when 
done on a farm, whether done by a farmer or by a contractor for the 
farmer, so long as they do not relate to farming operations on any other 
farms: The operation of a cook camp for the sole purpose of feeding 
persons engaged exclusively in agriculture on that farm; artificial 
insemination of the farm animals; custom corn shelling and grinding of 
feed for the farmer; the packing of apples by portable packing machines 
which are moved from farm to farm packing only apples grown on the 
particular farm where the packing is being performed; the culling, 
catching, cooping, and loading of poultry; the threshing of wheat; the 
shearing of sheep; the gathering and baling of straw.
    (c) It must be emphasized with respect to all practices performed on 
products for which exemption is claimed that they must be performed only 
on the products produced or raised by the particular farmer or on the 
particular farm (Mitchell v. Huntsville Nurseries, 267 F. 2d 286; Bowie 
v. Gonzalez, 117 F. 2d 11; Mitchell v. Hunt, 263 F. 2d 913; NLRB v. Olaa 
Sugar Co., 242 F. 2d 714; Farmers Reservoir Co. v. McComb, 337 U.S. 755; 
Walling v. Peacock Corp., 58 F. Supp. 880; Lenroot v. Hazelhurst 
Mercantile Co., 153 F. 2d 153; Jordan v. Stark Bros. Nurseries, 45 F. 
Supp. 769).



Sec. 780.159  Forest products.

    Trees grown in forests and the lumber derived therefrom are not 
agricultural or horticultural commodities, for the purpose of the FLSA. 
(See Sec. 780.205 regarding production of Christmas trees.) It follows 
that employment in the production, cultivation, growing, and harvesting 
of such trees or timber products is not sufficient to bring an employee 
within sec. 3(f) unless the operation is performed by a farmer or on a 
farm as an incident to or in conjunction with his or its farming 
operations. On the latter point, see Sec. Sec. 780.200 through 780.209 
discussing the question of when forestry or lumbering operations are 
incident to or in conjunction with farming operations so as to 
constitute agriculture. For a discussion of the exemption in sec. 
13(b)(28) of the Act for certain forestry and logging operations in 
which not more than eight employees are employed, see part 788 of this 
chapter.

[73 FR 77238, Dec. 18, 2008. Redesignated at 74 FR 26014, May 29, 2009]

    Effective Date Note: At 74 FR 26014, May 29, 2009, Sec. 780.115 was 
redesignated as Sec. 780.159 and newly designated Sec. 780.159 was 
suspended, effective June 29, 2009.



       Subpart C_Agriculture as It Relates to Specific Situations

                    Forestry or Lumbering Operations



Sec. 780.200  Inclusion of forestry or lumbering operations in
agriculture is limited.

    Employment in forestry or lumbering operations is expressly included 
in agriculture if the operations are performed ``by a farmer or on a 
farm as an incident to or in conjunction with such farming operation.'' 
While ``agriculture'' is sometimes used in a broad sense as including 
the science and art of cultivating forests, the language quoted in the 
preceding sentence is a limitation on the forestry and lumbering 
operations which will be considered agricultural for purposes of section 
3(f). It follows that employees of an employer engaged exclusively in 
forestry or lumbering operations are not considered agricultural 
employees.



Sec. 780.201  Meaning of ``forestry or lumbering operations.''

    The term ``forestry or lumbering operations'' refers to the 
cultivation and management of forests, the felling and

[[Page 569]]

trimming of timber, the cutting, hauling, and transportation of timber, 
logs, pulpwood, cordwood, lumber, and like products, the sawing of logs 
into lumber or the conversion of logs into ties, posts, and similar 
products, and similar operations. It also includes the piling, stacking, 
and storing of all such products. The gathering of wild plants and of 
wild or planted Christmas trees are included. (See the related 
discussion in Sec. Sec. 780.205 through 780.209 and in part 788 of this 
chapter which considers the section 13(a)(13) exemption for forestry or 
logging operations in which not more than eight employees are employed.) 
``Wood working'' as such is not included in ``forestry'' or 
``lumbering'' operations. The manufacture of charcoal under modern 
methods is neither a ``forestry'' nor ``lumbering'' operation and cannot 
be regarded as ``agriculture.''

[74 FR 26014, May 29, 2009]



Sec. 780.202  Subordination to farming operations is necessary 
for exemption.

    While section 3(f) speaks of practices performed ``in conjunction 
with'' as well as ``incident to'' farming operations, it would be an 
unreasonable construction of the Act to hold that all practices were to 
be regarded as agricultural if the person performing the practice did 
any farming, no matter how little, or resorted to tilling a small 
acreage for the purpose of qualifying for exemption (Ridgeway v. Warren, 
60 F. Supp. 363 (M.D. Tenn.); in re Combs, 5 WH Cases 595, 10 Labor 
Cases 62,802 (M.D. Ga.)). To illustrate, where an employer owns several 
thousand acres of timberland on which he carries on lumbering operations 
and cultivates about 100 acres of farm land which are contiguous to such 
timberland, he would not be engaged in agriculture so far as his 
forestry or lumbering operations are concerned. In such case, the 
forestry or lumbering operations would clearly not be subordinate to the 
farming operations but rather the principal or a separate business of 
the ``farmer.''



Sec. 780.203  Performance of operations on a farm but not by the farmer.

    Logging or sawmill operations on a farm undertaken on behalf of the 
farmer or on behalf of the buyer of the logs or the resulting lumber by 
a contract logger or sawmill owner are not within the scope of 
agriculture unless it can be shown that these logging or sawmill 
operations are clearly incidental to farming operations on the farm on 
which the logging or sawmill operations are being conducted. For 
example, the clearing of additional land for cultivation by the farmer 
or the preparation of timber for construction of his farm buildings 
would appear to constitute operations incidental to ``such farming 
operations.''



Sec. 780.204  Number of employees engaged in operations not material.

    The fact that the employer employs fewer than a certain number of 
employees in forestry and lumbering operations does not provide a basis 
for their being considered as agricultural employees. This is to be 
distinguished from the exemption provided by section 13(a)(13) 
(discussed in part 788 of this chapter) which is limited to employers 
employing not more than eight employees in the forestry or logging 
operations described therein.

                   Nursery and Landscaping Operations



Sec. 780.205  Nursery activities generally.

    The employees of a nursery who are engaged in the following 
activities are employed in ``agriculture'':
    (a) Sowing seeds and otherwise propagating fruit, nut, shade, 
vegetable, and ornamental plants or trees (but not Christmas trees), and 
shrubs, vines, and flowers;
    (b) Handling such plants from propagating frames to the field;
    (c) Planting, cultivating, watering, spraying, fertilizing, pruning, 
bracing, and feeding the growing crop.

[74 FR 26015, May 29, 2009]



Sec. 780.206  Planting and lawn mowing.

    (a) The planting of trees and bushes is within the scope of 
agriculture where it constitutes a step in the production, cultivation, 
growing, and harvesting of agricultural or horticultural commodities, or 
where it constitutes a practice performed by a farmer or on a farm as an 
incident to or in conjunction with farming operations (as where it is 
part of the subordinate marketing

[[Page 570]]

operations of the grower of such trees or bushes). Thus, employees of 
the nurseryman who raised such nursery stock are doing agricultural work 
when they plant the stock on private or public property, trim, spray, 
brace, and treat the planted stock, or perform other duties incidental 
to its care and preservation. Similarly, employees who plant fruit trees 
and berry stock not raised by their employer would be considered as 
engaged in agriculture if the planting is done on a farm as an incident 
to or in conjunction with the farming operation on that farm.
    (b) On the other hand, the planting of trees and bushes on 
residential, business, or public property is not agriculture when it is 
done by employees of an employer who has not grown the trees and bushes, 
or who, if he has grown them, engages in the planting operations as an 
incident, not to his farming operations, but to landscaping operations 
which include principally the laying of sod and the construction of 
pools, walks, drives, and the like.
    (c) The mowing of lawns, except where it can be considered 
incidental to farming operations, is not agricultural work.



Sec. 780.207  Operations with respect to wild plants.

    Nurseries frequently obtain plants growing wild in the woods or 
fields which are to be further cultivated by the nursery before they are 
sold by it. Obtaining such plants is a practice which is incidental to 
farming operations. The activities are therefore within the scope of 
agriculture if performed by a farmer or on a farm. Thus, employees of 
the nursery are engaged in agriculture when performing these activities. 
On the other hand, employees of an independent contractor performing 
these activities off the farm would not be engaged in agriculture. The 
transplanting of such wild plants in the nursery is performed ``on a 
farm'' and is an agricultural activity whether performed by employees of 
an independent contractor or by employees of the nursery.



Sec. 780.208  Forest and Christmas tree activities.

    Operations in a forest tree nursery such as seeding new beds and 
growing and transplanting forest seedlings are not farming operations. 
The planting, tending, and cutting of Christmas trees do not constitute 
farming operations. If such operations on forest products are within 
section 3(f), they must qualify under the second part of the definition 
dealing with incidental practices. (See Sec. 780.201.)

[74 FR 26015, May 29, 2009]



Sec. 780.209  Packing, storage, warehousing, and sale of nursery
products.

    Employees of a grower of nursery stock who work in packing and 
storage sheds sorting the stock, grading and trimming it, racking it in 
bins, and packing it for shipment are employed in ``agriculture'' 
provided they handle only products grown by their employer and their 
activities constitute an established part of their employer's 
agricultural activities and are subordinate to his farming operations. 
Such employees are not employed in agriculture when they handle the 
products of other growers (Mitchell v. Huntsville Nurseries, 267 F. 2d 
286; Jordan v. Stark Bros. Nurseries & Orchards Co., 45 F. Supp. 769). 
Agricultural activities would typically include employees engaged in the 
balling and storing of shrubs and trees grown in the nursery. Where a 
grower of nursery stock operates, as a separate enterprise, a processing 
establishment or an establishment for the wholesale of retail 
distribution of such commodities, the employees in such separate 
enterprise are not engaged in agriculture (see Walling v. Rocklin, 132 
F. 2d 3; Mitchell v. Huntsville Nurseries, 267 F. 2d 286). Although the 
handling and the sale of nursery commodities by the grower at or near 
the place where they were grown may be incidental to his farming 
operations, the character of these operations changes when they are 
performed in an establishment set up as a marketing point to aid the 
distribution of those products.

[[Page 571]]

                           Hatchery Operations



Sec. 780.210  The typical hatchery operations constitute ``agriculture.''

    As stated in Sec. 780.127, the typical hatchery is engaged in 
``agriculture,'' whether in a rural or city location. Where the hatchery 
is engaged solely in procuring eggs for hatching, performing the 
hatching operations, and selling the chicks, all the employees including 
office and maintenance workers are engaged in agriculture (see Miller 
Hatcheries v. Boyer, 131 F. 2d 283).



Sec. 780.211  Contract production of hatching eggs.

    It is common practice for hatcherymen to enter into arrangements 
with farmer poultry raisers for the production of hatching eggs which 
the hatchery agrees to buy. Ordinarily, the farmer furnishes the 
facilities, feed and labor and the hatchery furnishes the basic stock of 
poultry. The farmer undertakes a specialized program of care and 
improvement of the flock in cooperation with the hatchery. The hatchery 
may at times have a surplus of eggs, including those suitable for 
hatching and culled eggs which it sells. Activities such as grading and 
packing performed by the hatchery employees in connection with the 
disposal of these eggs, are an incident to the breeding of poultry by 
the hatchery and are within the scope of agriculture.



Sec. 780.212  Hatchery employees working on farms.

    The work of hatchery employees in connection with the maintenance of 
the quality of the poultry flock on farms is also part of the 
``raising'' operations. This includes testing for disese, culling, 
weighing, cooping, loading, and transporting the culled birds. The 
catching and loading of broilers on farms by hatchery employees for 
transportation to market are agricultural operations.



Sec. 780.213  Produce business.

    In some instances, hatcheries also engage in the produce business as 
such and commingle with the culled eggs and chickens other eggs and 
chickens which they buy for resale. In such a case that work which 
relates to both the hatchery and produce types of activities would not 
be within the scope of agriculture.



Sec. 780.214  Feed sales and other activities.

    In some situations, the hatchery also operates a feed store and 
furnishes feed to the growers. As in the case of the produce business 
operated by a hatchery, this is not an agricultural activity and 
employees engaged therein, such as truckdrivers hauling feed to growers, 
are not agricultural employees. Also office workers and other employees 
are not employed in agriculture when their duties relate to 
nonagricultural activities.



Sec. 780.215  Meaning of forestry or lumbering operations.

    The term forestry or lumbering operations refers to the cultivation 
and management of forests, the felling and trimming of timber, the 
cutting, hauling, and transportation of timber, logs, pulpwood, 
cordwood, lumber, and like products, the sawing of logs into lumber or 
the conversion of logs into ties, posts, and similar products, and 
similar operations. It also includes the piling, stacking, and storing 
of all such products. The gathering of wild plants and of wild Christmas 
trees is included. (See the related discussion in Sec. Sec. 780.205 
through 780.209 and in part 788 of this chapter which considers the sec. 
13(b)(28) exemption for forestry or logging operations in which not more 
than eight employees are employed.) Wood working as such is not included 
in forestry or lumbering operations. The manufacture of charcoal under 
modern methods is neither a forestry nor lumbering operation and cannot 
be regarded as agriculture.

[73 FR 77238, Dec. 18, 2008. Redesignated at 74 FR 26014, May 29, 2009]

    Effective Date Note: At 74 FR 26014, May 29, 2009, Sec. 780.201 was 
redesignated as Sec. 780.215 and newly designated Sec. 780.215 was 
suspended, effective June 29, 2009.



Sec. 780.216  Nursery activities generally and Christmas tree production.

    (a) The employees of a nursery who are engaged in the following 
activities are employed in agriculture:

[[Page 572]]

    (1) Sowing seeds and otherwise propagating fruit, nut, shade, 
vegetable, and ornamental plants or trees, and shrubs, vines, and 
flowers;
    (2) Handling such plants from propagating frames to the field;
    (3) Planting, cultivating, watering, spraying, fertilizing, pruning, 
bracing, and feeding the growing crop.
    (b) Trees produced through the application of extensive agricultural 
or horticulture techniques to be harvested and sold for seasonal 
ornamental use as Christmas trees are considered to be agricultural or 
horticultural commodities. Employees engaged in the application of 
agricultural and horticultural techniques to produce Christmas trees as 
ornamental horticultural commodities such as the following are employed 
in agriculture:
    (1) Planting seedlings in a nursery; on-going treatment with 
fertilizer, herbicides, and pesticides as necessary;
    (2) After approximately three years, re-planting in lineout beds;
    (3) After two more seasons, lifting and re-planting the small trees 
in cultivated soil with continued treatment with fertilizers, 
herbicides, and pesticides as indicated by testing to see if such 
applications are necessary;
    (4) Pruning or shearing yearly;
    (5) Harvesting of the tree for seasonal ornamental use, typically 
within 7 to 10 years of planting.
    (c) Trees to be used as Christmas trees which are gathered in the 
wild, such as from forests or uncultivated land and not produced through 
the application of agricultural or horticultural techniques are not 
agricultural or horticultural commodities for purposes of sec. 3(f).

[73 FR 77239, Dec. 18, 2008. Redesignated at 74 FR 26015, May 29, 2009]

    Effective Date Note: At 74 FR 26015, May 29, 2009, Sec. 780.205 was 
redesignated as Sec. 780.216 and newly designated Sec. 780.216 was 
suspended, effective June 29, 2009.



Sec. 780.217  Forestry activities.

    Operations in a forest tree nursery such as seeding new beds and 
growing and transplanting forest seedlings are not farming operations. 
For such operations to fall within sec. 3(f), they must qualify under 
the second part of the definition dealing with incidental practices. See 
Sec. 780.201.

[73 FR 77239, Dec. 18, 2008. Redesignated at 74 FR 26015, May 29, 2009]

    Effective Date Note: At 74 FR 26015, May 29, 2009, Sec. 780.208 was 
redesignated as Sec. 780.217 and newly designated Sec. 780.217 was 
suspended, effective June 29, 2009.



 Subpart D_Employment in Agriculture That Is Exempted From the Minimum 
        Wage and Overtime Pay Requirements Under Section 13(a)(6)

                          Statutory Provisions



Sec. 780.300  Statutory exemptions in section 13(a)(6).

    Section 13(a)(6) of the Act exempts from the minimum wage 
requirements of section 6 and from the overtime pay requirements of 
section 7:

    Any employee employed in agriculture: (A) If such employee is 
employed by an employer who did not, during any calendar quarter during 
the preceding calendar year, use more than 500 man-days of agricultural 
labor, (B) if such employee is the parent, spouse, child, or other 
member of his employer's immediate family, (C) if such employee (i) is 
employed as a hand harvest laborer and is paid on a piece-rate basis in 
an operation which has been, and is customarily and generally recognized 
as having been, paid on a piece-rate basis in the region of employment, 
(ii) commutes daily from his permanent residence to the farm on which he 
is so employed, and (iii) has been employed in agriculture less than 13 
weeks during the preceding calendar year, (D) if such employee (other 
than an employee described in clause (C) of this subsection) (i) is 16 
years of age or under and is employed as a hand harvest laborer, is paid 
on a piece-rate basis in an operation which has been, and is customarily 
and generally recognized as having been, paid on a piece-rate basis in 
the region of employment, (ii) is employed on the same farm as his 
parent or person standing in the place of his parent, and (iii) is paid 
at the same piece rate as employees over age 16 are paid on the same 
farm, or (E) if such employee is principally engaged in the range 
production of livestock.



Sec. 780.301  Other pertinent statutory provisions.

    (a) Man-day is defined by section 3(u) of the Act as follows:


[[Page 573]]


    ``Man-day'' means any day during which an employee performs any 
agriculture labor for not less than 1 hour.

    (b) Under section 3(e) of the Act the term employee does not include 
certain individuals in determining mandays of labor. Section 3(e) 
provides that:

    ``Employee'' includes any individual employed by an employer, except 
that such term shall not, for the purposes of section 3(u) include:
    (1) Any individual employed by an employer engaged in agriculture if 
such individual is the parent, spouse, child, or other member of the 
employer's immediate family, or
    (2) Any individual who is employed by an employer engaged in 
agriculture if such individual (A) is employed as a hand harvest laborer 
and is paid on a piece rate basis in an operation which has been, and is 
customarily and generally recognized as having been, paid on a piece-
rate basis in the region of employment, and (B) commutes daily from his 
permanent residence to the farm on which he is so employed, and (C) has 
been employed in agriculture less than 13 weeks during the preceding 
calendar year.

    (c) The legislative history of the 1966 amendments to the Fair Labor 
Standards Act indicates that the Congress in enacting minimum wage 
protection (section 6(a)(5)) for agriculture workers for the first time 
sought to provide a minimum wage floor for the farmworkers on large 
farms or agri-business enterprises. The section 13(a)(6)(A) exemption 
was intended to exempt those farmworkers on the smaller or familysize 
farms. In keeping with this intention, a labor requirement of 500 man-
days was incorporated into the exemption, and certain workers were 
specifically excluded from the man-day count, as provided in section 
3(e) (1) and (2).



Sec. 780.302  Basic conditions of section 13 (a)(6)(A).

    Section 13(a)(6)(A) applies to an employee provided all the 
following conditions are met:
    (a) He must be ``employed in agriculture''
    (b) By an ``employer''
    (c) Who did not use more than ``500 man-days'' of agriculture labor
    (d) During any ``calendar quarter of the preceding calendar year.''

The following sections discuss the meaning and application of these 
requirements.



Sec. 780.303  Exemption applicable on employee basis.

    Section 13(a)(6)(A) exempts ``any employee employed in agriculture * 
* * by an employer * * *.'' It is clear from this language that it is 
the activities of the employee rather than those of his employer which 
determine the application of the exemption. In other words, the 
exemption applies only to employees who are engaged in agricultural 
activities. Thus some employees of the employer may be exempt while 
others may not. In any case the burden of effecting segregation between 
exempt and nonexempt work as between different groups of employees is 
upon the employer. For a more detailed discussion of what constitutes 
employment in agriculture, see subpart B of this part.



Sec. 780.304  ``Employed by an employer.''

    (a) The employer may be an individual, a partnership, or a 
corporation. It is not necessary that the employer be a farmer as 
defined in Sec. 780.131. It is sufficient that he ``uses'' agricultural 
labor.
    (b) In applying this exemption, one of the main criteria is the 
number of man-days of agricultural labor used by the employer. Section 
13(a)(6)(A) provides that the exemption shall not apply to an employee 
employed in agriculture ``if such employee is employed by an employer 
who did not * * * use more than 500 man-days of agricultural labor * * 
*.'' From this language of the statute, the man-days of all agricultural 
workers, unless specifically excluded, of an employer whether he be the 
owner of a single farm, the owner of an enterprise consisting of several 
farms, a tenant farmer, an independent contractor, etc., are to be 
counted for purposes of section 13(a)(6)(A) whether they are employed at 
one place or several widely scattered places. For example if an employer 
owns and operates two farms, it is the total number of man-days used on 
both farms and not that used on each individual farm that determines 
whether he meets the 500 man-day test. Likewise independent

[[Page 574]]

contractor who harvests crops on different farms during the harvesting 
season must total all the man-days of agricultural labor used on all 
such farms except those excludable under section 3(e) in determining 
whether he meets the 500 man-day test.



Sec. 780.305  500 man-day provision.

    (a) Section 3(u) of the Act defines man-day to mean ``any day during 
which an employee performs agricultural labor for not less than 1 
hour.'' 500 man-days is approximately the equivalent of seven employees 
employed full-time in a calendar quarter. However, a farmer who hires 
temporary or part-time employees during part of the year, such as the 
harvesting season, may exceed the man-day test even though he may have 
only two or three full-time employees.
    (b) All of the employer's employees who are engaged in 
``agricultural labor'' except those specifically excluded by section 
3(e) (see Sec. 780.301) and those exempt under section 13(a)(14) (see 
subpart F of this part) must be counted in determining whether the 500 
man-day test is met. This is true even though an employee may be exempt 
from the monetary provisions under another section of the Act. For 
example, a general manager of a farm may be an exempt executive employee 
under section 13(a)(1) or a sheepherder may meet the requirements of 
section 13(a)(6)(E). Regardless of those exemptions, their man-days of 
employment would be included in the man-day count of the employer.
    (c) A farmer whose crops are harvested by an independent contractor 
is considered to be a joint employer with the contractor who supplies 
the harvest hands if the farmer has the power to direct, control or 
supervise the work, or to determine the pay rates or method of payment 
for the harvest hands. (See Sec. 780.331.) Each employer must include 
the contractor's employees in his man-day count in determining whether 
his own man-day test is met. Each employer will be considered 
responsible for compliance with the minimum wage and child labor 
requirements of the Act with respect to the employees who are jointly 
employed.

[37 FR 12084, June 17, 1972, as amended at 38 FR 27520, Oct. 4, 1973]



Sec. 780.306  Calendar quarter of the preceding calendar year defined.

    In applying section 13(a)(6)(A), it is necessary to consider each of 
the four calendar quarters (January 1-March 31; April 1-June 30; July 1-
September 30; October 1-December 31) in the preceding calendar year 
(January 1-December 31). If in any calendar quarter of the preceding 
calendar year the employer used more than 500 man-days of agricultural 
labor, he must comply with the minimum wage requirements of section 
6(a)(5) with respect to any employee not otherwise exempt in the current 
year. Compliance with the Act is required in the current year regardless 
of the number of man-days of agricultural labor used in the current 
year. On the other hand, if in the preceding calendar year the number of 
man-days used did not exceed 500 in any calendar quarter, there is no 
requirement to comply with respect to employment of agricultural labor 
in the current calendar year regardless of how many man-days are used in 
any calendar quarter of the current calendar year. Such employees are 
exempt under the basic provisions of section 13(a)(6)(A).



Sec. 780.307  Exemption for employer's immediate family.

    Section 13(a)(6)(B) of the Fair Labor Standards Amendments of 1966 
provides a minimum wage and overtime exemption in the case of ``any 
employee engaged in agriculture * * * if such employee is the parent, 
spouse, child, or other member of the employer's immediate family.'' The 
requirements of this exemption, evident from the statutory language, are 
that the employee be employed in agriculture and that he be a close 
blood relative, spouse or member of the employer's immediate family. 
Reference is made to subpart B of this part as to what constitutes 
employment in agriculture. The section 13(a)(6)(B) exemption applies to 
such an individual even though he is employed by an employer who 
otherwise used more than 500 man-days of agricultural labor in a 
calendar

[[Page 575]]

quarter of the preceding calendar year, as discussed in Sec. 780.305.



Sec. 780.308  Definition of immediate family.

    The Act does not define the scope of ``immediate family.'' Whether 
an individual other than a parent, spouse or child will be considered as 
a member of the employer's immediate family, for purposes of sections 
3(e)(1) and 13(a)(6)(b), does not depend on the fact that he is related 
by blood or marriage. Other than a parent, spouse or child, only the 
following persons will be considered to qualify as part of the 
employer's immediate family: Step-children, foster children, step-
parents and foster parents. Other relatives, even when living 
permanently in the same household as the employer, will not be 
considered to be part of the ``immediate family.''

[38 FR 17726, July 3, 1973]



Sec. 780.309  Man-day exclusion.

    Section 3(e)(1) specifically excludes from the employer's man-day 
total (as defined in section 3(u)) employees who qualify for exemption 
under section 13(a)(6)(B). See Sec. 780.301. This man-day count is a 
basic factor in the application of the section 13(a)(6)(A) exemption. 
See Sec. 780.302 et seq.



Sec. 780.310  Exemption for local hand harvest laborers.

    Section 13(a)(6)(C) was added to the Act by the Fair Labor Standards 
Amendments of 1966. The legislative history of the exemption indicates 
that it was intended to apply to the local worker who goes out on a 
temporary basis during the harvest season to harvest crops. The 
exemption was not intended to apply to a full-time farmworker, that is, 
one who earns a livelihood at farming. For instance, migrant laborers 
who travel from farm to farm were not intended to be within the scope of 
this exemption.



Sec. 780.311  Basic conditions of section 13(a)(6)(C).

    (a) Section 13(a)(6)(C) of the Act applies to an employee who:
    (1) Is employed in agriculture.
    (2) Is employed as a hand harvest laborer.
    (3) Is paid on a piece-rate basis.
    (4) Is paid piece-rates in an operation which has been, and is 
customarily and generally recognized as having been, paid on a piece-
rate basis in the region of employment.
    (5) Commutes daily from his permanent residence to the farm on which 
he is so employed.
    (6) Has been employed in agriculture less than 13 weeks during the 
preceding calendar year.
    (b) In order for the exemption to apply to an employee, all of the 
requirements must be met. Since a hand harvest laborer is normally an 
agricultural worker, while so engaged, such an employee would meet the 
basic requirements that he be employed in agriculture. Subpart B of this 
part contains a more detailed discussion of what constitutes employment 
in agriculture. The meaning and application of the remaining 
requirements are discussed in the following sections.



Sec. 780.312  ``Hand harvest laborer'' defined.

    (a) The term hand harvest laborer for purposes of this exemption 
refers to farm workers engaged in harvesting by hand, or with hand 
tools, soil grown crops such as cotton, tobacco, grains, fruits, and 
vegetables. The term would not include harvesting operations performed 
by an employee with an electrically powered mechanical device, such as a 
``blueberry picking tool.'' ``Hand-harvesting'' refers only to soil-
grown crops and does not include any operation involving animals, such 
as shearing or lambing of sheep and catching chickens. Hand-harvesting 
is defined as manually gathering or severing the crop from the soil, 
stems, or roots at its growing position in the fields. Included are 
integral related operations, closely related geographically and in point 
of time, which are performed before the transportation to concentration 
points on the farm.

    For example:
    (1) Employees who take tobacco leaves from the pickers and string 
them on poles by hand qualify as ``hand harvest laborers'' because the 
stringing operation is performed in the field almost simultaneously with 
the picking and before transportation to the concentration point on the 
farm (drying shed).

[[Page 576]]

    (2) The picking up of tomatoes by hand after hand pulling from the 
vines is ``hand-harvesting,'' as it is performed where the crop is 
severed and prior to its transportation to the packing shed.

    (b) The definition is limited to harvesting, and the performance by 
the hand harvester of any nonharvesting operation in the same workweek 
would cause the loss of the section 13(a)(6)(C) exemption.

    For example:
    (1) Employees who wrap tomatoes in a packing shed would not qualify, 
as the wrapping is a nonharvesting operation. (Schultz v. Durrence (S.D. 
Ga.) 63 CCH. Lab. Cas. 32,387; 19 W.H. Cases 747.)
    (2) Employees who hand pick small undesirable fruit prior to 
harvesting in order to insure a better crop would not qualify for the 
exemption. This is a preharvest culling operation performed as a part of 
the cultivation and growing operations not harvesting.
    (3) Employees who chop cotton, since this is a nonharvesting 
operation.



Sec. 780.313  Piece rate basis.

    The exemption provides that the employee must be paid on a piece-
rate basis. To be exempt the employee must be compensated solely on 
piece rates during the workweek. The exemption does not apply in any 
workweek in which the employee is compensated on any other basis. For 
example, if an employee is compensated on an hourly rate for part of the 
week and on a piece rate for part of the week, the exemption would not 
be available. Also, if any pieceworker who is otherwise subject to the 
minimum wage provisions of the Act does not meet all the requirements 
set forth in this section he must be paid at least the minimum wage for 
each hour worked in a particular workweek, regardless of the fact he is 
paid on piece rate unless he is exempted by some other provision of the 
Act.



Sec. 780.314  Operations customarily * * * paid on a piece rate basis * * *.

    A significant test of the exemption is that the hand harvest 
operation ``has been, and is customarily and generally recognized as 
having been, paid on a piece rate basis in the region of employment.'' 
The legislative history is silent on who must customarily and generally 
recognize the hand harvest operation as having been paid on a piece rate 
basis. However, considering the context in which the term is used, such 
recognition must be on the part of agricultural employers and employees 
and other individuals in the region of employment who are familiar with 
farming operations and practices in the region and the method of 
compensation utilized in such operations and practices.



Sec. 780.315  Local hand harvest laborers.

    (a) A requirement of the exemption is that an employee must commute 
each day from his permanent residence to the farm where he is employed. 
Thus, the exemption does not apply to a migrant worker who travels to 
different areas of the country during the harvesting seasons. This would 
be true even though the worker may remain in the area for a considerable 
period of time. On the other hand, if a migrant worker actually changes 
his place of residence and thereafter commutes daily from his permanent 
residence, the exemption applies from the date of the change of 
residence if the other tests are met.
    (b) The fact that a worker may live on the farm where the operations 
are performed would not be a reason for disqualification. For example, 
if the other tests for the exemption are met, members of a tractor 
driver's family who reside on the farm could be employed in picking 
cotton within the terms of the exemption. Such family members would be 
considered to be commuting daily from their permanent residence despite 
the fact that their residence may be located on the farm at which they 
are employed.



Sec. 780.316  Thirteen week provision.

    (a) The exemption provides that an ``employee must have been 
employed in agriculture less than 13 weeks during the preceding calendar 
year.'' For purposes of determining whether a worker has been employed 
in agriculture less than 13 weeks during the preceding calendar year, a 
week is considered to be a fixed and regularly recurring period of 168 
hours consisting of seven consecutive 24-hour periods during which the 
employee worked at least 1 ``man-day.'' Section 3(u) of the Act defines 
a

[[Page 577]]

man-day as ``any day during which an employee performs any agricultural 
labor for not less than 1 hour.''
    (b) In defining the term ``week'' in this manner for purposes of 
section 13(a)(6)(C) (as well as section 3(e)(2)) comports with the 
traditional definition of week used in administering all the other 
provisions of the law. On this basis, the phrase ``employed in 
agriculture less than 13 weeks'' means that an employee has spent less 
than 13 weeks in agricultural work, regardless of the number of hours he 
worked during each one of the 13 weekly units. This position recognizes 
and accommodates to situations where an employee works very long as well 
as very short hours during the week. This would accord with the 
legislative history of this exemption which clearly indicates that it 
was meant to apply only to temporary workers whose hours of work would 
undoubtedly vary in length, and would, thereby effectuate the 
legislative intent.
    (c) In determining the 13-week period, not only that work for the 
current employer in the preceding calendar year is counted, but also 
that agricultural work for all employers in the previous year. It is the 
total of all weeks of agricultural employment by the employee for all 
employers in the preceding calendar year that determines whether he 
meets the 13-week test. In this respect a self-employed farmer who works 
as a hand harvest laborer during part of the year is considered to be 
``employed'' in agriculture only during those weeks when he is an 
employee of other farmers. Thus, such weeks of employment are to be 
counted but any weeks when he works only for himself are not counted 
toward the 13 weeks.
    (d) The 13-week test applies to each individual worker. It does not 
apply on a family basis. To carry the example in the preceding section 
further, members of a tractor driver's family who reside on the farm 
could be employed in picking cotton within the terms of the exemption 
even though the driver had been employed in agriculture as much as 13 
weeks in the previous calendar year, so long as the family members 
themselves had not.
    (e) If an employer claims this exemption, it is the employer's 
responsibility to obtain a statement from the employee showing the 
number of weeks he was employed in agriculture during the preceding 
calendar year. This requirement is contained in the recordkeeping 
regulations in Sec. 516.33 (d) of this chapter.



Sec. 780.317  Man-day exclusion.

    Section 3(e)(2) specifically excludes from the employer's man-day 
total (as defined in section 3(u)) employees who qualify for exemption 
under section 13(a)(6)(C). (See Sec. 780.301.) This man-day count is a 
basic factor in the application of the section 13(a)(6)(A) exemption. 
(See Sec. 780.302 et seq.)



Sec. 780.318  Exemption for nonlocal minors.

    (a) Section 13(a)(6)(D) of the 1966 Amendments to the Fair Labor 
Standards Act exempts from the minimum wage and overtime provisions 
``any employee employed in agriculture * * * if such employee (other 
than an employee described in clause (C) of this subsection): (1) Is 16 
years of age or under and is employed as a hand harvest laborer, is paid 
on a piece rate basis in an operation which has been, and is customarily 
and generally recognized as having been, paid on a piece rate basis in 
the region of employment, (2) is employed on the same farm as his parent 
of persons standing in the place of his parent, and (3) is paid at the 
same piece rate as employees over age 16 are paid on the same farm.''
    (b) It is clear from the legislative history of the amendments that 
the exemption was intended to apply, where the other specific tests are 
met, only to minors 16 years of age or under who are not ``local'' in 
the sense that they are away from their permanent home when employed in 
agriculture. Specifically the exemption was intended to apply in the 
case of the children of migrants who typically accompany their parents 
in harvesting and other agricultural work. (S. Rept. No. 1487, 89th 
Cong., second sess., to accompany H.R. 13712, pp. 9 and 10)

[[Page 578]]



Sec. 780.319  Basic conditions of exemption.

    (a) Section 13(a)(6)(D) applies to an employee engaged in 
agriculture who meets all of the following tests:
    (1) Is not a local hand harvest laborer,
    (2) Is 16 years of age or under,
    (3) Is employed as a hand harvest laborer,
    (4) Is paid on a piece rate basis,
    (5) Is employed in an operation which has been, and is customarily 
and generally recognized as having been, paid on a piece rate basis in 
the region of employment,
    (6) Is employed on the same farm as his parent or person standing in 
the place of his parent, and
    (7) Is paid at the same piece rate as employees over age 16 are paid 
on the same farms.
    (b) Some of these requirements which are common to both sections 
13(a)(6)(C) and 13(a)(6)(D) have already been discussed in connection 
with section 13(a)(6)(C) and need not be repeated. They are found in 
Sec. Sec. 780.311 (employed in agriculture), 780.312 (hand harvest 
laborer), 780.313 (piece rate basis), and 780.314 (operations 
customarily * * * paid on a piece rate basis). The other requirements 
are discussed in the following sections.



Sec. 780.320  Nonlocal minors.

    The exemption applies only to migrant or other than local hand 
harvest workers 16 years of age or under who do come within the scope of 
section 13(a)(6)(C) (application to all local hand harvest laborers who 
commute daily from their permanent residences). (See Sec. 780.315.) A 
local youth under the prescribed age who commutes daily from his 
permanent residence to the farm to perform work is not exempt under 
section 13(a)(6)(D). The exemption may, however, be available for the 
specified minors who work for short periods of several days or weeks 
without returning daily to their homes on farms beyond commuting 
distances from their permanent homes.



Sec. 780.321  Minors 16 years of age or under.

    Section 13(a)(6)(D) by its very terms is available only to employees 
16 years of age or under. Accordingly, even though all the other tests 
of the exemption are met, the exemption is inapplicable in the case of 
an employee over 16 years of age and the employer must pay to such an 
employee the applicable statutory minimum wage unless his operations 
come within the reach of some other exemption, such as section 
13(a)(6)(A). Furthermore, although section 13(a)(6)(D) provides a 
minimum wage and overtime exemption for minors 16 years of age or under, 
the employer must nevertheless comply with the child labor provisions of 
the Act prohibiting the employment of minors in agriculture except under 
certain conditions and circumstances. These provisons are discussed in 
part 1500, subpart G of this title.



Sec. 780.322  Is employed on the same farm as his parent or persons
standing in the place of his parent.

    (a) The words ``employed on the same farm'' are accorded their 
natural meaning with the usual caution, however, that as in the case of 
all other exemptions, the exemptive language is to be construed 
narrowly. (See Sec. 780.2.)
    (b) Individuals who are considered as ``his parent or persons 
standing in place of his parent'' include natural parents, or any other 
person where the relationship between that person and a child is such 
that the person may be said to stand in place of a parent. For example, 
one who takes a child into his home and treats it as a member of his own 
family, educating and supporting the child as if it were his own, is 
generally said to stand to the child in place of a parent.



Sec. 780.323  Exemption for range production of livestock.

    Section 13(a)(6)(E) which was added to the Act by the Fair Labor 
Standards Amendments of 1966 provides an exemption from the minimum wage 
and overtime requirements of the Act for any employee ``employed in 
agriculture'' if he is ``principally engaged in the range production of 
livestock.'' It is apparent from the language of section 13(a)(6)(E) 
that the application of this exemption depends on the type of work 
performed by the individual employee for whom exemption is sought

[[Page 579]]

and on where the work is done. A determination of whether an employee is 
exempt therefore requires an examination of that employee's duties and 
where they are performed. Some employees of the employer may be exempt 
while others may not.



Sec. 780.324  Requirements for the exemption to apply.

    (a) All the following conditions must be met in order for the 
exemption to apply to an employee:
    (1) He must be ``engaged in agriculture'';
    (2) Be ``principally engaged'';
    (3) On the ``range'', and
    (4) In the ``production of livestock.''
    (b) Since the raising of livestock is included in the definition of 
agriculture under section 3(f) of the Act (see Sec. Sec. 780.119-
780.121 of subpart B of this part), the range production of livestock 
would normally be deemed agriculture work, and, consequently, an 
employee, during this time he is engaged in such activities, would meet 
the basic requirement of the exemption that he be ``employed in 
agriculture.''

The following sections discuss the meaning and application of the other 
requirements.



Sec. 780.325  Principally engaged.

    (a) To determine whether an employee is ``principally engaged'' in 
the range production of livestock, one must consider the nature of his 
duties and responsibilities. To qualify for this exemption the primary 
duty and responsibility of a range employee must be to take care of the 
animals actively or to stand by in readiness for that purpose. A 
determination of whether an employee has range production of livestock 
as his primary duty must be based on all the facts in a particular case. 
The amount of time spent in the performance of the range production 
duties is a useful guide in determining whether this is the primary duty 
of the employee. In the ordinary case it will be considered that the 
primary duty means the major part, or over 50 percent, of the employee's 
time.
    (b) Under this principle, an employee who spends more than 50 
percent of his time during the year on the range in the duties 
designated as range production duties would be exempt. This is true even 
though the employee may perform some activities not directly related to 
the range production of livestock, such as putting up hay or 
constructing dams or digging irrigation ditches.



Sec. 780.326  On the range.

    (a) For purposes of this exemption, ``range'' is defined generally 
as land that is not cultivated. It is land that produces native forage 
for animal consumption, and includes land that is revegetated naturally 
or artificially to provide a forage cover that is managed like range 
vegetation. ``Forage'' as used here means ``browse'' or herbaceous food 
that is available to livestock or game animals.
    (b) The range may be on private or Federal or State land, and need 
not be open. Typically it is not only noncultivated land, but land that 
is not suitable for cultivation because it is rocky, thin, semiarid, or 
otherwise poor. Typically, also, many acres of range land are required 
to graze one animal unit (five sheep or one cow) for 1 month. By its 
nature, range production of livestock is most typically conducted over 
wide expanses of land, such as thousands of acres.



Sec. 780.327  Production of livestock.

    For an employee to be engaged in the production of livestock, he 
must be actively taking care of the animals or standing by in readiness 
for that purpose. Thus, such activities as herding, handling, 
transporting, feeding, watering, caring for, branding, tagging, 
protecting, or otherwise assisting in the raising of livestock and in 
such immediately incidental duties as inspecting and repairing fences, 
wells, and windmills would be considered as the production of livestock. 
On the other hand, such work as terracing, reseeding, haying, and 
constructing dams, wells, and irrigation ditches would not be considered 
as the production of livestock within the meaning of the exemption.



Sec. 780.328  Meaning of livestock.

    The term ``livestock'' includes cattle, sheep, horses, goats, and 
other domestic animals ordinarily raised or used on

[[Page 580]]

the farm. This is further discussed in Sec. 780.120. Turkeys or 
domesticated fowl are considered poultry and not livestock within the 
meaning of this exemption.



Sec. 780.329  Exempt work.

    (a) The standard that must be used to determine whether the 
individual employee is exempt is that his primary duty must be the range 
production of livestock and that this duty necessitates his constant 
attendance on the range, on a standby basis, for such periods of time so 
as to make the computation of hours worked extremely difficult. The fact 
that an employee generally returns to his place of residence at the end 
of each day would not affect the application of the exemption.
    (b) Thus, exempt work must be performed away from the 
``headquarters.'' The headquarters is not, however, to be confused with 
the ``headquarters ranch.'' The term headquarters has reference to the 
place for the transaction of the business of the ranch (administrative 
center), as distinguished from buildings or lots used for convenience 
elsewhere. It is a particular location for the discharge of the 
management duties. Accordingly, the term ``headquarters'' would not 
embrace large acreage, but only the ranchhouse, barns, sheds, pen, 
bunkhouse, cookhouse, and other buildings in the vicinity. The balance 
of the ``headquarters ranch'' would be the ``range.''
    (c) Furthermore, the legislative history indicates that this 
exemption was not intended to apply to feed lots or to any area where 
the stock involved would be near headquarters. Its sponsors stated that 
the exemption would apply only to those employees principally engaged in 
activities which require constant attendance on a standby basis, away 
from headquarters, such as herding, where the computation of hours 
worked would be extremely difficult. Such constant surveillance of 
livestock that graze and reproduce on range lands is necessary to see 
that the animals receive adequate care, water, salt, minerals, feed 
supplements, and protection from insects, parasites, disease, predators, 
adverse weather, etc.
    (d) The man-days of labor of employees principally engaged in the 
range production of livestock, even though the employees are exempt from 
the wage and hour requirements of the Act, are included in the 
employer's man-day count for purposes of application of section 
13(a)(6)(A). Thus, if a cattle rancher in a particular calendar quarter 
uses 200 man-days of such range production labor and 400 man-days of 
agricultural labor performed by individuals not so engaged, he is 
required to pay the minimum wage to the latter employees in the 
following year.



Sec. 780.330  Sharecroppers and tenant farmers.

    (a) The test of coverage for sharecroppers and tenant farmers is the 
same as that applied under the Act to determine whether any other person 
is an employee or not. Certain so-called sharecroppers or tenants whose 
work activities are closely guided by the landowner or his agent are 
covered. Those individuals called sharecroppers and tenants whose work 
is closeIy directed and who have no actual discretion in controlling 
farm operations are in fact employees by another name. True independent-
contractor sharecroppers or tenant farmers who actually control their 
farm operations are not employees, but if they employ other workers they 
may be responsible as employers under the Act.
    (b) In determining whether such individuals are employees or 
independent contractors, the criteria laid down by the courts in 
interpreting the Act's definitions of employment, such as those 
enunciated by the Supreme Court in Rutherford Food Corporation v. 
McComb, are utilized. This case, as well as others, made it clear that 
the answer to the question of whether an individual is an employee or an 
independent contractor under the definitions in this Act lies in the 
relationship in its entirety, and is not determined by common law 
concepts. It does not depend upon isolated factors but on the ``whole 
activity.'' An employee is one who as a matter of economic reality 
follows the usual path of an employee. Each case must be decided on

[[Page 581]]

the basis of all facts and circumstances, and as an aid in the 
assessment, one considers such factors as the following:
    (1) The extent to which the services rendered are an integral part 
of the principal's business;
    (2) The permanency of the relationship;
    (3) The opportunities for profit or loss;
    (4) The initiative, judgment, or foresight exercised by the one who 
performs the services;
    (5) The amount of investment; and
    (6) The degree of control which the principal has in the situation.
    (c) Where a tenant or sharecropper is found to be an employee, he 
and any members of his family who work with him on the crop are also to 
be included in the 500 man-day count of the owner or operator of the 
farm. Thus, where a sharecropper is an employee and his wife and 
children help in chopping cotton, all the family members are employees 
of the farm owner or operator and all their man-days of work are 
counted.
    (d) On the other hand, a sharecropper or tenant who qualifies as a 
bona fide independent contractor is considered the same as any other 
employer, and only the man-days of agricultural labor performed by 
employees of such a sharecropper or tenant are counted toward the man-
days used by him. If he does not meet the 500 man-day test, he is not 
required to pay his employees the minimum wage even though those 
employees are entitled to the minimum wage when working for a separate 
employer who met the man-day test.



Sec. 780.331  Crew leaders and labor contractors.

    (a) Whether a crew leader or a labor contractor is the employer of 
the workers he supplies is a question of fact. The tests here are the 
same as those used to determine whether a sharecropper or tenant is an 
independent contractor. A crew leader who merely assembles a crew and 
brings them to the farm to be supervised and paid directly by the 
farmer, and who does the same work and receives the same pay as the 
crewmembers, is an employee of the farmer, and both he and his crew are 
counted as such and paid accordingly if the farmer is not exempt under 
the 500 man-day test. The situation is not significantly different if 
under the same circumstances, the crew is hired at so much per acre for 
their work. This is in effect a group piecework arrangement.
    (b) The situation is different where the farmer only establishes the 
general manner for the work to be done. Where this is the case, the 
labor contractor is the employer of the workers if he makes the day-to-
day decisions regarding the work and has an opportunity for profit or 
loss through his supervision of the crew and its output. As the 
employer, he has the authority to hire and fire the workers and direct 
them while working in the fields. Complaints by the farmer about the 
quality or quantity of the work or about a worker are made to the 
contractor or his representatives, who takes whatever action he deems 
appropriate. His opportunity for profit or loss comes from his control 
over the time and manner of performance of work by his crew and his 
authority to determine the wage rates paid to his workers.
    (c) There is also the common and general practice of an individual 
who performs custom work such as crop dusting or grain harvesting and 
threshing or sheepshearing. In the typical case this contractor has a 
substantial investment in equipment and his business decisions and 
judgments materially affect his opportunity for profit or loss. In the 
overall picture, the contractor is not following the usual path of an 
employee, but that of an independent contractor.

    For example: A sheepshearing contractor who operates in the 
following manner is considered an independent contractor and therefore 
an agricultural employer in his own right--he operates his own equipment 
including power supply from his own trucks or trailers, boards his 
shearing crew and has complete responsibility for their work and 
compensation, has complete charge of the sheep from the time they enter 
the shearing pen until they are shorn and turned out, and contracts with 
the rancher for the complete operation at an agreed rate per head.

    (d) Whether or not a labor contractor or crew leader is found to be 
a bona

[[Page 582]]

fide independent contractor, his employees are considered jointly 
employed by him and the farmer who is using their labor if the farmer 
has the power to direct, control or supervise the work, or to determine 
the pay rates or method of payment. (Hodgson v. Okada (C.A. 10), 20 W.H. 
Cases 1107; Hodgson v. Griffin & Brand (C.A. 5) 20 W.H. Cases 1051; 
Mitchell v. Hertzke, 234 F. 2d 183, 12 W.H. Cases 877 (C.A. 10).) In a 
joint employment situation, the man-days of agricultural labor rendered 
are counted toward the man-days of such labor of each employer. Each 
employer is considered equally responsible for compliance with the Act. 
With respect to the recordkeeping regulations in 29 CFR 516.33, the 
employer who actually pays the employees will be considered primarily 
responsible for maintaining and preserving the records of hours worked 
and employees' earnings specified in paragraph (c) of Sec. 516.33 of 
this chapter.

[37 FR 12084, June 17, 1972, as amended at 38 FR 27521, Oct. 4, 1973]



Sec. 780.332  Exchange of labor between farmers.

    (a) Occasionally a farmer may help his neighbor with the harvest of 
his crop. For instance, Farmer B helps his neighbor Farmer A harvest his 
wheat. In return Farmer A helps Farmer B with the harvest at his farm.
    (b) In a case where neighboring farmers exchange their own work 
under an arrangement where the work of one farmer is repaid by the labor 
of the other farmer and there is no monetary compensation for these 
services paid or contemplated, the Department of Labor would not assert 
that either farmer is an employee of the other.
    (c) In addition, there may be instances where employees of a farmer 
also work for neighboring farmers during harvest time. For example, 
employees of Farmer A may help Farmer B with his harvest, and later, 
Farmer B's employees may help Farmer A. These employees would be 
included in the man-day count of the farmer for whom the work is 
performed on the day in question. Since the Act defines man-day to mean 
any day during which an employee performs any agricultural labor for not 
less than 1 hour, there may be days on which these employees work for 
both Farmer A and Farmer B for a ``man-day.'' In that event they would 
be included for that day in the man-day count of both Farmer A and 
Farmer B.



Subpart E_Employment in Agriculture or Irrigation That Is Exempted From 
          the Overtime Pay Requirements Under Section 13(b)(12)



Sec. 780.400  Statutory provisions.

    Section 13(b)(12) of the Fair Labor Standards Act exempts from the 
overtime provisions of section 7 any employee employed in agriculture or 
in connection with the operation or maintenance of ditches, canals, 
reservoirs, or waterways, not owned or operated for profit, or operated 
on a sharecrop basis, and which are used exclusively for supply and 
storing of water, at least 90 percent of which was ultimately delivered 
for agricultural purposes during the preceding calendar year.

[76 FR 18859, Apr. 5, 2011]



Sec. 780.401  General explanatory statement.

    (a) Section 13(b)(12) of the Act contains the same wording exempting 
any employee employed in agriculture as did section 13(a)(6) prior to 
the 1966 amendments. The effect of this is to provide a complete 
overtime exemption for any employee employed in ``agriculture'' who does 
not qualify for exemption under section 13(a)(6) (A), (B), (C), (D), and 
(E) of the 1966 amendments.
    (b) In addition to exempting employees engaged in agriculture, 
section 13(b)(12) also exempts from the overtime provisions of the Act 
employees employed in specified irrigation activities. The effect of the 
1997 amendment to section 13(b)(12) is to expand the overtime exemption 
for any employee employed in specified irrigation activities used for 
supply and storing of water for agricultural purposes by substituting 
``water, at least 90 percent of

[[Page 583]]

which was ultimately delivered for agricultural purposes during the 
preceding calendar year'' for the prior requirement that all the water 
be used for agricultural purposes. Prior to the 1966 amendments 
employees employed in specified irrigation activities were exempt from 
the minimum wage and overtime pay requirements of the Act.
    (c) For exempt employment in ``agriculture,'' see subpart B of this 
part.

[37 FR 12084, June 17, 1972, as amended at 76 FR 18859, Apr. 5, 2011]



Sec. 780.402  The general guides for applying the exemption.

    (a) Like other exemptions provided by the Act, the section 13(b)(12) 
exemption is narrowly construed (Phillips, Inc. v. Walling, 334 U.S. 
490; Bowie v. Gonzalez, 117 F. 2d 11; Calaf v. Gonzalez, 127 F. 2d 934; 
Fleming v. Hawkeye Pearl Button Co., 113 F. 2d 52; Fleming v. Swift & 
Co., 41 F. Supp. 825; Miller Hatcheries v. Boyer, 131 F. 2d 283; Walling 
v. Friend, 156 F. 2d 429; see also Sec. 780.2 of subpart A of this part 
780). An employer who claims the exemption has the burden of showing 
that it applies. (See Sec. 780.2) The section 13(b)(12) exemption for 
employment in agriculture is intended to cover all agriculture, 
including ``extraordinary methods'' of agriculture as well as the more 
conventional ones and large operators as well as small ones. 
Nevertheless, it was meant to apply only to agriculture. It does not 
extend to processes that are more akin to manufacturing than to 
agriculture. Practices performed off the farm by nonfarmers are not 
within the exemption, except for the irrigation activities specifically 
described in section 13(b)(12). Practices performed by a farmer do not 
come within the exemption for agriculture if they are neither a part of 
farming nor performed by him as an incident to or in conjunction with 
his own farming operations. These principles have been well established 
by the courts in such cases as Mitchell v. Budd, 350 U.S. 473; Maneja v. 
Waialua, 349 U.S. 254; Farmers Reservoir Co. v. McComb, 337 U.S. 755; 
Addison v. Holly Hill Fruit Products, 322 U.S. 607; Calaf v. Gonzalez, 
127 F. 2d 934; Chapman v. Durkin, 214 F. 2d 363, certiorari denied, 348 
U.S. 897; McComb v. Puerto Rico Tobacco Marketing Co-op. Ass'n. 80 F. 
Supp. 953, 181 F. 2d 697.
    (b) When the Congress, in the 1961 amendments, provided special 
exemptions for some activities which had been held not to be included in 
the exemption for agriculture (see subparts F and J of this part 780), 
it was made very clear that no implication of disagreement with ``the 
principles and tests governing the application of the present 
agriculture exemption as enunciated by the courts'' was intended 
(Statement of the Managers on the part of the House, Conference Report, 
H. Rept. No. 327, 87th Cong. first sess., p. 18). Accordingly, an 
employee is considered an exempt agricultural or irrigation employee if, 
but only if, his work falls clearly within the specific language of 
section 3(f) or section 13(b)(12).



Sec. 780.403  Employee basis of exemption under section 13(b)(12).

    Section 13(b)(12) exempts ``any employee employed in * * *.'' It is 
clear from this language that it is the activities of the employee 
rather than those of his employer which ultimately determine the 
application of the exemption. Thus the exemption may not apply to some 
employees of an employer engaged almost exclusively in activities within 
the exemption, and it may apply to some employees of an employer engaged 
almost exclusively in other activities. But the burden of effecting 
segregation between exempt and nonexempt work as between different 
groups of employees is upon the employer.



Sec. 780.404  Activities of the employer considered in some situations.

    Although the activities of the individual employee, as distinguished 
from those of his employer, constitute the ultimate test for applying 
the exemption, it is necessary in some instances to examine the 
activities of the employer. For example, in resolving the status of the 
employees of an irrigation company for purposes of the agriculture 
exemption, the U.S. Supreme Court, found it necessary to consider the 
nature of the employer's activities (Farmers Reservoir Co. v. McComb, 
337 U.S. 755).

[[Page 584]]

                        The Irrigation Exemption



Sec. 780.405  Exemption is direct and does not mean activities are 
agriculture.

    The exemption provided in section 13(b)(12) for irrigation 
activities is a direct exemption which depends for its application on 
its own terms and not on the meaning of ``agriculture'' as defined in 
section 3(f). This exemption was added by an amendment to section 
13(a)(6) in 1949 to alter the effect of the decision of the U.S. Supreme 
Court in Farmers Reservoir Company v. McComb, 337 U.S. 755, so as to 
exclude the type of employees involved in that case from certain 
requirements of the Act. Congress chose to accomplish this result, not 
by expanding the definition of agriculture in section 3(f), but by 
adding a further exemption. In view of this approach, it can well be 
said that Congress agreed with the Supreme Court's holding that such 
workers are not employed in agriculture. (Goldberg v. Crowley Ridge 
Assn., 295 F. 2d 7.) Irrigation workers who are employed in any workweek 
exclusively by a farmer or on a farm in irrigation work which meets the 
requirement of performance as an incident to or in conjunction with the 
primary farming operations of such farmer or such farm, as previously 
explained, are considered as employed in agriculture under section 3(f) 
and may qualify for the minimum wage and overtime exemption under 
section 13(a)(6) or for the overtime exemption provided agricultural 
workers under section 13(b)(12). Where they are not so employed, they 
are not considered as agricultural workers (Farmers Reservoir Co. v. 
McComb, supra), but may qualify for the overtime exemption under section 
13(b)(12) relating to irrigation work if their duties and the irrigation 
system on which they work come within the express language of the 
statute. Where this is the case, it is not material whether the 
employees are employed in agriculture.



Sec. 780.406  Exemption is from overtime only.

    This exemption applies only to the overtime provisions of the Act 
and does not affect the minimum wage, child labor, recordkeeping, and 
other requirements of the Act.

[76 FR 18859, Apr. 5, 2011]



Sec. 780.407  System must be nonprofit or operated on a share-crop basis.

    The exemption does not apply to employees employed in the described 
operations on facilities of any irrigation system unless the ditches, 
canals, reservoirs, or waterways in connection with which their work is 
done meet the statutory requirement that they either be not owned or 
operated for profit, or be operated on a share-crop basis. The employer 
is paid on a share-crop basis when he receives, as his total 
compensation, a share of the crop of the farmers serviced.



Sec. 780.408  Facilities of system at least 90 percent of which was 
used for agricultural purposes.

    Section 13(b)(12) requires for exemption of irrigation work that the 
ditches, canals, reservoirs, or waterways in connection with which the 
employee's work is done be ``used exclusively for supply and storing of 
water at least 90 percent of which was ultimately delivered for 
agricultural purposes during the preceding calendar year.'' If a water 
supplier supplies water of which more than 10 percent is used for 
purposes other than ``agricultural purposes'' during the preceding 
calendar year, the exemption would not apply. For example, the exemption 
would not apply where more than 10 percent of the water supplier's water 
is delivered to a municipality to be used for general, domestic, and 
commercial purposes. Water used for watering livestock raised by a 
farmer is ``for agricultural purposes.''

[76 FR 18859, Apr. 5, 2011]



Sec. 780.409  Employment ``in connection with the operation or
maintenance'' is exempt.

    The irrigation exemption provided by section 13(b)(12) applies to 
``any employee employed * * * in connection with the operation or 
maintenance of ditches, canals, reservoirs, or waterways'' of an 
irrigation system which

[[Page 585]]

qualifies for the exemption. The employee, to be exempt, must be 
employed ``in connection with the operation or maintenance'' of the 
named facilities; other employees of the irrigation system, not employed 
in connection with the named activities, are not exempt. The exemption 
may apply to employees engaged in insect, rodent, and weed control along 
the canals and waterways of the irrigation system.



Subpart F_Employment or Agricultural Employees in Processing Shade-Grown 
Tobacco; Exemption From Minimum Wage and Overtime Pay Requirements Under 
                            Section 13(a)(14)

                              Introductory



Sec. 780.500  Scope and significance of interpretative bulletin.

    Subpart A of this part 780 and this subpart F together constitute 
the official interpretative bulletin of the Department of Labor with 
respect to the meaning and application of section 13(a)(14) of the Fair 
Labor Standards Act of 1938, as amended. This section provides an 
exemption from the minimum wage and overtime pay provisions of the Act 
for certain agricultural employees engaged in the processing, prior to 
stemming, or shade-grown tobacco for use as cigar wrapper tobacco. As 
appears more fully in subpart A, interpretations in this bulletin with 
respect to provisions of the Act discussed are official interpretations 
upon which reliance may be placed and which will guide the Secretary of 
Labor and the Administrator in the performance of their duties under the 
Act. The exemptions provided in section 13(a)(6) of the Act for 
employees employed in agriculture is not discussed in this subpart 
except in its relation to section 13(a)(14). The meaning and application 
of the section 13(a)(6) exemption is fully considered in subpart D of 
this part 780.



Sec. 780.501  Statutory provision.

    Section 13(a)(14) of the Fair Labor Standards Act exempts from the 
minimum wage requirements of section 6 of the Act and from the overtime 
provisions of section 7:

    Any agricultural employee employed in the growing and harvesting of 
shade-grown tobacco who is engaged in the processing (including, but not 
limited to, drying, curing, fermenting, bulking, rebulking, sorting, 
grading, aging, and baling) of such tobacco, prior to the stemming 
process, for use as cigar wrapper tobacco.



Sec. 780.502  Legislative history of exemption.

    The exemption for shade-grown tobacco workers was added to the Act 
by the Fair Labor Standards Amendments of 1961. The intent of the 
committee which inserted the provision in the amendments which were 
reported to the House (see H. Rept. No. 75, 87th Cong., first sess., p. 
29) was to exclude from the minimum wage and overtime requirements of 
the Act ``employees engaged prior to the stemming process in processing 
shade-grown tobacco for use as cigar wrapper tobacco, but only if the 
employees were employed in the growing and harvesting of such tobacco''. 
The Report also pointed out that ``such operations were assumed to be 
exempt prior to the case of Mitchell v. Budd, 350 U.S. 473 (1956), as a 
continuation of the agricultural process occurring in the vicinity where 
the tobacco was grown''. The original provision in the House-passed bill 
was in the form of an amendment to the Act's definition of agriculture. 
In that form, it would have altered the effect of the Supreme Court's 
decision in the case of Mitchell v. Budd, cited above, by bringing the 
described employees under the exemption provided for agriculture in 
section 13(a)(6) of the Act. (H. Rept. No. 75, p. 26, and H. Rept. No. 
327, p. 17, 87th Cong., first sess.) The Conference Committee, in 
changing the provision to provide a separate exemption, made it clear 
that it was ``not intended by the committee of conference to change * * 
* by the exemption for employees engaged in the named operations on 
shade-grown tobacco the application of the Act to any other employees. 
Nor is it intended that there be any implication of disagreement by the 
conference committee with the principles and tests governing the 
application of the present agricultural exemption as

[[Page 586]]

enunciated by the courts.'' (H. Rept. No. 327, supra, p. 18.)



Sec. 780.503  What determines the application of the exemption.

    The application of the section 13(a)(14) exemption depends upon the 
nature of the work performed by the individual employee for whom 
exemption is sought and not upon the character of the work of the 
employer. A determination of whether an employee is exempt therefore 
requires an examination of that employee's duties. Some employees of the 
employer may therefore be exempt while others may not.

                       Requirements for Exemption



Sec. 780.504  Basic conditions of exemption.

    Under section 13(a)(14) of the Act all the following conditions must 
be met in order for the exemption to apply to an employee:
    (a) He must work on ``shade-grown tobacco.''
    (b) He must be an ``agricultural employee'' employed ``in the 
growing and harvesting'' of shade-grown tobacco.
    (c) He must be engaged ``in the processing * * * of such tobacco'' 
and this processing must be both ``prior to the stemming process'' and 
to prepare the tobacco ``for use as cigar wrapper tobacco.'' These 
requirements are discussed in the foIlowing sections of this subpart.

                           Shade-Grown Tobacco



Sec. 780.505  Definition of ``shade-grown tobacco.''

    Shade-grown tobacco to which the exemption applies is Connecticut 
Valley Shade-Grown U.S. Type 61 and Georgia-Florida Shade-Grown U.S. 
Type 62.



Sec. 780.506  Dependence of exemption on shade-grown tobacco operations.

    The exemption provided by section 13(a)(14) of the Act is limited to 
the performance of certain operations with respect to the specified 
commodity, shade-grown tobacco. Work in connection with any other kind 
of tobacco, or any other commodity, including any other farm product, is 
not exempt under this section. An employee must be an agricultural 
employee variously employed in the growing and harvesting of ``shade-
grown tobacco'' and in the described processing of ``such tobacco'' in 
order that the section 13(a)(14) exemption may apply.



Sec. 780.507  ``Such tobacco.''

    To be within the exemption, the processing activities with respect 
to shade-grown tobacco must be performed by an employee who has been 
employed in growing and harvesting ``such tobacco.'' The term ``such 
tobacco'' clearly is limited to the specified type of tobacco named in 
the section, that is, shade-grown tobacco. While a literal 
interpretation of the term ``such tobacco'' might lead to a conclusion 
that the exemption extends only to the processing of the tobacco which 
the employee grew or harvested, it appears from the legislative history 
that the intent was to extend the exemption to the processing of such 
tobacco which may be viewed ``as a continuation of the agricultural 
process, occurring in the vicinity where the tobacco was grown.'' (H. 
Rept. 75, 87th Cong., first sess., p. 26.) Thus, it appears that the 
term ``such tobacco'' has reference to the local crop of shade-grown 
tobacco, raised by other local growers as well as by the processor, and 
which is being processed as a continuation of the growing and harvesting 
of such crop in the vicinity.



Sec. 780.508  Application of the exemption.

    (a) As indicated in Sec. 780.504, an employee qualifies for 
exemption under section 13(a)(14) only if he is an agricultural employee 
employed in the growing and harvesting of shade-grown tobacco and is 
engaged in the processing of such tobacco. However, both operations do 
not have to be performed during the same workweek. Section 13(a)(14) of 
the Act is intended to exempt any agricultural employee from the minimum 
wage and overtime provisions of the Act in any workweek when he is 
employed in the growing and harvesting of shade-grown tobacco, 
irrespective of the provisions of section 13(a)(6) and whether or not in 
such workweek he is also engaged in the processing of the tobacco as 
described

[[Page 587]]

in section 13(a)(14). The exemption would also apply in any workweek in 
which the employee, who grew and harvested shade-grown tobacco, is 
exclusively engaged in such processing.
    (b) An employee so employed in any workweek is considered to be 
excluded from the ``employee employed in agriculture'' whose exemption 
from the pay provisions of the Act is governed by section 13(a)(6). 
Therefore, his man-days of exempt labor under section 13(a)(14) in any 
such workweek are not to be counted as man-days of agricultural labor 
within the meaning of section 3(u) of the Act and to which section 
13(a)(6) refers.
    (c) However, since section 3(u) defines man-day to mean ``any day 
during which an employee performs any agricultural labor for not less 
than 1 hour'' in the case of an employee who qualifies for the exemption 
in some workweeks but not in others under section 13(a)(14), all such 
man-days of his agricultural labor in the workweeks when he is not 
exempt under section 13(a)(14) will be counted. In this connection, the 
performance of some agricultural work which does not relate to shade-
grown tobacco by an agricultural employee of a grower of such tobacco 
will not be considered as the performance of nonexempt work outside the 
section 13(a)(14) exemption in any workweek in which such an employee is 
employed by such an employer in the growing and harvesting of such 
tobacco or in its processing prior to stemming, or both, and engages in 
other agricultural work only incidentally or to an insubstantial extent.



Sec. 780.509  Agriculture.

    The definition of ``agriculture,'' as contained in section 3(f) of 
the Act, is discussed in subpart B of this part 780. The principles 
there discussed should be referred to as guides to the meaning of the 
terms ``agricultural employee'' and ``growing and harvesting'' as used 
in section 13(a)(14).



Sec. 780.510  ``Any agricultural employee.''

    The section 13(a)(14) exemption applies to ``any agricultural 
employee'' who is employed in the specified activities. The term ``any 
agricultural employee'' includes not only agricultural employees of the 
tobacco grower but also such employees of other farmers or independent 
contractors. ``Any agricultural employee'' employed in the growing and 
harvesting of shade-grown tobacco will qualify for exemption if he 
engages in the specified processing operations. The use of the word 
``agricultural'' before ``employee'' makes it apparent that separate 
consideration must be given to whether an employee is an ``agricultural 
employee'' and to whether he is employed in the specified ``growing and 
harvesting'' within the meaning of the Act.



Sec. 780.511  Meaning of ``agricultural employee.''

    An ``agricultural employee,'' for purposes of section 13(a)(14), may 
be defined as an employee employed in activities which are included in 
the definition of ``agriculture'' in section 3(f) of the Act (see Sec. 
780.103), and who is employed in these activities with sufficient 
regularity or continuity to characterize him as a person who engages in 
them as an occupation. Isolated or sporadic instances of engagement by 
an employee in activities defined as ``agriculture'' would not 
ordinarily establish that he is an ``agricultural employee.'' His 
engagement in agriculture should be sufficiently substantial to 
demonstrate some dedication to agricultural work as a means of 
livelihood.



Sec. 780.512  ``Employed in the growing and harvesting.''

    Section 13(a)(14) exempts processing operations on shade-grown 
tobacco only when performed by agricultural employees ``employed in the 
growing and harvesting'' of such tobacco. The use of the term ``and'' in 
the phrase ``growing and harvesting'' may be in recognition of the fact 
that in the raising of shade-grown tobacco the two operations are 
typically intermingled; however, it is not considered that the word 
``and'' would preclude a determination on the particular facts that an 
employee is qualified for the exemption if he is employed only in 
``growing'' or only in ``harvesting.'' Employment in work other than 
growing and harvesting of shade-grown tobacco will not satisfy the 
requirement that the employee be employed in growing and

[[Page 588]]

harvesting, even if such work is on shade-grown tobacco and constitutes 
``agriculture'' as defined in section 3(f) of the Act. For example, 
delivery of the tobacco by an employee of the farmer to the receiving 
platform of the bulking plant would be a ``delivery to market'' included 
in ``agriculture'' when performed by the farmer as an incident to or in 
conjunction with his farming operations (Mitchell v. Budd, 350 U.S. 
473), but it would not be part of ``growing and harvesting.''



Sec. 780.513  What employment in growing and harvesting is sufficient.

    To qualify for exemption the employee must be one of those who 
``were employed in the growing and harvesting of such tobacco'' (H. 
Rept. No. 75, 87th Cong., First Sess., p. 29) and one whose processing 
work could be viewed as a ``continuation of the agricultural process, 
occurring in the vicinity where the tobacco was grown.'' (Ibid. p. 26.) 
This appears to require that such employment be in connection with the 
crop of shade-grown tobacco which is being processed; it appears to 
preclude an employee who has had no such employment in the current crop 
season from qualifying for this exemption even if in some past season he 
was employed in growing and harvesting such tobacco. Bona fide 
employment in growing and harvesting shade-grown tobacco would also 
appear to be necessary. An attempt to qualify an employee for the 
processing exemption by sending him to the fields for growing or 
harvesting work for a few hours or days would not establish the bona 
fide employment in growing and harvesting contemplated by the Act. It 
would not seem sufficient that an employee has been engaged in growing 
or harvesting operations only occasionally or casually or incidentally 
for a small fraction of his work time. (See Walling v. Haden, 153 F. 2d 
196.) Employment for a significant period in the current crop season or 
on some regular recurring basis during this season would appear to be 
necessary before an agricultural employee could reasonably be described 
as one ``employed in the growing and harvesting of shade-grown 
tobacco.'' The determination in a doubtful case will, therefore, require 
a careful examination and consideration of the particular facts.



Sec. 780.514  ``Growing'' and ``harvesting.''

    The general meaning of ``growing'' and ``harvesting'' of 
agricultural commodities is explained in Sec. Sec. 780.117 and 780.118 
of subpart B of this part 780, where the meaning of these terms as used 
in the Act's definition of agriculture is fully discussed. As there 
indicated, these terms include the actual raising of the crop and the 
operations customarily performed in connection with the removal of the 
crops by the farmer from their growing position, but do not extend to 
operations subsequent to and unconnected with the actual process whereby 
the agricultural commodities are severed from their attachment to the 
soil. Thus, while transportation to a concentration point on the farm 
may be included, ``harvesting'' never extends to transportation or other 
operations off the farm. The ``growing'' of shade-grown tobacco is 
considered to include such work as preparing the soil, planting, 
irrigating, fertilizing, and other activities. This type of tobacco 
requires special cultivation and is grown in fields that are completely 
enclosed and covered with cheesecloth shade. The leaves of the plant are 
picked in stages, as they mature. The leaves are taken immediateIy to a 
tobacco barn, located on the farm, where they are strung on sticks and 
dried by heat. Before the drying process is completed, the leaves are 
allowed to absorb moisture. Then they are dried again. It is not until 
the end of this drying operation that the leaves are packed in boxes and 
taken from the farm to a building plant for further processing (see 
Mitchell v. Budd, 350 U.S. 473). Under the general principles stated 
above, ``harvesting'' of shade-grown tobacco is considered to include 
the removal of the tobacco leaves from the plant and moving the tobacco 
from the field to the drying barn on the farm, together with the 
performance of other work as a necessary part of such operations. 
Subsequent operations such as the drying of the tobacco in the barn on 
the farm and packing of the tobacco for transportation to the bulking 
plant are not included in ``harvesting.''

[[Page 589]]

                            Exempt Processing



Sec. 780.515  Processing requirements of section 13(a)(14).

    When it has been determined that an employee is an ``agricultural 
employee employed in the growing and harvesting of shade-grown 
tobacco,'' to whom section 13(a)(14) of the Act may apply, it then 
becomes necessary to ascertain whether he is ``engaged in the processing 
* * * of such tobacco, prior to the stemming process, for use as Cigar-
wrapper tobacco.''



Sec. 780.516  ``Prior to the stemming process.''

    The exemption provided by section 13(a)(14) applies only to 
employees whose processing operations on shade-grown tobacco are 
performed ``prior to the stemming process.'' (See H. Rept. No. 75, 87th 
Cong., first sess., p. 26). This means that an employee engaged in 
stemming, the removal of the midrib from the tobacco leaf (McComb v. 
Puerto Rico Tobacco Marketing Co-op. Ass'n., 80 F. Supp. 953, affirmed 
181 F. 2d 697), or in any operations on the tobacco which are performed 
after stemming has begun will not come within the exemption. Stemming 
and all subsequent operations are nonexempt work.



Sec. 780.517  ``For use as Cigar-wrapper tobacco.''

    The phrase ``for use as Cigar-wrapper tobacco'' limits the type of 
end product which may be produced by the exempt operations. As its name 
indicates, cigar-wrapper tobacco is used as a cigar wrapper and is 
distinguished from other types of tobacco which serve other purposes 
such as filler, pipe, chewing, and other kinds of tobacco. Normally, 
shade-grown tobacco is used only for cigar wrappers. However, if the 
tobacco is not being processed by the employer for such specific and 
limited use, the employee is not engaged in exempt processing 
operations.



Sec. 780.518  Exempt processing operations.

    The processing operations under section 13(a)(14) include, but are 
not limited to, ``drying, curing, fermenting, bulking, rebulking, 
sorting, grading, aging, and baling'' of the shade-grown tobacco. As 
previously noted, these operations are exempt only if performed on 
shade-grown tobacco prior to the stemming process to prepare the tobacco 
for use as cigar wrapper tobacco.



Sec. 780.519  General scope of exempt operations.

    All operations normally performed in the processing of shade-grown 
tobacco for use as cigar wrapper tobacco, if performed prior to the 
stemming process and for such use, are included in the exemption. As a 
whole, this processing substantially changes the physical properties and 
chemical content of the tobacco, improves its color, increases its 
combustibility, and eliminates the rawness and harshness of the freshly 
cured leaf. In the process the leaves are piled in ``bulks'' of about 
4,000 pounds each to undergo a ``sweating'' or ``fermentation'' process 
in which temperature and humidity are carefully controlled. Proper heat 
control includes, among other things, breaking up the bulk, 
redistributing the tobacco, and adding water. Proper fermentation or 
aging requires the bulk to be reconstructed several times. This bulking 
process may last from 4 to 8 months. When the tobacco is properly dried, 
cured, fermented, and aged, it is moved to long tables where the leaves 
are individually graded and sorted, after which they are tied in bundles 
called ``hands'' of about 30 to 35 leaves each, which are then baled for 
shipment. Equipment required for the work may include a steam-heated 
plant, platforms, thermometers, bulk covers, baling boxes and presses, 
baling mats and packing, sorting, and grading tables. (See Mitchell v. 
Budd, 350 U.S. 473, 475.) Employees performing any part of this 
processing prior to the stemming process, including the operations named 
in section 13(a)(14), may come within the exemption if they are 
otherwise qualified and if the tobacco on which they work is being 
processed for use as cigar wrapper tobacco.



Sec. 780.520  Particular operations which may be exempt.

    (a) General. Section 13(a)(14) lists a number of operations as being 
included in the processing of shade-grown tobacco. Some of these are, 
and others

[[Page 590]]

are not, themselves ``processing'' in the sense that performance of the 
operations changes the natural form of the commodity on which it is 
performed. All of the operations named and described in paragraph (b) of 
this section, however, are a necessary and integral part of the overall 
process of preparing shade-grown tobacco for use as cigar wrapper 
tobacco and, when performed as part of that process and prior to 
stemming of the tobacco, by an employee qualified under the terms of the 
section, will provide the basis for his exemption from the minimum wage 
and overtime provisions of the Act.
    (b) Particular operations--(1) Drying. Drying includes the removal 
or lowering of the moisture content of the tobacco, whether by natural 
means or by exposure to heat from ovens, furnaces, etc.
    (2) Curing. Curing includes removing the tobacco to the curing shed 
or barn and stringing the tobacco over slats.
    (3) Fermenting. Fermenting includes the operations controlling the 
chemical changes which take place in the tobacco as the result of 
bulking and rebulking.
    (4) Bulking. Bulking includes piling the tobacco in piles or bulks 
of about 4,000 pounds each for the purpose of fermenting the tobacco.
    (5) Rebulking. Rebulking includes the breaking down of the tobacco 
bulks or piles and rearranging them so that the tobacco on the inside 
will be placed on the outside of the bulk and tobacco on the outside 
will be placed inside.
    (6) Sorting. Sorting includes segregation of the tobacco leaves in 
connection with the grading and classifying of the cured tobacco.
    (7) Grading. Grading includes sorting or classifying as to size and 
quality.
    (8) Aging. Aging includes the curing process brought about by 
bulking.
    (9) Baling. Baling includes the tying of the tobacco into ``hands'' 
and placing them in bales for shipment.



Sec. 780.521  Other processing operations.

    The language of the section, namely, ``including, but not limited 
to,'' extends the exemption for processing to include other operations 
in the processing of shade-grown tobacco besides those specifically 
enumerated. These additional operations include only those which are a 
necessary and integral part of preparing the shade-grown tobacco for use 
as cigar wrapper tobacco. These additional operations, like those 
enumerated in section 13(a)(14), must be performed before the tobacco 
has been stemmed. Stemming work and further work on the tobacco after 
stemming has been performed are nonexempt.



Sec. 780.522  Nonprocessing employees.

    Only those employees who actually engaged in the growing and 
harvesting of shade-grown tobacco and the specified exempt processing 
activities are exempt. Clerical, maintenance and custodial workers are 
not included.



  Subpart G_Employment in Agriculture and Livestock Auction Operations 
                  Under the Section 13(b)(13) Exemption

                              Introductory



Sec. 780.600  Scope and significance of interpretative bulletin.

    Subpart A of this part 780 and this subpart G together constitute 
the official interpretative bulletin of the Department of Labor with 
respect to the meaning and application of section 13(b)(13) of the Fair 
Labor Standards Act of 1938, as amended. This section provides an 
exemption from the overtime pay provisions of the Act for certain 
employees who, in the same workweek, are employed by a farmer in 
agriculture and also in the farmer's livestock auction operations. As 
appears more fully in subpart A of this part, interpretations in this 
bulletin with respect to provisions of the Act discussed are official 
interpretations upon which reliance may be placed and which will guide 
the Secretary of Labor and the Administrator in the performance of their 
duties under the Act. The general exemptions provided in sections 
13(a)(6) and 13(b)(12) of the Act for employees employed in agriculture 
are not discussed in this subpart except in its relation to section 
13(b)(13). The meaning and application of these exemptions are fully 
considered in subparts D and E of this part 780.

[[Page 591]]



Sec. 780.601  Statutory provision.

    Section 13(b)(13) of the Fair Labor Standards Act exempts from the 
overtime provisions of section 7:

    Any employee with respect to his employment in agriculture by a 
farmer, notwithstanding other employment of such employee in connection 
with livestock auction operations in which such farmer is engaged as an 
adjunct to the raising of livestock, either on his own account or in 
conjunction with other farmers, if such employee (A) is primarily 
employed during his workweek in agriculture by such farmer, and (B) is 
paid for his employment in connection with such livestock auction 
operations at a wage rate not less than that prescribed by section 
6(a)(1).



Sec. 780.602  General explanatory statement.

    Ordinarily, as discussed in subparts D and E of this part 780, an 
employee who in the same workweek engages in work which is exempt as 
agriculture under section 13(a)(6) or 13(b)(12) of the Act and also 
performs nonexempt work to which the Act applies is not exempt in that 
week (Sec. 780.11). Employees of a farmer are not employed in work 
exempt as ``agriculture'' while engaged in livestock auction operations 
in which the livestock offered at auction includes livestock raised by 
other farmers (Mitchell v. Hunt, 263 F. 2d 913) (C.A. 5); Hearnsberger 
v. Gillespie, 435 F. 2d 926 (C.A. 8). However, under section 13(b)(13) 
an employee who is employed by a farmer in agriculture as well as in 
livestock auction operations in the same workweek will not lose the 
overtime exemption for that workweek, if certain conditions are met. 
These conditions and their meaning and application are discussed in this 
subpart.

                       Requirements for Exemption



Sec. 780.603  What determines application of exemption.

    The application of the section 13(b)(13) exemption depends largely 
upon the nature of the work performed by the individual employee for 
whom exemption is sought. The character of the employer's business also 
determine the application of the exemption. Whether an employee is 
exempt therefore depends upon his duties as well as the nature of the 
employer's activities. Some employees of the employer may be exempt in 
some weeks and others may not.



Sec. 780.604  General requirements.

    The general requirements for exemption under section 13(b)(13) are 
as follows:
    (a) Employment of the employee ``primarily'' in agriculture in the 
particular workweek.
    (b) This primary employment by a farmer.
    (c) Engagement by the farmer in raising livestock.
    (d) Engagement by the farmer in livestock auction operations ``as an 
adjunct to'' the raising of livestock.
    (e) Payment of the minimum wage required by section 6(a)(1) of the 
Act for all hours spent in livestock auction work by the employee.

These requirements will be separately discussed in the following 
sections of this subpart.



Sec. 780.605  Employment in agriculture.

    One requirement for exemption is that the employee be employed in 
``agriculture.'' ``Agriculture,'' as used in the Act, is defined in 
section 3(f) as follows:

    (f) ``Agriculture'' includes farming in all its branches and among 
other things includes the cultivation and tillage of the soil, dairying, 
the production, cultivation, growing, and harvesting of any agricultural 
or horticultural commodities (including commodities defined as 
agricultural commodities in section 15(g) of the Agricultural Marketing 
Act, as amended), the raising of livestock, bees, fur-bearing animals, 
or poultry, and any practices (including any forestry or lumbering 
operations) performed by a farmer or on a farm as an incident to or in 
conjunction with such farming operations, including preparation for 
market, delivery to storage or to market or to carriers for 
transportation to market.


An employee meets the tests of being employed in agriculture when he 
either engages in any one or more of the branches of farming listed in 
the first part of the above definition or performs, as an employee of a 
farmer or on a farm, practices incident to such farming operations as 
mentioned in the second part of the definition (Farmers Reservoir & 
Irrigation Co. v. McComb, 337

[[Page 592]]

U.S. 755). The exemption applies to ``any employee'' of a farmer whose 
employment meets the tests for exemption. Accordingly, any employee of 
the farmer who is employed in ``agriculture,'' including laborers, 
clerical, maintenance, and custodial employees, harvesters, dairy 
workers, and others may qualify for the exemption under section 
13(b)(13) if the other conditions of the exemption are met.



Sec. 780.606  Interpretation of term ``agriculture.''

    Section 3(f) of the Act, which defines ``agriculture,'' has been 
extensively interpreted by the Department of Labor and the courts. 
Subpart B of this part 780 contains those interpretations which have 
full application in construing the term ``agriculture'' as used in the 
13(b)(13) exemption.



Sec. 780.607  ``Primarily employed'' in agriculture.

    Not only must the employee be employed in agriculture, but he must 
be ``primarily'' so employed during the particular workweek or weeks in 
which the 13(b)(13) exemption is to be applied. The word ``primarily'' 
may be considered to mean chiefly or principally (Agnew v. Board of 
Governors, 153 F. 2d 785). This interpretation is consistent with the 
view, expressed by the sponsor of the exemption at the time of its 
adoption on the floor of the Senate (107 Cong. Rec. (daily ed., April 
19, 1961), p. 5879), that the word means ``most of his time.'' The 
Department of Labor will consider that an employee who spends more than 
one-half of his hours worked in the particular workweek in agriculture, 
as defined in the Act, is ``primarily'' employed in agriculture during 
that week.



Sec. 780.608  ``During his workweek.''

    Section 13(b)(13) specifically requires that the unit of time to be 
used in determining whether an employee is primarily employed in 
agriculture is ``during his workweek.'' The employee's own workweek, and 
not that of any other person, is to be used in applying the exemption. 
The employee's employment must meet the ``primarily'' test in each 
workweek in which the exemption is applied to him.



Sec. 780.609  Workweek unit in applying the exemption.

    The unit of time to be used in determining the application of the 
exemption to an employee is the workweek. (See Overnight Transportation 
Co. v. Missel, 316 U.S. 572.) A workweek is a fixed and regularly 
recurring interval of seven consecutive 24-hour periods. It may begin at 
any hour of any day set by the employer and need not coincide with the 
calendar week. Once the workweek has been set it commences each 
succeeding week on the same day and at the same hour. Changing of the 
workweek for the purpose of escaping the requirements of the Act is not 
permitted.



Sec. 780.610  Workweek exclusively in exempt work.

    An employee who engages exclusively in a workweek in duties which 
come within the exemption under section 13(b)(13) and is paid in 
accordance with the requirements of that exemption, is exempt in that 
workweek from the overtime requirements of the Act.



Sec. 780.611  Workweek exclusively in agriculture.

    In any workweek in which the employee works exclusively in 
agriculture, performing no duty in respect to livestock auction 
operations, his exemption for that week is determined by application of 
sections 13(a)(6) and 13(b)(12) to his activities. (See subparts D and E 
of this part.)



Sec. 780.612  Employment by a ``farmer.''

    A further requirement for exemption is the expressed statutory one 
that the employee must be employed in agriculture by a ``farmer.'' 
Employment by a nonfarmer will not qualify an employee for the 
exemption.



Sec. 780.613  ``By such farmer.''

    The employee's primary employment in agriculture during the exempt 
week is also required to be by ``such farmer.'' The phrase ``such 
farmer'' refers to the particular farmer by whom the employee is 
employed in agriculture and who engages in the livestock auction 
operations as an adjunct to his raising of livestock. Even if an 
employee may spend more than half of his work time

[[Page 593]]

in a workweek in agriculture, he would not be exempt if such employment 
in agriculture were engaged in for various persons so that less than the 
primary portion of his workweek was performed in his employment in 
agriculture by such farmer. For example, an employee may work a 60-hour 
week and be employed in agriculture for 50 of those hours, of which 20 
hours are worked in his employment by the farmer who is engaged in the 
livestock auction operations, the other 30 being performed for a 
neighboring farmer. Although this employee was primarily employed in 
agriculture during the workweek he is not exempt. His primary employment 
in agriculture was not by the farmer described in section 13(b)(13) as 
required.



Sec. 780.614  Definition of a farmer.

    The Act does not define the term ``farmer.'' Whether an employer is 
a ``farmer'' within the meaning of section 13(b)(13) must be determined 
by consideration of the particular facts, keeping in mind the purpose of 
the exemption. A full discussion of the meaning of the term ``farmer'' 
as used in the Act's definition of agriculture is contained in 
Sec. Sec. 780.130 through 780.133. Generally, as indicated in that 
discussion, a farmer under the Act is one who engages, as an occupation, 
in farming operations as a distinct activity for the purpose of 
producing a farm crop. A corporation or a farmers' cooperative may be a 
``farmer'' if engaged in actual farming of the nature and extent there 
indicated.



Sec. 780.615  Raising of livestock.

    Livestock auction operations are within the 13(b)(13) exemption only 
when they are conducted as an adjunct to the raising of livestock by the 
farmer. The farmer is required to engage in the raising of livestock as 
a prerequisite for the exemption of an employee employed in the 
operations described in section 13(b) (13). Engagement by the farmer in 
one or more of the other branches of farming will not meet this 
requirement.



Sec. 780.616  Operations included in raising livestock.

    Raising livestock includes such operations as the breeding, 
fattening, feeding, and care of domestic animals ordinarily raised or 
used on farms. A fuller discussion of the meaning of raising livestock 
is contained in Sec. Sec. 780.119 through 780.122.



Sec. 780.617  Adjunct livestock auction operations.

    The livestock auction operations referred to in section 13(b)(13) 
are those engaged in by the farmer ``as an adjunct'' to the raising of 
livestock. This phrase limits the relative extent to which the farmer 
may conduct livestock auctions and claim exemption under section 
13(b)(13). To qualify under the exemption provision, the auction 
operations should be an established part of the farmer's raising of the 
livestock and subordinate to it. (Hearnsberger v. Gillespie, 435 F. 2d 
926 (C.A. 8).) The auction operations should not be conducted on so 
large a scale as to predominate over the raising of livestock. The 
livestock auction should be adjunct to the farmer's raising of livestock 
not only when he engages in it on his own account, but also when he 
joins with other farmers to hold an auction.



Sec. 780.618  ``His own account''--``in conjunction with other farmers.''

    Under the terms of section 13(b)(13), the farmer may operate a 
livestock auction solely for his own benefit or he may join with ``other 
farmers'' to auction livestock for their mutual benefit. (See Sec. 
780.614 with regard to the definition of ``farmer.'') Unless the auction 
is conducted by the farmer alone or with others who are ``farmers'' the 
exemption does not apply.



Sec. 780.619  Work ``in connection with'' livestock auction operations.

    An employee whose agricultural employment meets the tests for 
exemption may engage in ``other'' employment ``in connection with'' his 
employer's livestock auction operations under the conditions stated in 
section 13(b)(13). The work which an employee may engage in under the 
phrase ``in connection with'' includes only those

[[Page 594]]

activities which are a necessary incident to conducting a livestock 
auction of the limited type permitted under the exemption. Such work as 
transporting the livestock and caring for it, custodial, maintenance, 
and clerical duties are included. Work which cannot be considered 
necessarily incident to the livestock auction is not exempt.



Sec. 780.620  Minimum wage for livestock auction work.

    The application of the exemption is further determined by whether 
another condition has been met. That condition is that the employee, in 
the workweek in which he engages in livestock auction activities, must 
be paid at a wage rate not less than the minimum rate required by 
section 6(a)(1) of the Act for the time spent in livestock auction work. 
The exemption does not apply unless there is payment for all hours spent 
in livestock auction work at not less than the applicable minimum rate 
prescribed in the Act.

                           Effect of Exemption



Sec. 780.621  No overtime wages in exempt week.

    In a workweek in which all the requirements of the section 13(b)(13) 
exemption are met, the employee is exempt from the overtime requirements 
of section 7 for that entire workweek.



     Subpart H_Employment by Small Country Elevators Within Area of 
   Production; Exemption From Overtime Pay Requirements Under Section 
                                13(b)(14)

                              Introductory



Sec. 780.700  Scope and significance of interpretative bulletin.

    Subpart A of this part 780 and this subpart together constitute the 
official interpretative bulletin of the Department of Labor with respect 
to the meaning and application of section 13(b)(14) of the Fair Labor 
Standards Act of 1938, as amended. This section provides an exemption 
from the overtime pay provisions of the Act for employees employed by 
certain country elevators ``within the area of production,'' as defined 
by the Secretary of Labor in part 536 of this chapter.



Sec. 780.701  Statutory provision.

    Section 13(b)(14) of the Fair Labor Standards Act exempts from the 
overtime provisions of section 7:

    Any employee employed within the area of production (as defined by 
the Secretary) by an establishment commonly recognized as a country 
elevator, including such an establishment which sells products and 
services used in the operation of a farm: Provided, That no more than 
five employees are employed in the establishment in such operations * * 
*.



Sec. 780.702  What determines application of the exemption.

    The application of the section 13(b)(14) exemption depends on te 
employment of the employee by an establishment of the kind described in 
the section, and on such employment ``within the area of production'' as 
defined by regulation. In any workweek when an employee is employed in 
country elevator activities by such an establishment within the area of 
production, the overtime pay requirements of the Act will not apply to 
him.



Sec. 780.703  Basic requirements for exemption.

    The basic requirements for exemption of country elevator employees 
under section 13(b)(14) of the Act are as follows:
    (a) The employing establishment must:
    (1) Be an establishment ``commonly recognized as a country 
elevator,'' and
    (2) Have not more than five employees employed in its operations as 
such; and
    (b) The employee must:
    (1) Be ``employed by'' such establishment, and
    (2) Be employed ``within the area of production,'' as defined by the 
Secretary of Labor.

All the requirements must be met in order for the exemption to apply to 
an employee in any workweek. The requirements in section 13(b)(14) are 
``explicit prerequisites to exemption'' and the burden of showing that 
they are satisfied rests upon the employer who asserts that the 
exemption applies

[[Page 595]]

(Arnold v. Kanowsky, 361 U.S. 388). In accordance with the general rules 
stated in Sec. 780.2 of subpart A of this part, this exemption is to be 
narrowly construed and applied only to those establishments plainly and 
unmistakably within its terms and spirit. The requirements for its 
application will be separately discussed below.

         Establishment Commonly Recognized as a Country Elevator



Sec. 780.704  Dependence of exemption on nature of employing
establishment.

    If an employee is to be exempt under section 13(b)(14), he must be 
employed by an ``establishment'' which is ``commonly recognized as a 
country elevator.'' If he is employed by such an establishment, the fact 
that it may be part of a larger enterprise which also engages in 
activities that are not recognized as those of country elevators (see 
Tobin v. Flour Mills, 185 F. 2d 596) would not make the exemption 
inapplicable.



Sec. 780.705  Meaning of ``establishment.''

    The word ``establishment'' has long been interpreted by the 
Department of Labor and the courts to mean a distinct physical place of 
business and not to include all the places of business which may be 
operated by an organization (Phillips v. Walling, 334 U.S. 490; Mitchell 
v. Bekins Van and Storage Co., 352 U.S. 1027). Thus, in the case of a 
business organization which operates a number of country elevators (see 
Tobin v. Flour Mills, 185 F. 2d 596), each individual elevator or other 
place of business would constitute an establishment, within the meaning 
of the Act. Country elevators are usually one-unit places of business 
with, in some cases, an adjoining flat warehouse. No problem exists of 
determining what is the establishment in such cases. However, where 
separate facilities are used by a country elevator, a determination must 
be made, based on their proximity to the elevator and their relationship 
to its operations, on whether the facilities and the elevator are one or 
more than one establishment. If there are more than one, it must be 
determined by which establishment the employee is employed and whether 
that establishment meets the requirements of section 13(b)(14) before 
the application of the exemption to the employee can be ascertained 
(compare Mitchell v. Cammill, 245 F. 2d 207; Remington v. Shaw (W.D. 
Mich.), 2 WH Cases 262).



Sec. 780.706  Recognition of character of establishment.

    A further requirement for exemption is that the establishment must 
be ``commonly recognized'' as a country elevator. The word ``commonly'' 
means ordinarily or generally and the term ``recognized'' means known. 
An elevator should be generally known by the public as a country 
elevator. This requirement imposes, on the establishment for whose 
employees exemption is sought, the obligation to demonstrate that it 
engages in the type of work and has the attributes which will cause the 
general public to know it as a country elevator. The recognition which 
the statute requires must be shown to exist if the employer seeks to 
take the benefit of the exemption (see Arnold v. Kanowsky, 361 U.S. 388, 
395).



Sec. 780.707  Establishments ``commonly recognized'' as country elevators.

    In determining whether a particular establishment is one that is 
``commonly recognized'' as a country elevator--and this must be true of 
the particular establishment if the exemption is to apply--it should be 
kept in mind that the intent of section 13(b)(14) is to ``exempt country 
elevators that market farm products, mostly grain, for farmers'' (107 
Cong. Rec. (daily ed.) p. 5883). It is also appropriate to consider the 
characteristics and functions which the courts and government agencies 
have recognized as those of ``country elevators'' and the distinctions 
which have been recognized between country elevators and other types of 
establishments. For example, in proceedings to determine industries of a 
seasonal nature under part 526 of the regulations in this chapter, 
``country'' grain elevators, public terminal and subterminal grain 
elevators, wheat flour mill elevators, non-elevator-type bulk grain 
storing establishments, and ``flat warehouses'' in which grain is stored 
in sacks, have been recognized as distinct

[[Page 596]]

types of establishments engaged in grain storage. (See 24 FR 2584; 
3581.) As the legislative history of the exemption cited above makes 
clear, country elevators handle ``mostly grain.'' The courts have 
recognized that the terms ``country elevator'' and ``country grain 
elevator'' are interchangeable (the term ``country house'' has also been 
recognized as synonymous), and that there are significant differences 
between country elevators and other types of establishments engaged in 
grain storage (see Tobin v. Flour Mils, 185 F. 2d 596; Mitchell v. 
Sampson Const. Co. (D. Kan.) 14 WH Cases 269).



Sec. 780.708  A country elevator is located near and serves farmers.

    Country elevators, as commonly recognized, are typically located 
along railroads in small towns or rural areas near grain farmers, and 
have facilities especially designed for receiving bulk grain by wagon or 
truck from farms, elevating it to storage bins, and direct loading of 
the grain in its natural state into railroad boxcars. The principal 
function of such elevators is to provide a point of initial 
concentration for grain grown in their local area and to handle, store 
for limited periods, and load out such grain for movement in carload 
lots by rail from the producing area to its ultimate destination. They 
also perform a transport function in facilitating the even and orderly 
movement of grain over the interstate network of railroads from the 
producing areas to terminal elevators, markets, mills, processors, 
consumers, and to seaboard ports for export. The country elevator is 
typically the farmer's market for his grain or the point at which his 
grain is delivered to carriers for transportation to market. The 
elevator may purchase the grain from the farmer or store and handle it 
for him, and it may also store and handle substantial quantities of 
grain owned by or pledged to the Government under a price-support 
program. Country elevators customarily receive, weigh, test, grade, 
clean, mix, dry, fumigate, store, and load out grain in its natural 
state, and provide certain incidental services and supplies to farmers 
in the locality. The foregoing attributes of country elevators have been 
recognized by the courts. See, for example, Mitchell v. Sampson Const. 
Co. (D. Kan.) 14 WH Cases 269; Tobin v. Flour Mills, 185 F. 2d 596; Holt 
v. Barnesville Elevator Co., 145 F. 2d 250; Remington v. Shaw (W.D. 
Mich.), 2 WH Cases 262.



Sec. 780.709  Size and equipment of a country elevator.

    Typically, the establishments commonly recognized as country 
elevators are small. Most of the establishments intended to come within 
the exemption have only one or two employees (107 Cong. Rec. (daily ed.) 
p. 5883), although some country elevators have a larger number. (See 
Holt v. Barnesville Elevator Co., 145 F. 2d 250.) Establishments with 
more than five employees are not within the exemption. (See Sec. 
780.712.) The storage capacity of a country elevator may be as small as 
6,000 bushels (see Tobin v. Flour Mills, 185 F. 2d 596) and will 
generally range from 15,000 to 50,000 bushels. As indicated in Sec. 
780.708, country elevators are equipped to receive grain in wagons or 
trucks from farmers and to load it in railroad boxcars. The facilities 
typically include scales for weighing the farm vehicles loaded with 
grain, grain bins, cleaning and mixing machinery, driers for prestorage 
drying of grain and endless conveyor belts or chain scoops to carry 
grain from the ground to the top of the elevator. The facilities for 
receiving grain in truckloads or wagonloads from farmers and the limited 
storage capacity, together with location of the elevator in or near the 
grain-producing area, serve to distinguish country elevators from 
terminal or subterminal elevators, to which the exemption is not 
applicable. The latter are located at terminal or interior market 
points, receive grain in carload lots, and receive the bulk of their 
grain from country elevators. Although some may receive grain from farms 
in the immediate areas, they are not typically equipped to receive grain 
except by rail. (See Tobin v. Flour Mills, supra; Mitchell v. Sampson 
Const. Co. (D. Kan.) 14 WH Cases 269.) It is the facilities of a country 
elevator for the elevation of bulk grain and the discharge of such grain 
into rail cars that make it an ``elevator'' and distinguish it from

[[Page 597]]

warehouses that perform similar functions in the flat warehousing, 
storage, and marketing for farmers of grain in sacks. Such warehouses 
are not ``elevators'' and therefore do not come within the section 
13(b)(14) exemption.



Sec. 780.710  A country elevator may sell products and services to farmers.

    Section 13(b)(14) expressly provides that an establishment commonly 
recognized as a country elevator, within the meaning of the exemption, 
includes ``such an establishment which sells products and services used 
in the operation of a farm.'' This language makes it plain that if the 
establishment is ``such an establishment,'' that is, if its functions 
and attributes are such that it is ``commonly recognized as a country 
elevator'' but not otherwise, exemption of its employees under this 
section will not be lost solely by reason of the fact that it sells 
products and services used in the operation of a farm. Establishments 
commonly recognized as country elevators, especially the smaller ones, 
not only engage in the storing of grain but also conduct various 
merchandising or ``sideline'' operations as well. They may distribute 
feed grains to feeders and other farmers, sell fuels for farm use, sell 
and treat seeds, and sell other farm supplies such as fertilizers, farm 
chemicals, mixed concentrates, twine, lumber, and farm hardware supplies 
and machinery. (See Tobin v. Flour Mills, 185 F. 2d 596; Holt v. 
Barnesville Elevator Co., 145 F. 2d 250). Services performed for farmers 
by country elevators may include grinding of feeds, cleaning and 
fumigating seeds, supplying bottled gas, and gasoline station services. 
As conducted by establishments commonly recognized as country elevators, 
the selling of goods and services used in the operation of a farm is a 
minor and incidental secondary activity and not a main business of the 
elevator (see Tobin v. Flour Mills, supra; Holt v. Barnesville Elevator 
Co., supra).



Sec. 780.711  Exemption of mixed business applies only to country
elevators.

    The language of section 13(b)(14) permitting application of the 
exemption to country elevators selling products and services used in the 
operation of a farm does not extend the exemption to an establishment 
selling products and services to farmers merely because of the fact that 
it is also equipped to provide elevator services to its customers. The 
exemption will not apply if the extent of its business of making sales 
to farmers is such that the establishment is not commonly known as a 
``country elevator'' or is commonly recognized as an establishment of a 
different kind. As the legislative history of the exemption indicates, 
its purpose is limited to exempting country elevators that market farm 
products, mostly grain, for farmers who are working long workweeks and 
need to have the elevator facilities open and available for disposal of 
their crops during the same hours that are worked by the farmers. (See 
107 Cong. Rec. (daily ed.) p.5883.) The reason for the exemption does 
not justify its application to employees selling products and services 
to farmers otherwise than as an incidental and subordinate part of the 
business of a country elevator as commonly recognized. An establishment 
making such sales must be ``such an establishment'' to come within this 
exemption. An employer may, however, be engaged in the business of 
making sales of goods and services to farmers in an establishment 
separate from the one in which he provides the recognized country 
elevator services. In such event, the exemption of employees who work in 
both establishments may depend on whether the work in the sales 
establishment comes within another exemption provided by the Act. (See 
Remington v. Shaw (W.D. Mich.), 2 WH Cases 262, and infra, Sec. 
780.724.)

              Employment of ``No More Than Five Employees''



Sec. 780.712  Limitation of exemption to establishments with five or 
fewer employees.

    If the operations of an establishment are such that it is commonly 
recognized as a country elevator, its employees may come within the 
section 13(b)(14) exemption provided that ``no more than five employees 
are employed in the establishment in such operations''. The exemption is 
intended, as explained by its sponsor, to ``affect

[[Page 598]]

only institutions that have five employees or less'' (107 Cong. Rec. 
(daily ed.) p. 5883). Since the Act is applied on a workweek basis, a 
country elevator is not an exempt place of work in any workweek in which 
more than five employees are employed in its operations.



Sec. 780.713  Determining the number of employees generally.

    The number of employees referred to in section 13(b)(14) is the 
number ``employed in the establishment in such operations''. The 
determination of the number of employees so employed involves a 
consideration of the meaning of employment ``in the establishment'' and 
``in such operations'' in relation to each other. If, in any workweek, 
an employee is ``employed in the establishment in such operations'' for 
more than a negligible period of time, he should be counted in 
determining whether, in that workweek, more than five employees were so 
employed. An employee so employed must be counted for this purpose 
regardless of whether he would, apart from this exemption, be within the 
coverage of the Act. Also, as noted in the following discussion, the 
employees to be counted are not necessarily limited to employees 
directly employed by the country elevator but may include employees 
directly employed by others who are engaged in performing operations of 
the elevator establishment.



Sec. 780.714  Employees employed ``in such operations'' to be counted.

    (a) The five-employee limitation on the exemption for country 
elevators relates to the number of employees employed in the 
establishment ``in such operations.'' This means that the employees to 
be counted include those employed in, and do not include any who are not 
employed in, the operations of the establishment commonly recognized as 
a country elevator, including the operations of such an establishment in 
selling products and services used in the operation of a farm, as 
previously explained.
    (b) In some circumstances, an employee employed in an establishment 
commonly recognized as a country elevator may, during his workweek, be 
employed in work which is not part of the operations of the elevator 
establishment. This would be true, for example, in the case of an 
employee who spends his entire workweek in the construction of an 
overflow warehouse for the elevator. Such an employee would not be 
counted in that workweek because constructing a warehouse is not part of 
the operations of the country elevator but is an entirely distinct 
activity.
    (c) Employees employed by the same employer in a separate 
establishment in which he is engaged in a different business, and not 
employed in the operations of the elevator establishment, would not be 
counted.
    (d) Employees not employed by the elevator establishment who come 
there sporadically, occasionally, or casually in the course of their 
duties for other employers are not employed in the operations of the 
establishment commonly recognized as a country elevator and would not be 
counted in determining whether the five-employee limitation is exceeded 
in any workweek. Examples of such employees are employees of a 
restaurant who bring food and beverages to the elevator employees, and 
employees of other employers who make deliveries to the establishment.



Sec. 780.715  Counting employees ``employed in the establishment.''

    (a) Employees employed ``in the establishment,'' if employed ``in 
such operations'' as previously explained, are to be counted in 
determining whether the five-employee limitation on the exemption is 
exceeded.
    (b) Employees employed ``in'' the establishment clearly include all 
employees engaged, other than casually or sporadically, in performing 
any duties of their employment there, regardless of whether they are 
direct employees of the country elevator establishment or are employees 
of a farmer, independent contractor, or other person who are suffered or 
permitted to work (see Act, section 3(g)) in the establishment. However, 
tradesmen, such as dealers and their salesmen, for example, are not 
employed in the elevator simply because they visit the establishment to 
do business there. Neither are workers

[[Page 599]]

who deliver, on behalf of their employers, goods used in the sideline 
business of the establishment to be considered employed in the elevator.
    (c) The use of the language ``employed in'' rather than ``engaged 
in'' makes it plain also that the employees to be counted include all 
those employed by the establishment in its operations without regard to 
whether they are engaged in the establishment or away from it in 
performing their duties. This has been the consistent interpretation of 
similar language in other sections of the Act.

   Employees ``Employed * * * By'' The Country Elevator Establishment



Sec. 780.716  Exemption of employees ``employed * * * by'' 
the establishment.

    If the establishment is a country elevator establishment qualified 
for exemption as previously explained, and if the ``area of production'' 
requirement is met (see Sec. 780.720), any employee ``employed * * * 
by'' such establishment will come within the section 13(b)(14) 
exemption. This will bring within the exemption employees who are 
engaged in duties performed away from the establishment as well as those 
whose duties are performed in the establishment itself, so long as such 
employees are ``employed * * * by'' the country elevator establishment 
within the meaning of the Act. The employees employed ``by'' the 
establishment, who may come within the exemption if the other 
requirements are met, are not necessarily identical with the employees 
employed ``in the establishment in such operations'' who must be counted 
for purposes of the five-employee limitation since some of the latter 
employees may be employed by another employer. (See Sec. Sec. 780.712 
through 780.715.)



Sec. 780.717  Determining whether there is employment ``by'' 
the establishment.

    (a) No single test will determine whether a worker is in fact 
employed ``by'' a country elevator establishment. This question must be 
decided on the basis of the total situation (Rutherford Food Corp. v. 
McComb, 331 U.S. 722; U.S. v. Silk, 331 U.S. 704). Clearly, an employee 
is so employed where he is hired by the elevator, engages in its work, 
is paid by the elevator and is under its supervision and control.
    (b) ``Employed by'' requires that there be an employer-employee 
relationship between the worker and the employer engaged in operating 
the elevator. The fact, however, that the employer carries an employee 
on the payroll of the country elevator establishment which qualifies for 
exemption does not automatically extend the exemption to that employee. 
In order to be exempt an employee must actually be ``employed by'' the 
exempt establishment. This means that whether the employee is performing 
his duties inside or outside the establishment, he must be employed in 
the work of the exempt establishment itself in activities within the 
scope of its exempt business in order to meet the requirement of actual 
employment ``by'' the establishment (see Walling v. Connecticut Co., 154 
F. 2d 552).
    (c) In the case of employers who operate multiunit enterprises and 
conduct business operations in more than one establishment (see Tobin v. 
Flour Mills, 185 F. 2d 596; Remington v. Shaw (W.D. Mich.) 2 WH Cases 
262), there will be employees of the employer who perform central office 
or central warehousing activities for the enterprise or for more than 
one establishment, and there may be other employees who spend time in 
the various establishments of the enterprise performing duties for the 
enterprise rather than for the particular establishment in which they 
are working at the time. Such employees are employed by the enterprise 
and not by any particular establishment of the employer (Mitchell v. 
Miller Drugs, 255 F. 2d 574; Mitchell v. Kroger Co., 248 F. 2d 935). 
Accordingly, so long as they perform such functions for the enterprise 
they would not be exempt as employees employed by a country elevator 
establishment operated as part of such an enterprise, even while 
stationed in it or placed on its payroll.



Sec. 780.718  Employees who may be exempt.

    Employees employed ``by'' a country elevator establishment which 
qualifies for exemption will be exempt, if the ``area of production'' 
requirement is

[[Page 600]]

met, while they are engaged in any of the customary operations of the 
establishment which is commonly recognized as a country elevator. 
Included among such employees are those who are engaged in selling the 
elevator's goods or services, keeping its books, receiving, handling, 
and loading out grain, grinding and mixing feed or treating seed for 
farmers, performing ordinary maintenance and repair of the premises and 
equipment or engaging in any other work of the establishment which is 
commonly recognized as part of its operations as a country elevator. An 
employee employed by such an elevator is not restricted to performing 
his work inside the establishment. He may also engage in his exempt 
duties away from the elevator. For example, a salesman who visits 
farmers on their farms to discuss the storage of their grain in the 
elevator is performing exempt work while on such visits. It is 
sufficient that an employee employed by an elevator is, while working 
away from the establishment, doing the exempt work of the elevator. If 
the establishment is engaged only in activities commonly recognized as 
those of a country elevator and none of its employees engaged in any 
other activities, all the employees employed by the country elevator 
will come within the exemption if no more than five employees are 
employed in the establishment in such operations and if the ``area of 
production'' requirement is met.



Sec. 780.719  Employees not employed ``by'' the elevator establishment.

    Since the exemption depends on employment ``by'' an establishment 
qualified for exemption rather than simply the work of the employee, 
employees who are not employed by the country elevator are not exempt. 
This is so even though they work in the establishment and engage in 
duties which are part of the services which are commonly recognized as 
those of a country elevator. Since they are not employed by the 
elevator, employees of independent contractors, farmers and others who 
work in or for the elevator are not exempt under section 13(b)(14) 
simply because they work in or for the elevator (see Walling v. Friend, 
156 F. 2d 429; Mitchell v. Kroger, 248 F. 2d 935; Durkin v. Joyce 
Agency, 110 F. Supp. 918, affirmed sub. nom. Mitchell v. Joyce Agency, 
348 U.S. 945). Thus an employee of an independent contractor who works 
inside the elevator in drying grain for the elevator is not exempt under 
this section.

              Employment ``Within the Area of Production''



Sec. 780.720  ``Area of production'' requirement of exemption.

    (a) In addition to the requirements for exemption previously 
discussed, section 13(b)(14) requires that the employee employed by an 
establishment commonly recognized as a country elevator be ``employed 
within the area of production (as defined by the Secretary).'' 
Regulations defining employment within the ``area of production'' for 
purposes of section 13(b)(14) are contained in part 536 of this chapter. 
All the requirements of the applicable regulations must be met in order 
for the exemption to apply.
    (b) Under the regulations, an employee is considered to be employed 
within ``the area of production'' within the meaning of section 
13(b)(14) if the country elevator establishment by which he is employed 
is located in the ``open country or a rural community,'' as defined in 
the regulations, and receives 95 percent or more of the agricultural 
commodities handled through its elevator services from normal rural 
sources of supply within specified distances from the country elevator. 
A definition of ``area of production'' in terms of such criteria has 
been upheld by the U.S. Supreme Court in Mitchell v. Budd, 350 U.S. 473. 
Reference should be made to part 536 of this chapter for the precise 
requirements of the definition.
    (c) However, it is appropriate to point out here that nothing in the 
definition places limits on the distance from which commodities come to 
the elevator for purposes other than the storage of marketing of farm 
products. The commodities, 95 percent of which are required by 
definition to come from specified distances, are those agriculural 
commodities received by the elevator with respect to which it performs 
the primary concentration,

[[Page 601]]

storage, and marketing functions of a country elevator as previously 
explained (see Sec. 780.708). This is consistent with the emphasis 
given, in the legislative history, to the country elevator's function of 
marketing farm products, mostly grain, for farmers (see 107 Cong. Rec. 
(daily ed.) p. 5883). Commodities brought or shipped to a country 
elevator establishment not for storage or for market but in connection 
with its secondary, incidental, or side-line functions of selling 
products and services used in the operation of a farm (see Sec. 
780.610) are not required to be counted in determining whether 95 
percent of the agricultural commodities handled come from rural sources 
of supply within the specified distances.

                    Workweek Application of Exemption



Sec. 780.721  Employment in the particular workweek as test of exemption.

    The period for determining whether the ``area of production'' 
requirement of section 13(b)(14) is met is prescribed in the regulations 
in part 536 of this chapter. Whether or not an establishment is one 
commonly recognized as a country elevator must be tested by general 
functions and attributes over a representative period of time, as 
previously explained, and requires reexamination for exemption purposes 
only if these change. But insofar as the exemption depends for its 
application on the employment of employees, it applies on a workweek 
basis. An employee employed by the establishment is not exempt in any 
workweek when more than five employees ``are employed in the 
establishment in such operations,'' as previously explained (see 
Sec. Sec. 780.712 through 780.715). Nor is any employee within the 
exemption in a workweek when he is not employed ``by'' the establishment 
within the meaning of section 13(b)(14) (see Sec. Sec. 780.716 through 
780.719). This is in accordance with the general rule that the unit of 
time to be used in determining the application of the Act and its 
exemptions to an employee is the workweek. (See Overnight Motor 
Transportation Co. v. Missel, 316 U.S. Mitchell v. Hunt, 263 F. 2d 913; 
McComb v. Puerto Rico Tobacco Marketing Co-op. Ass'n, 80 F. Supp. 953, 
affirmed 181 F. 2d 697.) A workweek is a fixed and regularly recurring 
interval of seven consecutive 24-hour periods. It may begin at any hour 
of any day set by the employer and need not coincide with the calendar 
week. Once the workweek has been set it commences each succeeding week 
on the same day and at the same hour. Changing the workweek for the 
purpose of escaping the requirements of the Act is not permitted.



Sec. 780.722  Exempt workweeks.

    An employee performing work for an establishment commonly recognized 
as a country elevator is exempt under section 13(b)(14) in any workweek 
when he is, for the entire workweek, employed ``by'' such establishment, 
if no more than five employees are ``employed in the establishment in 
such operations'', and if the ``area of production'' requirement is met.



Sec. 780.723  Exempt and nonexempt employment.

    Under section 13(b)(14), where an employee, for part of his 
workweek, is employed ``by'' an ``exempt'' establishment (one commonly 
recognized as a country elevator which has five employees or less 
employed in the establishment in such operations in that workweek) and 
the employee is, in his employment by the establishment, employed 
``within the area of production'' as defined by the regulations, but in 
the remainder of the workweek is employed by his employer in an 
establishment or in activities not within this or another exemption 
provided by the Act, in the course of which he performs any work to 
which the Act applies, the employee is, not exempt for any part of that 
workweek (see Mitchell v. Hunt, 263 F. 2d 913; Waialua v. Maneja, 77 F. 
Supp. 480; Walling v. Peacock Corp., 58 F. Supp. 880; McComb v. Puerto 
Rico Tobacco Marketing Co-op. Ass'n, 181 F. 2d 697).



Sec. 780.724  Work exempt under another section of the Act.

    Where an employee's employment during part of his workweek would 
qualify for exemption under section 13(b)(14) if it continued throughout 
the workweek, and the remainder of his workweek is spent in employment

[[Page 602]]

which, if it continued throughout the workweek, would qualify for 
exemption under another section or sections of the Act, the exemptions 
may be combined (see Remington v. Shaw (W.D. Mich.) 2 WH Cases 262). The 
employee, however, qualifies for exemption only to the extent of the 
exemption which is more limited in scope (see Mitchell v. Hunt, 263 F. 
2d 913). For example, if part of the work is exempt from both minimum 
wage and overtime compensation under one section of the Act and the rest 
is exempt only from the overtime pay provisions under another section, 
the employee is exempt that week from the overtime provisions, but not 
from the minimum wage requirements. In this connection, attention is 
directed to another exemption in the Act which relates to work in grain 
elevators, which may apply in appropriate circumstances, either in 
combination with section 13(b)(14) or to employees for whom the 
requirements of section 13(b)(14) cannot be met. This other exemption is 
that provided by section 7(c). Section 7(c), which is discussed in part 
526 of this chapter, provides a limited overtime exemption for employees 
employed in the seasonal industry of storing grain in country grain 
elevators, public terminal and sub-terminal elevators, wheat flour 
mills, nonelevator bulk storing establishments and flat warehouses, 
Sec. 526.10(b)(14) of this chapter.



Subpart I_Employment in Ginning of Cotton and Processing of Sugar Beets, 
   Sugar-Beet Molasses, Sugarcane, or Maple Sap into Sugar or Syrup; 
    Exemption From Overtime Pay Requirements Under Section 13(b)(15)

                              Introductory



Sec. 780.800  Scope and significance of interpretative bulletin.

    Subpart A of this part 780 and this subpart I constitute the 
official interpretative bulletin of the Department of Labor with respect 
to the meaning and application of section 13(b)(15) of the Fair Labor 
Standards Act of 1938, as amended. This section provides an exemption 
from the overtime pay provisions of the Act for two industries (a) for 
employees engaged in ginning of cotton for market in any place of 
employment located in a county where cotton is grown in commercial 
quantities and (b) for employees engaged in the processing of sugar 
beets, sugar-beet molasses, sugarcane or maple sap, into sugar (other 
than refined sugar) or syrup. The limited overtime exemptions provided 
for cotton ginning and for sugar processing under sections 7(c) and 7(d) 
(see part 526 of this chapter) are not discussed in this subpart.



Sec. 780.801  Statutory provisions.

    Section 13(b)(15) of the Fair Labor Standards Act exempts from the 
overtime requirements of section 7:

    Any employee engaged in ginning of cotton for market, in any place 
of employment located in a county where cotton is grown in commercial 
quantities, or in the processing of sugar beets, sugar-beet molasses, 
sugarcane, or maple sap, into sugar (other than refined sugar) or syrup.


Section 13(b)(15) supplants two exemptions that were contained in the 
Act prior to the Fair Labor Standards Amendments of 1966. The first is 
former section 13(a)(18), having identical language, which provided a 
complete exemption for those employed in the ginning of cotton. The 
second is the former section 7(c) which provided an overtime exemption 
for the employees of an employer engaged in sugar processing operations 
resulting in unrefined sugar or syrup.



Sec. 780.802  What determines application of the exemption.

    It is apparent from the language of section 13(b)(15) that the 
application of this exemption depends upon the nature and purpose of the 
work performed by the individual employee for whom exemption is sought, 
and in the case of ginning of cotton on the location of the place of 
employment where the work is done and other factors as well. It does not 
depend upon the character of the business of the employer. A 
determination of whether an employee is exempt therefore requires an 
examination of that employee's duties. Some employees of the employer 
may be exempt while others may not.

[[Page 603]]



Sec. 780.803  Basic conditions of exemption; first part, ginning of cotton.

    Under the first part of section 13(b)(15) of the Act, the ginning of 
cotton, all the following conditions must be met in order for the 
exemption to apply to an employee:
    (a) He must be ``engaged in ginning.''
    (b) The commodity ginned must be cotton.
    (c) The ginning of the cotton must be ``for market.''
    (d) The place of employment in which this work is done must be 
``located in a county where cotton is grown in commercial quantities.'' 
The following sections discuss the meaning and application of these 
requirements.

                      Ginning of Cotton for Market



Sec. 780.804  ``Ginning'' of cotton.

    The term ``ginning'' refers to operations performed on ``seed 
cotton'' to separate the seeds from the spinnable fibers. (Moore v. 
Farmer's Manufacturing and Ginning Co., 51 Ariz., 378, 77 F. 2d 209; 
Frazier v. Stone, 171 Miss. 56, 156 So. 596). ``Seed cotton'' is cotton 
in its natural state (Burchfield v. Tanner, 142 Tex. 404, 178 S.W. 2d 
681, 683) and the ginning to which section 13(b)(15) refers is the 
``first processing'' of this agricultural commodity (107 Cong. Rec. 
(daily ed.) p. 5887), which converts it into the marketable product 
commonly known as ``lint cotton'' (Wirtz v. Southern Pickery Inc. (W.D. 
Tenn.) 278 F. Supp. 729; Mangan v. State, 76 Ala. 60, 66) by removing 
the seed from the lint and then pressing and wrapping the lint into 
bales.



Sec. 780.805  Ginning of ``cotton.''

    Only the ginning of ``cotton'' is within the first part of the 
exemption. An employee engaged in ginning of moss, for example, would 
not be exempt. The reconditioning of cotton waste resulting from 
spinning or oil mill operations is not included, since such waste is not 
the agricultural commodity in its natural state for whose first 
processing the exemption was provided. (See 107 Cong. Rec. (daily ed.) 
p. 5887.) The ``cotton,'' ``seed cotton,'' and ``lint cotton'' ginned by 
ordinary gins do not include ``linter'' or ``Grabbot'' cotton, obtained 
by reginning cotton seed and hard locks of cotton mixed with hulls, 
bolls, and other substances which could not be removed by ordinary 
ginning (Mississippi Levee Com'rs v. Refuge Cotton Oil Co., 91 Miss. 
480, 44 So. 828, 829). Mote ginning, the process whereby raw motes 
(leaves, trash, sticks, dirt, and immature cotton with some cottonseed) 
are run through a ginning process to extract the short-fiber cotton, is 
not included in the ginning of cotton unless it is done as a part of the 
whole ginning process in one gin establishment as a continuous and 
uninterrupted series of operations resulting in useful cotton products 
including the regular ``gin'' bales, the ``mote'' bales (short-fiber 
cotton), and the cottonseed.



Sec. 780.806  Exempt ginning limited to first processing.

    As indicated in Sec. 780.804, the ginning for which the exemption 
is intended is the first processing of the agricultural commodity, 
cotton, in its natural form, into lint cotton for market. It does not 
include further operations which may be performed on the cottonseed or 
the cotton lint, even though such operations are performed in the same 
establishment where the ginning is done. Delinting, which is the removal 
of short fibers and fuzz from cottonseed, is not exempt under section 
13(b)(15). It is not first processing of the seed cotton; rather, it is 
performed on cottonseed, usually in cottonseed processing 
establishments, and even if regarded as ginning (Mitchell v. Burgess, 
239 F. 2d 484) it is not the ginning of cotton for market contemplated 
by section 13(b)(15). It may come within the overtime exemption provided 
in section 7(d) of the Act for certain seasonal industries. (See Sec. 
526.11(b)(1) of part 526 of this chapter.) Compressing of cotton, which 
is the pressing of bales into higher density bales than those which come 
from the gin, is a further processing of the cotton entirely removed 
from ginning (Peacock v. Lubbock Compress Co., 252 F. 2d 892). Employees 
engaged in compressing may, however, be subject to exemption from 
overtime pay under section 7(c). (See Sec. 526.10(b)(8) of this 
chapter.)

[[Page 604]]



Sec. 780.807  Cotton must be ginned ``for market.''

    As noted in Sec. 780.804, it is ginning of seed cotton which 
converts the cotton to marketable form. Section 13(b)(15), however, 
provides an exemption only where the cotton is actually ginned ``for 
market.'' (Wirtz v. Southern Pickery, Inc. (W.D. Tenn.) 278 F. Supp. 
729.) The ginning of cotton for some other purpose is not exempt work. 
Cotton is not ginned ``for market'' if it is not to be marketed in the 
form in which the ginning operation leaves it. Cotton is not ginned 
``for market'' if it is being ginned preliminary to further processing 
operations to be performed on the cotton by the same employer before 
marketing the commodity in an altered form. (Compare Mitchell v. Park 
(D. Minn.), 14 WH Cases 43, 36 Labor Cases 65, 191; Bush v. Wilson & 
Co., 157 Kans. 82, 138 P. 2d 457; Gaskin v. Clell Coleman & Sons, 2 WH 
Cases 977.)

                    Employees ``Engaged in'' Ginning



Sec. 780.808  Who may qualify for the exemption generally.

    The exemption applies to ``any employee engaged in'' ginning of 
cotton. This means that the exemption may apply to an employee so 
engaged, no matter by whom he is employed. Employees of the gin 
operator, of an independent contractor, or of a farmer may come within 
the exemption in any workweek when all other conditions of the exemption 
are met. To come within the exemption, however, an employee's work must 
be an integral part of ginning of cotton, as previously described. The 
courts have uniformly held that exemptions in the Act must be construed 
strictly to carry out the purpose of the Act. (See Sec. 780.2, in 
subpart A of this part.) No operation in which an employee engages in a 
place of employment where cotton is ginned is exempt unless it comes 
within the meaning of the term ``ginning.''



Sec. 780.809  Employees engaged in exempt operations.

    Employees engaged in actual ginning operations, as described in 
Sec. 780.804 will come within the exemption if all other conditions of 
section 13(b)(15) are met. The following activities are among those 
within the meaning of the term ``engaged in ginning of cotton'':
    (a) ``Spotting'' vehicles in the gin yard or in nearby areas before 
or after being weighed.
    (b) Moving vehicles in the gin yard or from nearby areas to the 
``Suction'' and reparking them subsequently.
    (c) Weighing the seed cotton prior to ginning, weighing lint cotton 
and seed subsequent to ginning (including preparation of weight records 
and tickets in connection with weighing operations).
    (d) Placing seed cotton in temporary storage at the gin and removing 
the cotton from such storage to be ginned.
    (e) Operating the suction feed.
    (f) Operating the gin stands and power equipment.
    (g) Making gin repairs during the ginning season.
    (h) Operating the press, including the handling of bagging and ties 
in connection with the ginning operations of that gin.
    (i) Removing bales from the press to holding areas on or near the 
gin premises.
    (j) Others whose work is so directly and physically connected with 
the ginning process itself that it constitutes an integral part of its 
actual performance.



Sec. 780.810  Employees not ``engaged in'' ginning.

    Since an employee must actually be ``engaged in'' ginning of cotton 
to come within the exemption, an employee engaged in other tasks, not an 
integral part of ``ginning'' operations, will not be exempt. (See, for 
rule that only the employees performing the work described in the 
exemption are exempt, Wirtz v. Burton Mercantile and Gin Co., Inc., 234 
F. Supp. 825, aff'd per curiam 338 F. 2d 414, cert. denied 380 U.S. 965; 
Wirtz v. Kelso Gin Co., Inc. (E.D. Ark.) 50 Labor Cases 31, 631, 16 WH 
Cases 663; Mitchell v. Stinson, 217 F. 2d 210; Phillips v. Meeker 
Cooperative Light and Power Ass'n 63 F. Supp. 743, affirmed 158 F. 2d 
698; Jenkins v. Durkin, 208 F. 2d 941; Heaburg v. Independent Oil Mill, 
Inc., 46 F. Supp. 751; Abram v. San Joaquin Cotton Oil Co., 46 F. Supp. 
969.) The following activities are among those not within the meaning of 
the term ``engaged in ginning of cotton'':

[[Page 605]]

    (a) Transporting seed cotton from farms or other points to the gin.
    (b) General maintenance work (as opposed to operating repairs).
    (c) General office and custodial duties.
    (d) ``Watching'' duties.
    (e) Working in the seed house.
    (f) Transporting seed, hulls, and ginned bales away from the gin.
    (g) Any activity performed during the ``off-season.''

          County Where Cotton Is Grown in Commercial Quantities



Sec. 780.811  Exemption dependent upon place of employment generally.

    Under the first part of section 13(b)(15), if the employee's work 
meets the requirements for exemption, the location of the place of 
employment where he performs it will determine whether the exemption is 
applicable. This location is required to be in a county where cotton is 
grown in commercial quantities. The exemption will apply, however, to an 
employee who performs such work in ``any'' place of employment in such a 
county. The place of employment in which he engages in ginning need not 
be an establishment exclusively or even principally devoted to such 
operations; nor is it important whether the place of employment is on a 
farm or in a town or city in such a county, or whether or to what extent 
the cotton ginned there comes from the county in which the ginning is 
done or from nearby or distant sources. It is enough if the place of 
employment where the employee is engaged in ginning cotton for market is 
``located'' in such a county.



Sec. 780.812  ``County.''

    As used in the section 13(b)(15) exemption, the term ``county'' 
refers to the political subdivision of a State commonly known as such, 
whether or not such a unit bears that name in a particular State. It 
would, for example, refer to the political subdivision known as a 
``parish'' in the State of Louisiana. A place of employment would not be 
located in a county, within the meaning of the exemption, if it were 
located in a city which, in the particular State, was not a part of any 
county.



Sec. 780.813  ``County where cotton is grown.''

    For the exemption to apply, the employee must be ginning cotton in a 
place of employment in a county where cotton ``is grown'' in the 
described quantities. It is the cotton grown, not the cotton ginned in 
the place of employment, to which the quantity test is applicable. The 
quantities of cotton ginned in the county do not matter, so long as the 
requisite quantities are grown there.



Sec. 780.814  ``Grown in commercial quantities.''

    Cotton must be ``grown in commercial quantities'' in the county 
where the place of employment is located if an employee ginning cotton 
in such place is to be exempt under section 13(b)(15). The term 
``commercial quantities'' is not defined in the statute, but in the 
cotton-growing areas of the country there should be little question in 
most instances as to whether commercial quantities of cotton are grown 
in the county where the ginning is done. If it should become necessary 
to determine whether commercial quantities are grown in a particular 
county, it would appear appropriate in view of crop-year variations to 
consider average quantities produced over a representative period such 
as 5 years. On the question of whether the quantities grown are 
``commercial'' quantities, the trade understanding of what are 
``commercial'' quantities of cotton would be important. It would appear 
appropriate also to measure ``commercial'' quantities in terms of 
marketable lint cotton in bales rather than by acreage or amounts of 
seed cotton grown, since seed cotton is not a commercially marketable 
product (Mangan v. State, 76 Ala. 60). Also, production of a commodity 
in ``commercial'' quantities generally involves quantities sufficient 
for sale with a reasonable expectation of some return to the producers 
in excess of costs (Bianco v. Hess (Ariz.), 339 P. 2d 1038; Nystel v. 
Thomas (Tex. Civ. App.) 42 S.W. 2d 168).

[[Page 606]]



Sec. 780.815  Basic conditions of exemption; second part, processing
of sugar beets, sugar-beet molasses, sugarcane, or maple sap.

    Under the second part of section 13(b)(15) of the Act, the following 
conditions must be met in order for the exemption to apply to an 
employee:
    (a) He must be engaged in the processing of sugar beets, sugar-beet 
molasses, sugarcane, or maple sap.
    (b) The product of the processing must be sugar (other than refined 
sugar) or syrup.



Sec. 780.816  Processing of specific commodities.

    Only the processing of sugar beets, sugar-beet molasses, sugarcane, 
or maple sap is within the exemption. Operations performed on 
commodities other than those named are not exempt under this section 
even though they result in the production of unrefined sugar or syrup. 
For example, sorghum cane or refinery syrup (which is a byproduct of 
refined syrup) are not named commodities and employees engaged in 
processing these products are not exempt under this section even though 
the resultant product is raw sugar. The loss of exemption would obtain 
for the same reason for employees engaged in processing sugar, glucose, 
or ribbon cane syrup into syrup.



Sec. 780.817  Employees engaged in processing.

    Only those employees who are engaged in the processing will come 
within the exemption. The processing of sugarcane to which the exemption 
applies and in which the employee must be engaged in order to come 
within it is considered to begin when the processor receives the cane 
for processing and to end when the cane is processed ``into sugar (other 
than refined sugar) or syrup.'' Employees engaged in the following 
activities of a sugarcane processing mill are considered to be engaged 
in ``the processing of'' the sugarcane into the named products, within 
the meaning of the exemption:
    (a) Loading of the sugarcane in the field or at a concentration 
point and hauling the cane to the mill ``if performed by employees of 
the mill.'' (Such activities performed by employees of some other 
employer, such as an independent contractor, are not considered to be 
within the exemption.)
    (b) Weighing, unloading, and stacking the cane at the mill yard.
    (c) Performing sampling tests (such as a trash test or sucrose 
content test) on the incoming cane.
    (d) Washing the cane, feeding it into the mill crushers and 
crushing.
    (e) Operations on the extracted cane juice in the making of raw 
sugar and molasses: Juice weighing and measurement, heating, 
clarification, filtration, evaporating, crystallization, centrifuging, 
and handling and storing the raw sugar or molasses at the plant during 
the grinding season.
    (f) Laboratory analytical and testing operations at any point in the 
processing or at the end of the process.
    (g) Loading out raw sugar or molasses during the grinding season.
    (h) Handling, baling, or storing bagasse during the grinding season.
    (i) Firing boilers and other activities connected with the overall 
operation of the plant machinery during grinding operations, including 
cleanup and maintenance work and day-to-day repairs. (This includes shop 
employees, mechanics, electricians, and employees maintaining stocks of 
various items used in repairs.)



Sec. 780.818  Employees not engaged in processing.

    Employees engaged in operations which are not an integral part of 
processing of the named commodities will not come within the exemption. 
The following activities are not considered exempt under section 
13(b)(15):
    (a) Office and general clerical work.
    (b) Feeding and housing millhands and visitors (typically this is 
called the ``boarding house'').
    (c) Hauling raw sugar or molasses away from the mill.
    (d) Any work outside the grinding season.



Sec. 780.819  Production must be of unrefined sugar or syrup.

    The second part of the section 13(b)(15) exemption is specifically 
limited to the production ``of sugar (other than refined sugar) or 
syrup.'' The production of ``refined sugar'' a term

[[Page 607]]

which is commonly understood to refer to the refinement of ``raw sugar'' 
is expressly excluded. Thus, the exemption does not apply to the 
manufacture of sugar that is produced by melting sugar, purifying the 
melted sugar solution through a carbon medium process and the 
recrystallization of the sugar from this solution. Nor does the 
exemption apply to the processing of cane syrup into refined sugar or to 
the further processing of sugar, as for example, beet sugar into 
powdered or liquid sugar.



  Subpart J_Employment in Fruit and Vegetable Harvest Transportation; 
    Exemption From Overtime Pay Requirements Under Section 13(b)(16)

                              Introductory



Sec. 780.900  Scope and significance of interpretative bulletin.

    Subpart A of this part 780 and this subpart J together constitute 
the official interpretative bulletin of the Department of Labor with 
respect to the meaning and application of section 13(b)(16) of the Fair 
Labor Standards Act of 1938, as amended. This section provides exemption 
from the overtime pay provisions of the Act for employees engaging in 
specified transportation activities when fruits and vegetables are 
harvested. As appears more fully in subpart A of this part, 
interpretations in this bulletin with respect to the provisions of the 
Act discussed are official interpretations upon which reliance may be 
placed and which will guide the Secretary of Labor and the Administrator 
in the performance of their duties under the Act. The general exemption 
provided in sections 13(a)(6) and 13(b)(12) of the Act for employees 
employed in agriculture, are not discussed in this subpart except in 
their relation to section 13(b)(16). The meaning and application of 
these exemptions are fully considered in subparts D and E, respectively, 
of this part 780.



Sec. 780.901  Statutory provisions.

    Section 13(b)(16) of the Act exempts from the overtime provisions of 
section 7:

    Any employee engaged (A) in the transportation and preparation for 
transportation of fruits or vegetables, whether or not performed by the 
farmer, from the farm to a place of first processing or first marketing 
within the same State, or (B) in transportation, whether or not 
performed by the farmer, between the farm and any point within the same 
State of persons employed or to be employed in the harvesting of fruits 
or vegetables.



Sec. 780.902  Legislative history of exemption.

    Since the language of section 13(b)(16) and its predecessor, section 
13(a)(22) is identical, the legislative history of former section 
13(a)(22) still retains its pertinency and vitality. The former section 
13(a)(22) was added to the Act by the Fair Labor Standards Amendments of 
1961. The original provision in the House-passed bill was in the form of 
an amendment to the Act's definition of agriculture. It would have 
altered the effect of holdings of the courts that operations such as 
those described in the amendment are not within the agriculture 
exemption provided by section 13(a)(6) when performed by employees of 
persons other than the farmer. (Chapman v. Durkin, 214 F. 2d 360, 
certiorari denied 348 U.S. 897; Fort Mason Fruit Co. v. Durkin, 214 F. 
2d 363, certiorari denied, 348 U.S. 897.) The amendment was offered to 
exempt operations which, in the sponsor's view, were meant to be exempt 
under the original Act. (See 107 Cong. Rec. (daily ed.) p. 4523.) The 
Conference Committee, in changing the provision to make it a separate 
exemption made it clear that is was ``not intended by the committee of 
conference to change by this exemption (for the described transportation 
employees) * * * the application of the Act to any other employees. Nor 
is it intended that there be any implication of disagreement by the 
conference committee with the principles and tests governing the 
application of the present agricultural exemption as enunciated by the 
courts.'' (H. Rept. No. 327, 87th Cong., first session, p. 18.)



Sec. 780.903  General scope of exemption.

    The exemption provided by section 13(b)(16) is in two parts, 
subsection (A), which exempts employees engaged in

[[Page 608]]

the described transportation and preparation for transportation of 
fruits or vegetables, and subsection (B) which exempts employees engaged 
in the specified transportation of employees who harvest fruits or 
vegetables. The transportation and preparation for transportation of 
fruits and vegetables must be from the farm to a place of first 
processing or first marketing located in the same State where the farm 
is located; the transportation of harvesters must be between the farm 
and a place located in the same State as the farm.



Sec. 780.904  What determines the exemption.

    The application of the exemption provided by section 13(b)(16) 
depends on the nature of the employee's work and not on the character of 
the employer's business. An employee is not exempt in any workweek 
unless his employment in that workweek meets all the requirements for 
exemption. To determine whether an employee is exempt an examination 
should be made of the duties which that employee performs. Some 
employees of the employer may be exempt and others may not.



Sec. 780.905  Employers who may claim exemption.

    A nonfarmer, as well as a farmer, who has an employee engaged in the 
operations specified in section 13(b)(16) may take advantage of the 
exemption. Employees of contractual haulers, packers, processors, 
wholesalers, ``bird-dog'' operators, and others may qualify for 
exemption. If an employee is engaged in the specified operations, the 
exemption will apply ``whether or not'' these operations are ``performed 
by the farmer'' who has grown the harvested fruits and vegetables. Where 
such operations are performed by the farmer, the engagement by his 
employee in them will provide a basis for exemption under section 
13(b)(16) without regard to whether the farmer is performing the 
operations as an incident to or in conjunction with his farming 
operations.

                Exempt Operations on Fruits or Vegetables



Sec. 780.906  Requisites for exemption generally.

    Section 13(b)(16), in clause (A), provides an exemption from the 
overtime pay provision of the Act for an employee during any workweek in 
which all the following conditions are satisfied:
    (a) The employee must be engaged ``in the transportation and 
preparation for transportation of fruits and vegetables''; and
    (b) Such transportation must be transportation ``from the farm''; 
and
    (c) The destination to which the fruits or vegetables are 
transported must be ``a place of first processing or first marketing''; 
and
    (d) The transportation must be from the farm to such destination 
``within the same State''.



Sec. 780.907  ``Fruits or vegetables.''

    The exempt operations of preparing for transportation and 
transporting must be performed with respect to ``fruits or vegetables.'' 
The intent of section 13(b)(16) is to exempt such operations on fruits 
or vegetables which are ``just-harvested'' and still in their raw and 
natural state. As explained at the time of adoption of the amendment on 
the floor of the House, the exemption was intended to eliminate the 
difference in treatment of farmers and nonfarmers with respect to 
exemption of such ``handling or hauling of fruit or vegetables in their 
raw or natural state.'' (See 107 Cong. Rec. (daily ed.) p. 4523.) 
Transporting and preparing for transportation other farm products which 
are not fruits or vegetables are not exempt under section 13(b)(16). For 
example, operations on livestock, eggs, tobacco, or poultry are 
nonexempt. Sugarcane is not a fruit or vegetable for purposes of this 
exemption (Wirtz v. Osceola Farms Co., 372 F. 2d 584).



Sec. 780.908  Relation of employee's work to specified transportation.

    In order for the exemption to apply to an employee, he must be 
engaged ``in the transportation and preparation for transportation'' of 
the just-harvested fruits or vegetables from the

[[Page 609]]

farm to the specified places within the same State. Engagement in other 
activities is not exempt work. The employee must be actually engaged in 
the described operations. The exemption is not available for other 
employees of the employer, such as office, clerical, and maintenance 
workers.



Sec. 780.909  ``Transportation.''

    ``Transportation,'' as used in section 13(b)(16), refers to the 
movement by any means of conveyance of fruits or vegetables from the 
farm to a place of first processing or first marketing in the same 
State. It includes only those activities which are immediately necessary 
to move the fruits or vegetables to the specified points and the return 
trips. Drivers, drivers' helpers, loaders, and checkers perform work 
which is exempt. Transportation ends with delivery at the receiving 
platform of the place to which the fruits or vegetables are transported. 
(Mitchell v. Budd, 350 U.S. 473.) Thus, unloading at the delivery point 
by employees who did not transport the commodities would not be a part 
of the transportation activities under section 13(b)(16).



Sec. 780.910  Engagement in transportation and preparation.

    Since transportation and preparation for transportation are both 
exempt activities, an employee who engages in both is performing exempt 
work. In referring to ``the transportation and preparation for 
transportation'' of the fruits or vegetables, the statute recognizes the 
two activities as interrelated parts of the single task of moving the 
commodities from the farm to the designated points. Accordingly, the 
word ``and'' between the words ``transportation'' and ``preparation'' is 
not considered to require that any employee be employed in both parts of 
the task in order to be exempt. The exemption may apply to an employee 
engaged either in transporting or preparing the commodities for 
transportation if he otherwise qualifies under section 13(b)(16).



Sec. 780.911  Preparation for transportation.

    The ``preparation for transportation'' of fruits or vegetables 
includes only those activities which are necessary to prepare the fruits 
or vegetables for transportation from the farm to the places described 
in section 13(b)(16). These preliminary activities on the farm will vary 
with the commodity involved, with the means of the transportation to be 
used, and with the nature of operations to be performed on the commodity 
after delivery.



Sec. 780.912  Exempt preparation.

    The following operations, if required in order to move the 
commodities from the farm and to deliver them to a place of first 
marketing or first processing, are considered preparation for 
transportation: Assembling, weighing, placing the fruits or vegetables 
in containers such as lugs, crates, boxes or bags, icing, marking, 
labeling or fastening containers, and moving the commodities from 
storage or concentration areas on the farm to loading sites.



Sec. 780.913  Nonexempt preparation.

    (a) Retail packing. Since the exemption, as expressly stated in 
section 13(b)(16), includes the transportation of the fruits or 
vegetables only to places of first marketing or first processing, 
packing or preparing for retail or further distribution beyond the place 
of first processing or first marketing is not exempt as ``preparation 
for transportation.'' (Schultz v. Durrence (D. Ga.), 19 WH Cases 747, 63 
CCH Lab. Cas. secs. 32, 387.)
    (b) Preparation for market. No exemption is provided under section 
13(b)(16) for operations performed on the farm in preparation for market 
(such as ripening, cleaning, grading, or sorting) rather than in 
preparation for the transportation described in the section. Exemption, 
if any, for these activities should be considered under sections 
13(a)(6) and 13(b)(12). (See subparts D and E of this part 780.)
    (c) Processing or canning. Processing is not exempt preparation for 
transportation. Thus, the canning of fruits or vegetables is not under 
section 13(b)(16).

[[Page 610]]



Sec. 780.914  ``From the farm.''

    The exemption applies only to employees whose work relates to 
transportation of fruits or vegetables ``from the farm.'' The phrase 
``from the farm'' makes it clear that the preparation of the fruits or 
vegetables should be performed on the farm and that the first movement 
of the commodities should commence at the farm. A ``farm'' has been 
interpreted under the Act to mean a tract of land devoted to one or more 
of the primary branches of farming outlined in the definition of 
``agriculture'' in section 3(f) of the Act. These expressly include the 
cultivation and tillage of the soil and the growing and harvesting of 
any agricultural or horticultural commodities.



Sec. 780.915  ``Place of first processing.''

    Under section 13(b)(16) the fruits or vegetables may be transported 
to only two types of places. One is a ``place of first processing'', 
which includes any place where canning, freezing, drying, preserving, or 
other operations which first change the form of the fresh fruits or 
vegetables from their raw and natural state are performed. (For overtime 
exemption applicable to ``first processing,'' see part 526 of this 
chapter.) A plant which grades and packs only is not a place of first 
processing (Walling v. DeSoto Creamery and Produce Co., 51 F. Supp. 
938). However, a packer's plant may qualify as a place of first 
marketing. (See Sec. 780.916.)



Sec. 780.916  ``Place of * * * first marketing.''

    A ``place of * * * first marketing'' is the second of the two types 
of places to which the freshly harvested fruits or vegetables may be 
transported from the farm under the exemption provided by section 
13(b)(16). Typically, a place of first marketing is a farmer's market of 
the kind to which ``delivery to market'' is made within the meaning of 
section 3(f) of the Act when a farmer delivers such commodities there as 
an incident to or in conjunction with his own farming operations. Under 
section 13(b)(16), of course, there is no requirement that the 
transportation be performed by or for a farmer or as an incident to or 
in conjunction with any farming operations. A place of first marketing 
may be described in general terms as a place at which the freshly 
harvested fruits or vegetables brought from the farm are first delivered 
for marketing, such as a packing plant or an establishment of a 
wholesaler or other distributor, cooperative marketing agency, or 
processor to which the fruits or vegetables are first brought from the 
farm and delivered for sale. A place of first marketing may also be a 
place of first processing (see Mitchell v. Budd, 350 U.S. 473) but it 
need not be. The ``first place of packing'' to which the just-harvested 
fruits or vegetables are transported from the farm is intended to be 
included. (See 107 Cong. Rec. (daily ed.) p. 4523.) Transportation to 
places which are not first processing or first marketing places is not 
exempt.



Sec. 780.917  ``Within the same State.''

    To qualify for exemption under section 13(b)(16), the transportation 
of the fruits or vegetables must be made to the specified places 
``within the same State'' in which the farm is located. Transportation 
is made to a place ``within the same State'' when the commodities are 
taken from the farm, hauled and delivered within the same State to first 
markets or first processors for sale or processing at the place of 
delivery. The exemption is not provided for transportation to any place 
of first marketing or first processing across State lines and does not 
apply to any part of the transportation within the State of fruits or 
vegetables destined for a place in another State at which they are to be 
first marketed or first processed. Transportation from the farm to an 
intermediate point in such a journey located within the same State would 
not qualify for exemption; it would make no difference that the 
intermediate point is a place of first marketing or first processing for 
other fruits or vegetables if it is not actually such for the fruits or 
vegetables being transported. On the other hand, where the place to 
which fruits or vegetables are transported from the farm within the same 
State is actually the place of first marketing or first processing of 
those very commodities, transportation of the goods across State lines 
by the first-market operator or first

[[Page 611]]

processor, after such delivery to him within the State, does not affect 
the nature of the delivery to him as one made within the State.

      Exempt Transportation of Fruit or Vegetable Harvest Employees



Sec. 780.918  Requisites for exemption generally.

    Section 13(b)(16), in clause (B), provides an exemption from the 
minimum wage and overtime pay provisions of the Act for an employee 
during any workweek in which all the following conditions are satisfied:
    (a) The employee must be engaged ``in transportation'' of harvest 
workers; and
    (b) The harvest workers transported must be ``persons employed or to 
be employed in the harvesting of fruits or vegetables''; and
    (c) The employee's transportation of such harvest workers must be 
``between the farm and any point within the same State.''



Sec. 780.919  Engagement ``in transportation'' of harvest workers.

    In order for the exemption to apply, the employees must be engaged 
``in transportation'' of the specified harvest workers between the 
points stated in the statute. Actual engagement ``in transportation'' of 
such workers is required. Engagement in other activities is not exempt 
work. Drivers, driver's helpers, and others who are engaged in the 
actual movement of the persons transported may qualify for the 
exemption. Office employees, garage mechanics, and other employees of 
the employer who may perform supporting activities but do not engage in 
the actual transportation work do not come within the exemption. There 
is no restriction in the statute as to the means of conveyance used; the 
exempt transportation may be by land, air, or water in any vehicle or 
conveyance appropriate for the purpose. Employees of any employer who 
are engaged in the specified transportation activities may qualify for 
exemption; it is not necessary that the transportation be performed by 
the farmer. (See Sec. 780.905.)



Sec. 780.920  Workers transported must be fruit or vegetable harvest
workers.

    Clause (B) of section 13(b)(16) exempts only those transportation 
employees who are engaged in transportation ``of persons employed or to 
be employed in the harvesting of fruits or vegetables.'' Transportation 
of harvest workers is not exempt unless the workers are fruit and 
vegetable harvest workers; transportation of workers employed or to be 
employed in harvesting or other commodities is not exempt work under 
section 13(b)(16). Wirtz v. Osceola Farms Co., 372 F. (2d) 584 (C.A. 5). 
Nor does the exemption apply to the transportation of persons for the 
purpose of planting or cultivating any crop, whether or not it is a 
fruit or a vegetable crop.



Sec. 780.921  Persons ``employed or to be employed'' in fruit or
vegetable harvesting.

    The exemption applies to the transportation of persons ``employed or 
to be employed'' in the harvesting of fruits or vegetables. Included in 
this phrase are persons who at the time of transportation are currently 
employed in harvesting fruits or vegetables and others who, regardless 
of their occupation at such time, are being transported to be employed 
in such harvesting. The conveying of persons to a farm from a factory, 
packinghouse or processing plant would be exempt where their 
transportation is for the purpose of their employment in harvesting the 
named commodities. On the other hand, the transportation of harvest 
workers, who have been employed in the fruit or vegetable harvest, to 
such a plant for the purpose of their employment in the plant would not 
be exempt. The transportation must come within the intended scope of 
section 13(b)(16) which is to provide exemption for ``transportation of 
the harvest crew to and from the farm'' (see 107 Cong. Rec. daily ed. p. 
4523).



Sec. 780.922  ``Harvesting'' of fruits or vegetables.

    Only transportation of employees employed or to be employed in the 
``harvesting'' of fruits or vegetables is exempt under clause (B) of 
section 13(b)(16). As indicated in Sec. 780.920, such

[[Page 612]]

harvest workers do not include employees employed or to be employed in 
planting or cultivating the crop. Nor do they include employees employed 
or to be employed in operations subsequent to harvesting, even where 
such operations constitute ``agriculture'' within the definition in 
section 3(f) of the Act. ``Harvesting'' refers to the removal of fruits 
or vegetables from their growing position in the fields, and as 
explained in Sec. 780.118 of this part, includes the operations 
customarily performed in connection with this severance of the crops 
from the soil (see Vives v. Serralles, 145 F. 2d 552), but does not 
extend to operations subsequent to and unconnected with the actual 
severance process or to operations performed off the farm. It may 
include moving the fruits or vegetables to concentration points on the 
farm, but would not include packingshed or other operations performed in 
preparation for market rather than as part of harvesting, such as 
ripening, cleaning, grading, sorting, drying, and storing. If the 
workers are employed or to be employed in ``harvesting'', it does not 
matter for purposes of the exemption whether a farmer or someone else 
employs them or does the harvesting. It is the character of their 
employment as ``harvesting'' and not the identity of their employer or 
the owner of the crop which determines whether their transportation to 
and from the farm will provide a basis for exemption of the 
transportation of employees.



Sec. 780.923  ``Between the farm and any point within the same State.''

    The transportation of fruit or vegetable harvest workers is 
permitted ``between the farm and any point within the same State''. The 
exempt transportation of such harvest workers therefore includes their 
movement to and from the farm (see 107 Cong. Rec. (daily ed.) p. 4523). 
Such transportation must, however, be from or to points ``within the 
same State'' in which the farm is located. Crossing of State lines is 
not contemplated. Thus, the exemption would not apply to day-haul 
transportation of fruit or vegetable harvest workers between a town in 
one State and farms located in another State. Also, the intent to exempt 
``transportation of the harvest crew to and from the farm'' (see 107 
Cong. Rec. (daily ed.) p. 4523) within a single State would not justify 
exemption of the transportation of workers from one State to another to 
engage in harvest work in the latter State. The exemption does not apply 
to transportation of persons on any trip, or any portion of a trip, in 
which the point of origin or point of destination is in another State. 
Subject to these limitations, however, where employees are being 
transported for employment in harvesting they may be picked up in any 
place within the State, including other farms, packing or processing 
establishments, factories, transportation terminals, and other places. 
The broad term ``any point'' must be interpreted in the light of the 
purpose of the exemption to facilitate the harvesting of fruits or 
vegetables. Transportation from a farm to ``any point'' within the same 
State (such as a factory or processing plant) where some other purpose 
than harvesting is served is not exempt.



Subpart K_Employment of Home- workers in Making Wreaths; Exemption From 
 Minimum Wage, Overtime Compensation, and Child Labor Provisions Under 
                              Section 13(d)

                              Introductory



Sec. 780.1000  Scope and significance of interpretative bulletin.

    Subpart A of this part 780 and this subpart K together constitute 
the official interpretative bulletin of the Department of Labor with 
respect to the meaning and application of section 13(d) of the Fair 
Labor Standards Act of 1938, as amended. This section provides an 
exemption from the minimum wage, overtime pay, and child labor 
provisions of the Act for certain homeworkers employed in making wreaths 
from evergreens and in harvesting evergreens and other forest products 
for use in making wreaths. Attention is directed to the fact that a 
limited overtime exemption for employees employed in the decoration 
greens industry is provided under section 7(c) of the Act (see part 526 
of this

[[Page 613]]

chapter). The section 7(c) exemption is not limited to homeworkers.



Sec. 780.1001  General explanatory statement.

    Workers in rural areas sometimes engage, as a family unit, around 
the Christmas holidays, in gathering evergreens and making them into 
wreaths in their homes. Such workers, under well-settled interpretations 
by the Department of Labor and the courts, have been held to be 
employees of the firm which purchases the wreaths and furnishes the 
workers with wire used in making such wreaths.

                       Requirements for Exemption



Sec. 780.1002  Statutory requirements.

    Section 13(d) of the Fair Labor Standards Act exempts from the 
minimum wage provisions of section 6, the overtime requirements of 
section 7 and the child labor restrictions of section 12:

    Any homeworker engaged in the making of wreaths composed principally 
of natural holly, pine, cedar, or other evergreens (including the 
harvesting of the evergreens or other forest products used in making 
such wreaths).



Sec. 780.1003  What determines the application of the exemption.

    The application of this exemption depends on the nature of the 
employee's work and not on the character of the employer's business. To 
determine whether an employee is exempt an examination should be made of 
the activities which that employee performs and the conditions under 
which he performs them. Some employees of the employer may be exempt and 
others may not.



Sec. 780.1004  General requirements.

    The general requirements of the exemption are that:
    (a) The employee must be a homeworker;
    (b) The employee must be engaged in making wreaths as a homeworker;
    (c) The wreaths must be made principally of evergreens;
    (d) Any harvesting of the evergreens and other forest products by 
the homeworkers must be for use in making the wreaths by homeworkers.



Sec. 780.1005  Homeworkers.

    The exemption applies to ``any homeworker.'' A homeworker within the 
meaning of the Act is a person who works for an employer in or about a 
home, apartment, tenement, or room in a residential establishment.



Sec. 780.1006  In or about a home.

    Whether the work of an employee is being performed ``in or about a 
home,'' so that he may be considered a homeworker, must be determined on 
the facts in the particular case. In general, however the phrase ``in or 
about a home'' includes any home, apartment, or other dwelling place and 
surrounding premises, such yards, garages, sheds or basements. A 
convent, orphanage or similar institution is considered a home.



Sec. 780.1007  Exemption is inapplicable if wreath-making is not in
or about a home.

    The section 13(d) exemption does not apply when the wreaths are made 
in or about a place which is not considered a ``home''. Careful 
consideration is required in many cases to determine whether work is 
being performed in or about a home. Thus, the circumstances under which 
an employee may engage in work in what ostensibly is a ``home'' may 
require the conclusion, on an examination of all the facts, that the 
work is not being performed in or about a home within the intent of the 
term and for purposes of section 13(d) of the Act.



Sec. 780.1008  Examples of places not considered homes.

    The following are examples of workplaces which, on examination, have 
been considered not to be a ``home'':
    (a) Living quarters allocated to and regularly used solely for 
production purposes, where workers work regular schedules and are under 
constant supervision by the employer, are not considered to be a home.
    (b) While a convent, orphanage or similar institution is considered 
a home, an area in such place which is set aside for and used for sewing 
or

[[Page 614]]

other productive work under supervision is not a home.
    (c) Where an employee performs work on wreaths in a home and also 
engages in work on the wreaths for the employer during that workweek in 
a factory, he is not exempt in that week, since some of his work is not 
performed in a home.



Sec. 780.1009  Wreaths.

    The only product which may be produced under the section 13(d) 
exemption by a homeworker is a wreath having no less than the specified 
evergreen content. The making of a product other than a wreath is 
nonexempt even though it is made principally of evergreens.



Sec. 780.1010  Principally.

    The exemption is intended to apply to the making of an evergreen 
wreath. Such a wreath is one made ``principally'' of evergreens. 
Principally means chiefly, in the main or mainly (Hartford Accident and 
Indemnity Co. v. Casualty Underwriters Insurance Co., 130 F. Supp. 56). 
A wreath is made ``principally'' of evergreens when it is comprised 
mostly of evergreens. For example, where a wreath is composed of 
evergreens and other kinds of material, the evergreens should comprise a 
greater part of the wreath than all the other materials together, 
including materials such as frames, stands, and wires. The principal 
portion of a wreath may consist of any one or any combination of the 
evergreens listed in section 13(d), including ``other evergreens.'' The 
making of wreaths in which natural evergreens are a secondary component 
is not exempt.



Sec. 780.1011  Evergreens.

    The material which must principally be used in making the wreaths is 
listed as ``natural holly, pine, cedar, or other evergreens.'' Other 
plants or materials cannot be used to satisfy this requirement.



Sec. 780.1012  Other evergreens.

    The ``other evergreens'' of which the wreath may be principally made 
include any plant which retains its greenness through all the seasons of 
the year, such as laurel, ivy, yew, fir, and others. While plants other 
than evergreens may be used in making the wreaths, such plants, whether 
they are forest products cultivated plants, cannot be considered as part 
of the required principal evergreen component of the wreath.



Sec. 780.1013  Natural evergreens.

    Only ``natural'' evergreens may comprise the principal part of the 
wreath. The word ``natural'' qualifies all of the evergreens listed in 
the section, including ``other evergreens.'' The term natural means that 
the evergreens at the time they are being used in making a wreath must 
be in the raw and natural state in which they have been harvested. 
Artificial evergreens (Herring Magic v. U.S., 258 F. 2d 197; Cal. 
Casualty Indemnity Exchange v. Industrial Accident Commission of Cal. 90 
P. 2d 289) or evergreens which have been processed as by drying and 
spraying with tinsel or by other means are not included. It is 
immaterial whether the natural evergreen used in making a wreath has 
been cultivated or is a product of the woods or forest.



Sec. 780.1014  Harvesting.

    The homeworker is permitted to harvest evergreens and other forest 
products to be used in making the wreath. The word harvesting means the 
removal of evergreens and other forest products from their growing 
positions in the woods or forest, including transportation of the 
harvested products to the home of the homeworker and the performance of 
other duties necessary for such harvesting.



Sec. 780.1015  Other forest products.

    The homeworker may also harvest ``other forest products'' for use in 
making wreaths. The term other forest products means any plant of the 
forest and includes, of course, deciduous plants as well.



Sec. 780.1016  Use of evergreens and forest products.

    Harvesting of evergreens and other forest products is exempt only 
when these products will be ``used in making such wreaths.'' The phrase 
``used in making such wreaths'' places a definite

[[Page 615]]

limitation on the purpose for which evergreens may be harvested under 
section 13(d). Harvesting of these materials for a use other than making 
wreaths is nonexempt. Also, such harvesting is nonexempt when the 
evergreens are used for wreathmaking by persons other than the 
homeworkers (see Mitchell v. Hunt, 263 F. 2d 913). For example, 
harvesting of evergreens for sale or distribution to an employer who 
uses them in his factory to make wreaths is not exempt.



PART 782_EXEMPTION FROM MAXIMUM HOURS PROVISIONS FOR CERTAIN EMPLOYEES
OF MOTOR CARRIERS--Table of Contents



Sec.
782.0 Introductory statement.
782.1 Statutory provisions considered.
782.2 Requirements for exemption in general.
782.3 Drivers.
782.4 Drivers' helpers.
782.5 Loaders.
782.6 Mechanics.
782.7 Interstate commerce requirements of exemption.
782.8 Special classes of carriers.

    Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201 et seq.

    Source: 36 FR 21778, Nov. 13, 1971, unless otherwise noted.



Sec. 782.0  Introductory statement.

    (a) Since the enactment of the Fair Labor Standards Act of 1938, the 
views of the Administrator of the Wage and Hour Division as to the scope 
and applicability of the exemption provided by section 13(b)(1) of the 
act have been expressed in interpretations issued from time to time in 
various forms. This part, as of the date of its publication in the 
Federal Register, supersedes and replaces such prior interpretations. 
Its purpose is to make available in one place general interpretations of 
the Administrator which will provide ``a practical guide to employers 
and employees as to how the office representing the public interest in 
enforcement of the law will seek to apply it.'' (Skidmore v. Swift & 
Co., 323 U.S. 134)
    (b) The interpretations contained in this part indicate, with 
respect to the scope and applicability of the exemption provided by 
section 13(b)(1) of the Fair Labor Standards Act, the construction of 
the law which the Secretary of Labor and the Administrator believe to be 
correct in the light of the decisions of the courts, the Interstate 
Commerce Commission, and since October 15, 1966, its successor, the 
Secretary of Transportation, and which will guide them in the 
performance of their administrative duties under the act unless and 
until they are otherwise directed by authoritative decisions of the 
courts or conclude upon reexamination of an interpretation that it is 
incorrect.
    (c) Public Law 89-670 (80 Stat. 931) transferred to and vested in 
the Secretary of Transportation all functions, powers, and duties of the 
Interstate Commerce Commission: (1) Under section 204 (a)(1) and (a)(2) 
to the extent they relate to qualifications and maximum hours of service 
of employees and safety of operations and equipment, and (2) under 
section 204(a)(5) of the Motor Carrier Act. The interpretations 
contained in this part are interpretations on which reliance may be 
placed as provided in section 10 of the Portal-to-Portal Act (Pub. L. 
49, 80th Cong., first sess. (61 Stat. 84), discussed in part 790, 
statement on effect of Portal-to-Portal Act of 1947), so long as they 
remain effective and are not modified, amended, rescinded, or determined 
by judicial authority to be incorrect.



Sec. 782.1  Statutory provisions considered.

    (a) Section 13(b)(1) of the Fair Labor Standards Act provides an 
exemption from the maximum hours and overtime requirements of section 7 
of the act, but not from the minimum wage requirements of section 6. The 
exemption is applicable to any employee with respect to whom the 
Secretary of Transportation has power to establish qualifications and 
maximum hours of service pursuant to the provisions of section 204 of 
the Motor Carrier Act of 1935, (part II of the Interstate Commerce Act, 
49 Stat. 546, as amended; 49 U.S.C. 304, as amended by Pub. L. 89-

[[Page 616]]

670, section 8e which substituted ``Secretary of Transportation'' for 
``Interstate Commerce Commission''--Oct. 15, 1966) except that the 
exemption is not applicable to any employee with respect to whom the 
Secretary of Transportation has power to establish qualifications and 
maximum hours of service solely by virtue of section 204(a)(3a) of part 
II of the Interstate Commerce Act. (Pub. L. 939, 84th Cong., second 
sess., Aug. 3, 1956, secs. 2 and 3) The Fair Labor Standards Act confers 
no authority on the Secretary of Labor or the Administrator to extend or 
restrict the scope of this exemption. It is settled by decisions of the 
U.S. Supreme Court that the applicability of the exemption to an 
employee otherwise entitled to the benefits of the Fair Labor Standards 
Act is determined exclusively by the existence of the power conferred 
under section 204 of the Motor Carrier Act to establish qualifications 
and maximum hours of service with respect to him. It is not material 
whether such qualifications and maximum hours of service have actually 
been established by the Secretary of Transportation; the controlling 
consideration is whether the employee comes within his power to do so. 
The exemption is not operative in the absence of such power, but an 
employee with respect to whom the Secretary of Transportation has such 
power is excluded, automatically, from the benefits of section 7 of the 
Fair Labor Standards Act. (Southland Gasoline Co. v. Bayley, 319 U.S. 
44; Boutell v. Walling, 327 U.S. 463; Levinson v. Spector Motor Service, 
330 U.S. 649; Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695; 
Morris v. McComb, 332 U.S. 422)
    (b) Section 204 of the Motor Carrier Act, 1935, provides that it 
shall be the duty of the Interstate Commerce Commission (now that of the 
Secretary of Transportation (see Sec. 782.0(c))) to regulate common and 
contract carriers by motor vehicle as provided in that act, and that 
``to that end the Commission may establish reasonable requirements with 
respect to * * * qualifications and maximum hours of service of 
employees, and safety of operation and equipment.'' (Motor Carrier Act, 
sec. 204(a)(1)(2), 49 U.S.C. 304(a)(1)(2)) Section 204 further provides 
for the establishing of similar regulations with respect to private 
carriers of property by motor vehicle, if need therefor is found. (Motor 
Carrier Act, sec. 204(a)(3), 49 U.S.C. 304(a)(3))
    (c) Other provisions of the Motor Carrier Act which have a bearing 
on the scope of section 204 include those which define common and 
contract carriers by motor vehicle, motor carriers, private carriers of 
property by motor vehicle (Motor Carrier Act, sec. 203(a) (14), (15), 
(16), (17), 49 U.S.C. sec. 303(a) (14), (15), (16), (17)) and motor 
vehicle (Motor Carrier Act, sec. 203(a)(13)); those which confer 
regulatory powers with respect to the transportation of passengers or 
property by motor carriers engaged in interstate or foreign commerce 
(Motor Carrier Act, sec. 202(a)), as defined in the Motor Carrier Act, 
sec. 203(a) (10), (11), and reserve to each State the exclusive exercise 
of the power of regulation of intrastate commerce by motor carriers on 
its highways (Motor Carrier Act, sec. 202(b)); and those which expressly 
make section 204 applicable to certain transportation in interstate or 
foreign commerce which is in other respects excluded from regulation 
under the act. (Motor Carrier Act, sec. 202(c))



Sec. 782.2  Requirements for exemption in general.

    (a) The exemption of an employee from the hours provisions of the 
Fair Labor Standards Act under section 13(b)(1) depends both on the 
class to which his employer belongs and on the class of work involved in 
the employee's job. The power of the Secretary of Transportation to 
establish maximum hours and qualifications of service of employees, on 
which exemption depends, extends to those classes of employees and those 
only who: (1) Are employed by carriers whose transportation of 
passengers or property by motor vehicle is subject to his jurisdiction 
under section 204 of the Motor Carrier Act (Boutell v. Walling, 327 U.S. 
463; Walling v. Casale, 51 F. Supp. 520; and see Ex parte Nos. MC-2 and 
MC-3, in the Matter of Maximum Hours of Service of Motor Carrier 
Employees, 28

[[Page 617]]

M.C.C. 125, 132), and (2) engage in activities of a character directly 
affecting the safety of operation of motor vehicles in the 
transportation on the public highways of passengers or property in 
interstate or foreign commerce within the meaning of the Motor Carrier 
Act. United States v. American Trucking Assns., 310 U.S. 534; Levinson 
v. Spector Motor Service, 330 U.S. 649; Ex parte No. MC-28, 13 M.C.C. 
481; Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125; Walling v. Comet 
Carriers, 151 F. (2d) 107 (C.A. 2).
    (b)(1) The carriers whose transportation activities are subject to 
the Secretary of Transportation jurisdiction are specified in the Motor 
Carrier Act itself (see Sec. 782.1). His jurisdiction over private 
carriers is limited by the statute to private carriers of property by 
motor vehicle, as defined therein, while his jurisdiction extends to 
common and contract carriers of both passengers and property. See also 
the discussion of special classes of carriers in Sec. 782.8. And see 
paragraph (d) of this section. The U.S. Supreme Court has accepted the 
Agency determination, that activities of this character are included in 
the kinds of work which has been defined as the work of drivers, 
driver's helpers, loaders, and mechanics (see Sec. Sec. 782.3 to 782.6) 
employed by such carriers, and that no other classes of employees 
employed by such carriers perform duties directly affecting such 
``safety of operation.'' Ex parte No. MC-2, 11 M.C.C. 203; Ex parte No. 
MC-28, 13 M.C.C. 481; Ex parte No. MC-3, 23 M.C.C. 1; Ex parte Nos. MC-2 
and MC-3, 28 M.C.C. 125; Levinson v. Spector Motor Service, 330 U.S. 
649; Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695; Southland 
Gasoline Co. v. Bayley, 319 U.S. 44. See also paragraph (d) of this 
section and Sec. Sec. 782.3 through 782.8.
    (2) The exemption is applicable, under decisions of the U.S. Supreme 
Court, to those employees and those only whose work involves engagement 
in activities consisting wholly or in part of a class of work which is 
defined: (i) As that of a driver, driver's helper, loader, or mechanic, 
and (ii) as directly affecting the safety of operation of motor vehicles 
on the public highways in transportation in interstate or foreign 
commerce within the meaning of the Motor Carrier Act. Pyramid Motor 
Freight Corp. v. Ispass, 330 U.S. 695; Levinson v. Spector Motor 
Service, 330 U.S. 649; Morris v. McComb, 332 U.S. 442. Although the 
Supreme Court recognized that the special knowledge and experience 
required to determine what classifications of work affects safety of 
operation of interstate motor carriers was applied by the Commission, it 
has made it clear that the determination whether or not an individual 
employee is within any such classification is to be determined by 
judicial process. (Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695; 
Cf. Missel v. Overnight Motor Transp., 40 F. Supp. 174 (D. Md.), 
reversed on other grounds 126 F. (2d) 98 (C.A. 4), affirmed 316 U.S. 
572; West v. Smoky Mountains Stages, 40 F. Supp. 296 (N.D. Ga.); Magann 
v. Long's Baggage Transfer Co., 39 F. Supp. 742 (W.D. Va.); Walling v. 
Burlington Transp. Co. (D. Nebr.), 5 W.H. Cases 172, 9 Labor Cases par. 
62,576; Hager v. Brinks, Inc., 6 W.H. Cases 262 (N.D. Ill.)) In 
determining whether an employee falls within such an exempt category, 
neither the name given to his position nor that given to the work that 
he does is controlling (Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 
695; Porter v. Poindexter, 158 F.--(2d) 759 (C.A. 10); Keeling v. Huber 
& Huber Motor Express, 57 F. Supp. 617 (W.D. Ky.); Crean v. Moran 
Transp. Lines (W.D. N.Y.) 9 Labor Cases, par. 62,416 (see also earlier 
opinion in 54 F. Supp. 765)); what is controlling is the character of 
the activities involved in the performance of his job.
    (3) As a general rule, if the bona fide duties of the job performed 
by the employee are in fact such that he is (or, in the case of a member 
of a group of drivers, driver's helpers, loaders, or mechanics employed 
by a common carrier and engaged in safety-affecting occupations, that he 
is likely to be) called upon in the ordinary course of his work to 
perform, either regularly or from time to time, safety-affecting 
activities of the character described in paragraph (b)(2) of this 
section, he comes within the exemption in all workweeks when he is 
employed at such job. This general rule assumes that the activities 
involved in the continuing duties of the job in all such workweeks will

[[Page 618]]

include activities which have been determined to affect directly the 
safety of operation of motor vehicles on the public highways in 
transportation in interstate commerce. Where this is the case, the rule 
applies regardless of the proportion of the employee's time or of his 
activities which is actually devoted to such safety-affecting work in 
the particular workweek, and the exemption will be applicable even in a 
workweek when the employee happens to perform no work directly affecting 
``safety of operation.'' On the other hand, where the continuing duties 
of the employee's job have no substantial direct effect on such safety 
of operation or where such safety-affecting activities are so trivial, 
casual, and insignificant as to be de minimis, the exemption will not 
apply to him in any workweek so long as there is no change in his 
duties. (Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695; Morris v. 
McComb, 332 U.S. 422; Levinson v. Spector Motor Service, 330 U.S. 649; 
Rogers Cartage Co. v. Reynolds, 166 F. (2d) 317 (C.A. 6); Opelika 
Bottling Co. v. Goldberg, 299 F. (2d) 37 (C.A. 5); Tobin v. Mason & 
Dixon Lines, Inc., 102 F. Supp. 466 (E.D. Tenn.)) If in particular 
workweeks other duties are assigned to him which result, in those 
workweeks, in his performance of activities directly affecting the 
safety of operation of motor vehicles in interstate commerce on the 
public highways, the exemption will be applicable to him those 
workweeks, but not in the workweeks when he continues to perform the 
duties of the non-safety-affecting job.
    (4) Where the same employee of a carrier is shifted from one job to 
another periodically or on occasion, the application of the exemption to 
him in a particular workweek is tested by application of the above 
principles to the job or jobs in which he is employed in that workweek. 
Similarly, in the case of an employee of a private carrier whose job 
does not require him to engage regularly in exempt safety-affecting 
activities described in paragraph (b)(1) of this section and whose 
engagement in such activities occurs sporadically or occasionally as the 
result of his work assignments at a particular time, the exemption will 
apply to him only in those workweeks when he engages in such activities. 
Also, because the jurisdiction of the Secretary of Transportation over 
private carriers is limited to carriers of property (see paragraph 
(b)(1) of this section) a driver, driver's helper, loader, or mechanic 
employed by a private carrier is not within the exemption in any 
workweek when his safety-affecting activities relate only to the 
transporation of passengers and not to the transportation of property.
    (c) The application of these principles may be illustrated as 
follows:
    (1) In a situation considered by the U.S. Supreme Court, 
approximately 4 percent of the total trips made by drivers employed by a 
common carrier by motor vehicle involved in the hauling of interstate 
freight. Since it appeared that employer, as a common carrier, was 
obligated to take such business, and that any driver might be called 
upon at any time to perform such work, which was indiscriminately 
distributed among the drivers, the Court considered that such trips were 
a natural, integral, and apparently inseparable part of the common 
carrier service performed by the employer and driver employees. Under 
these circumstances, the Court concluded that such work, which directly 
affected the safety of operation of the vehicles in interstate commerce, 
brought the entire classification of drivers employed by the carrier 
under the power of the Interstate Commerce Commission to establish 
qualifications and maximum hours of service, so that all were exempt 
even though the interstate driving on particular employees was sporadic 
and occasional, and in practice some drivers would not be called upon 
for long periods to perform any such work. (Morris v. McComb, 332 U.S. 
422)
    (2) In another situation, the U.S. Court of Appeals (Seventh 
Circuit) held that the exemption would not apply to truckdrivers 
employed by a private carrier on interstate routes who engaged in no 
safety-affecting activities of the character described above even though 
other drivers of the carrier on interstate routes were subject to the 
jurisdiction of the Motor Carrier Act. The court reaffirmed the 
principle that the exemption depends not only upon

[[Page 619]]

the class to which the employer belongs but also the activities of the 
individual employee. (Goldberg v. Faber Industries, 291 F. (2d) 232)
    (d) The limitations, mentioned in paragraph (a) of this section, on 
the regulatory power of the Secretary of Transportation (as successor to 
the Interstate Commerce Commission) under section 204 of the Motor 
Carrier Act are also limitations on the scope of the exemption. Thus, 
the exemption does not apply to employees of carriers who are not 
carriers subject to his jurisdiction, or to employees of noncarriers 
such as commercial garages, firms engaged in the business of maintaining 
and repairing motor vehicles owned and operated by carriers, firms 
engaged in the leasing and renting of motor vehicles to carriers and in 
keeping such vehicles in condition for service pursuant to the lease or 
rental agreements. (Boutell v. Walling, 327 U.S. 463; Walling v. Casale, 
51 F. Supp. 520). Similarly, the exemption does not apply to an employee 
whose job does not involve engagement in any activities which have been 
defined as those of drivers, drivers' helpers, loaders, or mechanics, 
and as directly affecting the ``safety of operation'' of motor vehicles. 
(Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695; Levinson v. 
Spector Motor Service, 330 U.S. 649; United States v. American Trucking 
Assn., 310 U.S. 534; Gordon's Transports v. Walling, 162 F. (2d) 203 
(C.A. 6); Porter v. Poindexter, 158 F. (2d) 759 (C.A. 10)) Except 
insofar as the Commission has found that the activities of drivers, 
drivers' helpers, loaders, and mechanics, as defined by it, directly 
affect such ``safety of operation,'' it has disclaimed its power to 
establish qualifications of maximum hours of service under section 204 
of the Motor Carrier Act. (Pyramid Motor Freight Corp. v. Ispass, 330 
U.S. 695) Safety of operation as used in section 204 of the Motor 
Carrier Act means ``the safety of operation of motor vehicles in the 
transportation of passengers or property in interstate or foreign 
commerce, and that alone.'' (Ex parte Nos. MC-2 and MC-3 (Conclusions of 
Law No. 1), 28 M.C.C. 125, 139) Thus the activities of drivers, drivers' 
helpers, loaders, or mechanics in connection with transportation which 
is not in interstate of foreign commerce within the meaning of the Motor 
Carrier Act provide no basis for exemption under section 13(b)(1) of the 
Fair Labor Standards Act. (Walling, v. Comet Carriers, 151 F. (2d) 107 
(C.C.A. 2); Hansen v. Salinas Valley Ice Co. (Cal. App.) 144 P. (2d) 
896; Reynolds v. Rogers Cartage Co., 71 F. Supp. 870 (W.D. Ky.), 
reversed on other grounds, 166 F. (d) 317 (C.A. 6); Earle v. Brinks, 
Inc., 54 F. Supp. 676 (S.D. N.Y.); Walling v. Villaume Box & Lumber Co., 
58 F. Supp. 150 (D. Minn.); Hager v. Brinks, Inc., 11 Labor Cases, par. 
63,296 (N.D. Ill.), 6 W.H. Cases 262; Walling v. DeSoto Creamery & 
Produce Co., 51 F. Supp. 938 (D. Minn.); Dallum v. Farmers Cooperative 
Trucking Assn., 46 F. Supp. 785 (D. Minn.); McLendon v. Bewely Mills 
(N.D. Tex.); 3 Labor Cases, par. 60,247, 1 W.H. Cases 934; Gibson v. 
Glasgow (Tenn. Sup. Ct.), 157 S.W. (2d) 814; cf. Morris v. McComb, 332 
U.S. 422. See also Sec. 782.1 and Sec. Sec. 782.7 through 782.8.)
    (e) The jurisdiction of the Secretary of Transportation under 
section 204 of the Motor Carrier Act relates to safety of operation of 
motor vehicles only, and ``to the safety of operation of such vehicles 
on the highways of the country, and that alone.'' (Ex parte Nos. MC-2 
and MC-3, 28 M.C.C. 125, 192. See also United States v. American 
Trucking Assns., 319 U.S. 534, 548.) Accordingly, the exemption does not 
extend to employees merely because they engage in activities affecting 
the safety of operation of motor vehicles operated on private premises. 
Nor does it extend to employees engaged solely in such activities as 
operating freight and passenger elevators in the carrier's terminals of 
moving freight or baggage therein or the docks or streets by hand 
trucks, which activities have no connection with the actual operation of 
motor vehicles. (Gordon's Transport v. Walling, 162 F. (2d) 203 (C.A. 
6), certorari denied 322 U.S. 774; Walling v. Comet Carriers, 57 F. 
Supp. 1018, affirmed, 151 F. (2d) 107 (C.A. 2), certiorari dismissed, 
382 U.S. 819; Gibson v. Glasgow (Tenn. Sup. Ct.), 157 S.W. (2d) 814; Ex 
parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 128. See also Pyramid Motor 
Freight Corp. v. Ispass, 330 U.S. 695; Levinson v. Spector Motor Serv., 
330 U.S. 949.)

[[Page 620]]

    (f) Certain classes of employees who are not within the definitions 
of drivers, driver's helpers, loaders, and mechanics are mentioned in 
Sec. Sec. 782.3-782.6, inclusive. Others who do not come within these 
definitions include the following, whose duties are considered to affect 
safety of operation, if at all, only indirectly; stenographers 
(including those who write letters relating to safety or prepare 
accident reports); clerks of all classes (including rate clerks, billing 
clerks, clerks engaged in preparing schedules, and filing clerks in 
charge of filing accident reports, hours-of-service records, inspection 
reports, and similar documents); foremen, warehousemen, superintendents, 
salesmen, and employees acting in an executive capacity. (Ex parte Nos. 
MC-2 and MC-3, 28 M.C.C. 125; Ex parte No. MC-28, 13 M.C.C. 481. But see 
Sec. Sec. 782.5(b) and 782.6(b) as to certain foremen and 
superintendents.) Such employees are not within the section 13(b)(1) 
exemption. (Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 (rate 
clerk who performed incidental duties as cashier and dispatcher); 
Levinson v. Spector Motor Service, 330 U.S. 649; Porter v. Poindexter, 
158 F. (2d) 759 (C.A. 10) (checker of freight and bill collector); 
Potashnik, Local Truck System v. Archer (Ark. Sup. Ct.), 179 S.W. (2d) 
696 (night manager who did clerical work on waybills, filed day's 
accumulation of bills and records, billed out local accumulation of 
shipments, checked mileage on trucks and made written reports, acted as 
night dispatcher, answered telephone calls, etc.).)



Sec. 782.3  Drivers.

    (a) A ``driver,'' as defined for Motor Carrier Act jurisdiction (49 
CFR parts 390-395; Ex parte No. MC-2, 3 M.C.C. 665; Ex parte No. MC-3, 
23 M.C.C.1; Ex parte No. MC-4, 1 M.C.C. 1), is an individual who drives 
a motor vehicle in transporation which is, within the meaning of the 
Motor Carrier Act, in interstate or foreign commerce. (As to what is 
considered transportation in interstate or foreign commerce within the 
meaning of the Motor Carrier Act, see Sec. 782.7). This definition does 
not require that the individual be engaged in such work at all times; it 
is recognized that even full-duty drivers devote some of their working 
time to activities other than such driving. ``Drivers,'' as thus 
officially defined, include, for example, such partial-duty drivers as 
the following, who drive in interstate or foreign commerce as part of a 
job in which they are required also to engage in other types of driving 
or nondriving work: Individuals whose driving duties are concerned with 
transportation some of which is in intrastate commerce and some of which 
is in interstate or foreign commerce within the meaning of the Motor 
Carrier Act; individuals who ride on motor vehicles engaged in 
transportation in interstate or foreign commerce and act as assistant or 
relief drivers of the vehicles in addition to helping with loading, 
unloading, and similar work; drivers of chartered buses or of farm 
trucks who have many duties unrelated to driving or safety of operation 
of their vehicles in interstate transportation on the highways; and so-
called ``driver-salesmen'' who devote much of their time to selling 
goods rather than to activities affecting such safety of operation. 
(Levinson v. Spector Motor Service, 300 U.S. 649; Morris v. McComb, 332 
U.S. 422; Richardson v. James Gibbons Co., 132 F. (2d) 627 (C.A. 4), 
affirmed 319 U.S. 44; Gavril v. Kraft Cheese Co., 42 F. Supp. 702 (N.D. 
Ill.); Walling v. Craig, 53 F. Supp. 479 (D. Minn.); Vannoy v. Swift & 
Co. (Mo. S. Ct.), 201 S.W. (2d) 350; Ex parte No. MC-2, 3 M.C.C. 665; Ex 
parte No. MC-3, 23 M.C.C. 1; Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125; 
Ex parte No. MC-4, 1 M.C.C. 1. Cf. Colbeck v. Dairyland Creamery Co. 
(S.D. Supp. Ct.), 17 N.W. (2d) 262, in which the court held that the 
exemption did not apply to a refrigeration mechanic by reason solely of 
the fact that he crossed State lines in a truck in which he transported 
himself to and from the various places at which he serviced equipment 
belonging to his employer.)
    (b) The work of an employee who is a full-duty or partial-duty 
``driver,'' as the term ``driver'' is above defined, directly affects 
``safety of operation'' within the meaning of section 204 of the Motor 
Carrier Act whenever he drives a motor vehicle in interstate or foreign 
commerce within the meaning of that act. (Levinson v. Spector Motor 
Service, 330 U.S. 649, citing Richardson

[[Page 621]]

v. James Gibbons Co., 132 F. (2d) 627 (C.A. 4), affirmed 319 U.S. 44; 
Morris v. McComb, 332 U.S. 422; Ex parte No. MC-28, 13 M.C.C. 481, 482, 
488; Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 139 (Conclusion of Law 
No. 2). See also Ex parte No. MC-2, 3 M.C.C. 665; Ex parte No. MC-3, 23 
M.C.C. 1; Ex parte No. MC-4, 1 M.C.C. 1.) The Secretary has power to 
establish, and has established, qualifications and maximum hours of 
service for such drivers employed by common and contract carriers or 
passengers or property and by private carriers of property pursuant to 
section 204, of the Motor Carrier Act. (See Ex parte No. MC-4, 1 M.C.C. 
1; Ex parte No. MC-2, 3 M.C.C. 665; Ex parte No. MC-3, 23 M.C.C. 1; Ex 
parte No. MC-28, 13 M.C.C. 481; Levinson v. Spector Motor Service, 330 
U.S. 649; Southland Gasoline Co. v. Bayley, 319 U.S. 44; Morris v. 
McComb, 332 U.S. 422; Safety Regulations (Carriers by Motor Vehicle), 49 
CFR parts 390, 391, 395) In accordance with principles previously stated 
(see Sec. 782.2), such drivers to whom this regulatory power extends 
are, accordingly, employees exempted from the overtime requirements of 
the Fair Labor Standards Act by section 13(b)(1). (Southland Gasoline 
Co. v. Bayley, 319 U.S. 44; Levinson v. Spector Motor Service, 330 U.S. 
649; Morris v. McComb, 332 U.S. 422; Rogers Cartage Co. v. Reynolds, 166 
F. (2d) 317 (C.A. 6). This does not mean that an employee of a carrier 
who drives a motor vehicle is exempted as a ``driver'' by virtue of that 
fact alone. He is not exempt if his job never involves transportation in 
interstate or foreign commerce within the meaning of the Motor Carrier 
Act (see Sec. Sec. 782.2 (d) and (e), 782.7, and 782.8, or if he is 
employed by a private carrier and the only such transportation called 
for by his job is not transportation of property. (See Sec. 782.2. See 
also Ex parte No. MC-28, 13 M.C.C. 481, Cf. Colbeck v. Dairyland 
Creamery Co. (S. Ct. S.D.), 17 N.W. (2d) 262 (driver of truck used only 
to transport himself to jobsites, as an incident of his work in 
servicing his employer's refrigeration equipment, held non exempt).) It 
has been held that so-called ``hostlers'' who ``spot'' trucks and 
trailers at a terminal dock for loading and unloading are not exempt as 
drivers merely because as an incident of such duties they drive the 
trucks and tractors in and about the premises of the trucking terminal. 
(Keegan v. Ruppert (S.D. N.Y.), 7 Labor Cases, par. 61,726 6 Wage Hour 
Rept. 676, cf. Walling v. Silver Fleet Motor Express, 67 F. Supp. 846)



Sec. 782.4  Drivers' helpers.

    (a) A Driver's ``helper,'' as defined for Motor Carrier Act 
jurisdiction (Ex Parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 135, 136, 138, 
139), is an employee other than a driver, who is required to ride on a 
motor vehicle when it is being operated in interstate or foreign 
commerce within the meaning of the Motor Carrier Act. (The term does not 
include employees who ride on the vehicle and act as assistants or 
relief drivers. Ex parte Nos. MC-2 and MC-3, supra. See Sec. 782.3.) 
This definition has classified all such employees, including armed 
guards on armored trucks and conductorettes on buses, as ``helpers'' 
with respect to whom he has power to establish qualifications and 
maximum hours of service because of their engagement in some or all of 
the following activities which, in his opinion, directly affect the 
safety of operation of such motor vehicles in interstate or foreign 
commerce (Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 135-136): Assist 
in loading the vehicles (they may also assist in unloading (Ex parte 
Nos. MC-2 and MC-3, supra), an activity which has been held not to 
affect ``safety of operation,'' see Sec. 782.5(c); as to what it meant 
by ``loading'' which directly affects ``safety of operation,'' see Sec. 
782.5(a)); dismount when the vehicle approaches a railroad crossing and 
flag the driver across the tracks, and perform a similar duty when the 
vehicle is being turned around on a busy highway or when it is entering 
or emerging from a driveway; in case of a breakdown: (1) Place the 
flags, flares, and fuses as required by the safety regulations. (2) go 
for assistance while the driver protects the vehicle on the highway, or 
vice versa, or (3) assist the driver in changing tires or making minor 
repairs; and assist in putting on or removing chains.
    (b) An employee may be a ``helper'' under the official definition 
even though such safety-affecting activities

[[Page 622]]

constitute but a minor part of his job. Thus, although the primary duty 
of armed guards on armored trucks is to protect the valuables in the 
case of attempted robberies, they are classified as ``helpers'' where 
they ride on such trucks being operated in interstate or foreign 
commerce, because, in the case of an accident or other emergency and in 
other respects, they act in a capacity somewhat similar to that of the 
helpers described in the text. Similarly, conductorettes on buses whose 
primary duties are to see to the comfort of the passengers are 
classified as ``helpers'' whose such buses are being operated in 
interstate or foreign commerce, because in instances when accidents 
occur, they help the driver in obtaining aid and protect the vehicle 
from oncoming traffic.
    (c) In accordance with principles previously stated (see Sec. 
782.2), the section 13(b)(1) exemption applies to employees who are, 
under the Secretary of Transporation's definitions, engaged in such 
activities as full- or partial-duty ``helpers'' on motor vehicles being 
operated in transporation in interstate or foreign commerce within the 
meaning of the Motor Carrier Act. (Ispass v. Pyramid Motor Freight 
Corp., 152 F. (2d) 619 (C.A. 2); Walling v. McGinley Co. (E.D. Tenn.), 
12 Labor Cases, par. 63,731, 6 W.H. Cases 916. See also Levinson v. 
Spector Motor Service, 330 U.S. 649; Pyramid Motor Freight Corp. v. 
Ispass, 330 U.S. 695; Dallum v. Farmers, Coop Trucking Assn. 46 F. Supp. 
785 (D. Minn.).) The exemption has been held inapplicable to so-called 
helpers who ride on motor vehicles but do not engage in any of the 
activities of ``helpers'' which have been found to affect directly the 
safety of operation of such vehicles in interstate or foreign commerce. 
(Walling v. Gordon's Transports (W.D. Tenn.) 10 Labor Cases par. 62,934, 
6 W.H. Cases 831, affirmed 162 F. (2d) 203 (C.A. 6), certiorari denied, 
332 U.S. 774 (helpers on city ``pickup and delivery trucks'' where it 
was not shown that the loading in any manner affected safety of 
operation and the helper's activities were ``in no manner similar'' to 
those of a driver's helper in over-the-road operation).) It should be 
noted also that an employee, to be exempted as a driver's ``helper'' 
under the Secretary's definitions, must be ``required'' as part of his 
job to ride on a motor vehicle when it is being operated in interstate 
or foreign commerce; an employee of a motor carrier is not exempted as a 
``helper'' when he rides on such a vehicle, not as a matter of fixed 
duty, but merely as a convenient means of getting himself to, from, or 
between places where he performs his assigned work. (See Pyramid Motor 
Freight Corp. v. Ispass, 330 U.S. 695, modifying, on other grounds, 152 
F. (2d) 619 (C.A. 2).)



Sec. 782.5  Loaders.

    (a) A ``loader,'' as defined for Motor Carrier Act jurisdiction (Ex 
parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 133, 134, 139), is an employee 
of a carrier subject to section 204 of the Motor Carrier Act (other than 
a driver or driver's helper as defined in Sec. Sec. 782.3 and 782.4) 
whose duties include, among other things, the proper loading of his 
employer's motor vehicles so that they may be safely operated on the 
highways of the country. A ``loader'' may be called by another name, 
such as ``dockman,'' ``stacker,'' or ``helper,'' and his duties will 
usually also include unloading and the transfer of freight between the 
vehicles and the warehouse, but he engages, as a ``loader,'' in work 
directly affecting ``safety of operation'' so long as he has 
responsibility when such motor vehicles are being loaded, for exercising 
judgment and discretion in planning and building a balanced load or in 
placing, distributing, or securing the pieces of freight in such a 
manner that the safe operation of the vehicles on the highways in 
interstate or foreign commerce will not be jeopardized. (Levinson v. 
Spector Motor Service, 300 U.S. 649; Pyramid Motor Freight Corp. v. 
Ispass, 330 U.S. 695; Walling v. Gordon's Transport (W.D. Tenn.), 10 
Labor Cases, par. 62,934, affirmed 162 F. (2d) 203 (C.A. 6), certiorari 
denied 332 U.S. 774; Walling v. Huber & Huber Motor Express, 67 F. Supp. 
855; Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 133, 134)
    (b) The section 13(b)(1) exemption applies, in accordance with 
principles previously stated (see Sec. 782.2), to an employee whose job 
involves activities consisting wholly or in part of doing, or 
immediately directing, a class of

[[Page 623]]

work defined: (1) As that of a loader, and (2) as directly affecting the 
safety of operation of motor vehicles in interstate or foreign commerce 
within the meaning of the Motor Carrier Act, since such an employee is 
an employee with respect to whom the Secretary of Transporation has 
power to establish qualifications and maximum hours of service. 
(Levinson v. Spector Motor Service, 330 U.S. 649; Pyramid Motor Freight 
Corp. v. Ispass, 330 U.S. 695; Walling v. Silver Fleet Motor Express, 67 
F. Supp. 846; Walling v. Huber & Huber Motor Express, 67 F. Supp. 855; 
Walling v. Gordon's Transports (W.D. Tenn.); 10 Labor Cases, par. 
62,934, affirmed 162 F. (2d) 203 (C.A. 6) certiorari denied 332 U.S. 
774; Tinerella v. Des Moines Transp. Co., 41 F. Supp. 798.) Where a 
checker, foreman, or other supervisor plans and immediately directs the 
proper loading of a motor vehicle as described above, he may come within 
the exemption as a partial-duty loader. (Levinson v. Spector Motor 
Service, 330 U.S. 649; Walling v. Gordon's Transports (W.D. Tenn.), 10 
Labor Cases, par. 62,934; affirmed 162 F. (2d) 203 (C.A. 6), certiorari 
denied 332 U.S. 774; Walling v. Huber & Huber Motor Express, 67 F. Supp. 
885; Walling v. Silver Fleet Motor Express, 67 F. Supp. 846; Crean v. 
Moran Transporation Lines, 57 F. Supp. 212 (W.D. N.Y.). See also 9 Labor 
Cases, par. 62,416; Walling v. Commercial Motor Freight (S.D. Ind.), 11 
Labor Cases, par. 63,451; Hogla v. Porter (E.D. Okla.), 11 Labor Cases, 
par. 63,389 6 W. H. Cases 608.)
    (c) An employee is not exempt as a loader where his activities in 
connection with the loading of motor vehicles are confined to classes of 
work other than the kind of loading described above, which directly 
affects ``safety of operation.'' (Pyramid Motor Freight Corp. v. Ispass, 
330 U.S. 695; Levinson v. Spector Motor Service, 330 U.S. 649) The mere 
handling of freight at a terminal, before or after loading, or even the 
placing of certain articles of freight on a motor carrier truck may form 
so trivial, casual, or occasional a part of an employee's activities, or 
his activities may relate only to such articles or to such limited 
handling of them, that his activities will not come within the kind of 
``loading'' which directly affects ``safety of operation.'' Thus the 
following activities have been held to provide no basis for exemption: 
Unloading; placing freight in convenient places in the terminal, 
checking bills of lading; wheeling or calling freight being loaded or 
unloaded; loading vehicles for trips which will not involve 
transportation in interstate or foreign commerce within the meaning of 
the Motor Carrier Act; and activities relating to the preservation of 
the freight as distinguished from the safety of operation of the motor 
vehicles carrying such freight on the highways. (Pyramid Motor Freight 
Corp. v. Ispass, 330 U.S. 695; Levinson v. Spector Motor Service, 330 
U.S. 649; Porter v. Poindexter, 158 F. (2d) 759 (C.A. 10); McKeown v. 
Southern Calif. Freight Forwarders, 49 F. Supp. 543; Walling v. Gordon's 
Transports (W.D. Tenn.), 10 Labor Cases, par. 62,934, affirmed 162 F. 
(2d) 203 (C.A. 6), certiorari denied 332 U.S. 774; Walling v. Huber & 
Huber Motor Express, 67 F. Supp. 855; Walling v. Silver Fleet Motor 
Express, 67 F. Supp. 846; Crean v. Moran Transp. Lines, 50 F. Supp. 107, 
54 F. Supp. 765 (cf. 57 F. Supp. 212); Gibson v. Glasgow (Tenn. Sup. 
Ct.) 157 S.W. (2d) 814. See also Keeling v. Huber & Huber Motor Express, 
57 F. Supp. 617.) As is apparent from opinion in Ex parte Nos. MC-2 and 
MC-3, 28 M.C.C. 125, red caps of bus companies engaged in loading 
baggage on buses are not loaders engaged in work directly affecting 
safety of operation of the vehicles. In the same opinion, it is 
expressly recognized that there is a class of freight which, because it 
is light in weight, probably could not be loaded in a manner which would 
adversely affect ``safety of operations.'' Support for this conclusion 
is found in Wirtz v. C&P Shoe Corp. 335 F. (2d) 21 (C.A. 5), wherein the 
court held the loading of boxes of shoes, patterned on the last in, 
first out principle clearly was not of a safety affecting character ``in 
view of the light weight of the cargo involved.'' In the case of coal 
trucks which are loaded from stockpiles by the use of an electric bridge 
crane and a mechanical conveyor, it has been held that employees 
operating such a crane or conveyor in the loading process are not exempt 
as ``loaders'' under section 13(b)(1). (Barrick v. South Chicago Coal & 
Dock Co. (N.D. Ill.), 8 Labor Cases, par. 62,242, affirmed 149 F.

[[Page 624]]

(2d) 960 (C.A. 7).) It seems apparent from the foregoing discussion that 
an employee who has no responsibility for the proper loading of a motor 
vehicle is not within the exemption as a ``loader'' merely because he 
furnishes physical assistance when necessary in loading heavy pieces of 
freight, or because he deposits pieces of freight in the vehicle for 
someone else to distribute and secure inplace, or even because he does 
the physical work of arranging pieces of freight in the vehicle where 
another employee tells him exactly what to do in each instance and he is 
given no share in the exercise of discretion as to the manner in which 
the loading is done. (See Pyramid Motor Freight Corp. v. Ispass, 330 
U.S. 695; Yellow Transit Freight Lines Inc. v. Balven, 320 F. (2d) 495 
(C.A. 8); Foremost Dairies v. Ivey, 204 F. (2d) 186 (C.A. 5); Ispass v. 
Pyramid Motor Freight Corp., 78 F. Supp. 475 (S.D. N.Y.); Mitchell v. 
Meco Steel Supply Co., 183 F. Supp. 779 (S.D. Tex.); Garton v. Sanders 
Transfer & Storage Co., 124 F. Supp. 84 (M.D. Tenn.); McKeown v. 
Southern Calif. Freight Forwarders, 49 F. Supp. 543; Walling v. Gordon's 
Transports (W.D. Tenn.) 10 Labor Cases, par. 62,934, affirmed 162 F. 
(2d) 203 (C.A. 6), certiorari denied 332 U.S. 774; Crean v. Moran 
Transporation Lines, 50 F. Supp. 107 (see also further opinion in 54 F. 
Supp. 765, and cf. the court's holding in 57 F. Supp. 212 with Walling 
v. Gordon's Transports, cited above). See also Levinson v. Spector Motor 
Service, 330 U.S. 649.) Such activities would not seem to constitute the 
kind of ``loading'' which directly affects the safety of operation of 
the loaded vehicle on the public highways, under the official 
definitions. (See Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 133, 134).



Sec. 782.6  Mechanics.

    (a) A ``mechanic,'' for purposes of safety regulations under the 
Motor Carrier Act is an employee who is employed by a carrier subject to 
the Secretary's jurisdiction under section 204 of the Motor Carrier Act 
and whose duty it is to keep motor vehicles operated in interstate or 
foreign commerce by his employer in a good and safe working condition. 
(Ex parte, Nos. MC-2 and MC-3, 28 M.C.C. 125, 132, 133. Ex parte No. MC-
40 (Sub. No. 2), 88 M.C.C. 710 (repair of refrigeration equipment). See 
also Morris v. McComb, 332 U.S. 422.) It has been determined that the 
safety of operation of such motor vehicles on the highways is directly 
affected by those activities of mechanics, such as keeping the lights 
and brakes in a good and safe working condition, which prevent the 
vehicles from becoming potential hazards to highway safety and thus aid 
in the prevention of accidents. The courts have held that mechanics 
perform work of this character where they actually do inspection, 
adjustment, repair or maintenance work on the motor vehicles themselves 
(including trucks, tractors and trailers, and buses) and are, when so 
engaged, directly responsible for creating or maintaining physical 
conditions essential to the safety of the vehicles on the highways 
through the correction or prevention of defects which have a direct 
causal connection with the safe operation of the unit as a whole. 
(Walling v. Silver Bros., 136 F. (2d) 168 (C.A. 1); McDuffie v. Hayes 
Freight Lines, 71 F. Supp. 755; Walling v. Silver Fleet Motor Express, 
67 F. Supp. 846; Keeling v. Huber & Huber Motor Express, 57 F. Supp. 
617; Walling v. Huber & Huber Motor Express, 67 F. Supp. 855; Tinerella 
v. Des Moines Transp. Co., 41 F. Supp. 798; Robbins v. Zabarsky, 44 F. 
Supp. 867; West V. Smoky Mt. Stages, 40 F. Supp. 296; Walling v. 
Cumberland & Liberty Mills Co. (S.D. Fla.), 6 Labor Cases, par. 61,184; 
Esibill v. Marshall (D. N.J.), 6 Labor Cases, par. 61,256; Keegan v. 
Ruppert (S.D. N.Y.), 7 Labor Cases, par. 61,726; Baker v. Sharpless 
Hendler Ice Cream Co. (E.D. Pa.), 10 Labor Cases, par. 62,956; Kentucky 
Transport Co. v. Drake (Ky. Ct. App.). 182 SW (2d) 960.) The following 
activities performed by mechanics on motor vehicles operated in 
interstate or foreign commerce are illustrative of the specific kinds of 
activities which the courts, in applying the foregoing principles, have 
regarded as directly affecting ``safety of operation'': The inspection, 
repair, adjustment, and maintenance for safe operation of steering 
apparatus, lights, brakes, horns, windshield wipers, wheels and axles, 
bushings, transmissions, differentials, motors, starters and ignition, 
carburetors, fifth wheels, springs and spring hangers, frames, and 
gasoline tanks

[[Page 625]]

(McDuffie v. Hayes Freight Lines, 71 F. Supp. 755; Walling v. Silver 
Fleet Motor Express, 67 F. Supp. 846; Wolfe v. Union Transfer & Storage 
Co., 48 F. Supp. 855; Mason & Dixon Lines v. Ligon (Tenn. Ct. App.) 7 
Labor Cases, par. 61,962; Walling v. Palmer, 67 F. Supp. 12; Kentucky 
Transport Co. v. Drake (Ky. Ct. App.), 182 SW (2d) 960.) Inspecting and 
checking air pressure in tires, changing tires, and repairing and 
rebuilding tires for immediate replacement on the vehicle from which 
they were removed have also been held to affect safety of operation 
directly. (Walling v. Silver Fleet Motor Express, 67 F. Supp. 846; 
Walling v. Palmer, 67 F. Supp. 12. See also McDuffie v. Hayes Freight 
Lines, 71 F. Supp. 755.) The same is true of hooking up tractors and 
trailers, including light and brake connections, and the inspection of 
such hookups. (Walling v. Silver Fleet Motor Express, 67 F. Supp. 846; 
Walling v. Palmer, 67 F. Supp. 12. See also Walling v. Gordon's 
Transports (W.D. Tenn.). 10 Labor cases, par. 62,934, affirmed 162 F. 
(2d) 203 (C.A. 6), certiorari denied 332 U.S. 744.)
    (b) The section 13(b)(1) exemption applies, in accordance with 
principles previously stated (see Sec. 782.2), to an employee whose job 
involves activities consisting wholly or in part of doing, or 
immediately directing, a class of work which, under the definitions 
referred to above, is that of a ``mechanic'' and directly affects the 
safety of operation of motor vehicles on the public highways in 
interstate or foreign commerce, within the meaning of the Motor Carrier 
Act. The power under the Motor Carrier Act to establish qualifications 
and maximum hours of service for such an employee has been sustained by 
the courts. (Morris v. McComb, 332 U.S. 422. See also Pyramid Motor 
Freight Corp. v. Ispass. 330 U.S. 695; Levinson v. Spector Motor 
Service, 330 U.S. 649; Walling v. Silver Bros., 136 F. (2d) 168 (C.C.A. 
1)). A supervisory employee who plans and immediately directs and checks 
the proper performance of this class of work may come within the 
exemption as a partial-duty mechanic. (Robbins v. Zabarsky, 44 F. Supp. 
867; Mason & Dixon Lines v. Ligon (Tenn. Ct. App.), 7 Labor Cases par. 
61,962; cf. Morris v. McComb, 332 U.S. 422 and Levinson v. Spector Motor 
Service, 330 U.S. 649)
    (c)(1) An employee of a carrier by motor vehicle is not exempted as 
a ``mechanic'' from the overtime provisions of the Fair Labor Standards 
Act under section 13(b)(1) merely because he works in the carrier's 
gargage, or because he is called a ``mechanic,'' or because he is a 
mechanic by trade and does mechanical work. (Wirtz v. Tyler Pipe & 
Foundry Co., 369 F. 2d 927 (C.A. 5).) The exemption applies only if he 
is doing a class of work defined as that of a ``mechanic'', including 
activities which directly affect the safety of operation of motor 
vehicles in transporation on the public highways in interstate or 
foreign commerce. (Morris v. McComb, 332 U.S. 422; Keeling v. Huber & 
Huber Motor Express, 57 F. Supp. 617; Walling v. Huber & Huber Motor 
Express, 67 F. Supp. 855; Walling v. Silver Fleet Motor Express, 67 F. 
Supp. 846; McDuffie v. Hayes Freight Lines, 71 F. Supp. 755; Anuchick v. 
Transamerican Freight Lines, 46 F. Supp. 861; Walling v. Burlington 
Transp. Co. (D. Nebr.), 9 Labor Cases, par. 62,576. Compare Ex parte No. 
MC-40 (Sub. No. 2), 88 M.C.C. 710 with Colbeck v. Dairyland Creamery Co. 
(S.D. Sup. Ct.), 17 N.W. (2d) 262. See also Pyramid Motor Freight Corp. 
v. Ispass 330 U.S. 695.) Activities which do not directly affect such 
safety of operation include those performed by employees whose jobs are 
confined to such work as that of dispatchers, carpenters, tarpaulin 
tailors vehicle painters, or servicemen who do nothing but oil, gas, 
grease, or wash the motor vehicles. (Ex parte Nos. MC-2 and MC-3, 28 
M.C.C. 125, 132, 133, 135) To these may be added activities such as 
filling radiators, checking batteries, and the usual work of such 
employees as stockroom personnel, watchmen, porters, and garage 
employees performing menial nondiscretionary tasks or disassembling 
work. Employees whose work is confined to such ``nonsafety'' activities 
are not within the exemption, even though the proper performance of 
their work may have an indirect effect on the safety of operation of the 
motor vehicles on the highways. (Morris v. McComb, 332 U.S. 422; 
Campbell v. Riss & Co. (W.D. Mo.), 5 Labor Cases, par. 61,092 
(dispatcher); McDuffie

[[Page 626]]

v. Hayes Freight Lines, 71 F. Supp. 755 (work of janitor and caretaker, 
carpentry work, body building, removing paint, preparing for repainting, 
and painting); Walling v. Silver Fleet Motor Express, 67 F. Supp. 846 
(body building, construction work, painting and lettering); Hutchinson 
v. Barry, 50 F. Supp. 292 (washing vehicles); Walling v. Palmer, 67 F. 
Supp. 12 (putting water in radiators and batteries, oil and gas in 
vehicles, and washing vehicles); Anuchick v. Transamerican Freight 
Lines, 46 F. Supp. 861 (body builders, tarpaulin worker, stockroom boy, 
night watchman, porter); Bumpus v. Continental Baking Co. (W.D. Tenn.), 
1 Wage Hour Cases 920 (painter), reversed on other grounds 124 F. (2d) 
549; Green v. Riss & Co., 45 F. Supp. 648 (night watchman and gas pump 
attendant); Walling v. Burlington Transp. Co. (D. Nebr.), 9 Labor Cases, 
par. 62,576 (body builders); Keegan v. Ruppert (S.D. N.Y.), 7 Labor 
Cases, par. 61,726 (greasing and washing); Walling v. East Texas Freight 
Lines (N.D. Tex.), 8 Labor Cases, par. 62,083 (Menial tasks); Collier v. 
Acme Freight Lines, unreported (S.D. Fla., Oct. 1943) (same); Potashnik 
Local Truck System v. Archer (Ark. Sup. Ct.). 179 S.W. (2d) 696 
(checking trucks in and out and acting as night dispatcher, among other 
duties); Overnight Motor Corp. v. Missel, 316 U.S. 572 (rate clerk with 
part-time duties as dispatcher).) The same has been held true of 
employees whose activities are confined to construction work, 
manufacture or rebuilding of truck, bus, or trailer bodies, and other 
duties which are concerned with the safe carriage of the contents of the 
vehicle rather than directly with the safety of operation on the public 
highways of the motor vehicle itself (Anuchick v. Transamerican Freight 
Lines, 46 F. Supp. 816; Walling v. Silver Fleet Motor Express, 67 F. 
Supp. 846; McDuffie v. Hayes Freight Lines 71 F. Supp. 755; Walling v. 
Burlington Transp. Co. (D. Nebr.), 9 Labor Cases, par. 62,576. Compare 
Colbeck v. Dairyland Creamery Co. (S.D. Sup. Ct.) 17 N.W. (2d) 262 with 
Ex parte No. MC-40 (Sub. No. 2), 88 M.C.C. 710.)
    (2) The distinction between direct and indirect effects on safety of 
operation is exemplified by the comments in rejecting the contention in 
Ex parte Nos. MC-2 and MC-3, 28 M.C.C. 125, 135, that the activities of 
dispatchers directly affect safety of operation. It was stated: ``It is 
contended that if a dispatcher by an error in judgment assigns a vehicle 
of insufficient size and weight-carrying capacity to transport the load, 
or calls a driver to duty who is sick, fatigued, or otherwise not in 
condition to operate the vehicle, or requires or permits the vehicle to 
depart when the roads are icy and the country to be traversed is hilly, 
an accident may result. While this may be true, it is clear that such 
errors in judgment are not the proximate causes of such accidents, and 
the dispatchers engage in no activities which directly affect the safety 
of operation of motor vehicles in interstate or foreign commerce.''
    (3) Similarly, the exemption has been held inapplicable to mechanics 
repairing and rebuilding parts, batteries, and tires removed from 
vehicles where a direct causal connection between their work and the 
safe operation of motor vehicles on the highways is lacking because they 
do no actual work on the vehicles themselves and entirely different 
employees have the exclusive responsibility for determining whether the 
products of their work are suitable for use, and for the correct 
installation of such parts, on the vehicles. (Keeling v. Huber & Huber 
Motor Express, 57 F. Supp. 617; Walling v. Huber & Huber Motor Express, 
67 F. Supp. 855) Mechanical work on motor vehicles of a carrier which is 
performed in order to make the vehicles conform to technical legal 
requirements rather than to prevent accidents on the highways has not 
been regarded by the courts as work directly affecting ``safety of 
operation.'' (Kentucky Transport Co. v. Drake (Ky. Ct. App.), 182 S.W. 
(2d) 960; Anuchick v. Transamerican Freight Lines, 46 F. Supp. 861; 
Yellow Transit Freight Lines Inc. v. Balsen 320 F. (2d) 495 (C.A. 8)) 
And it is clear that no mechanical work on motor vehicles can be 
considered to affect safety of operation of such vehicles in interstate 
or foreign commerce if the vehicles are never in fact used in 
transportation in such commerce on the public highways. (Baker v. 
Sharpless Hendler Ice Cream Co. (E.D. Pa.), 10 Labor Cases, par. 62,956)

[[Page 627]]



Sec. 782.7  Interstate commerce requirements of exemption.

    (a) As explained in preceding sections of this part, section 
13(b)(1) of the Fair Labor Standards Act does not exempt an employee of 
a carrier from the act's overtime provisions unless it appears, among 
other things, that his activities as a driver, driver's helper, loader, 
or mechanic directly affect the safety of operation of motor vehicles in 
transportation in interstate or foreign commerce within the meaning of 
the Motor Carrier Act. What constitutes such transportation in 
interstate or foreign commerce, sufficient to bring such an employee 
within the regulatory power of the Secretary of Transportation under 
section 204 of that act, is determined by definitions contained in the 
Motor Carrier Act itself. These definitions are, however, not identical 
with the definitions in the Fair Labor Standards Act which determine 
whether an employee is within the general coverage of the wage and hours 
provisions as an employee ``engaged in (interstate or foreign) 
commerce.'' For this reason, the interstate commerce requirements of the 
section 13(b)(1) exemption are not necessarily met by establishing that 
an employee is ``engaged in commerce'' within the meaning of the Fair 
Labor Standards Act when performing activities as a driver, driver's 
helper, loader, or mechanic, where these activities are sufficient in 
other respects to bring him within the exemption. (Hager v. Brinks, Inc. 
(N.D. Ill.), 11 Labor Cases, par. 63,296, 6 W.H. Cases 262; Earle v. 
Brinks, Inc., 54 F. Supp. 676 (S.D. N.Y.); Thompson v. Daugherty, 40 F. 
Supp. 279 (D. Md.). See also, Walling v. Villaume Box & Lbr. Co., 58 F. 
Supp. 150 (D. Minn.). And see in this connection paragraph (b) of this 
section and Sec. 782.8.) To illustrate, employees of construction 
contractors are, within the meaning of the Fair Labor Standards Act, 
engaged in commerce where they operate or repair motor vehicles used in 
the maintenance, repair, or reconstruction of instrumentalities of 
interstate commerce (for example, highways over which goods and persons 
regularly move in interstate commerce). (Walling v. Craig, 53 F. Supp. 
479 (D. Minn). See also Engbretson v. E. J. Albrecht Co., 150 F. (2d) 
602 (C.A. 7); Overstreet v. North Shore Corp., 318 U.S. 125; Pedersen v. 
J. F. Fitzgerald Constr. Co., 318 U.S. 740, 742.) Employees so engaged 
are not, however, brought within the exemption merely by reason of that 
fact. In order for the exemption to apply, their activities, so far as 
interstate commerce is concerned, must relate directly to the 
transportation of materials moving in interstate or foreign commerce 
within the meaning of the Motor Carrier Act. Asphalt distributor-
operators, although not exempt by reason of their work in applying the 
asphalt to the highways, are within the exemption where they transport 
to the road site asphalt moving in interstate commerce. See Richardson 
v. James Gibbons Co., 132 F. (2d) 627 (C.A. 4), affirmed 319 U.S. 44 
(and see reference to this case in footnote 18 of Levinson v. Spector 
Motor Service, 330 U.S. 649); Walling v. Craig, 53 F. Supp. 479 (D. 
Minn.).
    (b)(1) Highway transportation by motor vehicle from one State to 
another, in the course of which the vehicles cross the State line, 
clearly constitutes interstate commerce under both acts. Employees of a 
carrier so engaged, whose duties directly affect the safety of operation 
of such vehicles, are within the exemption in accordance with principles 
previously stated. (Southland Gasoline Co. v. Bayley, 319 U.S. 44; 
Plunkett v. Abraham Bros., 129 F. (2d) 419 (C.A. 6); Vannoy v. Swift & 
Co. (Mo. Sup. Ct.), 201 S.W. (2d) 350; Nelson v. Allison & Co. (E.D. 
Tenn.), 13 Labor Cases, par. 64,021; Reynolds v. Rogers Cartage Co. 
(W.D. Ky.), 13 Labor Cases, par. 63,978, reversed on other grounds 166 
F. (2d) 317 (C.A. 6); Walling v. McGinley Co. (E.D. Tenn.), 12 Labor 
Cases, par. 63,731; Walling v. A. H. Phillips, Inc., 50 F. Supp. 749, 
affirmed (C.A. 1) 144 F. (2d) 102,324 U.S. 490. See Sec. Sec. 782.2 
through 782.8.) The result is no different where the vehicles do not 
actually cross State lines but operate solely within a single State, if 
what is being transported is actually moving in interstate commerce 
within the meaning of both acts; the fact that other carriers transport 
it out of or into the State is not material. (Morris v. McComb, 68 S. 
Ct. 131; Pyramid Motor Freight Corp. v. Ispass, 330 U.S. 695; Walling v. 
Silver Bros. Co. 136 F. (2d) 168

[[Page 628]]

(C.A. 1); Walling v. Mutual Wholesale Food & Supply Co., 141 F. (2d) 331 
(C.A. 8); Dallum v. Farmers Cooperative Trucking Assn., 46 F. Supp. 785 
(D. Minn.); Gavril v. Kraft Cheese Co., 42 F. Supp. 702 (N.D. Ill.); 
Keegan v. Rupport (S.D. N.Y.), 7 Labor Cases, par. 61,726, 3 W.H. Cases 
412; Baker v. Sharpless Hendler Ice Cream Co. (E.D. Pa.), 10 Labor 
Cases, par. 62,956, 5 W.H. Cases 926). Transportation within a single 
State is in interstate commerce within the meaning of the Fair Labor 
Standards Act where it forms a part of a ``practical continuity of 
movement'' across State lines from the point of origin to the point of 
destination. (Walling v. Jacksonville Paper Co., 317 U.S. 564; Walling 
v. Mutual Wholesale Food & Supply Co., 141 F. (2d) 331 (C.A. 8); Walling 
v. American Stores Co., 133 F. (2d) 840 (C.A. 3); Baker v. Sharpless 
Hendler Ice Cream Co. (E.D. Pa.), 10 Labor Cases, par. 62,956 5 W.H. 
Cases 926) Since the interstate commerce regulated under the two acts is 
not identical (see paragraph (a) of this section), such transportation 
may or may not be considered also a movement in interstate commerce 
within the meaning of the Motor Carrier Act. Decisions of the Interstate 
Commerce Commission prior to 1966 seemingly have limited the scope of 
the Motor Carrier Act more narrowly than the courts have construed the 
Fair Labor Standards Act. (see Sec. 782.8.) It is deemed necessary, 
however, as an enforcement policy only and without prejudice to any 
rights of employees under section 16 (b) of the Act, to assume that such 
a movement in interstate commerce under the Fair Labor Standards Act is 
also a movement in interstate commerce under the Motor Carrier Act, 
except in those situations where the Commission has held or the 
Secretary of Transportation or the courts hold otherwise. (See Sec. 
782.8(a); and compare Beggs v. Kroger Co., 167 F. (2d) 700, with the 
Interstate Commerce Commission's holding in Ex parte No. MC-48, 71 
M.C.C. 17, discussed in paragraph (b)(2) of this section.) Under this 
enforcement policy it will ordinarily be assumed by the Administrator 
that the interstate commerce requirements of the section 13(b)(1) 
exemption are satisfied where it appears that a motor carrier employee 
is engaged as a driver, driver's helper, loader, or mechanic in 
transportation by motor vehicle which, although confined to a single 
State, is a part of an interstate movement of the goods or persons being 
thus transported so as to constitute interstate commerce within the 
meaning of the Fair Labor Standards Act. This policy does not extend to 
drivers, driver's helpers, loaders, or mechanics whose transportation 
activities are ``in commerce'' or ``in the production of goods for 
commerce'' within the meaning of the act but are not a part of an 
interstate movement of the goods or persons carried (see, e.g., Wirtz v. 
Crystal Lake Crushed Stone Co., 327 F. 2d 455 (C.A. 7)). Where, however, 
it has been authoritatively held that transportation of a particular 
character within a single State is not in interstate commerce as defined 
in the Motor Carrier Act (as has been done with respect to certain 
transportation of petroleum products from a terminal within a State to 
other points within the same State--see paragraph (b)(2) of this 
section), there is no basis for an exemption under section 13(b)(1), 
even though the facts may establish a ``practical continuity of 
movement'' from out-of-State sources through such in-State trip so as to 
make the trip one in interstate commerce under the Fair Labor Standards 
Act. Of course, engagement in local transportation which is entirely in 
intrastate commerce provides no basis for exempting a motor carrier 
employee. (Kline v. Wirtz, 373 F. 2d 281 (C.A. 5). See also paragraph 
(b) of this section.)
    (2) The Interstate Commerce Commission held that transportation 
confined to points in a single State from a storage terminal of 
commodities which have had a prior movement by rail, pipeline, motor, or 
water from an origin in a different State is not in interstate or 
foreign commerce within the meaning of part II of the Interstate 
Commerce Act if the shipper has no fixed and persisting transportation 
intent beyond the terminal storage point at the time of shipment. See Ex 
parte No. MC-48 (71 M.C.C. 17, 29). The Commission specifically ruled 
that there is not fixed and persisting intent where: (i) At the time of 
shipment there is no specific order being filled for a specific

[[Page 629]]

quantity of a given product to be moved through to a specific 
destination beyond the terminal storage, and (ii) the terminal storage 
is a distribution point or local marketing facility from which specific 
amounts of the product are sold or allocated, and (iii) transportation 
in the furtherance of this distribution within the single State is 
specifically arranged only after sale or allocation from storage. In 
Baird v. Wagoner Transportation Co., 425 F. (2d) 407 (C.A. 6), the court 
found each of these factors to be present and held the intrastate 
transportation activities were not ``in interstate commerce'' within the 
meaning of the Motor Carrier Act and denied the section 13(b)(1) 
exemption. While ex parte No. MC-48 deals with petroleum and petroleum 
products, the decision indicates that the same reasoning applies to 
general commodities moving interstate into a warehouse for distribution 
(71 M.C.C. at 27). Accordingly, employees engaged in such transportation 
are not subject to the Motor Carrier Act and therefore not within the 
section 13(b)(1) exemption. They may, however, be engaged in commerce 
within the meaning of the Fair Labor Standards Act. (See in this 
connection, Mid-Continent Petroleum Corp. v. Keen, 157 F. 2d 310 (C.A. 
8); DeLoach v. Crowley's Inc., 128 F. 2d 378 (C.A. 5); Walling v. 
Jacksonville Paper Co., 69 F. Supp. 599, affirmed 167 F. 2d 448, 
reversed on another point in 336 U.S. 187; and Standard Oil Co. v. Trade 
Commission, 340 U.S. 231, 238).
    (c) The wage and hours provisions of the Fair Labor Standards Act 
are applicable not only to employees engaged in commerce, as defined in 
the act, but also to employees engaged in the production of goods for 
commerce. Employees engaged in the ``production'' of goods are defined 
by the act as including those engaged in ``handling, transporting, or in 
any other manner working on such goods, or in closely related process or 
occupation directly essential to the production thereof, in any State.'' 
(Fair Labor Standards Act, sec. 3(j), 29 U.S.C., sec. 203(j), as amended 
by the Fair Labor Standards Amendments of 1949, 63 Stat. 910. See also 
the Division's Interpretative Bulletin, part 776 of this chapter on 
general coverage of the wage and hours provisions of the act.) Where 
transportation of persons or property by motor vehicle between places 
within a State falls within this definition, and is not transportation 
in interstate or foreign commerce within the meaning of the Motor 
Carrier Act because movement from points out of the State has ended or 
because movement to points out of the State has not yet begun, the 
employees engaged in connection with such transportation (this applies 
to employees of common, contract, and private carriers) are covered by 
the wage and hours provisions of the Fair Labor Standards Act and are 
not subject to the jurisdiction of the Secretary of Transportation. 
Examples are: (1) Drivers transporting goods in and about a plant 
producing goods for commerce; (2) chauffeurs or drivers of company cars 
or buses transporting officers or employees from place to place in the 
course of their employment in an establishment which produces goods for 
commerces; (3) drivers who transport goods from a producer's plant to 
the plant of a processor, who, in turn, sells goods in interstate 
commerce, the first producer's goods being a part or ingredient of the 
second producer's goods; (4) drivers transporting goods between a 
factory and the plant of an independent contractor who performs 
operations on the goods, after which they are returned to the factory 
which further processes the goods for commerce; and (5) drivers 
transporting goods such as machinery or tools and dies, for example, to 
be used or consumed in the production of other goods for commerce. These 
and other employees engaged in connection with the transportation within 
a State of persons or property by motor vehicle who are subject to the 
Fair Labor Standards Act because engaged in the production of goods for 
commerce and who are not subject to the Motor Carrier Act because not 
engaged in interstate or foreign commerce within the meaning of that 
act, are not within the exemption provided by section 13(b)(1). (Walling 
v. Comet Carriers, 151 F. (2d) 107 (C.A. 2); Griffin Cartage Co. v. 
Walling, 153 F. (2d) 587 (C.A. 6); Walling v. Morris, 155 F. (2d) 832 
(C.A. 6), reversed on other grounds in Morris v. McComb, 332 U.S. 422; 
West Kentucky Coal Co. v. Walling, 153 F. (2d) 582 (C.A. 6); Hamlet

[[Page 630]]

Ice Co. v. Fleming, 127 F. (2d) 165 (C.A. 4); Atlantic Co. v. Walling, 
131 F. (2d) 518 (C.A. 5); Chapman v. Home Ice Co., 136 F. (2d) 353 (C.A. 
6); Walling v. Griffin Cartage Co., 62 F. Supp. 396 (E.D. Mich.), 
affirmed 153 F. (2d) 587 (C.A. 6); Dallum v. Farmers Coop. Trucking 
Assn., 46 F. Supp. 785 (D. Minn.); Walling v. Villaume Box & Lbr. Co., 
58 F. Supp. 150 (D. Minn); Walling v. DeSoto Creamery & Produce Co., 51 
F. Supp. 938 (D. Minn.); Reynolds v. Rogers Cargate Co., 71 F. Supp. 870 
(W.D. Ky.), reversed on other grounds 166 F. (2d) 317 (C.A. 6), Hansen 
v. Salinas Valley Ice Co. (Cal. App.), 144 P. (2d) 896).



Sec. 782.8  Special classes of carriers.

    (a) The Interstate Commerce Commission consistently maintained that 
transportation with a State of consumable goods (such as food, coal, and 
ice) to railroad, docks, etc., for use of trains and steamships is not 
such transportation as is subject to its jurisdiction. (New Pittsburgh 
Coal Co. v. Hocking Valley Ry. Co., 24 I.C.C. 244; Corona Coal Co. v. 
Secretary of War, 69 I.C.C. 389; Bunker Coal from Alabama to Gulf Ports, 
227 I.C.C. 485.) The intrastate delivery of chandleries, including 
cordage, canvas, repair parts, wire rope, etc., to ocean-going vessels 
for use and consumption aboard such vessels which move in interstate or 
foreign commerce falls within this category. Employees of carriers so 
engaged are considered to be engaged in commerce, as that term is used 
in the Fair Labor Standards Act. These employees may also be engaged in 
the ``production of goods for commerce'' within the meaning of section 
3(j) of the Fair Labor Standards Act. See cases cited in Sec. 782.7(c), 
and see Mitchell v. Independent Ice Co., 294 F. 2d 186 (C.A. 5), 
certiorari denied 368 U.S. 952, and part 776 of this chapter. Since the 
Commission has disclaimed jurisdiction over this type of operation (see, 
in this connection Sec. 782.7(b)), it is the Division's opinion that 
drivers, driver's helpers, loaders, and mechanics employed by companies 
engaged in such activities are covered by the wage and hours provisions 
of the Fair Labor Standards Act, and are not within the exemption 
contained in section 13(b)(1). (See Hansen v. Salinas Valley Ice Co. 
(Cal. App.), 144 P. (2d) 896.)
    (b) Prior to June 14, 1972, when the Department of Transportation 
published a notice in the Federal Register (37 FR 11781) asserting its 
power to establish qualifications and maximum hours of service of 
employees of contract mail haulers, thereby reversing the long-standing 
position of the Interstate Commerce Commission, the Administrator of the 
Wage and Hour Division had taken the position that employees engaged in 
the transportation of mail under contract with the Postal Service were 
not within the exemption provided by section 13(b)(1) of the Fair Labor 
Standards Act. As the result of the notice of June 14, 1972, the 
Administrator will no longer assert that employees of contract mail 
carriers are not within the 13(b)(1) exemption for overtime work 
performed after June 14, 1972, pending authoritative court decisions to 
the contrary. This position is adopted without prejudice to the rights 
of individual employees under section 16(b) of the Fair Labor Standards 
Act.
    (c) Section 202(c)(2) of the Motor Carrier Act, as amended on May 
16, 1942, makes section 204 of that act ``relative to qualifications and 
maximum hours of service of employees and safety of operations and 
equipment,'' applicable ``to transportation by motor vehicle by any 
person (whether as agent or under a contractual arrangement) for a * * * 
railroad * * * express company * * * motor carrier * * * water carrier * 
* * or a freight forwarder * * * in the performance within terminal 
areas of transfer, collection, or delivery service.'' Thus, drivers, 
drivers' helpers, loaders, and mechanics of a motor carrier performing 
pickup and delivery service for a railroad, express company, or water 
carrier are to be regarded as within the 13(b)(1) exemption. (See 
Levinson v. Spector Motor Service, 330 U.S. 649 (footnote 10); cf. 
Cedarblade v. Parmelee Transp. Co. (C.A. 7), 166 F. (2d) 554, 14 Labor 
Cases, par. 64,340.) The same is true of drivers, drivers' helpers, 
loaders, and mechanics employed directly by a railroad, a water carrier 
or a freight forwarder in pickup and delivery service. Section 202(c)(1) 
of the Motor Carrier Act, as amended on May

[[Page 631]]

16, 1942, includes employees employed by railroads, water carriers, and 
freight forwarders, in transfer, collection, and delivery service in 
terminal areas by motor vehicles within the Interstate Commerce 
Commission's regulatory power under section 204 of the same act. See 
Morris v. McComb, 332 U.S. 422 and Sec. 782.2(a). (Such employees of a 
carrier subject to part I of the Interstate Commerce Act may come within 
the exemption from the overtime requirements provided by section 
13(b)(2). Cf. Cedarblade v. Parmelee Transp. Co. (C.A. 7), 166 F. (2d) 
554, 14 Labor Cases, par. 64,340. Thus, only employees of a railroad, 
water carrier, or freight forwarder outside of the scope of part I of 
the Interstate Commerce Act and of the 13(b)(2) exemption are affected 
by the above on and after the date of the amendment.) Both before and 
after the amendments referred to, it has been the Division's position 
that the 13(b)(1) exemption is applicable to drivers, drivers' helpers, 
loaders, and mechanics employed in pickup and delivery service to line-
haul motor carrier depots or under contract with forwarding companies, 
since the Interstate Commerce Commission had determined that its 
regulatory power under section 204 of the Motor Carrier Act extended to 
such employees.
    (d) The determinations of the Interstate Commerce Commission 
discussed in paragraphs (a), (b), and (c) of this section have not been 
amended or revoked by the Secretary of Transportation. These 
determinations will continue to guide the Administrator of the Wage and 
Hour Division in his enforcement of section 13(b)(1) of the Fair Labor 
Standards Act.

[36 FR 21778, Nov. 13, 1971, as amended at 37 FR 23638, Nov. 7, 1972]



PART 783_APPLICATION OF THE FAIR LABOR STANDARDS ACT TO EMPLOYEES 
EMPLOYED AS SEAMEN--Table of Contents



                              Introductory

Sec.
783.0 Purpose of this part.
783.1 General scope of the Act.
783.2 Matters discussed in this part.
783.3 Significance of official interpretations.
783.4 Basic support for interpretations.
783.5 Interpretations made, continued, and superseded by this part.

                         Some Basic Definitions

783.6 Definitions of terms used in the Act.
783.7 ``Employer'', ``employee'', and ``employ''.
783.8 ``Person''.
783.9 ``Enterprise''.
783.10 ``Establishment''.
783.11 ``Enterprise engaged in commerce or in the production of goods 
          for commerce''.
783.12 ``Commerce''.
783.13 ``Production''.
783.14 ``Goods''.
783.15 ``State''.
783.16 ``Wage''.
783.17 ``American vessel''.

             Application in General of the Act's Provisions

783.18 Commerce activities of employees.
783.19 Commerce activities of enterprises in which employee is employed.
783.20 Exemptions from the Act's provisions.
783.21 Guiding principles for applying coverage and exemption 
          provisions.
783.22 Pay standards for employees subject to ``old'' coverage of the 
          Act.
783.23 Pay standards for ``newly covered'' employees.

                The Statutory Provisions Regarding Seamen

783.24 The section 13(a)(14) exemption.
783.25 The section 13(b)(6) exemption.
783.26 The section 6(b)(2) minimum wage requirement.
783.27 Scope of the provisions regarding ``seamen''.

     Legislative History and Judicial Construction of the Exemptions

783.28 General legislative history.
783.29 Adoption of the exemption in the original 1938 Act.
783.30 The 1961 Amendments.

                     Who Is ``Employed as a Seaman''

783.31 Criteria for employment ``as a seaman''.
783.32 ``Seaman'' includes crew members.
783.33 Employment ``as a seaman'' depends on the work actually 
          performed.
783.34 Employees aboard vessels who are not ``seamen''.
783.35 Employees serving as ``watchmen'' aboard vessels in port.
783.36 Barge tenders.
783.37 Enforcement policy for nonseaman's work.

[[Page 632]]

                     What Is an ``American Vessel''

783.38 Statutory definition of ``American vessel''.
783.39 ``Vessel'' includes all means of water transportation.
783.40 ``Documented'' vessel.
783.41 ``Numbered'' vessel.
783.42 Vessels neither ``documented'' nor ``numbered''.

                     Computation of Wages and Hours

783.43 Computation of seaman's minimum wage.
783.44 Board and lodging as wages.
783.45 Deductions from wages.
783.46 Hours worked.
783.47 Off-duty periods.

                      Application of the Exemptions

783.48 Factors determining application of exemptions.
783.49 Workweek unit in applying the exemptions.
783.50 Work exempt under another section of the Act.
783.51 Seamen on a fishing vessel.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended; 29 U.S.C. 201-219.

    Source: 27 FR 8309, Aug. 21, 1962, unless otherwise noted.

                              Introductory



Sec. 783.0  Purpose of this part.

    This part 783 is the official interpretation of the Department of 
Labor with respect to the meaning and application of sections 6(b)(2), 
13(a)(14), and 13(b)(6) of the Fair Labor Standards Act, as amended, 
which govern the application of the minimum wage and overtime pay 
requirements of the Act to employees employed as seamen. Prior to the 
Fair Labor Standards Amendments of 1961, which became effective on 
September 3, 1961, all employees employed as seamen were exempt from 
both the minimum wage and overtime pay provisions of the Act. The 1961 
amendments have narrowed this exemption so as to extend the minimum wage 
provisions of the Act to employees employed as seamen on American 
vessels. Employees employed as seamen on vessels other than American 
vessels continue to be exempt from both the minimum wage and the 
overtime pay requirements of the Act. It is the purpose of this part to 
make available in one place the interpretations of the law relating to 
employees employed as seamen which will guide the Secretary of Labor and 
the Administrator in the performance of their duties under the Act.



Sec. 783.1  General scope of the Act.

    The Fair Labor Standards Act, as amended, is a Federal statute of 
general application which establishes minimum wage, overtime pay, and 
child labor requirements that apply as provided in the Act. All 
employees, whose employment has the relationship to interstate or 
foreign commerce which the Act specifies, are subject to the prescribed 
labor standards unless specifically exempt from them. Employers having 
such employees are required to comply with the Act's provisions in this 
regard unless relieved therefrom by some exemption in the Act. Such 
employers are also required to comply with specified recordkeeping 
requirements contained in part 516 of this chapter. The law authorizes 
the Department of Labor to investigate for compliance and, in the event 
of violations, to supervise the payment of unpaid wages or unpaid 
overtime compensation owing to any employee. The law also provides for 
enforcement in the courts.



Sec. 783.2  Matters discussed in this part.

    This part 783 discusses the meaning and application of the 
exemptions provided in sections 13(a)(14) and 13(b)(6) of the Act. The 
provisions of section 6(b)(2) of the Act, which relate to the 
calculation of minimum wages and the hours worked by seamen on American 
vessels, are also discussed in this part. Other provisions of the Act 
are discussed only to make clear their relevance to these provisions and 
are not considered in detail in this part. Interpretations and 
regulations also published elsewhere in this title deal in some detail 
with such subjects as the general coverage of the Act (part 776 of this 
chapter), methods of payment of wages (part 531 of this chapter), hours 
worked (part 785 of this chapter), recordkeeping requirements (part 516 
of this chapter), and qualifications for exempt executive, 
administrative, and professional employees (part 541 of this chapter). 
Reference should also be made to subpart G of part 570 of this

[[Page 633]]

chapter which contains the official interpretations of the child labor 
provisions of the Act. Copies of any of these documents may be obtained 
from any office of the Wage and Hour Division.



Sec. 783.3  Significance of official interpretations.

    This part contains the official interpretations of the Department of 
Labor pertaining to the provisions of section 6(b)(2) and the exemptions 
provided in sections 13(a)(14) and 13(b)(6) of the Act. It is intended 
that the positions stated concerning the Act will serve as ``a practical 
guide to employers and employees as to how the office representing the 
public interest in its enforcement will seek to apply it'' (Skidmore v. 
Swift, 323 U.S. 134). The Secretary of Labor and the Administrator will 
follow these interpretations in the performance of their duties under 
the Act, unless and until they are otherwise directed by authoritative 
decisions of the courts or conclude upon re-examination of an 
interpretation that it is incorrect. The interpretations contained 
herein may be relied upon in accordance with section 10 of the Portal-
to-Portal Act (29 U.S.C. 251-262), so long as they remain effective and 
are not modified, amended, rescinded, or determined by judicial 
authority to be incorrect.



Sec. 783.4  Basic support for interpretations.

    The ultimate decisions on interpretations of the Act are made by the 
courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
part are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (reorg. Pl. 6 of 1950, 64 Stat. 1263; Gen. 
Ord. 45A, May 24, 1950, 15 FR 3290). As included in this part, these 
interpretations are believed to express the intent of the law as 
reflected in its provisions and as construed by the courts and evidenced 
by its legislative history. References to pertinent legislative history 
are made in this part where it appears that they will contribute to a 
better understanding of the interpretations.



Sec. 783.5  Interpretations made, continued, and superseded by this part.

    On and after publication of this part 783 in the Federal Register, 
the interpretations contained therein shall be in effect and shall 
remain in effect until they are modified, rescinded or withdrawn. This 
part supersedes and replaces the interpretations previously published in 
the Federal Register and Code of Federal Regulations as part 783 of this 
chapter. Prior opinions, rulings, and interpretations and prior 
enforcement policies which are not inconsistent with the interpretations 
in this part or with the Fair Labor Standards Act as amended by the Fair 
Labor Standards Amendments of 1961 are continued in effect; all other 
opinions, rulings, interpretations, and enforcement policies on the 
subjects discussed in the interpretations in this part are rescinded and 
withdrawn. The interpretations in this part provide statements of 
general principles applicable to the subjects discussed and 
illustrations of the application of these principles to situations that 
frequently arise. They do not and cannot refer specifically to every 
problem which may be met by employers and employees in the application 
of the Act. The omission to discuss a particular problem in this part or 
in interpretations supplementing it should not be taken to indicate the 
adoption of any position by the Secretary of Labor or the Administrator 
with respect to such problem or to constitute an administrative 
interpretations or practice or enforcement policy. Questions on matters 
not fully covered by this part may be addressed to the Administrator of 
the Wage and Hour Division, U.S. Department of Labor, Washington, DC 
20210, or to any Regional Office of the Division.

[[Page 634]]

                         Some Basic Definitions



Sec. 783.6  Definitions of terms used in the Act.

    The meaning and application of the provisions of law discussed in 
this part depend in large degree on the definitions of terms used in 
these provisions. The Act itself defines some of these terms. Others 
have been defined and construed in decisions of the courts. In the 
following sections some of these basic definitions are set forth for 
ready reference in connection with the part's discussion of the various 
provisions in which they appear. These definitions and their application 
are further considered in other statements of interpretations to which 
reference is made, and in the sections of this part where the particular 
provisions containing the defined terms are discussed.



Sec. 783.7  ``Employer'', ``employee'', and ``employ''.

    The Act's major provisions impose certain requirements and 
prohibitions on every ``employer'' subject to their terms. The 
employment by an ``employer'' of an ``employee'' is, to the extent 
specified in the Act, made subject to minimum wage and overtime pay 
requirements and to prohibitions against the employment of oppressive 
child labor. The Act provides its own definitions of ``employer'', 
``employee'', and ``employ'', under which ``economic reality'' rather 
than ``technical concepts'' determines whether there is employment 
subject to its terms (Goldberg v. Whitaker House Cooperative, 366 U.S. 
28; United States v. Silk, 331 U.S. 704; Rutherford Food Corp. v. 
McComb, 331 U.S. 772). An ``employer'', as defined in section 3(d) of 
the Act, ``includes any person acting directly or indirectly in the 
interest of an employer in relation to an employee but shall not include 
the United States or any State or political subdivision of a State, or 
any labor organization (other than when acting as an employer), or 
anyone acting in the capacity of officer or agent of such labor 
organization''. An ``employee'', as defined in section 3(e) of the Act, 
``includes any individual employed by an employer'', and ``employ'', as 
used in the Act, is defined in section 3(g) to include ``to suffer or 
permit to work''. It should be noted, as explained in part 791 of this 
chapter, dealing with joint employment, that in appropriate 
circumstances two or more employers may be jointly responsible for 
compliance with the statutory requirements applicable to employment of a 
particular employee. It should also be noted that ``employer'', 
``enterprise'', and ``establishment'' are not synonymous terms, as used 
in the Act. An employer may have an enterprise with more than one 
establishment, or he may have more than one enterprise, in which he 
employs employees within the meaning of the Act. Also, there may be 
different employers who employ employees in a particular establishment 
or enterprise.



Sec. 783.8  ``Person''.

    As used in the Act (including definition of ``enterprise'' set forth 
below in Sec. 783.9), ``person'' is defined as meaning ``an individual, 
partnership, association, corporation, business trust, legal 
representative, or any organized group of persons'' (Act, section 3(a)).



Sec. 783.9  ``Enterprise''.

    The term ``enterprise'' which may, in some situations, be pertinent 
in determining coverage of this Act of employees employed by employers 
on vessels, is defined in section 3(r) of the Act. Section 3(r) states:

    Enterprise means the related activities performed (either through 
unified operation or common control) by any person or persons for a 
common business purpose, and includes all such activities whether 
performed in one or more establishments or by one or more corporate or 
other organizational units including departments of an establishment 
operated through leasing arrangements, but shall not include the related 
activities performed for such enterprise by an independent contractor * 
* *.


The scope and application of this definition is discussed in part 776 of 
this chapter and in Sec. Sec. 779.200 through 779.235 of this chapter.



Sec. 783.10  ``Establishment''.

    As used in the Act (including the provision quoted below in Sec. 
783.11), the term ``establishment'', which is not specifically defined 
therein, refers to a ``distinct physical place of business''

[[Page 635]]

rather than to ``an entire business or enterprise'' which may include 
several separate places of business. This is consistent with the meaning 
of the term as it is normally used in business and in government, is 
judicially settled, and has been recognized in the Congress in the 
course of enactment of amendatory legislation (Phillips v. Walling 334 
U.S. 490; Mitchell v. Bekins Van & Storage Co., 352 U.S. 1027; 95 Cong. 
Rec. 12505, 12579, 14877; H. Rept. No. 1453, 81st Cong., 1st sess. p. 
35). This is the meaning of the term as used in sections 3(r), 3(s), and 
6(b) of the Act. An establishment may have employees employed away from 
the establishment as well as within it (H. Rept. No. 1453, supra).



Sec. 783.11  ``Enterprise engaged in commerce or in the production 
of goods for commerce''.

    Portions of the definition of ``enterprise engaged in commerce or in 
the production of goods for commerce'' (Act section 3(s)) which may in 
some situations determine the application of provisions of the Act to 
employees employed by employers on vessels are as follows:

    (s) ``Enterprise engaged in commerce or in the production of goods 
for commerce'' means any of the following in the activities of which 
employees are so engaged, including employees handling, selling, or 
otherwise working on goods that have been moved in or produced for 
commerce by any person:

                                * * * * *

    (3) any establishment of any such enterprise * * * which has 
employees engaged in commerce or in the production of goods for commerce 
if the annual gross volume of sales of such enterprise is not less than 
$1,000,000.

                                * * * * *

The application of this definition is considered in part 776 of this 
chapter.



Sec. 783.12  ``Commerce''.

    ``Commerce'' as used in the Act includes interstate and foreign 
commerce. It is defined in section 3(b) of the Act to mean ``trade, 
commerce, transportation, transmission, or communication among the 
several States or between any State and any place outside thereof.'' 
(For the definition of ``State'', see Sec. 783.15.) The application of 
this definition and the kinds of activities which it includes are 
discussed at length in part 776 of this chapter dealing with the general 
coverage of the Act.



Sec. 783.13  ``Production''.

    To understand the meaning of ``production'' of goods for commerce as 
used in the Act it is necessary to refer to the definition in section 
3(j) of the term ``produced''. A detailed discussion of the application 
of the terms as defined is contained in part 776 of this chapter, 
dealing with the general coverage of the Act. Section 3(j) provides that 
``produced'' as used in the Act ``means produced, manufactured, mined, 
handled, or in any other manner worked on in any State; and for the 
purposes of this Act an employee shall be deemed to have been engaged in 
the production of goods if such employee was employed in producing, 
manufacturing, mining, handling, transporting, or in any other manner 
working on such goods, or in any closely related process or occupation 
directly essential to the production thereof, in any State.'' (For the 
definition of ``State'' see Sec. 783.15.)



Sec. 783.14  ``Goods''.

    The definition in section 3(i) of the Act states that ``goods'', as 
used in the Act means ``goods (including ships and marine equipment), 
wares, products, commodities, merchandise, or articles or subjects of 
commerce of any character, or any part or ingredient thereof, but does 
not include goods after their delivery into the actual physical 
possession of the ultimate consumer thereof other than a producer, 
manufacturer, or processor thereof.'' Part 776 of this chapter, dealing 
with the general coverage of the Act, contains a detailed discussion of 
the application of this definition and what is included in it.



Sec. 783.15  ``State''.

    As used in the Act, ``State'' means ``any State of the United States 
or the District of Columbia or any Territory or possession of the United 
States'' (Act, section 3(c)). The application of

[[Page 636]]

this definition in determining questions of coverage under the Acts' 
definition of ``commerce'' and ``produced'' (see Sec. Sec. 783.12, 
783.13) is discussed in part 776 of this chapter, dealing with general 
coverage.



Sec. 783.16  ``Wage''.

    ``Wage'' paid to an employee is defined in section 3(m) of the Act 
to include ``the reasonable cost, as determined by the Secretary of 
Labor, to the employer of furnishing such employee with board, lodging, 
or other facilities, if such board, lodging, or other facilities are 
customarily furnished by such employer to his employees: Provided, That 
the cost of board, lodging, or other facilities shall not be included as 
a part of the wage paid to any employee to the extent it is excluded 
therefrom under the terms of a bona fide collective bargaining agreement 
applicable to the particular employee: Provided further, That the 
Secretary is authorized to determine the fair value of such board, 
lodging, or other facilities for defined classes of employees and in 
defined areas, based on average cost to the employer or to groups of 
employers similarly situated, or average value to groups of employees, 
or other appropriate measure of fair value. Such evaluations, where 
applicable and pertinent, shall be used in lieu of actual measure of 
cost in determining the wage paid to any employee''. Although there is 
some incidental discussion in this part of this definition and its 
impact, a fuller discussion of its meaning and the regulations 
pertaining thereto are set forth in part 531 of this chapter.



Sec. 783.17  ``American vessel''.

    Section 3(p) of the Act, added by the 1961 Amendments, defines 
``American vessel'' to include ``any vessel which is documented or 
numbered under the laws of the United States.'' This definition and its 
effect with respect to the application of the Act to employment of 
individuals as seamen are discussed in subsequent sections of this part.

             Application in General of the Act's Provisions



Sec. 783.18  Commerce activities of employees.

    Prior to the 1961 Amendments, the Fair Labor Standards Act applied 
to all employees, not specifically exempted, who are engaged (a) in 
interstate or foreign commerce or (b) in the production of goods for 
such commerce, which is defined to include any closely related process 
or occupation directly, essential to such production (29 U.S.C. 206(a), 
207(a); and see Sec. Sec. 783.12 to 783.15 for definitions governing 
the scope of this coverage). The Act as amended in 1961 continues this 
coverage. In general, employees of businesses concerned with the 
transportation of goods or persons on navigable waters are engaged in 
interstate or foreign commerce, or in the production of goods for such 
commerce, as defined in the Act, and are subject to the Act's provisions 
except as otherwise provided in sections 13(a)(14) and 13(b)(6) or other 
express exemptions. A detailed discussion of the activities in commerce 
or in the production of goods for commerce which will bring an employee 
under the Act is contained in part 776 of this chapter, dealing with 
general coverage.



Sec. 783.19  Commerce activities of enterprises in which employee
is employed.

    Under amendments to the Fair Labor Standards Act effective September 
3, 1961, employees not covered by reason of their personal engagement in 
interstate commerce activites, as explained in Sec. 783.18, are 
nevertheless brought within the coverage of the Act if they are employed 
in an enterprise which is defined in section 3(s) of the Act as an 
enterprise engaged in commerce or in the production of goods for 
commerce, or by an establishment described in section 3(s)(3) of the Act 
(see Sec. 783.11). Such employees, if not exempt from the minimum wage 
and overtime pay requirements under section 13(a)(14) or exempt from the 
overtime pay requirements under section 13(b)(6), will have to be paid 
in accordance with those monetary standards of the Act unless expressly 
exempt under some other

[[Page 637]]

provision. This would generally be true of employees employed in 
enterprises and by establishments engaged in a business concerned with 
transportation of goods or persons by vessels, where the enterprise has 
an annual gross sales volume of $1,000,000 or more. Enterprise coverage 
is more fully discussed in part 776 of this chapter, dealing with 
general coverage.



Sec. 783.20  Exemptions from the Act's provisions.

    The Act provides a number of specific exemptions from the general 
requirements previously described. Some are exemptions from the overtime 
provisions only. Others are from the child labor provisions only. 
Several are exemptions from both the minimum wage and the overtime 
requirements of the Act. Finally, there are some exemptions from all 
three--minimum wage, overtime pay, and child labor requirements. An 
examination of the terminology in which the exemptions from the general 
coverage of the Fair Labor Standards Act are stated discloses language 
patterns which reflect congressional intent. Thus, Congress specified in 
varying degree the criteria for application of each of the exemptions 
and in a number of instances differentiated as to whether employees are 
to be exempt because they are employed by a particular kind of employer, 
employed in a particular type of establishment, employed in a particular 
industry, employed in a particular capacity or occupation, or engaged in 
a specified operation. (See 29 U.S.C. 203(d); 207 (b), (c), (h); 213 
(a), (b), (c), (d). And see Addison v. Holly Hill, 322 U.S. 607; Walling 
v. Haden, 153 F. 2d 196, certiorari denied 328 U.S. 866; Mitchell v. 
Stinson, 217 F. 2d 210.) In general, there are no exemptions from the 
child labor requirements that apply in enterprises or establishments 
engaged in transportation or shipping (see part 570, subpart G of this 
chapter). Such enterprises or establishments will, however, be concerned 
with the exemption from overtime pay in section 13(b)(6) of the Act for 
employees employed as seamen and the exemption from the mimimum wage and 
overtime pay requirements provided by section 13(a)(14) for employees so 
employed on vessels other than American vessels. These exemptions, which 
are subject to the general rules stated in Sec. 783.21, are discussed 
at length in this part.



Sec. 783.21  Guiding principles for applying coverage and exemption
provisions.

    It is clear that Congress intended the Fair Labor Standards Act to 
be broad in its scope (Helena Glendale Ferry Co. v. Walling, 132 F. 2d 
616). ``Breadth of coverage is vital to its mission'' (Powell v. U.S. 
Cartridge Co., 339 U.S. 497). An employer who claims an exemption under 
the Act has the burden of showing that it applies (Walling v. General 
Industries Co., 330 U.S. 545; Mitchell v. Kentucky Finance Co., 359 U.S. 
290; Tobin v. Blue Channel Corp. 198 F. 2d 245, approved in Mitchell v. 
Myrtle Grove Packing Co., 350 U.S. 891; Fleming v. Hawkeye Pearl Button 
Co., 113 F. 2d 52). Conditions specified in the language of the Act are 
``explicit prerequisites to exemption'' (Arnold v. Kanowsky, 361 U.S. 
388; and see Walling v. Haden, 153 F. 2d 196). In their application, the 
purpose of the exemption as shown in its legislative history as well as 
its language should be given effect. However, ``the details with which 
the exemptions in this Act have been made preclude their enlargement by 
implication'' and ``no matter how broad the exemption, it is meant to 
apply only to'' the specified activities (Addison v. Holly Hill, 322 
U.S. 607; Maneja v. Waialua, 349 U.S. 254). Exemptions provided in the 
Act ``are to be narrowly construed against the employer seeking to 
assert them'' and their application limited to those who come ``plainly 
and unmistakably within their terms and spirits.'' This construction of 
the exemptions is necessary to carry out the broad objectives for which 
the Act was passed (Phillips v. Walling, 324 U.S. 490; Mitchell v. 
Kentucky Finance Co., supra; Arnold v. Kanowsky, supra; Helena Glendale 
Ferry Co. v. Walling, supra; Mitchell v. Stinson, 217 F. 2d 210; 
Flemming v. Hawkeye Pearl Button Co., 113 F. 2d 52; Walling v. Bay State 
Dredging & Contracting Co., 149 F. 2d 346, certiorari denied 326 U.S. 
760; Anderson v. Manhattan Lighterage Corp., 148 F. 2d 971, certiorari 
denied 326 U.S. 722; Sternberg Dredging Co. v. Walling, 158 F. 2d 678).

[[Page 638]]



Sec. 783.22  Pay standards for employees subject to ``old''
coverage of the Act.

    The 1961 amendments did not change the tests described in Sec. 
783.18 by which coverage based on the employee's individual activities 
is determined. Any employee whose employment satisfies these tests and 
would not have come within some exemption (such as section 13(a)(14)) in 
the Act prior to the 1961 amendments is subject to the ``old'' 
provisions of the law and entitled to a minimum wage of at least $1.15 
an hour beginning September 3, 1961, and not less than $1.25 an hour 
beginning September 3, 1963 (29 U.S.C. 206(a)(1)), unless expressly 
exempted by some provision of the amended Act. Such an employee is also 
entitled to overtime pay for hours worked in excess of 40 in any 
workweek at a rate not less than one and one-half times his regular rate 
of pay (29 U.S.C. 207(a)(1)), unless expressly exempt from overtime by 
some exemption such as section 13(b)(6). (Minimum wage rates in Puerto 
Rico, the Virgin Islands, and American Samoa are governed by special 
provisions of the Act (26 U.S.C. 206(a)(3); 206(c)(2).) Information on 
these rates is available at any office of the Wage and Hour Division.



Sec. 783.23  Pay standards for ``newly covered'' employees.

    There are some employees whose individual activities would not bring 
them within the minimum wage or overtime pay provisions of the Act as it 
was prior to the 1961 amendments, but who are brought within minimum 
wage or overtime coverage or both for the first time by the new 
``enterprise'' coverage provisions or changes in exemptions, or both, 
which were enacted as part of the amendments and made effective 
September 3, 1961. Typical of such employees are those who, regardless 
of any engagement in commerce or in the production of goods for 
commerce, are employed as seamen and would therefore have been exempt 
from minimum wage as well as overtime pay requirements by virtue of 
section 13(a)(14) of the Act until the 1961 amendments if so employed 
during that period, but who by virtue of these amendments are exempt 
only from the overtime pay requirements on and after September 3, 1961, 
under section 13(b)(6) of the amended Act. These ``newly covered'' 
employees for whom no specific exemption has been retained or provided 
in the amendments must be paid not less than the minimum wages shown in 
the schedule below for hours worked, computed, in the case of employees 
employed as seamen, in accordance with the special provisions of section 
6(b)(2) which are discussed in subsequent sections of this part. Any 
``newly covered'' employees who are not exempted by section 13(b)(6) 
because of their employment as seamen must be paid, unless exempted by 
some other provision, not less than one and one-half times their regular 
rates of pay for overtime, as shown in the schedule below.

------------------------------------------------------------------------
                                   Minimum wage (29    Overtime pay (29
            Beginning               U.S.C. 206(b))     U.S.C. 207(a)(2))
------------------------------------------------------------------------
Sept. 3, 1961...................  $1 an hour........  None required.
Sept. 3, 1963...................  No change.........  After 44 hours in
                                                       a workweek
Sept. 3, 1964...................  $1.15 an hour.....  After 42 hours in
                                                       a workweek.
Sept. 3, 1965 \1\ and thereafter  $1.25 an hour.....  After 40 hours in
                                                       a workweek.
------------------------------------------------------------------------
\1\ Requirements identical to those for employees under ``old''
  coverage. (Minimum wage rates for newly covered employees, in Puerto
  Rico, the Virgin Islands, and American Samoa are set by wage order on
  recommendations of special industry committees (29 U.S.C. 206(a)(3);
  206(c)(2). Information on these rates may be obtained at any office of
  the Wage and Hour and Public Contracts Divisions.)

                The Statutory Provisions Regarding Seamen



Sec. 783.24  The section 13(a)(14) exemption.

    Section 13(a)(14) of the Fair Labor Standards Act exempts from the 
minimum wage and overtime pay requirements of the Act, but not from its 
child labor provisions, ``any employee employed as a seaman on a vessel 
other than an American vessel''.



Sec. 783.25  The section 13(b)(6) exemption.

    Section 13(b)(6) of the Act exempts from the overtime pay 
requirements of the Act, but not from its other requirements, ``any 
employee employed as a seaman''.

[[Page 639]]



Sec. 783.26  The section 6(b)(2) minimum wage requirement.

    Section 6(b), with paragraph (2) thereof, requires the employer to 
pay to an employee, ``if such employee is employed as a seaman on an 
American vessel, not less than the rate which will provide to the 
employee, for the period covered by the wage payment, wages equal to 
compensation at the hourly rate prescribed by paragraph (1) of this 
subsection for all hours during such period when he was actually on duty 
(including periods aboard ship when the employee was on watch or was, at 
the direction of a superior officer, performing work or standing by, but 
not including off-duty periods which are provided pursuant to the 
employment agreement).'' The ``hourly rate prescribed by'' paragraph (1) 
of the subsection is the minimum wage rate applicable according to the 
schedule shown in Sec. 783.23.



Sec. 783.27  Scope of the provisions regarding ``seamen''.

    In accordance with the above provisions of the Act as amended, an 
employee employed as a seaman is exempt only from its overtime pay 
provisions under the new section 13(b)(6), unless the vessel on which he 
is employed is not an American vessel. Section 13(a)(14) as amended 
continues the prior exemption, from minimum wages as well as overtime 
pay, for any employees employed as a seaman on a vessel other than an 
American vessel. Thus, to come within this latter exemption an employee 
now must be ``employed as'' a ``seaman'' on a vessel other than an 
``American vessel'', while to come within the overtime exemption 
provided by section 13(b)(6) an employee need only be ``employed as'' a 
``seaman''. The minimum wage requirements of the Act, as provided in 
section 6(b) and paragraph (2) of that subsection apply if the employee 
is ``employed as'' a ``seaman'' on an ``American vessel''. The meaning 
and scope of these key words, ``employed as a seaman'' and ``American 
vessel'' are discussed in subsequent sections of this part. Of course, 
if an employee is not ``employed as'' a ``seaman'' within the meaning of 
this term as used in the Act, these exemptions and section 6(b)(2) would 
have no relevancy and his status under the Act would depend, as in the 
case of any other employee, upon the other facts of his employment, 
(Sec. Sec. 783.18 through 783.20).

     Legislative History and Judicial Construction of the Exemptions



Sec. 783.28  General legislative history.

    As originally enacted in 1938, section 13(a)(3) of the Fair Labor 
Standards Act exempted from both the minimum wage and overtime pay 
requirements ``any employee employed as a seaman'' (52 Stat. 1050). In 
1949 when several amendments were made to the Act (63 Stat. 910), this 
exemption was not changed except that it was renumbered section 
13(a)(14). In the 1961 amendments (75 Stat. 65), a like exemption was 
retained but it was limited to one employed as a seaman on a vessel 
other than an American vessel (section 13(a)(14)); an overtime exemption 
was provided for all employees employed as seamen (section 13(b)(6)), 
and those employed as seamen on an American vessel were brought within 
the minimum wage provisions (sec. 6(b)(2)).



Sec. 783.29  Adoption of the exemption in the original 1938 Act.

    (a) The general pattern of the legislative history of the Act shows 
that Congress intended to exempt, as employees ``employed as'' seamen, 
only workers performing water transportation services. The original bill 
considered by the congressional committees contained no exemption for 
seamen or other transportation workers. At the joint hearings before the 
Senate and House Committees on Labor, representatives of the principal 
labor organizations representing seamen and other transportation workers 
testified orally and by writing that the peculiar needs of their 
industry and the fact that they were already under special governmental 
regulation made it unwise to bring them within the scope of the proposed 
legislation (see Joint Hearings before Senate Committee on Education and 
Labor and House Committee on Labor on S. 2475 and H.R. 7200, 75th Cong., 
1st sess., pp. 545, 546, 547, 549, 1216, 1217). The committees evidently 
acquiesced

[[Page 640]]

in this view and amendments were accepted (81 Cong. Rec. 7875) and 
subsequently adopted in the law, exempting employees employed as seamen 
(sec. 13(a)(3)), certain employees of motor carriers (sec. 13(b)(1)), 
railroad employees (sec. 13(b)(2)), and employees of carriers by air 
(sec. 13(a)(4), now sec. 13(b)(3)).
    (b) That the exemption was intended to exempt employees employed as 
``seamen'' in the ordinary meaning of that word is evidenced by the fact 
that the chief proponents for the seamen's exemption were the Sailors 
Union of the Pacific and the National Maritime Union. The former wrote 
asking for an exemption for ``seamen'' for the reason that they were 
already under the jurisdiction of the Maritime Commission pursuant to 
the Merchant Marine Act of 1936 (Joint Hearings before the Committees on 
Labor on S. 2475 and H.R. 7200, 75th Cong., 1st sess., pp. 1216, 1217). 
The representative of the latter union also asked that ``seamen'' be 
exempted for the same reason saying * * * ``We feel that in a general 
interpretation of the whole bill that the way has been left open for the 
proposed Labor Standards Board to have jurisdiction over those classes 
of workers who are engaged in transportation. While this may not have an 
unfavorable effect upon the workers engaged in transportation by water, 
we feel that it may conflict with the laws now in effect regarding the 
jurisdiction of the government machinery now set up to handle these 
problems'' (id. at p. 545). And he went on to testify, ``What we would 
like is an interpretation of the bill which would provide a protective 
clause for the `seamen' '' (id. at p. 547).
    (c) Consonant with this legislative history, the courts in 
interpreting the phrase ``employee employed as a seaman'' for the 
purpose of the Act have given it its commonly accepted meaning, namely, 
one who is aboard a vessel necessarily and primarily in aid of its 
navigation (Walling v. Bay State Dredging and Contracting Co., 149 F. 2d 
346; Walling v. Haden, 153 F. 2d 196; Sternberg Dredging Co. v. Walling, 
158 F. 2d 678). In arriving at this conclusion the courts recognized 
that the term ``seaman'' does not have a fixed and precise meaning but 
that its meaning is governed by the context in which it is used and the 
purpose of the statute in which it is found. In construing the Fair 
Labor Standards Act, as a remedial statute passed for the benefit of all 
workers engaged in commerce, unless exempted, the courts concluded that 
giving a liberal interpretation of the meaning of the term ``seaman'' as 
used in an exemptive provision of the Act would frustrate rather than 
accomplish the legislative purpose (Helena Glendale Ferry Co. v. 
Walling, 132 F. 2d 616; Walling v. Bay State Dredging and Contracting 
Co., supra; Sternberg Dredging Co. v. Walling, supra; Walling v. Haden, 
supra).



Sec. 783.30  The 1961 Amendments.

    One of the steps Congress took in the 1961 Amendments to extend the 
monetary provisions of the Act to more workers was to limit the scope of 
the exemption which excluded all employees employed as seamen from 
application of the minimum wage and overtime provisions. This it did by 
extending the minimum wage provisions of the Act to one employed as a 
seaman on an American vessel (section 6(b)(2)), by adding to the 
language of section 13(a)(14) to make the exemption applicable only to a 
seaman employed on a vessel other than an American vessel, and finally 
by the addition of a new exemption, section 13(b)(6), relieving 
employers of overtime pay requirements with respect to those employees 
employed as seamen who do not come within the scope of the amended 
section 13(a)(14). (H. Rep. No. 75, 87th Cong., 1st sess., pp. 33, 36; 
Sen. Rep. No. 145, 87th Cong., 1st sess., pp. 32, 50; Statement of the 
Managers on the part of the House, H. (Cong.) Rep. No. 327, 87th Cong., 
1st sess., p. 16.) In view of the retention in the 1961 amendments of 
the basic language of the original exemption, ``employee employed as a 
seaman'', the legislative history and prior judicial construction (see 
Sec. 783.29) of the scope and meaning of this phrase would seem 
controlling for purposes of the amended Act.

[[Page 641]]

                     Who Is ``Employed as a Seaman''



Sec. 783.31  Criteria for employment ``as a seaman.''

    In accordance with the legislative history and authoritative 
decisions as discussed in Sec. Sec. 783.28 and 783.29, an employee will 
ordinarily be regarded as ``employed as a seaman'' if he performs, as 
master or subject to the authority, direction, and control of the master 
aboard a vessel, service which is rendered primarily as an aid in the 
operation of such vessel as a means of transportation, provided he 
performs no substantial amount of work of a different character. This is 
true with respect to vessels navigating inland waters as well as ocean-
going and coastal vessels (Sternberg Dredging Co. v. Walling, 158 F. 2d 
678; Walling v. Haden, 153 F. 2d 196, certiorari denied 328 U.S. 866; 
Walling v. Great Lakes Dredge & Dock Co., 149 F. 2d 9, certiorari denied 
327 U.S. 722; Douglas v. Dixie Sand and Gravel Co., (E.D. Tenn.) 9 WH 
Cases 285). The Act's provisions with respect to seamen apply to a 
seaman only when he is ``employed as'' such (Walling v. Haden, supra); 
it appears also from the language of section 6(b)(2) and 13(a)(14) that 
they are not intended to apply to any employee who is not employed on a 
vessel.



Sec. 783.32  ``Seaman'' includes crew members.

    The term ``seaman'' includes members of the crew such as sailors, 
engineers, radio operators, firemen, pursers, surgeons, cooks, and 
stewards if, as is the usual case, their service is of the type 
described in Sec. 783.31. In some cases it may not be of that type, in 
which event the special provisions relating to seamen will not be 
applicable (Sternberg Dredging Co. v. Walling, 158 F. 2d 678; Cuascut v. 
Standard Dredging Co., 94 F. Supp. 197; Woods Lumber Co. v. Tobin, 199 
F. 2d 455). However, an employee employed as a seaman does not lose his 
status as such simply because, as an incident to such employment, he 
performs some work not connected with operation of the vessel as a means 
of transportation, such as assisting in the loading or unloading of 
freight at the beginning or end of a voyage, if the amount of such work 
is not substantial.



Sec. 783.33  Employment ``as a seaman'' depends on the work actually
performed.

    Whether an employee is ``employed as a seaman'', within the meaning 
of the Act, depends upon the character of the work he actually performs 
and not on what it is called or the place where it is performed (Walling 
v. Haden, 153 F. 2d 196; Cuascut v. Standard Dredging Corp., 94 F. Supp. 
197). Merely because one works aboard a vessel (Helena Glendale Ferry 
Co. v. Walling, 132 F. 2d 616; Walling v. Bay State Dredging & 
Contracting Co., 149 F. 2d 346), or may be articled as a seaman (see 
Walling v. Haden, supra), or performs some maritime duties (Walling v. 
Bay State Dredging & Contracting Co., 149 F. 2d 346; Anderson v. 
Manhattan Lighterage Corp., 148 F. 2d 971) one is not employed as a 
seaman within the meaning of the Act unless one's services are rendered 
primarily as an aid in the operation of the vessel as a means of 
transportation, as for example services performed substantially as an 
aid to the vessel in navigation. For this reason it would appear that 
employees making repairs to vessels between navigation seasons would not 
be ``employed as'' seamen during such a period. (See Desper v. Starved 
Rock Ferry Co., 342 U.S. 187; but see Walling v. Keansburg Steamboat 
Co., 162 F. 2d 405 in which the seaman exemption was allowed in the case 
of an article employee provided he also worked in the ensuing navigation 
period but not in the case of unarticled employees who only worked 
during the lay-up period.) For the same and other reasons, stevedores 
and longshoremen are not employed as seamen. (Knudson v. Lee & Simmons, 
Inc., 163 F. 2d 95.) Stevedores or roust-abouts traveling aboard a 
vessel from port to port whose principal duties require them to load and 
unload the vessel in port would not be employed as seamen even though 
during the voyage they may perform from time to time certain services of 
the same type as those rendered by other employees who would be regarded 
as seamen under the Act.

[[Page 642]]



Sec. 783.34  Employees aboard vessels who are not ``seamen''.

    Concessionaires and their employees aboard a vessel ordinarily do 
not perform their services subject to the authority, direction, and 
control of the master of the vessel, except incidentally, and their 
services are ordinarily not rendered primarily as an aid in the 
operation of the vessel as a means of transportation. As a rule, 
therefore, they are not employed as seamen for purposes of the Act. 
Also, other employees working aboard vessels, whose service is not 
rendered primarily as an aid to the operation of the vessel as a means 
of transportation are not employed as seamen (Knudson v. Lee & Simmons, 
Inc., 163 F. 2d 95; Walling v. Haden, 153 F. 2d 196, certiorari denied 
32 U.S. 866). Thus, employees on floating equipment who are engaged in 
the construction of docks, levees, revetments or other structures, and 
employees engaged in dredging operations or in the digging or processing 
of sand, gravel, or other materials are not employed as seamen within 
the meaning of the Act but are engaged in performing essentially 
industrial or excavation work (Sternberg Dredging Co. v. Walling, 158 F. 
2d 678; Walling v. Haden, supra; Walling v. Bay State Dredging & 
Contracting Co., 149 F. 2d 346; Walling v. Great Lakes Dredge & Dock 
Co., 149 F. 2d 9, certiorari denied 327 U.S. 722). Thus, ``captains'' 
and ``deck hands'' of launches whose dominant work was industrial 
activity performed as an integrated part of harbor dredging operations 
and not in furtherance of transportation have been held not to be 
employed as seamen within the meaning of the Act (Cuascut v. Standard 
Dredging Corp. 94 F. Supp. 197).



Sec. 783.35  Employees serving as ``watchmen'' aboard vessels in port.

    Various situations are presented with respect to employees rendering 
watchman or similar service aboard a vessel in port. Members of the 
crew, who render such services during a temporary stay in port or during 
a brief lay-up for minor repairs, are still employed as ``seamen''. 
Where the vessel is laid up for a considerable period, members of the 
crew rendering watchman or similar services aboard the vessel during 
this period would not appear to be within the special provisions 
relating to seamen because their services are not rendered primarily as 
an aid in the operation of the vessel as a means of transportation. See 
Desper v. Starved Rock Ferry Co., 342 U.S. 187. Furthermore, employees 
who are furnished by independent contractors to perform watchman or 
similar services aboard a vessel while in port would not be employed as 
seamen regardless of the period of time the vessel is in port, since 
such service is not of the type described in Sec. 783.31. The same 
considerations would apply in the case of members of a temporary or 
skeleton crew hired merely to maintain the vessel while in port so that 
the regular crew may be granted shore leave. On the other hand, licensed 
relief officers engaged during relatively short stays in port whose duty 
it is to maintain the ship in safe and operational condition and who 
exercise the authority of the master in his absence, including keeping 
the log, checking the navigation equipment, assisting in the movement of 
the vessel while in port, are employed as seamen within the meaning of 
the exemptions. The same may be true of licensed relief engineers 
employed under the same circumstances whose duty it is to maintain the 
ship's auxiliary machinery in operation and repair (see Pratt v. Alaska 
Packers Asso. (N.D. Calif.) 9 WH Cases 61).



Sec. 783.36  Barge tenders.

    Barge tenders on non-selfpropelled barges who perform the normal 
duties of their occupation, such as attending to the lines and anchors, 
putting out running and mooring lights, pumping out bilge water, and 
other similar activities necessary and usual to the navigation of 
barges, are considered to be employed as ``seamen'' for the purposes of 
the Act unless they do a substantial amount of ``non-seaman's'' work 
(Gale v. Union Bag & Paper Corp., 116 F. (2d) 27 (C.A. 5, 1940), cert. 
den. 313 U.S. 559 (1941)). However, there are employees who, while 
employed on vessels such as barges and lighters, are primarily or 
substantially engaged in performing duties such as loading and unloading 
or custodial service which do

[[Page 643]]

not constitute service performed primarily as an aid in the operation of 
these vessels as a means of transportation and consequently are not 
employed as ``seamen'' (McCarthy v. Wright & Cobb Lighterage Co., 163 F. 
(2d) 92; Anderson v. Manhattan Lighterage Corp., 148 F. (2d) 971, 
certiorari denied 326 U.S. 722; Woods Lumber Co. v. Tobin, 20 Labor 
Cases 66, 640 (W.D. Tenn, 1951), aff'd, 199 F. (2d) 455). Whether an 
employee is on board a vessel primarily to perform maritime services as 
a seaman or loading and unloading services typical of such shore-bases 
personnel as longshoremen is a question of fact and can be determined 
only after reviewing all the facts in the particular case.



Sec. 783.37  Enforcement policy for non-seaman's work.

    In the enforcement of the Act, an employee will be regarded as 
``employed as a seaman'' if his work as a whole meets the test stated in 
Sec. 783.31, even though during the workweek he performs some work of a 
nature other than that which characterizes the service of a seaman, if 
such nonseaman's work is not substantial in amount. For enforcement 
purposes, the Administrator's position is that such differing work is 
``substantial'' if it occupies more than 20 percent of the time worked 
by the employee during the workweek.

                     What Is an ``American Vessel''



Sec. 783.38  Statutory definition of ``American vessel''.

    The provisions of section 6(b)(2) prescribe special methods for 
computing minimum wages and hours worked under the Act which are 
applicable only to seamen who are employed on American vessels. An 
``American vessel'', which would appear to signify a vessel of the 
United States as distinguished from a foreign vessel, ``includes'', 
under the terms of the definition in section 3(p) of the Act, ``any 
vessel which is documented or numbered under the laws of the United 
States.'' The Department of the Treasury, Bureau of Customs and the 
United States Coast Guard, respectively, are responsible for 
documentation and numbering of vessels.



Sec. 783.39  ``Vessel'' includes all means of water transportation.

    Since the Act does not define ``vessel'' it is appropriate to apply 
the difinition of ``vessel'' as set forth in the United States Code (1 
U.S.C. 3). The Code defines ``vessel'' as including ``every description 
of watercraft or other artificial contrivance used, or capable of being 
used, as a means of transportation on water''. But the Federal Boating 
Act of 1958, (under which the U.S. Coast Guard is responsible for 
numbering vessels) and the Documentation Regulations administered by the 
Bureau of Customs, utilize this basic definition, with the addition of 
specific exclusions for ``seaplanes'' and ``aircraft'' (46 U.S.C. 527; 
19 CFR 3.1(a)).



Sec. 783.40  ``Documented'' vessel.

    A vessel ``documented * * * under the laws of the United States'' is 
typically a vessel which has been registered, enrolled and licensed, or 
licensed by the Bureau of Customs under the laws of the United States 
(46 U.S.C. 11, 193, 251-252, 258, 840). Although Bureau of Customs 
regulations provide for three types of documentations, distinctions 
between the categories of vessels subject to them are immaterial for the 
purposes of the Fair Labor Standards Act, since a vessel with any of the 
three kinds of documentation is an ``American vessel'' within the 
section 3(p) definition. Generally, any vessel of five net tons or more 
which is owned by a citizen of the United States is ``entitled to'' 
documentation. Complete information on the documentation requirements 
may be found in 19 CFR part 3.



Sec. 783.41  ``Numbered'' vessel.

    A vessel ``numbered under the laws of the United States'' means a 
vessel numbered pursuant to the provisions of Federal law, including 
vessels numbered under any State numbering system approved by the 
Secretary of the Department under which the U.S. Coast Guard is 
operating, in accordance with section 2(c) of the Federal Boating Act of 
1958 (46 U.S.C. 527-527h). Generally, any vessel, which is not required 
to have and does not have, a valid marine document issued by the Bureau 
of Customs and is propelled by

[[Page 644]]

machinery of more than 10 horsepower, whether or not such machinery is 
the principal source of propulsion, is required to be numbered in 
conformity with the Federal Boating Act of 1958 if it uses the navigable 
waters of the United States, its Territories, or the District of 
Columbia, or is owned in a State and uses the high seas (46 U.S.C. 
527(a)). The requirements and procedures of this Act are explained in 
detail in 46 CFR part 170.



Sec. 783.42  Vessels neither ``documented'' nor ``numbered''.

    An ``American vessel'' on which employment as a seaman is subject to 
the minimum wage under the provisions of section 6(b)(2) and section 
13(a)(14) is not limited by the language of the Act to those vessels 
which are ``documented'' or ``numbered'' as described above in 
Sec. Sec. 783.40 and 783.41. Since the term ``American vessel'' has 
traditionally been applied to regularly documented vessels (see U.S. v. 
Rogers, 27 Fed. Cas. 890; Badger v. Entierrez, 111 U.S. 734; 18 Op. A.G. 
234 (1885); 48 Am. Jur. 40), the inclusion of numbered vessels in the 
statutory definition of ``American vessel'' would indicate that the work 
``includes'' is used in the sense of ``embracing'', as an enlargement 
and not as a word of limitation. The term may therefore apply to other 
vessels that do not fall within the illustrations given. For example, 
neither the documenting laws nor the numbering laws apply to vessels 
plying the purely internal waters of a State which do not join up with 
navigable waters touching on another State (19 CFR 3.5(a)(4); 33 CFR 
2.10-5), but, nevertheless, the Fair Labor Standards Act does apply in 
those areas and it clearly would not comport with the remedial purpose 
of the Act to exclude from its minimum wage provisions seamen engaged in 
commerce or in the production of goods for commerce in those areas 
though the vessels are not documented or numbered. On the contrary, the 
legislative history shows the affirmative purpose to improve, though to 
a limited extent, the status of seamen (Sen. Rep. No. 145, 87th Cong., 
1st sess., p. 32, 50).

                     Computation of Wages and Hours



Sec. 783.43  Computation of seaman's minimum wage.

    Section 6(b) requires, under paragraph (2) of the subsection, that 
an employee employed as a seaman on an American vessel be paid wages at 
not less than the rate which will provide to the employee, for the 
period covered by the wage payment, wages which are equal to 
compensation for all hours on duty in such period at the hourly rate 
prescribed for employees newly covered by the Act's minimum wage 
requirements by reason of the 1961 Amendments (see Sec. Sec. 783.23 and 
783.26). Although the Act takes the workweek as the unit of time to be 
used in determining compliance with the minimum wage of overtime 
requirements and in applying the exemptions, Congress, in recognition of 
the unique working conditions of seamen and of the customs in the 
industry, made this special provision. Under section 6(b)(2) periods 
other than a workweek may be used, in accordance with established 
customs in the industry, as the basis for calculating wages for covered 
seamen provided the wages equal the compensation at the applicable 
minimum hourly rate which would be due to the employee for his hours 
actually spent on duty in the period. This would mean that the wage 
period may properly cover, for example, the period of a month or of a 
voyage so long as the seaman receives at the appropriate time 
compensation at least equal to the prescribed minimum rate for each 
compensable hour in that pay period. (See also Sec. 531.26 of this 
chapter concerning requirements of other laws governing calculation of 
wages and frequency and manner of payment.) To illustrate, where seamen 
have customarily been paid monthly under an arrangement to perform 
seamen's duties during stipulated periods and to be off duty during 
stipulated periods during the month, if such a seaman works 300 hours 
during the month and receives his monthly compensation in an amount 
equal to a payment for that number of hours at the applicable minimum 
rate, there would be compliance with the requirements of section 
6(b)(2). The fact that this seaman

[[Page 645]]

works a varying number of hours during the weeks comprising the monthly 
period or that the monthly compensation is disbursed in two or four 
partial payments to the seaman during the month would not warrant a 
contrary conclusion.



Sec. 783.44  Board and lodging as wages.

    The wages for the period covered by the wage payment include all 
remuneration for employment paid to or on behalf of the employee for all 
hours actually on duty intended to be compensated by such wage payment. 
The reasonable cost or fair value, as determined by the Secretary of 
Labor pursuant to section 3(m) of the Act, of board and lodging 
furnished the employee during such period, if customarily furnished by 
the employer to his employees, is also included as part of the wages for 
the actual hours worked in the period (see Sec. 783.16). However, the 
cost of board and lodging would not be included as part of the wages 
paid to the employee to the extent it is excluded from the employee's 
wages under terms of a bona fide collective bargaining agreement 
applicable to such employee, whether or not customarily furnished to the 
employee. Where such an exclusion is not provided for in any bona fide 
collective bargaining agreement applicable to the employee, the 
reasonable cost or fair value thereof, whichever is appropriate, as 
determined in accordance with the standards set forth in the regulations 
in part 531 of this chapter, is included as part of the wage paid to 
such employee. Part 531 of this chapter also contains the official 
regulations and interpretations of the Department of Labor concerning 
the application of section 3(m) to other facilities as well as board and 
lodging furnished to an employee.



Sec. 783.45  Deductions from wages.

    Where deductions are made from the wages of a seaman subject to 
section 6(b) of the Act, consideration must be given as to whether or 
not such deductions are permitted to be made when they result in the 
seaman receiving cash wages which are less than the applicable minimum 
wage rate for each hour actually on duty during the period covered by 
the wage payments. Such considerations are to be based upon the 
principles and interpretations governing such deductions. These are set 
forth and discussed in part 531 of this chapter. The methods of paying 
the compensation required by section 6 and the application thereto of 
the provisions of section 3(m) of the Act, which are set forth and 
explained in the said part 531, are applicable to seamen subject to the 
minimum wage provisions of the Act.



Sec. 783.46  Hours worked.

    The provisions of section 6(b)(2) of the Act require that a seaman 
employed on an American vessel be paid wages equal to compensation at 
not less than the prescribed minimum wage rate for all of the hours the 
employee ``was actually on duty (including periods aboard ship when the 
employee was on watch or was, at the direction of a superior officer, 
performing work or standing by, but not including off-duty periods which 
are provided pursuant to the employment agreement)''. The Act in this 
portion of section 6(b)(2) is reflecting concepts that are well 
established in the law, and existing precedents (in such cases as Armour 
& Co. v. Wantock, 323 U.S. 126; Skidmore v. Swift & Co., 323 U.S. 134; 
Steiner v. Mitchell, 350 U.S. 247; Mitchell v. King Packing Co., 350 
U.S. 260; Tennessee Coal, Iron & R. Co. v. Muscoda Local N. 123, 321 
U.S. 590; and General Electric Co. v. Porter, 208 F. 2d 805, certiorari 
denied, 347 U.S. 951, 975) would be applicable in determining what time 
constitutes hours worked. See also the general discussion of hours 
worked in part 785 of this chapter.



Sec. 783.47  Off-duty periods.

    Off-duty periods include not only such periods as shore leave but 
also generally those hours spent by a seaman on the vessel outside his 
watch or normal or regular working hours and his standby periods during 
which hours he is not required to perform and does not perform work of 
any kind but is free to utilize his time for his own purpose. The fact 
that during such off-duty periods the employee is subject to call in 
case of emergency situations affecting the safety and welfare of the 
vessel upon which he is employed, or of

[[Page 646]]

its passengers, crew, or cargo or for participation in life boat or fire 
drills will not render such off-duty periods, excluded by employment 
agreement applicable to the employee, ``hours worked''. Responding to 
such calls, however, as well as the performance of work in response 
thereto constitute compensable work time. For further and more detailed 
discussion on what generally are regarded as ``hours worked'' under the 
Act, see part 785 of this chapter.

                      Application of the Exemptions



Sec. 783.48  Factors determining application of exemptions.

    The application of the exemptions provided by section 13(a)(14) and 
section 13(b)(6) of the Act is determined in accordance with their 
language and scope as explained in Sec. Sec. 783.24, 783.25, and 
783.27, with regard to the principles set forth in Sec. 783.20 and the 
legislative history and judicial construction outlined in Sec. Sec. 
783.28 through 783.30. Whether a particular employee is exempt depends 
on what he does, as explained in Sec. Sec. 783.31 through 783.37. 
Whether he is exempt from the overtime pay provisions only or from 
minimum wages as well depends on whether his employment is or is not on 
an American vessel, which is determined as indicated in Sec. Sec. 
783.38 through 783.42. In addition, sections 13(a)(14) and 13(b)(6), 
like other exemptions in the Act, apply on a workweek basis as mentioned 
in Sec. 783.43 and explained in Sec. Sec. 783.49 and 783.50.



Sec. 783.49  Workweek unit in applying the exemptions.

    The unit of time to be used in determining the application of the 
exemption provided by section 13(b)(6) or 13(a)(14) to an employee is 
the workweek. (See Overnight Transportation Co. v. Missel, 316 U.S. 572; 
Sternberg Dredging Co. v. Walling, 158 F. 2d 678.) This is the period 
used in determining whether a substantial amount of non-seaman's work 
has been performed so as to make the exemption inapplicable. See Sec. 
783.37. A workweek is a fixed and regularly recurring interval of 7 
consecutive 24-hour periods. It may begin at any hour of any day set by 
the employer and need not coincide with the calendar week. Once the 
workweek has been set it commences each succeeding week on the same day 
and at the same hour. Changing of the workweek for the purpose of 
escaping the requirements of the Act is not permitted.



Sec. 783.50  Work exempt under another section of the Act.

    Where an employee performs work during his workweek, some of which 
is exempt under one section of the Act, and the remainder of which is 
exempt under another section or sections of the Act, the exemptions may 
be combined. The employee's combination exemption is controlled in such 
case by that exemption which is narrower in scope. For example, if part 
of his work is exempt from both minimum wage and overtime compensation 
under one section of the Act, and the rest is exempt only from the 
overtime pay requirements under section 13(b)(6), the employee is exempt 
that week from the overtime pay provisions but not from the minimum wage 
requirements.



Sec. 783.51  Seamen on a fishing vessel.

    In extending the minimum wage to seamen on American vessels by 
limiting the exemption from minimum wages and overtime provided by 
section 13(a)(14) of the Act to ``any employee employed as a seaman on a 
vessel other than an American vessel,'' and at the same time extending 
the minimum wage to ``onshore'' but not ``offshore'' operations 
concerned with aquatic products, the Congress, in the 1961 Amendments to 
the Act, did not indicate any intent to remove the crews of fishing 
vessels engaged in operations named in section 13(a)(5) from the 
exemption provided by that section. The exemption provided by section 
13(a)(14), and the general exemption in section 13(b)(6) from overtime 
for ``any employee employed as a seaman'' (whether or not on an American 
vessel) apply, in general, to employees, working aboard vessels, whose 
services are rendered primarily as an aid to navigation (Sec. Sec. 
783.31-783.37). It appears, however, that it is not the custom or 
practice in the fishing industry for a

[[Page 647]]

fishing vessel to have two crews; namely, a fishing crew whose duty it 
is primarily to fish and to perform other duties incidental thereto and 
a navigational crew whose duty it is primarily to operate the boat. 
Where, as is the typical situation, there is but one crew which performs 
all these functions, the section 13(a)(5) exemption from both the 
minimum wage and the overtime provisions would apply to its members. For 
a further explanation of the fishery exemption see part 784 of this 
chapter.



PART 784_PROVISIONS OF THE FAIR LABOR STANDARDS ACT APPLICABLE TO 
FISHING AND OPERATIONS ON AQUATIC PRODUCTS--Table of Contents



                            Subpart A_General

                              Introductory

Sec.
784.0 Purpose.
784.1 General scope of the Act.
784.2 Matters discussed in this part.
784.3 Matters discussed in other interpretations.
784.4 Significance of official interpretations.
784.5 Basic support for interpretations.
784.6 Interpretations made, continued, and superseded by this part.

                         Some Basic Definitions

784.7 Definition of terms used in the Act.
784.8 ``Employer,'' ``employee,'' and ``employ.''
784.9 ``Person.''
784.10 ``Enterprise.''
784.11 ``Establishment.''
784.12 ``Commerce.''
784.13 ``Production.''
784.14 ``Goods.''
784.15 ``State.''
784.16 ``Regular rate.''

      Application of Coverage and Exemptions Provisions of the Act

784.17 Basic coverage in general.
784.18 Commerce activities of employees.
784.19 Commerce activities of enterprise in which employee is employed.
784.20 Exemptions from the Act's provisions.
784.21 Guiding principles for applying coverage and exemption 
          provisions.

Subpart B_Exemptions Provisions Relating to Fishing and Aquatic Products

                        The Statutory Provisions

784.100 The section 13(a)(5) exemption.
784.101 The section 13(b)(4) exemption.

                    Legislative History of Exemptions

784.102 General legislative history.
784.103 Adoption of the exemption in the original 1938 Act.
784.104 The 1949 amendments.
784.105 The 1961 amendments.

               Principles Applicable to the Two Exemptions

784.106 Relationship of employee's work to the named operations.
784.107 Relationship of employee's work to operations on the specified 
          aquatic products.
784.108 Operations not included in named operations on forms of aquatic 
          ``life.''
784.109 Manufacture of supplies for named operations is not exempt.
784.110 Performing operations both on nonaquatic products and named 
          aquatic products.
784.111 Operations on named products with substantial amounts of other 
          ingredients are not exempt.
784.112 Substantial amounts of nonaquatic products; enforcement policy.
784.113 Work related to named operations performed in off- or dead-
          season.
784.114 Application of exemptions on a workweek basis.
784.115 Exempt and noncovered work performed during the workweek.
784.116 Exempt and nonexempt work in the same workweek.
784.117 Combinations of exempt work.

      General Character and Scope of the Section 13(a)(5) Exemption

784.118 The exemption is intended for work affected by natural factors.
784.119 Effect of natural factors on named operations.
784.120 Application of exemption to ``offshore'' activities in general.
784.121 Exempt fisheries operations.
784.122 Operations performed as an integrated part of fishing.
784.123 Operations performed on fishing equipment.
784.124 Going to and returning from work.
784.125 Loading and unloading.
784.126 Operation of the fishing vessel.
784.127 Office and clerical employees under section 13(a)(5).

 First Processing, Canning, or Packing of Marine Products Under Section 
                                13(a)(5)

784.128 Requirements for exemption of first processing, etc., at sea.

[[Page 648]]

784.129 ``Marine products.''
784.130 ``At sea.''
784.131 ``As an incident to, or in conjuction with,'' fishing 
          operations.
784.132 The exempt operations.
784.133 ``First processing.''
784.134 ``Canning.''
784.135 ``Packing.''

      General Character and Scope of the Section 13(b)(4) Exemption

784.136 ``Shore'' activities exempted under section 13(b)(4).
784.137 Relationship of exemption to exemption for ``offshore'' 
          activities.
784.138 Perishable state of the aquatic product as affecting exemption.
784.139 Scope of exempt operations in general.
784.140 Fabrication and handling of supplies for use in named 
          operations.
784.141 Examples of nonexempt employees.

                               ``Canning''

784.142 Meaning and scope of ``canning'' as used in section 13(b)(4).
784.143 ``Necessary preparatory operations.''
784.144 Preliminary processing by the canner.
784.145 Preliminary processing by another employer as part of 
          ``canning.''
784.146 ``Subsequent operations.''
784.147 Employees ``employed in'' canning.

                    Processing, Freezing, and Curing

784.148 General scope of processing, freezing, and curing activities.
784.149 Typical operations that may qualify for exemption.
784.150 Named operations performed on previously processed aquatic 
          products.
784.151 Operations performed after product is rendered nonperishable.
784.152 Operations performed on by-products.

       Marketing, Storing, Packing for Shipment, and Distributing

784.153 General scope of named operations.
784.154 Relationship to other operations as affecting exemption.
784.155 Activities performed in wholesale establishments.

        Application of Section 13(b)(4) in Certain Establishments

784.156 Establishments exclusively devoted to named operations.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended, 75 Stat. 65; 29 
U.S.C. 201-219.

    Source: 35 FR 13342, Aug. 20, 1970, unless otherwise noted.



                            Subpart A_General

                              Introductory



Sec. 784.0  Purpose.

    It is the purpose of this part to provide an official statement of 
the views of the Department of Labor with respect to the meaning and 
application of sections 13(a)(5) and 13(b)(4) of the Fair Labor 
Standards Act, which govern the application of the minimum wage and 
overtime pay requirements of the Act to employees engaged in fishing and 
related activities and in operations on aquatic products. It is an 
objective of this part to make available in one place, the 
interpretations of law relating to such employment which will guide the 
Secretary of Labor and the Administrator in carrying out their 
responsibilities under the Act.



Sec. 784.1  General scope of the Act.

    The Fair Labor Standards Act, as amended, is a Federal statute of 
general application which establishes minimum wage, overtime pay, equal 
pay, and child labor requirements that apply as provided in the Act. 
Employers and employees in enterprises engaged in fishing and related 
activities, or in operations on aquatic products on shore, need to know 
how the Act applies to employment in these enterprises so that they may 
understand their rights and obligations under the law. All employees 
whose employment has the relationship to interstate or foreign commerce 
which the Act specifies are subject to the prescribed labor standards 
unless specifically exempted from them. Employers having such employees 
are required to comply with the Act's provisions in this regard and with 
specified recordkeeping requirements contained in part 516 of this 
chapter. The law authorizes the Department of Labor to investigate for 
compliance and, in the event of violations, to supervise the payment of 
unpaid minimum wages or unpaid overtime compensation owing to any 
employee. The law also provides for enforcement in the courts.

[[Page 649]]



Sec. 784.2  Matters discussed in this part.

    This part discusses generally the provisions of the Act which govern 
its application to employers and employees in enterprises and 
establishments of the fisheries, seafood processing, and related 
industries. It discusses in some detail those exemption provisions of 
the Act in sections 13(a)(5) and 13(b)(4) which refer specifically to 
employees employed in described activities with respect to seafood and 
other forms of aquatic life.



Sec. 784.3  Matters discussed in other interpretations.

    Interpretations having general application to others subject to the 
law, as well as to fishermen and seafood canners, processors, or 
distributors and their employees, have been issued on a number of 
subjects of general interest. These will be found in other parts of this 
chapter. Reference should be made to them for guidance on matters which 
they discuss in detail, which this part does not undertake to do. They 
include part 776 of this chapter, discussing coverage; part 531 of this 
chapter, discussing payment of wages; part 778 of this chapter, 
discussing computation and payment of overtime compensation; part 785 of 
this chapter, discussing the calculation of hours worked; and part 800 
of this chapter, discussing equal pay for equal work. Reference should 
also be made to subpart G of part 570 of this chapter, which contains 
the official interpretations of the child labor provisions of the Act.



Sec. 784.4  Significance of official interpretations.

    The regulations in this part contain the official interpretations of 
the Department of Labor pertaining to the exemptions provided in 
sections 13(a)(5) and 13(b)(4) of the Fair Labor Standards Act of 1938, 
as amended. It is intended that the positions stated will serve as ``a 
practical guide to employers and employees as to how the office 
representing the public interest in its enforcement will seek to apply 
it'' (Skidmore v. Swift, 323 U.S. 134, 138). These interpretations 
indicate the construction of the law which the Secretary of Labor and 
the Administrator believe to be correct and which will guide them in the 
performance of their duties under the Act, unless and until they are 
otherwise directed by authoritative decisions of the courts or conclude 
upon re-examination of an interpretation that it is incorrect. The 
interpretations contained herein may be relied upon in accordance with 
section 10 of the Portal-to-Portal Act (29 U.S.C. 251-262), so long as 
they remain effective and are not modified, amended, rescinded, or 
determined by judicial authority to be incorrect.



Sec. 784.5  Basic support for interpretations.

    The ultimate decisions on interpretations of the Act are made by the 
courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
part are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (Reorganization Plan 6 of 1950, 64 Stat. 
1263; Gen. Ord. 45 A, May 24, 1950; 15 FR 3290). As included in the 
regulations in this part, these interpretations are believed to express 
the intent of the law as reflected in its provisions and as construed by 
the courts and evidenced by its legislative history. References to 
pertinent legislative history are made in this part where it appears 
that they will contribute to a better understanding of the 
interpretations.



Sec. 784.6  Interpretations made, continued, and superseded by this part.

    On and after publication of this part 784 in the Federal Register, 
the interpretations contained therein shall be in effect, and shall 
remain in effect until

[[Page 650]]

they are modified, rescinded, or withdrawn. This part supersedes and 
replaces the interpretations previously published in the Federal 
Register and Code of Federal Regulations as part 784 of this chapter. 
Prior opinions, rulings, and interpretations and prior enforcement 
policies which are not inconsistent with the interpretations in this 
part or with the Fair Labor Standards Act as amended are continued in 
effect; all other opinions, rulings, interpretations, and enforcement 
policies on the subjects discussed in the interpretations in this part 
are rescinded and withdrawn. The interpretations in this part provide 
statements of general principles applicable to the subjects discussed 
and illustrations of the application of these principles to situations 
that frequently arise. They do not and cannot refer specifically to 
every problem which may be met by employers and employees in the 
application of the Act. The omission to discuss a particular problem in 
this part or in interpretations supplementing it should not be taken to 
indicate the adoption of any position by the Secretary of Labor or the 
Administrator with respect to such problem or to constitute an 
administrative interpretation or practice or enforcement policy. 
Questions on matters not fully covered by this bulletin may be addressed 
to the Administrator of the Wage and Hour Division, U.S. Department of 
Labor, Washington, DC 20210, or to any Regional Office of the Division.

                         Some Basic Definitions



Sec. 784.7  Definition of terms used in the Act.

    The meaning and application of the provisions of law discussed in 
this part depend in large degree on the definitions of terms used in 
these provisions. The Act itself defines some of these terms. Others 
have been defined and construed in decisions of the courts. In the 
following sections some of these basic definitions are set forth for 
ready reference in connection with the part's discussion of the various 
provisions in which they appear. These definitions and their application 
are further considered in other interpretative bulletins to which 
reference is made, and in the sections of this part where the particular 
provisions containing the defined terms are discussed.



Sec. 784.8  ``Employer,'' ``employee,'' and ``employ.''

    The Act's major provisions impose certain requirements and 
prohibitions on every ``employer'' subject to their terms. The 
employment by an ``employer'' of an ``employee'' is, to the extent 
specified in the Act, made subject to minimum wage and overtime pay 
requirements and to prohibitions against the employment of oppressive 
child labor. The Act provides its own definitions of ``employer,'' 
``employee'' and ``employ,'' under which ``economic reality'' rather 
than ``technical concepts'' determines whether there is employment 
subject to its terms (Goldberg v. Whitaker House Cooperative, 366 U.S. 
28; United States v. Silk, 331 U.S. 704; Rutherford Food Corp. v. 
McComb, 331 U.S. 722). An ``employer,'' as defined in section 3(d) of 
the Act, ``includes any person acting directly or indirectly in the 
interest of an employer in relation to an employee but shall not include 
the United States or any State or political subdivision of a State or 
any labor organization (other than when acting as an employer), or 
anyone acting in the capacity of officer or agent of such labor 
organization.'' An ``employee,'' as defined in section 3(e) of the Act, 
``includes any individual employed by an employer,'' and ``employ,'' as 
used in the Act, is defined in section 3(g) to include ``to suffer or 
permit to work.'' It should be noted, as explained in part 791 of this 
chapter, dealing with joint employment that in appropriate circumstances 
two or more employers may be jointly responsible for compliance with the 
statutory requirements applicable to employment of a particular 
employee. It should also be noted that ``employer,'' ``enterprise,'' and 
``establishment'' are not synonymous terms, as used in the Act. An 
employer may have an enterprise with more than one establishment, or he 
may have more than one enterprise in which he employs employees within 
the meaning of the Act. Also, there may be different employers who 
employ employees in a particular establishment or enterprise.

[[Page 651]]



Sec. 784.9  ``Person.''

    As used in the Act (including the definition of ``enterprise'' set 
forth below in Sec. 784.10), ``person'' is defined as meaning ``an 
individual, partnership, association, corporation, business trust, legal 
representative, or any organized group of persons'' (Act, section 3(a)).



Sec. 784.10  ``Enterprise.''

    The term ``enterprise'' which may, in some situations, be pertinent 
in determining coverage of this Act to employees employed by employers 
engaged in the procurement, processing, or distribution of aquatic 
products, is defined in section 3(r) of the Act, section 3(r) states:

    Enterprise means the related activities performed (either through 
unified operation or common control) by any person or persons for a 
common business purpose, and includes all such activities whether 
performed in one or more establishments or by one or more corporate or 
other organizational units including departments of an establishment 
operated through leasing arrangements, but shall not include the related 
activities performed for such enterprise by an independent contractor * 
* *.


The scope and application of this definition is discussed in part 776 of 
this chapter.



Sec. 784.11  ``Establishment.''

    As used in the Act, the term ``establishment'', which is not 
specially defined therein, refers to a ``distinct physical place of 
business'' rather than to ``an entire business or enterprise'' which may 
include several separate places of business. This is consistent with the 
meaning of the term as it is normally used in business and in 
government, is judicially settled, and has been recognized in the 
Congress in the course of enactment of amendatory legislation (Phillips 
v. Walling, 324 U.S. 490; Mitchell v. Bekins Van & Storage Co., 352 U.S. 
1027; 95 Cong. Rec. 12505, 12579, 14877; H. Rept. No. 1453, 81st Cong., 
first session, p. 25). This is the meaning of the term as used in 
sections 3(r) and 3(s) of the Act.



Sec. 784.12  ``Commerce.''

    ``Commerce'' as used in the Act includes interstate and foreign 
commerce. It is defined in section 3(b) of the Act to mean ``trade, 
commerce, transportation, transmission, or communication among the 
several States or between any State and any place outside thereof.'' 
(For the definition of ``State,'' see Sec. 784.15.) The application of 
this definition and the kinds of activities which it includes are 
discussed at length in part 776 of this chapter dealing with the general 
coverage of the Act.



Sec. 784.13  ``Production.''

    To understand the meaning of ``production'' of goods for commerce as 
used in the Act it is necessary to refer to the definition in section 
3(j) of the term ``produced.'' A detailed discussion of the application 
of the term as defined is contained in part 776 of this chapter, dealing 
with the general coverage of the Act. Section 3(j) provides that 
``produced'' as used in the Act ``means produced, manufactured, mined, 
handled, or in any other manner worked on in any State; and for the 
purposes of this Act an employee shall be deemed to have been engaged in 
the production of goods if such employee was employed in producing, 
manufacturing, mining, handling, transporting, or in any other manner 
working on such goods, or in any closely related process or occupation 
directly essential to the production thereof, in any State.'' (For the 
definition of ``State'' see Sec. 784.15.)



Sec. 784.14  ``Goods.''

    The definition in section 3(i) of the Act states that ``goods,'' as 
used in the Act, means ``goods (including ships and marine equipment), 
wares, products, commodities, merchandise, or articles or subjects of 
commerce of any character, or any part or ingredient thereof, but does 
not include goods after their delivery into the actual physical 
possession of the ultimate consumer thereof other than a producer, 
manufacturer, or processor thereof.'' Part 776 of this chapter, dealing 
with the general coverage of the Act, contains a detailed discussion of 
the application of this definition and what is included in it.

[[Page 652]]



Sec. 784.15  ``State.''

    As used in the Act, ``State'' means ``any State of the United States 
or the District of Columbia or any Territory or possession of the United 
States'' (Act, section 3(c)). The application of this definition in 
determining questions of ``coverage under the Act's definition of 
``commerce'' and ``produced'' (see Sec. Sec. 784.12, 784.13) is 
discussed in part 776 of this chapter, dealing with general coverage.



Sec. 784.16  ``Regular rate.''

    As explained in part 778 of this chapter, dealing with overtime 
compensation, employees subject to the overtime pay provisions of the 
Act must generally receive for their overtime work in any workweek as 
provided in the Act not less than one and one-half times their regular 
rates of pay. Section 7(e) of the Act defines the term ``regular rate'' 
``to include all remuneration for employment paid to, or on behalf of, 
the employee'' except certain payments which are expressly described in 
and excluded by the statutory definition. This definition, which is 
discussed at length in part 778 of this chapter, determines the regular 
rate upon which time and one-half overtime compensation must be computed 
under section 7(a) of the Act for employees within its general coverage 
who are not exempt from the overtime provisions under either of the 
fishery and seafood exemptions provided by sections 13(a)(5) and 
13(b)(4) or under some other exemption contained in the Act.

      Application of Coverage and Exemptions Provisions of the Act



Sec. 784.17  Basic coverage in general.

    Except as otherwise provided in specific exemptions, the minimum 
wage, overtime pay, and child labor standards of the Act are generally 
applicable to employees who engage in specified activities concerned 
with interstate or foreign commerce. The employment of oppressive child 
labor in or about establishments producing goods for such commerce is 
also restricted by the Act. The monetary and child labor standards of 
the Act are also generally applicable to other employees, not 
specifically exempted, who are employed in specified enterprises engaged 
in such commerce or in the production of goods for such commerce. The 
employer must observe the monetary standards with respect to all such 
employees in his employ except those who may be denied one or both of 
these benefits by virtue of some specific exemption provision of the 
Act, such as section 13(a)(5) or 13(b)(4). It should be noted that 
enterprises having employees subject to these exemptions may also have 
other employees who may be exempt under section 13(a)(1) of the Act, 
subject to conditions specified in regulations, as employees employed in 
a bona fide executive, administrative, or professional capacity, or in 
the capacity of outside salesman. The regulations governing these 
exemptions are set forth and explained in part 541 of this chapter.



Sec. 784.18  Commerce activities of employees.

    The Fair Labor Standards Act has applied since 1938 to all 
employees, not specifically exempted, who are engaged (a) in interstate 
or foreign commerce or (b) in the production of goods for such commerce, 
which is defined to include any closely related process or occupation 
directly essential to such production (29 U.S.C. 206(a), 207(a); and see 
Sec. Sec. 784.12 to 784.15 for definitions governing the scope of this 
coverage). In general, employees of businesses concerned with fisheries 
and with operations on seafood and other aquatic products are engaged in 
interstate or foreign commerce, or in the production of goods for such 
commerce, as defined in the Act, and are subject to the Act's provisions 
except as otherwise provided in sections 13(a)(5) and 13(b)(4) or other 
express exemptions. A detailed discussion of the activities in commerce 
or in the production of goods for commerce which will bring an employee 
under the Act is contained in part 776 of this chapter, dealing with 
general coverage.



Sec. 784.19  Commerce activities of enterprise in which employee is employed.

    Under amendments to the Fair Labor Standards Act employees not 
covered by reason of their personal engagement in interstate commerce 
activities, as

[[Page 653]]

explained in Sec. 784.18, are nevertheless brought within the coverage 
of the Act if they are employed in an enterprise which is defined in 
section 3(s) of the Act as an enterprise engaged in commerce or in the 
production of goods for commerce. Such employees, if not exempt from 
minimum wages and overtime pay under section 13(a)(5) or exempt from 
overtime pay under section 13(b)(4), will have to be paid in accordance 
with the monetary standards of the Act unless expressly exempt under 
some other provision. This would generally be true of employees employed 
in enterprises and by establishments engaged in the procurement, 
processing, marketing, or distribution of seafood and other aquatic 
products, where the enterprise has an annual gross sales volume of not 
less than $250,000. Enterprise coverage is more fully discussed in part 
776 of this chapter, dealing with general coverage.



Sec. 784.20  Exemptions from the Act's provisions.

    The Act provides a number of specific exemptions from the general 
requirements previously described. Some are exemptions from the overtime 
provisions only. Several are exemptions from both the minimum wage and 
the overtime requirements of the Act. Finally, there are some exemptions 
from all three--minimum wage, overtime pay, and child labor 
requirements. An examination of the terminology in which the exemptions 
from the general coverage of the Fair Labor Standards Act are stated 
discloses language patterns which reflect congressional intent. Thus, 
Congress specified in varying degree the criteria for application of 
each of the exemptions and in a number of instances differentiated as to 
whether employees are to be exempt because they are employed by a 
particular kind of employer, employed in a particular type of 
establishment, employed in a particular industry, employed in a 
particular capacity or occupation or engaged in a specified operation. 
(See 29 U.S.C. 203(d); 207 (b), (c), (i); 213 (a), (b), (c), (d). And 
see Addison v. Holly Hill, 322 U.S. 607; Mitchell v. Trade Winds, Inc., 
289 F. 2d 278; Mitchell v. Stinson, 217 F. 2d (210). In general there 
are no exemptions from the child labor requirements that apply in 
enterprises or establishments engaged in fishing or in operations on 
aquatic products (see part 570, subpart G, of this chapter). Such 
enterprises or establishments will, however, be concerned with the 
exemption from overtime pay in section 13(b)(4) of the Act for employees 
employed in specified ``on-shore'' operations (see Sec. 784.101), and 
the exemption from minimum wages and overtime pay provided by section 
13(a)(5) for employees employed in fishing, fish-farming, and other 
specified ``off-shore'' operations on aquatic products. These 
exemptions, which are subject to the general rules stated in Sec. 
784.21, are discussed at length in subpart B of this part 784.



Sec. 784.21  Guiding principles for applying coverage and exemption
provisions.

    It is clear that Congress intended the Fair Labor Standards Act to 
be broad in its scope. ``Breadth of coverage is vital to its mission'' 
(Powell v. U.S. Cartridge Co., 339 U.S. 497). An employer who claims an 
exemption under the Act has the burden of showing that it applies 
(Walling v. General Industries Co., 330 U.S. 545; Mitchell v. Kentucky 
Finance Co., 359 U.S. 290: Tobin v. Blue Channel Corp., 198 F. 2d 245, 
approved in Mitchell v. Myrtle Grove Packing Co., 350 U.S. 891; Fleming 
v. Hawkeye Pearl Button Co., 113 F. 2d 52). Conditions specified in the 
language of the Act are ``explicit prerequisites to exemption'' (Arnold 
v. Kanowsky, 361 U.S. 388). In their application, the purpose of the 
exemption as shown in its legislative history as well as its language 
should be given effect. However, ``the details with which the exemptions 
in this Act have been made preclude their enlargement by implication'' 
and ``no matter how broad the exemption, it is meant to apply only to'' 
the specified activities (Addison v. Holly Hill, 322 U.S. 607; Maneja v. 
Waialua, 349 U.S. 254). Exemptions provided in the Act ``are to be 
narrowly construed against the employer seeking to assert them'' and 
their application limited to those who

[[Page 654]]

come ``plainly and unmistakably within their terms and spirit.'' This 
construction of the exemptions is necessary to carry out the broad 
objectives for which the Act was passed (Phillips v. Walling, 324 U.S. 
490; Mitchell v. Kentucky Finance Co., supra; Arnold v. Kanowsky, supra; 
Calaf v. Gonzales, 127 F. 2d 934; Bowie v. Gonzales, 117 F. 2d 11; 
Mitchell v. Stinson, 217 F. 2d 210; Fleming v. Hawkeye Pearl Button Co., 
113 F. 2d 52).



Subpart B_Exemptions Provisions Relating to Fishing and Aquatic Products

                        The Statutory Provisions



Sec. 784.100  The section 13(a)(5) exemption.

    Section 13(a)(5) grants an exemption from both the minimum wage and 
the overtime requirements of the Act and applies to ``any employee 
employed in the catching, taking, propagating, harvesting, cultivating, 
or farming of any kind of fish, shellfish, crustacea, sponges, seaweeds, 
or other aquatic forms of animal and vegetable life, or in the first 
processing, canning, or packing of such marine products at sea as an 
incident to, or in conjunction with, such fishing operations, including 
the going to and returning from work and loading and unloading when 
performed by any such employee.''



Sec. 784.101  The section 13(b)(4) exemption.

    Section 13(b)(4) grants an exemption only from the overtime 
requirements of the Act and applies to ``any employee employed in the 
canning, processing, marketing, freezing, curing, storing, packing for 
shipment, or distributing of any kind of fish shellfish, or other 
aquatic forms of animal or vegetable life, or any byproduct thereof.''

                    Legislative History of Exemptions



Sec. 784.102  General legislative history.

    (a) As orginally enacted in 1938, the Fair Labor Standards Act 
provided an exemption from both the minimum wage requirements of section 
6 and the overtime pay requirements of section 7 which was made 
applicable to ``any employee employed in the catching, taking, 
harvesting, cultivating, or farming of any kind of fish, shellfish, 
crustacea, sponges, seaweeds or other aquatic forms of animal and 
vegetable life, including the going to and returning from work and 
including employment in the loading, unloading, or packing of such 
products for shipment or in propagating, processing, marketing, 
freezing, canning, curing, storing, or distributing the above products 
or by products thereof'' (52 Stat. 1060, sec. 13(a)(5)).
    (b) In 1949 the minimum wage was extended to employees employed in 
canning such products by deleting the word ``canning'' from the above 
exemption, adding the parenthetical phrase ``(other than canning)'' 
after the word ``processing'' therein, and providing a new exemption in 
section 13(b)(4), from overtime pay provisions only, applicable to ``any 
employee employed in the canning of any kind of fish, shellfish, or 
other aquatic forms of animal or vegetable life, or any byproduct 
thereof''. All other employees included in the original minimum wage and 
overtime exemption remained within it (63 Stat. 910).
    (c) By the Fair Labor Standards Amendments of 1961, both these 
exemptions were further revised to read as set forth in Sec. Sec. 
784.100 and 784.101. The effect of this change was to provide a means of 
equalizing the application of the Act as between canning employees and 
employees employed in other processing, marketing, and distributing of 
aquatic products on shore, to whom minimum wage protection, formerly 
provided only for canning employees, was extended by this action. The 
1961 amendments, however, left employees employed in fishing, in fish 
farming, and in related occupations concerned with procurement of 
aquatic products from nature, under the existing exemption from minimum 
wages as well as overtime pay.



Sec. 784.103  Adoption of the exemption in the original 1938 Act.

    Although in the course of consideration of the legislation in 
Congress before passage in 1938, provisions to exempt employment in 
fisheries and

[[Page 655]]

aquatic products activities took various forms, section 13(a)(5), as 
drafted by the conference committee and finally approved, followed the 
language of an amendment adopted during consideration of the bill by the 
House of Representatives on May 24, 1938, which was proposed by 
Congressman Bland of Virginia. He had earlier on the same day, offered 
an amendment which had as its objective the exemption of the ``fishery 
industry,'' broadly defined. The amendment had been defeated (83 Cong. 
Rec. 7408), as had an amendment subsequently offered by Congressman Mott 
of Oregon (to a pending amendment proposed by Congressman Coffee of 
Nebraska) which would have provided an exemption for ``industries 
engaged in producing, processing, distributing, or handling * * * 
fishery or seafood products which are seasonal or perishable'' (83 Cong. 
Rec. 7421-7423). Against this background, when Congressman Bland offered 
his amendment which ultimately became section 13(a)(5) of the Act he 
took pains to explain: ``This amendment is not the same. In the last 
amendment I was trying to define the fishery industry. I am now dealing 
with those persons who are exempt, and I call the attention of the 
Committee to the language with respect to the employment of persons in 
agriculture * * * I am only asking for the seafood and fishery industry 
that which has been done for agriculture.'' It was after this 
explanation that the amendment was adopted (83 Cong. Rec. 7443). When 
the conference committee included in the final legislation this 
provision from the House bill, it omitted from the bill another House 
provision granting an hours exemption for employees ``in any place of 
employment'' where the employer was ``engaged in the processing of or in 
canning fresh fish or fresh seafood'' and the provision of the Senate 
bill providing an hours exemption for employees ``employed in connection 
with'' the canning or other packing of fish, etc. (see Mitchell v. 
Stinson, 217 F. 2d 210; McComb v. Consolidated Fisheries, 75 F. Supp. 
798). The indication in this legislative history that the exemption in 
its final form was intended to depend upon the employment of the 
particular employee in the specified activities is in accord with the 
position of the Department of Labor and the weight of judicial 
authority.



Sec. 784.104  The 1949 amendments.

    In deleting employees employed in canning aquatic products from the 
section 13(a)(5) exemption and providing them with an exemption in like 
language from the overtime provisions only in section 13(b)(4), the 
conferees on the Fair Labor Standards Amendments of 1949 did not 
indicate any intention to change in any way the category of employees 
who would be exempt as ``employed in the canning of'' the aquatic 
products. As the Supreme Court has pointed out in a number of decisions, 
``When Congress amended the Act in 1949 it provided that pre-1949 
rulings and interpretations by the Administrator should remain in effect 
unless inconsistent with the statute as amended 63 Stat. 920'' (Mitchell 
v. Kentucky Finance Co., 359 U.S. 290). In connection with this 
exemption the conference report specifically indicates what operations 
are included in the canning process (see Sec. 784.142). In a case 
decided before the 1961 amendments to the Act, this was held to 
``indicate that Congress intended that only those employees engaged in 
operations physically essential in the canning of fish, such as cutting 
the fish, placing it in cans, labelling and packing the cans for 
shipment are in the exempt category'' (Mitchell v. Stinson, 217 F. 2d 
210).



Sec. 784.105  The 1961 amendments.

    (a) The statement of the Managers on the Part of the House in the 
conference report on the Fair Labor Standards Amendments of 1961 (H. 
Rept. No. 327, 87th Cong., first session, p. 16) refers to the fact that 
the changes made in sections 13(a)(5) and 13(b)(4) originated in the 
Senate amendment to the House bill and were not in the bill as passed by 
the House. In describing the Senate provision which was retained in the 
final legislation, the Managers stated that it ``changes the exemption 
in the act for'' the operations transferred to section 13(b)(4) from 
section 13(a)(5) ``from a minimum wage and overtime exemption to an 
overtime only exemption.'' They further stated: ``The present complete 
exemption is retained

[[Page 656]]

for employees employed in catching, propagating, taking, harvesting, 
cultivating, or farming fish and certain other marine products, or in 
the first processing, canning, or packing such marine products at sea as 
an incident to, or in conjunction with, such fishing operations, 
including the going to and returning from work and loading and unloading 
when performed by such an employee.'' In the report of the Senate 
committee on the provision included in the Senate bill (S. Rept. No. 
145, 87th Cong., first session, p. 33), the committee stated: ``The bill 
would modify the minimum wage and overtime exemption in section 13(a)(5) 
of the Act for employees engaged in fishing and in specified activities 
on aquatic products.'' In further explanation, the report states that 
the bill would amend this section ``to remove from this exemption those 
so-called on-shore activities and leave the exemption applicable to 
`offshore' activities connected with the procurement of the aquatic 
products, including first processing, canning, or packing at sea 
performed as an incident to fishing operations, as well as employment in 
loading and unloading such products for shipment when performed by any 
employee engaged in these procurement operations.'' It is further stated 
in the report that ``persons who are employed in the activities removed 
from the section 13(a)(5) exemption will have minimum wage protection 
but will continue to be exempt from the Act's overtime requirements 
under an amended section 13(b)(4). The bill will thus have the effect of 
placing fish processing and fish canning on the same basis under the 
Act. There is no logical reason for treating them differently and their 
inclusion within the Act's protection is desirable and consistent with 
its objectives.''
    (b) The language of the Managers on the Part of the House in the 
conference report and of the Senate committee in its report, as quoted 
above, is consistent with the position supported by the earlier 
legislative history and by the courts, that the exemption of an employee 
under these provisions of the Act depends on what he does. The Senate 
report speaks of the exemption ``for employees engaged in fishing and in 
specified activities'' and of the ``activities now enumerated in this 
section.'' While this language confirms the legislative intent to 
continue to provide exemptions for employees employed in specified 
activities rather than to grant exemption on an industry, employer, or 
establishment basis (see Mitchell v. Trade Winds, Inc., 289 F. 2d 278), 
the report also refers with apparent approval to certain prior judicial 
interpretations indicating that the list of activities set out in the 
exemption provisions is intended to be ``a complete catalog of the 
activities involved in the fishery industry'' and that an employee to be 
exempt, need not engage directly in the physical acts of catching, 
processing, canning, etc. of aquatic products which are included in the 
operation specifically named in the statute (McComb v. Consolidated 
Fisheries Co., 174 F. 2d 74). It was stated that an interpretation of 
section 13(a)(5) and section 13(b)(4) which would include within their 
purview ``any employee who participates in activities which are 
necessary to the conduct of the operations specifically described in the 
exemptions'' is ``consistent with the congressional purpose'' of the 
1961 amendments. (See Sen. Rep. No. 145, 87 Cong., first session, p. 33; 
Statement of Representative Roosevelt, 107 Cong. Rec. (daily ed.) p. 
6716, as corrected May 4, 1961.) From this legislative history the 
intent is apparent that the application of these exemptions under the 
Act as amended in 1961 is to be determined by the practical and 
functional relationship of the employee's work to the performance of the 
operations specifically named in section 13(a)(5) and section 13(b)(4).

               Principles Applicable to the Two Exemptions



Sec. 784.106  Relationship of employee's work to the named operations.

    It is clear from the language of section 13(a)(5) and section 
13(b)(4) of the Act, and from their legislative history as discussed in 
Sec. Sec. 784.102-784.105, that the exemptions which they provide are 
applicable only to those employees who are ``employed in'' the named 
operations. Under the Act as amended in 1961 and in accordance with the 
evident

[[Page 657]]

legislative intent (see Sec. 784.105), an employee will be considered 
to be ``employed in'' an operation named in section 13(a)(5) or 13(b)(4) 
where his work is an essential and integrated step in performing such 
named operation (see Mitchell v. Myrtle Grove Packing Co., 350 U.S. 891, 
approving Tobin v. Blue Channel Corp., 198 F. 2d 245; Mitchell v. 
Stinson, 217 F. 2d 210), or where the employee is engaged in activities 
which are functionally so related to a named operation under the 
particular facts and circumstances that they are necessary to the 
conduct of such operation and his employment is, as a practical matter, 
necessarily and directly a part of carrying on the operation for which 
exemption was intended (Mitchell v. Trade Winds, Inc., 289 F. 2d 278; 
see also Waller v. Humphreys, 133 F. 2d 193 and McComb v. Consolidated 
Fisheries Co., 174 F. 2d 74). Under these principles, generally an 
employee performing functions without which the named operations could 
not go on is, as a practical matter, ``employed in'' such operations. It 
is also possible for an employee to come within the exemption provided 
by section 13(a)(5) or section 13(b)(4) even though he does not directly 
participate in the physical acts which are performed on the enumerated 
marine products in carrying on the operations which are named in that 
section of the Act. However, it is not enough to establish the 
applicability of such an exemption that an employee is hired by an 
employer who is engaged in one or more of the named operations or that 
the employee is employed by an establishment or in an industry in which 
operations enumerated in section 13(a)(5) or section 13(b)(4) are 
performed. The relationship between what he does and the performance of 
the named operations must be examined to determine whether an 
application of the above-stated principles to all the facts and 
circumstances will justify the conclusion that he is ``employed in'' 
such operations within the intendment of the exemption provision.



Sec. 784.107  Relationship of employee's work to operations on 
the specified aquatic products.

    It is also necessary to the application of the exemptions that the 
operation of which the employee's work is a part be performed on the 
marine products named in the Act. Thus the operations described in 
section 13(a)(5) must be performed with respect to ``any kind of fish, 
shellfish, crustacea, sponges, seaweeds, or other aquatic forms of 
animal and vegetable life.'' The operations enumerated in section 
13(b)(4) must be performed with respect to ``any kind of fish, 
shellfish, or other aquatic forms of animal or vegetable life, or any 
byproduct thereof''. Work performed on products which do not fall within 
these descriptions is not within the exemptions (Fleming v. Hawkeye 
Pearl Button Co., 113 F. 2d 52; Mitchell v. Trade Winds, Inc., 289 F. 2d 
278; Walling v. Haden, 153 F. 2d 196).



Sec. 784.108  Operations not included in named operations on forms 
of aquatic ``life.''

    Since the subject matter of the exemptions is concerned with 
``aquatic forms of animal and vegetable life,'' the courts have held 
that the manufacture of buttons from clam shells or the dredging of 
shells to be made into lime and cement are not exempt operations because 
the shells are not living things (Fleming v. Hawkeye Pearl Button Co., 
113 F. 2d 52; Walling v. Haden, 153 F. 2d 196, certiorari denied 328 
U.S. 866). Similarly, the production of such items as crushed shell and 
grit, shell lime, pearl buttons, knife handles, novelties, liquid glue, 
isinglass, pearl essence, and fortified or refined fish oil is not 
within these exemptions.



Sec. 784.109  Manufacture of supplies for named operations is not exempt.

    Employment in the manufacture of supplies for the named operations 
is not employment in the named operations on aquatic forms of life. 
Thus, the exemption is not applicable to the manufacture of boxes, 
barrels, or ice by a seafood processor for packing or shipping its 
seafood products or for use of the ice in its fishing vessels. These 
operations, when performed by an independent manufacturer, would 
likewise not be exempt (Dize v. Maddix, 144 F. 284 (C.A. 4), affirmed 
324 U.S. 667, and approved on this point in Farmers' Reservoir Co. v. 
McComb, 337 U.S. 755).

[[Page 658]]



Sec. 784.110  Performing operations both on nonaquatic products and 
named aquatic products.

    By their terms, sections 13(a)(5) and 13(b)(4) provide no exemption 
with respect to operations performed on any products other than the 
aquatic products named in these subsections (see Sec. 784.107). 
Accordingly, neither of the exemptions is applicable to the making of 
any commodities from ingredients only part of which consist of such 
aquatic products, if a substantial amount of other products is contained 
in the commodity so produced (compare Walling v. Bridgeman-Russell Co., 
6 Labor Cases 61, 422, 2 WH Cases 785 (D. Minn.) and Miller v. 
Litchfield Creamery Co., 11 Labor Cases 63, 274, 5 WH Cases 1039 (N.D. 
Ind.), with Mitchell v. Trade Winds, Inc., 289 F. 2d 278). Thus, the 
first processing, canning, or processing of codfish cakes, clam chowder, 
dog food, crab cakes, or livestock food containing aquatic products is 
often not exempt within the meaning of the relevant exemptions.



Sec. 784.111  Operations on named products with substantial amounts of
other ingredients are not exempt.

    To exempt employees employed in first processing, canning, or 
processing products composed of the named commodities and a substantial 
amount of ingredients not named in the exemptions would be contrary to 
the language and purposes of such exemptions which specifically 
enumerate the commodities on which exempt operations were intended to be 
performed. Consequently, in such situations all operations performed on 
the mixed products at and from the time of the addition of the foreign 
ingredients, including those activities which are an integral part of 
first processing, canning, or processing are nonexempt activities. 
However, activities performed in connection with such operations on the 
named aquatic products prior to the addition of the foreign ingredients 
are deemed exempt operations under the applicable exemption. Where the 
commodity produced from named aquatic products contains an insubstantial 
amount of products not named in the exemption, the operations will be 
considered as performed on the aquatic products and handling and 
preparation of the foreign ingredients for use in the exempt operations 
will also be considered as exempt activities.



Sec. 784.112  Substantial amounts of nonaquatic products; enforcement
policy.

    As an enforcement policy in applying the principles stated in 
Sec. Sec. 784.110 and 784.111, if more than 20 percent of a commodity 
consists of products other than aquatic products named in section 
13(a)(5) or 13(b)(4), the commodity will be deemed to contain a 
substantial amount of such nonaquatic products.



Sec. 784.113  Work related to named operations performed in 
off- or dead-season.

    Generally, during the dead or inactive season when operations named 
in section 13(a)(5) or 13(b)(4) are not being performed on the specified 
aquatic forms of life, employees performing work relating to the plant 
or equipment which is used in such operations during the active seasons 
are not exempt. Illustrative of such employees are those who repair, 
overhaul, or recondition fishing equipment or processing or canning 
equipment and machinery during the off-season periods when fishing, 
processing, or canning is not going on. An exemption provided for 
employees employed ``in'' specified operations is plainly not intended 
to apply to employees employed in other activities during periods when 
the specified operations are not being carried on, where their work is 
functionally remote from the actual conduct of the operations for which 
exemption is provided and is unaffected by the natural factors which the 
Congress relied on as reason for exemption. The courts have recognized 
these principles. See Maneja v. Waialua, 349 U.S. 254; Mitchell v. 
Stinson, 217 F. 2d 210; Maisonet v. Central Coloso, 6 Labor Cases (CCH) 
par. 61,337, 2 WH Cases 753 (D. P.R.); Abram v. San Joaquin Cotton Oil 
Co., 49 F. Supp. 393 (S.D. Calif.), and Heaburg v. Independent Oil Mill 
Inc., 46 F. Supp. 751 (W.D. Tenn.). On the other hand, there may be 
situations where employees performing certain preseason or postseason 
activities immediately

[[Page 659]]

prior or subsequent to carrying on operations named in sections 13(a)(5) 
or section 13(b)(4) are properly to be considered as employed ``in'' the 
named operations because their work is so close in point of time and 
function to the conduct of the named operations that the employment is, 
as a practical matter, necessarily and directly a part of carrying on 
the operation for which exemption was intended. Depending on the facts 
and circumstances, this may be true, for example, of employees who 
perform such work as placing boats and other equipment in condition for 
use at the beginning of the fishing season, and taking the necessary 
protective measures with respect to such equipment which are required in 
connection with termination of the named operations at the end of the 
season. Where such work is integrated with and is required for the 
actual conduct of the named operations on the specified aquatic forms of 
life, and is necessarily performed immediately before or immediately 
after such named operations, the employees performing it may be 
considered as employed in the named operations, so as to come within the 
exemption. It should be kept in mind that the relationship between the 
work of an employee and the named operations which is required for 
exemption is not necessarily identical with the relationship between 
such work and the production of goods for commerce which is sufficient 
to establish its general coverage under the Act. Thus, repair, overhaul, 
and reconditioning work during the inactive season which does not come 
within the exemption is nevertheless closely related and directly 
essential to the production of goods for commerce which takes place 
during the active season and, therefore, is subject to the provisions of 
the Act (Farmers' Reservoir Co. v. McComb, 337 U.S. 755; Mitchell v. 
Stinson, 217 F. 2d 210; Bowie v. Gonzalez, 117 F. 2d 11; Weaver v. 
Pittsburgh Steamship Co., 153 F. 2d 597, cert., den., 328 U.S. 858).



Sec. 784.114  Application of exemptions on a workweek basis.

    The general rule that the unit of time to be used in determining the 
application of the exemption to an employee is the workweek (see 
Overnight Motor Transportation Co. v. Missel, 316 U.S. 572; Mitchell v. 
Stinson, 217 F. 2d 210; Mitchell v. Hunt. 263 F. 2d 913; Puerto Rico 
Tobacco Marketing Co-op. Ass'n. v. McComb, 181 F. 2d 697). Thus, the 
workweek is the unit of time to be taken as the standard in determining 
the applicability to an employee of section 13(a)(5) or section 13(b)(4) 
(Mitchell v. Stinson, supra). An employee's workweek is a fixed and 
regularly recurring period of 168 hours--seven consecutive 24-hour 
periods. It may begin at an hour of any day set by the employer and need 
not coincide with the calendar week. Once the workweek has been set it 
commences each succeeding week on the same day and at the same hour. 
Changing the workweek for the purpose of escaping the requirements of 
the Act is not permitted. If in any workweek an employee does only 
exempt work he is exempt from the wage and hours provisions of the Act 
during that workweek, irrespective of the nature of his work in any 
other workweek or workweeks. An employee may thus be exempt in one 
workweek and not the next (see Mitchell v. Stinson, supra). But the 
burden of effecting segregation between exempt and nonexempt work as 
between particular workweeks is on the employer (see Tobin v. Blue 
Channel Corp., 198 F. 2d 245).



Sec. 784.115  Exempt and noncovered work performed during the workweek.

    The wage and hours requirements of the Act do not apply to any 
employees during any workweek in which a portion of his activities falls 
within section 13(a)(5) if no part of the remainder of his activities is 
covered by the Act. Similarly, the overtime requirements are 
inapplicable in any workweek in which a portion of an employee's 
activities falls within section 13(b)(4) if no part of the remainder of 
his activities is covered by the Act. Covered activities for purposes of 
the above statements mean engagement in commerce, or in the production 
of goods for commerce, or in an occupation closely related or directly 
essential to such production or employment in an enterprise engaged in 
commerce or in the

[[Page 660]]

production of goods for commerce, as explained in Sec. Sec. 784.17 
through 784.19.



Sec. 784.116  Exempt and nonexempt work in the same workweek.

    Where an employee, during any workweek, performs work that is exempt 
under section 13(a)(5) or 13(b)(4), and also performs nonexempt work, 
some part of which is covered by the Act, the exemption will be deemed 
inapplicable unless the time spent in performing nonexempt work during 
that week is not substantial in amount. For enforcement purposes, 
nonexempt work will be considered substantial in amount if more than 20 
percent of the time worked by the employee in a given workweek is 
devoted to such work (see Mitchell v. Stinson, 217 F. 2d 210). Where 
exempt and nonexempt work is performed during a workweek by an employee 
and is not or cannot be segregated so as to permit separate measurement 
of the time spent in each, the employee will not be exempt (see Tobin v. 
Blue Channel Corp., 198 F. 2d 245; Walling v. Public Quick Freezing and 
Cold Storage Co., 62 F. Supp. 924).



Sec. 784.117  Combinations of exempt work.

    The combination of exempt work under sections 13(a)(5) and 13(b)(4), 
or one of these sections with exempt work under another section of the 
Act, is permitted. Where a part of an employee's covered work in a 
workweek is exempt under section 13(a)(5) and the remainder is exempt 
under another section which grants an exemption from the minimum wage 
and overtime provisions of the Act, the wage and hours requirements are 
not applicable. If the scope of the exemption is not the same, however, 
the exemption applicable to the employee is that provided by whichever 
exemption provision is more limited in scope unless, of course, the time 
spent in performing work which is nonexempt under the broader exemption 
is not substantial. For example, an employee may devote part of his 
workweek to work within section 13(b)(4) and the remainder to work 
exempt from both the minimum wage and overtime requirements under 
another section of the Act. In such a case he must receive the minimum 
wage but is not required to receive time and one-half for his overtime 
work during that week (C.F. Mitchell v. Myrtle Grove Packing Co., 350 
U.S. 891; Tobin v. Blue Channel Corp., 198 F. 2d 245). Each activity is 
tested separately under the applicable exemption as though it were the 
sole activity of the employee for the whole workweek in question. Unless 
the employee meets all the requirements of each exemption a combination 
exemption would not be available.

      General Character and Scope of the Section 13(a)(5) Exemption



Sec. 784.118  The exemption is intended for work affected by natural factors.

    As indicated by the legislative history, the purpose of the section 
13(a)(5) exemption is to exempt from the minimum wage and overtime 
provisions of the Act employment in those activities in the fishing 
industry that are controlled or materially affected by natural factors 
or elements, such as the vicissitudes of the weather, the changeable 
conditions of the water, the run of the catch, and the perishability of 
the products obtained (83 Cong. Rec. 7408, 7443; S. Rep. No. 145, p. 33 
on H.R. 3935, 87th Cong., first session; Fleming v. Hawkeye Pearl Button 
Co., 113 F. 2d 52; Walling v. Haden, 153 F. 2d 196, certiorari denied 
328 U.S. 866).



Sec. 784.119  Effect of natural factors on named operations.

    The various activities enumerated in section 13(a)(5)--the catching, 
taking, propagating, harvesting, cultivating, or farming of aquatic 
forms of animal or vegetable life as well as ``the going to and 
returning from work'' are materially controlled and affected by the 
natural elements. Similarly, the activities of ``first processing, 
canning, or packing of such marine products at sea as an incident to, or 
in conjunction with, such fishing operations'' are subject to the 
natural factors mentioned above. The ``loading and unloading'' of such 
aquatic products when performed at sea are also subject to the natural 
forces.

[[Page 661]]



Sec. 784.120  Application of exemption to ``offshore'' activities 
in general.

    The expression ``offshore activities'' is used to describe the 
category of named operations pertaining to the acquisition from nature 
of aquatic forms of animal and vegetable life. As originally enacted in 
1938, section 13(a)(5) exempted not only employees employed in such 
``offshore'' or ``trip'' activities but also employees employed in 
related activities on shore which were similarly affected by the natural 
factors previously discussed (see Sec. 784.103, and Fleming v. Hawkeye 
Pearl Button Co., 113 F. 2d 52). However, the intent of the 1961 
amendments to the Act was to remove from the exemption the so-called 
onshore activities and ``leave the exemption applicable to `offshore' 
activities connected with the procurement of the aquatic products'' (S. 
Rep. 145, 87th Cong., first session, p. 33). Despite its comprehensive 
reach (see Sec. Sec. 784.105 and 784.106), the exemption, like the 
similar exemption is the Act for agriculture, is ``meant to apply only'' 
to the activities named in the statute (see Maneja v. Waialua, 349 U.S. 
254; Farmers Reservoir Co. v. McComb, 337 U.S. 755).



Sec. 784.121  Exempt fisheries operations.

    Employees engaged in the named operations, such at ``catching'' or 
``taking,'' are clearly exempt. As indicated in Sec. 784.106, employees 
engaged in activities that are ``directly and necessarily a part of'' an 
enumerated operation are also exempt (Mitchell v. Trade Winds, Inc., 289 
F. 2d 278). The ``catching, taking, propagating, harvesting, 
cultivating, or farming'' of the various forms of aquatic life includes 
not only the actual performance of the activities, but also the usual 
duties inherent in the occupations of those who perform the activities. 
Thus, the fisherman who is engaged in ``catching'' and ``taking'' must 
see to it that his lines, nets, seines, traps, and other equipment are 
not fouled and are in working order. He may also have to mend or replace 
his lines or nets or repair or construct his traps. Such activities are 
an integral part of the operations of ``catching'' and ``taking'' of an 
aquatic product.



Sec. 784.122  Operations performed as an integrated part of fishing.

    Certain other activities performed on a fishing vessel in connection 
with named operations are, functionally and as a practical matter, 
directly and necessarily a part of such operations. For example, 
maintenance work performed by members of the fishing crew during the 
course of the trip on the fishing boat would necessarily be a part of 
the fishing operation, since the boat itself is as much a fishing 
instrument as the fishing rods or nets. Similarly, work required on the 
vessel to keep in good operating condition any equipment used for 
processing, canning, or packing the named aquatic products at sea is so 
necessary to the conduct of such operations that it must be considered a 
part of them and exempt.



Sec. 784.123  Operations performed on fishing equipment.

    On the principle stated in Sec. 784.122 the replacement, repair, 
mending, or construction of the fisherman's equipment performed at the 
place of the fishing operation would be exempt. Such activities 
performed in contemplation of the trip are also within the exemption if 
the work is so closely related both in point of time and function to the 
acquisition of the aquatic life that it is really a part of the fishing 
operation or of ``going to * * * work.'' For example, under appropriate 
facts, the repair of the nets, or of the vessel, or the building of fish 
trap frames on the shore immediately prior to the opening of the fishing 
season would be within the exemption. Activities at the termination of a 
fishing trip which are similarly related in time and function to the 
actual conduct of fishing operations or ``returning from work'' may be 
within the exemption on like principles. Similarly, the fact that the 
exemption is intended generally for ``offshore'' activities does not 
mean that it may not apply to employment in other activities performed 
on shore which are so integrated with the conduct of actual fishing 
operations and functionally so necessary thereto that the employment is, 
in practical effect, directly and necessarily a part of the fishing 
operations for which the exemption is intended. In such circumstances 
the exemption will

[[Page 662]]

apply, for example, to an employee employed by a vessel owner to watch 
the fishing vessel, its equipment, and the catch when it comes to port, 
checks the mooring lines, operate bilge pumps and heating and cooling 
systems on the vessel, and assist in the loading and unloading of the 
fishing equipment and the catch. Work of the kinds referred to may be 
exempt when performed by the fisherman himself or necessary to the 
conduct of the fishing organization. However, the exemption would not 
apply to employees of a manufacturer of supplies or to employees of 
independent shops which repair boats and equipment. (Dize v. Maddix, 144 
F. 2d 584, affirmed 324 U.S. 697.)



Sec. 784.124  Going to and returning from work.

    The phrase ``including the going to and returning from work'' 
relates to the preceding named operations which pertain to the procuring 
and appropriation of seafood and other forms of aquatic life from 
nature. The expression obviously includes the time spent by fishermen 
and others who go to and from the fishing grounds or other locations 
where the aquatic life is reduced to possession. If going to work 
requires fishermen to prepare and carry the equipment required for the 
fishing operation, this would be included within the exemption. In 
performing such travel the fishermen may be required to row, guide or 
sail the boat or otherwise assist in its operation. Similarly, if an 
employee were digging for clams or other shellfish or gathering seaweed 
on the sand or rocks it might be necessary to drive a truck or other 
vehicle to reach his destination. Such activities are exempt within the 
meaning of this language. However, the phrase does not apply to 
employees who are not employed in the activities involved in the 
acquisition of aquatic animal or vegetable life, such as those going to 
or returning from work at processing or refrigerator plants or wholesale 
establishments.



Sec. 784.125  Loading and unloading.

    The term ``loading and unloading'' applies to activities connected 
with the removal of aquatic products from the fishing vessel and their 
initial movement to markets or processing plants. The term, however, is 
not without limitation. The statute by its clear language makes these 
activities exempt only when performed by any employee employed in the 
procurement activities enumerated in section 13(a)(5). This limitation 
is confirmed by the legislative history of the 1961 amendments which 
effectuated this change in the application of this term (S. Rep. 145, 
87th Cong., first session, p. 33). Consequently, members of the fishing 
crew engaged in loading and unloading the catch of the vessel to another 
vessel at sea, or at the dockside would be engaging in exempt activities 
within the meaning of section 13(a)(5). On the other hand, dock workers 
performing the same kind of tasks would not be within the exemption.



Sec. 784.126  Operation of the fishing vessel.

    In extending the minimum wage to seamen on American vessels by 
limiting the exemption from minimum wages and overtime provided by 
section 13(a)(12) of the Act to ``any employee employed as a seaman on a 
vessel other than an American vessel'', and at the same time extending 
the minimum wage to ``onshore'' but not ``offshore'' operations 
concerned with aquatic products, the Congress, in the 1961 amendments to 
the Act, did not indicate any intent to remove the crews of fishing 
vessels engaged in operations named in section 13(a)(5) from the 
exemption provided by that section. The exemption provided by section 
13(a)(12), above noted, and the general exemption in section 13(b)(6) 
from overtime for ``any employee employed as a seaman'' (whether or not 
on an American vessel) apply, in general to employees, working aboard 
vessels, whose services are rendered primarily as an aid to navigation. 
It appears, however, that it is not the custom or practice in the 
fishing industry for a fishing vessel to have two crews; namely, a 
fishing crew whose duty it is primarily to fish and to perform other 
duties incidental thereto and a navigational crew whose duty it is 
primarily to operate the boat. Where, as is the typical situation, there 
is but one crew which performs all these functions, the section 13(a)(5)

[[Page 663]]

exemptions would apply to its members. For a further explanation of the 
seaman's exemption, see part 783 of this chapter.



Sec. 784.127  Office and clerical employees under section 13(a)(5).

    Office and clerical employees, such as bookkeepers, stenographers, 
typists, and others who perform general office work of a firm engaged in 
operating fishing boats are not for that reason within the section 
13(a)(5) exemption. Under the principles stated in Sec. 784.106, their 
general office activities are not a part of any of the named operations 
even when they are selling, taking, and putting up orders, on recording 
sales, taking cash or making telephone connections for customer or 
dealer calls. Employment in the specific activities enumerated in the 
preceding sentence would ordinarily, however, be exempt under section 
13(b)(4) since such activities constitute ``marketing'' or 
``distributing'' within the meaning of that exemption (see Sec. 
784.153). In certain circumstances, office or clerical employees may 
come within the section 13(a)(5) exemption. If, for example, it is 
necessary to the conduct of the fishing operations that such employees 
accompany a fishing expedition to the fishing grounds to perform certain 
work required there in connection with the catch, their employment under 
such circumstances may, as a practical matter, be directly and 
necessarily a part of the operations for which exemption was intended, 
in which event the exemption would apply to them.

 First Processing, Canning, or Packing of Marine Products Under Section 
                                13(a)(5)



Sec. 784.128  Requirements for exemption of first processing, etc., at sea.

    A complete exemption from minimum and overtime wages is provided by 
section 13(a)(5) for employees employed in the operations of first 
processing, canning, or packing of marine products at sea as an incident 
to, or in conjunction with ``such'' fishing operations--that is, the 
fishing operations of the fishing vessel (S. Rep. 145, 87th Cong., first 
session, p. 33). To qualify under this part of the exemption, there must 
be a showing that: (a) The work of the employees is such that they are, 
within the meaning of the Act, employed in one or more of the named 
operations of first processing, canning or packing, (b) such operations 
are performed as an incident to, or in conjunction with, fishing 
operations of the vessel, (c) such operations are performed at sea, and 
(d) such operations are performed on the marine product specified in the 
statute.



Sec. 784.129  ``Marine products''.

    The marine products which form the basis of the exemption are the 
``fish, shellfish, crustaceas, sponges, seaweeds, or other aquatic forms 
of animal and vegetable life'' mentioned in section 13(a)(5). The 
exemption contemplates aquatic products currently or recently acquired 
and in the form obtained from the sea, since the language of the 
exemption clearly indicates the named operations of first processing, 
canning, or packing must be performed ``at sea'' and ``as an incident to 
or in conjunction with'', fishing operations. Also, such ``marine 
products'' are limited to aquatic forms of ``life.''



Sec. 784.130  ``At sea.''

    The ``at sea'' requirement must be construed in context and in such 
manner as to accomplish the statutory objective. The section 13(a)(5) 
exemption is for the ``catching, taking, propagating, harvesting,'' 
etc., of ``aquatic forms of animal and vegetable life.'' There is no 
limitation as to where these activities must take place other than, as 
the legislative history indicates, that they are ``offshore'' 
activities. Since the purpose of the 1961 amendments is to exempt the 
``first processing, canning, or packing such marine products at sea as 
an incident to, or in conjunction with, such fishing operations,'' it 
would frustrate this objective to give the phrase ``at sea'' a technical 
or special meaning. For example, to define ``at sea'' to include only 
bodies of water subject to the ebb and flow of the tides or to saline 
waters would exclude the Great Lakes which obviously would not comport 
with the legislative intent. On the other hand, one performing the named 
activities of

[[Page 664]]

first processing, canning, or packing within the limits of a port or 
harbor is not performing them ``at sea'' within the meaning of the 
legislative intent although the situs of performance is subject to 
tidewaters. In any event it would not appear necessary to draw a precise 
line as to what constitutes ``at sea'' operations, for, as a practical 
matter, such first processing, canning, or packing operations are those 
closely connected with the physical catching of the fish and are 
performed on the fishing vessel shortly or immediately following the 
``catching'' and ``taking'' of the fish.



Sec. 784.131  ``As an incident to, or in conjunction with'', fishing
operations.

    The statutory language makes clear that the ``first processing, 
canning, or packing,'' unlike the other named operations of ``catching, 
taking, propagating, harvesting, cultivating, or farming'' are not 
exempt operations in and of themselves. They are exempt only when 
performed ``as an incident to, or in conjunction with such fishing 
operations'' (see Farmers Reservoir Co. v. McComb, 337 U.S. 755). It is 
apparent from the context that the language ``such fishing operations'' 
refers to the principal named operations of ``catching, taking, 
propagating, harvesting, cultivating, or farming'' as performed by the 
fishermen or fishing vessel (compare Bowie v. Gonzales, 117 F. 2d 11). 
Therefore to be ``an incident to, or in conjunction with such fishing 
operations'', the first processing, canning, or packing must take place 
upon the vessel that is engaged in the physical catching, taking, etc., 
of the fish. This is made abundantly clear by the legislative history. 
In Senate Report No. 145, 87th Congress, first session, at page 33, it 
pointed out:

    For the same reasons, there was included in section 13(a)(5) as 
amended by the bill an exemption for the ``first processing, canning, or 
packing'' of marine products ``at sea as an incident to, or in 
conjunction with such fishing operations.'' The purpose of this 
additional provision is to make certain that the Act will be uniformly 
applicable to all employees on the fishing vessel including those 
employees on the vessel who may be engaged in these activities at sea as 
an incident to the fishing operations conducted by the vessel.


In accordance with this purpose of the section, the exemption is 
available to an employee on a fishing vessel who is engaged in first 
processing fish caught by fishing employees of that same fishing vessel; 
it would not be available to such an employee if some or all of the fish 
being first processed were obtained from other fishing vessels, 
regardless of the relationship, financial or otherwise, between such 
vessels (cf. Mitchell v. Hunt, 263 F. 2d 913; Farmers Reservoir Co. v. 
McComb, 337 U.S. 755).



Sec. 784.132  The exempt operations.

    The final requirement is that the employee on the fishing vessel 
must be employed in ``the first processing, canning or packing'' of the 
marine products. The meaning and scope of these operations when 
performed at sea as an incident to the fishing operations of the vessel 
are set forth in Sec. Sec. 784.133 to 784.135. To be ``employed in'' 
such operations the employee must, as previously explained (see 
Sec. Sec. 784.106 and 784.121), be engaged in work which is clearly 
part of the named activity.



Sec. 784.133  ``First processing.''

    Processing connotes a change from the natural state of the marine 
product and first processing would constitute the first operation or 
series of continuous operations that effectuate this change. It appears 
that the first processing operations ordinarily performed on the fishing 
vessels at sea consist for the most part of eviscerating, removal of the 
gills, beheading certain fish that have large heads, and the removal of 
the scallop from its shell. Icing or freezing operations, which 
ordinarily immediately follow these operations, would also constitute an 
integral part of the first processing operations, as would such 
activities as filleting, cutting, scaling, or salting when performed as 
part of a continuous series of operations. Employment aboard the fishing 
vessel in freezing operations thus performed is within the exemption if 
the first processing of which it is a part otherwise meets the 
conditions of section 13(a)(5), notwithstanding the transfer by the 1961 
amendments of ``freezing'', as such, from this exemption to the 
exemption from overtime only provided by section 13(b)(4). Such

[[Page 665]]

preliminary operations as cleaning, washing, and grading of the marine 
products, though not exempt as first processing since they effect no 
change, would be exempt as part of first processing when done in 
preparation for the first processing operation described above including 
freezing. The same would be true with respect to the removal of the 
waste products resulting from the above described operations on board 
the fishing vessel.



Sec. 784.134  ``Canning.''

    The term ``canning'' was defined in the legislative history of the 
1949 amendments (House (Conference) Report No. 1453, 81st Cong., first 
session; 95 Cong. Rec. 14878, 14932-33). These amendments made the 
``canning'' of marine products or byproducts exempt from overtime only 
under a separate exemption (section 13(b)(4), and subject to the minimum 
wage requirements of the Act (see Sec. 784.136 et seq.). The same 
meaning will be accorded to ``canning'' in section 13(a)(5) as in 
section 13(b)(4) (see Sec. 784.142 et seq.) subject, of course, to the 
limitations necessarily imposed by the context in which it is found. In 
other words, although certain operations as described in Sec. 784.142 
et seq. qualify as canning, they are, nevertheless, not exempt under 
section 13(a)(5) unless they are performed on marine products by 
employees of the fishing vessel at sea as an incident to, or in 
conjunction with the fishing operations of the vessel.



Sec. 784.135  ``Packing.''

    The packing of the various named marine products at sea as an 
incident to, or in conjunction with, the fishing operations of the 
vessel is an exempt operation. The term ``packing'' refers to the 
placing of the named product in containers, such as boxes, crates, bags, 
and barrels. Activities such as washing, grading, sizing, and placing 
layers of crushed ice in the containers are deemed a part of packing 
when performed as an integral part of the packing operation. The packing 
operation may be a simple or complete and complex operation depending 
upon the nature of the marine product, the length of time out and the 
facilities aboard the vessel. Where the fishing trip is of short 
duration, the packing operation may amount to no more than the simple 
operation, of packing the product in chipped or crushed ice in wooden 
boxes, as in the case of shrimp, or placing the product in wooden boxes 
and covering with seaweed as in the case of lobsters. Where the trips 
are of long duration, as for several weeks or more, packing the 
operations on fishing vessels with the proper equipment sometimes are 
integrated with first processing operations so that together these 
operations amount to readying the product in a marketable form. For 
example, in the case of shrimp, the combined operations may consist of 
the following series of operations--washing, grading, sizing, placing 5-
pound boxes already labeled for direct marketing, placing in trays with 
other boxes, loading into a quick freezer locker, removing after 
freezing, emptying the box, glazing the contents with a spray of fresh 
water, replacing the box, putting them in 50-pound master cartons and 
finally stowing in refrigerated locker.

      General Character and Scope of the Section 13(a)(4) Exemption



Sec. 784.136  ``Shore'' activities exempted under section 13(b)(4).

    Section 13(b)(4) provides an exemption from the overtime but not 
from the minimum wage provisions of the Act for ``any employee employed 
in the canning, processing, marketing, freezing, curing, storing, 
packing for shipment, or distributing'' aquatic forms of animal and 
vegetable life or any byproducts thereof. Orginally, all these 
operations were contained in the exemption provided by section 13(a)(5) 
but, as a result of amendments, first ``canning'', in 1949, and then the 
other operations in 1961, were transferred to section 13(b)(4). (See the 
discussion in Sec. Sec. 784.102 to 784.105.) These activities are 
``shore'' activities and in general have to do with the movement of the 
perishable aquatic products to a nonperishable state or to points of 
consumption (S. Rept. 145, 87th Cong., first session, p. 33).

[[Page 666]]



Sec. 784.137  Relationship of exemption to exemption for ``offshore'' 
activities.

    The reasons advanced for exemption of employment in ``shore'' 
operations, now listed in section 13(b)(4), at the time of the adoption 
of the original exemption in 1938, had to do with the difficulty of 
regulating hours of work of those whose operations, like those of 
fishermen, were stated to be governed by the time, size, availability, 
and perishability of the catch, all of which were considered to be 
affected by natural factors that the employer could not control (see 83 
Cong. Rec. 7408, 7422, 7443). The intended limited scope of the 
exemption in this respect was not changed by transfer of the ``shore'' 
activities from section 13(a)(5) to section 13(b)(4). The exemption of 
employment in these ``shore'' operations may be considered, therefore, 
as intended to implement and supplement the exemption for employment in 
``offshore'' operations provided by section 13(a)(5), by exempting from 
the hours provisions of the Act employees employed in those ``shore'' 
activities which are necessarily somewhat affected by the same natural 
factors. These ``shore'' activities are affected primarily, however, by 
fluctuations in the supply of the product or by the necessity for 
consumption or preservation of such products before spoilage occurs (see 
Fleming v. Hawkeye Pearl Button Co., 113 F. 2d 52; cf. McComb v. 
Consolidated Fisheries, 174 F. 2d 74).



Sec. 784.138  Perishable state of the aquatic product as affecting 
exemption.

    (a) Activities performed after conversion of an aquatic product to a 
nonperishable state cannot form the basis for application of the section 
13(b)(4) exemption unless the subsequent operation is so integrated with 
the performance of exempt operations on the aquatic forms of animal and 
vegetable life mentioned in the section that functionally and as a 
practical matter it must be considered a part of the operations for 
which exemption was intended. The exemption is, consequently, not 
available for the handling or shipping of nonperishable products by an 
employer except where done as a part of named operations commenced on 
the product when it was in a perishable state. Thus, employees of 
dealers in or distributors of such nonperishable products as fish oil 
and fish meal, or canned seafood, are not within the exemption. 
Similarly, there is no basis for application of the exemption to 
employees employed in further processing of or manufacturing operations 
on products previously rendered nonperishable, such as refining fish oil 
or handling fish meal in connection with the manufacture of feeds. 
Further specific examples of application of the foregoing principle are 
given in the subsequent discussion of particular operations named in 
section 13(b)(4).
    (b) In applying the principle stated in paragraph (a) of this 
section, the Department has not asserted that the exemption is 
inapplicable to the performance of the operations described in section 
13(b)(4) on frozen, smoked, salted, or cured fish. The Department will 
continue to follow this policy until further clarification from the 
courts.



Sec. 784.139  Scope of exempt operations in general.

    Exemption under section 13(b)(4), like exemption under section 
13(a)(5), depends upon the employment in the actual activities named in 
the section, and an employee performing a function which is not 
necessary to the actual conduct of a named activity, as explained in 
Sec. 784.106, is not within the exemption. It is also essential to 
exemption that the operations named in section 13(b)(4) be performed on 
the forms of aquatic life specified in the section and not on other 
commodities a substantial part of which consists of materials or 
products other than the named aquatic products. Application of these 
principles has been considered generally in the earlier discussion, and 
further applications will be noted in the following sections and in the 
subsequent discussion of particular operations mentioned in the section 
13(b)(4) exemption.



Sec. 784.140  Fabrication and handling of supplies for use in named 
operations.

    (a) As noted in Sec. 784.109, the exemption for employees employed 
``in'' the named operations does not extend to

[[Page 667]]

an employee by reason of the fact that he engages in fabricating 
supplies for the named operations. Employment in connection with the 
furnishing of supplies for the processing or canning operations named in 
section 13(b)(4) is not exempt as employment ``in'' such named 
operations unless the functional relationship of the work to the actual 
conduct of the named operations is such that, as a practical matter, the 
employment is directly and necessarily a part of the operations for 
which exemption is intended. Employees who meet the daily needs of the 
canning or processing operations by delivering from stock, handling, and 
working on supplies such as salt, condiments, cleaning supplies, 
containers, etc., which must be provided as needed if the named 
operations are to continue, are within the exemption because such work 
is, in practical effect, a part of the operations for which exemption is 
intended. On the other hand, the receiving, unloading, and storing of 
such supplies during seasons when the named operations are not being 
carried on for subsequent use in the operations expected to be performed 
during the active season, are ordinarily too remote from the actual 
conduct of the named operations to come within the exemption (see Sec. 
784.113), and are not affected by the natural factors (Sec. 784.137) 
which were considered by the Congress to constitute a fundamental reason 
for providing the exemption. Whether the receiving, unloading, and 
storing of supplies during periods when the named operations are being 
carried on are functionally so related to the actual conduct of the 
operations as to be, in practical effect, a part of the named operations 
and within the exemption, will depend on all the facts and circumstances 
of the particular situation and the manner in which the named operations 
are carried on. Normally where such activities are directed to building 
up stock for use at a relatively remote time and there is no direct 
integration with the actual conduct of the named operations, the 
exemption will not apply.
    (b) It may be that employees are engaged in the same workweek in 
performing exempt and nonexempt work. For example, a shop machinist 
engaged in making a new part to be used in the repair of a machine 
currently used in canning operations would be doing exempt work. If he 
also in the same workweeks makes parts to be used in a manufacturing 
plant operated by his employer, this work, since it does not directly or 
necessarily contribute to the conduct of the canning operations, would 
be nonexempt work causing the loss of the exemption if such work 
occupied a substantial amount (for enforcement purposes, more than 20 
percent) of the employee's worktime in that workweek (see Sec. 784.116 
for a more detailed discussion).



Sec. 784.141  Examples of nonexempt employees.

    An employer who engaged in operations specified in section 13(b)(4) 
which he performs on the marine products and byproducts described in 
that section may operate a business which engages also in operations of 
a different character or one in which some of the activities carried on 
are not functionally necessary to the conduct of operations named in 
section 13(b)(4). In such a business there will ordinarily be, in 
addition to the employees employed in such named operations, other 
employees who are nonexempt because their work is concerned entirely or 
in substantial part with carrying on activities which constitute neither 
the actual engagement in the named operations nor the performance of 
functions which are, as a practical matter, directly and necessarily a 
part of their employer's conduct of such named operations. Ordinarily, 
as indicated in Sec. 784.156, such nonexempt employees will not be 
employed in an establishment which is exclusively devoted by the 
employer to the named operations during the period of their employment. 
It is usually when the named operations are not being carried on, or in 
places wholly or partly devoted to other operations, that employees of 
such an employer will be performing functions which are not so 
necessarily related to the conduct of the operations named in section 
13(b)(4) as to come within the exemption. Typical illustrations of the 
occupations in which such nonexempt workers may be found

[[Page 668]]

(although employment in such an occupation does not necessarily mean 
that the worker is nonexempt) are the following: General office work 
(such as maintaining employment, social security, payroll and other 
records, handling general correspondence, etc., as distinguished from 
``marketing'' or ``distributing'' work like that described in Sec. 
784.155), custodial, maintenance, watching, and guarding occupations; 
furnishing food, lodging, transportation, or nursing services to 
workers; and laboratory occupations such as those concerned with 
development of new products. Such workers are, of course, not physically 
engaged in operations named in section 13(b)(4) in the ordinary case, 
and they are not exempt unless they can be shown to be ``employed in'' 
such operations on other grounds. But any of them may come within the 
exemption in a situation where the employer can show that the functions 
which they perform, in view of all the facts and circumstances under 
which the named operations are carried on, are actually so integrated 
with or essential to the conduct of the named operations as to be, in 
practical effect directly and necessarily a part of the operations for 
which exemption was intended. Thus, for example, if canning operations 
described in section 13(b)(4) are carried on in a location where the 
canning employees cannot obtain necessary food unless the canner 
provides it, his employment of culinary employees to provide such food 
is functionally so necessary to the conduct of the canning operations 
that their work is, as a practical matter, a part of such operations, 
and the exemption will apply to them. On like principle, the exemption 
may apply to a watchman whose services are required during performance 
of the named operations in order to guard against spontaneous combustion 
of the products of such operations and other occurrences which may 
jeopardize the conduct of the operations.

                               ``Canning''



Sec. 784.142  Meaning and scope of ``canning'' as used in section 13(b)(4).

    Section 13(b)(4) exempts any employee employed in the canning of 
aquatic forms of animal or vegetable life or byproducts thereof from the 
overtime requirements of the Act. As previously stated, it was made a 
limited exemption by the Fair Labor Standards Amendments of 1949. The 
legislative history of this section in specifically explaining what 
types of activities are included in the term ``canning'' and the 
antecedents from which this section evolved make it clear that the 
exemption applies to those employees employed in the activities that 
Congress construed as being embraced in the term and not to all those 
engaged in the fish canning industry (Mitchell v. Stinson, 217 F. 2d 
214). Congress defined Report No. 1453, 81st Cong., first session 95 
Cong. Rec. 14878, 14932-33) as follows:

    Under the conference agreement ``canning'' means hermetically 
sealing and sterilizing or pasteurizing and has reference to a process 
involving the performance of such operations. It also means other 
operations performed in connection therewith such as necessary 
preparatory operations performed on the products before they are placed 
in bottles, cans, or other containers to be hermetically sealed, as well 
as the actual placing of the commodities in such containers. Also 
included are subsequent operations such as the labeling of the cans or 
other cases or boxes whether such subsequent operations are performed as 
part of an uninterrupted or interrupted process. It does not include the 
placing of such products or byproducts thereof in cans or other 
containers that are not hermetically sealed as such an operation is 
``processing'' as distinguished from ``canning'' and comes within the 
complete exemption contained in section 13(a)(5).


Of course, the processing other than canning, referred to in the last 
sentence quoted above, is now like canning, in section 13(a)(5).



Sec. 784.143  ``Necessary preparatory operations.''

    All necessary preparatory work performed on the named aquatic 
products as an integral part of a single uninterrupted canning process 
is subject to section 13(b)(4) (see Tobin v. Blue Channel Corp., 198 F. 
2d 245, approved in Mitchell v. Myrtle Grove Packing Co., 350 U.S. 891). 
Such activities conducted as essential and integrated steps in the 
continuous and uninterrupted process

[[Page 669]]

of canning are clearly within the definition of ``canning'' as 
contemplated by Congress and cannot be viewed in isolation from the 
canning process as a whole. Exempt preparatory operations include the 
necessary weighing, cleaning, picking, peeling, shucking, cutting, 
heating, cooling, steaming, mixing, cooking, carrying, conveying, and 
transferring to the containers the exempt aquatic products (see Mitchell 
v. Stinson, 217 F. 2d 214). But the preparatory operations do not 
include operations specified in section 13(a)(5) pertaining to the 
acquisition of the exempt products from nature. Therefore, if a canner 
employs fishermen or others to catch, take, harvest, cultivate or farm 
aquatic animal and vegetable life, section 13(a)(5) and not section 
13(b)(4) would apply to these particular operations.



Sec. 784.144  Preliminary processing by the canner.

    The mere fact that operations preparatory to canning are physically 
separated from the main canning operations of hermetically sealing and 
sterilizing or pasteurizing would not be sufficient to remove them from 
the scope of section 13(b)(4). Where preparatory operations such as the 
steaming or shucking of oysters are performed in an establishment owned, 
operated, or controlled by a canner of seafood as part of a process 
consisting of continuous series of operations in which such products are 
hermetically sealed in containers and sterilized or pasteurized, all 
employees who perform any part of such series of operations on any 
portion of such aquatic products for canning purposes are within the 
scope of the term ``canning.''



Sec. 784.145  Preliminary processing by another employer as part of ``canning.''

    If the operations of separate processors are integrated in producing 
canned seafood products all employees of such processors who perform any 
part of the described continuous series of operations to accomplish this 
result would be ``employed in the canning of'' such products. Moreover, 
preliminary operations performed in a separately owned processing 
establishment which are directed toward the particular requirements of a 
cannery pursuant to some definite arrangement between the operators of 
the two establishments would generally appear to be integrated with the 
cannery operations within the meaning of the above principles, so that 
the employees engaged in the preliminary operations in the separate 
establishment would be employed in ``canning'' within the meaning of 
section 13(b)(4) of the Act. Whether or not integration exists in a 
specific case of this general nature will depend, of course, upon all 
the relevant facts and circumstances in such case.



Sec. 784.146  ``Subsequent operations.''

    Canning, within the meaning of the exemption, includes operations 
performed after hermetic sealing of the cans or other containers, such 
as labeling of them and placing of them in cases or boxes, which are 
required to place the canned product in the form in which it will be 
sold or shipped by the canner. This is so whether or not such operations 
immediately follow the actual canning operations as a part of an 
uninterrupted process. Storing and shipping operations performed by the 
employees of the cannery in connection with its canned products, during 
weeks in which canning operations are going on, to make room for the 
canned products coming off the line or to make storage room, come within 
the exemption. The fact that such activities relate in part to products 
canned during the previous weeks or seasons would not affect the 
application of the exemption, provided canning operations such as 
hermetic sealing and sterilizing, or labeling, are currently being 
carried on.



Sec. 784.147  Employees ``employed in'' canning.

    All employees whose activities are directly and necessarily a part 
of the canning of the specified aquatic forms of life are within the 
exemption provided by section 13(b)(4). Thus, employees engaged in 
handling the fish or seafood, placing it into the cans, providing steam 
for cooking it or operating the machinery that seals the cans or the 
equipment that sterilizes the canned

[[Page 670]]

product are engaged in exempt activities. In addition, can loft workers, 
those engaged in removing and carrying supplies from the stock room for 
current use in canning operations, and employees whose duty it is to re-
form cans, when canning operations are going on, for current use, are 
engaged in exempt activities. Similarly, the repairing, oiling, or 
greasing during the active season of canning machinery or equipment 
currently used in the actual canning operations are exempt activities. 
The making of repairs in the production room such as to the floor around 
the canning machinery or equipment would also be deemed exempt 
activities where the repairs are essential to the continued canning 
operations or to prevent interruptions in the canning operations. These 
examples are illustrative but not exhaustive. Employees engaged in other 
activities which are similarly integrated with and necessary to the 
actual conduct of the canning operations will also come within the 
exemption. Employees whose work is not directly and necessarily a part 
of the canning operations are not exempt. See Sec. Sec. 784.106, 
784.140, and 784.141.

                    Processing, Freezing, and Curing



Sec. 784.148  General scope of processing, freezing, and curing activities.

    Processing, freezing, and curing embrace a variety of operations 
that change the form of the ``aquatic forms of animal and vegetable 
life.'' They include such operations as filleting, cutting, scaling, 
salting, smoking, drying, pickling, curing, freezing, extracting oil, 
manufacturing meal or fertilizer, drying seaweed preparatory to the 
manufacture of agar, drying and cleaning sponges (Feming v. Hawkeye 
Pearl Button Co., 113 F. 2d 52).



Sec. 784.149  Typical operations that may qualify for exemption.

    Such operations as transporting the specified aquatic products to 
the processing plant; moving the products from place to place in the 
plant; cutting, trimming, eviscerating, peeling, shelling, and otherwise 
working on the products; packing the products; and moving the products 
from the production line to storage or to the shipping platform are 
typical of the operations in processing plants which are included in the 
exemption. Removal of waste, such as clam and oyster shells, operation 
of processing and packing machinery, and providing steam and brine for 
the processing operations (see Mitchell v. Trade Winds Inc., 289 F. 2d 
278, explaining Waller v. Humphreys, 133 F. 2d 193) are also included. 
As for the application of the exemption to office, maintenance, 
warehouse, and other employees, see the discussion in Sec. 784.106 et 
seq., and Sec. Sec. 784.140 and 784.141.



Sec. 784.150  Named operations performed on previously processed 
aquatic products.

    It will be noted that section 13(b)(4) refers to employees employed 
in ``processing'' the named aquatic commodities and not just to ``first 
processing'' as does the provision in section 13(a)(5) for such 
processing at sea. Accordingly, if the aquatic products, though 
subjected to a processing operation, are still in a perishable state, 
the subsequent performance of any of the enumerated operations on the 
still perishable products will be within the exemption no matter who the 
employer performing the exempt operations may be. He may be the same 
employer who performed the prior processing or other exempt operation, 
another processor, or a wholesaler, as the case may be. As noted in 
Sec. 784.138(b), the Department has not questioned the applicability of 
the foregoing rule where the operation is performed on frozen, salted, 
smoked, or cured fish.



Sec. 784.151  Operations performed after product is rendered 
nonperishable.

    As indicated in Sec. 784.138, after the character of the aquatic 
products as taken from nature has been altered by the performance of the 
enumerated operations so as to render them nonperishable (e.g., drying 
and cleaning sponges) section 13(b)(4) provides no exemption for any 
subsequent operations on the preserved products, unless the subsequent 
operation is performed as an integrated part of the operations named in 
the exemption which are performed by an employer on aquatic commodities 
described in section 13(b)(4)

[[Page 671]]

after receiving them in the perishable state. In the case of an employer 
who is engaged in performing on perishable aquatic forms of life 
specified in section 13(b)(4) any operations named in that section which 
result in a nonperishable product, the employment of his employees in 
the storing, marketing, packing for shipment, or distributing of 
nonperishable products resulting from such operations performed by him 
(including products processed during previous weeks or seasons) will be 
considered to be an integrated part of his operations on the perishable 
aquatic forms of life during those workweeks when he is actively engaged 
in such operations. The employees employed by him in such work on the 
nonperishable products are, accordingly, within the exemption in such 
workweeks.



Sec. 784.152  Operations performed on byproducts.

    The principles stated in the two preceding sections would also be 
applicable where the specified operations are performed on perishable 
byproducts. Any operation performed on perishable fish scraps, an 
unsegregated portion of which is to be canned, would come within the 
canning (not the processing) part of the exemption. Fish-reduction 
operations performed on the inedible and still perishable portions of 
fish resulting from processing or canning operations, to produce fish 
oil or meal, would come within the processing part of the exemption. 
Subsequent operations on the oil to fortify it would not be exempt, 
however, since fish oil is nonperishable in the sense that it may be 
held for a substantial period of time without deterioration.

       Marketing, Storing, Packing for Shipment, and Distributing



Sec. 784.153  General scope of named operations.

    The exemption from the overtime pay requirements provided by section 
13(b)(4) of the Act extends to employees ``employed in the * * * 
marketing * * * storing, packing for shipment, or distributing of any 
kind of'' perishable aquatic product named in the section. An employee's 
work must be functionally so related to the named activity as to be, in 
practical effect, a part of it, and the named activity must be performed 
with respect to the perishable aquatic commodities listed in section 
13(b)(4), in order for the exemption to apply to him. The named 
activities include the operations customarily performed in the 
marketing, storing, packing for shipment, or distributing of perishable 
marine products. For example, an employee engaged in placing perishable 
marine products in boxes, cartons, crates, bags, barrels, etc., 
preparatory to shipment and placing the loaded containers on conveyances 
for delivery to customers would be employed in the ``packing for 
shipment'' of such products. Salesmen taking orders for the perishable 
aquatic products named in the section would be employed in the 
``marketing'' of them. Employees of a refrigerated warehouse who perform 
only duties involved in placing such perishable marine products in the 
refrigerated space, removing them from it, and operating the 
refrigerating equipment, would be employed in ``storing'' or 
``distributing'' such products, depending on the facts. On the other 
hand, employees of a public warehouse handling aquatic products which 
have been canned or otherwise rendered nonperishable, or handling 
perishable products which contain substantial amount of ingredients not 
named in section 13(b)(4), would not be within the exemption. Office, 
clerical, maintenance, and custodial employees are not exempt by reason 
of the fact that they are employed by employers engaged in marketing, 
storing, packing for shipment, or distributing seafood and other aquatic 
products. Such employees are exempt only when the facts of their 
employment establish that they are performing functions so necessary to 
the actual conduct of such operations by the employer that, as a 
practical matter, their employment is directly and necessarily a part of 
the operations intended to be exempted (see, for some examples, Sec. 
784.155).



Sec. 784.154  Relationship to other operations as affecting exemption.

    Employment in marketing, storing, distributing, and packing for 
shipment of the aquatic commodities described

[[Page 672]]

in section 13(b)(4) is, as such, exempted from the overtime pay 
provisions of the Act. This means that the employees actually employed 
in such operations on the named commodities are within the exemption 
without regard to the intimacy or remoteness of the relationship between 
their work and processing operations also performed on the commodities, 
so long as any prior processing has not rendered the commodity 
nonperishable (as in the case of a canned product) and therefore removed 
it from the category of marine products referred to by section 13(b)(4). 
If the commodity has previously been rendered nonperishable, the 
marketing, storing, distributing, or packing for shipment of it by an 
employee can come within the exemption only if the activity is one 
performed by his employer as an integrated part of a series of the named 
operations which commenced with operations on the perishable marine 
products to which section 13(b)(4) refers. Some examples of this 
situation are given in Sec. Sec. 784.146 and 784.151.



Sec. 784.155  Activities performed in wholesale establishments.

    The section 13(b)(4) exemption for employment in ``marketing * * * 
storing, or distributing'' the named aquatic products or byproducts, as 
applied to the wholesaling of fish and seafood, affords exemption to 
such activities as unloading the aquatic product at the establishment, 
icing or refrigerating the product and storing it, placing the product 
into boxes, and loading the boxes on trucks or other transportation 
facilities for shipment to retailers or other receivers. Transportation 
to and from the establishment is also included (Johnson v. Johnson & 
Company, Inc., N.D. Ga., 47 F. Supp. 650). Office and clerical employees 
of a wholesaler who perform general office work such as posting to 
ledgers, sending bills and statements, preparing tax returns, and making 
up payrolls, are not exempt unless these activities can be shown to be 
functionally necessary, in the particular fact situation, to the actual 
conduct of the operations named in section 13(b)(4). Such activities as 
selling, taking, and putting up orders, recording sales, and taking cash 
are, however, included in employment in ``marketing'' or 
``distributing'' within the exemption. Employees of a wholesaler engaged 
in the performance of any of the enumerated operations on fresh fish or 
fish products will be engaged in exempt work. However, any such 
operations which they perform on aquatic products which have been canned 
or otherwise rendered nonperishable are nonexempt in accordance with the 
principles stated in Sec. Sec. 784.138 and 784.154.

        Application of Section 13(b)(4) in Certain Establishments



Sec. 784.156  Establishments exclusively devoted to named operations.

    As noted in Sec. 784.106 and elsewhere in the previous discussion, 
the section 13(b)(4) exemption depends on employment of the employee in 
the operations named in that section and does not apply on an 
establishment basis. However, the fact that an establishment is 
exclusively devoted to operations specified in section 13(b)(4) is, in 
the absence of evidence to the contrary, an indication that the 
employees employed there are employed in the named operations either 
directly or through the performance of functions so necessary to 
conducting the operations that the employment should, in practical 
effect, be considered a part of the activity intended to be exempted. 
Where this is the case, it is consistent with the legislative intent to 
avoid segmentation and treat all employees of the establishment in the 
same manner (see Sen. Rep. No. 145, 87th Cong. first session, p. 33). 
Accordingly, where it can be demonstrated that an establishment is, 
during a particular workweek, devoted exclusively to the performance of 
the operations named in section 13(b)(4), on the forms of aquatic life 
there specified, any employee of the establishment who is employed there 
during such workweek will be considered to be employed in such 
operations and to come within the exemption if there are no other facts 
pertinent to his employment that require a particular examination of the 
functions which he performs in connection with the conduct of the named 
operations.

[[Page 673]]

If, however, there are any facts (for example, the employment of the 
same employee at the establishment or the engagement by other employees 
in like duties there during periods when none of the named operations 
are being carried on) which raise questions as to whether he is actually 
engaged in the exempt activities, it will be necessary to scrutinize 
what he is actually doing during the conduct of the operations named in 
section 13(b)(4) in order to determine the applicability of the 
exemption to him. This is necessary because an employee who would not 
otherwise be within the exemption such as a carpenter doing repair work 
during the dead season, does not become exempt as ``employed in'' one of 
the named activities merely because the establishment begins canning or 
processing fish.



PART 785_HOURS WORKED--Table of Contents



                    Subpart A_General Considerations

Sec.
785.1 Introductory statement.
785.2 Decisions on interpretations; use of interpretations.
785.3 Period of effectiveness of interpretations.
785.4 Application to Walsh-Healey Public Contracts Act.

         Subpart B_Principles for Determination of Hours Worked

785.5 General requirements of sections 6 and 7 of the Fair Labor 
          Standards Act.
785.6 Definition of ``employ'' and partial defintion of ``hours 
          worked''.
785.7 Judicial construction.
785.8 Effect of custom, contract, or agreement.
785.9 Statutory exceptions.

                   Subpart C_Application of Principles

785.10 Scope of subpart.

               Employees ``Suffered or Permitted'' to Work

785.11 General.
785.12 Work performed away from the premises or job site.
785.13 Duty of management.

                              Waiting Time

785.14 General.
785.15 On duty.
785.16 Off duty.
785.17 On-call time.

                          Rest and Meal Periods

785.18 Rest.
785.19 Meal.

               Sleeping Time and Certain Other Activities

785.20 General.
785.21 Less than 24-hour duty.
785.22 Duty of 24 hours or more.
785.23 Employees residing on employer's premises or working at home.

                  Preparatory and Concluding Activities

785.24 Principles noted in Portal-to-Portal Bulletin.
785.25 Illustrative U.S. Supreme Court decisions.
785.26 Section 3(o) of the Fair Labor Standards Act.

                Lectures, Meetings and Training Programs

785.27 General.
785.28 Involuntary attendance.
785.29 Training directly related to employee's job.
785.30 Independent training.
785.31 Special situations.
785.32 Apprenticeship training.

                               Traveltime

785.33 General.
785.34 Effect of section 4 of the Portal-to-Portal Act.
785.35 Home to work; ordinary situation.
785.36 Home to work in emergency situations.
785.37 Home to work on special one-day assignment in another city.
785.38 Travel that is all in the day's work.
785.39 Travel away from home community.
785.40 When private automobile is used in travel away from home 
          community.
785.41 Work performed while traveling.

Adjusting Grievances, Medical Attention, Civic and Charitable Work, and 
                           Suggestion Systems

785.42 Adjusting grievances.
785.43 Medical attention.
785.44 Civic and charitable work.
785.45 Suggestion systems.

                    Subpart D_Recording Working Time

785.46 Applicable regulations governing keeping of records.
785.47 Where records show insubstantial or insignificant periods of 
          time.
785.48 Use of time clocks.

                   Subpart E_Miscellaneous Provisions

785.49 Applicable provisions of the Fair Labor Standards Act.
785.50 Section 4 of the Portal-to-Portal Act.


[[Page 674]]


    Authority: 52 Stat. 1060; 29 U.S.C. 201-219; 29 U.S.C. 254. Pub. L. 
104-188, 100 Stat. 1755.

    Source: 26 FR 190, Jan. 11, 1961, unless otherwise noted.



                    Subpart A_General Considerations



Sec. 785.1  Introductory statement.

    Section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206) 
requires that each employee, not specifically exempted, who is engaged 
in commerce, or in the production of goods for commerce, or who is 
employed in an enterprise engaged in commerce, or in the production of 
goods for commerce receive a specified minimum wage. Section 7 of the 
Act (29 U.S.C. 207) provides that persons may not be employed for more 
than a stated number of hours a week without receiving at least one and 
one-half times their regular rate of pay for the overtime hours. The 
amount of money an employee should receive cannot be determined without 
knowing the number of hours worked. This part discusses the principles 
involved in determining what constitutes working time. It also seeks to 
apply these principles to situations that frequently arise. It cannot 
include every possible situation. No inference should be drawn from the 
fact that a subject or an illustration is omitted. If doubt arises 
inquiries should be sent to the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, Washington, DC 20210, or to any area 
or Regional Office of the Division.

[35 FR 15289, Oct. 1, 1970]



Sec. 785.2  Decisions on interpretations; use of interpretations.

    The ultimate decisions on interpretations of the act are made by the 
courts. The Administrator must determine in the first instance the 
positions he will take in the enforcement of the Act. The regulations in 
this part seek to inform the public of such positions. It should thus 
provide a ``practical guide for employers and employees as to how the 
office representing the public interest in its enforcement will seek to 
apply it.'' (Skidmore v. Swift, 323 U.S. 134, 138 (1944).)



Sec. 785.3  Period of effectiveness of interpretations.

    These interpretations will remain in effect until they are 
rescinded, modified or withdrawn. This will be done when and if the 
Administrator concludes upon reexamination, or in the light of judicial 
decision, that a particular interpretation, ruling or enforcement policy 
is incorrect or unwarranted. All other rulings, interpretations or 
enforcement policies inconsistent with any portion of this part are 
superseded by it. The Portal-to-Portal Bulletin (part 790 of this 
chapter) is still in effect except insofar as it may not be consistent 
with any portion hereof. The applicable statutory provisions are set 
forth in Sec. 785.50.



Sec. 785.4  Application to Walsh-Healey Public Contracts Act.

    The principles set forth in this part are also followed by the 
Administrator of the Wage and Hour Division in determining hours worked 
by employees performing work subject to the provisions of the Walsh-
Healey Public Contracts Act.

[35 FR 15289, Oct. 1, 1970]



         Subpart B_Principles for Determination of Hours Worked



Sec. 785.5  General requirements of sections 6 and 7 of the Fair Labor
Standards Act.

    Section 6 requires the payment of a minimum wage by an employer to 
his employees who are subject to the Act. Section 7 prohibits their 
employment for more than a specified number of hours per week without 
proper overtime compensation.

[26 FR 7732, Aug. 18, 1961]



Sec. 785.6  Definition of ``employ'' and partial definition of 
``hours worked''.

    By statutory definition the term ``employ'' includes (section 3(g)) 
``to suffer or permit to work.'' The act, however, contains no 
definition of ``work''. Section 3(o) of the Fair Labor Standards Act 
contains a partial definition of ``hours worked'' in the form of a 
limited exception for clothes-changing and wash-up time.

[[Page 675]]



Sec. 785.7  Judicial construction.

    The United States Supreme Court originally stated that employees 
subject to the act must be paid for all time spent in ``physical or 
mental exertion (whether burdensome or not) controlled or required by 
the employer and pursued necessarily and primarily for the benefit of 
the employer and his business.'' (Tennessee Coal, Iron & Railroad Co. v. 
Muscoda Local No. 123, 321 U. S. 590 (1944)) Subsequently, the Court 
ruled that there need be no exertion at all and that all hours are hours 
worked which the employee is required to give his employer, that ``an 
employer, if he chooses, may hire a man to do nothing, or to do nothing 
but wait for something to happen. Refraining from other activity often 
is a factor of instant readiness to serve, and idleness plays a part in 
all employments in a stand-by capacity. Readiness to serve may be hired, 
quite as much as service itself, and time spent lying in wait for 
threats to the safety of the employer's property may be treated by the 
parties as a benefit to the employer.'' (Armour & Co. v. Wantock, 323 
U.S. 126 (1944); Skidmore v. Swift, 323 U.S. 134 (1944)) The workweek 
ordinarily includes ``all the time during which an employee is 
necessarily required to be on the employer's premises, on duty or at a 
prescribed work place''. (Anderson v. Mt. Clemens Pottery Co., 328 U.S. 
680 (1946)) The Portal-to-Portal Act did not change the rule except to 
provide an exception for preliminary and postliminary activities. See 
Sec. 785.34.

[26 FR 190, Jan. 11, 1961, as amended at 76 FR 18859, Apr. 5, 2011]



Sec. 785.8  Effect of custom, contract, or agreement.

    The principles are applicable, even though there may be a custom, 
contract, or agreement not to pay for the time so spent with special 
statutory exceptions discussed in Sec. Sec. 785.9 and 785.26.

[35 FR 15289, Oct. 1, 1970]



Sec. 785.9  Statutory exemptions.

    (a) The Portal-to-Portal Act. The Portal-to-Portal Act (secs. 1-13, 
61 Stat. 84-89, 29 U.S.C. 251-262) eliminates from working time certain 
travel and walking time and other similar ``preliminary'' and 
``postliminary'' activities performed ``prior'' or ``subsequent'' to the 
``workday'' that are not made compensable by contract, custom, or 
practice. It should be noted that ``preliminary'' activities do not 
include ``principal'' activities. See Sec. Sec. 790.6 to 790.8 of this 
chapter. The use of an employer's vehicle for travel by an employee and 
activities that are incidental to the use of such vehicle for commuting 
are not considered ``principal'' activities when meeting the following 
conditions: The use of the employer's vehicle for travel is within the 
normal commuting area for the employer's business or establishment and 
the use of the employer's vehicle is subject to an agreement on the part 
of the employer and the employee or the representative of such employee. 
Section 4 of the Portal-to-Portal Act does not affect the computation of 
hours worked within the ``workday''. ``Workday'' in general, means the 
period between ``the time on any particular workday at which such 
employee commences (his) principal activity or activities'' and ``the 
time on any particular workday at which he ceases such principal 
activity or activities.'' The ``workday'' may thus be longer than the 
employee's scheduled shift, hours, tour of duty, or time on the 
production line. Also, its duration may vary from day to day depending 
upon when the employee commences or ceases his ``principal'' activities. 
With respect to time spent in any ``preliminary'' or ``postliminary'' 
activity compensable by contract, custom, or practice, the Portal-to-
Portal Act requires that such time must also be counted for purposes of 
the Fair Labor Standards Act. There are, however, limitations on this 
requirement. The ``preliminary'' or ``postliminary'' activity in 
question must be engaged in during the portion of the day with respect 
to which it is made compensable by the contract, custom, or practice. 
Also, only the amount of time allowed by the contract or under the 
custom or practice is required to be counted. If, for example, the time 
allowed is 15 minutes but the activity takes 25 minutes, the time to be 
added to other working time would be limited to 15 minutes. (Galvin v. 
National Biscuit Co., 82 F.

[[Page 676]]

Supp. 535 (S.D.N.Y. 1949) appeal dismissed, 177 F. 2d 963 (C.A. 2, 
1949))
    (b) Section 3(o) of the Fair Labor Standards Act. Section 3(o) gives 
statutory effect, as explained in Sec. 785.26, to the exclusion from 
measured working time of certain clothes-changing and washing time at 
the beginning or the end of the workday by the parties to collective 
bargaining agreements.

[26 FR 190, Jan. 11, 1961, as amended at 30 FR 9912, Aug. 10, 1965; 76 
FR 18859, Apr. 5, 2011]



                   Subpart C_Application of Principles



Sec. 785.10  Scope of subpart.

    This subpart applies the principles to the problems which arise 
frequently.

               Employees ``Suffered or Permitted'' to Work



Sec. 785.11  General.

    Work not requested but suffered or permitted is work time. For 
example, an employee may voluntarily continue to work at the end of the 
shift. He may be a pieceworker, he may desire to finish an assigned task 
or he may wish to correct errors, paste work tickets, prepare time 
reports or other records. The reason is immaterial. The employer knows 
or has reason to believe that he is continuing to work and the time is 
working time. (Handler v. Thrasher, 191, F. 2d 120 (C.A. 10, 1951); 
Republican Publishing Co. v. American Newspaper Guild, 172 F. 2d 943 
(C.A. 1, 1949; Kappler v. Republic Pictures Corp., 59 F. Supp. 112 (S.D. 
Iowa 1945), aff'd 151 F. 2d 543 (C.A. 8, 1945); 327 U.S. 757 (1946); 
Hogue v. National Automotive Parts Ass'n. 87 F. Supp. 816 (E.D. Mich. 
1949); Barker v. Georgia Power & Light Co., 2 W.H. Cases 486; 5 CCH 
Labor Cases, para. 61,095 (M.D. Ga. 1942); Steger v. Beard & Stone 
Electric Co., Inc., 1 W.H. Cases 593; 4 Labor Cases 60,643 (N.D. Texas, 
1941))



Sec. 785.12  Work performed away from the premises or job site.

    The rule is also applicable to work performed away from the premises 
or the job site, or even at home. If the employer knows or has reason to 
believe that the work is being performed, he must count the time as 
hours worked.



Sec. 785.13  Duty of management.

    In all such cases it is the duty of the management to exercise its 
control and see that the work is not performed if it does not want it to 
be performed. It cannot sit back and accept the benefits without 
compensating for them. The mere promulgation of a rule against such work 
is not enough. Management has the power to enforce the rule and must 
make every effort to do so.

                              Waiting Time



Sec. 785.14  General.

    Whether waiting time is time worked under the Act depends upon 
particular circumstances. The determination involves ``scrutiny and 
construction of the agreements between particular parties, appraisal of 
their practical construction of the working agreement by conduct, 
consideration of the nature of the service, and its relation to the 
waiting time, and all of the circumstances. Facts may show that the 
employee was engaged to wait or they may show that he waited to be 
engaged.'' (Skidmore v. Swift, 323 U.S. 134 (1944)) Such questions 
``must be determined in accordance with common sense and the general 
concept of work or employment.'' (Central Mo. Tel. Co. v. Conwell, 170 
F. 2d 641 (C.A. 8, 1948))



Sec. 785.15  On duty.

    A stenographer who reads a book while waiting for dictation, a 
messenger who works a crossword puzzle while awaiting assignments, 
fireman who plays checkers while waiting for alarms and a factory worker 
who talks to his fellow employees while waiting for machinery to be 
repaired are all working during their periods of inactivity. The rule 
also applies to employees who work away from the plant. For example, a 
repair man is working while he waits for his employer's customer to get 
the premises in readiness. The time is worktime even though the employee 
is allowed to leave the premises or the job site during such periods of 
inactivity. The periods during which these occur are unpredictable. They 
are usually of short duration. In either event the employee is unable to 
use the time

[[Page 677]]

effectively for his own purposes. It belongs to and is controlled by the 
employer. In all of these cases waiting is an integral part of the job. 
The employee is engaged to wait. (See: Skidmore v. Swift, 323 U.S. 134, 
137 (1944); Wright v. Carrigg, 275 F. 2d 448, 14 W.H. Cases (C.A. 4, 
1960); Mitchell v. Wigger, 39 Labor Cases, para. 66,278, 14 W.H. Cases 
534 (D.N.M. 1960); Mitchell v. Nicholson, 179 F. Supp, 292,14 W.H. Cases 
487 (W.D.N.C. 1959))



Sec. 785.16  Off duty.

    (a) General. Periods during which an employee is completely relieved 
from duty and which are long enough to enable him to use the time 
effectively for his own purposes are not hours worked. He is not 
completely relieved from duty and cannot use the time effectively for 
his own purposes unless he is definitely told in advance that he may 
leave the job and that he will not have to commence work until a 
definitely specified hour has arrived. Whether the time is long enough 
to enable him to use the time effectively for his own purposes depends 
upon all of the facts and circumstances of the case.
    (b) Truck drivers; specific examples. A truck driver who has to wait 
at or near the job site for goods to be loaded is working during the 
loading period. If the driver reaches his destination and while awaiting 
the return trip is required to take care of his employer's property, he 
is also working while waiting. In both cases the employee is engaged to 
wait. Waiting is an integral part of the job. On the other hand, for 
example, if the truck driver is sent from Washingtion, DC to New York 
City, leaving at 6 a.m. and arriving at 12 noon, and is completely and 
specifically relieved from all duty until 6 p.m. when he again goes on 
duty for the return trip the idle time is not working time. He is 
waiting to be engaged. (Skidmore v. Swift, 323 U.S. 134, 137 (1944); 
Walling v. Dunbar Transfer & Storage, 3 W.H. Cases 284; 7 Labor Cases 
para. 61,565 (W.D. Tenn. 1943); Gifford v. Chapman, 6 W.H. Cases 806; 12 
Labor Cases para. 63,661 (W.D. Okla., 1947); Thompson v. Daugherty, 40 
Supp. 279 (D. Md. 1941))



Sec. 785.17  On-call time.

    An employee who is required to remain on call on the employer's 
premises or so close thereto that he cannot use the time effectively for 
his own purposes is working while ``on call''. An employee who is not 
required to remain on the employer's premises but is merely required to 
leave word at his home or with company officials where he may be reached 
is not working while on call. (Armour & Co. v. Wantock, 323 U.S. 126 
(1944); Handler v. Thrasher, 191 F. 2d 120 (C.A. 10, 1951); Walling v. 
Bank of Waynesboro, Georgia, 61 F. Supp. 384 (S.D. Ga. 1945))

                          Rest and Meal Periods



Sec. 785.18  Rest.

    Rest periods of short duration, running from 5 minutes to about 20 
minutes, are common in industry. They promote the efficiency of the 
employee and are customarily paid for as working time. They must be 
counted as hours worked. Compensable time of rest periods may not be 
offset against other working time such as compensable waiting time or 
on-call time. (Mitchell v. Greinetz, 235 F. 2d 621, 13 W.H. Cases 3 
(C.A. 10, 1956); Ballard v. Consolidated Steel Corp., Ltd., 61 F. Supp. 
996 (S.D. Cal. 1945))



Sec. 785.19  Meal.

    (a) Bona fide meal periods. Bona fide meal periods are not worktime. 
Bona fide meal periods do not include coffee breaks or time for snacks. 
These are rest periods. The employee must be completely relieved from 
duty for the purposes of eating regular meals. Ordinarily 30 minutes or 
more is long enough for a bona fide meal period. A shorter period may be 
long enough under special conditions. The employee is not relieved if he 
is required to perform any duties, whether active or inactive, while 
eating. For example, an office employee who is required to eat at his 
desk or a factory worker who is required to be at his machine is working 
while eating. (Culkin v. Glenn L. Martin, Nebraska Co., 97 F. Supp. 661 
(D. Neb. 1951), aff'd 197 F. 2d 981 (C.A. 8, 1952), cert. denied 344 
U.S. 888 (1952); Thompson v. Stock & Sons, Inc., 93 F. Supp. 213 (E.D. 
Mich 1950), aff'd 194 F.

[[Page 678]]

2d 493 (C.A. 6, 1952); Biggs v. Joshua Hendy Corp., 183 F. 2d 515 (C. A. 
9, 1950), 187 F. 2d 447 (C.A. 9, 1951); Walling v. Dunbar Transfer & 
Storage Co., 3 W.H. Cases 284; 7 Labor Cases para. 61.565 (W.D. Tenn. 
1943); Lofton v. Seneca Coal and Coke Co., 2 W.H. Cases 669; 6 Labor 
Cases para. 61,271 (N.D. Okla. 1942); aff'd 136 F. 2d 359 (C.A. 10, 
1943); cert. denied 320 U.S. 772 (1943); Mitchell v. Tampa Cigar Co., 36 
Labor Cases para. 65, 198, 14 W.H. Cases 38 (S.D. Fla. 1959); Douglass 
v. Hurwitz Co., 145 F. Supp. 29, 13 W.H. Cases (E.D. Pa. 1956))
    (b) Where no permission to leave premises. It is not necessary that 
an employee be permitted to leave the premises if he is otherwise 
completely freed from duties during the meal period.

               Sleeping Time and Certain Other Activities



Sec. 785.20  General.

    Under certain conditions an employee is considered to be working 
even though some of his time is spent in sleeping or in certain other 
activities.



Sec. 785.21  Less than 24-hour duty.

    An employee who is required to be on duty for less than 24 hours is 
working even though he is permitted to sleep or engage in other personal 
activities when not busy. A telephone operator, for example, who is 
required to be on duty for specified hours is working even though she is 
permitted to sleep when not busy answering calls. It makes no difference 
that she is furnished facilities for sleeping. Her time is given to her 
employer. She is required to be on duty and the time is worktime. 
(Central Mo. Telephone Co. v. Conwell, 170 F. 2d 641 (C.A. 8, 1948); 
Strand v. Garden Valley Telephone Co., 51 F. Supp. 898 (D. Minn. 1943); 
Whitsitt v. Enid Ice & Fuel Co., 2 W. H. Cases 584; 6 Labor Cases para. 
61,226 (W.D. Okla. 1942).)



Sec. 785.22  Duty of 24 hours or more.

    (a) General. Where an employee is required to be on duty for 24 
hours or more, the employer and the employee may agree to exclude bona 
fide meal periods and a bona fide regularly scheduled sleeping period of 
not more than 8 hours from hours worked, provided adequate sleeping 
facilities are furnished by the employer and the employee can usually 
enjoy an uninterrupted night's sleep. If sleeping period is of more than 
8 hours, only 8 hours will be credited. Where no expressed or implied 
agreement to the contrary is present, the 8 hours of sleeping time and 
lunch periods constitute hours worked. (Armour v. Wantock, 323 U.S. 126 
(1944); Skidmore v. Swift, 323 U.S. 134 (1944); General Electric Co. v. 
Porter, 208 F. 2d 805 (C.A. 9, 1953), cert. denied, 347 U.S. 951, 975 
(1954); Bowers v. Remington Rand, 64 F. Supp. 620 (S.D. Ill, 1946), 
aff'd 159 F. 2d 114 (C.A. 7, 1946) cert. denied 330 U.S. 843 (1947); 
Bell v. Porter, 159 F. 2d 117 (C.A. 7, 1946) cert. denied 330 U.S. 813 
(1947); Bridgeman v. Ford, Bacon & Davis, 161 F. 2d 962 (C.A. 8, 1947); 
Rokey v. Day & Zimmerman, 157 F. 2d 736 (C.A. 8, 1946); McLaughlin v. 
Todd & Brown, Inc., 7 W.H. Cases 1014; 15 Labor Cases para. 64,606 (N.D. 
Ind. 1948); Campbell v. Jones & Laughlin, 70 F. Supp. 996 (W.D. Pa. 
1947).)
    (b) Interruptions of sleep. If the sleeping period is interrupted by 
a call to duty, the interruption must be counted as hours worked. If the 
period is interrupted to such an extent that the employee cannot get a 
reasonable night's sleep, the entire period must be counted. For 
enforcement purposes, the Divisons have adopted the rule that if the 
employee cannot get at least 5 hours' sleep during the scheduled period 
the entire time is working time. (See Eustice v. Federal Cartridge 
Corp., 66 F. Supp. 55 (D. Minn. 1946).)



Sec. 785.23  Employees residing on employer's premises or working at home.

    An employee who resides on his employer's premises on a permanent 
basis or for extended periods of time is not considered as working all 
the time he is on the premises. Ordinarily, he may engage in normal 
private pursuits and thus have enough time for eating, sleeping, 
entertaining, and other periods of complete freedom from all duties when 
he may leave the premises for purposes of his own. It is, of course, 
difficult to determine the exact hours worked under these circumstances 
and any reasonable agreement of the parties which takes into 
consideration all

[[Page 679]]

of the pertinent facts will be accepted. This rule would apply, for 
example, to the pumper of a stripper well who resides on the premises of 
his employer and also to a telephone operator who has the switchboard in 
her own home. (Skelly Oil Co. v. Jackson, 194 Okla. 183, 148 P. 2d 182 
(Okla. Sup. Ct. 1944; Thompson v. Loring Oil Co., 50 F. Supp. 213 (W.D. 
La. 1943).)

                  Preparatory and Concluding Activities



Sec. 785.24  Principles noted in Portal-to-Portal Bulletin.

    In November, 1947, the Administrator issued the Portal-to-Portal 
Bulletin (part 790 of this chapter). In dealing with this subject, Sec. 
790.8 (b) and (c) of this chapter said:

    (b) The term ``principal activities'' includes all activities which 
are an integral part of a principal activity. Two examples of what is 
meant by an integral part of a principal activity are found in the 
report of the Judiciary Committee of the Senate on the Portal-to-Portal 
bill. They are the following:
    (1) In connection with the operation of a lathe, an employee will 
frequently, at the commencement of his workday, oil, grease, or clean 
his machine, or install a new cutting tool. Such activities are an 
integral part of the principal activity, and are included within such 
term.
    (2) In the case of a garment worker in a textile mill, who is 
required to report 30 minutes before other employees report to commence 
their principal activities, and who during such 30 minutes distributes 
clothing or parts of clothing at the workbenches of other employees and 
gets machines in readiness for operation by other employees, such 
activities are among the principal activities of such employee.

Such preparatory activities, which the Administrator has always regarded 
as work and as compensable under the Fair Labor Standards Act, remain so 
under the Portal Act, regardless of contrary custom or contract.
    (c) Among the activities included as an integral part of a principal 
activity are those closely related activities which are indispensable to 
its performance. If an employee in a chemical plant, for example, cannot 
perform his principal activities without putting on certain clothes, 
changing clothes on the employer's premises at the beginning and end of 
the workday would be an integral part of the employee's principal 
activity. On the other hand, if changing clothes is merely a convenience 
to the employee and not directly related to his principal activities, it 
would be considered as a ``preliminary'' or ``postliminary'' activity 
rather than a principal part of the activity. However, activities such 
as checking in and out and waiting in line to do so would not ordinarily 
be regarded as integral parts of the principal activity or activities.



Sec. 785.25  Illustrative U.S. Supreme Court decisions.

    These principles have guided the Administrator in the enforcement of 
the Act. Two cases decided by the U.S. Supreme Court further illustrate 
the types of activities which are considered an integral part of the 
employees' jobs. In one, employees changed their clothes and took 
showers in a battery plant where the manufacturing process involved the 
extensive use of caustic and toxic materials. (Steiner v. Mitchell, 350 
U.S. 247 (1956).) In another case, knifemen in a meatpacking plant 
sharpened their knives before and after their scheduled workday 
(Mitchell v. King Packing Co., 350 U.S. 260 (1956)). In both cases the 
Supreme Court held that these activities are an integral and 
indispensable part of the employees' principal activities.



Sec. 785.26  Section 3(o) of the Fair Labor Standards Act.

    Section 3(o) of the Act provides an exception to the general rule 
for employees under collective bargaining agreements. This section 
provides for the exclusion from hours worked of time spent by an 
employee in changing clothes or washing at the beginning or end of each 
workday which was excluded from measured working time during the week 
involved by the express terms of or by custom or practice under a bona 
fide collective-bargaining agreement applicable to the particular 
employee. During any week in which such clothes-changing or washing time 
was not so excluded, it must be counted as hours worked if the changing 
of clothes or washing is indispensable to the performance of the 
employee's work or is required by law or by the rules of the employer. 
The same would be true if the changing of clothes or washing was a 
preliminary or postliminary activity compensable by

[[Page 680]]

contract, custom, or practice as provided by section 4 of the Portal-to-
Portal Act, and as discussed in Sec. 785.9 and part 790 of this 
chapter.

[30 FR 9912, Aug. 10, 1965]

                Lectures, Meetings and Training Programs



Sec. 785.27  General.

    Attendance at lectures, meetings, training programs and similar 
activities need not be counted as working time if the following four 
criteria are met:
    (a) Attendance is outside of the employee's regular working hours;
    (b) Attendance is in fact voluntary;
    (c) The course, lecture, or meeting is not directly related to the 
employee's job; and
    (d) The employee does not perform any productive work during such 
attendance.



Sec. 785.28  Involuntary attendance.

    Attendance is not voluntary, of course, if it is required by the 
employer. It is not voluntary in fact if the employee is given to 
understand or led to believe that his present working conditions or the 
continuance of his employment would be adversely affected by 
nonattendance.



Sec. 785.29  Training directly related to employee's job.

    The training is directly related to the employee's job if it is 
designed to make the employee handle his job more effectively as 
distinguished from training him for another job, or to a new or 
additional skill. For example, a stenographer who is given a course in 
stenography is engaged in an activity to make her a better stenographer. 
Time spent in such a course given by the employer or under his auspices 
is hours worked. However, if the stenographer takes a course in 
bookkeeping, it may not be directly related to her job. Thus, the time 
she spends voluntarily in taking such a bookkeeping course, outside of 
regular working hours, need not be counted as working time. Where a 
training course is instituted for the bona fide purpose of preparing for 
advancement through upgrading the employee to a higher skill, and is not 
intended to make the employee more efficient in his present job, the 
training is not considered directly related to the employee's job even 
though the course incidentally improves his skill in doing his regular 
work.

[30 FR 9912, Aug, 10, 1965]



Sec. 785.30  Independent training.

    Of course, if an employee on his own initiative attends an 
independent school, college or independent trade school after hours, the 
time is not hours worked for his employer even if the courses are 
related to his job.



Sec. 785.31  Special situations.

    There are some special situations where the time spent in attending 
lectures, training sessions and courses of instruction is not regarded 
as hours worked. For example, an employer may establish for the benefit 
of his employees a program of instruction which corresponds to courses 
offered by independent bona fide institutions of learning. Voluntary 
attendance by an employee at such courses outside of working hours would 
not be hours worked even if they are directly related to his job, or 
paid for by the employer.



Sec. 785.32  Apprenticeship training.

    As an enforcement policy, time spent in an organized program of 
related, supplemental instruction by employees working under bona fide 
apprenticeship programs may be excluded from working time if the 
following criteria are met:
    (a) The apprentice is employed under a written apprenticeship 
agreement or program which substantially meets the fundamental standards 
of the Bureau of Apprenticeship and Training of the U.S. Department of 
Labor; and
    (b) Such time does not involve productive work or performance of the 
apprentice's regular duties. If the above criteria are met the time 
spent in such related supplemental training shall not be counted as 
hours worked unless the written agreement specifically provides that it 
is hours worked. The mere payment or agreement to pay for time spent in 
related instruction does not

[[Page 681]]

constitute an agreement that such time is hours worked.

                               Traveltime



Sec. 785.33  General.

    The principles which apply in determining whether or not time spent 
in travel is working time depend upon the kind of travel involved. The 
subject is discussed in Sec. Sec. 785.35 to 785.41, which are preceded 
by a brief discussion in Sec. 785.34 of the Portal-to-Portal Act as it 
applies to traveltime.



Sec. 785.34  Effect of section 4 of the Portal-to-Portal Act.

    The Portal Act provides in section 4(a) that except as provided in 
subsection (b) no employer shall be liable for the failure to pay the 
minimum wage or overtime compensation for time spent in ``walking, 
riding, or traveling to and from the actual place of performance of the 
principal activity or activities which such employee is employed to 
perform either prior to the time on any particular workday at which such 
employee commences, or subsequent to the time on any particular workday 
at which he ceases, such principal activity or activities.'' Section 
4(a) further provides that the use of an employer's vehicle for travel 
by an employee and activities that are incidental to the use of such 
vehicle for commuting are not considered principal activities when the 
use of such vehicle is within the normal commuting area for the 
employer's business or establishment and is subject to an agreement on 
the part of the employer and the employee or the representative of such 
employee. Subsection (b) provides that the employer shall not be 
relieved from liability if the activity is compensable by express 
contract or by custom or practice not inconsistent with an express 
contract. Thus traveltime at the commencement or cessation of the 
workday which was originally considered as working time under the Fair 
Labor Standards Act (such as underground travel in mines or walking from 
time clock to work-bench) need not be counted as working time unless it 
is compensable by contract, custom or practice. If compensable by 
express contract or by custom or practice not inconsistent with an 
express contract, such traveltime must be counted in computing hours 
worked. However, ordinary travel from home to work (see Sec. 785.35) 
need not be counted as hours worked even if the employer agrees to pay 
for it. (See Tennessee Coal, Iron & RR. Co. v. Musecoda Local, 321 U.S. 
590 (1946); Anderson v. Mt. Clemens Pottery Co., 328 U.S. 690 (1946); 
Walling v. Anaconda Copper Mining Co., 66 F. Supp. 913 (D. Mont. 
(1946).)

[26 FR 190, Jan. 11, 1961, as amended at 76 FR 18860, Apr. 5, 2011]



Sec. 785.35  Home to work; ordinary situation.

    An employee who travels from home before his regular workday and 
returns to his home at the end of the workday is engaged in ordinary 
home to work travel which is a normal incident of employment. This is 
true whether he works at a fixed location or at different job sites. 
Normal travel from home to work is not worktime.



Sec. 785.36  Home to work in emergency situations.

    There may be instances when travel from home to work is overtime. 
For example, if an employee who has gone home after completing his day's 
work is subsequently called out at night to travel a substantial 
distance to perform an emergency job for one of his employer's customers 
all time spent on such travel is working time. The Divisions are taking 
no position on whether travel to the job and back home by an employee 
who receives an emergency call outside of his regular hours to report 
back to his regular place of business to do a job is working time.



Sec. 785.37  Home to work on special one-day assignment in another city.

    A problem arises when an employee who regularly works at a fixed 
location in one city is given a special 1-day work assignment in another 
city. For example, an employee who works in Washington, DC, with regular 
working hours from 9 a.m. to 5 p.m. may be given a special assignment in 
New York City, with instructions to leave Washington at 8 a.m. He 
arrives in New York at 12 noon, ready for work. The special assignment 
is completed at 3

[[Page 682]]

p.m., and the employee arrives back in Washington at 7 p.m. Such travel 
cannot be regarded as ordinary home-to-work travel occasioned merely by 
the fact of employment. It was performed for the employer's benefit and 
at his special request to meet the needs of the particular and unusual 
assignment. It would thus qualify as an integral part of the 
``principal'' activity which the employee was hired to perform on the 
workday in question; it is like travel involved in an emergency call 
(described in Sec. 785.36), or like travel that is all in the day's 
work (see Sec. 785.38). All the time involved, however, need not be 
counted. Since, except for the special assignment, the employee would 
have had to report to his regular work site, the travel between his home 
and the railroad depot may be deducted, it being in the ``home-to-work'' 
category. Also, of course, the usual meal time would be deductible.



Sec. 785.38  Travel that is all in the day's work.

    Time spent by an employee in travel as part of his principal 
activity, such as travel from job site to job site during the workday, 
must be counted as hours worked. Where an employee is required to report 
at a meeting place to receive instructions or to perform other work 
there, or to pick up and to carry tools, the travel from the designated 
place to the work place is part of the day's work, and must be counted 
as hours worked regardless of contract, custom, or practice. If an 
employee normally finishes his work on the premises at 5 p.m. and is 
sent to another job which he finishes at 8 p.m. and is required to 
return to his employer's premises arriving at 9 p.m., all of the time is 
working time. However, if the employee goes home instead of returning to 
his employer's premises, the travel after 8 p.m. is home-to-work travel 
and is not hours worked. (Walling v. Mid-Continent Pipe Line Co., 143 F. 
2d 308 (C. A. 10, 1944))



Sec. 785.39  Travel away from home community.

    Travel that keeps an employee away from home overnight is travel 
away from home. Travel away from home is clearly worktime when it cuts 
across the employee's workday. The employee is simply substituting 
travel for other duties. The time is not only hours worked on regular 
working days during normal working hours but also during the 
corresponding hours on nonworking days. Thus, if an employee regularly 
works from 9 a.m. to 5 p.m. from Monday through Friday the travel time 
during these hours is worktime on Saturday and Sunday as well as on the 
other days. Regular meal period time is not counted. As an enforcement 
policy the Divisions will not consider as worktime that time spent in 
travel away from home outside of regular working hours as a passenger on 
an airplane, train, boat, bus, or automobile.



Sec. 785.40  When private automobile is used in travel away from 
home community.

    If an employee is offered public transporation but requests 
permission to drive his car instead, the employer may count as hours 
worked either the time spent driving the car or the time he would have 
had to count as hours worked during working hours if the employee had 
used the public conveyance.



Sec. 785.41  Work performed while traveling.

    Any work which an employee is required to perform while traveling 
must, of course, be counted as hours worked. An employee who drives a 
truck, bus, automobile, boat or airplane, or an employee who is required 
to ride therein as an assistant or helper, is working while riding, 
except during bona fide meal periods or when he is permitted to sleep in 
adequate facilities furnished by the employer.

Adjusting Grievances, Medical Attention, Civic and Charitable Work, and 
                           Suggestion Systems



Sec. 785.42  Adjusting grievances.

    Time spent in adjusting grievances between an employer and employees 
during the time the employees are required to be on the premises is 
hours worked, but in the event a bona fide union is involved the 
counting of such time will, as a matter of enforcement

[[Page 683]]

policy, be left to the process of collective bargaining or to the custom 
or practice under the collective bargaining agreement.



Sec. 785.43  Medical attention.

    Time spent by an employee in waiting for and receiving medical 
attention on the premises or at the direction of the employer during the 
employee's normal working hours on days when he is working constitutes 
hours worked.



Sec. 785.44  Civic and charitable work.

    Time spent in work for public or charitable purposes at the 
employer's request, or under his direction or control, or while the 
employee is required to be on the premises, is working time. However, 
time spent voluntarily in such activities outside of the employee's 
normal working hours is not hours worked.



Sec. 785.45  Suggestion systems.

    Generally, time spent by employees outside of their regular working 
hours in developing suggestions under a general suggestion system is not 
working time, but if employees are permitted to work on suggestions 
during regular working hours the time spent must be counted as hours 
worked. Where an employee is assigned to work on the development of a 
suggestion, the time is considered hours worked.



                    Subpart D_Recording Working Time



Sec. 785.46  Applicable regulations governing keeping of records.

    Section 11(c) of the Act authorizes the Secretary to promulgate 
regulations requiring the keeping of records of hours worked, wages paid 
and other conditions of employment. These regulations are published in 
part 516 of this chapter. Copies of the regulations may be obtained on 
request.



Sec. 785.47  Where records show insubstantial or insignificant 
periods of time.

    In recording working time under the Act, insubstantial or 
insignificant periods of time beyond the scheduled working hours, which 
cannot as a practical administrative matter be precisely recorded for 
payroll purposes, may be disregarded. The courts have held that such 
trifles are de minimis. (Anderson v. Mt. Clemens Pottery Co., 328 U.S. 
680 (1946)) This rule applies only where there are uncertain and 
indefinite periods of time involved of a few seconds or minutes 
duration, and where the failure to count such time is due to 
considerations justified by industrial realities. An employer may not 
arbitrarily fail to count as hours worked any part, however small, of 
the employee's fixed or regular working time or practically 
ascertainable period of time he is regularly required to spend on duties 
assigned to him. See Glenn L. Martin Nebraska Co. v. Culkin, 197 F. 2d 
981, 987 (C.A. 8, 1952), cert. denied, 344 U.S. 866 (1952), rehearing 
denied, 344 U.S. 888 (1952), holding that working time amounting to $1 
of additional compensation a week is ``not a trivial matter to a 
workingman,'' and was not de minimis; Addison v. Huron Stevedoring 
Corp., 204 F. 2d 88, 95 (C.A. 2, 1953), cert. denied 346 U.S. 877, 
holding that ``To disregard workweeks for which less than a dollar is 
due will produce capricious and unfair results.'' Hawkins v. E. I. du 
Pont de Nemours & Co., 12 W.H. Cases 448, 27 Labor Cases, para. 69,094 
(E.D. Va., 1955), holding that 10 minutes a day is not de minimis.



Sec. 785.48  Use of time clocks.

    (a) Differences between clock records and actual hours worked. Time 
clocks are not required. In those cases where time clocks are used, 
employees who voluntarily come in before their regular starting time or 
remain after their closing time, do not have to be paid for such periods 
provided, of course, that they do not engage in any work. Their early or 
late clock punching may be disregarded. Minor differences between the 
clock records and actual hours worked cannot ordinarily be avoided, but 
major discrepancies should be discouraged since they raise a doubt as to 
the accuracy of the records of the hours actually worked.
    (b) ``Rounding'' practices. It has been found that in some 
industries, particularly where time clocks are used, there has been the 
practice for many years of recording the employees' starting time

[[Page 684]]

and stopping time to the nearest 5 minutes, or to the nearest one-tenth 
or quarter of an hour. Presumably, this arrangement averages out so that 
the employees are fully compensated for all the time they actually work. 
For enforcement purposes this practice of computing working time will be 
accepted, provided that it is used in such a manner that it will not 
result, over a period of time, in failure to compensate the employees 
properly for all the time they have actually worked.



                   Subpart E_Miscellaneous Provisions



Sec. 785.49  Applicable provisions of the Fair Labor Standards Act.

    (a) Section 6. Section 6 of the Fair Labor Standards Act of 1938 (29 
U.S.C. 206) requires that each employee, not specifically exempted, who 
is engaged in commerce, or in the production of goods for commerce, or 
who is employed in an enterprise engaged in commerce, or in the 
production of goods for commerce receive a specified minimum wage.
    (b) Section 7. Section 7(a) of the Act (29 U.S.C. 207) provides that 
persons may not be employed for more than a stated number of hours a 
week without receiving at least one and one-half times their regular 
rate of pay for the overtime hours.
    (c) Section 3(g). Section 3(g) of this act provides that: `` 
`Employ' includes to suffer or permit to work.''
    (d) Section 3(o). Section 3(o) of this act provides that: ``Hours 
worked--in determining for the purposes of sections 6 and 7 the hours 
for which an employee is employed, there shall be excluded any time 
spent in changing clothes or washing at the beginning or end of each 
workday which was excluded from the measured working time during the 
week involved by the express terms of or by custom or practice under a 
bona fide collective-bargaining agreement applicable to the particular 
employees.''

[26 FR 190, Jan. 11, 1961, as amended at 26 FR 7732, Aug. 18, 1961]



Sec. 785.50  Section 4 of the Portal-to-Portal Act.

    Section 4 of this Act provides that:
    (a) Except as provided in paragraph (b), of this section, no 
employer shall be subject to any liability or punishment under the Fair 
Labor Standards Act of 1938, as amended, the Walsh-Healey Act, or the 
Davis-Bacon Act, on account of the failure of such employer to pay an 
employee minimum wages, or to pay an employee overtime compensation, for 
or on account of any of the following activities of such employee 
engaged in, on, or after May 14, 1947:
    (1) Walking, riding, or traveling to and from the actual place of 
performance of the principal activity or activities which such employee 
is employed to perform, and
    (2) Activities which are preliminary to or postliminary to said 
principal activity or activities, which occur either prior to the time 
on any particular workday at which such employee commences, or 
subsequent to the time on any particular workday which he ceases, such 
principal activity or activities. For purposes of this subsection, the 
use of an employer's vehicle for travel by an employee and activities 
performed by an employee which are incidental to the use of such vehicle 
for commuting shall not be considered part of the employee's principal 
activities if the use of such vehicle for travel is within the normal 
commuting area for the employer's business or establishment and the use 
of the employer's vehicle is subject to an agreement on the part of the 
employer and the employee or representative of such employee.
    (b) Notwithstanding the provisions of paragraph (a) of this section 
which relieve an employer from liability and punishment with respect to 
an activity the employer shall not be so relieved if such activity is 
compensable by either:
    (1) An express provision of a written or nonwritten contract in 
effect, at the time of such activity, between such employee, his agent, 
or collective-bargaining representative and his employer; or
    (2) A custom or practice in effect, at the time of such activity, at 
the establishment or other place where such employee is employed, 
covering such activity, not inconsistent with a written or nonwritten 
contract, in effect at the

[[Page 685]]

time of such activity, between such employee, his agent, or collective-
bargaining representative and his employer.
    (c) For the purposes of paragraph (b) of this section, an activity 
shall be considered as compensable, under such contract provision or 
such custom or practice only when it is engaged in during the portion of 
the day with respect to which it is so made compensable.
    (d) In the application of the minimum wage and overtime compensation 
provisions of the Fair Labor Standards Act of 1938, as amended, of the 
Walsh-Healey Act, or of the Davis-Bacon Act, in determining the time for 
which an employer employs an employee with respect to walking, riding, 
traveling, or other preliminary or postliminary activities described in 
paragraph (a) of this section, there shall be counted all that time, but 
only that time, during which the employee engages in any such activity 
which is compensable within the meaning of paragraphs (b) and (c) of 
this section.

[26 FR 190, Jan. 11, 1961, as amended at 76 FR 18860, Apr. 5, 2011]



PART 786_MISCELLANEOUS EXEMPTIONS AND EXCLUSIONS FROM COVERAGE--
Table of Contents



                        Subpart A_Carriers by Air

Sec.
786.1 Enforcement policy concerning performance of nonexempt work.

Subpart B [Reserved]

                Subpart C_Switchboard Operator Exemption

786.100 Enforcement policy concerning performance of nonexempt work.

    Subpart D_Employers Subject to Part 1 of Interstate Commerce Act

786.150 Enforcement policy concerning performance of nonexempt work.

                       Subpart E_Taxicab Operators

786.200 Enforcement policy concerning performance of nonexempt work.

                     Subpart F_Newspaper Publishing

786.250 Enforcement policy.

                    Subpart G_Youth Opportunity Wage

786.300 Application of the youth opportunity wage.

          Subpart H_Volunteers at Private Non-Profit Food Banks

786.350 Exclusion from definition of ``employee'' of volunteers at 
          private non-profit food banks.

    Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201-219. Pub. L. 
104-188, 100 Stat. 1755. Pub. L. 105-221, 112 Stat. 1248, 29 U.S.C. 
203(e).



                        Subpart A_Carriers by Air



Sec. 786.1  Enforcement policy concerning performance of nonexempt work.

    The Division has taken the position that the exemption provided by 
section 13(b)(3) of the Fair Labor Standards Act of 1938, as amended, 
will be deemed applicable even though some nonexempt work (that is, work 
of a nature other than that which characterizes the exemption) is 
performed by the employee during the workweek, unless the amount of such 
nonexempt work is substantial. For enforcement purposes, the amount of 
nonexempt work will be considered substantial if it occupies more than 
20 percent of the time worked by the employed during the workweek.

[21 FR 5056, July 7, 1956]

Subpart B [Reserved]



                Subpart C_Switchboard Operator Exemption



Sec. 786.100  Enforcement policy concerning performance of nonexempt work.

    The Division has taken the position that the exemption provided by 
section 13(a)(10) of the Fair Labor Standards Act will be deemed 
applicable even though some nonexempt work (that is, work of a nature 
other than that which characterizes the exemption) is performed by the 
employee during the workweek, unless the amount of such nonexempt work 
is substantial. For enforcement purposes, the amount of nonexempt work 
will be considered substantial if it occupies more than 20

[[Page 686]]

percent of the time worked by the employee during the workweek.

[32 FR 15426, Nov. 4, 1967]



    Subpart D_Employers Subject to Part 1 of Interstate Commerce Act



Sec. 786.150  Enforcement policy concerning performance of nonexempt work.

    The Division has taken the position that the exemption provided by 
section 13(b)(2) of the Fair Labor Standards Act will be deemed 
applicable even though some nonexempt work (that is, work of a nature 
other than that which characterizes the exemption) is performed by the 
employee during the workweek, unless the amount of such nonexempt work 
is substantial. For enforcement purposes, the amount of nonexempt work 
will be considered substantial if it occupies more than 20 percent of 
the time worked by the employee during the workweek.

[13 FR 1377, Mar. 17, 1948]



                       Subpart E_Taxicab Operators



Sec. 786.200  Enforcement policy concerning performance of nonexempt work.

    The Division has taken the position that the exemption provided by 
section 13(b)(17) of the Fair Labor Standards Act will be deemed 
applicable even though some nonexempt work (that is, work of a nature 
other than that which characterizes the exemption) is performed by the 
employee during the workweek, unless the amount of such nonexempt work 
is substantial. For enforcement purposes, the amount of nonexempt work 
will be considered substantial if it occupies more than 20 percent of 
the time worked by the employee during the workweek.

[32 FR 15426, Nov. 4, 1967]



                     Subpart F_Newspaper Publishing



Sec. 786.250  Enforcement policy.

    The exemption provided by paragraph 13(a)(8) of the Fair Labor 
Standards Act of 1938 applies to ``any employee employed in connection 
with the publication of any weekly, semiweekly, or daily newspaper with 
a circulation of less than four thousand the major part of which 
circulation is within the county where published or counties contiguous 
thereto.'' For the purpose of enforcement, it is the Divisions' position 
that such an employee is within the exemption even though he is also 
engaged in job printing activities. if less than 50 percent of the 
employee's worktime during the workweek is spent in job printing work, 
some of which is subject to the Act. If none of the job printing 
activities are within the general coverage of the Act, the exemption 
applies even if the job printing activities equal or exceed 50 percent 
of the employee's worktime. However, this exemption is not applicable if 
the employee spends 50 percent or more of his worktime in a workweek on 
job printing, any portion of which is within the general coverage of the 
Act on an individual or enterprise basis.

[32 FR 15426, Nov. 4, 1967]



                    Subpart G_Youth Opportunity Wage



Sec. 786.300  Application of the youth opportunity wage.

    Section 6(g) of the Fair Labor Standards Act allows any employer to 
pay any employee who has not attained the age of 20 years a wage of not 
less than $4.25 an hour during the first 90 consecutive calendar days 
after such employee is initially employed by such employer. For the 
purposes of hiring workers at this wage, no employer may take any action 
to displace employees, including partial displacements such as reducing 
hours, wages, or employment benefits. Any employer that violates these 
provisions is considered to have violated section 15(a)(3) of the Act.

[76 FR 18860, Apr. 5, 2011]



          Subpart H_Volunteers at Private Non-Profit Food Banks



Sec. 786.350  Exclusion from definition of ``employee'' of volunteers
at private non-profit food banks.

    Section 3(e)(5) of the Fair Labor Standards Act excludes from the 
definition of the term ``employee'' individuals who volunteer their 
services solely

[[Page 687]]

for humanitarian purposes at private non-profit food banks and who 
receive groceries from the food banks.

[76 FR 18860, Apr. 5, 2011]



PART 788_FORESTRY OR LOGGING OPERATIONS IN WHICH NOT MORE THAN EIGHT 
EMPLOYEES ARE EMPLOYED--Table of Contents



Sec.
788.1 Statutory provisions.
788.2 Matters not discussed in this part.
788.3 Purpose of this part.
788.4 Significance of official interpretations.
788.5 Reliance on official interpretations.
788.6 Scope of the section 13(a)(13) exemption.
788.7 ``Planting or tending trees.''
788.8 ``Cruising, surveying, or felling timber.''
788.9 ``Preparing * * * logs.''
788.10 ``Preparing* * * other forestry products.''
788.11 ``Transporting [such] products to the mill, processing plant, 
          railroad, or other transportation terminal.''
788.12 Limitation of exemption to specific operations in which ``number 
          of employees * * * does not exceed eight.''
788.13 Counting the eight employees.
788.14 Number employed in other than specified operations.
788.15 Multiple crews.
788.16 Employment relationship.
788.17 Employees employed in both exempt and nonexempt work.
788.18 Preparing other forestry products.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended; 29 U.S.C. 201-219.

    Source: 34 FR 15794, Oct. 14, 1969, unless otherwise noted.



Sec. 788.1  Statutory provisions.

    Section 13(a)(13) of the Fair Labor Standards Act of 1938, as 
amended, provides an exemption from the minimum wage and overtime 
requirements of the Act, as follows:

    The provisions of sections 6 and 7 shall not apply with respect to * 
* * any employee employed in planting or tending trees, cruising, 
surveying, or felling timber, or in preparing or transporting logs or 
other forestry products to the mill, processing plant, railroad, or 
other transportation terminal, if the number of employees employed by 
his employer in such forestry or lumbering operations does not exceed 
eight.


This exemption, formerly section 13(a)(15) of the Act, was amended by 
the Fair Labor Standards Amendments of 1966 (80 Stat. 830) to change the 
number of employees limitation from 12 to eight, and to redesignate it 
as section 13(a)(13).



Sec. 788.2  Matters not discussed in this part.

    The exemption in section 13(a)(13) of the Act need not be considered 
unless the employee is ``engaged in commerce or the production of goods 
for commerce'' or is employed in an ``enterprise engaged in commerce or 
in the production of goods for commerce,'' as those words are defined in 
the Act, so as to come within the general scope of sections 6 and 7. The 
principles of coverage are discussed in part 776 of this chapter and the 
discussion will not be repeated in this part. Neither does this part 
discuss the exemptions provided in section 13(a)(6) and 13(b)(12), or 
section 3(f) which includes in the definition of agriculture forestry or 
lumbering operations performed by a farmer or on a farm as an incident 
to or in conjunction with certain farming operations. (See part 780 of 
this chapter.)



Sec. 788.3  Purpose of this part.

    The purpose of this part is to make available in one place the views 
of the Department of Labor with respect to the application and meaning 
of the provisions of section 13(a)(13) of the Act which will provide ``a 
practical guide to employers and employees as to how the office 
representing the public interest in enforcement of the law will seek to 
apply it'' (Skidmore v. Swift & Co., 324 U.S. 134).



Sec. 788.4  Significance of official interpretations.

    The interpretations contained in this part indicate, with respect to 
section 13(a)(13) of the Act which refers to small forestry or lumbering 
operations, the construction of the law which the Secretary of Labor and 
the Administrator believes to be correct and which will guide them in 
the performance of their duties under the Act unless and until they are 
otherwise directed by authoratative decisions of the courts

[[Page 688]]

or conclude, upon reexamination of an interpretation, that it is 
incorrect.



Sec. 788.5  Reliance on offical interpretations.

    Under section 10 of the Portal-to-Portal Act of 1947 (29 U.S.C. 
259), official interpretation issued under the Fair Labor Standards Act 
of 1938 may, under certain circumstances, be controlling in determining 
the rights and liabilities of employers and employees. The 
interpretations of the law contained in this part are official 
interpretations on which reliance may be placed as provided in section 
l0 of the Portal-to-Portal Act so long as they remain effective and are 
not modified, rescinded, or determined by judicial authority to be 
incorrect. However, the failure to discuss a particular problem in this 
part or in the interpretations supplementing it should not be taken to 
indicate the adoption of any position by the Secretary of Labor or the 
Administrator with respect to such problem or to constitute an 
administrative interpretation or practice or enforcement policy.



Sec. 788.6  Scope of the section 13(a)(13) exemption.

    Employees will not be held exempt under section 13(a)(13) unless 
they are clearly shown to come within its terms. (Wirtz v. F. M. Sloan 
Co., 4ll F. 2d 56 (C.A. 3), 18 WH Cases 878; Gatlin Lumber Co. v. 
Mitchell, 287 F. 2d 76 (C.A. 5) cert. denied, 366 U.S. 963.) By its 
terms, the exemption is limited to those employed in the named 
operations by an employer who employs not more than eight employees 
therein. The named operations are described in terms of ordinary speech 
and mean what they mean in ordinary intercourse in this context. These 
operations include the incidental activities normally performed by 
persons employed in them, but do not include mill operations.



Sec. 788.7  ``Planting or tending trees.''

    Employees employed in ``planting or tending trees'' include those 
engaged in weeding, preparing firebreaks, removing ``seeding, planting 
seedlings, pruning, rot or rusts, spraying, and similar operations when 
the object is to bring about, protect, or foster the growth of trees.'' 
``Tending trees'' would also include watching the timberland to guard 
against thefts and fire (Gatlin Lumber Co. v. Mitchell, 287 F. 2d 76, 
cert. den. 366 U.S. 963).



Sec. 788.8  ``Cruising, surveying, or felling timber.''

    Employees engaged in ``cruising * * * timber'' include all those 
members of a field crew whose purpose is to estimate and report on the 
volume of marketable timber. Employees engaged in ``surveying * * * 
timber'' include the customary members of a crew accomplishing that 
function such as the chairmen, the transit men, the rodmen, and the 
axmen who clear the ground of brush or trees in order that the transit 
men may obtain a clear sight. Similarly, the usual members of a crew 
which go to the woods for the purpose of felling timber and preparing 
and transporting logs are engaged in operations described in the 
exemption. Typically included, when members of such a crew, are fellers, 
limbers, skidders, buckers, loaders, swampers, scalers, and log truck 
drivers.



Sec. 788.9  ``Preparing * * * logs.''

    Preparing logs includes, where appropriate, removing the limbs and 
top, cutting them into lengths, removing the bark, and splitting or 
facing them when done at the felling site, but does not include such 
operations when done at a mill. Employees engaged in sawmill, tie mill, 
and other operations in connection with the processing of logs, such as 
the production of lumber, are not exempt.



Sec. 788.10  ``Preparing * * * other forestry products.''

    As used in the exemption, ``other forestry products'' mean plants of 
the forest and the natural properties or substances of such plants and 
trees. Included among these are decorative greens such as holly, ferns 
and Christmas trees, roots, stems, leaves, Spanish moss, wild fruit, and 
brush. Gathering and preparing such forestry products as well as 
transporting them to the mill, processing plant, railroad, or other 
transportation terminal are among the described operations. Preparing 
such

[[Page 689]]

forestry products does not include operations which change the natural 
physical or chemical condition of the products or which amount to 
extracting as distinguished from gathering, such as shelling nuts, or 
mashing berries to obtain juices.

[74 FR 26015, May 29, 2009]



Sec. 788.11  ``Transporting [such] products to the mill, processing 
plant, railroad, or other transportation terminal.''

    The transportation or movement of logs or other forestry products to 
a ``mill processing plant, railroad, or other transportation terminal'' 
is among the described operations. Loading and unloading, when performed 
by employees employed in the named operations, are included as exempt 
operations. Loading logs or other forestry products onto railroad cars 
or other transportation facilities for further shipment if performed as 
part of the exempt transportation will be considered a step in the 
exempt transportation (Woods Lumber Co. v. Tobin, 199 F. 2d 455 
(C.A.5)). However, any other loading, transportation, or other 
activities performed in connection with the logs or other forestry 
products after they have been unloaded at one of the described 
destinations is not exempt. ``Other transportation terminal'' refers to 
any place where there are established facilities or equipment for the 
shipment or transportation of logs or other forestry products. Motor 
carrier yards, docks, wharves, or similar facilities are examples of 
other transportation terminals, but the place where logs are picked up 
by contract motor carriers or haulers at the site of the woods 
operations for transportation to the mill, processing plant, or railroad 
is not such a terminal.



Sec. 788.12  Limitation of exemption to specific operations in which
``number of employees * * * does not exceed eight.''

    Regardless of his duties, no employee is exempt under section 
13(a)(13) unless ``the number of employees employed by his employer in 
such forestry or lumbering operations does not exceed eight.''



Sec. 788.13  Counting the eight employees.

    The determination of the number of employees employed in the named 
operations is to be made on an occupational and a workweek basis. Thus 
the exemption will be available in one workweek when eight or less 
employees are employed in the exempt operations and not in another 
workweek when more than that number are so employed. For a discussion of 
the term ``workweek'' see part 778 of this chapter. The exemption will 
not be defeated, however, if one or more of the eight employees so 
engaged is replaced during the workweek, for example, by reason of 
illness. But if additional employees are employed during the workweek in 
the named operations, even if they work on a different shift, the 
exemption would no longer be available if the total number exceed eight. 
Similarly, all of an employer's employees employed in any workweek in 
the named operations must be counted in the eight regardless of where 
the work is performed or how it is divided. Thus if an employer employs 
four employees in felling timber and preparing logs at one location and 
five at another location in those operations, the exemption would not be 
available. Similarly, if he employs six employees in such operations and 
three other employees in transportation work as discussed in Sec. 
788.11, the exemption could not apply. Under such circumstances he would 
be employing more than eight employees in the named operations. The fact 
that some of these employees may not be engaged in commerce or the 
production of goods for commerce or may be engaged in other exempt 
operations will not affect these conclusions (Woods Lumber Co. v. Tobin, 
199 F. 2d 455 (C.A. 5)). Except for replacements, therefore, all of an 
employer's employees employed in the named operations in a workweek must 
be counted, regardless of where they perform their work or in which of 
the named operations or combinations of such operations they are 
employed. The length of time an employee is employed in the named 
operations during a workweek is also immaterial for the purpose of 
applying the numerical limitation. Thus, even if

[[Page 690]]

an employee would not himself be exempt because he is engaged 
substantially in nonexempt work (see Sec. 788.17), nevertheless, if, as 
a regular part of his duties, he is also engaged in the operations named 
in the exemption, he must be counted in determining whether the eight 
employee limitation is satisfied.



Sec. 788.14  Number employed in other than specified operations.

    The exemption is available to an employer, however, even if he has a 
total of nine or more employees, if only eight of them or less are 
employed in the named operations. Thus, if such an employer employs only 
eight employees in the named operations and others in operations not 
named in the exemption, such as sawmill operations, the exemption is not 
defeated because of the fact that he employs more than eight employees 
altogether. It will not apply, however, to those engaged in the 
operations not named in the exemption.



Sec. 788.15  Multiple crews.

    In many cases an employer who operates a sawmill or concentration 
yard will be supplied with logs or other forestry products by several 
crews of persons who are engaged in the named operations. Frequently 
some or all of such crews, separately considered, do not employ more 
than eight persons but the total number of such employees is in excess 
of eight. Whether the exemption will apply to the members of the 
individual crews which do not exceed eight will depend on whether they 
are employees of the sawmill or concentration yard to which the logs or 
other forestry products are delivered or whether each such crew is a 
truly independently owned and operated business. If the number of 
employees in such a truly independently owned and operated business does 
not exceed eight, the exemption will apply. On the other hand, the 
Secretary and the Administrator will assume that the courts will be 
reluctant to approve as bona fide a plan by which an employer of a large 
number of woods employees splits his employees into several allegedly 
``independent businesses'' in order to take advantage of the exemption.



Sec. 788.16  Employment relationship.

    (a) The Supreme Court has made it clear that there is no single rule 
or test for determining whether an individual is an employee or an 
independent contractor, but that the ``total situation controls'' (see 
Rutherford Food Corp. v. McComb, 331 United States 722; United States v. 
Silk, 331 United States 704; Harrison v. Greyvan Lines, 331 United 
States 704; Bartels v. Birmingham, 332 United States 126). In general an 
employee, as distinguished from a person who is engaged in a business of 
his own, is one who ``follows the usual path of an employee'' and is 
dependent on the business which he serves. As an aid in assessing the 
total situation the Court mentioned some of the characteristics of the 
two classifications which should be considered. Among these are: The 
extent to which the services rendered are an integral part of the 
principal's business, the permanency of the relationship, the 
opportunities for profit or loss, the initiative judgment or foresight 
exercised by the one who performs the services, the amount of 
investment, and the degree of control which the principal has in the 
situation. The Court specifically rejected the degree of control 
retained by the principal as the sole criterion to be applied.
    (b) At least in one situation it is possible to be specific: (1) 
Where the sawmill or concentration yard to which the products are 
delivered owns the land or the appropriation rights to the timber or 
other forestry products; (2) the crew boss has no very substantial 
investment in tools or machinery used; and (3) the crew does not 
transfer its relationship as a unit from one sawmill or concentration 
yard to another, the crew boss and the employees working under him will 
be considered employees of the sawmill or concentration yard. Other 
situations, where one or more of these three factors is not present, 
will be considered as they arise on the basis of the criteria mentioned 
in paragraph (a) of this section. Where all of these three criteria are 
present, however, it will make no difference if the crew boss receives 
the entire compensation for the production from the sawmill or 
concentration yard

[[Page 691]]

and distributes it in any way he chooses to the crew members. Similarly, 
it will make no difference if the hiring, firing, and supervising of the 
crew members is left in the hands of the crew boss. (See Tobin v. 
LaDuke, 190 F. 2d 977 (C.A. 9); Tobin v. Anthony-Williams Mfg. Co., 196 
F. 2d 547 (C.A. 8).)



Sec. 788.17  Employees employed in both exempt and nonexempt work.

    The exemption for an employee employed in exempt work will be 
defeated in any workweek in which he performs a substantial amount of 
nonexempt work. For enforcement purposes nonexempt work will be 
considered substantial in amount if more than 20 percent of the time 
worked by the employee in a given workweek is devoted to such work. 
Where two types of work cannot be segregated, however, so as to permit 
separate measurement of the time spent in each, the employee will not be 
exempt.



Sec. 788.18  Preparing other forestry products.

    As used in the exemption, other forestry products means plants of 
the forest and the natural properties or substances of such plants and 
trees. Included among these are decorative greens such as holly, ferns, 
roots, stems, leaves, Spanish moss, wild fruit, and brush. Christmas 
trees are only included where they are gathered in the wild from forests 
or from uncultivated land and not produced through the application of 
extensive agricultural or horticultural techniques. See 29 CFR 780.205 
for further discussion. Gathering and preparing such forestry products 
as well as transporting them to the mill, processing plant, railroad, or 
other transportation terminal are among the described operations. 
Preparing such forestry products does not include operations that change 
the natural physical or chemical condition of the products or that 
amount to extracting (as distinguished from gathering) such as shelling 
nuts, or that mash berries to obtain juices.

[73 FR 77239, Dec. 18, 2008. Redesignated at 74 FR 26015, May 29, 2009]

    Effective Date Note: At 74 FR 26015, May 29, 2009, Sec. 788.10 was 
redesignated as Sec. 788.18 and newly designated Sec. 788.18 was 
suspended, effective June 29, 2009.



PART 789_GENERAL STATEMENT ON THE PROVISIONS OF SECTION 12(a) AND 
SECTION 15(a)(1) OF THE FAIR LABOR STANDARDS ACT OF 1938, RELATING 

TO WRITTEN ASSURANCES--Table of Contents



Sec.
789.0 Introductory statement.
789.1 Statutory provisions and legislative history.
789.2 ``* * * in reliance on written assurance from the producer * * *''
789.3 ``* * * goods were produced in compliance with'' * * * the 
          requirements referred to.
789.4 Scope and content of assurances of compliance.
789.5 ``* * * acquired * * * in good faith * * * for value without 
          notice * * *''.

    Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201-219.

    Source: 15 FR 5047, Aug. 5, 1950, unless otherwise noted.



Sec. 789.0  Introductory statement.

    (a) Section 12(a) and section 15(a)(1) of the Fair Labor Standards 
Act of 1938 \1\ (hereinafter referred to as the (Act) contain certain 
prohibitions against putting into interstate or foreign commerce any 
goods ineligible for shipment (commonly called ``hot goods''), in the 
production of which the child-labor or wage-hour standards of the Act 
were not observed. These sections were amended by the Fair Labor 
Standards Amendments of 1949 \2\ to provide, among other things, 
protection against these ``hot goods'' prohibitions

[[Page 692]]

with respect to purchasers ``who acquired such goods for value without 
notice of such violation'' if they did so ``in good faith in reliance 
on'' a specified ``written assurance.''
---------------------------------------------------------------------------

    \1\ Pub. L. 718, 75th Cong., 3d sess. (52 Stat. 1060), as amended by 
the Act of June 26, 1940 (Pub. Res. No. 88, 76th Cong., 3d sess., 54 
Stat. 616); by Reorganization Plan No. 2 (60 Stat. 616); by 
Reorganization Plan No. 2 (60 Stat. 1095), effective July 16, 1946; by 
the Portal-to-Portal Act of 1947, approved May 14, 1947 (61 Stat. 84); 
by the Fair Labor Standards Amendments of 1949, approved October 26, 
1949 (Pub. L. 393, 81st Cong., 1st sess., 63 Stat. 910); by 
Reorganization Plan No. 6 of 1950 (15 FR 3174), effective May 24, 1950; 
and by the Fair Labor Standards Amendments of 1955, approved August 12, 
1955 (Pub. L. 381, 84th Cong., 1st sess., C. 867, 69 Stat. 711).
    \2\ Pub. L. 393, 81st Cong., 1st sess. 963 Stat. 910.
---------------------------------------------------------------------------

    (b) These amendments to the Act relating to purchasers in good faith 
and written assurances are for the protection of purchasers. The Act 
does not provide that a purchaser must secure such an assurance or that 
a supplier must give it. The amendments confer no express authority for 
the Department of Labor to require the use of these assurances or to 
prescribe their form or content. Whether any particular written 
assurance affords the statutory protection to a purchaser who acquires 
his goods in good faith and for value without notice of an applicable 
violation, is left for determination by the courts. Opinions issued by 
the Department of Labor on this question are advisory only and represent 
simply the Department's best judgment as to what the courts may hold.
    (c) The interpretations contained in this general statement are 
confined to the statutory protection accorded these purchasers in 
section 12(a) and section 15(a)(1) of the Act. These interpretations, 
with respect to this protection of purchasers, indicate the construction 
of the law which the Secretary of Labor and the Administrator of the 
Wage and Hour Division \3\ believe to be correct and which will guide 
them in the performance of their administrative duties under the Act 
unless and until they are otherwise directed by authoritative decisions 
of the courts or conclude, upon re-examination of an interpretation, 
that it is incorrect.
---------------------------------------------------------------------------

    \3\ The functions of the Secretary and the Administrator under the 
Act are delineated in 13 FR 2195, 12 FR 6971, and 15 FR 3290.

[15 FR 5047, Aug. 5, 1950, as amended at 21 FR 1450, Mar. 6, 1956]



Sec. 789.1  Statutory provisions and legislative history.

    Section 12(a) of the Act provides, in part that no producer, 
manufacturer or dealer shall ship or deliver for shipment in commerce 
any goods produced in an establishment situated in the United States in 
or about which within 30 days prior to the removal of such goods 
therefrom, any oppressive child labor has been employed. Section 12(a) 
then provides an exception from this prohibition in the following 
language:

    Provided, That any such shipment or delivery for shipment of such 
goods by a purchaser who acquired them in good faith in reliance on 
written assurance from the producer, manufacturer, or dealer that the 
goods were produced in compliance with the requirements of this section, 
and who acquired such goods for value without notice of any such 
violation, shall not be deemed prohibited by this subsection * * *.


Section 15(a)(1) provides, in part, that it shall be unlawful for any 
person to transport, offer for transportation, ship, deliver, or sell 
with knowledge that shipment or delivery or sale thereof in commerce is 
intended, any goods in the production of which any employee was employed 
in violation of section 6 or 7 of the Act or any regulation or order of 
the Administrator issued under section 14. Section 15(a)(1) also 
provides the following exception with respect to this ``hot goods'' 
restriction:

    * * * any such transportation, offer, shipment, delivery, or sale of 
such goods by a purchaser who acquired them in good faith in reliance on 
written assurance from the producer that the goods were produced in 
compliance with the requirements of the Act, and who acquired such goods 
for value without notice of any such violation, shall not be deemed 
unlawful.


The most important portion of the legislative history of those 
provisions in sections 12(a) and 15(a)(1) which relate to the protection 
of purchasers is found in the following discussion of the amendment to 
section 15(a)(1), contained in the Statement of the Managers on the part 
of the House appended to the Conference Report on the Fair Labor 
Standards Amendments of 1949: \4\
---------------------------------------------------------------------------

    \4\ H. Rept. No. 1453, 81st Cong. 1st sess., p. 31.

    This provision protects an innocent purchaser from an unwitting 
violation and also protects him from having goods which he has purchased 
in good faith ordered to be withheld from shipment in commerce by a 
``hot goods'' injunction. An affirmative duty is

[[Page 693]]

imposed upon him to assure himself that the goods in question were 
produced in compliance with the Act, and he must have secured written 
assurance to that effect from the producer of the goods. The requirement 
that he must have made the purchase in good faith is comparable to 
similar requirements imposed on purchasers in other fields of law, and 
is to be subjected to the test of what a reasonable, prudent man, acting 
with due diligence, would have done in the circumstances. (Emphasis 
---------------------------------------------------------------------------
supplied.)


This discussion would appear to be generally applicable also to the 
similar provisions of the Act contained in section 12(a).



Sec. 789.2  `` * * * in reliance on written assurance from the producer * * *.''

    In order for a purchaser to be protected under these provisions of 
the Act, he must acquire the goods ``in reliance on written assurance * 
* *.'' The written assurance specified in section 15(a)(1) is one from 
the ``producer'' and in section 12(a) it is one from the ``producer, 
manufacturer or dealer.''

Since the acquisition of the goods by the purchaser must be ``in 
reliance'' upon such written assurance it is obvious that the Act 
contemplates a written assurance given to the purchaser as a part of the 
transaction by which the goods are acquired and on which he can rely at 
the time of their acquisition. Thus, where the purchaser does not 
receive a written assurance at the time he acquires particular goods, he 
cannot be said to have acquired the goods ``in reliance on'' the 
specified written assurance merely because the producer later furnishes 
an assurance that all goods which the purchaser has previously acquired 
from him were produced in compliance with the Fair Labor Standards Act.

The assurances described in the Act are assurances in writing ``from'' 
the producer or ``from'' the producer, manufacturer, or dealer, as the 
case may be. It is therefore clear that the following procedures will 
not amount to ``written assurance from the producer'' within the meaning 
of the Act:
    (a) The purchaser stamps his purchase order with the statement that 
the order is valid only for goods produced in compliance with the 
requirements of the Fair Labor Standards Act. No written statement 
concerning the production of the goods is made to the purchaser by the 
producer. The producer ships the goods which the purchaser has ordered.
    (b) The purchaser stamps the above statement on his purchase order 
and in addition notifies the producer that shipment of the goods so 
ordered will be construed by the purchaser as a guarantee by the 
producer that the goods were produced in compliance with the Act. The 
producer ships the goods to the purchaser.

In neither of these situations can the purchase order be deemed to 
contain a written assurance from the producer to the purchaser. A 
statement concerning the circumstances under which the order will be 
valid is sent to the producer, but no written instrument at all is given 
the purchaser by the producer. Although, in these situations, the 
shipment of the goods by the producer may establish a contractual 
relationship between the parties, the conditions of the statute are not 
satisfied because there is in neither situation any written assurance 
from the producer to the purchaser that the goods were produced in 
compliance with applicable provisions of the Act referred to in sections 
12(a) and 15(a)(1).



Sec. 789.3  ``* * * goods were produced in compliance with'' * * * 
the requirements referred to.

    It is apparent from the language of the statute and the statement 
appended to the Conference Report \5\ that the written assurance 
referred to is one with respect to specific goods in being, assuring the 
purchaser that the ``goods in question were produced in compliance'' 
with the requirements referred to in sections 12(a) and 15(a) (1). A 
written statement made prior to production of the particular goods is 
not the type of assurance contemplated by the statute.
---------------------------------------------------------------------------

    \5\ H. Rept. No. 1453, 81st Cong., 1st sess., p. 31.


A so-called ``general and continuing'' assurance or ``blanket 
guarantee'' stating, for instance, that all goods to be shipped to the 
purchaser during a twelve-month period following a certain date ``will 
be or were produced'' in

[[Page 694]]

compliance with applicable provisions of the Act would not afford the 
purchaser the statutory protection with respect to any production of 
such goods after the assurance is given. This type of assurance attempts 
to assure the purchaser concerning the future production of goods. With 
respect to any production of goods after the assurance is given, this 
``general and continuing'' assurance would, at most, be an assurance 
---------------------------------------------------------------------------
that the goods will be produced in compliance with the Act.

The definitions of the terms ``goods'' and ``produced'' in sections 3(i) 
and 3(j) of the Act \6\ respectively, should be considered in 
interpreting the requirement that the written assurance must relate to 
goods which were produced in compliance with applicable provisions of 
the Act. These definitions make it apparent, for instance that the raw 
materials from which a machine has been made retain their identity as 
``goods'' even though these raw materials have been converted into an 
entirely different finished product in which the raw materials are 
merely a part.
---------------------------------------------------------------------------

    \6\ Section 3(i) defines ``goods'' to mean ``goods (including ships 
and marine equipment), wares, products, commodities, merchandise, or 
articles or subjects of commerce of any character, or any part or 
ingredient thereof, but does not include goods after their delivery into 
the actual physical possession of the ultimate consumer thereof other 
than a producer, manufacturer, or processor thereof.''
    Section 3(j) defines ``produced'' to mean ``produced, manufactured, 
mined, handled, or in any other manner worked on in any state; and for 
the purposes of this Act an employee shall be deemed to have been 
engaged in the production of goods if such employee was employed in 
producing, manufacturing, mining, handling, transporting, or in any 
other manner working on such goods, or in any closely related process or 
occupation directly essential to the production thereof, in any State.''


Since ``goods,'' as defined in the Act, ``does not include goods after 
their delivery into the actual physical possession of the ultimate 
consumer thereof other than a producer, manufacturing, or processor 
thereof,'' the ``hot goods'' restrictions of section 12(a) and section 
15(a)(1) do not apply to such ultimate consumers. There appears to be no 
need, therefore, for such consumers to secure these written assurances 
from their suppliers.



Sec. 789.4  Scope and content of assurances of compliance.

    A question frequently asked is whether a single written assurance of 
compliance will suffice for purposes both of section 12(a), relating to 
child labor, and section 15(a)(1), relating to wage and hour standards. 
A single assurance would appear to be sufficient, provided it is 
specific enough to meet all the conditions of the two sections. Although 
it is possible that the courts might find assurances referring generally 
to compliance ``with the requirements of the Act'' adequate for all 
purposes, the safer course to pursue would be to phrase the assurance in 
terms of compliance with the specific sections of the Act whose 
violation would bar the goods from interstate or foreign commerce.

The language of the statute gives support to this view. It will be noted 
that the written assurance referred to in section 15(a)(1) is described 
as one of ``compliance with the requirements of the Act * * *,'' whereas 
the written assurance referred to in section 12(a) is described as one 
of ``compliance with this section.'' In view of the differences in 
wording of the two sections, a court might conclude that a general 
assurance of compliance with the Act is not sufficient to include a 
specific assurance of compliance with section 12, on the theory that if 
Congress had intended an assurance of compliance with the Act to be 
sufficient under the child-labor provisions, there would have been no 
reason for the use of the more specific language which it placed in 
section 12. Also, it is possible that a court might conclude that 
Congress intended, under section 15(a)(1), that the assurance should 
refer specifically to the particular sections of the Act mentioned 
therein, since unless there is some violation of one of those sections 
in the production of goods, a subsequent purchaser is not prohibited 
from putting them in commerce.

There is no prescribed form or language that must be followed in order 
for the written assurance of compliance to afford the desired 
protection. However, in view of the considerations

[[Page 695]]

mentioned above, the following is suggested as a guide for the type of 
language which would appear to provide the maximum degreee of certainty 
that a purchaser who acquired the goods in good faith in reliance on the 
written assurance would receive the protection intended by the 
amendments:

    We hereby certify that these goods were produced in compliance with 
all applicable requirements of sections 6, 7, and 12 of the Fair Labor 
Standards Act, as amended, and of regulations and orders of the United 
States Department of Labor issued under section 14 thereof:


The question has also arisen as to what method should be used to give a 
purchaser a proper written assurance which would adequately identify the 
particular goods to which such assurance relates. Although other means 
of giving proper written assurances may be found to be more practical 
and convenient, it appears that one simple and feasible method of giving 
such assurance is for the producer to stamp or print the assurance on 
the invoice which covers the particular goods and which is given to the 
purchaser as a part of the transaction whereby the goods are acquired.



Sec. 789.5  ``* * * acquired * * * in good faith * * * 
for value without notice * * *.''

    Section 12(a) and section 15(a)(1) of the Act provide that a 
purchaser must acquire the goods in good faith in reliance on the 
specified written assurance in order to be accorded the statutory 
protection.

The legislative history of the amendments indicates that a purchaser's 
good faith is not to be determined merely from the actual state of his 
mind but that good faith also depends upon an objective test--that of 
what a ``reasonable, prudent man, acting with due diligence, would have 
done in the circumstances.'' This good faith requirement is, in the 
words of the House Managers, ``comparable to similar requirements 
imposed on purchasers in other fields of law.'' The final determination 
of what will amount to good faith can be made only upon the basis of the 
pertinent facts in each situation.

It is clear, however, that good faith as used in the Act, not only 
requires honesty of intention but also that a purchaser must not know, 
have reason to know, or have knowledge of circumstances which ought to 
put him on inquiry that the goods in question were produced in violation 
of any of the provisions of the Act referred to in sections 12(a) and 
15(a)(1).

These good faith provisions are reinforced by the requirement in 
sections 12(a) and 15(a)(1) that the purchaser must also acquire his 
goods ``for value without notice'' of an applicable violation of the 
Act.

To illustrate the application of the above principles, let us assume 
that a purchaser of goods for value acquires them in reliance upon a 
written assurance from the producer, manufacturer, or dealer that the 
particular goods were produced in compliance with all applicable 
requirements of the Act, and that the form and content of the assurance 
is sufficient to meet the conditions of sections 12 and 15(a)(1) of the 
Act. If a reasonable, prudent man in the purchaser's position, acting 
with the diligence, would have no reason to question the truth of the 
assurance that the applicable requirements has been complied with, the 
purchaser's reliance on such written assurance would be considered to be 
in good faith and without notice of any violation, and the purchaser 
would be protected in the event that violations of the child-labor or 
the wage-hour standards of the Act had actually occurred in the 
production of such goods by the vendor or by prior producers of the 
goods. In such circumstances, the purchaser's protection would not be 
contingent on his securing separate written assurances from the prior 
producers or on his assuring himself that his vendor had secured 
specific guarantees from them with respect to compliance.



PART 790_GENERAL STATEMENT AS TO THE EFFECT OF THE PORTAL-TO-PORTAL
ACT OF 1947 ON THE FAIR LABOR STANDARDS ACT OF 1938--Table of Contents



                                 General

Sec.
790.1 Introductory statement.
790.2 Interrelationship of the two Acts.

[[Page 696]]

Provisions Relating to Certain Activities Engaged in by Employees on or 
                           After May 14, 1947

790.3 Provisions of the statute.
790.4 Liability of employer; effect of contract, custom, or practice.
790.5 Effect of Portal-to-Portal Act on determination of hours worked.
790.6 Periods within the ``workday'' unaffected.
790.7 ``Preliminary'' and ``postliminary'' activities.
790.8 ``Principal'' activities.
790.9 ``Compensable * * * by an express provision of a written or 
          nonwritten contract.''
790.10 ``Compensable * * * by a custom or practice.''
790.11 Contract, custom or practice in effect ``at the time of such 
          activity.''
790.12 ``Portion of the day.''

   Defense of Good Faith Reliance on Administrative Regulations, etc.

790.13 General nature of defense.
790.14 ``In conformity with.''
790.15 ``Good faith.''
790.16 ``In reliance on.''
790.17 ``Administrative regulation, order, ruling, approval, or 
          interpretation.''
790.18 ``Administrative practice or enforcement policy.''
790.19 ``Agency of the United States.''

             Restrictions and Limitations on Employee Suits

790.20 Right of employees to sue; restrictions on representative 
          actions.
790.21 Time for bringing employee suits.
790.22 Discretion of court as to assessment of liquidated damages.

    Authority: 52 Stat. 1060, as amended; 110 Stat. 1755; 29 U.S.C. 201-
219; 29 U.S.C. 254.

    Source: 12 FR 7655, Nov. 18, 1947, unless otherwise noted.

                                 General



Sec. 790.1  Introductory statement.

    (a) The Portal-to-Portal Act of 1947 was approved May 4, 1947. \1\ 
It contains provisions which, in certain circumstances, affect the 
rights and liabilities of employees and employers with regard to alleged 
underpayments of minimum or overtime wages under the provisions of the 
Fair Labor Standards Act of 1938, \2\ the Walsh-Healey Public Contracts 
Act, and the Bacon-Davis Act. The Portal Act also establishes time 
limitations for the bringing of certain actions under these three Acts, 
limits the jurisdiction of the courts with respect to certain claims, 
and in other respects affects employee suits and proceedings under these 
Acts.
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    \1\ An act to relieve employers from certain liabilities and 
punishments under the Fair Labor Standards Act of 1938, as amended, the 
Walsh-Healey Act, and the Bacon-Davis Act, and for other purposes (61 
Stat. 84; 29 U.S.C., Sup., 251 et seq.).
    \2\ 52 Stat. 1060, as amended; 29 U.S.C. 201 et seq. In the Fair 
Labor Standards Act, the Congress exercised its power over interstate 
commerce to establish basic standards with respect to minimum and 
overtime wages and to bar from interstate commerce goods in the 
production of which these standards were not observed. For the nature of 
liabilities under this Act, see footnote 17.

    For the sake of brevity, this Act is referred to in the following 
---------------------------------------------------------------------------
discussion as the Portal Act.

    (b) It is the purpose of this part to outline and explain the major 
provisions of the Portal Act as they affect the application to employers 
and employees of the provisions of the Fair Labor Standards Act. The 
effect of the Portal Act in relation to the Walsh-Healey Act and the 
Bacon-Davis Act is not within the scope of this part, and is not 
discussed herein. Many of the provisions of the Portal Act do not apply 
to claims or liabilities arising out of activities engaged in after the 
enactment of the Act. These provisions are not discussed at length in 
this part, \3\ because the primary purpose of this part is to indicate 
the effect of the Portal Act upon the future administration and 
enforcement of the Fair Labor Standards Act, with which the 
Administrator of the Wage and Hour Division is charged under the law. 
The discussion of the Portal Act in this part is therefore directed 
principally to those provisions that have to do with the application of 
the Fair Labor Standards Act on or after May 14, 1947.
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    \3\ Sections 790.23 through 790.29 in the prior edition of this part 
790 have been omitted in this revision because of their obsolescence in 
that they dealt with those sections of the Act concerning activities 
prior to May 14, 1947, the effective date of the Portal-to-Portal Act.
---------------------------------------------------------------------------

    (c) The correctness of an interpretation of the Portal Act, like the 
correctness of an interpretation of the Fair

[[Page 697]]

Labor Standards Act, can be determined finally and authoritatively only 
by the courts. It is necessary, however, for the Administrator to reach 
informed conclusions as to the meaning of the law in order to enable him 
to carry out his statutory duties of administration and enforcement. It 
would seem desirable also that he makes these conclusions known to 
persons affected by the law. \4\ Accordingly, as in the case of the 
interpretative bulletins previously issued on various provisions of the 
Fair Labor Standards Act, the interpretations set forth herein are 
intended to indicate the construction of the law which the 
Administration believes to be correct \5\ and which will guide him in 
the performance of his administrative duties under the Fair Labor 
Standards Act, unless and until he is directed otherwise by 
authoritative rulings of the courts or concludes, upon reexamination of 
an interpretation, that it is incorrect. As the Supreme Court has 
pointed out, such interpretations provide a practical guide to employers 
and employees as to how the office representing the public interest in 
\6\ enforcement of the law will seek to apply it. As has been the case 
in the past with respect to other interpretative bulletins, the 
Administrator will receive and consider statements suggesting change of 
any interpretation contained in this part.
---------------------------------------------------------------------------

    \4\ See Skidmore v. Swift & Co., 323 U.S. 134; Kirschbaum Co. v. 
Walling, 316 U.S. 517; Portal-to-Portal Act, sec. 10.
    \5\ The interpretations expressed herein are based on studies of the 
intent, purpose, and interrelationship of the Fair Labor Standards Act 
and the Portal Act as evidenced by their language and legislative 
history, as well as on decisions of the courts establishing legal 
principles believed to be applicable in interpreting the two Acts. These 
interpretations have been adopted by the Administrator after due 
consideration of relevant knowledge and experience gained in the 
administration of the Fair Labor Standards Act of 1938 and after 
consultation with the Solicitor of Labor.
    \6\ Skidmore v. Swift & Co., 323 U.S. 134. See also Roland 
Electrical Co. v. Walling, 326 U.S. 657; United States v. American 
Trucking Assn., 310 U.S. 534; Overnight Motor Transp. Co. v. Missel, 316 
U.S. 572.

[12 FR 7655, Nov. 18, 1947, as amended at 35 FR 7383, May 12, 1970]



Sec. 790.2  Interrelationship of the two acts.

    (a) The effect on the Fair Labor Standards Act of the various 
provisions of the Portal Act must necessarily be determined by viewing 
the two acts as interelated parts of the entire statutory scheme for the 
establishment of basic fair labor standards. \7\ The Portal Act 
contemplates that employers will be relieved, in certain circumstances, 
from liabilities or punishments to which they might otherwise be subject 
under the Fair Labor Standards Act. \8\ But the act makes no express 
change in the national policy, declared by Congress in section 2 of the 
Fair Labor Standards Act, of eliminating labor conditions ``detrimental 
to the maintenance of the minimum standard of living necessary for 
health, efficiency, and general well-being of workers.'' The legislative 
history indicates that the Portal Act was not intended to change this 
general policy. \9\ The Congressional declaration of policy in section 1 
of the Portal Act is explicitly directed to the meeting of the existing 
emergency and the correction, both

[[Page 698]]

retroactively and prospectively, of existing evils referred to therein. 
\10\ Sponsors of the legislation in both Houses of Congress asserted 
that it ``in no way repeals the minimum wage requirements and the 
overtime compensation requirements of the Fair Labor Standards Act'' 
\11\ that it ``protects the legitimate claims'' under that Act, \12\ and 
that one of the objectives of the sponsors was to ``preserve to the 
worker the rights he has gained under the Fair Labor Standards Act.'' 
\13\ It would therefore appear that the Congress did not intend by the 
Portal Act to change the general rule that the remedial provisions of 
the Fair Labor Standards Act are to be given a liberal interpretation 
\14\ and exemptions therefrom are to be narrowly construed and limited 
to those who can meet the burden of showing that they come ``plainly and 
unmistakably within (the) terms and spirit'' of such an exemption. \15\
---------------------------------------------------------------------------

    \7\ As appears more fully in the following sections of this part, 
the several provisions of the Portal Act relate, in pertinent part, to 
actions, causes of action, liabilities, or punishments based on the 
nonpayment by employers to their employees of minimum or overtime wages 
under the provision of the Fair Labor Standards Act. Section 13 of the 
Portal Act provides that the terms, ``employer,'' ``employee,'' and 
``wage'', when used in the Portal Act, in relation to the Fair Labor 
Standards Act, have the same meaning as when used in the latter Act.
    \8\ Portal Act, sections 1, 2, 4, 6, 9, 10, 11, 12.
    Sponsors of the legislation asserted that the provisions of the 
Portal Act do not deprive any person of a contract right or other right 
which he may have under the common law or under a State statute. See 
colloquy between Senators Donnell, Hatch and Ferguson, 93 Cong. Rec. 
2098; colloquy between Senators Donnell and Ferguson, 93 Cong. Rec. 
2127; statement of Representative Gwynne, 93 Cong. Rec. 1557.
    \9\ See references to this policy at page 5 of the Senate Committee 
Report on the bill (Senate Rept. 48, 80th Cong., 1st sess.), and in 
statement of Senator Donnell, 93 Cong. Rec. 2177; see also statement of 
Senator Morse, 93 Cong. Rec. 2274; statement of Representative Walter, 
93 Cong. Rec. 4389.
    \10\ Cf. House Rept. No. 71; Senate Rept. No. 48; House (Conf.) 
Rept. No. 326, 80th Cong., 1st sess. (referred to hereafter as House 
Report, Senate Report, and Conference Report); statement of 
Representative Michener, 93 Cong. Rec. 4390; statement of Senator Wiley, 
93 Cong. Rec. 4269, 4270; statement of Representative Gwynne, 93 Cong. 
Rec. 1572; statements of Senator Donnell, 93 Cong. Rec. 2133-2135, 2176-
2178; statement of Representative Robison, 93 Cong. Rec. 1499; Message 
of the President to Congress, May 14, 1947 on approval of the Act (93 
Cong. Rec. 5281).
    \11\ Statements of Senator Wiley, explaining the conference 
agreement to the Senate, 93 Cong. Rec. 4269 and 4371. See also statement 
of Senator Cooper, 93 Cong. Rec. 2295; statement of Representative 
Robsion, 93 Cong. Rec. 1499, 1500.
    \12\ Statement of Representative Michener, explaining the conference 
agreement to the House of Representatives, 93 Cong. Rec. 4391. See also 
statement of Representative Keating, 93 Cong. Rec. 1512.
    \13\ Statement of Senator Cooper, 93 Cong. Rec. 2300; see also 
statements of Senator Donnell, 93 Cong. Rec. 2361, 2362, 2364; 
statements of Representatives Walter and Robsion, 93 Cong. Rec. 1496, 
1498.
    \14\ Roland Electrical Co. v. Walling, 326 U.S. 657; United States 
v. Rosenwasser, 323 U.S. 360; Brooklyn Savings Bank v. O'Neil, 324 U.S. 
697.
    \15\ See Phillips Co. v. Walling, 324 U.S. 490; Walling v. General 
Industries Co., 330 U.S. 545.
---------------------------------------------------------------------------

    (b) It is clear from the legislative history of the Portal Act that 
the major provisions of the Fair Labor Standards Act remain in full 
force and effect, although the application of some of them is affected 
in certain respects by the 1947 Act. The provisions of the Portal Act do 
not directly affect the provisions of section 15(a)(1) of the Fair Labor 
Standards Act banning shipments in interstate commerce of ``hot'' goods 
produced by employees not paid in accordance with the Act's 
requirements, or the provisions of section 11(c) requiring employers to 
keep records in accordance with the regulations prescribed by the 
Administrator. The Portal Act does not affect in any way the provision 
in section 15(a)(3) banning discrimination against employees who assert 
their rights under the Fair Labor Standards Act, or the provisions of 
section 12(a) of the Act banning from interstate commerce goods produced 
in establishments in or about which oppressive child labor is employed. 
The effect of the Portal Act in relation to the minimum and overtime 
wage requirements of the Fair Labor Standards Act is considered in this 
part in connection with the discussion of specific provisions of the 
1947 Act.

Provisions Relating to Certain Activities Engaged in by Employees on or 
                           After May 14, 1947



Sec. 790.3  Provisions of the statute.

    Section 4 of the Portal Act, which relates to so-called ``portal-to-
portal'' activities engaged in by employees on or after May 14, 1947, 
provides as follows:

    (a) Except as provided in subsection (b), no employer shall be 
subject to any liability or punishment under the Fair Labor Standards 
Act of 1938, as amended, * * * on account of the failure of such 
employer to pay an employee minimum wages, or to pay an employee 
overtime compensation, for or on account of any of the following 
activities of such employee engaged in on or after the date of the 
enactment of this Act:
    (1) Walking, riding, or traveling to and from the actual place of 
performance of the principal activity or activities which such employee 
is employed to perform, and
    (2) Activities which are preliminary to or postliminary to said 
principal activity or activities

which occur either prior to the time on any particular workday at which 
such employee commences, or subsequent to the time on any particular 
workday at which he ceases,

[[Page 699]]

such principal activity or activities. For purposes of this subsection, 
the use of an employer's vehicle for travel by an employee and 
activities performed by an employee which are incidental to the use of 
such vehicle for commuting shall not be considered part of the 
employee's principal activities if the use of such vehicle for travel is 
within the normal commuting area for the employer's business or 
establishment and the use of the employer's vehicle is subject to an 
agreement on the part of the employer and the employee or representative 
of such employee.
    (b) Notwithstanding the provisions of subsection (a) which relieve 
an employer from liability and punishment with respect to an activity, 
the employer shall not be so relieved if such activity is compensable by 
either:
    (1) An express provision of a written or nonwritten contract in 
effect, at the time of such activity, between such employee, his agent, 
or collective-bargaining representative and his employer; or
    (2) A custom or practice in effect, at the time of such activity, at 
the establishment or other place where such employee is employed, 
covering such activity, not inconsistent with a written or nonwritten 
contract, in effect at the time of such activity, between such employee, 
his agent, or collective-bargaining representative and his employer.
    (c) For the purpose of subsection (b), an activity shall be 
considered as compensable under such contract provision or such custom 
or practice only when it is engaged in during the portion of the day 
with respect to which it is so made compensable.
    (d) In the application of the minimum wage and overtime compensation 
provisions of the Fair Labor Standards Act of 1938, as amended, * * * in 
determining the time for which an employer employs an employee with 
respect to walking, riding, traveling, or other preliminary or 
postliminary activities described in subsection (a) of this section, 
there shall be counted all that time, but only that time, during which 
the employee engages in any such activity which is compensable within 
the meaning of subsections (b) and (c) of this section.

[12 FR 7655, Nov. 18, 1947, as amended at 76 FR 18860, Apr. 5, 2011]



Sec. 790.4  Liability of employer; effect of contract, custom, or practice.

    (a) Section 4 of the Portal Act, quoted above, applies to situations 
where an employee, on or after May 14, 1974, has engaged in activities 
of the kind described in this section and has not been paid for or on 
account of these activities in accordance with the statutory standards 
established by the Fair Labor Standards Act. \16\ Where, in these 
circumstances such activities are not compensable by contract, custom, 
or practice as described in section 4, this section relieves the 
employer from certain liabilities or punishments to which he might 
otherwise be subject under the provisions of the Fair Labor Standards 
Act. \17\ The primary Congressional objectives in enacting section 4 of 
the Portal Act, as disclosed by the statutory language and legislative 
history were:
 (1) To minimize uncertainty as to the liabilities of employers which 
it was felt might arise in the future if the compensability under the 
Fair Labor Standards Act of such preliminary or postliminary activities 
should continue to be tested solely by existing criteria \18\ for 
determining compensable
---------------------------------------------------------------------------

    \16\ The Fair Labor Standards Act, as amended, requires the payment 
of the applicable minimum wage for all hours worked and overtime 
compensation for all hours in excess of 40 in a workweek at a rate not 
less than one and one-half times the employees regular rate of pay, 
unless a specific exemption applies.
    \17\ The failure of an employer to compensate employees subject to 
the Fair Labor Standards Act in accordance with its minimum wage and 
overtime requirements makes him liable to them for the amount of their 
unpaid minimum wages and unpaid overtime compensation together with an 
additional equal amount (subject to section 11 of the Portal-to-Portal 
Act, discussed below in Sec. 790.22) as liquidated damages (section 
16(b) of the Act); and, if his Act or omission is willful, subjects him 
to criminal penalties (section 16(a) of the Act). Civil actions for 
injunction can be brought by the Administrator (sections 11(a) and 17 of 
the Act).
\18\ Employees subject to the minimum and overtime wage provisions 
of the Fair Labor Standards Act have been held to be entitled to 
compensation in accordance with the statutory standards, regardless of 
contrary custom or contract, for all time spent during the workweek in 
``physical or mental exertion (whether burdensome or not), controlled or 
required by the employer and pursued necessarily and primarily for the 
benefit of the employer and his business'' (Tennessee Coal Iron & R.R. 
Co. v. Muscoda Local, 321 U.S. 590, 598), as well as for all time spent 
in active or inactive duties which such employees are engaged to perform 
(Armour & Co. v. Wantock, 323 U.S. 126, 132-134; Skidmore v. Swift & 
Co., 323, U.S. 134, 136-137).

 
[[Page 700]]


worktime, independently of contract, custom, or pratice; \19\ and
---------------------------------------------------------------------------

    
    \19\ Portal Act, section 1: Senate Report, pp. 41, 42, 46-49; 
Conference Report, pp. 12, 13; statements of Senator Wiley, 93 Cong. 
Rec. 2084, 4269-4270; statements of Senator Donnell, 93 Cong. Rec. 2089, 
2121, 2122, 2181, 2182, 2362, 2363; statements of Senator Cooper, 93 
Cong. Rec. 2292-2300.
---------------------------------------------------------------------------

    (2) To leave in effect, with respect to the workday proper, the 
interpretations by the courts and the Administrator of the requirements 
of the Fair Labor Standards Act with regard to the compensability of 
activities and time to be included in computing hours worked. \20\
---------------------------------------------------------------------------

    \20\ Senate Report, pp. 46-49; Conference Report, pp. 12, 13; 
statements of Senator Donnell, 93 Cong. Rec. 2181, 2182, 2362; 
statements of Senator Cooper, 93 Cong. Rec. 2294, 2296, 2297, 2299, 
2300; statement of Representative Gwynne, 93 Cong. Rec. 4388; statements 
of Senator Wiley, 93 Cong. Rec. 2084, 4269-4270.
---------------------------------------------------------------------------

    (b) Under section 4 of the Portal Act, an employer who fails to pay 
an employee minimum wages or overtime compensation for or on account of 
activities engaged in by such employee is relieved from liability or 
punishment therefor if, and only if, such activities meet the following 
three tests:
    (1) They constitute ``walking, riding, or traveling'' of the kind 
described in the statute, or other activities ``preliminary'' or 
``postliminary'' to the ``principal activity or activities'' which the 
employee is employed to perform; and
    (2) They take place before or after the performance of all the 
employee's ``principal activities'' in the workday; and
    (3) They are not compensable, during the portion of the day when 
they are engaged in, by virtue of any contract, custom, or practice of 
the kind described in the statute.
    (c) It will be observed that section 4 of the Portal Act relieves an 
employer of liability or punishment only with respect to activities of 
the kind described, which have not been made compensable by a contract 
or by a custom or practice (not inconsistent with a contract) at the 
place of employment, in effect at the time the activities are performed. 
The statute states that ``the employer shall not be so relieved'' if 
such activities are so compensable; \21\ it does not matter in such a 
situation that they are so-called ``portal-to-portal'' activities. \22\
---------------------------------------------------------------------------

    \21\ Section 4(b) of the Act (quoted in Sec. 790.3).
    \22\ Conference Report, pp. 12, 13; colloquy between Senators 
Donnell and Hakes, 93 Cong. Rec. 2181-2182; colloquy between Senators 
Cooper and McGrath, 93 Cong. Rec. 2297-2298, cf. colloquy between 
Senators Donnell and Hawkes, 93 Cong. Rec. 2179.


Accordingly, an employer who fails to take such activities into account 
in paying compensation to an employee who is subject to the Fair Labor 
Standards Act is not protected from liability or punishment in either of 
the following situations.
    (1) Where, at the time such activities are performed there is a 
contract, whether written or not, in effect between the employer and the 
employee (or the employee's agent or collective-bargaining 
representative), and by an express provision of this contract the 
activities are to be paid for; \23\ or
---------------------------------------------------------------------------

    \23\ Statements of Senator Donnell, 93 Cong. Rec. 2179, 2181, 2182; 
statements of Senator Cooper, 93 Cong. Rec. 2297, 2298, 2299.
---------------------------------------------------------------------------

    (2) Where, at the time such activities are performed, there is in 
effect at the place of employment a custom or practice to pay for such 
activities, and this custom or practice is not inconsistent with any 
applicable contract between such parties. \24\
---------------------------------------------------------------------------

    \24\ Statements of Senator Donnell, 93 Cong. Rec. 2181, 2182.


In applying these principles, it should be kept in mind that under the 
provisions of section 4(c) of the Portal-to-Portal Act, ``preliminary'' 
or ``postliminary'' activities which take place outside the workday 
``before the morning whistle'' or ``after the evening whistle'' are, for 
purposes of the statute, not to be considered compensable by a contract, 
custom or practice if such contract, custom or practice makes them 
compensable only during some other portion of the day. \25\

[12 FR 7655, Nov. 18, 1947, as amended at 35 FR 7383, May 12, 1970]

---------------------------------------------------------------------------

    \25\ Conference Report, pp. 12, 13. See also Sec. 790.12.


[[Page 701]]



Sec. 790.5  Effect of Portal-to-Portal Act on determination of hours worked.

    (a) In the application of the minimum wage and overtime compensation 
provisions of the Fair Labor Standards Act to activities of employees on 
or after May 14, 1947, the determination of hours worked is affected by 
the Portal Act only to the extent stated in section 4(d). This section 
requires that:

    . . . in determining the time for which an employer employs an 
employee with respect to walking, riding, traveling or other preliminary 
or postliminary activities described (in section 4(a)) there shall be 
counted all that time, but only that time, during which the employee 
engages in any such activity which is compensable (under contract, 
custom, or practice within the meaning of section 4 (b), (c)). \26\
---------------------------------------------------------------------------

    \26\ The full text of section 4 of the Act is set forth in Sec. 
790.3.


This provision is thus limited to the determination of whether time 
spent in such ``preliminary'' or ``postliminary'' activities, performed 
before or after the employee's ``principal activities'' for the workday 
\27\ must be included or excluded in computing time worked. \28\ If time 
spent in such an activity would be time worked within the meaning of the 
Fair Labor Standards Act if the Portal Act had not been enacted, \29\ 
then the question whether it is to be included or excluded in computing 
hours worked under the law as changed by this provision depends on the 
compensability of the activity under the relevant contract, custom, or 
practice applicable to the employment. Time occupied by such an activity 
is to be excluded in computing the time worked if, when the employee is 
so engaged, the activity is not compensable by a contract, custom, or 
practice within the meaning of section 4; otherwise it must be included 
as worktime in calculating minimum or overtime wages due. \30\ Employers 
are not relieved of liability for the payment of minimum wages or 
overtime compensation for any time during which an employee engages in 
such activities thus compensable by contract, custom, or practice. \31\ 
But where, apart from the Portal Act, time spent in such an activity 
would not be time worked within the meaning of the Fair Labor Standards 
Act, although made compensable by contract, custom, or practice, such 
compensability will not make it time worked under section 4(d) of the 
Portal Act.
---------------------------------------------------------------------------

    \27\ See Sec. 709.6. Section 4(d) makes plain that subsections (b) 
and (c) of section 4 likewise apply only to such activities.
    \28\ Conference Report, p. 13.
    \29\ See footnote 18.
    \30\ See Conference Report, pp. 10, 13.
    \31\ Conference Report, p. 10.
---------------------------------------------------------------------------

    (b) The operation of section 4(d) may be illustrated by the common 
situation of underground miners who spend time in traveling between the 
portal of the mine and the working face at the beginning and end of each 
workday. Before enactment of the Portal Act, time thus spent constituted 
hours worked. Under the law as changed by the Portal Act, if there is a 
contract between the employer and the miners calling for payment for all 
or a part of this travel, or if there is a custom or practice to the 
same effect of the kind described in section 4, the employer is still 
required to count as hours worked, for purposes of the Fair Labor 
Standards Act, all of the time spent in the travel which is so made 
compensable. \32\ But if there is no such contract, custom, or practice, 
such time will be excluded in computing worktime for purposes of the 
Act. And under the provisions of section 4(c) of the Portal Act, \33\ if 
a contract, custom, or practice of the kind described makes such travel 
compensable only during the portion of the day before the miners arrive 
at the working face and not during the portion of the day when they 
return from the working face to the portal of the mine, the only time 
spent in such travel which the employer is required to count as hours 
worked will be the time spent in traveling from the portal to the 
working face at the beginning of the workday.
---------------------------------------------------------------------------

    \32\ Cf. colloquies between Senators Donnell and Hawkes, 93 Cong. 
Rec. 2179, 2181, 2182; colloquy between Senators Ellender and Cooper, 83 
Cong. Rec. 2296-2297; colloquy between Senators McGrath and Cooper, 93 
Cong. Rec. 2297-2298. See also Senate Report, p. 48.
    \33\ See Sec. 790.3 and Conference Report pp. 12, 13. See also 
Senate Report, p. 48.

---------------------------------------------------------------------------

[[Page 702]]



Sec. 790.6  Periods within the ``workday'' unaffected.

    (a) Section 4 of the Portal Act does not affect the computation of 
hours worked within the ``workday'' proper, roughly described as the 
period ``from whistle to whistle,'' and its provisions have nothing to 
do with the compensability under the Fair Labor Standards Act of any 
activities engaged in by an employee during that period. \34\ Under the 
provisions of section 4, one of the conditions that must be present 
before ``preliminary'' or ``postliminary'' activities are excluded from 
hours worked is that they `occur either prior to the time on any 
particular workday at which the employee commences, or subsequent to the 
time on any particular workday at which he ceases' the principal 
activity or activities which he is employed to perform. Accordingly, to 
the extent that activities engaged in by an employee occur after the 
employee commences to perform the first principal activity on a 
particular workday and before he ceases the performance of the last 
principal activity on a particular workday, the provisions of that 
section have no application. Periods of time between the commencement of 
the employee's first principal activity and the completion of his last 
principal activity on any workday must be included in the computation of 
hours worked to the same extent as would be required if the Portal Act 
had not been enacted. \35\ The principles for determining hours worked 
within the ``workday'' proper will continue to be those established 
under the Fair Labor Standards Act without reference to the Portal Act, 
\36\ which is concerned with this question only as it relates to time 
spent outside the ``workday'' in activities of the kind described in 
section 4. \37\
---------------------------------------------------------------------------

    \34\ The report of the Senate Judiciary Committee states (p. 47), 
``Activities of an employee which take place during the workday are * * 
* not affected by this section (section 4 of the Portal-to-Portal Act, 
as finally enacted) and such activities will continue to be compensable 
or not without regard to the provisions of this section.''
    \35\ See Senate Report, pp. 47, 48; Conference Report, p. 12; 
statement of Senator Wiley, explaining the conference agreement to the 
Senate, 93 Cong. Rec. 4269 (also 2084, 2085); statement of 
Representative Gwynne, explaining the conference agreement to the House 
of Representatives, 93 Cong. Rec. 4388; statements of Senator Cooper, 93 
Cong. Rec. 2293-2294, 2296-2300; statements of Senator Donnell, 93 Cong. 
Rec. 2181, 2182, 2362.
    \36\ The determinations of hours worked under the Fair Labor 
Standards Act, as amended is discussed in part 785 of this chapter.
    \37\ See statement of Senator Wiley explaining the conference 
agreement to the Senate, 93 Cong. Rec. 3269. See also the discussion in 
Sec. Sec. 790.7 and 790.8.
---------------------------------------------------------------------------

    (b) ``Workday'' as used in the Portal Act means, in general, the 
period between the commencement and completion on the same workday of an 
employee's principal activity or activities. It includes all time within 
that period whether or not the employee engages in work throughout all 
of that period. For example, a rest period or a lunch period is part of 
the ``workday'', and section 4 of the Portal Act therefore plays no part 
in determining whether such a period, under the particular circumstances 
presented, is or is not compensable, or whether it should be included in 
the computation of hours worked. \38\ If an employee is required to 
report at the actual place of performance of his principal activity at a 
certain specific time, his ``workday'' commences at the time he reports 
there for work in accordance with the employer's requirement, even 
though through a cause beyond the employee's control, he is not able to 
commence performance of his productive activities until a later time. In 
such a situation the time spent waiting for work would be part of the 
workday, \39\ and section 4 of the Portal Act would not affect its 
inclusion in hours worked for purposes of the Fair Labor Standards Act.
---------------------------------------------------------------------------

    \38\ Senate Report, pp. 47, 48. Cf. statement of Senator Wiley 
explaining the conference agreement to the Senate, 93 Cong. Rec. 4269; 
statement of Senator Donnell, 93 Cong. Rec. 2362; statements of Senator 
Cooper, 93 Cong. Rec. 2297, 2298.
    \39\ Colloquy between Senators Cooper and McGrath, 93 Cong. Rec. 
2297, 2298.

[12 FR 7655, Nov. 18, 1947, as amended at 35 FR 7383, May 12, 1970]

[[Page 703]]



Sec. 790.7  ``Preliminary'' and ``postliminary'' activities.

    (a) Since section 4 of the Portal Act applies only to situations 
where employees engage in ``preliminary'' or ``postliminary'' activities 
outside the workday proper, it is necessary to consider what activities 
fall within this description. The fact that an employee devotes some of 
his time to an activity of this type is, however, not a sufficient 
reason for disregarding the time devoted to such activity in computing 
hours worked. If such time would otherwise be counted as time worked 
under the Fair Labor Standards Act, section 4 may not change the 
situation. Whether such time must be counted or may be disregarded, and 
whether the relief from liability or punishment afforded by section 4 of 
the Portal Act is available to the employer in such a situation will 
depend on the compensability of the activity under contract, custom, or 
practice within the meaning of that section. \40\ On the other hand, the 
criteria described in the Portal Act have no bearing on the 
compensability or the status as worktime under the Fair Labor Standards 
Act of activities that are not ``preliminary'' or ``postliminary'' 
activities outside the workday. \41\ And even where there is a contract, 
custom, or practice to pay for time spent in such a ``preliminary'' or 
``postliminary'' activity, section 4(d) of the Portal Act does not make 
such time hours worked under the Fair Labor Standards Act, if it would 
not be so counted under the latter Act alone. \42\
---------------------------------------------------------------------------

    \40\ See Conference Report. pp. 10, 12, 13; statements of Senator 
Donnell, 93 Cong. Rec. 2178-2179, 2181, 2182; statements of Senator 
Cooper, 93 Cong. Rec. 2297, 2298. See also Sec. Sec. 790.4 and 790.5.
    \41\ See Conference Report, p. 12; Senate Report, pp. 47, 48; 
statement of Senator Wiley, explaining the conference agreement to the 
Senate, 93 Cong. Rec. 4269; statement of Representative Gwynne, 
explaining the conference agreement to the House of Representatives, 93 
Cong. Rec. 4388. See also Sec. 790.6.
    \42\ See Sec. 790.5(a).
---------------------------------------------------------------------------

    (b) The words ``preliminary activity'' mean an activity engaged in 
by an employee before the commencement of his ``principal'' activity or 
activities, and the words ``postliminary activity'' means an activity 
engaged in by an employee after the completion of his ``principal'' 
activity or activities. No categorical list of ``preliminary'' and 
``postliminary'' activities except those named in the Act can be made, 
since activities which under one set of circumstances may be 
``preliminary'' or ``postliminary'' activities, may under other 
conditions be ``principal'' activities. The following ``preliminary'' or 
``postliminary'' activities are expressly mentioned in the Act: 
``Walking, riding, or traveling to or from the actual place of 
performance of the principal activity or activities which (the) employee 
is employed to perform.'' \43\
---------------------------------------------------------------------------

    \43\ Portal Act, subsections 4(a), 4(d). See also Conference Report, 
p. 13; statement of Senator Donnell, 93 Cong. Rec. 2181, 2362.
---------------------------------------------------------------------------

    (c) The statutory language and the legislative history indicate that 
the ``walking, riding or traveling'' to which section 4(a) refers is 
that which occurs, whether on or off the employer's premises, in the 
course of an employee's ordinary daily trips between his home or lodging 
and the actual place where he does what he is employed to do. It does 
not, however, include travel from the place of performance of one 
principal activity to the place of performance of another, nor does it 
include travel during the employee's regular working hours. \44\ For 
example, travel by a repairman from one place where he performs repair 
work to another such place, or travel by a messenger delivering 
messages, is not the kind of ``walking, riding or traveling'' described 
in section 4(a). Also, where an employee travels outside his regular 
working hours at the direction and on the business of his employer, the 
travel

[[Page 704]]

would not ordinarily be ``walking, riding, or traveling'' of the type 
referred to in section 4(a). One example would be a traveling employee 
whose duties require him to travel from town to town outside his regular 
working hours; another would be an employee who has gone home after 
completing his day's work but is subsequently called out at night to 
travel a substantial distance and perform an emergency job for one of 
his employer's customers. \45\ In situations such as these, where an 
employee's travel is not of the kind to which section 4(a) of the Portal 
Act refers, the question whether the travel time is to be counted as 
worktime under the Fair Labor Standards Act will continue to be 
determined by principles established under this Act, without reference 
to the Portal Act. \46\
---------------------------------------------------------------------------

    \44\ These conclusions are supported by the limitation, ``to and 
from the actual place of performance of the principal activity or 
activities which (the) employee is employed to perform,'' which follows 
the term ``walking, riding or traveling'' in section 4(a), and by the 
additional limitation applicable to all ``preliminary'' and 
``postliminary'' activities to the effect that the Act may affect them 
only if they occur ``prior to'' or ``subsequent to'' the workday. See, 
in this connection the statements of Senator Donnell, 93 Conf. Rec. 
2121, 2181, 2182, 2363; statement of Senator Cooper, 93 Cong. Rec. 2297. 
See also Senate Report, pp. 47, 48.
    \45\ The report of the Senate Judiciary Committee (p. 48) emphasized 
that this section of the Act ``does not attempt to cover by specific 
language that many thousands of situations that do not readily fall 
within the pattern of the ordinary workday.''
    \46\ These principles are discussed in part 785 of this chapter.
---------------------------------------------------------------------------

    (d) An employee who walks, rides or otherwide travels while 
performing active duties is not engaged in the activities described in 
section 4(a). An illustration of such travel would be the carrying by a 
logger of a portable power saw or other heavy equipment (as 
distinguished from ordinary hand tools) on his trip into the woods to 
the cutting area. In such a situation, the walking, riding, or traveling 
is not segreable from the simultaneous performance of his assigned work 
(the carrying of the equipment, etc.) and it does not constitute travel 
``to and from the actual place of performance'' of the principal 
activities he is employed to perform. \47\
---------------------------------------------------------------------------

    \47\ Senator Cooper, after explaining that the ``principal'' 
activities referred to include activities which are an integral part of 
a ``principal'' activity (Senate Report, pp. 47, 48), that is, those 
which ``are indispensable to the performance of the productive work,'' 
summarized this provision as it appeared in the Senate Bill by stating: 
``We have clearly eliminated from compensation walking, traveling, 
riding, and other activities which are not an integral part of the 
employment for which the worker is employer.'' 93 Cong. Rec. 2299.
---------------------------------------------------------------------------

    (e) The report of the Senate Committee on the Judiciary (p. 47) 
describes the travel affected by the statute as ``Walking, riding, or 
traveling to and from the actual place of performance of the principal 
activity or activities within the employer's plant, mine, building, or 
other place of employment, irrespective of whether such walking, riding, 
or traveling occur on or off the premises of the employer or before or 
after the employee has checked in or out.'' The phrase, actual place of 
performance,'' as used in section 4(a), thus emphasizes that the 
ordinary travel at the beginning and end of the workday to which this 
section relates includes the employee's travel on the employer's 
premises until he reaches his workbench or other place where he 
commences the performance of the principal activity or activities, and 
the return travel from that place at the end of the workday. However 
where an employee performs his principal activity at various places 
(common examples would be a telephone lineman, a ``trouble-shooter'' in 
a manufacturing plant, a meter reader, or an exterminator) the travel 
between those places is not travel of the nature described in this 
section, and the Portal Act has not significance in determining whether 
the travel time should be counted as time worked.
    (f) Examples of walking, riding, or traveling which may be performed 
outside the workday and would normally be considered ``preliminary'' or 
``postliminary'' activities are (1) walking or riding by an employee 
between the plant gate and the employee's lathe, workbench or other 
actual place of performance of his principal activity or activities; (2) 
riding on buses between a town and an outlying mine or factory where the 
employee is employed; and (3) riding on buses or trains from a logging 
camp to a particular site at which the logging operations are actually 
being conducted. \48\
---------------------------------------------------------------------------

    \48\ See Senate Report, p. 47; statements of Senator Donnell, 93 
Cong. Rec. 2121, 2182, 3263.
---------------------------------------------------------------------------

    (g) Other types of activities which may be performed outside the 
workday

[[Page 705]]

and, when performed under the conditions normally present, would be 
considered ``preliminary'' or ``postliminary'' activities, include 
checking in and out and waiting in line to do so, changing clothes, 
washing up or showering, and waiting in line to receive pay checks. \49\
---------------------------------------------------------------------------

    \49\ See Senate Report p. 47. Washing up after work, like the 
changing of clothes, may in certain situations be so directly related to 
the specific work the employee is employed to perform that it would be 
regarded as an integral part of the employee's ``principal activity''. 
See colloquy between Senators Cooper and McGrath, 93 Cong. Rec. 2297-
2298. See also paragraph (h) of this section and Sec. 790.8(c). This 
does not necessarily mean, however, that travel between the washroom or 
clothes-changing place and the actual place of performance of the 
specific work the employee is employed to perform, would be excluded 
from the type of travel to which section 4(a) refers.
---------------------------------------------------------------------------

    (h) As indicated above, an activity which is a ``preliminary'' or 
``postliminary'' activity under one set of circumstances may be a 
principal activity under other conditions. \50\ This may be illustrated 
by the following example: Waiting before the time established for the 
commencement of work would be regarded as a preliminary activity when 
the employee voluntarily arrives at his place of employment earlier than 
he is either required or expected to arrive. Where, however, an employee 
is required by his employer to report at a particular hour at his 
workbench or other place where he performs his principal activity, if 
the employee is there at that hour ready and willing to work but for 
some reason beyond his control there is no work for him to perform until 
some time has elapsed, waiting for work would be an integral part of the 
employee's principal activities. \51\ The difference in the two 
situations is that in the second the employee was engaged to wait while 
in the first the employee waited to be engaged. \52\
---------------------------------------------------------------------------

    \50\ See paragraph (b) of this section. See also footnote 49.
    \51\ Colloquy between Senators Cooper and McGrath, 93 Cong. Rec. 
2298.
    \52\ See Skidmore v. Swift & Co., 323 U.S. 134, 7 WHR 1165.

[12 FR 7655, Nov. 18, 1947, as amended at 35 FR 7383, May 12, 1970]



Sec. 790.8  ``Principal'' activities.

    (a) An employer's liabilities and obligations under the Fair Labor 
Standards Act with respect to the ``principal'' activities his employees 
are employed to perform are not changed in any way by section 4 of the 
Portal Act, and time devoted to such activities must be taken into 
account in computing hours worked to the same extent as it would if the 
Portal Act had not been enacted. \53\ But before it can be determined 
whether an activity is ``preliminary or postliminary to (the) principal 
activity or activities'' which the employee is employed to perform, it 
is generally necessary to determine what are such ``principal'' 
activities. \54\
---------------------------------------------------------------------------

    \53\ See Sec. Sec. 790.4 through 790.6 of this bulletin and part 
785 of this chapter, which discusses the principles for determining 
hours worked under the Fair Labor Standards Act, as amended.
    \54\ Although certain ``preliminary'' and ``postliminary'' 
activities are expressly mentioned in the statute (see Sec. 790.7(b)), 
they are described with reference to the place where principal 
activities are performed. Even as to these activities, therefore, 
identification of certain other activities as ``principal'' activities 
is necessary.


The use by Congress of the plural form ``activities'' in the statute 
makes it clear that in order for an activity to be a ``principal'' 
activity, it need not be predominant in some way over all other 
activities engaged in by the employee in performing his job; \55\ 
rather, an employee may, for purposes of the Portal-to-Portal Act be 
engaged in several ``principal'' activities during the workday. The 
``principal'' activities referred to in the statute are activities which 
the employee is ``employed to perform''; \56\ they do not include 
noncompensable ``walking, riding, or traveling'' of the type referred to 
in section 4 of the Act. \57\ Several guides to determine what 
constitute ``principal activities'' was suggested in the legislative 
debates. One of the members of the

[[Page 706]]

conference committee stated to the House of Representatives that ``the 
realities of industrial life,'' rather than arbitrary standards, ``are 
intended to be applied in defining the term `principal activity or 
activities','' and that these words should ``be interpreted with due 
regard to generally established compensation practices in the particular 
industry and trade.'' \58\ The legislative history further indicates 
that Congress intended the words ``principal activities'' to be 
construed liberally in the light of the foregoing principles to include 
any work of consequence performed for an employer, no matter when the 
work is performed. \59\ A majority member of the committee which 
introduced this language into the bill explained to the Senate that it 
was considered ``sufficiently broad to embrace within its terms such 
activities as are indispensable to the performance of productive work.'' 
\60\
---------------------------------------------------------------------------

    \55\ Cf. Edward F. Allison Co., Inc. v. Commissioner of Internal 
Revenue, 63 F. (2d) 553 (C.C.A. 8, 1933).
    \56\ Cf. Armour & Co. v. Wantock, 323 U.S. 126, 132-134; Skidmore v. 
Swift & Co., 323 U.S. 134, 136-137.
    \57\ See statement of Senator Cooper, 93 Cong. Rec. 2297.
    \58\ Remarks of Representative Walter, 93 Cong. Rec. 4389. See also 
statements of Senator Cooper, 93 Cong. Rec. 2297, 2299.
    \59\ See statements of Senator Cooper, 93 Cong. Rec. 2296-2300. See 
also Senate Report, p. 48, and the President's message to Congress on 
approval of the Portal Act, May 14, 1947 (93 Cong. Rec. 5281).
    \60\ See statement of Senator Cooper, 93 Cong. Rec. 2299.
---------------------------------------------------------------------------

    (b) The term ``principal activities'' includes all activities which 
are an integral part of a principal activity. \61\ Two examples of what 
is meant by an integral part of a principal activity are found in the 
Report of the Judiciary Committee of the Senate on the Portal-to-Portal 
Bill. \62\ They are the following:
---------------------------------------------------------------------------

    \61\ Senate Report, p. 48; statements of Senator Cooper, 93 Cong. 
Rec. 2297-2299.
    \62\ As stated in the Conference Report (p. 12), by Representative 
Gwynne in the House of Representatives (93 Cong. Rec. 4388) and by 
Senator Wiley in the Senate (93 Cong. Rec. 4371), the language of the 
provision here involved follows that of the Senate bill.
---------------------------------------------------------------------------

    (1) In connection with the operation of a lathe an employee will 
frequently at the commencement of his workday oil, grease or clean his 
machine, or install a new cutting tool. Such activities are an integral 
part of the principal activity, and are included within such term.
    (2) In the case of a garment worker in a textile mill, who is 
required to report 30 minutes before other employees report to commence 
their principal activities, and who during such 30 minutes distributes 
clothing or parts of clothing at the work-benches of other employees and 
gets machines in readiness for operation by other employees, such 
activities are among the principal activities of such employee.

Such preparatory activities, which the Administrator has always regarded 
as work and as compensable under the Fair Labor Standards Act, remain so 
under the Portal Act, regardless of contrary custom or contract. \63\
---------------------------------------------------------------------------

    \63\ Statement of Senator Cooper, 93 Cong. Rec. 2297; colloquy 
between Senators Barkley and Cooper, 93 Cong. Rec. 2350. The fact that a 
period of 30 minutes was mentioned in the second example given by the 
committee does not mean that a different rule would apply where such 
preparatory activities take less time to perform. In a colloquy between 
Senators McGrath and Cooper, 93 Cong. Rec. 2298, Senator Cooper stated 
that ``There was no definite purpose in using the words `30 minutes' 
instead of 15 or 10 minutes or 5 minutes or any other number of 
minutes.'' In reply to questions, he indicated that any amount of time 
spent in preparatory activities of the types referred to in the examples 
would be regarded as a part of the employee's principal activity and 
within the compensable workday. Cf. Anderson v. Mt. Clemens Pottery Co., 
328 U.S. 680, 693.
---------------------------------------------------------------------------

    (c) Among the activities included as an integral part of a principal 
activity are those closely related activities which are indispensable to 
its performance. \64\ If an employee in a chemical plant, for example, 
cannot perform his principal activities without putting on certain 
clothes, \65\ changing clothes on the employer's premises at the 
beginning and end of the workday would be an integral part of the 
employee's principal activity. \66\ On the other hand, if

[[Page 707]]

changing clothes is merely a convenience to the employee and not 
directly related to his principal activities, it would be considered as 
a ``preliminary'' or ``postliminary'' activity rather than a principal 
part of the activity. \67\ However, activities such as checking in and 
out and waiting in line to do so would not ordinarily be regarded as 
integral parts of the principal activity or activities. \67\
---------------------------------------------------------------------------

    \64\ See statements of Senator Cooper, 93 Cong. Rec. 2297-2299, 
2377; colloquy between Senators Barkley and Cooper, 93 Cong. Rec. 2350.
    \65\ Such a situation may exist where the changing of clothes on the 
employer's premises is required by law, by rules of the employer, or by 
the nature of the work. See footnote 49.
    \66\ See colloquy between Senators Cooper and McGrath, 93 Cong. Rec. 
2297-2298.
    \67\ See Senate Report, p. 47; statements of Senator Donnell, 93 
Cong. Rec. 2305-2306, 2362; statements of Senator Cooper, 93 Cong. Rec. 
2296-2297, 2298.

[12 FR 7655, Nov, 18, 1947, as amended at 35 FR 7383, May 12, 1970]



Sec. 790.9  ``Compensable * * * by an express provision of a written
or nonwritten contract.''

    (a) Where an employee engages in a ``preliminary'' or 
``postliminary'' activity of the kind described in section 4(a) of the 
Portal Act and this activity is ``compensable * * * by an express 
provision of a written or nonwritten contract'' applicable to the 
employment, section 4 does not operate to relieve the employer of 
liability or punishment under the Fair Labor Standards Act with respect 
to such activity, \68\ and does not relieve the employer of any 
obligation he would otherwise have under that Act to include time spent 
in such activity in computing hours worked. \69\
---------------------------------------------------------------------------

    \68\ See Sec. 790.4.
    \69\ See Sec. Sec. 790.5 and 790.7.
---------------------------------------------------------------------------

    (b) The word ``compensable,'' is used in subsections (b), (c), and 
(d) of section 4 without qualification. \70\ It is apparent from these 
provisions that ``compensable'' as used in the statute, means 
compensable in any amount. \71\
---------------------------------------------------------------------------

    \70\ The word is also so used throughout section 2 of the Act which 
relates to past claims. See Sec. Sec. 790.28-790.25.
    \71\ Cf. Conference Report, pp. 9, 10, 12, 13; message of the 
President to the Congress on approval of the Portal-to-Portal Act, May 
14, 1947 (93 Cong. Rec. 5281).
---------------------------------------------------------------------------

    (c) The phrase ``compensable by an express provision of a written or 
non- written contract'' in section 4(b) of the Portal Act offers no 
difficulty where a written contract states that compensation shall be 
paid for the specific activities in question, naming them in explicit 
terms or identifying them through any appropriate language. Such a 
provision clearly falls within the statutory description. \72\ The 
existence or nonexistence of an express provision making an activity 
compensable is more difficult to determine in the case of a nonwritten 
contract since there may well be conflicting recollections as to the 
exact terms of the agreement. The words ``compensable by an express 
provision'' indicate that both the intent of the parties to contract 
with respect to the activity in question and their intent to provide 
compensation for the employee's performance of the activity must 
satisfactorily appear from the express terms of the agreement.
---------------------------------------------------------------------------

    \72\ See colloquy between Senators Donnell and Lodge, 93 Cong. Rec. 
2178; colloquies between Senators Donnell and Hawkes, 93 Cong. Rec. 
2179, 2181-2182.
---------------------------------------------------------------------------

    (d) An activity of an employee is not ``compensable by * * * a 
written or nonwritten contract'' within the meaning of section 4(b) of 
the Portal Act unless the contract making the activity compensable is 
one ``between such employee, \72\ his agent, or collective-bargaining 
representative and his employer.'' \73\ Thus, a provision in a contract 
between a government agency and the employer, relating to compensation 
of the contractor's employees, would not in itself establish the 
compensability by ``contract'' of an activity, for purposes of section 
4.
---------------------------------------------------------------------------

    \73\ The terms ``employee'' and ``employer'' have the same meaning 
as when used in the Fair Labor Standards Act. Portal-to-Portal Act, 
section 13(a).
---------------------------------------------------------------------------



Sec. 790.10  ``Compensable * * * by a custom or practice.''

    (a) A ``preliminary'' or ``postliminary'' activity of the type 
described in section 4(a) of the Portal Act may be ``compensable'' 
within the meaning of section 4(b), by a custom or practice as well as 
by a contract. If it is so compensable, the relief afforded by section 4 
is not available to the employer with respect to such activity, \74\ and 
section 4(d) does not operate to exclude the time spent in such activity 
from hours worked under the Fair

[[Page 708]]

Labor Standards Act. \75\ Accordingly, in the event that no ``express 
provision of a written or nonwritten contract'' makes compensable the 
activity in question, it is necessary to determine whether the activity 
is made compensable by a custom or practice, not inconsistent with such 
a contract, in effect at the establishment or other place where the 
employee was employed. \76\
---------------------------------------------------------------------------

    \74\ See Sec. 790.4.
    \75\ See Sec. Sec. 790.5 and 790.7.
    \76\ See Senate Report, p. 49.
    The same is true with respect to the activities referred to in 
section 2 of the Portal Act in an action or proceeding relating to 
activities performed before May 14, 1947. See Senate Report, p. 45. See 
also Sec. 790.23.
---------------------------------------------------------------------------

    (b) The meaning of the word ``compensable'' is the same, for 
purposes of the statute, whether a contract or a custom or practice is 
involved. \77\
---------------------------------------------------------------------------

    \77\ See Sec. 790.9(b).
---------------------------------------------------------------------------

    (c) The phrase, ``custom or practice,'' is one which, in common 
meaning, is rather broad in scope. The meaning of these words as used in 
the Portal Act is not stated in the statute; it must be ascertained from 
their context and from other available evidence of the Congressional 
intent, with such aid as may be had from the many judicial decisions 
interpreting the words ``custom'' and ``practice'' as used in other 
connections. Although the legislative history casts little light on the 
precise limits of these terms, it is believed that the Congressional 
reference to contract, custom or practice was a deliberate use of non-
technical words which are commonly understood and broad enough to cover 
every normal situation under which an employee works or an employer for 
compensation. \78\ Accordingly, ``custom'' and ``practice,'' as used in 
section 4(b) of the Portal Act, may be said to be descriptive generally 
of those situations where an employer, without being compelled to do so 
by an express provision of a contract, has paid employees for certain 
activities performed. One of the sponsors of the legislation in the 
House of Representatives indicated that the intention was not only ``to 
protect every collective bargaining agreement about these activities'' 
but ``to protect the agreement between one workman and his employer'' 
and ``every practice or custom which we assume must have entered into 
the minds of the people when they made the contract.'' \79\
---------------------------------------------------------------------------

    \78\ See colloquy between Senators Donnell and Tydings, 93 Cong. 
Rec. 2125, 2126; colloquy between Senators Donnell, Lodge, and Hawkes, 
93 Cong. Rec. 2178, 2179; colloquy between Senators Donnell and Hawkes, 
93 Cong. Rec. 2181, 2182. Statements of Senator Cooper, 93 Cong. Rec. 
2293.
    \79\ Statements of Representative Gwynne, 93 Cong. Rec. 1566.
---------------------------------------------------------------------------

    (d) The words, ``custom or practice,'' as used in the Portal Act, do 
not refer to industry custom or the habits of the community which are 
familiar to the people; these words are qualified by the phrase ``in 
effect * * * at the establishment or other place where such employee was 
employed.'' The compensability of an activity under custom or practice, 
for purposes of this Act, is tested by the custom or the practice at the 
``particular place of business,'' ``plant,'' ``mine,'' ``factory,'' 
``forest,'' etc. \80\
---------------------------------------------------------------------------

    \80\ Senate Report, p. 45; colloquy between Senators Donnell and 
Hawkes, 93 Cong. Rec. 2179.
---------------------------------------------------------------------------

    (e) ``The custom or practice'' by which compensability of an 
activity is tested under the statute is one ``covering such activity.'' 
Thus, a custom or practice to pay for washing up in the plant after the 
end of the workday, for example, would not necessarily establish the 
compensability of walking time thereafter from the washroom in the plant 
to the plant gate. It is enough, however, if there is a custom or 
practice covering ``such activity''; there is no provision, as there is 
with regard to contracts, that the custom or practice be one ``between 
such employee, his agent, or collective-bargaining representative, and 
his employer.'' \81\
---------------------------------------------------------------------------

    \81\ See Sec. 790.9(d).
---------------------------------------------------------------------------

    (f) Another qualification of the ``custom or practice'' referred to 
in the statute is that it be ``not inconsistent with a written or non-
written contract'' of the kind mentioned therein. If the contract is 
silent on the question of compensability of the activity, a custom or 
practice to pay for it would

[[Page 709]]

not be inconsistent with the contract. \82\ However, the intent of the 
provision is that a custom or practice which is inconsistent with the 
terms of any such contract shall not be taken into account in 
determining whether such an activity is compensable. \83\
---------------------------------------------------------------------------

    \82\ Senate Report, pp. 45, 49; colloquy between Senators Donnell 
and Hawkes, 93 Cong. Rec. 2179.
    \83\ Senate Report, pp. 45, 49.
---------------------------------------------------------------------------



Sec. 790.11  Contract, custom or practice in effect ``at the time of 
such activity.''

    The ``contract,'' ``custom'' or ``practice'' on which the 
compensability of the activities referred to in section 4 of the Portal 
Act may be based, is a contract, custom or practice in effect ``at the 
time of such activity.'' Thus, the compensability of such an activity, 
and its inclusion in computation of hours worked, is not determinable by 
a custom or practice which had been terminated before the activity was 
engaged in or was adopted some time after the activity was performed. 
This phrase would also seem to permit recognition of changes in customs, 
practices and agreements which reflect changes in labor-management 
relations or policies.



Sec. 790.12  ``Portion of the day.''

    A ``preliminary'' or ``postliminary'' activity of the kind referred 
to in section 4 of the Portal Act is compensable under a contract, 
custom, or practice within the meaning of that section ``only when it is 
engaged in during the portion of the day with respect to which it is so 
made compensable.'' \84\ This provision in no way affects the 
compensability of activities performed within the workday proper or the 
computation of hours worked within such workday for purposes of the Fair 
Labor Standards Act; \85\ the provision is applicable only to walking, 
riding, traveling or other ``preliminary'' or ``postliminary'' 
activities of the kind described in section 4(a) of the Portal Act, \86\ 
which are engaged in outside the workday, during the portions of the day 
before performance of the first principal activity and after performance 
of the last principal activity of the employee. \87\
---------------------------------------------------------------------------

    \84\ Section 4(c) of the Portal Act (set out in full in Sec. 
790.3).
    \85\ See Sec. Sec. 790.4-790.6.
    \86\ Conference Report, pp. 12, 13.
    \87\ See Conference Report, p. 13; Sec. Sec. 790.4(c) and 790.5(b).
    The scope of section 4(c) is narrower in this respect than that of 
section 2(b), which is couched in identical language. Cf. Conference 
Report, pp. 9, 10; pp. 12, 13. See also Sec. 790.23.
---------------------------------------------------------------------------

   Defense of Good Faith Reliance on Administrative Regulations, etc.



Sec. 790.13  General nature of defense.

    (a) Under the provisions of sections 9 and 10 of the Portal Act, an 
employer has a defense against liability or punishment in any action or 
proceeding brought against him for failure to comply with the minimum 
wage and overtime provisions of the Fair Labor Standards Act, where the 
employer pleads and proves that ``the act or omission complained of was 
in good faith in conformity with and in reliance on any administrative 
regulation, order, ruling, approval, or interpretation'' or ``any 
administrative practice or enforcement policy * * * with respect to the 
class of employers to which he belonged.'' In order to provide a defense 
with respect to acts or omissions occurring on or after May 14, 1947 
(the effective date of the Portal Act), the regulation, order, ruling, 
approval, interpretation, administrative practice or enforcement policy 
relied upon and conformed with must be that of the ``Administrator of 
the Wage and Hour Division of the Department of Labor,'' and a 
regulation, order, ruling, approval, or interpretation of the 
Administrator may be relied on only if it is in writing. \88\ But where 
the acts or omissions complained of occurred before May 14, 1947, the 
employer may show that they were in good faith in conformity with and in 
reliance on ``any'' (written or nonwritten) administrative

[[Page 710]]

regulation, order, ruling, or interpretation of ``any agency of the 
United States,'' or any administrative practice or enforcement policy of 
``any such agency'' with respect to the class of employers to which he 
belonged. \89\ In all cases, however, the act or omission complained of 
must be both ``in conformity with'' \90\ and ``in reliance on'' \91\ the 
administrative regulation, order, ruling, approval, interpretation, 
practice, or enforcement policy, as the case may be, and such 
conformance and reliance and such act or omission must be ``in good 
faith.'' \92\ The relief from liability or punishment provided by 
sections 9 and 10 of the Portal Act is limited by the statute to 
employers who both plead and prove all the requirements of the defence. 
\93\
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    \88\ Portal Act, sec. 10; Conference Report, p. 16; statements of 
Senator Wiley, explaining the conference agreement to the Senate, 93 
Cong. Rec. 4270; statements of Representatives Gwynne and Walter, 
explaining the conference agreement to the House of Representatives, 93 
Cong. Rec. 4388, 4389. See also Sec. Sec. 790.17 and 790.19.
    \89\ Portal Act, sec. 10; Conference Report, p. 16; statement of 
Senator Wiley, explaining the conference agreement to the Senate, 93 
Cong. Rec. 4270; statements of Representatives Gwynne and Walter, 93 
Cong. Rec. 4388, 4389. See also Sec. 790.19.
    \90\ See Sec. 790.14.
    \91\ See Sec. 790.16.
    \92\ See Sec. 790.15.
    \93\ Conference Report, pp. 15, 16; statements of Representatives 
Gwynne and Walter, explaining the conference agreement to the House of 
Representatives, 93 Cong. Rec. 4388, 4389; statements of Senators Cooper 
and Donnell, 93 Cong. Rec. 4372, 4451, 4452. See also the President's 
message of May 14, 1947, to the Congress on approval of the Act (93 
Cong. Rec. 5281).
    The requirements of the statute as to pleading and proof emphasize 
the continuing recognition by Congress of the remedial nature of the 
Fair Labor Standards Act and of the need for safeguarding the protection 
which Congress intended it to afford employees. See Sec. 790.2; of. 
statements of Senator Wiley, 93 Cong. Rec. 4270; Senator Donnell, 93 
Cong. Rec. 4452, and Representative Walter, 93 Cong. Rec. 4388, 4389.
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    (b) The distinctions mentioned in paragraph (a) of this section, 
depending on whether the acts or omissions complained of occurred before 
or after May 14, 1947, may be illustrated as follows: Assume that an 
employer, on commencing performance of a contract with X Federal Agency 
extending from January 1, 1947 to January 1, 1948, received an opinion 
from the agency that employees working under the contract were not 
covered by the Fair Labor Standards Act. Assume further that the 
employer may be said to have relied in good faith upon this opinion and 
therefore did not compensate such employees during the period of the 
contract in accordance with the provisions of the Act. After completion 
of the contract on January 1, 1948, the employees, who have learned that 
they are probably covered by the Act, bring suit against their employer 
for unpaid overtime compensation which they claim is due them. If the 
court finds that the employees were performing work subject to the Act, 
they can recover for the period commencing May 14, 1947, even though the 
employer pleads and proves that his failure to pay overtime was in good 
faith in conformity with and in reliance on the opinion of X Agency, 
because for that period the defense would, under section 10 of the 
Portal Act, have to be based upon written administrative regulation, 
order, ruling, approval, or interpretation, or an administrative 
practice or enforcement policy of the Administrator of the Wage and Hour 
Division. The defense would, however, be good for the period from 
January 1, 1947 to May 14, 1947, and the employer would be freed from 
liability for that period under the provisions of section 9 of the 
statute.



Sec. 790.14  ``In conformity with.''

    (a) The ``good faith'' defense is not available to an employer 
unless the acts or omissions complained of were ``in conformity with'' 
the regulation, order, ruling, approval, interpretation, administrative 
practice or enforcement policy upon which he relied. \94\ This is true 
even though the employer erroneously believes he conformed with it and 
in good faith relied upon it; actual conformity is necessary.
---------------------------------------------------------------------------

    \94\ Statement of Senator Cooper, 93 Cong. Rec. 4451; message of the 
President to Congress on approval of the Act, May 14, 1947, 93 Cong. 
Rec. 5281.
---------------------------------------------------------------------------

    (b) An example of an employer not acting ``in conformity with'' an 
administrative regulation, order, ruling, approval, practice, or 
enforcement policy is a situation where an employer receives a letter 
from the Administrator of the Wage and Hour Division, stating that if 
certain specified circumstances and facts regarding the work performed

[[Page 711]]

by the employer's employees exist, the employees are, in his opinion, 
exempt from provisions of the Fair Labor Standards Act. One of these 
hypothetical circumstances upon which the opinion was based does not 
exist regarding these employees, but the employer, erroneously assuming 
that this circumstance is irrelevant, relies upon the Administrator's 
ruling and fails to compensate the employees in accordance with the Act. 
Since he did not act ``in conformity'' with that opinion, he has no 
defense under section 9 or 10 of the Portal Act.
    (c) As a further example of the requirement of conformity, reference 
is made to the illustration given in Sec. 790.13(b), where an employer, 
who had a contract with the X Federal Agency covering the period from 
January 1, 1947 to January 1, 1948, received an opinion from the agency 
that employees working on the contract were not covered by the Fair 
Labor Standards Act. Assume (1) that the X Agency's opinion was confined 
solely and exclusively to activities performed under the particular 
contract held by the employer with the agency and made no general 
statement regarding the status under the Act of the employer's employees 
while performing other work; and (2) that the employer, erroneously 
believing the reasoning used in the agency's opinion also applied to 
other and different work performed by his employees, did not compensate 
them for such different work, relying upon that opinion. As previously 
pointed out, the opinion from the X Agency, if relied on and conformed 
with in good faith by the employer, would form the basis of a ``good 
faith'' defense for the period prior to May 14, 1947, insofar as the 
work performed by the employees on this particular contract with that 
agency was concerned. The opinion would not, however, furnish the 
employer a defense regarding any other activities of a different nature 
performed by his employees, because it was not an opinion concerning 
such activities, and insofar as those activities are concerned, the 
employer could not act ``in conformity'' with it.



Sec. 790.15  ``Good faith.''

    (a) One of the most important requirements of sections 9 and 10 is 
proof by the employer that the act or omission complained of and his 
conformance with and reliance upon an administrative regulation, order, 
ruling, approval, interpretation, practice or enforcement policy, were 
in good faith. The legislative history of the Portal Act makes it clear 
that the employer's ``good faith'' is not to be determined merely from 
the actual state of his mind. Statements made in the House and Senate 
indicate that ``good faith'' also depends upon an objective test--
whether the employer, in acting or omitting to act as he did, and in 
relying upon the regulation, order, ruling, approval, interpretation, 
administrative practice or enforcement policy, acted as a reasonably 
prudent man would have acted under the same or similar circumstances. 
\95\ ``Good faith'' requires that the employer have honesty of intention 
and no knowledge of circumstances which ought to put him upon inquiry. 
\96\
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    \95\ Colloquy between Representatives Reeves and Devitt, 93 Cong. 
Rec. 1593; colloquy between Senators Ferguson and Donnell, 93 Cong. Rec. 
4451-4452.
    \96\ See statement of Senator McGrath, 93 Cong. Rec. 2254-2255; 
statement of Representative Keating, 93 Cong. Rec. 4391; statement of 
Representative Walter, 93 Cong. Rec. 4389.
---------------------------------------------------------------------------

    (b) Some situations illustrating the application of the principles 
stated in paragraph (a) of this section may be mentioned. Assume that a 
ruling from the Administrator, stating positively that the Fair Labor 
Standards Act does not apply to certain employees, is received by an 
employer in response to a request which fully described the duties of 
the employees and the circumstances surrounding their employment. It is 
clear that the employer's employment of such employees in such duties 
and under such circumstances in reliance on the Administrator's ruling, 
without compensating them in accordance with the Act, would be in good 
faith so long as the ruling remained unrevoked and the employer had no 
notice of any facts or circumstances which would lead a reasonably 
prudent man to make further inquiry as to

[[Page 712]]

whether the employees came within the Act's provisions. Assume, however, 
that the Administrator's ruling was expressly based on certain court 
decisions holding that employees so engaged in commerce or in the 
production of goods for commerce, and that the employer subsequently 
learned from his attorney that a higher court had reversed these 
decisions or had cast doubt on their correctness by holding employees 
similarly situated to be engaged in an occupation necessary to the 
production of goods for interstate commerce. Assume further that the 
employer, after learning of this, made no further inquiry but continued 
to pay the employees without regard to the requirements of the Act in 
reliance on the Administrator's earlier ruling. In such a situation, if 
the employees later brought an action against the employer, the court 
might determine that they were entitled to the benefits of the Act and 
might decide that the employer, after learning of the decision of the 
higher court, knew facts which would put a reasonably prudent man upon 
inquiry and therefore had not provided his good faith in relying upon 
the Administrator's ruling after receiving this advice.
    (c) In order to illustrate further the test of ``good faith,'' 
suppose that the X Federal Agency published a general bulletin regarding 
manufacturing, which contained the erroneous statement that all foremen 
are exempt under the Fair Labor Standards Act as employed in a ``bona 
fide executive * * * capacity.'' Suppose also that an employer knowing 
that the Administrator of the Wage and Hour Division is charged with the 
duties of administering the Fair Labor Standards Act and of defining the 
phrase ``bona fide executive * * * capacity'' in that Act, nevertheless 
relied upon the above bulletin without inquiring further and, 
inconformity with this advice, failed to compensate his nonexempt 
foremen in accordance with the overtime provisions of the Fair Labor 
Standards Act for work subject to that Act, performed before May 14, 
1947. If the employer had inquired of the Administrator or had consulted 
the Code of Federal Regulations, he would have found that his foremen 
were not exempt. In a subsequent action brought by employees under 
section 16(b) of the Fair Labor Standards Act, the court may decide that 
the employer knew facts which ought to have put him as a reasonable man 
upon further inquiry, and, consequently, that he did not rely ``in good 
faith'' within the meaning of section 9, upon the bulletin published by 
the X Agency. \97\
---------------------------------------------------------------------------

    \97\ See statement of Representative Gwynne, 93 Cong. Rec. 1563, and 
colloquy between Senators Connally and Donnell, 93 Cong. Rec. 4453.
---------------------------------------------------------------------------

    (d) Insofar as the period prior to May 14, 1947, is concerned, the 
employer may have received an interpretation from an agency which 
conflicted with an interpretation of the Administrator of the Wage and 
Hour Division of which he was also aware. If the employer chose to reply 
upon the interpretation of the other agency, which interpretation worked 
to his advantage, considerable weight may well be given to the fact that 
the employer ignored the interpretation of the agency charged with the 
administration of the Fair Labor Standards Act and chose instead to rely 
upon the interpretation of an outside agency. \98\ Under these 
circumstances ``the question could properly be considered as to whether 
it was a good faith reliance or whether the employer was simply choosing 
a course which was most favorable to him.'' \99\

[[Page 713]]

This problem will not arise in regard to any acts or omissions by the 
employer occurring on or after May 14, 1947, because section 10 provides 
that the employer, insofar as the Fair Labor Standards Act is concerned, 
may rely only upon regulations, orders, rulings, approvals, 
interpretations, administrative practices and enforcement policies of 
the Administrator of the Wage and Hour Division. \100\
---------------------------------------------------------------------------

    \98\ This view was expressed several times during the debates. See 
statements of Representative Keating, 93 Cong. Rec. 1512 and 4391; 
colloquy between Representatives Keating and Devitt, 93 Cong. Rec. 1515; 
statement of Representative Walter, 93 Cong. Rep. 4389; statement of 
Representative MacKinnon, 93 Cong. Rec. 4391; statement of 
Representative Gwynne, 93 Cong. Rec. 1563; statement of Senator Cooper, 
93 Cong. Rec. 4451; colloquy between Senators Connally and Donnell, 93 
Cong. Rec. 4452-4453.
    \99\ Statement of Senator Cooper, 93 Cong. Rec. 4451. Representative 
Walter, a member of the Conference Committee, made the following 
explanatory statement to the House of Representatives (93 Cong. Rec. 
4390): ``The defense of good faith is intended to apply only where an 
employer innocently and to his detriment, followed the law as it was 
laid down to him by Government agencies, without notice that such 
interpretations were claimed to be erroneous or invalid. It is not 
intended that this defense shall apply where an employer had knowledge 
of conflicting rules and chose to act in accordance with the one most 
favorable to him.'' Representative Gwynne made a similar statement (93 
Cong. Rec. 1563).
    \100\ Statement of Senator Wiley explaining Conference agreement to 
the Senate, 93 Cong. Rec. 4270; statement of Representative Walter, 93 
Cong. Rec. 4389.
---------------------------------------------------------------------------



Sec. 790.16  ``In reliance on.''

    (a) In addition to acting (or omitting to act) in good faith and in 
conformity with an administrative regulation, order, ruling, approval, 
interpretation, enforcement policy or practice, the employer must also 
prove that he actually relied upon it. \101\
---------------------------------------------------------------------------

    \101\ In a colloquy between Senators Thye and Cooper (93 Cong. Rec. 
4451), Senator Cooper pointed out that the purpose of section 9 was to 
provide a defense for an employer who pleads and proves, among other 
things, that his failure to bring himself under the Act ``grew out of 
reliance upon'' the ruling of an agency. See also statement of 
Representative Keating, 93 Cong. Rec. 1512; colloquy between 
Representatives Keating and Devitt, 93 Cong. Rec. 1515; cf. colloquy 
between Senators Donnell and Ball, 93 Cong. Rec. 4372.
---------------------------------------------------------------------------

    (b) Assume, for example, that an employer failed to pay his 
employees in accordance with the overtime provisions of the Fair Labor 
Standards Act. After an employee suit has been brought against him, 
another employer calls his attention to a letter that had been written 
by the Administrator of the Wage and Hour Division, in which the opinion 
was expressed that employees of the type employed by the defendant were 
exempt from the overtime provisions of the Fair Labor Standards Act. The 
defendant had no previous knowledge of this letter. In the pending 
employee suit, the court may decide that the opinion of the 
Administrator was erroneous and that the plaintiffs should have been 
paid in accordance with the overtime provisions of the Fair Labor 
Standards Act. Since the employer had no knowledge of the 
administrator's interpretation at the time of his violations, his 
failure to comply with the overtime provisions could not have been ``in 
reliance on'' that interpretation; consequently, he has no defense under 
section 9 or section 10 of the Portal Act.



Sec. 790.17  ``Administrative regulation, order, ruling, approval, 
or interpretation.''

    (a) Administrative regulations, orders, rulings, approvals, and 
interpretations are all grouped together in sections 9 and 10, with no 
distinction being made in regard to their function under the ``good 
faith'' defense. Accordingly, no useful purpose would be served by an 
attempt to precisely define and distinguish each term from the others, 
especially since some of these terms are often employed interchangeably 
as having the same meaning.
    (b) The terms ``regulation'' and ``order'' are variously used to 
connote the great variety of authoritative rules issued pursuant to 
statute by an administrative agency, which have the binding effect of 
law, unless set aside upon judicial review as arbitrary, capricious, an 
abuse of discretion, or otherwise not in accordance with law. \102\
---------------------------------------------------------------------------

    \102\ See Final Report of Attorney General's Committee on 
Administrative Procedure, Senate Document No. 8, 77th Cong. 1st sess. 
(1941) p. 27; 1 Vom Baur, Federal Administrative Law (1942) p. 486; 
sections 2(c), 2(d) and 10(e) of the Administrative Procedure Act, 5 
U.S.C.A. section 1001.
---------------------------------------------------------------------------

    (c) The term ``interpretation'' has been used to describe a 
statement ``ordinarily of an advisory character, indicating merely the 
agency's present belief concerning the meaning of applicable statutory 
language.'' \103\ This would include bulletins, releases, and other 
statements issued by an agency which indicate its interpretation of the 
provisions of a statute.
---------------------------------------------------------------------------

    \103\ Final Report of the Attorney General's Committee on 
Administrative Procedure, Senate Document No. 8, 77th Cong., 1st sess. 
(1941), p. 27.
---------------------------------------------------------------------------

    (d) The term ``ruling'' commonly refers to an interpretation made by 
an agency ``as a consequence of individual

[[Page 714]]

requests for rulings upon particular questions.'' \104\ Opinion letters 
of an agency expressing opinions as to the application of the law to 
particular facts presented by specific inquiries fall within this 
description.
---------------------------------------------------------------------------

    \104\ Final Report of the Attorney General's Committee, page 27. To 
the same effect in 1 Vom Baur, Federal Administrative Law (1942), p. 
492.
---------------------------------------------------------------------------

    (e) The term ``approval'' includes the granting of licenses, 
permits, certificates or other forms of permission by an agency, 
pursuant to statutory authority. \105\
---------------------------------------------------------------------------

    \105\ See section 2(e) of the Administrative Procedure Act, 5 
U.S.C.A. sec. 1001.
---------------------------------------------------------------------------

    (f) The terms ``administrative regulation order, ruling, approval, 
or interpretation'' connote affirmative action on the part of an agency. 
\106\ A failure to act or a failure to reply to an inquiry on the part 
of an administrative agency is not a ``regulation, order, ruling, 
approval, or interpretation'' within the meaning of sections 9 and 10. 
\107\ Thus, suppose that an employer writes a letter to the 
Administrator of the Wage and Hour Division, setting forth the facts 
concerning his business. He goes on to state in his letter that he 
believes his employees are not covered by the Fair Labor Standards Act, 
and that unless he hears to the contrary from the Administrator, he will 
not pay them in accordance with its provisions. When the employer does 
not receive a reply to his letter within what he regards as a reasonable 
time, he assumes that the Administrator agrees with his (the employer's) 
interpretation of the Act and he acts accordingly. The employer's 
reliance under such circumstances is not a reliance upon an 
administrative regulation, order, ruling, approval or interpretation, 
within the meaning of sections 9 and 10.
---------------------------------------------------------------------------

    \106\ See Final Report of Attorney General's Committee, p. 27; 1 Vom 
Baur, Federal Administrative Law, pp. 486, 492; Conference Report, p. 
16; statements of Representative Walter, 93 Cong. Rec. 4389; statements 
of Representative Gwynne, 93 Cong. Rec. 1491; statements of Senator 
Donnell, 93 Cong. Rec. 2185; President's message of May 14, 1947, on 
approval of the Portal-to-Portal Act (93 Cong. Rec. 5281).
    \107\ That this is true on and after the effective date of the Act 
is clear from the requirement in section 10 that the regulation, order, 
ruling, approval or interpretation relied on must be that of the 
Administrator in writing. As to section 9, the terms appear to have no 
different meaning.
---------------------------------------------------------------------------

    (g) The affirmative action taken by the agency must be one which 
actually results in a ``regulation, order, ruling, approval, or 
interpretation.'' If for example, the agency declines to express an 
opinion as to the application of the law in a particular fact situation, 
the agency is refraining from interpreting the law rather than giving an 
interpretation. \108\
---------------------------------------------------------------------------

    \108\ See Final Report of Attorney General's Committee on 
Administrative Procedure, p. 33.
---------------------------------------------------------------------------

    (h) An employer does not have a defense under these two sections 
unless the regulation, order, ruling, approval, or interpretation, upon 
which he relies, is in effect and operation at the time of his reliance. 
To the extent that it has been rescinded, modified, or determined by 
judicial authority to be invalid, it is no longer a ``regulation, order, 
ruling, approval, or interpretation,'' and, consequently, an employer's 
subsequent reliance upon it offers him no defense under section 9 and 
10. \109\ On the other hand, the last sentence in section 9 and in 
section 10 expressly provides that where the employer's good faith 
reliance on a regulation, order, ruling, approval or interpretation 
occurs before it is rescinded, modified, or determined by judicial 
authority to be invalid, his claim of a ``good faith'' defense for such 
earlier period is not defeated by the subsequent rescission or 
modification or by the subsequent determination of invalidity.
---------------------------------------------------------------------------

    \109\ See House Report, p. 7, and statements of Representative 
Gwynne, 93 Cong. Rec. 1491, 1492, 1563. It will be noted that the 
provisions of section 12 of the Act, affording relief of employers who 
acted in conformity with the invalidated ``area of production'' 
regulations, would have been unnecessary if reliance could be placed on 
a regulation no longer in effect. See statement of Representative 
Gwynne, 93 Cong. Rec. 4388, and cf. remarks of Senator McCarran, 
discussing the bill before section 12 was added by the conference 
committee, 93 Cong. Rec. 2247.
---------------------------------------------------------------------------

    (i) To illustrate these principles, assume that the Administrator of 
the Wage and Hour Division, in reply to an inquiry received from a 
particular employer, sends him a letter, in which the

[[Page 715]]

opinion is expressed that employees performing a particular type of work 
are not covered by the Fair Labor Standards Act. The employer relied 
upon the Administrator's letter and did not pay his employees who were 
engaged in such work, in accordance with the provisions of the Fair 
Labor Standards Act. Several months later the Administrator issues a 
general statement, published in the Federal Register and given general 
distribution, that recent court decisions have persuaded him that the 
class of employees referred to above are within the coverage of the Fair 
Labor Standards Act. Accordingly, the statement continues, the 
Administrator hereby rescinds all his previous interpretations and 
rulings to the contrary. The employer who had received the 
Administrator's letter, not learning of the Administrator's subsequent 
published statement rescinding his contrary interpretations, continued 
to rely upon the Administrator's letter after the effective date of the 
published statement. Under these circumstances, the employer would, from 
the date he received the Administrator's letter to the effective date of 
the published statement rescinding the position expressed in the letter, 
have a defense under section 9 or 10, assuming he relied upon and 
conformed with that letter in good faith. However, in spite of the fact 
that this employer did not receive actual notice of the subsequent 
published statement, he has no defense for his reliance upon the letter 
during the period after the effective date of the public statement, 
because the letter, having been rescinded, was no longer an 
``administrative * * * ruling * * * or interpretation'' within the 
meaning of sections 9 and 10. \110\
---------------------------------------------------------------------------

    \110\ See Final Report of Attorney General's Gwynne, 93 Cong. Rec. 
1563; colloquy between Representative Gwynne and Lee Pressman, Hearings 
before House Subcommittee on the Judiciary, pp. 156-7.
    The fact that an employer has no defense under section 9 or 10 of 
the Portal Act in the situation stated in the text would not, of course, 
preclude a court from finding that he acted in good faith having 
reasonable grounds to believe he was not in violation of the law. In 
such event, section 11 of the Act would permit the court to reduce or 
eliminate the employer's liability for liquidated damages in an employee 
suit. See Sec. 790.22.
---------------------------------------------------------------------------



Sec. 790.18  ``Administrative practice or enforcement policy.''

    (a) The terms ``administrative practice or enforcement policy'' 
refer to courses of conduct or policies which an agency has determined 
to follow \111\ in the administration and enforcement of a statute, 
either generally, or with respect to specific classes of situations. 
\112\ Administrative practices and enforcement policies may be set forth 
in statements addressed by the agency to the public. \113\ Although they 
may be, and frequently are, based upon decisions or views which the 
agency has set forth in its regulations, orders, rulings, approvals, or 
interpretations, nevertheless administrative practices and enforcement 
policies differ from these forms of agency action in that such practices 
or policies are not limited to matters concerned with the meaning or 
legal effect of the statutes administered by the agency and may be based 
wholly or in part on other considerations.
---------------------------------------------------------------------------

    \111\ The agency may have determined to follow the course of conduct 
or policy for a limited time only (see paragraphs (c) and (f), this 
section) or for an indefinite time (see paragraph (b), this section), or 
for a period terminable by the happening of some contingency, such as a 
final decision in pending litigation.
    \112\ See United States v. Minnesota, 270 U.S. 181 (1926); United 
States v. Boston & Maine R.R. Co., 279 U.S. 732 (1929); Lucas v. 
American Code Co., 280 U.S. 445 (1930); Estate of Sanford v. 
Commissioner of Internal Revenue, 308 U.S. 39 (1939). See also Final 
Report of Attorney General's Committee on Administrative Procedure in 
Government Agencies, pp. 26-29; 1 Von Baur, Federal Administrative Law 
(1942), p. 474.
    As to requirement that practice or policy be one with respect to a 
``class of employers,'' see paragraph (g) of this section.
    \113\ Pursuant to section 3 of the Administrative Procedure Act, 
statements of general policy formulated and adopted by the agency for 
the guidance of the public are published in the Federal Register. An 
example is the statement of the Secretary of Labor and the Administrator 
of the Wage and Hour Division, dated June 16, 1947, published in 12 FR 
3915.
---------------------------------------------------------------------------

    (b) To illustrate this distinction, suppose the Administrator of the 
Wage and Hour Division issues a general

[[Page 716]]

statement indicating that in his opinion a certain class of employees 
come within a specified exemption from provisions of the Fair Labor 
Standards Act in any workweek when they do not engage in a substantial 
amount of nonexempt work. Such a statement is an ``interpretation'' 
within the meaning of sections 9 and 10 of the Portal Act. Assume that 
at the same time, the Administrator states that for purposes of 
enforcement, until further notice such an employee will be considered as 
engaged in a substantial amount of nonexempt work in any workweek when 
he spends in excess of a specified percentage of his time in such 
nonexempt work. This latter type of statement announces an 
``administrative practice or enforcement policy'' within the meaning of 
sections 9 and 10 of the Portal Act.
    (c) An administrative practice or enforcement policy may, under 
certain circumstances be at variance with the agency's current 
interpretation of the law. For example, suppose the Administrator 
announces that as a result of court decisions he has changed his view as 
to coverage of a certain class of employees under the Fair Labor 
Standards Act. However, he may at the same time announce that in order 
to give affected employers an opportunity to make the adjustments 
necessary for compliance with the changed interpretation, the Wage and 
Hour Division will not commence to enforce the Act on the basis of the 
new interpretation until the expiration of a specified period.
    (d) In the statement of the managers on the part of the House, 
accompanying the report of the Conference Committee on the Portal-to-
Portal Act, it is indicated (page 16) that under sections 9 and 10 ``an 
employer will be relieved from liability, in an action by an employee, 
because of reliance in good faith on an administrative practice or 
enforcement policy only (1) where such practice or policy was based on 
the ground that an act or omission was not a violation of the (Fair 
Labor Standards) Act, or (2) where a practice or policy of not enforcing 
the Act with respect to acts or omissions led the employer to believe in 
good faith that such acts or omissions were not violations of the Act.''
    (e) The statement explaining the Conference Committee Report goes on 
to say, ``However, the employer will be relieved from criminal 
proceedings or injunctions brought by the United States, not only in the 
cases described in the preceding paragraph, but also where the practice 
or policy was such as to lead him in good faith to believe that he would 
not be proceeded against by the United States.''
    (f) The statement explaining the Conference Committee Report gives 
the following illustrations of the above rules:

    An employer will not be relieved from liability under the Fair Labor 
Standards Act of 1938 to his employees (in an action by them) for the 
period December 26, 1946, to March 1, 1947, if he is not exempt under 
the ``Area of Production'' regulations published in the Federal Register 
of December 25, 1946, notwithstanding the press release issued by the 
Administrator of the Wage and Hour Division of the Department of Labor, 
in which he stated that he would not enforce the Fair Labor Standards 
Act of 1938 on account of acts or omissions occurring prior to March 1, 
1947. On the other hand, he will, by reason of the enforcement policy 
set forth in such press releases, have a good defense to a criminal 
proceeding or injunction brought by the United States based on an act or 
omission prior to March 1, 1947.

    (g) It is to be noted that, under the language of sections 9 and 10, 
an employer has a defense for good faith reliance on an administrative 
practice or an enforcement policy only when such practice or policy is 
``with respect to the class of employers to which he belonged.'' \114\ 
Thus where an enforcement policy has been announced pertaining to 
laundries and linen-supply companies serving industrial or commercial

[[Page 717]]

establishments the operator of an establishment furnishing window-
washing service to industrial and commercial concerns, who relied upon 
that policy in regard to his employees, has no defense under sections 9 
and 10. The enforcement policy upon which he claimed reliance did not 
pertain to ``the class of employers to which he belonged.''
---------------------------------------------------------------------------

    \114\ This provision, which appeared for the first time in the 
conference bill, to which the term ``practice'' was restored after 
elimination by the Senate, was apparently designed to meet some of the 
objections which led to elimination of the word ``practice'' from the 
bill reported by the Senate judiciary Committee. Cf. remarks of Senator 
Murray, 93 Cong. Rec. 2238; remarks of Senator Johnston, 93 Cong. Rec. 
2373; colloquy between Senators Lucas and Donnell, 93 Cong. Rec. 2185; 
remarks of Senator McGrath, 93 Cong. Rec. 2254-2256.
---------------------------------------------------------------------------

    (h) Administrative practices and enforcement policies, similar to 
administrative regulations, orders, rulings, approvals and 
interpretations required affirmative action by an administrative agency. 
\115\ This should not be construed as meaning that an agency may not 
have administrative practices or policies to refrain from taking certain 
action as well as practices or policies contemplating positive acts of 
some kind. \116\ But before it can be determined that an agency actually 
has a practice or policy to refrain from acting, there must be evidence 
of its adoption by the agency through some affirmative action 
establishing it as the practice or policy of the agency. \117\ Suppose, 
for example, that shoe factories in a particular area were not 
investigated by Wage and Hour Division inspectors operating in the area. 
This fact would not establish the existence of a practice or policy of 
the Administrator to treat the employees of such establishments, for 
enforcement purposes, as not subject to the provisions of the Fair Labor 
Standards Act, in the absence of proof of some affirmative action by the 
Administrator adopting such a practice or policy. A failure to inspect 
might be due to any one of a number of different reasons. It might, for 
instance, be due entirely to the fact that the inspectors' time was 
fully occupied in inspections of other industries in the area.
---------------------------------------------------------------------------

    \115\ See Union Stockyards & Transit Co. v. United States, 308 U.S. 
213, 223 (1939); and United States v. American Union Transport, Inc., 
327 U.S. 437, 454 (1946). Cf. Federal Trade Commission v. Bunte 
Brothers, Inc., 312 U.S. 349, 351 (1941). See also President's message 
of May 14, 1947, 93 Cong. Rec. 5281.
    \116\ See, for example, Mintz v. Baldwin, 289 U.S. 346, 349 (1933), 
where the Department of Agriculture announced ``its policy for the 
present is to leave the control (of Bang's disease) with the various 
States.'' See also in this connection the statement of June 23, 1947, by 
the Senate Committee on the Judiciary regarding the President's message 
of May 14, 1947, on the Portal-to-Portal Act, 93 Cong. Rec. 5281.
    \117\ Union Stockyards & Transit Co. v. United States, supra. It may 
be noted in this connection that examples given by the sponsors of the 
legislation, in discussing the terms ``administrative practice or 
enforcement policy,'' involved situations in which affirmative action 
had been taken by the agency. Conference Report, p. 16; 93 Cong. Rec. 
2185, 2198, 4389-4391.
---------------------------------------------------------------------------

    (i) It was pointed out above that sections 9 and 10 do not offer a 
defense to the employer who relies upon a regulation, order, ruling, 
approval or interpretation which at the time of his reliance has been 
rescinded, modified or determined by judicial authority to be invalid. 
The same is true regarding administrative practices and enforcement 
policies. \118\ However, a plea of a ``good faith'' defense is not 
defeated by the fact that after the employer's reliance, the practice or 
policy is rescinded, modified, or declared invalid.
---------------------------------------------------------------------------

    \118\ See Sec. 790.17 (h) and (i), and footnotes 111 and 112.
---------------------------------------------------------------------------



Sec. 790.19  ``Agency of the United States.''

    (a) In order to provide a defense under section 9 or section 10 of 
the Portal Act, the regulation, order, ruling, approval, interpretation, 
administrative practice or enforcement policy relied upon and conformed 
with must be that of an ``agency of the United States.'' Insofar as acts 
or omissions occurring on or after May 14, 1947 are concerned, it must 
be that of the ``agency of the United States specified in'' section 
10(b), which, in the case of the Fair Labor Standards Act, is ``the 
Administrator of the Wage and House Division of the Department of 
Labor.'' However, with respect to acts or omissions occurring prior to 
May 14, 1947, section 9 of the Act permits the employer to show that he 
relied upon and conformed with a regulation, order, ruling, approval, 
interpretation, administrative practice or enforcement policy of ``any 
agency of the United States.'' \119\
---------------------------------------------------------------------------

    \119\ The differences in the provisions of the two sections are 
explained and illustrated in Sec. 790.13.

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[[Page 718]]

    (b) The Portal Act contains no comprehensive definition of 
``agency'' as used in sections 9 and 10, but an indication of the 
meaning intended by Congress may be found in section 10. In that 
section, where the ``agency'' whose regulation, order, ruling, approval, 
interpretation, administrative practice or enforcement policy may be 
relied on is confined to ``the agency of the United States'' specified 
in the section, the Act expressly limits the meaning of the term to the 
official or officials actually vested with final authority under the 
statutes involved. \120\ Similarly, the definitions of ``agency'' in 
other Federal statutes \121\ indicate that the term has customarily been 
restricted in its usage by Congress to the persons vested under the 
statutes with the real power to act for the Government--those who 
actually have the power to act as (rather than merely for) the highest 
administrative authority of the Government establishment. \122\ 
furthermore, it appears from the statement of the managers on the part 
of the House accompanying the Conference Committee Report, that the term 
``agency'' as appearing in the Portal Act was employed in this sense. As 
there stated (p. 16), the regulations, orders, ruling, approvals, 
interpretations, administrative practices and enforcement policies 
relied upon and conformed with ``must be those of an `agency' and not of 
an individual officer or employee of the agency. Thus, if inspector A 
tells the employer that the agency interpretation is that the employer 
is not subject to the (Fair Labor Standards) Act, the employer is not 
relieved from liability, despite his reliance in good faith on such 
interpretations, unless it is in fact the interpretation of the 
agency.'' \123\ Similarly, the Chairman of the Senate Judiciary 
Committee, in explaining the conference agreement to the Senate, made 
the following statement concerning the ``good faith'' defense. ``It will 
be noted that the relief from liability must be based on a ruling of a 
Federal agency, and not a minor official thereof. I, therefore, feel 
that the legitimate interest of labor will be adequately protected under 
such a provision, since the agency will exercise due care in the 
issuance of any such ruling.'' \124\
---------------------------------------------------------------------------

    \120\ In regard to the Walsh-Healey Act, ``agency'' is defined in 
section 10 of the Portal-to-Portal Act as including, in addition to the 
Secretary of Labor, ``any Federal officer utilized by him in the 
administration of such Act.'' The legislative history of the Portal-to-
Portal Act (93 Cong. Rec. 2239-2240) reveals that this clause was added 
because of the language in the Walsh-Healey Act authorizing the 
Secretary of Labor to administer the Act ``and to utilize such Federal 
officers and employees * * * as he may find necessary in the 
administration.''
    \121\ Federal Register Act, 44 U.S.C. 304; Federal Reports Act, 5 
U.S.C. 139; Administrative Procedure Act, 5 U.S.C. 1001.
    \122\ See Cudahy Packing Co. v. Holland, 315 U.S. 357 (1942); United 
States v. Watashe, 102 F. (2d) 428 (C.A. 10, 1939); 39 Opinions Attorney 
General 15 (1925). Cf. Keyser v. Hitz, 133 U.S. 138 (1890); 39 Opinions 
Attorney General 541 (1933); 13 George Washington Law Review 144 (1945).
    \123\ See also statement by Representative Gwynne, 93 Cong. Rec. 
1563; and statement by Senator Wiley explaining the conference agreement 
to the Senate, 93 Cong. Rec. 4270.
    \124\ Statement of Senator Wiley, 93 Cong. Rec. 4270.
---------------------------------------------------------------------------

    (c) Accordingly, the defense provided by sections 9 and 10 of the 
Portal Act is restricted to those situations where the employer can show 
that the regulation, order, ruling, approval, interpretation, 
administrative practice or enforcement policy with which he conformed 
and on which he relied in good faith was actually that of the authority 
vested with power to issue or adopt regulations, orders, rulings, 
approvals, interpretations, administrative practices or enforcement 
policies of a final nature as the official act or policy of the agency. 
\125\ Statements made by other officials or employees are not 
regulations, orders, rulings, approvals, interpretations, administrative 
practices or enforcement policies of the agency within the meaning of 
sections 9 and 10.
---------------------------------------------------------------------------

    \125\ Statement by Representative Gwynne, 93 Cong. Rec. 1563; 
statements by Representative Walter, 93 Cong. Rec. 1496-1497, 4389; 
statement by Representative Robsion, 93 Cong. Rec. 1500; statement by 
Senator Thye, 93 Cong. Rec. 4452.

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[[Page 719]]

             Restrictions and Limitations on Employee Suits



Sec. 790.20  Right of employees to sue; restrictions on representative actions.

    Section 16(b) of the Fair Labor Standards Act, as amended by section 
5 of the Portal Act, no longer permits an employee or employees to 
designate an agent or representative (other than a member of the 
affected group) to maintain, an action for and in behalf of all 
employees similarly situated. Collective actions brought by an employee 
or employees (a real party in interest) for and in behalf of himself or 
themselves and other employees similarly situated may still be brought 
in accordance with the provisions of section 16(b). With respect to 
these actions, the amendment provides that no employee shall be a party 
plaintiff to any such action unless he gives his consent in writing to 
become such a party and such consent is filed in the court in which such 
action is brought. The amendment is expressly limited to actions which 
are commenced on or after the date of enactment of the Portal Act. 
Representative actions which were pending on May 14, 1947 are not 
affected by this amendment. \126\ However, under sections 6 and 8 of the 
Portal Act, a collective or representative action commenced prior to 
such date will be barred as to an individual claimant who was not 
specifically named as a party plaintiff to the action on or before 
September 11, 1947, if his written consent to become such a party is not 
filed with the court within a prescribed period. \127\
---------------------------------------------------------------------------

    \126\ Conference Report, p. 13.
    \127\ Conference Report, pp. 14, 15. The claimant must file this 
consent within the shorter of the following two periods: (1) Two years, 
or (2) the period prescribed by the applicable State Statute of 
limitations. See Conference Report, p. 15.
---------------------------------------------------------------------------



Sec. 790.21  Time for bringing employee suits.

    (a) The Portal Act \128\ provides a statute of limitations fixing 
the time limits within which actions by employees under section 16(b) of 
the Fair Labor Standards Act \129\ may be commenced, as follows:
---------------------------------------------------------------------------

    \128\ See sections 6-8 inclusive.
    \129\ Sponsors of the legislation stated that the time limitations 
prescribed therein apply only to the statutory actions, brought under 
the special authority contained in section 16(b), in which liquidated 
damages may be recovered, and do not purport to affect the usual 
application of State statutes of limitation to other actions brought by 
employees to recover wages due them under contract, at common law, or 
under State statutes. Statements of Representative Gwynne, 93 Cong. Rec. 
1491, 1557-1588; colloquy between Representative Robsion, Vorys, and 
Celler, 93 Cong. Rec. 1495.

    (1) Actions to enforce causes of action accruing on or after May 14, 
1947; two years.
    (2) Actions to enforce causes of action accruing before May 14, 
1947. \130\ Two years or period prescribed by applicable State statute 
of limitations, whichever is shorter.
---------------------------------------------------------------------------

    \130\ This refers to actions commenced after September 11, 1947. 
Such actions commenced on or between May 14, 1947 and September 11, 1947 
were left subject to State statutes of limitations. As to collective and 
representatives actions commenced before May 14, 1947, section 8 of the 
Portal Act makes the period of limitations stated in the text applicable 
to the filing, by certain individual claimants, of written consents to 
become parties plaintiff. See Conference Report, p. 15; Sec. 790.20 of 
this part.


These are maximum periods for bringing such actions, measured from the 
time the employee's cause of action accrues to the time his action is 
commenced. \131\
---------------------------------------------------------------------------

    \131\ Conference Report, pp. 13-15.
---------------------------------------------------------------------------

    (b) The courts have held that a cause of action under the Fair Labor 
Standards Act for unpaid minimum wages or unpaid overtime compensation 
and for liquidated damages ``accrues'' when the employer fails to pay 
the required compensation for any workweek at the regular pay day for 
the period in which the workweek ends. \132\ The Portal

[[Page 720]]

Act \133\ provides that an action to enforce such a cause of action 
shall be considered to be ``commenced'':
---------------------------------------------------------------------------

    \132\ Reid v. Solar Corp., 69 F. Supp. 626 (N.D. Iowa); Mid-
Continent Petroleum Corp. v. Keen, 157 F. (2d) 310, 316 (C.A. 8). See 
also Brooklyn Savings Bank v. O'Neil, 324 U.S. 697; Rigopoulos v. 
Kervan, 140 F. (2d) 506 (C.A. 2).
    In some instances an employee may receive, as a part of his 
compensation, extra payments under incentive or bonus plans, based on 
factors which do not permit computation and payment of the sums due for 
a particular workweek or pay period until some time after the pay day 
for that period. In such cases it would seem that an employee's cause of 
action, insofar as it may be based on such payments, would not accrue 
until the time when such payment should be made. Cf. Walling v. 
Harnischfeger Corp., 325 U.S. 427.
    \133\ Section 7. See also Conference Report, p. 14.
---------------------------------------------------------------------------

    (1) In individual actions, on the date the complaint is filed;
    (2) In collective or class actions, as to an individual claimant.
    (i) On the date the complaint is filed, if he is specifically named 
therein as a party plaintiff and his written consent to become such is 
filed with the court on that date, or
    (ii) On the subsequent date when his written consent to become a 
party plaintiff is filed in the court, if it was not so filed when the 
complaint was filed or if he was not then named therein as a party 
plaintiff. \134\
---------------------------------------------------------------------------

    \134\ This is also the rule under section 8 of the Portal Act as to 
individual claimants, in collective or representative actions commenced 
before May 14, 1947, who were not specifically named as parties 
plaintiff on or before September 11, 1947.
---------------------------------------------------------------------------

    (c) The statute of limitations in the Portal Act is silent as to 
whether or not the running of the two-year period of limitations may be 
suspended for any cause. \135\ In this connection, attention is directed 
to section 205 of the Soldiers' and Sailors' Civil Relief Act of 1940, 
\136\ as amended, which provides that the period of military service 
shall not be included in the period limited by law for the bringing of 
an action or proceeding, whether the cause of action shall have accrued 
prior to or during the period of such service.
---------------------------------------------------------------------------

    \135\ A limited suspension provision was contained in section 2(d) 
of the House bill, but was eliminated by the Senate. Neither the Senate 
debates, the Senate committee report, nor the conference committee 
report, indicate the reason for this. While the courts have held that in 
a proper case, a statute of limitations may be suspended by causes not 
mentioned in the statute itself (Braun v. Sauerwein, 10 Wall. 218, 223; 
see also Richards v. Maryland Ins. Co., 8 Cranch 84, 92; Bauserman v. 
Blunt, 147 U.S. 647), they have also held that when the statute has once 
commenced to run, its operation is not suspended by a subsequent 
disability to sue, and that the bar of the statute cannot be postponed 
by the failure of the creditor (employee) to avail himself of any means 
within his power to prosecute or to preserve his claim. Bauserman v. 
Blunt, 147 U.S. 647, 657; Smith v. Continental Oil Co., 59 F. Supp. 91, 
94.
    \136\ Act of October 17, 1940, ch. 888, 54 Stat. 1178, as amended by 
the act of October 6, 1942, ch. 581, 56 Stat. 769 (50 U.S.C.A. App. sec. 
525).
---------------------------------------------------------------------------



Sec. 790.22  Discretion of court as to assessment of liquidated damages.

    (a) Section 11 of the Portal Act provides that in any action brought 
under the Fair Labor Standards Act to recover unpaid minimum wages, 
unpaid overtime, compensation, or liquidated damages, the court may, 
subject to prescribed conditions, in its sound discretion award no 
liquidated damages or award any amount of such damages not to exceed the 
amount specified in section 16 (b) of the Fair Labor Standards Act. 
\137\
---------------------------------------------------------------------------

    \137\ Section 16(b) of the Fair Labor Standards Act provides that an 
employer who violates the minimum--wage or overtime provisions of the 
act shall be liable to the affected employees not only for the amount of 
the unpaid minimum wages or unpaid overtime compensation, as the case 
may be, but also for an additional equal amount as liquidated damages. 
The courts have held that this provision is ``not penal in its nature'' 
but rather that such damages ``constitute compensation for the retention 
of a workman's pay'' where the required wages are not paid ``on time.'' 
Under this provision of the law, the courts have held that the liability 
of an employer for liquidated damages in an amount equal to his 
underpayments of required wages become fixed at the time he fails to pay 
such wages when due, and the courts were given no discretion, prior to 
the enactment of the Portal-to-Portal Act, to relieve him of any portion 
of this liability. See Brooklyn Savings Bank v. O'Neil, 324 U.S. 697; 
Overnight Motor Transp. Co. v. Missel, 316 U.S. 572.
---------------------------------------------------------------------------

    (b) The conditions prescribed as prerequisites to such an exercise 
of discretion by the court are two: (1) The employers must show to the 
satisfaction of the court that the act or omission giving rise to such 
action was in good faith; and (2) he must show also, to the satisfaction 
of the court, that he had reasonable grounds for believing that his act 
or omission was not a violation of the Fair Labor Standards Act. If

[[Page 721]]

these conditions are met by the employer against whom the suit is 
brought, the court is permitted, but not required, in its sound 
discretion to reduce or eliminate the liquidated damages which would 
otherwise be required in any judgment against the employer. This may be 
done in any action brought under section 16(b) of the Fair Labor 
Standards Act, regardless of whether the action was instituted prior to 
or on or after May 14, 1947, and regardless of when the employee 
activities on which it is based were engaged in. If, however, the 
employer does not show to the satisfaction of the court that he has met 
the two conditions mentioned above, the court is given no discretion by 
the statute, and it continues to be the duty of the court to award 
liquidated damages. \138\
---------------------------------------------------------------------------

    \138\ See Conference Report, p. 17; remarks of Representative 
Walter, 93 Cong. Rec. 1496-1497; President's message of May 14, 1947, to 
the Congress on approval of the Portal Act, 93 Cong. Rec. 5281.
---------------------------------------------------------------------------

    (c) What constitutes good faith on the part of an employer and 
whether he had reasonable grounds for believing that his act or omission 
was not a violation of the Fair Labor Standards Act are mixed questions 
of fact and law, which should be determined by objective tests. \139\ 
Where an employer makes the required showing, it is for the court to 
determine in its sound discretion what would be just according to the 
law on the facts shown.
---------------------------------------------------------------------------

    \139\ Cf. Sec. Sec. 790.13 to 790.16.
---------------------------------------------------------------------------

    (d) Section 11 of the Portal Act does not change the provisions of 
section 16(b) of the Fair Labor Standards Act under which attorney's 
fees and court costs are recoverable when judgment is awarded to the 
plaintiff.



PART 791_JOINT EMPLOYMENT RELATIONSHIP UNDER FAIR LABOR STANDARDS ACT
OF 1938--Table of Contents



Sec.
791.1 Introductory statement.
791.2 Joint employment.

    Authority: 52 Stat. 1060, as amended; 29 U.S.C. 201-219.



Sec. 791.1  Introductory statement.

    The purpose of this part is to make available in one place the 
general interpretations of the Department of Labor pertaining to the 
joint employment relationship under the Fair Labor Standards Act of 
1938. \1\ It is intended that the positions stated will serve as ``a 
practical guide to employers and employees as to how the office 
representing the public interest in its enforcement will seek to apply 
it.'' \2\ These interpretations contain the construction of the law 
which the administrator believes to be correct and which will guide him 
in the performance of his duties under the Act, unless and until he is 
otherwise directed by authoritative decisions of the courts or he 
concludes upon reexamination of an interpretation that it is incorrect. 
To the extent that prior administrative rulings, interpretations, 
practices, and enforcement policies relating to sections 3 (d), (e) and 
(g) of the Act, which define the terms ``employer'', ``employee'', and 
``employ'', are inconsistent or in conflict with the principles stated 
in this part they are hereby rescinded. The interpretations contained in 
this part may be relied upon in accordance with section 10 of the 
Portal-to-Portal Act, \3\ so long as they remain effective and are not 
modified, amended, rescinded, or determined by judicial authority to be 
incorrect.
---------------------------------------------------------------------------

    \1\ 29 U.S.C. 201-219. Under Reorganization Plan No. 6 of 1950 and 
pursuant to General Order No. 45-A, issued by the Secretary of Labor on 
May 24, 1950, interpretations of the provisions (other than the child 
labor provisions) of the act are issued by the Administrator of the Wage 
and Hour Division on the advice of the Solicitor of Labor. See 15 FR 
3290.
    \2\ Skidmore v. Swift and Company, 323 U.S. 134, 138.
    \3\ 61 Stat. 84; 29 U.S.C. 251-262.

[23 FR 5905, Aug. 5, 1958]



Sec. 791.2  Joint employment.

    (a) A single individual may stand in the relation of an employee to 
two or more employers at the same time under the Fair Labor Standards 
Act of 1938, since there is nothing in the act which prevents an 
individual employed by one employer from also entering

[[Page 722]]

into an employment relationship with a different employer. A 
determination of whether the employment by the employers is to be 
considered joint employment or separate and distinct employment for 
purposes of the act depends upon all the facts in the particular case. 
If all the relevant facts establish that two or more employers are 
acting entirely independently of each other and are completely 
disassociated with respect to the employment of a particular employee, 
who during the same workweek performs work for more than one employer, 
each employer may disregard all work performed by the employee for the 
other employer (or employers) in determining his own responsibilities 
under the Act. \4\ On the other hand, if the facts establish that the 
employee is employed jointly by two or more employers, i.e., that 
employment by one employer is not completely disassociated from 
employment by the other employer(s), all of the employee's work for all 
of the joint employers during the workweek is considered as one 
employment for purposes of the Act. In this event, all joint employers 
are responsible, both individually and jointly, for compliance with all 
of the applicable provisions of the act, including the overtime 
provisions, with respect to the entire employment for the particular 
workweek. \5\ In discharging the joint obligation each employer may, of 
course, take credit toward minimum wage and overtime requirements for 
all payments made to the employee by the other joint employer or 
employers.
---------------------------------------------------------------------------

    \4\ Walling v. Friend, et al., 156 F. 2d 429 (C. A. 8).
    \5\ Both the statutory language (section 3(d) defining ``employer'' 
to include anyone acting directly or indirectly in the interest or an 
employer in relation to an employee) and the Congressional purpose as 
expressed in section 2 of the Act, require that employees generally 
should be paid overtime for working more than the number of hours 
specified in section 7(a), irrespective of the number of employers they 
have. Of course, an employer should not be held responsible for an 
employee's action in seeking, independently, additional part-time 
employment. But where two or more employers stand in the position of 
``joint employers'' and permit or require the employee to work more than 
the number of hours specified in section 7(a), both the letter and the 
spirit of the statute require payment of overtime.
---------------------------------------------------------------------------

    (b) Where the employee performs work which simultaneously benefits 
two or more employers, or works for two or more employers at different 
times during the workweek, a joint employment relationship generally 
will be considered to exist in situations such as:
    (1) Where there is an arrangement between the employers to share the 
employee's services, as, for example, to interchange employees; \6\ or
---------------------------------------------------------------------------

    \6\ Mid-Continent Pipeline Co., et al. v. Hargrave, 129 F. 2d 655 
(C.A. 10); Slover v. Wathen, 140 F. 2d 258 (C.A. 4); Mitchell v. Bowman, 
131 F. Supp., 520 (M.D. Ala. 1954); Mitchell v. Thompson Materials & 
Construction Co., et al., 27 Labor Cases Para. 68, 888; 12 WH Cases 367 
(S.D. Calif. 1954).
---------------------------------------------------------------------------

    (2) Where one employer is acting directly or indirectly in the 
interest of the other employer (or employers) in relation to the 
employee; \7\ or
---------------------------------------------------------------------------

    \7\ Section 3(d) of the Act; Greenberg v. Arsenal Building Corp., et 
al., 144 F. 2d 292 (C.A. 2).
---------------------------------------------------------------------------

    (3) Where the employers are not completely disassociated with 
respect to the employment of a particular employee and may be deemed to 
share control of the employee, directly or indirectly, by reason of the 
fact that one employer controls, is controlled by, or is under common 
control with the other employer. \8\
---------------------------------------------------------------------------

    \8\ Dolan v. Day & Zimmerman, Inc., et al., 65 F. Supp. 923 (D. 
Mass. 1946); McComb v. Midwest Rust Proof Co., et al., 16 Labor Cases 
Para. 64, 927; 8 WH Cases 460 (E.D. Mo. 1948); Durkin v. Waldron., et 
al., 130 F. Supp., 501 (W.D. La. 1955). See also Wabash Radio Corp. v. 
Walling, 162 F. 2d 391 (C.A. 6).

[23 FR 5905, Aug. 5, 1958, as amended at 26 FR 7732, Aug. 18, 1961]



PART 793_EXEMPTION OF CERTAIN RADIO AND TELEVISION STATION EMPLOYEES
FROM OVERTIME PAY REQUIREMENTS UNDER SECTION 13(b)(9) OF THE FAIR 

LABOR STANDARDS ACT--Table of Contents



                              Introductory

Sec.
793.0 Purpose of interpretative bulletin.
793.1 Reliance upon interpretations.
793.2 General explanatory statement.

[[Page 723]]

                       Requirements for Exemption

793.3 Statutory provision.
793.4 General requirements for exemption.
793.5 What determines application of the exemption.
793.6 Exemption limited to employees in named occupations.
793.7 ``Announcer.''
793.8 ``News editor.''
793.9 ``Chief engineer.''
793.10 Primary employment in named occupations.
793.11 Combination announcer, news editor and chief engineer.
793.12 Related and incidental work.
793.13 Limitation on related and incidental work.
793.14 Employed by.
793.15 Duties away from the station.
793.16 ``Radio or television station.''
793.17 ``Major studio.''
793.18 Location of ``major studio.''

                    Workweek Application of Exemption

793.19 Workweek is used in applying the exemption.
793.20 Exclusive engagement in exempt work.
793.21 Exempt and nonexempt work.

    Authority: Secs. 1-19, 52 Stat. 1060, as amended; 75 Stat. 65; 29 
U.S.C. 201-219.

    Source: 26 FR 10275, Nov. 2, 1961, unless otherwise noted.

                              Introductory



Sec. 793.0  Purpose of interpretative bulletin.

    This part 793 constitutes the official interpretative bulletin of 
the Department of Labor with respect to the meaning and application of 
section 13(b)(9) of the Fair Labor Standards Act of 1938, as amended. 
This section provides an exemption from the overtime pay provisions of 
the Act for certain employees employed by certain small market radio and 
television stations. This exemption was added to the Act by the 1961 
amendments. It is the purpose of this bulletin to make available in one 
place the interpretations of the provisions in section 13(b) (9) which 
will guide the Secretary of Labor and the Administrator in the 
performance of their duties under the Act unless and until they are 
otherwise directed by authoritative decisions of the courts or conclude, 
upon re-examination of an interpretation, that it is incorrect.



Sec. 793.1  Reliance upon interpretations.

    The interpretations of the law contained in this part are official 
interpretations which may be relied upon as provided in section 10 of 
the Portal-to-Portal Act of 1947. All prior opinions, rulings and 
interpretations which are inconsistent with the interpretations in this 
bulletin are rescinded and withdrawn.



Sec. 793.2  General explanatory statement.

    Some employees of radio and television stations perform work which 
may be exempt from the minimum wage and overtime requirements under 
section 13(a)(1) of the Act. This 13(a)(1) exemption applies to 
employees employed in a bona fide executive, administrative or 
professional capacity, or in the capacity of outside salesman, as these 
terms are defined and delimited by regulations of the Secretary. This 
exemption continues to be available for employees of radio and 
television stations who meet the requirements for exemption specified in 
part 541 of this chapter. The section 13(b) (9) exemption, which is an 
exemption from the overtime provisions of the Act, but not from the 
minimum wage requirements, applies to a limited classification of 
employees employed by small market radio and television stations whose 
employment meets the requirements for the exemption. These requirements 
and their meaning and application are discussed in this bulletin.

                       Requirements for Exemption



Sec. 793.3  Statutory provision.

    Section 13(b) (9) of the Act exempts from the overtime requirements 
of section 7, but not from the minimum wage provisions of section 6, of 
the Act:

any employee employed as an announcer, news editor, or chief engineer by 
a radio or television station the major studio of which is located (A) 
in a city or town of one hundred thousand population or less, according 
to the latest available decennial census figures as compiled by the 
Bureau of the Census except where such city or town is part of a 
standard metropolitan statistical area, as defined and designated by the 
Bureau of the Budget, which has a total population in excess of one 
hundred thousand, or (B) in a city or town of twenty-five thousand 
population or less, which is part of such an area but is

[[Page 724]]

at least 40 airline miles from the principal city in such area.



Sec. 793.4  General requirements for exemption.

    All of the following requirements must be met in order that an 
employee may be exempt under section 13(b) (9):
    (a) The employee must be ``employed as'' an announcer, or a news 
editor, or a chief engineer.
    (b) The employee must be employed ``by'' a radio or television 
station.
    (c) The major studio of such radio or television station must be 
located in a city or town which meets the prescribed population and 
locality tests.



Sec. 793.5  What determines application of the exemption.

    The exemption applies only to an employee who is ``employed as'' an 
announcer, news editor, or chief engineer under the conditions specified 
in section 13(b) (9). Although the nature of the employer's business is 
important in applying the exemption to a particular employee in one of 
the named occupations, employment in the named occupation is an 
essential prerequisite for exemption. Whether an employee is exempt 
therefore depends upon an examination of his duties as well as the 
nature of the employer's activities. Some employees of the employer may 
be exempt and others may not.



Sec. 793.6  Exemption limited to employees in named occupations.

    The legislative history of section 13(b)(9) makes it clear that the 
exemption is specifically limited to employees employed in the specified 
occupations (S. Rept. 145, 87th Cong. 1st sess., p. 37). To be exempt, 
therefore, an employee must be employed in the named occupations of 
announcer, a news editor, or a chief engineer. In applying this test to 
an employee, his title or job description is not determinative. His 
aggregate duties, as evidenced by the work which he actually performs in 
his everyday activities, determines the nature of his occupation. The 
employee's duties, taken as a whole, must characterize the occupation of 
the employee as that of announcer, news editor, or chief engineer, if 
the statutory requirement that he be ``employed as'' such an employee is 
to be satisfied (see Walling v. Haden, 153 F. 2d 196, cert. denied 328 
U.S. 866). This exemption does not apply to employees who are employed 
in occupations other than those of announcer, news editor, or chief 
engineer.



Sec. 793.7  ``Announcer.''

    An announcer is an employee who appears before the microphone or 
camera to introduce programs, read news announcements, present 
commercial messages, give station identification and time signals, and 
present other similar routine on-the-air material. In small stations, an 
announcer may, in addition to these duties, operate the studio control 
board, give cues to the control room for switching programs, make 
recordings, make the necessary preparations for the day's programs, play 
records, or write advertising, promotional or similar type copy. An 
employee who is primarily engaged in the above described activities and 
in activities which are an integral part thereof will be considered to 
be employed as an announcer within the meaning of the exemption in 
section 13(b)(9).



Sec. 793.8  ``News editor.''

    A news editor is an employee who gathers, edits and rewrites the 
news. He may also select and prepare news items for broadcast and 
present the news on the air. An employee who is primarily engaged in the 
above duties and in activities which are an integral part thereof will 
be considered to be employed as a news editor within the meaning of the 
exemption in section 13(b)(9).



Sec. 793.9  ``Chief engineer.''

    A chief engineer is an employee who primarily supervises the 
operation maintenance and repair of all electronic equipment in the 
studio and at the transmitter and is licensed by the Federal 
Communications Commission as a Radio Telephone Operator First Class. In 
small stations, only one such engineer may be employed, and in some 
cases he may be assisted by part-time workers from other departments. 
The engineer in such cases will be regarded as employed as the ``chief 
engineer'' for

[[Page 725]]

purposes of the section 13(b) (9) exemption provided that he performs 
the duties described above and is properly licensed by the Federal 
Communications Commission. Where two or more engineers are employed by a 
station, only one may qualify as ``chief engineer''--that one who, on 
the basis of the factual situation, is in charge of the engineering 
work.



Sec. 793.10  Primary employment in named occupation.

    The legislative history of the exemption is explicit that the 
exemption applies only to an employee who is employed ``primarily'' as 
an announcer, news editor, or chief engineer. Thus the Senate Report 
states: ``The exemption is specifically limited to those employees who 
are employed primarily in the named occupations * * *'' (S. Rept. 145, 
87th Cong., 1st sess., p. 37). No specific rule can be established for 
determining whether in any given case an employee is employed 
``primarily'' in the named occupations. Generally, however, where an 
employee spends more than half of the hours he works in a workweek in a 
named occupation, he will be considered to be primarily employed in such 
occupation during that workweek. The answer will necessarily depend upon 
the facts in each case.



Sec. 793.11  Combination announcer, news editor and chief engineer.

    The 13(b)(9) exemption, as was made clear during the debate on the 
amendment, is intended to apply to employees employed in the named 
occupations by small market radio and television stations. It is known 
at the time of such debate that these stations employ only a small 
number of employees and that, at times, an employee of such a station 
may perform a variety of duties in connection with the operation of the 
station. For example, an employee may perform work both as an announcer 
and as a news editor. In such cases, the primary employment test under 
the section 13(b)(9) exemption will be considered to be met by an 
employee who is employed primarily in any one or any combination of the 
named occupations. Thus an employee who works both as an announcer and 
news editor for the greater part of the workweek will be considered to 
be primarily employed in the named occupations during that week.



Sec. 793.12  Related and incidental work.

    An employee who is employed primarily in one or more of the named 
occupations may also be engaged in other duties pertaining to the 
operation of the station by which he is employed. The Senate Report 
states that, for purposes of this exemption, employees who are primarily 
employed in the named occupation ``may engage in related activities, 
including the sale of broadcasting time for the broadcasting company by 
which they are employed, as an incident to their principal occupation'', 
(S. Rept. 145, 87th Cong., 1st sess., p. 37). Time spent in such duties 
will not be considered to defeat the exemption if the employee is 
primarily employed in the named occupations and if the other 
requirements of the exemption are met.



Sec. 793.13  Limitation on related and incidental work.

    The related work which an employee may perform is clearly limited in 
nature and extent by a number of requirements. One limitation is that 
the work must be an incident to the employee's primary occupation. The 
work therefore may not predominate over his primary job. He is not 
``employed as'' an announcer, news editor, or chief engineer if his 
dominant employment is in work outside such occupations (see Walling v. 
Haden, 153 F. 2d 196, cert. denied 328 U.S. 866). For instance, an 
announcer who spends 40 hours of his 48 hour workweek in selling 
broadcasting time would not be considered to be ``incidentally'' engaged 
in such selling. Selling would in such circumstances be his primary 
occupation. His duties as an announcer must constitute his primary job. 
Another requirement is that the work of the employees must be performed 
``for the broadcasting company by which they are employed * * *'' (see 
S. Rept. cited in Sec. 793.12). Sale of broadcasting time for a company 
which does not employ the employee as an announcer, news editor, or 
chief engineer, is not exempt work. Work which is not performed for the 
station by which the employee is employed, is not intended

[[Page 726]]

to be exempt. For a discussion of the effect on the exemption of 
nonexempt work see Sec. Sec. 793.19 to 793.21.



Sec. 793.14  Employed by.

    The application of the exemption is limited to employees ``employed 
by'' a radio or television station. The question whether a worker is 
employed ``by'' a radio or television station depends on the particular 
facts. (See Rutherford Food Corporation v. McComb, 331 U.S. 722; U.S. v. 
Silk, 331 U.S. 704.) In general, however, an employee is so employed 
where he is hired by the radio or television station, engages in its 
work, is paid by the radio or television station and is under its 
supervision and control. Employees of independent contractors and of 
others who work for a radio or television station but who are not 
``employed by'' such station are not exempt under this exemption even if 
they engage in the named occupation. (Mitchell v. Kroger, 248, F. 2d 
935.)



Sec. 793.15  Duties away from the station.

    An employee who is ``employed by'' a radio or television station in 
one or more of the named occupations may perform his work at the station 
or away from the station so long as his activities meet the requirements 
for exemption.



Sec. 793.16  ``Radio or television station.''

    The employee must be employed by a ``radio or television station.'' 
A radio or television station is one which is designated and licensed as 
such by the Federal Communications Commission.



Sec. 793.17  ``Major studio.''

    The exemption further depends on whether ``the major studio'' of the 
radio or television station which employes the employee is in a city or 
town as defined in section 13(b)(9). The location of secondary studios 
of the radio or television station is immaterial. It is the location of 
the ``major'' studio that determines the qualification of the employer 
for the exemption. A major studio for purposes of the exemption is the 
main studio of the radio or television station as designated on the 
station's license by the Federal Communications Commission. It is this 
major studio which must be located in the city or town as defined in 
section 13(b)(9) of the Act.



Sec. 793.18  Location of ``major studio.''

    Section (b)(9) specifies that the ``major studio'' must be located 
``(A) in a city or town of one hundred thousand population or less 
according to the latest available decennial census figures as compiled 
by the Bureau of the Census, except where such city or town is part of a 
standard metropolitan statistical area, as defined and designated by the 
Bureau of the Budget, which has a total population in excess of one 
hundred thousand or (B) in a city or town of twenty-five thousand 
population or less, which is part of such an area but is at least 40 
airline miles from the principal city in such area.'' These tests may be 
summarized as follows:
    (a) A city or town with more than 100,000 population. The exemption 
does not apply to any employee of a radio or television station the 
major studio of which is located in any city or town with a population 
in excess of 100,000.
    (b) A city or town with 100,000 population or less. The exemption 
may apply if the major studio is located in a city or town of not more 
than 100,000 population: Provided, That the city or town is not within a 
standard metropolitan statistical area which has more than 100,000 
population.
    (c) A city or town with 25,000 population or less. The exemption may 
apply even if the major studio is located in a city or town that is 
within a standard metropolitan statistical area which has more than 
100,000 population: Provided, That such city or town has a population or 
not more than 25,000 and the city or town is at least 40 airline miles 
from the principal city in such area.
    (d) Sources of information. The Bureau of the Budget issues 
periodically a booklet entitled ``Standard Metropolitan Statistical 
Areas'', which lists and describes these areas in the United States and 
Puerto Rico. The booklet lists the standard metropolitan statistical 
areas by name and shows their population according to the latest 
available decennial census figures as compiled by the Bureau of the 
Census. The booklet also lists the major cities

[[Page 727]]

within each standard metropolitan statistical area and the population of 
these cities. From time to time, new areas are designated as ``standard 
metropolitan statistical areas'' and areas once designated as such are 
deleted from the area definitions. This booklet may be purchased, for 25 
cents, from the Superintendent of Documents, U.S. Government Printing 
Office, Washington, DC 20402.
    (e) Principal city. The term ``principal city'', as used in section 
13(b)(9), means the ``central city'', or cities, of the standard 
metropolitan statistical area, which are defined and designated as such 
by the Bureau of the Census. The name of the ``central city'' is 
incorporated in the name of the standard metropolitan statistical area. 
Where two or more cities are designated by the Bureau of the Census as 
the ``central cities'', the names of such cities appear in the title of 
the standard metropolitan statistical area. For example, the ``Duluth-
Superior'' standard metropolitan statistical area, has two ``central'' 
cities, namely Duluth and Superior; both appear in the title of the 
standard metropolitan statistical area, and both are regarded as 
``principal'' cities for purposes of the section 13(b)(9) exemption. 
Where, as in the example, more than one city is designated as the 
``central'' city airline mileage will be measured from that ``central'' 
city which is nearest to the city or town in which the major studio of 
the radio or television station is located.
    (f) Determining the population. The population of a city or town, or 
of a standard metropolitan statistical area, will be determined by the 
latest available decennial census figures as compiled by the U.S. Bureau 
of the Census.
    (g) Measuring airline miles. Airline miles for purposes of the 
section 13(b)(9) exemption are measured, with a straight edge on a map, 
from the zero milestone, or the city hall, of the ``central'' city, to 
the zero milestone, or city or town hall, of the city or town in which 
the major studio of the radio or television station is located.

                    Workweek Application of Exemption



Sec. 793.19  Workweek is used in applying the exemption.

    The unit of time to be used in determining the application of the 
exemption under section 13(b)(9) to an employee is the workweek. (See 
Overnight Motor Transportation Co. v. Missel, 316 U.S. 572; McComb v. 
Puerto Rico Tobacco Marketing Co-op Ass'n., 80 F. Supp. 953, affirmed, 
181 F. 2d 697.) A workweek is a fixed and regularly recurring period of 
7 consecutive 24-hour periods. It may begin at any hour of any day set 
by the employer and need not coincide with the calendar week. Once the 
workweek has been set it commences each succeeding week on the same day 
and at the same hour. The workweek may not be changed for the purpose of 
evading the requirements of the Act.



Sec. 793.20  Exclusive engagement in exempt work.

    An employee who engages exclusively in a workweek in work which is 
exempt under section 13(b)(9) is exempt from the Act's overtime 
requirements for the entire week.



Sec. 793.21  Exempt and nonexempt work.

    Where an employee in the same workweek performs work which is exempt 
from the overtime requirements of the Act under section 13(b)(9), and 
also engages in work to which the overtime requirements apply, he is not 
exempt from overtime provisions of the Act in that week. (See McComb v. 
Puerto Rico Tobacco Marketing Co-op Ass'n., 80 F. Supp. 953, affirmed, 
181 F. 2d 697; Mitchell v. Hunt, 263 F. 2d 913; Abram v. San Joaquin 
Cotton Oil Co., 46 F. Supp. 969; McComb v. del Valle, 80 F. Supp. 945; 
Walling v. Peacock Corp., 58 F. Supp. 880.) As explained in Sec. 
793.13, work which does not come within the occupational duties of an 
announcer, news editor, or chief engineer, or which is not related and 
incidental thereto, is not exempt work under section 13(b)(9). The mere 
isolated or occasional performance of insubstantial amounts of such 
nonexempt work will not defeat the exemption for the employee. Where, 
however, an employee, in a particular workweek, performs a substantial 
amount of nonexempt work to

[[Page 728]]

which the overtime provisions of the Act are applicable, the employee is 
not exempt under section 13(b)(9) in that workweek. For administrative 
purposes an employee who spends 20 percent or more of the hours he works 
in a workweek in such nonexempt work, will not be considered exempt 
under section 13(b)(9) in that workweek.



PART 794_PARTIAL OVERTIME EXEMPTION FOR EMPLOYEES OF WHOLESALE OR BULK
PETROLEUM DISTRIBUTORS UNDER SECTION 7(b)(3) OF THE FAIR LABOR 

STANDARDS ACT--Table of Contents



                            Subpart A_General

Sec.
794.1 General scope of the Act.
794.2 Purpose of this part.
794.3 Matters discussed in this part.
794.4 Significance of official interpretations.
794.5 Basic support for interpretations.
794.6 Reliance on interpretations.
794.7 Interpretations made, continued, and superseded by this part.

Subpart B_Exemption From Overtime Pay Requirements Under Section 7(b)(3) 
                               of the Act

                    Scope and Application in General

794.100 The statutory provision.
794.101 Intended scope of exemption.
794.102 Guides for construing exemptions.
794.103 Dependence of exemption on engagement in described distribution.
794.104 Enterprises engaged in described distribution and in other 
          activities.
794.105 Other requirements for exemption.

                           The ``Enterprise''

794.106 Statutory definition of ``enterprise.''
794.107 ``Establishment'' distinguished.
794.108 Scope of enterprise must be known before exemption tests can be 
          applied.
794.109 Statutory basis for inclusion of activities in enterprise.
794.110 Activities excluded from the enterprise by the statute.
794.111 General characteristics of the statutory enterprise.

         ``Independently Owned and Controlled Local Enterprise''

794.112 Only independent and local enterprises qualify for exemption.
794.113 The enterprise must be ``local.''
794.114 The enterprise must be ``independently owned and controlled.''
794.115 ``Independently owned.''
794.116 ``Independently * * * controlled.''
794.117 Effect of franchises and other arrangements.
794.118 Effect of unrelated activities.

                      Annual Gross Volume of Sales

794.119 Dependence of exemption on sales volume of the enterprise.
794.120 Meaning of ``annual gross volume of sales.''
794.121 Exclusion of excise taxes.
794.122 Ascertainment of ``annual'' gross sales volume.
794.123 Method of computing annual volume of sales.
794.124 Computations on a fiscal year basis.
794.125 Grace period of 1 month for compliance.
794.126 Computations for a new business.

                       Sales Made Within the State

794.127 Exemption conditioned on making 75 percent of sales within the 
          State.
794.128 Sales made to out-of-State customers.
794.129 Sales ``made within the State'' not limited to noncovered 
          activity.

                  Sales Made to Other Bulk Distributors

794.130 Not more than 25 percent of sales may be to customers engaged in 
          bulk distribution of petroleum products for resale.
794.131 ``Customer * * * engaged in bulk distribution.''
794.132 ``Petroleum products.''
794.133 ``Bulk'' distribution.
794.134 Distribution ``for resale.''

                  Application of Exemption to Employees

794.135 Employees who are exempt.
794.136 Employees whose activities may qualify them for exemption.
794.137 Effect of activities other than ``wholesale or bulk distribution 
          of petroleum products.''
794.138 Workweek unit in applying the exemption.
794.139 Exempt and nonexempt activities in the workweek.
794.140 Compensation requirements for a workweek under section 7(b)(3).
794.141 Workweeks when hours worked do not exceed 12 in any day or 56 in 
          the week; compensation requirements.
794.142 Special compensation when overtime in excess of 12 daily or 56 
          weekly hours is worked in the workweek.
794.143 Work exempt under another section of the Act.

                     Records to be Kept by Employers

794.144 Records to be maintained.


[[Page 729]]


    Authority: Secs. 1-19, 52 Stat. 1060, as amended; 29 U.S.C. 201-219.

    Source: 35 FR 16510, Oct. 22, 1970, unless otherwise noted.



                            Subpart A_General



Sec. 794.1  General scope of the Act.

    The Fair Labor Standards Act, as amended, hereinafter referred to as 
the Act, is a Federal statute of general application which establishes 
minimum wage, overtime pay, equal pay and child labor requirements that 
apply as provided in the Act. All employees whose employment has the 
relationship to interstate or foreign commerce which the Act specifies 
are subject to the prescribed labor standards unless specifically 
exempted from them. Employers having such employees are required to 
comply with the Act's provisions in this regard unless relieved 
therefrom by some exemption in the Act. Such employers are also required 
to comply with specified recordkeeping requirements contained in part 
516 of this chapter. The law authorizes the Department of Labor to 
investigate for compliance and, in the event of violations, to supervise 
the payment of unpaid wages or unpaid overtime compensation owing to any 
employee. The law also provides for enforcement in the courts.



Sec. 794.2  Purpose of this part.

    This part 794 constitutes the official interpretation of the 
Department of Labor with respect to the meaning and application of 
section 7(b)(3) of the Act. This section provides a limited partial 
exemption from the overtime provisions of section 7 of the Act (but not 
from the minimum wage, child labor, equal pay, or recordkeeping 
provisions) with respect to employees of an independently owned and 
controlled local enterprise engaged in the wholesale or bulk 
distribution of petroleum products, if the enterprise meets certain 
specified conditions. This exemption was added to the Act by the 1966 
Amendments, which repealed a complete overtime exemption previously 
available for employees of such enterprises (section 13(b)(10) of the 
Act as amended in 1961). It is the purpose of this part to make 
available in one place the interpretations of the law governing this 
exemption which will guide the Secretary of Labor and the Administrator 
in the performance of their duties under the Act.



Sec. 794.3  Matters discussed in this part.

    This part primarily discusses the meaning and application of the 
section 7(b)(3) exemption. The meaning and application of other 
provisions of the Fair Labor Standards Act are discussed only to make 
clear their relevance to the 7(b)(3) exemption and are not considered in 
detail in this part. Interpretations published elsewhere in this title 
deal with such subjects as the general coverage of the Act (part 776 of 
this chapter), methods of payment of wages (part 531, subpart C, of this 
chapter), computation and payment of overtime compensation (part 778 of 
this chapter), computation and payment of overtime compensation (part 
778 of this chapter), retailing of goods or services (part 779 of this 
chapter), hours worked (part 785 of this chapter), and child labor 
provisions (part 570 of this chapter). Regulations on recordkeeping are 
contained in part 516 of this chapter, and regulations defining exempt 
bona fide executive, administrative, and professional employees are 
contained in part 541 of this chapter. The equal pay provisions are 
discussed in part 800 of this chapter. Regulations and interpretations 
on other subjects concerned with the application of the Act are listed 
in the table of contents to this chapter. Copies of any of these 
documents may be obtained from any office of the Wage and Hour Division.



Sec. 794.4  Significance of official interpretations.

    The interpretations of the law contained in this part are official 
interpretations of the Department of Labor with respect to the 
application under described circumstances of the provisions of law which 
they discuss. These interpretations indicate the construction of the law 
which the Secretary of Labor and the Administrator believe to be correct 
and which will guide them in the performance of their duties under the 
Act unless and until they are otherwise directed by authoritative 
decisions of the courts or conclude, upon

[[Page 730]]

re-examination of an interpretation, that it is incorrect. The 
interpretations in this part provide statements of general principles 
applicable to the subjects discussed and illustrations of the 
application of these principles to situations that frequently arise. 
They do not and cannot refer specifically to every problem which may be 
met in the consideration of the exemption discussed. The omission to 
discuss a particular problem in this part or in interpretations 
supplementing it should not be taken to indicate the adoption of any 
position by the Secretary of Labor or the Administrator with respect to 
such problem or to constitute an administrative interpretation or 
practice or enforcement policy. Questions on matters not fully covered 
by this part may be addressed to the Administrator of the Wage and Hour 
Division, U.S. Department of Labor, Washington, DC 20210 or to any 
Regional or Area Office of the Division.



Sec. 794.5  Basic support for interpretations.

    The ultimate decisions on interpretations of the Act are made by the 
courts (Mitchell v. Zachry, 362 U.S. 310; Kirschbaum v. Walling, 316 
U.S. 517). Court decisions supporting interpretations contained in this 
part are cited where it is believed they may be helpful. On matters 
which have not been determined by the courts, it is necessary for the 
Secretary of Labor and the Administrator to reach conclusions as to the 
meaning and the application of provisions of the law in order to carry 
out their responsibilities of administration and enforcement (Skidmore 
v. Swift, 323 U.S. 134). In order that these positions may be made known 
to persons who may be affected by them, official interpretations are 
issued by the Administrator on the advice of the Solicitor of Labor, as 
authorized by the Secretary (Reorg. Plan 6 of 1950, 64 Stat. 1263; Gen. 
Ord. 45A, May 24, 1950, 15 FR 3290). As included in the regulations in 
this part, these interpretations are believed to express the intent of 
the law as reflected in its provisions and as construed by the courts 
and evidenced by its legislative history. References to pertinent 
legislative history are made in this part where it appears that they 
will contribute to a better understanding of the interpretations.



Sec. 794.6  Reliance on interpretations.

    As previously stated, the interpretations of the law contained in 
this part are official interpretations. So long as they remain effective 
and are not modified, amended, rescinded or determined by judicial 
authority to be incorrect, they may be relied upon as provided in 
section 10 of the Portal-to-Portal Act of 1947 (63 Stat. 910, 29 U.S.C. 
251 et seq., discussed in part 790 of this chapter). In addition, the 
Supreme Court has recognized that such interpretations of this Act 
``provide a practical guide to employers and employees as to how the 
office representing the public interest in its enforcement will seek to 
apply it'' and ``constitute a body of experience and informed judgment 
to which courts and litigants may properly resort for guidance.'' 
Further, as stated by the Court: ``Good administration of the Act and 
good judicial administration alike require that the standards of public 
enforcement and those for determining private rights shall be at 
variance only where justified by very good reasons.'' (Skidmore v. 
Swift, 323 U.S. 134).



Sec. 794.7  Interpretations made, continued, and superseded by this part.

    On and after publication of this part in the Federal Register, the 
interpretations contained therein shall be in effect and shall remain in 
effect until they are modified, rescinded, or withdrawn. Prior opinions, 
rulings, and interpretations and prior enforcement policies which are 
not inconsistent with the interpretations in this part or with the Fair 
Labor Standards Act as amended by the Fair Labor Standards Amendment of 
1966 and which were in effect at the time of such publication are 
continued in effect; all other opinions, rulings, interpretations, and 
enforcement policies on the subjects discussed in the interpretations in 
this part are rescinded and withdrawn.

[[Page 731]]



Subpart B_Exemption From Overtime Pay Requirements Under Section 7(b)(3) 
                               of the Act

                    Scope and Application in General



Sec. 794.100  The statutory provision.

    Section 7(b)(3) of the Act provides a partial exemption from the 
overtime pay requirements of section 7 (but not from the minimum wage, 
equal pay or child labor requirements) for any employee employed

by an independently owned and controlled local enterprise (including an 
enterprise with more than one bulk storage establishment) engaged in the 
wholesale or bulk distribution of petroleum products if:
    (A) The annual gross volume of sales of such enterprise is less than 
$1 million exclusive of excise taxes;
    (B) More than 75 per centum of such enterprise's annual dollar 
volume of sales is made within the State in which such enterprise is 
located, and
    (C) Not more than 25 per centum of the annual dollar volume of sales 
of such enterprise is to customers who are engaged in the bulk 
distribution of such products for resale, and such employee receives 
compensation for employment in excess of 40 hours in any workweek at a 
rate not less than one and one-half times the minimum wage applicable to 
him under section 6, and if such employee receives compensation for 
employment in excess of 12 hours in any workday, or for employment in 
excess of 56 hours in any workweek, as the case may be, at a rate not 
less than one and one-half times the regular rate at which he is 
employed.



Sec. 794.101  Intended scope of exemption.

    Under section 7(b)(3) of the Act, the intent of the exemption must 
be given effect in determining the scope of its application to an 
enterprise and to the employees of an enterprise. The statutory language 
must be applied to the facts in a manner consistent with the purpose of 
the exemption as evidenced by its legislative history. This purpose is 
to relieve the described enterprises from the application of the Act's 
general overtime pay requirements (in the limited manner specified in 
the exemption) to employment in their activities of distributing 
petroleum products. Such employment was stated to be affected by 
climatic, seasonal, and other pertinent factors characteristic of 
business operations in the distribution of such products. (See, in this 
connection, the following documents of 87th Cong., first sess.; H. Rept. 
No. 75, pp. 26, 27, 36; 105 Congressional Record (daily edition) p. 
4519; S. Rept. No. 145, pp. 37, 50; H. Rept. No. 327, p. 18; Hearings 
before Senate Subcommittee on Labor on S. 256, S. 879, and S. 895, at 
pp. 411-424; Hearings before House Special Subcommittee on Labor on H.R. 
2935, at pp. 422-425 and 627-629; and these documents of the 89th Cong., 
second sess.; H. Rept. No. 1366, pp. 12, 13, and 43; Cong. Record (daily 
edition) p. 10745; S. Rept. No. 1487, pp. 32 and 51.)



Sec. 794.102  Guides for construing exemptions.

    It is judicially settled that ``The details with which the 
exemptions in this Act have been made preclude their enlargement by 
implication'' and ``no matter how broad the exemption, it is meant to 
apply only to'' the employment specified in the statute. Conditions 
specified in the language of the Act are ``explicit prerequisities to 
exemption.'' Accordingly, it is the well-established rule that 
exemptions from the Act ``are to be narrowly construed against the 
employer seeking to assert them'' and their applications is limited to 
those who come ``plainly and unmistakably within their terms and 
spirit.'' An employer who claims such an exemption has the burden of 
showing that it applies. See Wirtz v. Lunsford, 404 F. 2d 693 (C.A. 6); 
Addison v. Holly Hill, 322 U.S. 607; Maneja v. Waialua, 349 U.S. 254; 
Phillips v. Walling, 334 U.S. 490; Arnold v. Kanowsky, 361 U.S. 388; 
Mitchell v. Kentucky Finance Co., 359 U.S. 290; Walling v. General 
Industries Co., 330 U.S. 545.



Sec. 794.103  Dependence of exemption on engagement in described
distribution.

    By its terms, section 7(b)(3) provides a partial and contingent 
exemption from the general overtime pay requirements of the Act 
applicable to ``any employee * * * employed * * * by an * * * enterprise 
* * * engaged in the wholesale or bulk distribution of petroleum product 
* * *.'' Thus, engagement in the described distribution is an ``explicit 
prerequisite to exemption'' (Arnold v. Kanowsky, 361 U.S. 388), as

[[Page 732]]

are the other express conditions set forth in the section. A natural 
reading of the statutory language suggests that the employee as well as 
the enterprise must be so engaged in order for the exemption to apply 
(see Porto Rico Light Co. v. Mor, 253 U.S. 345). To the extent that its 
employees are engaged in the described distribution, the enterprise is 
itself so engaged (see Kirshbaum v. Walling, 316 U.S. 517; and see Sec. 
794.104). Also, whenever an enterprise is so engaged, any of its 
employees will be considered to be ``employed by an * * * enterprise * * 
* engaged in the wholesale or bulk distribution of petroleum products'' 
if the duties of his employment require him to perform any operations or 
provide any services in carrying on such activities of his employer, and 
if the employee is not engaged in a substantial portion of his workweek 
in other activities which do not provide a basis for exemption under 
section 7(b)(3). Such an interpretation of the quoted language is 
believed necessary to give effect to the intended scope of the exemption 
as explained in Sec. 794.101. Where an enterprise is exclusively 
engaged in the wholesale or bulk distribution of petroleum products and 
meets all the other requirements of section 7(b)(3), all of its 
employees who are paid for their hours of work in accordance with 
section 6 of the Act and the special pay provisions of section 7(b)(3) 
(see Sec. 778.602 of this chapter and Sec. Sec. 794.135 through 
794.136) will be exempt from the overtime pay requirements of the Act 
under the principles stated above. What products are included in the 
term ``petroleum products'' and what constitutes the ``bulk 
distribution'' of such products within the meaning of section 7(b)(3) 
are discussed in Sec. Sec. 794.132 through 794.133.



Sec. 794.104  Enterprises engaged in described distribution and in 
other activities.

    An enterprise may be engaged in the wholesale or bulk distribution 
of petroleum products, within the meaning of section 7(b)(3), without 
being exclusively so engaged. Such engagement may be only one of the 
several related activities, performed through unified operation or 
common control for a common business purpose, which constitute the 
enterprise (see Sec. 794.106) under section 3(r) of the Act. If 
engaging in such distribution is a regular and significant part of its 
business, an enterprise which meets the other tests for exception under 
section 7(b)(3) will be relieved of overtime pay obligations with 
respect to employment of its employees in such distribution activities, 
in accordance with the intended scope (see Sec. 794.101) of the 
exemption. The same will be true with respect to employment of its 
employees in those related activities which are customarily performed as 
an incident to or in conjunction with the wholesale or bulk distribution 
of petroleum products in the enterprises of the industry engaged in such 
distribution. There is no requirement that engaging in such activities 
constitute any particular percentage of the enterprises's business. 
However, in the case of an enterprise engaged in other activities as 
well as in the wholesale or bulk distribution of petroleum products 
(including related activities customarily performed in the enterprises 
of the industry as an incident thereto or in conjunction therewith), an 
employee employed in such other activities of the enterprise is not 
engaged in employment which the exemption was intended to reach (see 
Sec. 794.101). Such an employee is not brought within the exemption by 
virtue of the fact that the enterprise by which he is employed is 
engaged with other employees in the distribution activities described in 
section 7(b)(3). This accords with the judicial construction of other 
exemptions in the Act which are similarly worded. See Connecticut Co. v. 
Walling, 154 F. 2d 522, Certiorari denied, 329 U.S. 667; Northwest 
Airlines v. Jackson, 185 F. 2d 74; Davis v. Goodman Lumber Co., 133 F. 
2d 52; Fleming v. Swift & Co., 41 F. Supp. 825, aff'd 131 F. 2d 249.



Sec. 794.105  Other requirements for exemption.

    The limited overtime pay exemption provided by section 7(b)(3) 
applies to any employee compensated in accordance with its terms who is 
``employed * * * by an * * * enterprise * * * engaged in the wholesale 
or bulk distribution of petroleum products'' as explained in Sec. Sec. 
794.103 through 794.104 if

[[Page 733]]

the enterprise which employs him meets all of the following 
requirements: (a) It is a ``local'' enterprise; (b) it is 
``independently owned and controlled''; (c) it has an annual gross 
volume of sales of less than $1 million exclusive of excise taxes; (d) 
it makes more than 75 percent of its annual dollar volume of sales 
within the State in which it is located; and (e) not more than 25 
percent of such annual dollar volume of sales is to customers who are 
engaged in the bulk distribution of petroleum products for resale. In 
order to determine whether all these requirements are met, it is 
necessary to know what constitutes the ``enterprise'' to which reference 
is made, the meaning of ``the wholesale or bulk distribution of 
petroleum products'' in which engagement is required as a prerequisite 
to exemption, what is meant by a ``local'' enterprise and what 
characterizes it as ``independently owned and controlled'', and the 
criteria for application of the dollar volume tests. These matters will 
be discussed in some detail in the sections following.

                           The ``Enterprise''



Sec. 794.106  Statutory definition of ``enterprise.''

    The term ``enterprise'' is defined in section 3(r) of the Act. That 
definition (insofar as it affects a wholesale or bulk petroleum 
distributor) is as follows:

    ``Enterprise'' means the related activities performed (either 
through unified operation or common control) by any person or persons 
for a common business purpose, and includes all such activities whether 
performed in one or more establishments or by one or more corporate or 
other organizational units including departments of an establishment 
operated through leasing arrangements, but shall not include the related 
activities performed for such enterprise by an independent contractor: 
Provided, That within the meaning of this subsection, a retail or 
service establishment which is under independent ownership shall not be 
deemed to be so operated or controlled as to be other than a separate 
and distinct enterprise by reason of any arrangement, which includes, 
but is not necessarily limited to, an agreement (1) that it will sell, 
or sell only, certain goods specified by a particular manufacturer, 
distributor, or advertiser, or (2) that it will join with other such 
establishments in the same industry for the purpose of collective 
purchasing, or (3) that it will have the exclusive right to sell the 
goods or use the brand name of a manufacturer, distributor, or 
advertiser within a specified area, or by reason of the fact that it 
occupies premises leased to it by a person who also leases premises to 
other retail or service establishments.



Sec. 794.107  ``Establishment'' distinguished.

    The ``enterprise'' referred to in the section 7(b)(3) exemption is 
to be distinguished from an ``establishment''. As used in the Act, the 
term ``establishment'', which is not specially defined therein, refers 
to a ``distinct physical place of business'' rather than to ``an entire 
business or enterprise'' which may include several separate places of 
business. (See Phillips v. Walling, 324 U.S. 490; Mitchell v. Bekins Van 
& Storage Co., 352 U.S. 1027; 95 Congressional Record 12505, 12579, 
14877; H. Rept. No. 1453, 81st Cong., first session, p. 25.) It will be 
noted from the definition of ``enterprise'' in section 3(r), as set 
forth in Sec. 794.106, that the activities of the enterprise may be 
``performed in one or more establishments,'' and section 7(b)(3) 
specifies that the enterprises to which its exemption requirements are 
applicable will include ``an enterprise with more than one bulk storage 
establishment.''



Sec. 794.108  Scope of enterprise must be known before exemption
tests can be applied.

    The scope of the ``enterprise'' as defined by section 3(r) of the 
Act must be ascertained before it is possible to apply the tests for 
exemption contained in section 7(b)(3) which are based on the dollar 
volume of sales of the ``enterprise''. The activities included in the 
enterprise must be known, and any activities not a part of the 
enterprise must be excluded before the dollar volume of sales derived 
from the activities of the enterprise can be computed.



Sec. 794.109  Statutory basis for inclusion of activities in enterprise.

    The ``enterprise'' for purposes of enterprise coverage under section 
3(s) and the exemption provision in section 7(b)(3), is defined in 
section 3(r) (Sec. 794.106) in terms of the activities in which it is 
engaged. All the ``related

[[Page 734]]

activities'' which are ``performed * * * by any person or persons for a 
common business purpose'' are included if they are performed ``either 
through unified operation or common control.'' This is true even if they 
are performed by more than one person, or in more than one establishment 
or by more than one corporate or other organizational unit. The 
definition specifically includes as a part of the enterprise, 
departments of an establishment operated through leasing arrangements. 
These statutory criteria are discussed in more detail in subsequent 
sections.



Sec. 794.110  Activities excluded from the enterprise by the statute.

    The circumstances under which certain activities will be excluded 
from the ``enterprise'' referred to in the Act are made clear by the 
definition quoted in Sec. 794.106. The definition distinguishes between 
the related activities performed through unified operation and common 
control for a common business purpose by the participants in the 
enterprise, and activities which are related to these activities but are 
performed for the enterprise by a bona fide independent contractor (for 
example, an independent accounting or auditing firm). The latter 
activities are expressly excluded from the ``enterprise'' as defined. In 
addition, the definition contains a proviso detailing certain 
circumstances under which a retail or service establishment under 
independent ownership will not lose its status as a separate and 
distinct enterprise by reason of certain franchise and other 
arrangements which it may enter into with others. This proviso, the 
effect of which is more fully explained in parts 776 and 779 of this 
chapter, may be important to wholesale or bulk distributors of petroleum 
products in determining whether the effect of particular arrangements 
which they may make with retailers of their products will be to include 
activities of the latter with their own activities in the same 
enterprise for purposes of the Act.



Sec. 794.111  General characteristics of the statutory enterprise.

    As defined in the Act, the term ``enterprise'' is roughly 
descriptive of a business rather than of an establishment or of an 
employer although on occasion the three may coincide. The enterprise, 
however, is not necessarily coextensive with the entire business 
activities of an employer. The enterprise may consist of a single 
establishment which may be operated by one or more employers; or it may 
be composed of a number of establishments which may be operated by one 
or more employers. On the other hand, a single employer may operate more 
than one enterprise. The Act treats as separate enterprises different 
businesses which are unrelated to each other and lack any common 
business purpose, even if they are operated by the same employer.

         ``Independently Owned and Controlled Local Enterprise''



Sec. 794.112  Only independent and local enterprises qualify for exemption.

    The legislative history of the exemption (Sec. 794.101) shows that 
the proponents of an amendment to provide the relief which it grants 
from the overtime pay provisions of the Act were organizations of 
independent local merchants who did not as a rule engage extensively in 
interstate operations such as those typical of major oil companies, and 
who functioned primarily at the local level in distributing petroleum 
products at wholesale or in bulk. As a result the exemption provided by 
the Act, like that requested, was limited to enterprises which are 
``local'' (Sec. 794.113) and are ``independently owned and controlled'' 
(Sec. Sec. 794.114-794.118).



Sec. 794.113  The enterprise must be ``local.''

    It is clear from the language of section 7(b)(3) that the exemption 
which it provides is available to an enterprise only if it is a ``local 
enterprise''. The other tests of exemption must also, of course be met. 
A ``local'' enterprise is not defined in the Act, and the word 
``local'', which appears in a different context elsewhere in the Act 
(see clause (2) of the last sentence of section 3(r) and sections 
13(b)(7), 13(b)(11)), is likewise given no express definition. There is 
no fixed legal meaning of the term ``local''; it is usually a flexible

[[Page 735]]

and comparative term whose meaning may vary in different contexts. As 
used here, certain guides are available from the context in which it is 
used, the legislative history surrounding adoption of section 7(b)(3), 
and the law of which it forms a part. A ``local'' enterprise engaged in 
the wholesale or bulk distribution of petroleum products is clearly 
intended to embrace the kind of enterprise operated by the merchants who 
requested the amendment; that is, one which provides farmers, 
homeowners, country merchants, and others in its locality with petroleum 
products in bulk quantities or at wholesale. The language of section 
7(b)(3) makes it clear also that the enterprise will not be regarded as 
other than ``local'' merely because it has more than one bulk storage 
establishment. On the other hand, the section makes it equally clear 
that ordinarily an enterprise which is not located within a single State 
is not a local enterprise of the kind to which the exemption will apply. 
This follows from the express requirement that more than 75 percent of 
the enterprise's annual dollar volume of sales must be made ``within the 
State in which such enterprise is located.'' The legislative history 
provides further evidence of this intent. At the hearings before the 
Senate Labor Subcommittee a proponent of the amendment which eventually 
was enacted in somewhat different language (sec. 13(b)(10) of the Act 
which was repealed by the 1966 Amendments to the Act and replaced by 
section 7(b)(3)), stated with respect to the significance of the word 
``local'':

    * * * the language which we have suggested in the proposed amendment 
``locally owned and controlled establishments'', I admit that can point 
up some trouble and make some work for lawyers.
    We, however, in our endeavor to show our sincerity of only trying to 
cover local intrastate establishments, went overboard on this language.
    You will note that 75 percent of our business has to be performed in 
one State. I think that ``locally owned and controlled establishments'' 
language should better read ``independently owned and controlled local 
enterprises or establishment.'' (Sen. Hearings on amendments to the Fair 
Labor Standards Act, 87th Cong., first session, p. 416.)


The same witness also quoted from the Congressional Record of August 18, 
1960, the discussion in the course of the consideration of the 
amendments to the Act by the Senate during the 86th Congress, second 
session, as follows:

    These wholesale and bulk distributors of petroleum products, 
commonly referred to as oil jobbers, are primarily local businessmen who 
acquire these products from their suppliers' bulk terminal in the State 
in which the jobber does business and sell these products to service 
stations, farmers, and homeowners in the State in which they maintain 
their place of business * * * I am advised that 98.3 percent of all the 
oil jobbers in the United States sell their products only in the State 
in which their place of business is located thus qualifying by any 
definition as local merchants. (Sen. Hearings on amendments to the Fair 
Labor Standards Act 87th Cong., first session, pp. 415-416.)


It thus appears that the word ``local'' was intended to confine the 
exemption to enterprises of such local merchants. The enterprise need 
not, of course, conduct all of its business within the State in which it 
is physically located, since the exemption specifically provides that it 
may make a portion of its sales outside the State in which it is 
located.



Sec. 794.114  The enterprise must be ``independently owned and controlled.''

    Another requirement for exemption under section 7(b)(3) is that the 
enterprise must be ``independently owned and controlled''. Since this 
requirement is in the conjunctive, it must be established that the 
enterprise which is engaged in the wholesale or bulk distribution of 
petroleum products is both independently owned and independently 
controlled. (Wirtz v. Lunsford, 404 F. 2d 693 (C.A. 6).) At the hearing 
before the Senate Labor Subcommittee, when the amendment was proposed 
which eventually was incorporated in the Act as section 13(b)(10) by the 
1961 amendments (later repealed by the 1966 amendments to the Act and 
replaced by section 7(b)(3)), a spokesman for proponents of the 
amendment made the following statement, which bears on this requirement 
for exemption:

    The designation ``independent'' as applied to an oil jobber means 
that he owns his own office, bulk storage, and delivery facilities; pays 
his own personnel, and in all respects

[[Page 736]]

conducts his business as any other independent businessman.
    It also means that the jobber is not a subsidiary of nor controlled 
by any so-called major oil company, although the jobber may sell the 
branded products of such a company.
    Some jobbers own service stations which they lease to independent 
dealers and a small percentage of jobbers may operate one or more 
service stations with their own salaried personnel. (Senate Hearings on 
the Amendments to the Fair Labor Standards Act, 87th Cong., first 
session, p. 411.)


It appears, therefore, that the purpose of the requirement limiting the 
exemption to the enterprises which are ``independently owned and 
controlled,'' is to confine the exemption to those petroleum jobbers who 
own their own facilities and equipment and who are not subsidiaries nor 
controlled by any producer, refinery, terminal supplier or so-called 
major oil company. (See Wirtz v. Lunsford, cited above.) The fact that 
the petroleum jobber sells a branded product of a major oil company will 
not, of itself, affect the status of his enterprise as one which is 
``independently owned and controlled''. So also the fact that the jobber 
owns gasoline service stations, which he leases or which he operates 
himself, will not affect the status of his enterprise as being 
``independently owned and controlled''.



Sec. 794.115  ``Independently owned.''

    Ownership of the enterprise may be vested in an individual petroleum 
jobber, or a partnership, or a corporation, so long as such ownership is 
not shared by a major oil company, or other producer, refiner, 
distributor or supplier of petroleum products, so as to affect the 
independent ownership of the enterprise. As noted in Sec. 794.114, an 
enterprise will not be considered independently owned where it does not 
own its own office, bulk storage, and delivery facilities. The 
enterprise may also not be considered ``independently owned'' where it 
does not own its stock-in-trade. (See Wirtz v. Lunsford, 404 F.2d 693 
(C.A. 6).) It is recognized that, in the ordinary course of business 
dealings, an independently owned enterprise may purchase its goods on 
credit and this, of course, will not affect its characterization as 
being ``independently owned'' within the meaning of the exemption. 
However, there may well be a question as to whether the enterprise is 
``independently owned'' where the enterprise receives its petroleum 
products on consignment and the supplier lays claim to the ownership of 
the account receivable. Of possible relevance also is the intent evident 
in the statutory language to provide exemption only for an enterprise 
which can meet the specified tests which depend on ``the sales of such 
enterprise.'' The determination in such cases, as in other cases 
involving questions of independent ownership, will necessarily depend on 
all the facts.



Sec. 794.116  ``Independently * * * controlled.''

    As explained in Sec. 794.114, the enterprise in addition to being 
independently owned must also be ``independently controlled.'' The test 
here is whether the individual, partnership, or corporation which owns 
the enterprise also controls the enterprise as an independent 
businessman, free of control by any so-called major oil company or other 
person engaged in the petroleum business. Control by others may be 
evidenced by ownership; but control may exist in the absence of any 
ownership. For example where an enterprise engaged in the wholesale or 
bulk distribution of petroleum products enters into franchise or other 
arrangements which have the effect of restricting the products it 
distributes, the prices it may charge, or otherwise controlling the 
activities of the enterprise in those respects which are the common 
attributes of an independent businessman, these facts may establish that 
the enterprise is not ``independently controlled'' as required by the 
exemption under section 7(b)(3). (Wirtz v. Lunsford, 404 F. 2d 693 (C.A. 
6).)



Sec. 794.117  Effect of franchises and other arrangements.

    Whether a franchise or other contractual arrangement affects the 
status of the enterprise as ``an independently owned and controlled * * 
* enterprise,'' depends upon all the facts including the terms of the 
agreements and arrangements between the parties as well as the other 
relationships that have been established. The term ``franchise''

[[Page 737]]

is not susceptible of precise definition. While it is clear that in 
every franchise a business surrenders some rights, it is equally clear 
that every franchise does not necessarily deprive an enterprise of its 
character as an independently owned and operated business. This matter 
was the subject of legislative consideration in connection with other 
provisions of the 1961 amendments to the Act. The Senate Report on the 
amendments, in discussing the effects of franchises and similar 
arrangements on the scope of the ``enterprise'' under section 3(r) of 
the Act, stated as follows:

    There may be a number of different types of arrangements established 
in such cases. The key in each case may be found in the answer to the 
question, ``Who receives the profits, suffers the losses, sets the wages 
and working conditions of employees, or otherwise manages the business 
in those respects which are the common attributes of an independent 
businessman operating a business for profit?''

                                * * * * *

    In all of these cases if it is found on the basis of all the facts 
and circumstances that the arrangements are so restrictive as to 
products, prices, profits, or management as to deny the ``franchised'' 
establishment the essential prerogative of the ordinary independent 
businessman, the establishment, the dealer, or concessionaire will be 
considered an integral part of the related activities of the enterprise 
which grants the franchise, rights or concession. (S. Rep. 145, 87th 
Cong., first session, p. 42.)


Thus there may be a number of different types of arrangements 
established in such cases and the determination as to whether the 
arrangements have the effect of depriving the enterprise of its 
independent ownership or control will necessarily depend on all the 
facts. The fact that the distributor hires and controls the employees 
engaged in distribution of the product does not establish the requisite 
independence of the distributor; it is only one factor to be considered 
(Wirtz v. Lunsford, 404 F. 2d 693 (C.A. 6).) Ultimately the 
determination of the precise scope of such arrangements and their effect 
upon the independent ownership and control of the enterprise under 
section 7(b)(3), as well as on the question whether such arrangements 
result in creating a larger enterprise, rests with the courts.



Sec. 794.118  Effect of unrelated activities.

    The term ``independently owned and controlled'' has reference to 
independence of ownership and control by others. Accordingly, the fact 
that the petroleum jobber may himself engage in other businesses which 
are not related to the enterprise engaged in the wholesale or bulk 
distribution of petroleum products, will not affect the question whether 
the petroleum enterprise is independently owned or controlled. For 
example, the fact that the wholesale or bulk petroleum distributor also 
owns or controls a wholly sep- arate tourist lodge enterprise or job 
printing business will not affect the status of his enterprise engaged 
in the wholesale or bulk distribution of petroleum products as an 
``independently controlled'' enterprise.

                      Annual Gross Volume of Sales



Sec. 794.119  Dependence of exemption on sales volume of the enterprise.

    It is a requirement of the section 7(b)(3) exemption that the annual 
gross volume of sales of the enterprise must be less than $1 million 
exclusive of excise taxes. This dollar volume test is separate and 
distinct from the $250,000 annual gross volume (of sales made or 
business done) test in section 3(s)(1) of the Act. This latter test is 
for the purpose of determining coverage as an enterprise engaged in 
commerce or in the production of goods for commerce; whereas the $1 
million test is for limiting the 7(b)(3) exemption to enterprises with 
annual sales of less than that amount.



Sec. 794.120  Meaning of ``annual gross volume of sales.''

    The annual gross volume of sales of an enterprise consists of its 
gross receipts from all types of sales during a 12-month period (Sec. 
794.122). The gross volume derived from all sales transactions is 
included, and will embrace among other things receipts from service, 
credit, or similar charges. However, credits for goods returned or 
exchanged (as distinguished from ``trade-ins''), rebates, discounts, and 
the like

[[Page 738]]

are not ordinarily included in the annual gross volume of sales. In 
determining whether the million dollar limit on annual gross sales 
volume is or is not exceeded, the sales volume from all the related 
activities which constitute the enterprise must be included; the dollar 
volume of the entire business in all establishments is added together. 
Thus, the gross volume of sales will include the receipts from sales 
made by any gasoline service stations of the enterprise, as well as the 
sales made by any other establishments of the enterprise. These 
principles and their application are considered in more detail in parts 
776 and 779 of this chapter, which contain general discussions of 
``annual gross volume'' as used in other provisions of the Act.



Sec. 794.121  Exclusion of excise taxes.

    The computation of the annual gross volume of sales of the 
enterprise for purposes of section 7(b)(3) is made ``exclusive of excise 
taxes.'' It will be noted that the excise taxes excludable under section 
7(b)(3) are not, like those referred to in section 3(s)(1) and section 
13(a)(2), limited to those ``at the retail level which are separately 
stated.'' Under section 7(b)(3), therefore, all excise taxes which are 
included in the sales price may be excluded in computing the annual 
gross volume of the enterprise.



Sec. 794.122  Ascertainment of ``annual'' gross sales volume.

    The annual gross volume of sales of an enterprise engaged in the 
wholesale or bulk distribution of petroleum products consists of its 
gross dollar volume of sales during a 12-month period. Where a 
computation of annual gross volume of sales is necessary to determine 
the status of the enterprise under section 7(b)(3) of the Act, it must 
be based on the most recent prior experience which it is practicable to 
use.



Sec. 794.123  Method of computing annual volume of sales.

    (a) Where the enterprise, during the portion of its current income 
tax year up to the end of the current payroll period, has already had a 
gross volume of sales in excess of the amount specified in the statute, 
it is plain that its annual gross volume of sales currently is in excess 
of the statutory amount.
    (b) Where the enterprise has not yet in such current year exceeded 
the statutory amount in its gross volume of sales, but has had, in the 
most recently ended year used by it for income tax purposes, a gross 
volume of sales in excess of the amount specified in the Act, the 
enterprise will be deemed to have an annual gross volume of sales in 
excess of such statutory amount, unless use of the method set forth in 
paragraph (c) of this section establishes a gross annual volume less 
than the statutory amount.
    (c) When it is necessary to make a computation of the annual gross 
volume of sales of the enterprise the following method shall be used: At 
the beginning of each calendar quarter (Jan. 1-Mar. 31; Apr. 1-June 30; 
July 1-Sept. 30; Oct. 1-Dec. 31), the gross receipts from all of its 
sales during the annual period (12 calendar months) which immediately 
precedes the current calendar quarter, is totaled. In this manner the 
employer, by calculating the sales of his enterprise, will know whether 
or not the dollar volume tests have been met for the purpose of 
complying with the law in the workweeks ending in the current calendar 
quarter.



Sec. 794.124  Computations on a fiscal year basis.

    Some enterprises operate on a fiscal year, consisting of an annual 
period different from the calendar year, for income tax or sales or 
other accounting purposes. Such enterprises in applying the method of 
computation in Sec. 794.123(c) may use the four quarters of the fiscal 
period instead of the four quarters of the calendar year. Once adopted, 
the same basis must be used in subsequent calculations.



Sec. 794.125  Grace period of 1 month for compliance.

    Where it is not practicable to compute the annual gross volume of 
sales under Sec. 794.123 or Sec. 794.124 in time to determine 
obligations under the Act for the current quarter, an enterprise may use 
a 1-month grace period. If this 1-month grace period is used, the 
computations made under those sections will determine its obligations 
under

[[Page 739]]

the Act for the 3-month period commencing 1 month after the end of the 
preceding calendar or fiscal quarter. Once adopted the same basis must 
be used for each successive 3-month period.



Sec. 794.126  Computations for a new business.

    When a new business is commenced the employer will necessarily be 
unable for a time to determine its annual dollar volume on the basis of 
a full 12-month period as described in Sec. Sec. 794.123 and 794.124. 
In many cases, it is readily apparent that the enterprise will or will 
not have the requisite annual dollar volume specified in the Act. For 
example, the new business may be so large that it is clear from the 
outset that the business will exceed the $1 million test of the 
exemption. In other cases, where doubt exists, the gross receipts of the 
new business during the first quarter year in which it has been in 
operation will be taken as representative of its annual dollar volume 
tests for purposes of determining its status under section 7(b)(3) of 
the Act in workweeks falling in the following quarter-year period. 
Similarly, for purposes of determining its status under the Act in 
workweeks falling within ensuing quarter-year periods, the gross 
receipts of the new business for the completed quarter-year periods will 
be taken as representative of its annual dollar volume in applying the 
annual volume tests of the Act. After the new business has been in 
operation for a full calendar or fiscal year, the analysis can be made 
by the methods described in Sec. Sec. 794.123 and 794.124.

                       Sales Made Within the State



Sec. 794.127  Exemption conditioned on making 75 percent of sales
within the State.

    A further requirement of the section 7(b)(3) exemption is that more 
than 75 percent of the sales of the enterprise engaged in the wholesale 
or bulk distribution of petroleum products (measured by annual dollar 
volume) must be made ``within the State in which such enterprise is 
located.'' This means that over 75 percent of the annual dollar volume 
of sales must be from sales to customers within the same State in which 
the enterprise is located. If 25 percent or more of its sales volume is 
from sales to customers outside the State of its location, the 
requirement is not met and the enterprise cannot qualify for exemption.



Sec. 794.128  Sales made to out-of-State customers.

    Whether the sale of goods or services is made to an out-of-State 
customer is a question of fact. In order for a customer to be considered 
an out-of-State customer, some specific relationship between him and the 
seller has to exist to indicate his out-of-State character. On the one 
hand, sales made to the casual cash-and-carry customer (such as at a 
gasoline station owned or operated by the enterprise), who, for all 
practical purposes, is indistinguishable from the mass of customers who 
visit the establishment, are sales made within the State even though the 
seller knows or has reason to believe, because of his proximity to the 
State line or because he is frequented by tourists, that some of the 
customers who visit his establishment reside outside the State. If the 
customer is of that type, sales made to him are sales made within the 
State even if the seller knows in the particular instance that the 
customer resides outside the State. On the other hand, a sale is made to 
an out-of-State customer and therefore, is not a sale made ``within the 
State'' in which the enterprise is located, if delivery of the goods is 
made outside that State, or if the relationship with the customer is 
such as to indicate his out-of-State character. Such a relationship 
would exist, for example, where an out-of-State company in the regular 
course of dealing picks up the petroleum products at the bulk storage 
station of the enterprise and transports them out of the State in its 
own trucks.



Sec. 794.129  Sales ``made within the State'' not limited to
noncovered activity.

    Sales to customers located in the same State as the establishment 
are sales made ``within the State'' even though such sales may 
constitute activity within the interstate commerce coverage of the Act, 
as where the sale (a) is made pursuant to prior orders

[[Page 740]]

from customers for goods to be obtained from outside the State; (b) 
contemplates the purchase of goods from outside the State to fill a 
customer's orders; or (c) is made to a customer for his use in 
interstate or foreign commerce or in the production of goods for such 
commerce.

                  Sales Made to Other Bulk Distributors



Sec. 794.130  Not more than 25 percent of sales may be to customers 
engaged in bulk distribution of petroleum products for resale.

    As a further requirement for exemption, section 7(b)(3) limits to 
not more than 25 percent (measured by annual dollar volume) the sales 
which an enterprise engaged in the wholesale or bulk distribution of 
petroleum products may make to customers who are engaged in the bulk 
distribution of such products for resale. It should be noted that this 
limitation does not depend on whether the goods sold by the enterprise 
to such customers are sold by it for resale, or on whether the goods 
sold to such customers are petroleum products. It is whether the 
customer is engaged in selling petroleum products for resale that is 
controlling. A sale of any goods must be included in this 25 percent 
limitation so long as it is made to a customer who, as described in 
section 7(b)(3), can be characterized as one ``engaged in the bulk 
distribution of such products for resale''. It should be also noted that 
this provision does not in any way limit the sales which the enterprise 
may make to customers who are not engaged in the bulk distribution of 
petroleum products for resale. Thus, there is no limitation on the sales 
the enterprise may make to gasoline service stations which sell such 
products for resale but do no engage in the ``bulk distribution'' of the 
products so sold, or to any other customers except those specified in 
the exemption in section 7(b)(3). Who is a ``customer engaged in the 
bulk distribution of such products for resale'' is discussed in 
Sec. Sec. 794.131-794.133.



Sec. 794.131  ``Customer * * * engaged in bulk distribution''.

    A sale to a customer of an enterprise engaged in the wholesale or 
bulk distribution of petroleum products will be considered to come 
within the 25 percent limitation for purposes of the exemption under 
section 7(b)(3) if it is made to a ``customer who is engaged in the bulk 
distribution of such products for resale''. The identity of such 
customers is generally well known in the trade. For example, this would 
generally include other petroleum jobbers, brokers, wholesalers, and any 
others who engaged in the bulk distribution of petroleum products for 
resale. Thus a sale to a petroleum jobber who is engaged in selling 
petroleum products to gasoline stations would clearly be a sale to a 
customer described in section 7(b)(3). The essential tests are: first, 
that the customer must be one who is engaged in the distribution of 
``such products'', which means petroleum products; second, that he must 
engage in ``the bulk distribution'' of such products; and finally, that 
he must be engaged in such distribution ``for resale''. These three 
requirements are discussed in Sec. Sec. 794.132 through 794.134.



Sec. 794.132  ``Petroleum products''.

    A sale by an enterprise engaged in the wholesale or bulk 
distribution of petroleum products will be included in the 25 percent 
limitation under the exemption only if it is made to a customer who 
engages in the distribution, in bulk and for resale, of ``petroleum 
products''. The term ``petroleum products'' as used in section 7(b)(3) 
includes such products as gasoline, kerosene, diesel fuel, lubricating 
oils, fuel oils, greases, and liquified-petroleum gas. Sales to 
customers who are not engaged in the distribution of petroleum products 
will not be included in the 25 percent limitation.



Sec. 794.133  ``Bulk'' distribution.

    ``Bulk'' distribution of petroleum products typically connotes those 
methods of distribution in which large quantities of the product are 
distributed in a single delivery or delivery trip. Thus, ``bulk'' 
distribution includes deliveries from bulk storage facilities at the 
establishment to the tank truck of a customer (whether or not at 
``wholesale''). It also includes deliveries made in series on a single 
trip on a delivery route to the storage

[[Page 741]]

tanks or facilities of a number of customers from a bulk supply of the 
product transported by tank truck, motor transport, or other motor 
carrier operated by the enterprise. Such deliveries are to be contrasted 
with such typical small-quantity individual deliveries as those made 
into the tank of a motor vehicle for use in its propulsion.



Sec. 794.134  Distribution ``for resale.''

    A sale made to a customer engaged in the bulk distribution of 
petroleum products will be included in the 25 percent limitation only if 
the customer engages in the bulk distribution of petroleum products 
``for resale''. Except with respect to a specific exclusion in section 
3(n) regarding certain building materials, the word ``resale'' is not 
defined in the Act. The common meaning of ``resale'' is the act of 
``selling again''. A sale is made for resale when the seller knows or 
has reasonable cause to believe that what is sold by him will be resold 
by the purchaser in the same or a different form. Where the sale is thus 
made for resale, it does not matter what ultimately happens to the 
subject of the sale. Thus, the fact that goods sold for resale are 
consumed by fire or no market is found for them and they are therefore 
never resold does not alter the character of the sale which is made for 
resale. In considering whether there is a sale of petroleum products for 
resale in any specific situation, the term ``sale'' includes, as defined 
in section 3(k) of the Act, ``any sale, exchange, contract to sell, 
consignment for sale, shipment for sale, or other disposition.''

                  Application of Exemption to Employees



Sec. 794.135  Employees who are exempt.

    If an enterprise engaged in distribution of petroleum products 
satisfies all the conditions specified in section 7(b)(3) as previously 
discussed, the partial exemption provided by this section from the Act's 
general overtime pay requirements will be applicable to all employees 
employed by their employer in activities of the enterprise for which the 
exemption was intended if, but only if, such employees are compensated 
in accordance with the compensation requirements of section 7(b)(3) (see 
Sec. 794.100).



Sec. 794.136  Employees whose activities may qualify them for exemption.

    The activities for which the section 7(b)(3) partial exemption was 
intended are discussed generally in Sec. Sec. 794.103 through 794.104. 
In accordance with the principles there set forth, those employees 
employed in an enterprise which qualifies for application of the 
exemption, who are engaged in the storage and delivery of petroleum 
products for the enterprise, and those employees whose work is required 
for the performance of the activities in the wholesale or bulk 
distribution of the petroleum products or the related activities 
customarily performed as an incident to or in conjunction with such 
distribution in the enterprises of the industry which distributes such 
products, are employees for whom the employer may take the exemption 
provided they are paid in accordance with the special compensation 
provisions of section 7(b)(3). Thus, so long as these payment 
requirements are met, the exemption is applicable not only to such 
employees as drivers, helpers, loaders, dispatchers, and warehousemen 
engaged in the bulk delivery and storage of petroleum products, but also 
to such employees as office, management, and sales personnel, 
maintenance, custodial, protective personnel, and any others, who engage 
in related functions customarily carried on by such enterprises in the 
industry in conjunction with the wholesale and bulk distribution of the 
petroleum products.



Sec. 794.137  Effect of activities other than ``wholesale or bulk 
distribution of petroleum products.''

    As previously noted, in some cases the related activities performed 
through unified operation or common control for a common business 
purpose which are included in the enterprise under the definition in 
section 3(r) of the Act may include activities other than the wholesale 
or bulk distribution of petroleum products. Examples are tire recapping 
or gasoline station services, the sale and servicing of oil burners, or 
the distribution of coal, ice, feed, building supplies, paint, etc. In

[[Page 742]]

some instances, as in the case of oil-burner servicing, these other 
activities are customarily performed as an incident to or in conjunction 
with the wholesale or bulk distribution of petroleum products in the 
enterprises of the industry engaged in such distribution. As indicated 
in Sec. 794.104, employees of the enterprise who engage in such 
activities are within the general scope of the exemption. However, 
activities which are not customary practices of enterprises in the 
industry of wholesale or bulk distribution of petroleum products are not 
within the scope of the intent of the section 7(b)(3) exemption. For 
example, construction activities, operation of a sporting goods store, 
scrap paper and metal activities, the operation of a general repair 
garage, etc., are not the type of activities for which the section 
7(b)(3) exemption was intended. Thus, where an enterprise engaged in the 
wholesale or bulk distribution of petroleum products operates a general 
repair garage, a mechanic servicing the automobiles and trucks brought 
to the garage by customers will not for that reason be within the 
exemption provided by section 7(b)(3), although the exemption provided 
by section 13(a)(2) may apply to him if the garage qualifies as an 
exempt retail or service establishment under the tests provided in that 
section of the Act. On the other hand, mechanics employed by an 
enterprise engaged in the wholesale or bulk distribution of petroleum 
products for the purpose of keeping the distribution equipment of the 
enterprise in good repair would come within the 7(b)(3) exemption.



Sec. 794.138  Workweek unit in applying the exemption.

    (a) As is true generally with respect to provisions of the Act 
concerning compensation for overtime hours of work (see Sec. Sec. 
778.100 through 778.105 of this chapter, Overnight Transportation Co. v. 
Missel, 316 U.S. 572), the unit of time to be used in determining the 
application of all provisions of the section 7(b)(3) exemption to an 
employee is the workweek. As defined in Sec. 778.105 of this chapter, 
an employee's workweek is a fixed and regularly recurring period of 168 
hours--seven consecutive 24-hour periods. It may begin at any hour of 
any day set by the employer and need not coincide with the calendar 
week. Once the workweek has been set it commences each succeeding week 
on the same day and at the same hour. Changing the workweek for the 
purpose of escaping the requirements of the Act is not permitted.
    (b) By its terms (Sec. 794.100), section 7(b)(3) exempts an 
employer from any statutory responsibility he might otherwise have for a 
violation of section 7(a) of the Act ``by employing any employee for a 
workweek in excess of that specified in such subsection'' without paying 
the overtime compensation prescribed therein, ``if such employee is so 
employed * * * by an * * * enterprise'' qualifying under section 7(b)(3) 
for application of its provisions to such employment and if such 
employee receives the compensation which section 7(b)(3) requires. 
Accordingly, for section 7(b)(3) to apply to any workweek when an 
employee is employed for hours in excess of those specified in section 
7(a), it must be established that in such workweek he is employed by his 
employer in the exempt activities of an enterprise described in section 
7(b)(3) and that the compensation received by him for his work in such 
workweek satisfies the special pay requirements of section 7(b)(3).



Sec. 794.139  Exempt and nonexempt activities in the workweek.

    The general nature of the activities of a wholesale or bulk 
petroleum distribution enterprise in which an employee must be engaged 
in order to come within the intent of the section 7(b)(3) exemption is 
discussed in Sec. Sec. 794.136 through 794.137. In each case where an 
employee of the enterprise is engaged for a substantial portion of his 
workweek in activities which do not appear to be a part of the wholesale 
or bulk distribution of petroleum products, it will be necessary to 
examine such activities and the manner and extent of their performance 
to determine whether they are included in or are foreign to the 
activities customarily performed as an incident to or in conjunction 
with such distribution in the enterprises of the industry which 
distributes such products. If they are foreign

[[Page 743]]

to the activities thus customarily performed, engagement in them by the 
employee for a substantial portion of his workweek will render section 
7(b)(3) inapplicable to him for that workweek. On the other hand, where 
an employee, who is otherwise engaged in the exempt activities (the 
wholesale or bulk distribution of petroleum products, including 
activities which are a necessary part thereof, and in activities 
customarily performed in the enterprises of the industry as an incident 
thereto or in conjunction therewith), devotes an insubstantial amount of 
time (for administrative purposes, not more than 20 percent in a 
workweek) to these foreign activities, the section 7(b)(3) exemption 
will not for that reason be considered inapplicable to him.



Sec. 794.140  Compensation requirements for a workweek under section 7(b)(3).

    (a) Exemption of an employee in any workweek under section 7(b)(3) 
is expressly conditioned on and limited by the special compensation 
provisions which it contains. These are set forth in full text in Sec. 
794.100. They require payment to the employee of compensation at 
specified rates for certain periods within the workweek when such 
periods are included in his hours of work. Their application requires an 
increase of at least 50 percent in the minimum wage rate otherwise 
applicable to the employee in such workweek ``for employment in excess 
of forty hours'' and, in addition, if such employment is ``in excess of 
twelve hours in any workday, or * * * in excess of fifty-six hours in 
any workweek, as the case may be,'' the employee must be paid overtime 
compensation ``at a rate not less than one and one-half times the 
regular rate at which he is employed'' for all hours worked in the 
workweek in excess of the specified daily standard or in excess of the 
specified weekly standard, whichever is the greater number of overtime 
hours. The sections following discuss separately the application of 
these provisions to workweeks when the employee's hours of work do not 
exceed the daily or weekly standard specified in section 7(b)(3), and to 
workweeks when hours in excess of the daily or the weekly standard are 
worked.
    (b) The special compensation requirements of section 7(b)(3) apply 
to an employee otherwise eligible for the exemption whenever he works 
more than 40 hours in a workweek for an enterprise described in and 
operating under this subsection. In any workweek in which the employee 
does not work more than 40 hours for his employer only the minimum wage 
requirements of section 6 are applicable. This is because section 
7(b)(3) operates only as an exemption from the requirement of section 
7(a) that compensation at a rate not less than one and one-half times 
the employee's regular rate must be paid for all hours worked by him in 
excess of 40 in the workweek. (This general 40-hour workweek standard 
has been applicable since Feb. 1, 1969, to all employment within the 
general coverage of the Act, regardless of whether any overtime pay 
requirements were previously applicable to such employment before the 
provisions added by the Fair Labor Standards Amendments of 1966 became 
effective.)



Sec. 794.141  Workweeks when hours worked do not exceed 12 in any day
or 56 in the week; compensation requirements.

    (a) The overtime pay exemption provided by section 7(b)(3) is 
``limited to 12 hours a day and 56 hours a week'' in any workweek; the 
exemption is provided ``for employment up to 12 hours in any workday and 
up to 56 hours in any workweek'' without any payment for overtime hours 
at one and one-half times the regular rate being required. However, the 
exemption from any such time-and-one-half payment is limited to 
workweeks when ``no more'' than the specified hours are worked and is 
contingent on payment to the employee in such a workweek of 
``compensation for hours between 40 and 56'' at a rate ``not less than 
one and one-half times the applicable minimum wage.'' (H. Rept. No. 
1366, pp. 12-13, 43, and S. Rept. No. 1487, p. 32, 89th Cong., second 
sess.) Thus, the exemption will be applicable to an employee otherwise 
eligible under the principles previously discussed in this part in any 
workweek when his hours of work do not exceed

[[Page 744]]

12 in any day or 56 in the week if, and only if, his ``compensation for 
employment in excess of forty hours'' is ``at a rate not less than one 
and one-half times the minimum wage rate applicable to him under section 
6'', as provided in section 7(b)(3). This means that in addition to the 
requirement of section 6, under which the first 40 hours of work must be 
paid for at a rate not less than the minimum hourly wage rate therein 
specified, the compensation requirements applicable to such an employee 
for whom the 7(b)(3) exemption is claimed include any increase in his 
regular straight-time pay rate for the hours worked in excess of 40 
which may be necessary in order to raise the wage rate for such hours to 
a level of 50 percent above the rate required under section 6. Of 
course, if the employee is employed at a regular straight-time rate for 
all his hours of work which is as great or greater than one and one-half 
times the minimum wage applicable to him under section 6, no increase 
for the hours in excess of 40 will be required under the provisions of 
section 7(b)(3).
    (b) The general minimum wage rate applicable to employees in 
employment that was subject to the minimum wage provisions of the Act 
prior to the effective date of the Fair Labor Standards Amendments of 
1966 is $1.60 an hour. Under section 7(b)(3) an employee of a wholesale 
or bulk petroleum products distributor to whom this rate is applicable 
must be paid at least $2.40 an hour for hours worked in excess of 40 in 
the workweek in order for the exemption to apply. Many employees of such 
distributors are subject to the $1.60 minimum wage rate under section 6 
either because they are traditionally covered as employees individually 
engaged in commerce or in the production of goods for commerce as 
defined in the Act or because the enterprise coverage provisions in 
effect prior to the 1966 amendments (applicable to enterprises with an 
annual gross volume of $1 million or more including excise taxes) would 
subject their employment to the minimum wage provisions if the 1966 
amendments had not been enacted. In the case, however, of an employee of 
such a distributor whose employment comes within the minimum wage 
provisions only because of the 1966 amendments (which reduced the annual 
gross volume for covered enterprises to $500,000 on Feb. 1, 1967, and to 
$250,000 on Feb. 1, 1969, exclusive of specified separately stated 
excise taxes at the retail level), the minimum wage rate applicable 
under section 6 was $1.30 an hour until February 1, 1970, when it 
increased to $1.45 an hour. Beginning February 1, 1971, the minimum wage 
rate applicable to such an employee will be the same ($1.60 an hour) as 
that presently applicable to employment covered by the provisions of the 
prior Act. For employees subject to the $1.30 minimum wage rate the rate 
required for work over 40 hours under section 7(b)(3) was accordingly 
$1.95 an hour; for those subject to the $1.45 rate beginning February 1, 
1970, such rate is $2.175. A discussion of the present and prior 
coverage of the Act will be found in part 776 of this chapter, when a 
revision of such part discussing enterprise coverage is published.



Sec. 794.142  Special compensation when overtime in excess of 12 daily
or 56 weekly hours is worked in the workweek.

    (a) As noted in Sec. 794.141, the partial exemption provided by 
section 7(b)(3) from the requirement that overtime hours be paid for at 
not less than one and one-half times the employee's regular rate applies 
only to ``employment up to 12 hours in any workday and up to 56 hours in 
any workweek.'' The statute makes it plain that in any workweek when an 
employee otherwise eligible for the exemption works more than the 
specified daily or weekly hours the exemption applies only ``if such 
employee receives compensation for employment in excess of 12 hours in 
any workday, or for employment in excess of 56 hours in any workweek, as 
the case may be, at a rate not less than one and one-half times the 
regular rate at which he is employed.'' Failure of the employer to pay 
overtime compensation under these special standards defeat the 
exemption. (See Wirtz v. Osceola Farms Co., 372 F. 2d 584 (C.A. 5); 
Holtville Alfalfa Mills v. Wyatt, 230 F. 2d 298 (C.A. 9).)
    (b) Under this provision, the number of hours worked in the workweek

[[Page 745]]

which are in excess of 12 in any workday or workdays therein, or the 
number in excess of 56 in the week, whichever is the greater number, 
must be compensated as provided in section 7(b)(3). Thus, the requisite 
time-and-one-half compensation must be paid for all daily overtime hours 
in excess of 12 per day worked by an employee in a workweek when his 
hours worked do not exceed 56 in the week; and for all weekly overtime 
hours in excess of 56 which he works in a workweek when he does not work 
more than 12 hours in any day. When an employee works in excess of both 
the daily and weekly maximum hours standards in any workweek for which 
the exemption is claimed, he must be paid at such overtime rate for all 
hours worked in the workweek in excess of the applicable daily maximum 
or in excess of the applicable weekly maximum, whichever number of hours 
is greater. Thus, if his total hours of work in the workweek which are 
in excess of the daily maximum are 10 and his hours in excess of the 
weekly maximum are 8, overtime compensation is required for 10 hours, 
not 18. As an example, suppose an employee employed at an hourly rate of 
$2.40 is employed under the other conditions specified for exemption 
under section 7(b)(3) and works the following schedule:

------------------------------------------------------------------------
                 Hours                   M   T   W   T   F   S   S  Tot.
------------------------------------------------------------------------
Worked................................  14   9  10  15  12   8   0   68
------------------------------------------------------------------------
Number of overtime hours in excess of 56 in the workweek, 12; number of
  hours in excess of 12 per day, five.


Since the weekly overtime hours are greater, the employee is entitled to 
overtime pay for 12 hours at $3.60 an hour (1\1/2\x$2.40), a total of 
$43.60 for the overtime hours, in addition to pay at his regular rate 
for the remaining 56 hours (56x$2.40) in the amount of $134.40, or a 
total of $177.60 for the week. If the employee had not worked the 8 
hours on Saturday, his total hours worked in the week would have been 
60, of which five were daily overtime hours, and there would have been 4 
weekly overtime hours under the section 7(b) standard. For such a 
schedule the employee would be entitled to 5 hours of overtime pay at 
time and one-half (5x1\1/2\x$2.40=$18) plus the pay at his regular rate 
for the remaining 55 hours (55x$2.40=$132) making a total of $150 due 
him for the week.
    (c) The overtime compensation payable to an employee under section 
7(b)(3) when his hours worked in the workweek are in excess of 12 in any 
workday or in excess of 56 in the week must be ``at a rate not less than 
one and one-half times the regular rate at which he is employed.'' This 
extra compensation for the excess hours cannot be said to have been paid 
to an employee unless all the straight time compensation due him for the 
nonovertime hours under his contract (express or implied) or under any 
applicable statute has been paid (Sec. 778.315 of this chapter). In 
computing the extra compensation due, the ``regular rate'' of the 
employee is calculated in accordance with section 7(e) of the Act, as 
explained in Sec. 778.107 of this chapter, et seq., and can in no event 
be less than the minimum required by the Act (see Sec. 778.107 of this 
chapter). Since, for exemption from section 7(a) under section 7(b)(3) 
in workweeks exceeding 40 hours, the Act requires that the employee 
receive not only compensation for 40 hours at not less than the minimum 
rate prescribed in section 6 but also ``compensation for employment in 
excess of 40 hours'' at a rate not less than one and one-half times such 
minimum rate, the ``regular rate'', on which time-and-one-half overtime 
pay must be computed for daily hours worked in excess of 12 or weekly 
hours worked in excess of 56, must be calculated in conformity with 
these minimum standards.
    (d) The following illustrations of the application of these 
principles in the case of an employee whose applicable minimum wage rate 
under section 6 is $1.60 an hour may be helpful. First, suppose the 
``regular rate'' at which such an employee is employed, calculated in 
accordance with section 7(e) of the Act and part 778 of this chapter, is 
$2.40 an hour or more. This would be true of an employee employed solely 
at a single hourly rate of pay of $2.40 or more which he receives as 
straight time compensation for every hour of work. It would likewise be 
true of an employee, however compensated (whether by a salary for a 
fixed or variable number of hours, by commissions,

[[Page 746]]

piece rates, day rates or other pay systems or by a combination of 
these), whose pay for all hours worked in the workweek (except amounts 
excluded under section 7(e)) yields him average hourly straight-time 
earnings of $2.40 or more an hour. Since the employee's regular rate 
received for all nonovertime hours of work is in such a case not less 
than one and one-half times his applicable minimum rate under section 6, 
the compensation requirements of section 7(b)(3) are satisfied for all 
nonovertime as well as overtime hours worked if he receives compensation 
at his ``regular rate'' of $2.40 or more an hour for all hours worked in 
his workweek which are not in excess of 12 in his workday or 56 in his 
workweek, together with extra compensation for overtime in an amount 
sufficient to provide compensation for all his hours worked in excess of 
such daily or weekly hours, whichever are greater, at a rate at least 50 
percent higher than such regular rate (at least $3.60 an hour if the 
regular rate is $2.40 an hour). A somewhat different situation is 
presented, however, where the employee whose applicable minimum wage 
under section 6 is $1.60 an hour is paid, as the Act permits, at a wage 
rate for nonovertime hours up to 40 in the workweek which is not less 
than the $1.60 minimum but is not as much as the $2.40 required for 
hours of employment in excess of 40. As an example, suppose he is paid 
$2 an hour for 40 hours and $2.40 as required by section 7(b)(3) for 
hours in excess of 40, and works 60 hours in a workweek in which 10 of 
his hours worked are in excess of 12 in a workday for which overtime 
compensation must be paid at not less than one and one-half times his 
regular rate of pay. Since payment of the $2 and $2.40 rates for hours 
worked up to and in excess of 40, respectively, satisfies the straight-
time requirements for compensation under section 7(b)(3), all the 
compensation requirements for exemption thereunder will be satisfied if, 
in addition, he is paid for the 10 daily overtime hours an extra sum 
equal to one-half his ``regular rate'' multiplied by 10. His regular 
rate is computed for the workweek by dividing his total straight-time 
compensation for the week by the number of hours worked for which it is 
paid and is accordingly $2.133 an hour ($2x40=$80; $2.40x20=$48; 
$80+48=$128; $128/60=$2.133; see Sec. 778.115 of this chapter). Thus, 
the section 7(b)(3) compensation requirements are satisfied by payment 
of straight-time compensation in the amount of $80 for 40 hours of work 
and in the amount of $48 for the 20 additional hours worked, together 
with $10.67 as overtime premium for the 10 daily overtime hours 
($2.133x\1/2\x10), or total pay of $138.67 for the week.



Sec. 794.143  Work exempt under another section of the Act.

    Where an employee performs work during his workweek, some of which 
is exempt under one section of the Act, and the remainder of which is 
exempt under another section or sections, of the Act, the exemptions may 
be combined. The employee's combination exemption is controlled in such 
case by that exemption which is narrower in scope. For example, if part 
of his work is exempt from both minimum wage and overtime compensation 
under one section of the Act, and the rest is exempt only from the 
overtime pay requirements by virtue of section 7(b)(3), the employee is 
exempt that week from the overtime pay provisions, but not from the 
minimum wage requirements. Similarly, an employee who spends part of his 
workweek in work which would, if done throughout the week, exempt him 
completely from the overtime pay requirements, and the remainder of the 
week in work exempt from such requirements only to the extent and under 
the conditions specified in section 7(b)(3), could be exempt from 
overtime pay only to such extent and under such conditions. Thus where 
an employee spends part of his workweek in transporting petroleum 
products by tank truck for an employer in an enterprise described in 
section 7(b)(3), and the remainder of his workweek in driving a taxicab 
for the employer's taxi business (work exempt from the overtime 
provisions under section 13(b)(17)), he is eligible for exemption from 
overtime pay only if he is compensated in such workweek in accordance 
with the provisions of section

[[Page 747]]

7(b)(3) and only to the extent which that section provides.

                     Records to be Kept by Employers



Sec. 794.144  Records to be maintained.

    (a) Form of records. No particular order or form of records is 
prescribed by the recordkeeping regulations (part 516 of this chapter). 
Every employer operating under section 7(b)(3) of the Act is, however, 
required to maintain and preserve records containing the information and 
data as set out in Sec. Sec. 516.2 and 516.21 of this chapter.

[[Page 748]]



                         SUBCHAPTER C_OTHER LAWS





PART 801_APPLICATION OF THE EMPLOYEE POLYGRAPH PROTECTION ACT OF
1988--Table of Contents



                            Subpart A_General

Sec.
801.1 Purpose and scope.
801.2 Definitions.
801.3 Coverage.
801.4 Prohibitions on lie detector use.
801.5 Effect on other laws or agreements.
801.6 Notice of protection.
801.7 Authority of the Secretary.
801.8 Employment relationship.

                          Subpart B_Exemptions

801.10 Exclusion for public sector employers.
801.11 Exemption for national defense and security.
801.12 Exemption for employers conducting investigations of economic 
          loss or injury.
801.13 Exemption for employers authorized to manufacture, distribute, or 
          dispense controlled substances.
801.14 Exemption for employers providing security services.

       Subpart C_Restrictions on Polygraph Usage Under Exemptions

801.20 Adverse employment action under ongoing investigation exemption.
801.21 Adverse employment action under security service and controlled 
          substance exemptions.
801.22 Rights of examinee--general.
801.23 Rights of examinee--pretest phase.
801.24 Rights of examinee--actual testing phase.
801.25 Rights of examinee--post-test phase.
801.26 Qualifications of and requirements for examiners.

           Subpart D_Recordkeeping and Disclosure Requirements

801.30 Records to be preserved for 3 years.
801.35 Disclosure of test information.

                          Subpart E_Enforcement

801.40 General.
801.41 Representation of the Secretary.
801.42 Civil money penalties--assessment.
801.43 Civil money penalties--payment and collection.

                  Subpart F_Administrative Proceedings

                                 General

801.50 Applicability of procedures and rules.

                     Procedures Relating to Hearing

801.51 Written notice of determination required.
801.52 Contents of notice.
801.53 Request for hearing.

                            Rules of Practice

801.58 General.
801.59 Service and computation of time.
801.60 Commencement of proceeding.
801.61 Designation of record.
801.62 Caption of proceeding.

                          Referral for Hearing

801.63 Referral to Administrative Law Judge.
801.64 Notice of docketing.

               Procedures Before Administrative Law Judge

801.65 Appearances; representation of the Department of Labor.
801.66 Consent findings and order.
801.67 Decision and Order of Administrative Law Judge.

  Modification or Vacation of Decision and Order of Administrative Law 
                                  Judge

801.68 Authority of the Secretary.
801.69 Procedures for initiating review.
801.70 Implementation by the Secretary.
801.71 Filing and service.
801.72 Responsibility of the Office of Administrative Law Judges.
801.73 Final decision of the Secretary.

                                 Record

801.74 Retention of official record.
801.75 Certification of official record.

Appendix A to Part 801--Notice to Examinee

    Authority: Pub. L. 100-347, 102 Stat. 646, 29 U.S.C. 2001-2009.

    Source: 56 FR 9064, Mar. 4, 1991, unless otherwise noted.



                            Subpart A_General



Sec. 801.1  Purpose and scope.

    (a) Effective December 27, 1988, the Employee Polygraph Protection 
Act of 1988 (EPPA or the Act) prohibits most private employers (Federal, 
State, and

[[Page 749]]

local government employers are exempted from the Act) from using any lie 
detector tests either for pre-employment screening or during the course 
of employment. Polygraph tests, but no other types of lie detector 
tests, are permitted under limited circumstances subject to certain 
restrictions. The purpose of this part is to set forth the regulations 
to carry out the provisions of EPPA.
    (b) The regulations in this part are divided into six subparts. 
Subpart A contains the provisions generally applicable to covered 
employers, including the requirements relating to the prohibitions on 
lie detector use and the posting of notices. Subpart A also sets forth 
interpretations regarding the effect of section 10 of the Act on other 
laws or collective bargaining agreements. Subpart B sets forth rules 
regarding the statutory exemptions from application of the Act. Subpart 
C sets forth the restrictions on polygraph usage under such exemptions. 
Subpart D sets forth the recordkeeping requirements and the rules on the 
disclosure of polygraph test information. Subpart E deals with the 
authority of the Secretary of Labor and the enforcement provisions under 
the Act. Subpart F contains the procedures and rules of practice 
necessary for the administrative enforcement of the Act.



Sec. 801.2  Definitions.

    For purposes of this part:
    (a) Act or EPPA means the Employee Polygraph Protection Act of 1988 
(Pub. L. 100-347, 102 Stat. 646, 29 U.S.C. 2001-2009).
    (b) (1) The term commerce has the meaning provided in section 3(b) 
of the Fair Labor Standards Act of 1938 (29 U.S.C. 203(b)). As so 
defined, commerce means trade, commerce, transportation, transmission, 
or communication among the several States or between any State and any 
place outside thereof.
    (2) The term State means any of the fifty States and the District of 
Columbia and any Territory or possession of the United States.
    (c) The term employer means any person acting directly or indirectly 
in the interest of an employer in relation to an employee or prospective 
employee. A polygraph examiner either employed for or whose services are 
retained for the sole purpose of administering polygraph tests 
ordinarily would not be deemed an employer with respect to the 
examinees.
    (d) (1) The term lie detector means a polygraph, deceptograph, voice 
stress analyzer, psychological stress evaluator, or any other similar 
device (whether mechanical or electrical) that is used, or the results 
of which are used, for the purpose of rendering a diagnostic opinion 
regarding the honesty or dishonesty of an individual. Voice stress 
analyzers, or psychological stress evaluators, include any systems that 
utilize voice stress analysis, whether or not an opinion on honesty or 
dishonesty is specifically rendered.
    (2) The term lie detector does not include medical tests used to 
determine the presence or absence of controlled substances or alcohol in 
bodily fluids. Also not included in the definition of lie detector are 
written or oral tests commonly referred to as ``honesty'' or ``paper and 
pencil'' tests, machine-scored or otherwise; and graphology tests 
commonly referred to as handwriting tests.
    (e) The term polygraph means an instrument that--
    (1) Records continuously, visually, permanently, and simultaneously 
changes in cardiovascular, respiratory, and electrodermal patterns as 
minimum instrumentation standards; and
    (2) Is used, or the results of which are used, for the purpose of 
rendering a diagnostic opinion regarding the honesty or dishonesty of an 
individual.
    (f) The terms manufacture, dispense, distribute, and deliver have 
the meanings set forth in the Controlled Substances Act, 21 U.S.C. 812.
    (g) The term Secretary means the Secretary of Labor or authorized 
representative.
    (h) Employment Standards Administration means the agency within the 
Department of Labor, which includes the Wage and Hour Division.
    (i) Wage and Hour Division means the organizational unit in the 
Employment Standards Administration of the Department of Labor to which 
is assigned primary responsibility for enforcement and administration of 
the Act.

[[Page 750]]

    (j) Administrator means the Administrator of the Wage and Hour 
Division, or authorized representative.



Sec. 801.3  Coverage.

    (a) The coverage of the Act extends to ``any employer engaged in or 
affecting commerce or in the production of goods for commerce.'' 
(Section 3 of EPPA; 29 U.S.C. 2002.) In interpreting the phrase 
``affecting commerce'' in other statutes, courts have found coverage to 
be coextensive with the full scope of the Congressional power to 
regulate commerce. See, for example, Godwin v. Occupational Safety and 
Health Review Commission, 540 F. 2d 1013, 1015 (9th Cir. 1976). Since 
most employers engage in one or more types of activities that would be 
regarded as ``affecting commerce'' under the principles established by a 
large body of court cases, virtually all employers are deemed subject to 
the provisions of the Act, unless otherwise exempt pursuant to section 7 
(a), (b), or (c) of the Act and Sec. Sec. 801.10 or 801.11 of this 
part.
    (b) The Act also extends to all employees of covered employers 
regardless of their citizenship status, and to foreign corporations 
operating in the United States. Moreover, the provisions of the Act 
extend to any actions relating to the administration of lie detector, 
including polygraph, tests which occur within the territorial 
jurisdiction of the United States, e.g., the preparation of paperwork by 
a foreign corporation in a Miami office relating to a polygraph test 
that is to be administered on the high seas or in some foreign location.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



Sec. 801.4  Prohibitions on lie detector use.

    (a) Section 3 of EPPA provides that, unless otherwise exempt 
pursuant to section 7 of the Act and Sec. Sec. 801.10 through 801.14 of 
this part, covered employers are prohibited from:
    (1) Requiring, requesting, suggesting or causing, directly or 
indirectly, any employee or prospective employee to take or submit to a 
lie detector test;
    (2) Using, accepting, or inquiring about the results of a lie 
detector test of any employee or prospective employee; and
    (3) Discharging, disciplining, discriminating against, denying 
employment or promotion, or threatening any employee or prospective 
employee to take such action for refusal or failure to take or submit to 
such test, on the basis of the results of a test, for filing a 
complaint, for testifying in any proceeding, or for exercising any 
rights afforded by the Act.
    (b) An employer who reports a theft or other incident involving 
economic loss to police or other law enforcement authorities is not 
engaged in conduct subject to the prohibitions under paragraph (a) of 
this section if, during the normal course of a subsequent investigation, 
such authorities deem it necessary to administer a polygraph test to an 
employee(s) suspected of involvement in the reported incident. Employers 
who cooperate with police authorities during the course of their 
investigations into criminal misconduct are likewise not deemed engaged 
in prohibitive conduct provided that such cooperation is passive in 
nature. For example, it is not uncommon for police authorities to 
request employees suspected of theft or criminal activity to submit to a 
polygraph test during the employee's tour of duty since, as a general 
rule, suspect employees are often difficult to locate away from their 
place of employment. Allowing a test on the employer's premises, 
releasing an employee during working hours to take a test at police 
headquarters, and other similar types of cooperation at the request of 
the police authorities would not be construed as ``requiring, 
requesting, suggesting, or causing, directly or indirectly, any employee 
* * * to take or submit to a lie detector test.'' Cooperation of this 
type must be distinguished from actual participation in the testing of 
employees suspected of wrongdoing, either through the administration of 
a test by the employer at the request or direction of police 
authorities, or through employer reimbursement of tests administered by 
police authorities to employees. In some communities, it may be a 
practice of police authorities to request employer testing of employees 
before a police investigation is initiated on a reported

[[Page 751]]

incident. In other communities, police examiners are available to 
employers, on a cost reimbursement basis, to conduct tests on employees 
suspected by an employer of wrongdoing. All such conduct on the part of 
employers is deemed within the Act's prohibitions.
    (c) The receipt by an employer of information from a polygraph test 
administered by police authorities pursuant to an investigation is 
prohibited by section 3(2) of the Act. (See paragraph (a)(2) of this 
section.)
    (d) The simulated use of a polygraph instrument so as to lead an 
individual to believe that an actual test is being or may be performed 
(e.g., to elicit confessions or admissions of guilt) constitutes conduct 
prohibited by paragraph (a) of this section. Such use includes the 
connection of an employee or prospective employee to the instrument 
without any intention of a diagnostic purpose, the placement of the 
instrument in a room used for interrogation unconnected to the employee 
or prospective employee, or the mere suggestion that the instrument may 
be used during the course of the interview.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



Sec. 801.5  Effect on other laws or agreements.

    (a) Section 10 of EPPA provides that the Act, except for subsections 
(a), (b), and (c) of section 7, does not preempt any provision of a 
State or local law, or any provision of a collective bargaining 
agreement, that prohibits lie detector tests or is more restrictive with 
respect to the use of lie detector tests.
    (b)(1) This provision applies to all aspects of the use of lie 
detector tests, including procedural safeguards, the use of test 
results, the rights and remedies provided examinees, and the rights, 
remedies, and responsibilities of examiners and employers.
    (2) For example, if the State prohibits the use of polygraphs in all 
private employment, polygraph examinations could not be conducted 
pursuant to the limited exemptions provided in section 7 (d), (e) or (f) 
of the Act; a collective bargaining agreement that provides greater 
protection to an examinee would apply in addition to the protection 
provided in the Act; or more stringent licensing or bonding requirements 
in a State law would apply in addition to the Federal bonding 
requirement.
    (3) On the other hand, industry exemptions and applicable 
restrictions thereon, provided in EPPA, would preempt less restrictive 
exemptions established by State law for the same industry, e.g., random 
testing of current employees in the drug industry not prohibited by 
State law but limited by this Act to tests administered in connection 
with ongoing investigations.
    (c) EPPA does not impede the ability of State and local governments 
to enforce existing statutes or to enact subsequent legislation 
restricting the use of lie detectors with respect to public employees.
    (d) Nothing in section 10 of the Act restricts or prohibits the 
Federal Government from administering polygraph tests to its own 
employees or to experts, consultants, or employees of contractors, as 
provided in subsections 7(b) and 7(c) of the Act, and Sec. 801.11 of 
this part.



Sec. 801.6  Notice of protection.

    Every employer subject to EPPA shall post and keep posted on its 
premises a notice explaining the Act, as prescribed by the Secretary. 
Such notice must be posted in a prominent and conspicuous place in every 
establishment of the employer where it can readily be observed by 
employees and applicants for employment. Copies of such notice may be 
obtained from local offices of the Wage and Hour Division.



Sec. 801.7  Authority of the Secretary.

    (a) Pursuant to section 5 of the Act, the Secretary is authorized 
to:
    (1) Issue such rules and regulations as may be necessary or 
appropriate to carry out the Act;
    (2) Cooperate with regional, State, local, and other agencies, and 
cooperate with and furnish technical assistance to employers, labor 
organizations, and employment agencies to aid in effectuating the 
purposes of the Act; and
    (3) Make investigations and inspections as necessary or appropriate,

[[Page 752]]

through complaint or otherwise, including inspection of such records 
(and copying or transcription thereof), questioning of such persons, and 
gathering such information as deemed necessary to determine compliance 
with the Act or these regulations; and
    (4) Require the keeping of records necessary or appropriate for the 
administration of the Act.
    (b) Section 5 of the Act also grants the Secretary authority to 
issue subpoenas requiring the attendance and testimony of witnesses or 
the production of any evidence in connection with any investigation or 
hearing under the Act. The Secretary may administer oaths, examine 
witnesses, and receive evidence. For the purpose of any investigation or 
hearing provided for in the Act, the authority contained in sections 9 
and 10 of the Federal Trade Commission Act (15 U.S.C. 49, 50), relating 
to the attendance of witnesses and the production of books, papers, and 
documents, shall be available to the Secretary.
    (c) In case of disobedience to a subpoena, the Secretary may invoke 
the aid of a United States District Court which is authorized to issue 
an order requiring the person to obey such subpoena.
    (d) Any person may report a violation of the Act or these 
regulations to the Secretary by advising any local office of the Wage 
and Hour Division, Employment Standards Administration, U.S. Department 
of Labor, or any authorized representative of the Administrator. The 
office or person receiving such a report shall refer it to the 
appropriate office of the Wage and Hour Division, Employment Standards 
Administration, for the region or area in which the reported violation 
is alleged to have occurred.
    (e) The Secretary shall conduct investigations in a manner which, to 
the extent practicable, protects the confidentiality of any complainant 
or other party who provides information to the Secretary in good faith.
    (f) It is a violation of these regulations for any person to resist, 
oppose, impede, intimidate, or interfere with any official of the 
Department of Labor assigned to perform an investigation, inspection, or 
law enforcement function pursuant to the Act during the performance of 
such duties.



Sec. 801.8  Employment relationship.

    (a) EPPA broadly defines ``employer'' to include ``any person acting 
directly or indirectly in the interest of an employer in relationship to 
an employee or prospective employee'' (EPPA section 2(2)).
    (b) EPPA restrictions apply to State Employment Services, private 
employment placement agencies, job recruiting firms, and vocational 
trade schools with respect to persons who may be referred to potential 
employers. Such entities are not liable for EPPA violations, however, 
where the referrals are made to employers for whom no reason exists to 
know that the latter will perform polygraph testing of job applicants or 
otherwise violate the provisions of EPPA.
    (c) EPPA prohibitions against discrimination apply to former 
employees of an employer. For example, an employee may quit rather than 
take a lie detector test. The employer cannot discriminate or threaten 
to discriminate in any manner against that person (such as by providing 
bad references in the future) because of that person's refusal to be 
tested, or because that person files a complaint, institutes a 
proceeding, testifies in a proceeding, or exercises any right under 
EPPA.



                          Subpart B_Exemptions



Sec. 801.10  Exclusion for public sector employers.

    (a) Section 7(a) provides an exclusion from the Act's coverage for 
the United States Government, any State or local government, or any 
political subdivision of a State or local government, acting in the 
capacity of an employer. This exclusion from the Act also extends to any 
interstate governmental agency.
    (b) The term United States Government means any agency or 
instrumentality, civilian or military, of the executive, legislative, or 
judicial branches of the Federal Government, and includes independent 
agencies, wholly-owned government corporations, and nonappropriated fund 
instrumentalities.

[[Page 753]]

    (c) The term any political subdivision of a State or local 
government means any entity which is either.
    (1) Created directly by a state or local government, or
    (2) Administered by individuals who are responsible to public 
officials (i.e., appointed by an elected public official(s) and/or 
subject to removal procedures for public officials, or to the general 
electorate.
    (d) This exclusion from the Act applies only to the Federal, State, 
and local government entity with respect to its own public employees. 
Except as provided in sections 7 (b) and (c) of the Act, and Sec. 
801.11 of the regulations, this exclusion does not extend to contractors 
or nongovernmental agents of a government entity, nor does it extend to 
government entities with respect to employees of a private employer with 
which the government entity has a contractual or other business 
relationship.



Sec. 801.11  Exemption for national defense and security.

    (a) The exemptions allowing for the administration of lie detector 
tests in the following paragraphs (b) through (e) of this section apply 
only to the Federal Government; they do not allow private employers/
contractors to administer such tests.
    (b) Section 7(b)(1) of the Act provides that nothing in the Act 
shall be construed to prohibit the administration of any lie detector 
test by the Federal Government, in the performance of any 
counterintelligence function, to any expert, consultant or employee of 
any contractor under contract with the Department of Defense; or with 
the Department of Energy, in connection with the atomic energy defense 
activities of such Department.
    (c) Section 7(b)(2)(A) provides that nothing in the Act shall be 
construed to prohibit the administration of any lie detector test by the 
Federal Government, in the performance of any intelligence or 
counterintelligence function of the National Security Agency, the 
Defense Intelligence Agency, or the Central Intelligence Agency, to any 
individual employed by, assigned to, or detailed to any such agency; or 
any expert or consultant under contract to any such agency; or any 
employee of a contractor to such agency; or any individual applying for 
a position in any such agency; or any individual assigned to a space 
where sensitive cryptologic information is produced, processed, or 
stored for any such agency.
    (d) Section 7(b)(2)(B) provides that nothing in the Act shall be 
construed to prohibit the administration of any lie detector test by the 
Federal Government, in the performance of any intelligence or 
counterintelligence function, to any expert, or consultant (or employee 
of such expert or consultant) under contract with any Federal Government 
department, agency, or program whose duties involve access to 
information that has been classified at the level of top secret or 
designated as being within a special access program under section 4.2 
(a) of Executive Order 12356 (or a successor Executive Order).
    (e) Section 7(c) provides that nothing in the Act shall be construed 
to prohibit the administration of any lie detector test by the Federal 
Government, in the performance of any counterintelligence function, to 
any employee of a contractor of the Federal Bureau of Investigation of 
the Department of Justice who is engaged in the performance of any work 
under a contract with the Bureau.
    (f) Counterintelligence for purposes of the above paragraphs means 
information gathered and activities conducted to protect against 
espionage and other clandestine intelligence activities, sabotage, 
terrorist activities, or assassinations conducted for or on behalf of 
foreign governments, or foreign or domestic organizations or persons.
    (g) Lie detector tests of persons described in the above paragraphs 
will be administered in accordance with applicable Department of Defense 
directives and regulations, or other regulations and directives 
governing the use of such tests by the United States Government, as 
applicable.



Sec. 801.12  Exemption for employers conducting investigations of
economic loss or injury.

    (a) Section 7(d) of the Act provides a limited exemption from the 
general

[[Page 754]]

prohibition on lie detector use in private employment settings for 
employers conducting ongoing investigations of economic loss or injury 
to the employer's business. An employer may request an employee, subject 
to the conditions set forth in sections 8 and 10 of the Act and 
Sec. Sec. 801.20, 801.22, 801.23, 801.24, 801.25, 801.26, and 801.35 of 
this part, to submit to a polygraph test, but no other type of lie 
detector test, only if--
    (1) The test is administered in connection with an ongoing 
investigation involving economic loss or injury to the employer's 
business, such as theft, embezzlement, misappropriation or an act of 
unlawful industrial espionage or sabotage;
    (2) The employee had access to the property that is the subject of 
the investigation;
    (3) The employer has a reasonable suspicion that the employee was 
involved in the incident or activity under investigation;
    (4) The employer provides the examinee with a statement, in a 
language understood by the examinee, prior to the test which fully 
explains with particularity the specific incident or activity being 
investigated and the basis for testing particular employees and which 
contains, at a minimum:
    (i) An identification with particularity of the specific economic 
loss or injury to the business of the employer;
    (ii) A description of the employee's access to the property that is 
the subject of the investigation;
    (iii) A description in detail of the basis of the employer's 
reasonable suspicion that the employee was involved in the incident or 
activity under investigation; and
    (iv) Signature of a person (other than a polygraph examiner) 
authorized to legally bind the employer; and
    (5) The employer retains a copy of the statement and proof of 
service described in paragraph (a)(4) of this section for at least 3 
years and makes it available for inspection by the Wage and Hour 
Division on request. (See Sec. 801.30(a).)

(Approved by the Office of Management and Budget under control number 
1225-0170)
    (b) For the exemption to apply, the condition of an ``ongoing 
investigation'' must be met. As used in section 7(d) of the Act, the 
ongoing investigation must be of a specific incident or activity. Thus, 
for example, an employer may not request that an employee or employees 
submit to a polygraph test in an effort to determine whether or not any 
thefts have occurred. Such random testing by an employer is precluded by 
the Act. Further, because the exemption is limited to a specific 
incident or activity, an employer is precluded from using the exemption 
in situations where the so-called ``ongoing investigation'' is 
continuous. For example, the fact that items in inventory are frequently 
missing from a warehouse would not be a sufficient basis, standing 
alone, for administering a polygraph test. Even if the employer can 
establish that unusually high amounts of inventory are missing from the 
warehouse in a given month, this, in and of itself, would not be a 
sufficient basis to meet the specific incident requirement. On the other 
hand, polygraph testing in response to inventory shortages would be 
permitted where additional evidence is obtained through subsequent 
investigation of specific items missing through intentional wrongdoing, 
and a reasonable suspicion that the employee to be polygraphed was 
involved in the incident under investigation. Administering a polygraph 
test in circumstances where the missing inventory is merely unspecified, 
statistical shortages, without identification of a specific incident or 
activity that produced the inventory shortages and a ``reasonable 
suspicion that the employee was involved,'' would amount to little more 
than a fishing expedition and is prohibited by the Act.
    (c)(1)(i) The terms economic loss or injury to the employer's 
business include both direct and indirect economic loss or injury.
    (ii) Direct loss or injury includes losses or injuries resulting 
from theft, embezzlement, misappropriation, industrial espionage or 
sabotage. These examples, cited in the Act, are intended to be 
illustrative and not exhaustive. Another specific incident

[[Page 755]]

which would constitute direct economic loss or injury is the 
misappropriation of confidential or trade secret information.
    (iii) Indirect loss or injury includes the use of an employer's 
business to commit a crime, such as check-kiting or money laundering. In 
such cases, the ongoing investigation must be limited to criminal 
activity that has already occurred, and to use of the employer's 
business operations (and not simply the use of the premises) for such 
activity. For example, the use of an employer's vehicles, warehouses, 
computers or equipment to smuggle or facilitate the importing of illegal 
substances constitutes an indirect loss or injury to the employer's 
business operations. Conversely, the mere fact that an illegal act 
occurs on the employer's premises (such as a drug transaction that takes 
place in the employer's parking lot or rest room) does not constitute an 
indirect economic loss or injury to the employer.
    (iv) Indirect loss or injury also includes theft or injury to 
property of another for which the employer exercises fiduciary, 
managerial or security responsibility, or where the firm has custody of 
the property (but not property of other firms to which the employees 
have access by virtue of the business relationship). For example, if a 
maintenance employee of the manager of an apartment building steals 
jewelry from a tenant's apartment, the theft results in an indirect 
economic loss or injury to the employer because of the manager's 
management responsibility with respect to the tenant's apartment. A 
messenger on a delivery of confidential business reports for a client 
firm who steals the reports causes an indirect economic loss or injury 
to the messenger service because the messenger service is custodian of 
the client firm's reports, and therefore is responsible for their 
security. Similarly, the theft of property protected by a security 
service employer is considered an economic loss or injury to that 
employer.
    (v) A theft or injury to a client firm does not constitute an 
indirect loss or injury to an employer unless that employer has custody 
of, or management, or security responsibility for, the property of the 
client that was lost or stolen or injured. For example, a cleaning 
contractor has no responsibility for the money at a client bank. If 
money is stolen from the bank by one of the cleaning contractor's 
employees, the cleaning contractor does not suffer an indirect loss or 
injury.
    (vi) Indirect loss or injury does not include loss or injury which 
is merely threatened or potential, e.g., a threatened or potential loss 
of an advantageous business relationship.
    (2) Economic losses or injuries which are the result of 
unintentional or lawful conduct would not serve as a basis for the 
administration of a polygraph test. Thus, apparently unintentional 
losses or injuries stemming from truck, car, workplace, or other similar 
type accidents or routine inventory or cash register shortages would not 
meet the economic loss or injury requirement. Any economic loss incident 
to lawful union or employee activity also would not satisfy this 
requirement. It makes no difference that an employer may be obligated to 
directly or indirectly incur the cost of the incident, as through 
payment of a ``deductible'' portion under an insurance policy or higher 
insurance premiums.
    (3) It is the business of the employer which must suffer the 
economic loss or injury. Thus, a theft committed by one employee against 
another employee of the same employer would not satisfy the requirement.
    (d) While nothing in the Act prohibits the use of medical tests to 
determine the presence of controlled substances or alcohol in bodily 
fluids, the section 7(d) exemption does not permit the use of a 
polygraph test to learn whether an employee has used drugs or alcohol, 
even where such possible use may have contributed to an economic loss to 
the employer (e.g., an accident involving a company vehicle).
    (e) Section 7(d)(2) provides that, as a condition for the use of the 
exemption, the employee must have had access to the property that is the 
subject of the investigation.
    (1) The word access, as used in section 7(d)(2), refers to the 
opportunity which an employee had to cause, or to aid or abet in 
causing, the specific economic loss or injury under investigation. The

[[Page 756]]

term ``access'', thus, includes more than direct or physical contact 
during the course of employment. For example, as a general matter, all 
employees working in or with authority to enter a warehouse storage area 
have ``access'' to unsecured property in the warehouse. All employees 
with the combination to a safe have ``access'' to the property in a 
locked safe. Employees also have ``access'' who have the ability to 
divert possession or otherwise affect the disposition of the property 
that is the subject of investigation. For example, a bookkeeper in a 
jewelry store with access to inventory records may aid or abet a clerk 
who steals an expensive watch by removing the watch from the employer's 
inventory records. In such a situation, it is clear that the bookkeeper 
effectively has ``access'' to the property that is the subject of the 
investigation.
    (2) As used in section 7(d)(2), property refers to specifically 
identifiable property, but also includes such things of value as 
security codes and computer data, and proprietary, financial or 
technical information, such as trade secrets, which by its availability 
to competitors or others would cause economic harm to the employer.
    (f)(1) As used in section 7(d)(3), the term reasonable suspicion 
refers to an observable, articulable basis in fact which indicates that 
a particular employee was involved in, or responsible for, an economic 
loss. Access in the sense of possible or potential opportunity, standing 
alone, does not constitute a basis for ``reasonable suspicion''. 
Information from a co-worker, or an employee's behavior, demeanor, or 
conduct may be factors in the basis for reasonable suspicion. Likewise, 
inconsistencies between facts, claims, or statements that surface during 
an investigation can serve as a sufficient basis for reasonable 
suspicion. While access or opportunity, standing alone, does not 
constitute a basis for reasonable suspicion, the totality of 
circumstances surrounding the access or opportunity (such as its 
unauthorized or unusual nature or the fact that access was limited to a 
single individual) may constitute a factor in determining whether there 
is a reasonable suspicion.
    (2) For example, in an investigation of a theft of an expensive 
piece of jewelry, an employee authorized to open the establishment's 
safe no earlier than 9 a.m., in order to place the jewelry in a window 
display case, is observed opening the safe at 7:30 a.m. In such a 
situation, the opening of the safe by the employee one and one-half 
hours prior to the specified time may serve as the basis for reasonable 
suspicion. On the other hand, in the example given, if the employer 
asked the employee to bring the piece of jewelry to his or her office at 
7:30 a.m., and the employee then opened the safe and reported the 
jewelry missing, such access, standing alone, would not constitute a 
basis for reasonable suspicion that the employee was involved in the 
incident unless access to the safe was limited solely to the employee. 
If no one other than the employee possessed the combination to the safe, 
and all other possible explanations for the loss are ruled out, such as 
a break-in, the employer may formulate a basis for reasonable suspicion 
based on sole access by one employee.
    (3) The employer has the burden of establishing that the specific 
individual or individuals to be tested are ``reasonably suspected'' of 
involvement in the specific economic loss or injury for the requirement 
in section 7(d)(3) to be met.
    (g)(1) As discussed in paragraph (a)(4) of this section, section 
7(d)(4) of the Act sets forth what information, at a minimum, must be 
provided to an employee if the employer wishes to claim the exemption.
    (2) The statement required under paragraph (a)(4) of this section 
must be received by the employee at least 48 hours, excluding weekend 
days and holidays, prior to the time of the examination. The statement 
must set forth the time and date of receipt by the employee and be 
verified by the employee's signature. This will provide the employee 
with adequate pre-test notice of the specific incident or activity being 
investigated and afford the employee sufficient time prior to the test 
to obtain and consult with legal counsel or an employee representative.

[[Page 757]]

    (3) The statement to be provided to the employee must set forth with 
particularity the specific incident or activity being investigated and 
the basis for testing particular employees. Section 7(d)(4)(A) requires 
specificity beyond the mere assertion of general statements regarding 
economic loss, employee access, and reasonable suspicion. For example, 
an employer's assertion that an expensive watch was stolen, and that the 
employee had access to the watch and is therefore a suspect, would not 
meet the ``with particularity'' criterion. If the basis for an 
employer's requesting an employee (or employees) to take a polygraph 
test is not articulated with particularity, and reduced to writing, then 
the standard is not met. The identity of a co-worker or other individual 
providing information used to establish reasonable suspicion need not be 
revealed in the statement.
    (4) It is further required that the statement provided to the 
examinee be signed by the employer, or an employee or other 
representative of the employer with authority to legally bind the 
employer. The person signing the statement must not be a polygraph 
examiner unless the examiner is acting solely in the capacity of an 
employer with respect to his or her own employees and does not conduct 
the examination. The standard would not be met, and the exemption would 
not apply if the person signing the statement is not authorized to 
legally bind the employer.
    (h) Polygraph tests administered pursuant to this exemption are 
subject to the limitations set forth in sections 8 and 10 of the Act, as 
discussed in Sec. Sec. 801.20, 801.22, 801.23, 801.24, 801.25, 801.26, 
and 801.35 of this part. As provided in these sections, the exemption 
will apply only if certain requirements are met. Failure to satisfy any 
of the specified requirements nullifies the statutory authority for 
polygraph test administration and may subject the employer to the 
assessment of civil money penalties and other remedial actions, as 
provided for in section 6 of the Act (see subpart E, Sec. 801.42 of 
this part). The administration of such tests is also subject to State or 
local laws, or collective bargaining agreements, which may either 
prohibit lie detector tests, or contain more restrictive provisions with 
respect to polygraph testing.



Sec. 801.13  Exemption of employers authorized to manufacture,
distribute, or dispense controlled substances.

    (a) Section 7(f) provides an exemption from the Act's general 
prohibition regarding the use of polygraph tests for employers 
authorized to manufacture, distribute, or dispense a controlled 
substance listed in schedule I, II, III, or IV of section 202 of the 
Controlled Substances Act (21 U.S.C. 812). This exemption permits the 
administration of polygraph tests, subject to the conditions set forth 
in sections 8 and 10 of the Act and Sec. Sec. 801.21, 801.22, 801.23, 
801.24, 801.25, 801.26, and 801.35 of this part, to:
    (1) A prospective employee who would have direct access to the 
manufacture, storage, distribution, or sale of any such controlled 
substance; or
    (2) A current employee if the following conditions are met:
    (i) The test is administered in connection with an ongoing 
investigation of criminal or other misconduct involving, or potentially 
involving, loss or injury to the manufacture, distribution, or 
dispensing of any such controlled substance by such employer; and
    (ii) The employee had access to the person or property that is the 
subject of the investigation.
    (b)(1) The terms manufacture, distribute, distribution, dispense, 
storage, and sale, for the purposes of this exemption, are construed 
within the meaning of the Controlled Substances Act (21 U.S.C. 812 et 
seq.), as administered by the Drug Enforcement Administration (DEA), 
U.S. Department of Justice.
    (2) The exemption in section 7(f) of the Act applies only to 
employers who are authorized by DEA to manufacture, distribute, or 
dispense a controlled substance. Section 202 of the Controlled 
Substances Act (21 U.S.C. 812) requires every person who manufactures, 
distributes, or dispenses any controlled substance to register with the 
Attorney General (i.e., with DEA). Common or contract carriers and 
warehouses whose possession of the controlled substance is in the usual 
course of their

[[Page 758]]

business or employment are not required to register. Since this 
exemption is intended to apply only to employees and prospective 
employees of persons or entities registered with DEA, and is not 
intended to apply to truck drivers employed by persons or entities who 
are not so registered, it has no application to employees of common or 
contract carriers or public warehouses. Truck drivers and warehouse 
employees of the persons or entities registered with DEA and authorized 
to manufacture, distribute, or dispense controlled substances, are 
within the scope of the exemption where they have direct access or 
access to the controlled substances, as discussed below.
    (c) In order for a polygraph examination to be performed, section 
7(f) of the Act requires that a prospective employee have ``direct 
access'' to the controlled substance(s) manufactured, dispensed, or 
distributed by the employer. Where a current employee is to be tested as 
a part of an ongoing investigation, section 7(f) requires that the 
employee have ``access'' to the person or property that is the subject 
of the investigation.
    (1) A prospective employee would have ``direct access'' if the 
position being applied for has responsibilities which include contact 
with or which affect the disposition of a controlled substance, 
including participation in the process of obtaining, dispensing, or 
otherwise distributing a controlled substance. This includes contact or 
direct involvement in the manufacture, storage, testing, distribution, 
sale or dispensing of a controlled substance and may include, for 
example, packaging, repackaging, ordering, licensing, shipping, 
receiving, taking inventory, providing security, prescribing, and 
handling of a controlled substance. A prospective employee would have 
``direct access'' if the described job duties would give such person 
access to the products in question, whether such employee would be in 
physical proximity to controlled substances or engaged in activity which 
would permit the employee to divert such substances to his or her 
possession.
    (2) A current employee would have ``access'' within the meaning of 
section 7(f) if the employee had access to the specific person or 
property which is the subject of the on-going investigation, as 
discussed in Sec. 801.12(e) of this part. Thus, to test a current 
employee, the employee need not have had ``direct'' access to the 
controlled substance, but may have had only infrequent, random, or 
opportunistic access. Such access would be sufficient to test the 
employee if the employee could have caused, or could have aided or 
abetted in causing, the loss of the specific property which is the 
subject of the investigation. For example, a maintenance worker in a 
drug warehouse, whose job duties include the cleaning of areas where the 
controlled substances which are the subject of the investigation were 
present, but whose job duties do not include the handling of controlled 
substances, would be deemed to have ``access'', but normally not 
``direct access'', to the controlled substances. On the other hand, a 
drug warehouse truck loader, whose job duties include the handling of 
outgoing shipment orders which contain controlled substances, would have 
``direct access'' to such controlled substances. A pharmacy department 
in a supermarket is another common situation which is useful in 
illustrating the distinction between ``direct access'' and ``access''. 
Store personnel receiving pharmaceutical orders, i.e., the pharmacist, 
pharmacy intern, and other such employees working in the pharmacy 
department, would ordinarily have ``direct access'' to controlled 
substances. Other store personnel whose job duties and responsibilities 
do not include the handling of controlled substances but who had 
occasion to enter the pharmacy department where the controlled 
substances which are the subject of the investigation were stored, such 
as maintenance personnel or pharmacy cashiers, would have ``access''. 
Certain other store personnel whose job duties do not permit or require 
entrance into the pharmacy department for any reason, such as produce or 
meat clerks, checkout cashiers, or baggers, would not ordinarily have 
``access.'' However, any current employee, regardless of described job 
duties, may be polygraphed if the employer's investigation of criminal 
or other misconduct discloses that such employee in fact took action to 
obtain

[[Page 759]]

``access'' to the person or property that is the subject of the 
investigation--e.g., by actually entering the drug storage area in 
violation of company rules. In the case of ``direct access'', the 
prospective employee's access to controlled substances would be as a 
part of the manufacturing, dispensing or distribution process, while a 
current employee's ``access'' to the controlled substances which are the 
subject of the investigation need only be opportunistic.
    (d) The term prospective employee, for the purposes of this section, 
includes a current employee who presently holds a position which does 
not entail direct access to controlled substances, and therefore is 
outside the scope of the exemption's provisions for preemployment 
polygraph testing, provided the employee has applied for and is being 
considered for transfer or promotion to another position which entails 
such direct access. For example, an office secretary may apply for 
promotion to a position in the vault or cage areas of a drug warehouse, 
where controlled substances are kept. In such a situation, the current 
employee would be deemed a ``prospective employee'' for the purposes of 
this exemption, and thus could be subject to preemployment polygraph 
screening, prior to such a change in position. However, any adverse 
action which is based in part on a polygraph test against a current 
employee who is considered a ``prospective employee'' for purposes of 
this section may be taken only with respect to the prospective position 
and may not affect the employee's employment in the current position.
    (e) Section 7(f) of the Act makes no specific reference to a 
requirement that employers provide current employees with a written 
statement prior to polygraph testing. Thus, employers to whom this 
exemption is available are not required to furnish a written statement 
such as that specified in section 7(d) of the Act and Sec. 801.12(a)(4) 
of this part.
    (f) For the section 7(f) exemption to apply, the polygraph testing 
of current employees must be administered in connection with an ongoing 
investigation of criminal or other misconduct involving, or potentially 
involving, loss or injury to the manufacture, distribution, or 
dispensing of any such controlled substance by such employer.
    (1) Current employees may only be administered polygraph tests in 
connection with an ongoing investigation of criminal or other 
misconduct, relating to a specific incident or activity, or potential 
incident or activity. Thus, an employer is precluded from using the 
exemption in connection with continuing investigations or on a random 
basis to determine if thefts are occurring. However, unlike the 
exemption in section 7(d) of the Act for employers conducting ongoing 
investigations of economic loss or injury, the section 7(f) exemption 
includes ongoing investigations of misconduct involving potential drug 
losses. Nor does the latter exemption include the requirement for 
``reasonable suspicion'' contained in the section 7(d) exemption. Thus, 
a drug store employer is permitted to polygraph all current employees 
who have access to a controlled substance stolen from the inventory, or 
where there is evidence that such a theft is planned. Polygraph testing 
based on an inventory shortage of the drug during a particular 
accounting period would not be permitted unless there is extrinsic 
evidence of misconduct.
    (2) In addition, the test must be administered in connection with 
loss or injury, or potential loss or injury, to the manufacture, 
distribution, or dispensing of a controlled substance.
    (i) Retail drugstores and wholesale drug warehouses typically carry 
inventory of so-called health and beauty aids, cosmetics, over-the-
counter drugs, and a variety of other similar products, in addition to 
their product lines of controlled drugs. The noncontrolled products 
usually constitute the majority of such firms' sales volumes. An 
economic loss or injury related to such noncontrolled substances would 
not constitute a basis of applicability of the section 7(f) exemption. 
For example, an investigation into the theft of a gross of cosmetic 
products could not be a basis for polygraph testing under section 7(f), 
but the theft of a container of valium could be.
    (ii) Polygraph testing, with respect to an ongoing investigation 
concerning

[[Page 760]]

products other than controlled substances might be initiated under 
section 7(d) of the Act and Sec. 801.12 of this part. However, the 
exemption in section 7(f) of the Act and this section is limited solely 
to losses or injury associated with controlled substances.
    (g) Polygraph tests administered pursuant to this exemption are 
subject to the limitations set forth in sections 8 and 10 of the Act, as 
discussed in Sec. Sec. 801.21, 801.22, 801.23, 801.24, 801.25, 801.26, 
and 801.35 of this part. As provided in these sections, the exemption 
will apply only if certain requirements are met. Failure to satisfy any 
of the specified requirements nullifies the statutory authority for 
polygraph test administration and may subject the employer to the 
assessment of civil money penalties and other remedial actions, as 
provided for in section 6 of the Act (see subpart E, Sec. 801.40 of 
this part). The administration of such tests is also subject to State or 
local laws, or collective bargaining agreements, which may either 
prohibit lie detector tests, or contain more restrictive provisions with 
respect to polygraph testing.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



Sec. 801.14  Exemption for employers providing security services.

    (a) Section 7(e) of the Act provides an exemption from the general 
prohibition against polygraph tests for certain armored car, security 
alarm, and security guard employers. Subject to the conditions set forth 
in sections 8 and 10 of the Act and Sec. Sec. 801.21, 801.22, 801.23, 
801.24, 801.25, 801.26, and 801.35 of this part, section 7(e) permits 
the use of polygraph tests on certain prospective employees provided 
that such employers have as their primary business purpose the providing 
of armored car personnel, personnel engaged in the design, installation, 
and maintenance of security alarm systems, or other uniformed or 
plainclothes security personnel; and provided the employer's function 
includes protection of:
    (1) Facilities, materials, or operations having a significant impact 
on the health or safety of any State or political subdivision thereof, 
or the national security of the United States, such as--
    (i) Facilities engaged in the production, transmission, or 
distribution of electric or nuclear power,
    (ii) Public water supply facilities,
    (iii) Shipments or storage of radioactive or other toxic waste 
materials, and
    (iv) Public transportation; or
    (2) Currency, negotiable securities, precious commodities or 
instruments, or proprietary information.
    (b)(1) Section 7(e) permits the administration of polygraph tests 
only to prospective employees. However, security service employers may 
administer polygraph tests to current employees in connection with an 
ongoing investigation, subject to the conditions of section 7(d) of the 
Act and Sec. 801.12 of this part.
    (2) The term prospective employee generally refers to an individual 
who is not currently employed by and who is being considered for 
employment by an employer. However, the term ``prospective employee'' 
also includes current employees under circumstances similar to those 
discussed in paragraph (d) of Sec. 801.13 of this part, i.e., if the 
employee was initially hired for a position which was not within the 
exemption provided by section 7(e) of the Act, and subsequently applies 
for, and is under consideration for, transfer to a position for which 
pre-employment testing is permitted. Thus, for example, a security guard 
may be hired for a job outside the scope of the exemption's provisions 
for pre-employment polygraph testing, such as a position at a 
supermarket. If subsequently this guard is under consideration for 
transfer or promotion to a job at a nuclear power plant, this currently-
employed individual would be considered to be a ``prospective employee'' 
for purposes of this exemption, prior to such proposed transfer or 
promotion. However, any adverse action which is based in part on a 
polygraph test against a current employee who is considered to be a 
``prospective employee'' for purposes of this exemption may be taken 
only with respect to the prospective position and may not affect the 
employee's employment in the current position.

[[Page 761]]

    (c) Section 7(e) applies to certain private employers whose 
``primary business purpose'' consists of providing armored car 
personnel, personnel engaged in the design, installation, and 
maintenance of security alarm systems, or other uniformed or 
plainclothes security personnel. Thus, the exemption is limited to firms 
primarily in the business of providing such security services, and does 
not apply to firms primarily in some other business who employ their own 
security personnel. (For example, a utility company which employs its 
own security personnel could not qualify.) In the case of diversified 
firms, the term primary business purpose shall mean that at least 50% of 
the employer's annual dollar volume of business is derived from the 
provision of the types of security services specifically identified in 
section 7(e). Where a parent corporation includes a subsidiary 
corporation engaged in providing security services, the annual dollar 
volume of business test is applied to the legal entity (or entities) 
which is the employer, i.e., the subsidiary corporation, not the parent 
corporation.
    (d)(1) As used in section 7(e)(1)(A), the terms facilities, 
materials, or operations having a significant impact on the health or 
safety of any State or political subdivision thereof, or the national 
security of the United States include protection of electric or nuclear 
power plants, public water supply facilities, radioactive or other toxic 
waste shipments or storage, and public transportation. These examples 
are intended to be illustrative, and not exhaustive. However, the types 
of ``facilities, materials, or operations'' within the scope of the 
exemption are not to be construed so broadly as to include low priority 
or minor security interests. The ``facilities, materials, or 
operations'' in question consist only of those having a ``significant 
impact'' on public health or safety, or national security. However, the 
``facilities, materials, or operations'' may be either privately or 
publicly owned.
    (2) The specific ``facilities, materials, or operations'' 
contemplated by this exemption include those against which acts of 
sabotage, espionage, terrorism, or other hostile, destructive, or 
illegal acts could significantly impact on the general public's safety 
or health, or national security. In addition to the specific examples 
set forth in the Act and in paragraph (d)(1) of this section, the terms 
would include:
    (i) Facilities, materials, and operations owned or leased by 
Federal, State, or local governments, including instrumentalities or 
interstate agencies thereof, for which an authorized public official has 
determined that a need for security exists, as evidenced by the 
establishment of security requirements utilizing private armored car, 
security alarm system, or uniformed or plainclothes security personnel, 
or a combination thereof. Examples of such facilities, materials and 
operations include:
    (A) Government office buildings;
    (B) Prisons and correction facilities;
    (C) Public schools;
    (D) Public libraries;
    (E) Water supply;
    (F) Military reservations, installations, posts, camps, arsenals, 
laboratories, Government-owned and contractor operated (GOCO) or 
Government-owned and Government-operated (GOGO) industrial plants, and 
other similar facilities subject to the custody, jurisdiction, or 
administration of any Department of Defense (DOD) component;
    (ii) Commercial and industrial assets and operations which--
    (A) Are protected pursuant to security requirements established in 
contracts with the United States or other directives by a Federal agency 
(such as those of defense contractors and researchers), including 
factories, plants, buildings, or structures used for researching, 
designing, testing, manufacturing, producing, processing, repairing, 
assembling, storing, or distributing products or components related to 
the national defense; or
    (B) Are protected pursuant to security requirements imposed on 
registrants under the Controlled Substances Act; or
    (C) Would pose a serious threat to public health or safety in the 
event of a breach of security (this would include, for example, a plant 
engaged in the manufacture or processing of hazardous materials or 
chemicals but

[[Page 762]]

would not include a plant engaged in the manufacture of shoes);
    (iii) Public and private energy and precious mineral facilities, 
supplies, and reserves, including--
    (A) Public or private power plants and utilities;
    (B) Oil or gas refineries and storage facilities;
    (C) Strategic petroleum reserves; and
    (D) Major dams, such as those which provide hydroelectric power;
    (iv) Major public or private transportation and communication 
facilities and operations, including--
    (A) Airports;
    (B) Train terminals, depots, and switching and control facilities;
    (C) Major bridges and tunnels;
    (D) Communications centers, such as receiving and transmission 
centers, and control centers;
    (E) Transmission and receiving operations for radio, television, and 
satellite signals; and
    (F) Network computer systems containing data important to public 
health and safety or national security;
    (v) The Federal Reserve System and stock and commodity exchanges;
    (vi) Hospitals and health research facilities;
    (vii) Large public events, such as political conventions and major 
parades, concerts, and sporting events; and
    (viii) Large enclosed shopping centers (malls).
    (3) If an employer believes that ``facilities, materials, or 
operations'' which are not listed in this subsection fall within the 
contemplated purview of this exemption, a request for a ruling may be 
filed with the Administrator. A ruling that such ``facilities, 
materials, or operations'' are included within this exemption must be 
obtained prior to the administration of a polygraph test or any other 
action prohibited by section 3 of the Act. It is not possible to 
exhaustively account for all ``facilities, materials, or operations'' 
which fall within the purview of section 7(e) (1) (A). While it is 
likely that additional entities may fall within the exemption's scope, 
any such ``facilities, materials, or operations'' must meet the 
``significant impact'' test. Thus, ``facilities, materials, or 
operations'' which would be of vital importance during periods of war or 
civil emergency, or whose sabotage would greatly affect the public 
health or safety, could fall within the scope of the term ``significant 
impact''.
    (e)(1) Section 7(e)(1)(B) of the Act extends the exemption to firms 
whose function includes protection of ``currency, negotiable securities, 
precious commodities or instruments, or proprietary information''. These 
terms collectively are construed to include assets primarily handled by 
financial institutions such as banks, credit unions, savings and loan 
institutions, stock and commodity exchanges, brokers, or security 
dealers.
    (2) The terms ``currency, negotiable securities, precious 
commodities or instruments or proprietary information'' refer to assets 
which are typically handled by, protected for and transported between 
and among commercial and financial institutions. Services provided by 
the armored car industry are thus clearly within the scope of the 
exemption, as are security alarm and security guard services provided to 
financial and similar institutions of the type referred to above. Also 
included are the cash assets handled by casinos, racetracks, lotteries, 
or other businesses where the cash constitutes the inventory or stock in 
trade. Similarly, security services provided to businesses engaged in 
the sale or exchange of precious commodities such as gold, silver, or 
diamonds, including jewelry stores that stock such precious commodities 
prior to transformation into pieces of jewelry, are also included. The 
term ``proprietary information'' generally refers to business assets 
such as trade secrets, manufacturing processes, research and development 
data, and cost/pricing data. Security alarm or guard services provided 
to protect the premises of private homes, or businesses not primarily 
engaged in handling, trading, transferring, or storing currency, 
negotiable securities, precious commodities or instruments, or 
proprietary information, on the other hand, are normally outside the 
scope of the exemption. This is true even though such places may 
physically house some such assets. However, where such security alarm or 
guard service is specifically designed or limited to the protection of

[[Page 763]]

the types of assets identified above, whether located in businesses or 
residences, or elsewhere, the security services provided are within the 
scope of the exemption. For example, a security system specially 
designed to protect diamonds kept in a home vault of a diamond merchant 
would be within the exemption. However, a security system installed 
generally to protect the premises of the home of the same merchant would 
not be within the exemption. A guard sent to a client firm to secure a 
restricted office in which only proprietary research data is developed 
and stored is within the scope of the exemption. Another guard sent to 
the same firm to protect the building entrance from unwanted intruders 
is not within the scope of the exemption even though the building 
contains the restricted room in which the proprietary research data is 
developed and stored, since the security system is not specifically 
designed to protect the proprietary information.
    (f) An employer who falls within the scope of the exemption is one 
``whose function includes'' protection of ``facilities, materials, or 
operations'', discussed in paragraph (d) of this section or of 
``currency, negotiable securities, precious commodities or instruments, 
or proprietary information'' discussed in paragraph (e) of this section. 
Thus, assuming that the employer has met the ``primary business 
purpose'' test, as set forth in paragraph (c) of this section, the 
employer's operations then must simply ``include'' protection of at 
least one of the facilities within the scope of the exemption.
    (g)(1) Section 7(e)(2) provides that the exemption shall not apply 
if a polygraph test is administered to a prospective employee who would 
not be employed to protect the ``facilities, materials, operations, or 
assets'' referred to in section 7(e)(1) of the Act, and discussed in 
paragraphs (d) and (e) of this section. Thus, while the exemption 
applies to employers whose function ``includes'' protection of certain 
facilities, employers would not be permitted to administer polygraph 
tests to prospective employees who are not being employed to protect 
such functions.
    (2) The phrase ``employed to protect'' in section 7(e)(2) has 
reference to a wide spectrum of prospective employees in the security 
industry, and includes any job applicant who would likely protect the 
security of any qualifying ``facilities, materials, operations, or 
assets.''
    (3) In many cases, it will be readily apparent that certain 
positions within security companies would, by virtue of the individual's 
official job duties, entail ``protection''. For example, armored car 
drivers and guards, security guards, and alarm system installers and 
maintenance personnel all would be employed to protect in the most 
direct and literal sense of the term.
    (4) The scope of the exemption is not limited, however, to those 
security personnel having direct, physical access to the facilities 
being protected. Various support personnel may also, as a part of their 
job duties, have access to the process of providing security services 
due to the position's exposure to knowledge of security plans and 
operations, employee schedules, delivery schedules, and other such 
activities. Where a position entails the opportunity to cause or 
participate in a breach of security, an employee to be hired for the 
position would also be deemed to be ``employed to protect'' the 
facility.
    (i) For example, in the armored car industry, the duties of 
personnel other than guards and drivers may include taking customer 
orders for currency and commodity transfers, issuing security badges to 
guards, coordinating routes of travel and times for pick-up and 
delivery, issuing access codes to customers, route planning and other 
sensitive responsibilities. Similarly, in the security alarm industry, 
several types of employees would have access to the process of providing 
security services, such as designers of security systems, system 
monitors, service technicians, and billing clerks (where they review the 
system design drawings to ensure proper customer billing). In the 
security industry, generally, administrative employees may have access 
to customer accounts, schedules, information relating to alarm system 
failures, and other security information, such as security employee 
absences due to illness that create ``holes'' in a security plan. 
Employees

[[Page 764]]

of this type are a part of the overall security services provided by the 
employer. Such employees possess the ability to affect, on an 
opportunistic basis, the security of protected operations, by virtue of 
the knowledge gained through their job duties.
    (ii) On the other hand, there are certainly some types of employees 
in the security industry who ``would not be employed to protect'' the 
facilities or assets within the purview of the exemption, and who would 
not be in the process of providing exempt security services. For 
example, custodial and maintenance employees typically would not have 
access, either directly or indirectly as a part of their job duties, to 
the operations or clients of the employer. Any employee whose ``access'' 
to secured areas or to sensitive information is on a controlled basis, 
such as by escort, would also be outside the scope of the exemption. In 
cases where security service companies also provide janitorial, food and 
beverage, or other services unrelated to security, the exemption would 
clearly not extend to any employee considered for employment in such 
activity.
    (5) The phrase ``employed to protect'' includes any job applicant 
who, if not hired specifically to protect the listed facilities or 
assets, would likely be so employed, as through a systematic assignment 
process, such as rotation of work assignments or selection from a pool 
of available employees, even if selection for such work is unpredictable 
or infrequent. A prospective employee whose job assignment to perform 
qualifying protective functions would be made by selection from a pool 
of available employees (all of whom have an equal chance of being 
selected), or an employee who is to be rotated through different job 
assignments which include some qualifying protective functions, is 
included within the exemption. However, if there is only a remote 
possibility that a prospective employee, if hired, would perform exempt 
protective functions, such as on an emergency basis, or if a prospective 
employee by reason of his or her position, qualifications, or level of 
experience or for other reasons, would when hired, not ordinarily be 
assigned to protect qualifying facilities, such an employee would be 
deemed to have not been hired to protect such facilities and would be 
excluded from the exemption.
    (h) Polygraph tests administered pursuant to this exemption are 
subject to the limitations set forth in sections 8 and 10 of the Act, as 
discussed in Sec. Sec. 801.21, 801.22, 801.23, 801.24, 801.25, 801.26, 
and 801.35 of this part. As provided in these sections, the exemption 
will apply only if certain requirements are met. Failure to satisfy any 
of the specified requirements nullifies the statutory authority for 
polygraph test administration and may subject the employer to the 
assessment of civil money penalties and other remedial actions, as 
provided for in section 6 of the Act (see subpart E, Sec. 801.42 of 
this part). The administration of such tests is also subject to State or 
local laws, or collective bargaining agreements, which may either 
prohibit lie detectors test, or contain more restrictive provisions with 
respect to polygraph testing.



       Subpart C_Restrictions on Polygraph Usage Under Exemptions



Sec. 801.20  Adverse employment action under ongoing investigation exemption.

    (a) Section 8(a) (1) of the Act provides that the limited exemption 
in section 7(d) of the Act and Sec. 801.12 of this part for ongoing 
investigations shall not apply if an employer discharges, disciplines, 
denies employment or promotion or otherwise discriminates in any manner 
against a current employee based upon the analysis of a polygraph test 
chart or the refusal to take a polygraph test, without additional 
supporting evidence.
    (b) ``Additional supporting evidence'', for purposes of section 8(a) 
of the Act, includes, but is not limited to, the following:
    (1)(i) Evidence indicating that the employee had access to the 
missing or damaged property that is the subject of an ongoing 
investigation; and
    (ii) Evidence leading to the employer's reasonable suspicion that 
the employee was involved in the incident or activity under 
investigation; or

[[Page 765]]

    (2) Admissions or statements made by an employee before, during or 
following a polygraph examination.
    (c) Analysis of a polygraph test chart or refusal to take a 
polygraph test may not serve as a basis for adverse employment action, 
even with additional supporting evidence, unless the employer observes 
all the requirements of sections 7(d) and 8(b) of the Act, as described 
in Sec. Sec. 801.12, 801.22, 801.23, 801.24, and 801.25 of this part.



Sec. 801.21  Adverse employment action under security service and 
controlled substance exemptions.

    (a) Section 8(a) (2) of the Act provides that the security service 
exemption in section 7(e) of the Act and Sec. 801.14 of this part and 
the controlled substance exemption in section 7(f) of the Act and Sec. 
801.13 of this part shall not apply if an employer discharges, 
disciplines, denies employment or promotion, or otherwise discriminates 
in any manner against a current employee or prospective employee based 
solely on the analysis of a polygraph test chart or the refusal to take 
a polygraph test.
    (b) Analysis of a polygraph test chart or refusal to take a 
polygraph test may serve as one basis for adverse employment actions of 
the type described in paragraph (a) of this section, provided that the 
adverse action was also based on another bona fide reason, with 
supporting evidence therefor. For example, traditional factors such as 
prior employment experience, education, job performance, etc. may be 
used as a basis for employment decisions. Employment decisions based on 
admissions or statements made by an employee or prospective employee 
before, during or following a polygraph examination may, likewise, serve 
as a basis for such decisions.
    (c) Analysis of a polygraph test chart or the refusal to take a 
polygraph test may not serve as a basis for adverse employment action, 
even with another legitimate basis for such action, unless the employer 
observes all the requirements of section 7 (e) or (f) of the Act, as 
appropriate, and section 8(b) of the Act, as described in Sec. Sec. 
801.13, 801.14, 801.22, 801.23, 801.24, and 801.25 of this part.



Sec. 801.22  Rights of examinee--general.

    (a) Pursuant to section 8(b) of the Act, the limited exemption in 
section 7(d) of the Act for ongoing investigations, and the security 
service and controlled substance exemptions in 7(e) and (f) of the Act 
(described in Sec. 801.12, 801.13, and 801.14 of this part) shall not 
apply unless all of the requirements set forth in this section and 
Sec. Sec. 801.23 through 801.25 of this part are met.
    (b) During all phases of the polygraph testing the person being 
examined has the following rights:
    (1) The examinee may terminate the test at any time.
    (2) The examinee may not be asked any questions in a degrading or 
unnecessarily intrusive manner.
    (3) The examinee may not be asked any questions dealing with:
    (i) Religious beliefs or affiliations;
    (ii) Beliefs or opinions regarding racial matters;
    (iii) Political beliefs or affiliations;
    (iv) Sexual preferences or behavior; or
    (v) Beliefs, affiliations, opinions, or lawful activities concerning 
unions or labor organizations.
    (4) The examinee may not be subjected to a test when there is 
sufficient written evidence by a physician that the examinee is 
suffering from any medical or psychological condition or undergoing any 
treatment that might cause abnormal responses during the actual testing 
phase. ``Sufficient written evidence'' shall constitute, at a minimum, a 
statement by a physician specifically describing the examinee's medical 
or psychological condition or treatment and the basis for the 
physician's opinion that the condition or treatment might result in such 
abnormal responses.
    (5) An employee or prospective employee who exercises the right to 
terminate the test, or who for medical reasons with sufficient 
supporting evidence is not administered the test, shall be subject to 
adverse employment action only on the same basis as one who refuses to 
take a polygraph test, as described in Sec. Sec. 801.20 and 801.21 of 
this part.
    (c) Any polygraph examination shall consist of one or more pretest 
phases, actual testing phases, and post-test

[[Page 766]]

phases, which must be conducted in accordance with the rights of 
examinees described in Sec. Sec. 801.23 through 801.25 of this part.



Sec. 801.23  Rights of examinee--pretest phase.

    (a) The pretest phase consists of the questioning and other 
preparation of the prospective examinee before the actual use of the 
polygraph instrument. During the initial pretest phase, the examinee 
must be:
    (1) Provided with written notice, in a language understood by the 
examinee, as to when and where the examination will take place and that 
the examinee has the right to consult with counsel or an employee 
representative before each phase of the test. Such notice shall be 
received by the examinee at least forty-eight hours, excluding weekend 
days and holidays, before the time of the examination, except that a 
prospective employee may, at the employee's option, give written consent 
to administration of a test anytime within 48 hours but no earlier than 
24 hours after receipt of the written notice. The written notice or 
proof of service must set forth the time and date of receipt by the 
employee or prospective employee and be verified by his or her 
signature. The purpose of this requirement is to provide a sufficient 
opportunity prior to the examination for the examinee to consult with 
counsel or an employee representative. Provision shall also be made for 
a convenient place on the premises where the examination will take place 
at which the examinee may consult privately with an attorney or an 
employee representative before each phase of the test. The attorney or 
representative may be excluded from the room where the examination is 
administered during the actual testing phase.
    (2) Informed orally and in writing of the nature and characteristics 
of the polygraph instrument and examination, including an explanation of 
the physical operation of the polygraph instrument and the procedure 
used during the examination.
    (3) Provided with a written notice prior to the testing phase, in a 
language understood by the examinee, which shall be read to and signed 
by the examinee. Use of appendix A to this part, if properly completed, 
will constitute compliance with the contents of the notice requirement 
of this paragraph. If a format other than in appendix A is used, it must 
contain at least the following information:
    (i) Whether or not the polygraph examination area contains a two-way 
mirror, a camera, or other device through which the examinee may be 
observed;
    (ii) Whether or not any other device, such as those used in 
conversation or recording will be used during the examination;
    (iii) That both the examinee and the employer have the right, with 
the other's knowledge, to make a recording of the entire examination;
    (iv) That the examinee has the right to terminate the test at any 
time;
    (v) That the examinee has the right, and will be given the 
opportunity, to review all questions to be asked during the test;
    (vi) That the examinee may not be asked questions in a manner which 
degrades, or needlessly intrudes;
    (vii) That the examinee may not be asked any questions concerning 
religious beliefs or opinions; beliefs regarding racial matters; 
political beliefs or affiliations; matters relating to sexual behavior; 
beliefs, affiliations, opinions, or lawful activities regarding unions 
or labor organizations;
    (viii) That the test may not be conducted if there is sufficient 
written evidence by a physician that the examinee is suffering from a 
medical or psychological condition or undergoing treatment that might 
cause abnormal responses during the examination;
    (ix) That the test is not and cannot be required as a condition of 
employment;
    (x) That the employer may not discharge, dismiss, discipline, deny 
employment or promotion, or otherwise discriminate against the examinee 
based on the analysis of a polygraph test, or based on the examinee's 
refusal to take such a test, without additional evidence which would 
support such action;
    (xi)(A) In connection with an ongoing investigation, that the 
additional evidence required for the employer to

[[Page 767]]

take adverse action against the examinee, including termination, may be 
evidence that the examinee had access to the property that is the 
subject of the investigation, together with evidence supporting the 
employer's reasonable suspicion that the examinee was involved in the 
incident or activity under investigation;
    (B) That any statement made by the examinee before or during the 
test may serve as additional supporting evidence for an adverse 
employment action, as described in paragraph (a)(3)(x) of this section, 
and that any admission of criminal conduct by the examinee may be 
transmitted to an appropriate government law enforcement agency;
    (xii) That information acquired from a polygraph test may be 
disclosed by the examiner or by the employer only:
    (A) To the examinee or any other person specifically designated in 
writing by the examinee to receive such information;
    (B) To the employer that requested the test;
    (C) To a court, governmental agency, arbitrator, or mediator 
pursuant to a court order;
    (D) To a U.S. Department of Labor official when specifically 
designated in writing by the examinee to receive such information;
    (E) By the employer, to an appropriate governmental agency without a 
court order where, and only insofar as, the information disclosed is an 
admission of criminal conduct;
    (xiii) That if any of the examinee's rights or protections under the 
law are violated, the examinee has the right to file a complaint with 
the Wage and Hour Division of the U.S. Department of Labor, or to take 
action in court against the employer. Employers who violate this law are 
liable to the affected examinee, who may recover such legal or equitable 
relief as may be appropriate, including, but not limited to, employment, 
reinstatement, and promotion, payment of lost wages and benefits, and 
reasonable costs, including attorney's fees. The Secretary of Labor may 
also bring action to obtain compliance with the Act, and may assess 
civil money penalties against the employer;
    (xiv) That the examinee has the right to obtain and consult with 
legal counsel or other representative before each phase of the test, 
although the legal counsel or representative may be excluded from the 
room where the test is administered during the actual testing phase.
    (xv) That the employee's rights under the Act may not be waived, 
either voluntarily or involuntarily, by contract or otherwise, except as 
part of a written settlement to a pending action or complaint under the 
Act, agreed to and signed by the parties.
    (b) During the initial or any subsequent pretest phases, the 
examinee must be given the opportunity, prior to the actual testing 
phase, to review all questions in writing that the examiner will ask 
during each testing phase. Such questions may be presented at any point 
in time prior to the testing phase.



Sec. 801.24  Rights of examinee--actual testing phase.

    (a) The actual testing phase refers to that time during which the 
examiner administers the examination by using a polygraph instrument 
with respect to the examinee and then analyzes the charts derived from 
the test. Throughout the actual testing phase, the examiner shall not 
ask any question that was not presented in writing for review prior to 
the testing phase. An examiner may, however, recess the testing phase 
and return to the pre-test phase to review additional relevant questions 
with the examinee. In the case of an ongoing investigation, the examiner 
shall ensure that all relevant questions (as distinguished from 
technical baseline questions) pertain to the investigation.
    (b) No testing period subject to the provisions of the Act shall be 
less than ninety minutes in length. Such ``test period'' begins at the 
time that the examiner begins informing the examinee of the nature and 
characteristics of the examination and the instruments involved, as 
prescribed in section 8(b) (2)(B) of the Act and Sec. 801.23 (a)(2) of 
this part, and ends when the examiner completes the review of the test 
results with the examinee as provided in Sec. 801.25 of this part. The 
ninety-minute minimum duration shall not apply if

[[Page 768]]

the examinee voluntarily acts to terminate the test before the 
completion thereof, in which event the examiner may not render an 
opinion regarding the employee's truthfulness.



Sec. 801.25  Rights of examinee--post-test phase.

    (a) The post-test phase refers to any questioning or other 
communication with the examinee following the use of the polygraph 
instrument, including review of the results of the test with the 
examinee. Before any adverse employment action, the employer must:
    (1) Further interview the examinee on the basis of the test results; 
and
    (2) Give to the examinee a written copy of any opinions or 
conclusions rendered in response to the test, as well as the questions 
asked during the test, with the corresponding charted responses. The 
term ``corresponding charted responses'' refers to copies of the entire 
examination charts recording the employee's physiological responses, and 
not just the examiner's written report which describes the examinee's 
responses to the questions as ``charted'' by the instrument.



Sec. 801.26  Qualifications of and requirements for examiners.

    (a) Section 8 (b) and (c) of the Act provides that the limited 
exemption in section 7(d) of the Act for ongoing investigations, and the 
security service and controlled substances exemptions in section 7 (e) 
and (f) of the Act, shall not apply unless the person conducting the 
polygraph examination meets specified qualifications and requirements.
    (b) An examiner must meet the following qualifications:
    (1) Have a valid current license, if required by the State in which 
the test is to be conducted; and
    (2) Carry a minimum bond of $50,000 provided by a surety 
incorporated under the laws of the United States or of any State, which 
may under those laws guarantee the fidelity of persons holding positions 
of trust, or carry an equivalent amount of professional liability 
coverage.
    (c) An examiner must also, with respect to examinees identified by 
the employer pursuant to Sec. 801.30(c) of this part:
    (1) Observe all rights of examinees, as set out in Sec. Sec. 
801.22, 801.23, 801.24, and 801.25 of this part;
    (2) Administer no more than five polygraph examinations in any one 
calendar day on which a test or tests subject to the provisions of EPPA 
are administered, not counting those instances where an examinee 
voluntarily terminates an examination prior to the actual testing phase;
    (3) Administer no polygraph examination subject to the provisions of 
the Act which is less than ninety minutes in duration, as described in 
Sec. 801.24(b) of this part;
    (4) Render any opinion or conclusion regarding truthfulness or 
deception in writing. Such opinion or conclusion must be based solely on 
the polygraph test results. The written report shall not contain any 
information other than admissions, information, case facts, and 
interpretation of the charts relevant to the stated purpose of the 
polygraph test and shall not include any recommendation concerning the 
employment of the examinee; and
    (5) Maintain all opinions, reports, charts, written questions, 
lists, and other records relating to the test, including statements 
signed by examinees advising them of rights under the Act (as described 
in Sec. 801.23 (a)(3) of this part) and any electronic recordings of 
examinations, for at least three years from the date of the 
administration of the test. (See Sec. 801.30 of this part for 
recordkeeping requirements.)



           Subpart D_Recordkeeping and Disclosure Requirements



Sec. 801.30  Records to be preserved for 3 years.

    (a) The following records shall be kept for a minimum period of 
three years from the date the polygraph examination is conducted (or 
from the date the examination is requested if no examination is 
conducted):
    (1) Each employer who requests an employee to submit to a polygraph 
examination in connection with an ongoing investigation involving 
economic loss or injury shall retain a copy of the statement that sets 
forth the specific

[[Page 769]]

incident or activity under investigation and the basis for testing that 
particular employee, as required by section 7(d)(4) of the Act and 
described in Sec. 801.12 (a)(4) of this part.
    (2) Each employer who administers a polygraph examination under the 
exemption provided by section 7(f) of the Act (described in Sec. 801.13 
of this part) in connection with an ongoing investigation of criminal or 
other misconduct involving, or potentially involving, loss or injury to 
the manufacture, distribution or dispensing of a controlled substance, 
shall retain records specifically identifying the loss or injury in 
question and the nature of the employee's access to the person or 
property that is the subject of the investigation.
    (3) Each employer who requests an employee or prospective employee 
to submit to a polygraph examination pursuant to any of the exemptions 
under section 7(d), (e) or (f) of the Act (described in Sec. Sec. 
801.12, 801.13, and 801.14) shall retain a copy of the written statement 
that sets forth the time and place of the examination and the examinee's 
right to consult with counsel, as required by section 8 (b)(2)(A) of the 
Act and described in Sec. 801.23(a)(1) of this part.
    (4) Each employer shall identify in writing to the examiner persons 
to be examined pursuant to any of the exemptions under section 7 (d), 
(e) or (f) of the Act (described in Sec. Sec. 801.12, 801.13, and 
801.14 of this part), and shall retain a copy of such notice.
    (5) Each employer who retains an examiner to administer examinations 
pursuant to any of the exemptions under section 7 (d), (e) or (f) of the 
Act (described in Sec. Sec. 801.12, 801.13, and 801.14 of this part) 
shall maintain copies of all opinions, reports or other records 
furnished to the employer by the examiner relating to such examinations.
    (6) Each examiner retained to administer examinations to persons 
identified by employers under paragraph (a)(4) of this section shall 
maintain all opinions, reports, charts, written questions, lists, and 
other records relating to polygraph tests of such persons. In addition, 
the examiner shall maintain records of the number of examinations 
conducted during each day in which one or more tests are conducted 
pursuant to the Act, and, with regard to tests administered to persons 
identified by their employer under paragraph (a)(4) of this section, the 
duration of each test period, as defined in Sec. 801.24(b) of this 
part.
    (b) Each employer shall keep the records required by this part safe 
and accessible at the place or places of employment or at one or more 
established central recordkeeping offices where employment records are 
customarily maintained. If the records are maintained at a central 
recordkeeping office, other than in the place or places of employment, 
such records shall be made available within 72 hours following notice 
from the Secretary or an authorized representative.
    (c) Each examiner shall keep the records required by this part safe 
and accessible at the place or places of business or at one or more 
established central recordkeeping offices where examination records are 
customarily maintained. If the records are maintained at a central 
recordkeeping office, other than in the place or places of business, 
such records shall be made available within 72 hours following notice 
from the Secretary or an authorized representative.
    (d) All records shall be available for inspection and copying by the 
Secretary or an authorized representative. Information for which 
disclosure is restricted under section 9 of the Act and Sec. 801.35 of 
this part shall be made available to the Secretary or the Secretary's 
representative where the examinee has designated the Secretary, in 
writing, to receive such information, or by order of a court of 
competent jurisdiction.

(Approved by the Office of Management and Budget under control number 
1215-0170)



Sec. 801.35  Disclosure of test information.

    Section 9 of the Act prohibits the unauthorized disclosure of any 
information obtained during a polygraph test by any person, other than 
the examinee, directly or indirectly, except as follows:
    (a) A polygraph examiner or an employer (other than an employer 
exempt under section 7 (a), (b), or (c) of the Act (described in 
Sec. Sec. 801.10 and 801.11 of this

[[Page 770]]

part)) may disclose information acquired from a polygraph test only to:
    (1) The examinee or an individual specifically designated in writing 
by the examinee to receive such information;
    (2) The employer that requested the polygraph test pursuant to the 
provisions of this Act (including management personnel of the employer 
where the disclosure is relevant to the carrying out of their job 
responsibilities);
    (3) Any court, governmental agency, arbitrator, or mediator pursuant 
to an order from a court of competent jurisdiction requiring the 
production of such information;
    (4) The Secretary of Labor, or the Secretary's representative, when 
specifically designated in writing by the examinee to receive such 
information.
    (b) An employer may disclose information from the polygraph test at 
any time to an appropriate governmental agency without the need of a 
court order where, and only insofar as, the information disclosed is an 
admission of criminal conduct.
    (c) A polygraph examiner may disclose test charts, without 
identifying information (but not other examination materials and 
records), to another examiner(s) for examination and analysis, provided 
that such disclosure is for the sole purpose of consultation and review 
of the initial examiner's opinion concerning the indications of 
truthfulness or deception. Such action would not constitute disclosure 
under this part provided that the other examiner has no direct or 
indirect interest in the matter.



                          Subpart E_Enforcement



Sec. 801.40  General.

    (a) Whenever the Secretary believes that the provisions of the Act 
or these regulations have been violated, such action shall be taken and 
such proceedings instituted as deemed appropriate, including the 
following:
    (1) Petitioning any appropriate District Court of the United States 
for temporary or permanent injunctive relief to restrain violation of 
the provisions of the Act or this part by any person, and to require 
compliance with the Act and this part, including such legal or equitable 
relief incident thereto as may be appropriate, including, but not 
limited to, employment, reinstatement, promotion, and the payment of 
lost wages and benefits;
    (2) Assessing a civil penalty against any employer who violates any 
provision of the Act or this part in an amount of not more than $10,000 
for each violation, in accordance with regulations set forth in this 
part; or
    (3) Referring any unpaid civil money penalty which has become a 
final and unappealable order of the Secretary or a final judgment of a 
court in favor of the Secretary to the Attorney General for recovery.
    (b)(1) Any employer who violates this Act shall be liable to the 
employee or prospective employee affected by such violation for such 
legal or equitable relief as may be appropriate, including, but not 
limited to, employment, reinstatement, promotion, and the payment of 
lost wages and benefits.
    (2) An action under this subsection may be maintained against the 
employer in any Federal or State court of competent jurisdiction by an 
employee or prospective employee for or on behalf of such employee, 
prospective employee and others similarly situated. Such action must be 
commenced within a period not to exceed 3 years after the date of the 
alleged violation. The court, in its discretion, may allow reasonable 
costs (including attorney's fees) to the prevailing party.
    (c) The taking of any one of the actions referred to in paragraph 
(a) of this section shall not be a bar to the concurrent taking of any 
other appropriate action.



Sec. 801.41  Representation of the Secretary.

    (a) Except as provided in section 518(a) of title 28, U.S. Code, 
relating to litigation before the Supreme Court, the Solicitor of Labor 
may appear for and represent the Secretary in any civil litigation 
brought under section 6 of the Act, as described in Sec. 801.40 of this 
part.
    (b) The Solicitor of Labor, through authorized representatives, 
shall represent the Administrator in all administrative hearings under 
the provisions of section 6 of the Act and this part.

[[Page 771]]



Sec. 801.42  Civil money penalties--assessment.

    (a) A civil money penalty in an amount not to exceed $10,000 for any 
violation may be assessed against any employer for:
    (1) Requiring, requesting, suggesting or causing an employee or 
prospective employee to take a lie detector test or using, accepting, 
referring to or inquiring about the results of any lie detector test of 
any employee or prospective employee, other than as provided in the Act 
or this part;
    (2) Taking an adverse action or discriminating in any manner against 
any employee or prospective employee on the basis of the employee's or 
prospective employee's refusal to take a lie detector test, other than 
as provided in the Act or this part;
    (3) Discriminating or retaliating against an employee or prospective 
employee for the exercise of any rights under the Act;
    (4) Disclosing information obtained during a polygraph test, except 
as authorized by the Act or this part;
    (5) Failing to maintain the records required by the Act or this 
part;
    (6) Resisting, opposing, impeding, intimidating, or interfering with 
an official of the Department of Labor during the performance of an 
investigation, inspection, or other law enforcement function under the 
Act or this part; or
    (7) Violating any other provision of the Act or this part.
    (b) In determining the amount of penalty to be assessed for any 
violation of the Act or this part, the Administrator will consider the 
previous record of the employer in terms of compliance with the Act and 
regulations, the gravity of the violations, and other pertinent factors. 
The matters which may be considered include, but are not limited to, the 
following:
    (1) Previous history of investigation(s) or violation(s) of the Act 
or this part;
    (2) The number of employees or prospective employees affected by the 
violation or violations;
    (3) The seriousness of the violation or violations;
    (4) Efforts made in good faith to comply with the provisions of the 
Act and this part;
    (5) If the violations resulted from the actions or inactions of an 
examiner, the steps taken by the employer to ensure the examiner 
complied with the Act and the regulations in this part, and the extent 
to which the employer could reasonably have foreseen the examiner's 
actions or inactions;
    (6) The explanation of the employer, including whether the 
violations were the result of a bona fide dispute of doubtful legal 
certainty;
    (7) The extent to which the employee(s) or prospective employee(s) 
suffered loss or damage;
    (8) Commitment to future compliance, taking into account the public 
interest and whether the employer has previously violated the provisions 
of the Act or this part.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



Sec. 801.43  Civil money penalties--payment and collection.

    Where the assessment is directed in a final order of the Department, 
the amount of the penalty is immediately due and payable to the United 
States Department of Labor. The person assessed such penalty shall remit 
promptly the amount thereof as finally determined, to the Administrator 
by certified check or by money order, made payable to the order of 
``Wage and Hour Division, Labor''. The remittance shall be delivered or 
mailed to the Wage and Hour Division Regional Office for the area in 
which the violations occurred.



                  Subpart F_Administrative Proceedings

                                 General



Sec. 801.50  Applicability of procedures and rules.

    The procedures and rules contained in this subpart prescribe the 
administrative process for assessment of civil money penalties for 
violations of the Act or of these regulations.

[[Page 772]]

                     Procedures Relating to Hearing



Sec. 801.51  Written notice of determination required.

    Whenever the Administrator determines to assess a civil money 
penalty for a violation of the Act or this part, the person against whom 
such penalty is assessed shall be notified in writing of such 
determination. Such notice shall be served in person or by certified 
mail.



Sec. 801.52  Contents of notice.

    The notice required by Sec. 801.51 of this part shall:
    (a) Set forth the determination of the Administrator and the reason 
or reasons therefor;
    (b) Set forth a description of each violation and the amount 
assessed for each violation;
    (c) Set forth the right to request a hearing on such determination;
    (d) Inform any affected person or persons that in the absence of a 
timely request for a hearing, the determination of the Administrator 
shall become final and unappealable; and
    (e) Set forth the time and method for requesting a hearing, and the 
procedures relating thereto, as set forth in Sec. 801.53 of this part.



Sec. 801.53  Request for hearing.

    (a) Any person desiring to request an administrative hearing on a 
civil money penalty assessment pursuant to this part shall make such 
request in writing to the official who issued the determination at the 
Wage and Hour Division address appearing on the determination notice, no 
later than 30 days after the date of receipt of the notice referred to 
in Sec. 801.51 of this part.
    (b) The request for hearing must be received by the Administrator at 
the address set forth in the notice issued pursuant to Sec. 801.52 of 
this part, within the time set forth in paragraph (a) of this section. 
For the affected person's protection, if the request is by mail, it 
should be by certified mail, return receipt requested.
    (c) No particular form is prescribed for any request for hearing 
permitted by this subpart. However, any such request shall:
    (1) Be typewritten or legibly written;
    (2) Specify the issue or issues stated in the notice of 
determination giving rise to such request;
    (3) State the specific reason or reasons why the person requesting 
the hearing believes such determination is in error;
    (4) Be signed by the person making the request or by an authorized 
representative of such person; and
    (5) Include the address at which such person or authorized 
representative desires to receive further communications relating 
thereto.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991, as amended at 60 
FR 46531, Sept. 7, 1995]

                            Rules of Practice



Sec. 801.58  General.

    Except as provided in this subpart, and to the extent they do not 
conflict with the provisions of this subpart, the ``Rules of Practice 
and Procedure for Administrative Hearings Before the Office of 
Administrative Law Judges'' established by the Secretary at 29 CFR part 
18 shall apply to administrative proceedings under this subpart.



Sec. 801.59  Service and computation of time.

    (a) Service of documents under this subpart shall be made by 
personal service to the individual, officer of a corporation, or 
attorney of record or by mailing the determination to the last known 
address of the individual, officer, or attorney. If done by certified 
mail, service is complete upon mailing. If done by regular mail, service 
is complete upon receipt by addressee.
    (b) Two (2) copies of all pleadings and other documents required for 
any administrative proceeding provided by this part shall be served on 
the attorneys for the Department of Labor. One copy shall be served on 
the Associate Solicitor, Division of Fair Labor Standards, Office of the 
Solicitor, U.S. Department of Labor, 200 Constitution Avenue NW., 
Washington, DC 20210, and one copy on the Attorney representing the 
Department in the proceeding.
    (c) Time will be computed beginning with the day following the 
action and includes the last day of the period unless it is a Saturday, 
Sunday, or federally-observed holiday, in which case

[[Page 773]]

the time period includes the next business day.
    (d) When a request for hearing is served by mail, five (5) days 
shall be added to the prescribed period during which the party has the 
right to request a hearing on the determination.



Sec. 801.60  Commencement of proceeding.

    Each administrative proceeding permitted under the Act and these 
regulations shall be commenced upon receipt of a timely request for 
hearing filed in accordance with Sec. 801.53 of this part.



Sec. 801.61  Designation of record.

    (a) Each administrative proceeding instituted under the Act and this 
part shall be identified of record by a number preceded by the year and 
the letters ``EPPA''.
    (b) The number, letter, and designation assigned to each such 
proceeding shall be clearly displayed on each pleading, motion, brief, 
or other formal document filed and docketed of record.



Sec. 801.62  Caption of proceeding.

    (a) Each administrative proceeding instituted under the Act and this 
part shall be captioned in the name of the person requesting such 
hearing, and shall be styled as follows:

    In Matter of --------------------, Respondent.

    (b) For the purposes of administrative proceedings under the Act and 
this part the ``Secretary of Labor'' shall be identified as plaintiff 
and the person requesting such hearing shall be named as respondent.

                          Referral for Hearing



Sec. 801.63  Referral to Administrative Law Judge.

    (a) Upon receipt of a timely request for a hearing filed pursuant to 
and in accordance with Sec. 801.53 of this part, the Administrator, by 
the Associate Solicitor for the Division of Fair Labor Standards or by 
the Regional Solicitor for the Region in which the action arose, shall 
by Order of Reference, promptly refer a copy of the notice of 
administrative determination complained of, and the original or a 
duplicate copy of the request for hearing signed by the person 
requesting such hearing or the authorized representative of such person, 
to the Chief Administrative Law Judge, for a determination in an 
administrative proceeding as provided herein. The notice of 
administrative determination and request for hearing shall be filed of 
record in the Office of the Chief Administrative Law Judge and shall, 
respectively, be given the effect of a complaint and answer thereto for 
purposes of the administrative proceeding, subject to any amendment that 
may be permitted under this part.
    (b) A copy of the Order of Reference, together with a copy of this 
part, shall be served by counsel for the Secretary upon the person 
requesting the hearing, in the manner provided in 29 CFR 18.3.



Sec. 801.64  Notice of docketing.

    The Chief Administrative Law Judge shall promptly notify the parties 
of the docketing of each matter.

               Procedures Before Administrative Law Judge



Sec. 801.65  Appearances; representation of the Department of Labor.

    The Associate Solicitor, Division of Fair Labor Standards, or 
Regional Solicitor shall represent the Department in any proceeding 
under this part.



Sec. 801.66  Consent findings and order.

    (a) General. At any time after the commencement of a proceeding 
under this part, but prior to the reception of evidence in any such 
proceeding, a party may move to defer the receipt of any evidence for a 
reasonable time to permit negotiation of an agreement containing consent 
findings and an order disposing of the whole or any part of the 
proceeding. The allowance of such deferment and the duration thereof 
shall be at the discretion of the Administrative Law Judge, after 
consideration of the nature of the proceeding, the requirements of the 
public interest, the representations of the parties, and the probability 
of an agreement being reached which will result in a just disposition of 
the issues involved.

[[Page 774]]

    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the notice of administrative determination (or amended 
notice, if one is filed), and the agreement;
    (3) A waiver of any further procedural steps before the 
Administrative Law Judge; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into, in accordance with the agreement.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representatives or their 
counsel may:
    (1) Submit the proposed agreement for consideration by the 
Administrative Law Judge; or
    (2) Inform the Administrative Law Judge that agreement cannot be 
reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
Administrative Law Judge, within thirty (30) days thereafter, shall, if 
satisfied with its form and substance, accept such agreement by issuing 
a decision based upon the agreed findings.



Sec. 801.67  Decision and Order of Administrative Law Judge.

    (a) The Administrative Law Judge shall prepare, as promptly as 
practicable after the expiration of the time set for filing proposed 
findings and related papers, a decision on the issues referred by the 
Secretary.
    (b) The decision of the Administrative Law Judge shall be limited to 
a determination whether the respondent has violated the Act or these 
regulations and the appropriateness of the remedy or remedies imposed by 
the Secretary. The Administrative Law Judge shall not render 
determinations on the legality of a regulatory provision or the 
constitutionality of a statutory provision.
    (c) The decision of the Administrative Law Judge, for purposes of 
the Equal Access to Justice Act (5 U.S.C. 504), shall be limited to 
determinations of attorney fees and/or other litigation expenses in 
adversary proceedings requested pursuant to Sec. 801.53 of this part 
which involve the imposition of a civil money penalty assessed for a 
violation of the Act or this part.
    (d) The decision of the Administrative Law Judge shall include a 
statement of findings and conclusions, with reasons and basis therefor, 
upon each material issue presented on the record. The decision shall 
also include an appropriate order which may be to affirm, deny, reverse, 
or modify, in whole or in part, the determination of the Secretary. The 
reason or reasons for such order shall be stated in the decision.
    (e) The Administrative Law Judge shall serve copies of the decision 
on each of the parties.
    (f) If any party desires review of the decision of the 
Administrative Law Judge, a petition for issuance of a Notice of Intent 
shall be filed in accordance with Sec. 801.69 of this subpart.
    (g) The decision of the Administrative Law Judge shall constitute 
the final order of the Secretary unless the Secretary, pursuant to Sec. 
801.70 of this subpart issues a Notice of Intent to Modify or Vacate the 
Decision and Order.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]

  Modification or Vacation of Decision and Order of Administrative Law 
                                  Judge



Sec. 801.68  Authority of the Secretary.

    (a) The Secretary may modify or vacate the Decision and Order of the 
Administrative Law Judge whenever the Secretary concludes that the 
Decision and Order:
    (1) Is inconsistent with a policy or precedent established by the 
Department of Labor;
    (2) Encompasses determinations not within the scope of the authority 
of the Administrative Law Judge;
    (3) Awards attorney fees and/or other litigation expenses pursuant 
to the

[[Page 775]]

Equal Access to Justice Act which are unjustified or excessive; or
    (4) Otherwise warrants modifying or vacating.
    (b) The Secretary may modify or vacate a finding of fact only where 
the Secretary determines that the finding is clearly erroneous.



Sec. 801.69  Procedures for initiating review.

    (a) Within twenty (20) days after the date of the decision of the 
Administrative Law Judge, the respondent, the Administrator, or any 
other party desiring review thereof, may file with the Secretary an 
original and two copies of a petition for issuance of a Notice of Intent 
as described under Sec. 801.70. The petition shall be in writing and 
shall contain a concise and plain statement specifying the grounds on 
which review is sought. A copy of the Decision and Order of the 
Administrative Law Judge shall be attached to the petition.
    (b) Copies of the petition shall be served upon all parties to the 
proceeding and on the Chief Administrative Law Judge.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



Sec. 801.70  Implementation by the Secretary.

    (a) Review of the Decision and Order by the Secretary shall not be a 
matter of right but of the sound discretion of the Secretary. At any 
time within 30 days after the issuance of the Decision and Order of the 
Administrative Law Judge the Secretary may, upon the Secretary's own 
motion or upon the acceptance of a party's petition, issue a Notice of 
Intent to modify or vacate the Decision and Order in question.
    (b) The Notice of Intent to Modify or Vacate a Decision and Order 
shall specify the issue or issues to be considered, the form in which 
submission shall be made (i.e., briefs, oral argument, etc.), and the 
time within which such presentation shall be submitted. The Secretary 
shall closely limit the time within which the briefs must be filed or 
oral presentations made, so as to avoid unreasonable delay.
    (c) The Notice of Intent shall be issued within thirty (30) days 
after the date of the Decision and Order in question.
    (d) Service of the Notice of Intent shall be made upon each party to 
the proceeding, and upon the Chief Administrative Law Judge, in person 
or by certified mail.



Sec. 801.71  Filing and service.

    (a) Filing. All documents submitted to the Secretary shall be filed 
with the Secretary of Labor, U.S. Department of Labor, Washington, DC 
20210.
    (b) Number of copies. An original and two copies of all documents 
shall be filed.
    (c) Computation of time for delivery by mail. Documents are not 
deemed filed with the Secretary until actually received by the 
Secretary. All documents, including documents filed by mail, must be 
received by the Secretary either on or before the due date. No 
additional time shall be added where service of a document requiring 
action within a prescribed time thereafter was made by mail.
    (d) Manner and proof of service. A copy of all documents filed with 
the Secretary shall be served upon all other parties involved in the 
proceeding. Service under this section shall be by personal delivery or 
by mail. Service by mail is deemed effected at the time of mailing to 
the last known address.

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



Sec. 801.72  Responsibility of the Office of Administrative Law Judges.

    Upon receipt of the Secretary's Notice of Intent to Modify or Vacate 
the Decision and Order of an Administrative Law Judge, the Chief 
Administrative Law Judge shall, within fifteen (15) days, forward a copy 
of the complete hearing record to the Secretary.



Sec. 801.73  Final decision of the Secretary.

    The Secretary's final Decision and Order shall be served upon all 
parties and the Chief Administrative Law Judge.

[[Page 776]]

                                 Record



Sec. 801.74  Retention of official record.

    The official record of every completed administrative hearing 
provided by this part shall be maintained and filed under the custody 
and control of the Chief Administrative Law Judge.



Sec. 801.75  Certification of official record.

    Upon receipt of timely notice of appeal to a United States District 
Court of a Decision and Order issued under this part, the Chief 
Administrative Law Judge shall promptly certify and file with the 
appropriate United States District Court, a full, true, and correct copy 
of the entire record, including the transcript of proceedings.



             Sec. Appendix A to Part 801--Notice to Examinee

    Section 8(b) of the Employee Polygraph Protection Act, and 
Department of Labor regulations (29 CFR 801.22, 801.23, 801.24, and 
801.25) require that you be given the following information before 
taking a polygraph examination:
    1. (a) The polygraph examination area [does] [does not] contain a 
two-way mirror, a camera, or other device through which you may be 
observed.
    (b) Another device, such as those used in conversation or recording, 
[will] [will not] be used during the examination.
    (c) Both you and the employer have the right, with the other's 
knowledge, to record electronically the entire examination.
    2. (a) You have the right to terminate the test at any time.
    (b) You have the right, and will be given the opportunity, to review 
all questions to be asked during the test.
    (c) You may not be asked questions in a manner which degrades, or 
needlessly intrudes.
    (d) You may not be asked any questions concerning: Religious beliefs 
or opinions; beliefs regarding racial matters; political beliefs or 
affiliations; matters relating to sexual preference or behavior; 
beliefs, affiliations, opinions, or lawful activities regarding unions 
or labor organizations.
    (e) The test may not be conducted if there is sufficient written 
evidence by a physician that you are suffering from a medical or 
psychological condition or undergoing treatment that might cause 
abnormal responses during the examination.
    (f) You have the right to consult with legal counsel or other 
representative before each phase of the test, although the legal counsel 
or other representative may be excluded from the room where the test is 
administered during the actual testing phase.
    3. (a) The test is not and cannot be required as a condition of 
employment.
    (b) The employer may not discharge, dismiss, discipline, deny 
employment or promotion, or otherwise discriminate against you based on 
the analysis of a polygraph test, or based on your refusal to take such 
a test without additional evidence which would support such action.
    (c)(1) In connection with an ongoing investigation, the additional 
evidence required for an employer to take adverse action against you, 
including termination, may be (A) evidence that you had access to the 
property that is the subject of the investigation, together with (B) the 
evidence supporting the employer's reasonable suspicion that you were 
involved in the incident or activity under investigation.
    (2) Any statement made by you before or during the test may serve as 
additional supporting evidence for an adverse employment action, as 
described in 3(b) above, and any admission of criminal conduct by you 
may be transmitted to an appropriate government law enforcement agency.
    4. (a) Information acquired from a polygraph test may be disclosed 
by the examiner or by the employer only:
    (1) To you or any other person specifically designated in writing by 
you to receive such information;
    (2) To the employer that requested the test;
    (3) To a court, governmental agency, arbitrator, or mediator that 
obtains a court order;
    (4) To a U.S. Department of Labor official when specifically 
designated in writing by you to receive such information.
    (b) Information acquired from a polygraph test may be disclosed by 
the employer to an appropriate governmental agency without a court order 
where, and only insofar as, the information disclosed is an admission of 
criminal conduct.
    5. If any of your rights or protections under the law are violated, 
you have the right to file a complaint with the Wage and Hour Division 
of the U.S. Department of Labor, or to take action in court against the 
employer. Employers who violate this law are liable to the affected 
examinee, who may recover such legal or equitable relief as may be 
appropriate, including, but not limited to, employment, reinstatement, 
and promotion, payment of lost wages and benefits, and reasonable costs, 
including attorney's fees. The Secretary of Labor may also bring action 
to restrain violations of the Act, or may assess civil money penalties 
against the employer.
    6. Your rights under the Act may not be waived, either voluntarily 
or involuntarily, by contract or otherwise, except as part of a written 
settlement to a pending action or

[[Page 777]]

complaint under the Act, and agreed to and signed by the parties.
    I acknowledge that I have received a copy of the above notice, and 
that it has been read to me.

________________________________________________________________________

(Date)
________________________________________________________________________

(Signature)

[56 FR 9064, Mar. 4, 1991; 56 FR 14469, Apr. 10, 1991]



PART 825_THE FAMILY AND MEDICAL LEAVE ACT OF 1993--Table of Contents



        Subpart A_Coverage Under the Family and Medical Leave Act

Sec.
825.100 The Family and Medical Leave Act.
825.101 Purpose of the Act.
825.102-825.103 [Reserved]
825.104 Covered employer.
825.105 Counting employees for determining coverage.
825.106 Joint employer coverage.
825.107 Successor in interest coverage.
825.108 Public agency coverage.
825.109 Federal agency coverage.
825.110 Eligible employee.
825.111 Determining whether 50 employees are employed within 75 miles.
825.112 Qualifying reasons for leave, general rule.
825.113 Serious health condition.
825.114 Inpatient care.
825.115 Continuing treatment.
825.116-825.118 [Reserved]
825.119 Leave for treatment of substance abuse.
825.120 Leave for pregnancy or birth.
825.121 Leave for adoption or foster care.
825.122 Definitions of spouse, parent, son or daughter, next of kin of a 
          covered servicemember, adoption, foster care, son or daughter 
          on active duty or call to active duty status, son or daughter 
          of a covered servicemember, and parent of a covered 
          servicemember.
825.123 Unable to perform the functions of the position.
825.124 Needed to care for a family member or covered servicemember.
825.125 Definition of health care provider.
825.126 Leave because of a qualifying exigency.
825.127 Leave to care for a covered servicemember with a serious injury 
          or illness.

Subpart B_Employee Leave Entitlements Under the Family and Medical Leave 
                                   Act

825.200 Amount of leave.
825.201 Leave to care for a parent.
825.202 Intermittent leave or reduced leave schedule.
825.203 Scheduling of intermittent or reduced schedule leave.
825.204 Transfer of an employee to an alternative position during 
          intermittent leave or reduced schedule leave.
825.205 Increments of FMLA leave for intermittent or reduced schedule 
          leave.
825.206 Interaction with the FLSA.
825.207 Substitution of paid leave.
825.208 [Reserved]
825.209 Maintenance of employee benefits.
825.210 Employee payment of group health benefit premiums.
825.211 Maintenance of benefits under multi-employer health plans.
825.212 Employee failure to pay health plan premium payments.
825.213 Employer recovery of benefit costs.
825.214 Employee right to reinstatement.
825.215 Equivalent position.
825.216 Limitations on an employee's right to reinstatement.
825.217 Key employee, general rule.
825.218 Substantial and grievous economic injury.
825.219 Rights of a key employee.
825.220 Protection for employees who request leave or otherwise assert 
          FMLA rights.

  Subpart C_Employee and Employer Rights and Obligations Under the Act

825.300 Employer notice requirements.
825.301 Designation of FMLA leave.
825.302 Employee notice requirements for foreseeable FMLA leave.
825.303 Employee notice requirements for unforeseeable FMLA leave.
825.304 Employee failure to provide notice.
825.305 Certification, general rule.
825.306 Content of medical certification for leave taken because of an 
          employee's own serious health condition or the serious health 
          condition of a family member.
825.307 Authentication and clarification of medical certification for 
          leave taken because of an employee's own serious health 
          condition or the serious health condition of a family member; 
          second and third opinions.
825.308 Recertifications for leave taken because of an employee's own 
          serious health condition or the serious health condition of a 
          family member.
825.309 Certification for leave taken because of a qualifying exigency.
825.310 Certification for leave taken to care for a covered 
          servicemember (military caregiver leave).
825.311 Intent to return to work.
825.312 Fitness-for-duty certification.
825.313 Failure to provide certification.

[[Page 778]]

                    Subpart D_Enforcement Mechanisms

825.400 Enforcement, general rules.
825.401 Filing a complaint with the Federal Government.
825.402 Violations of the posting requirement.
825.403 Appealing the assessment of a penalty for willful violation of 
          the posting requirement.
825.404 Consequences for an employer when not paying the penalty 
          assessment after a final order is issued.

                  Subpart E_Recordkeeping Requirements

825.500 Recordkeeping requirements.

       Subpart F_Special Rules Applicable to Employees of Schools

825.600 Special rules for school employees, definitions.
825.601 Special rules for school employees, limitations on intermittent 
          leave.
825.602 Special rules for school employees, limitations on leave near 
          the end of an academic term.
825.603 Special rules for school employees, duration of FMLA leave.
825.604 Special rules for school employees, restoration to ``an 
          equivalent position.''

   Subpart G_Effect of Other Laws, Employer Practices, and Collective 
           Bargaining Agreements on Employee Rights Under FMLA

825.700 Interaction with employer's policies.
825.701 Interaction with State laws.
825.702 Interaction with Federal and State anti-discrimination laws.

                          Subpart H_Definitions

825.800 Definitions.

Appendix A to Part 825--Index [Reserved]
Appendix B to Part 825--Certification of Health Care Provider (Forms WH-
          380E & WH-380F)
Appendix C to Part 825--Notice to Employees Of Rights Under FMLA (WH 
          Publication 1420)
Appendix D to Part 825--Notice of Eligibility and Rights & 
          Responsibilities (Form WH-381)
Appendix E to Part 825--Designation Notice to Employee of FMLA Leave 
          (Form WH-382)
Appendix F to Part 825 [Reserved]
Appendix G to Part 825--Certification of Qualifying Exigency for 
          Military Family Leave (Form WH-384)
Appendix H to Part 825--Certification for Serious Injury or Illness of 
          Covered Servicemember for Military Family Leave (Form WH-385)

    Authority: 29 U.S.C. 2654.

    Source: 73 FR 68073, Nov. 17, 2008, unless otherwise noted.



        Subpart A_Coverage Under the Family and Medical Leave Act



Sec. 825.100  The Family and Medical Leave Act.

    (a) The Family and Medical Leave Act of 1993, as amended, (FMLA or 
Act) allows ``eligible'' employees of a covered employer to take job-
protected, unpaid leave, or to substitute appropriate paid leave if the 
employee has earned or accrued it, for up to a total of 12 workweeks in 
any 12 months (see Sec. 825.200(b)) because of the birth of a child and 
to care for the newborn child, because of the placement of a child with 
the employee for adoption or foster care, because the employee is needed 
to care for a family member (child, spouse, or parent) with a serious 
health condition, because the employee's own serious health condition 
makes the employee unable to perform the functions of his or her job, or 
because of any qualifying exigency arising out of the fact that the 
employee's spouse, son, daughter, or parent is a covered military member 
on active duty (or has been notified of an impending call or order to 
active duty) in support of a contingency operation. In addition, 
``eligible'' employees of a covered employer may take job-protected, 
unpaid leave, or substitute appropriate paid leave if the employee has 
earned or accrued it, for up to a total of 26 workweeks in a ``single 
12-month period'' to care for a covered servicemember with a serious 
injury or illness (see Sec. 825.127(c)). In certain cases, FMLA leave 
may be taken on an intermittent basis rather than all at once, or the 
employee may work a part-time schedule.
    (b) An employee on FMLA leave is also entitled to have health 
benefits maintained while on leave as if the employee had continued to 
work instead of taking the leave. If an employee was paying all or part 
of the premium payments prior to leave, the employee would continue to 
pay his or her share during the leave period. The employer may recover 
its share only if the employee does not return to work for a

[[Page 779]]

reason other than the serious health condition of the employee or the 
employee's covered family member, the serious injury or illness of a 
covered servicemember, or another reason beyond the employee's control.
    (c) An employee generally has a right to return to the same position 
or an equivalent position with equivalent pay, benefits, and working 
conditions at the conclusion of the leave. The taking of FMLA leave 
cannot result in the loss of any benefit that accrued prior to the start 
of the leave.
    (d) The employer generally has a right to advance notice from the 
employee. In addition, the employer may require an employee to submit 
certification to substantiate that the leave is due to the serious 
health condition of the employee or the employee's covered family 
member, due to the serious injury or illness of a covered servicemember, 
or because of a qualifying exigency. Failure to comply with these 
requirements may result in a delay in the start of FMLA leave. Pursuant 
to a uniformly applied policy, the employer may also require that an 
employee present a certification of fitness to return to work when the 
absence was caused by the employee's serious health condition (see 
Sec. Sec. 825.312 and 825.313). The employer may delay restoring the 
employee to employment without such certificate relating to the health 
condition which caused the employee's absence.



Sec. 825.101  Purpose of the Act.

    (a) FMLA is intended to allow employees to balance their work and 
family life by taking reasonable unpaid leave for medical reasons, for 
the birth or adoption of a child, for the care of a child, spouse, or 
parent who has a serious health condition, for the care of a covered 
servicemember with a serious injury or illness, or because of a 
qualifying exigency arising out of the fact that the employee's spouse, 
son, daughter, or parent is on active duty or call to active duty status 
in support of a contingency operation. The Act is intended to balance 
the demands of the workplace with the needs of families, to promote the 
stability and economic security of families, and to promote national 
interests in preserving family integrity. It was intended that the Act 
accomplish these purposes in a manner that accommodates the legitimate 
interests of employers, and in a manner consistent with the Equal 
Protection Clause of the Fourteenth Amendment in minimizing the 
potential for employment discrimination on the basis of sex, while 
promoting equal employment opportunity for men and women.
    (b) The FMLA was predicated on two fundamental concerns--the needs 
of the American workforce, and the development of high-performance 
organizations. Increasingly, America's children and elderly are 
dependent upon family members who must spend long hours at work. When a 
family emergency arises, requiring workers to attend to seriously-ill 
children or parents, or to newly-born or adopted infants, or even to 
their own serious illness, workers need reassurance that they will not 
be asked to choose between continuing their employment, and meeting 
their personal and family obligations or tending to vital needs at home.
    (c) The FMLA is both intended and expected to benefit employers as 
well as their employees. A direct correlation exists between stability 
in the family and productivity in the workplace. FMLA will encourage the 
development of high-performance organizations. When workers can count on 
durable links to their workplace they are able to make their own full 
commitments to their jobs. The record of hearings on family and medical 
leave indicate the powerful productive advantages of stable workplace 
relationships, and the comparatively small costs of guaranteeing that 
those relationships will not be dissolved while workers attend to 
pressing family health obligations or their own serious illness.



Sec. Sec. 825.102-825.103  [Reserved]



Sec. 825.104  Covered employer.

    (a) An employer covered by FMLA is any person engaged in commerce or 
in any industry or activity affecting commerce, who employs 50 or more 
employees for each working day during each of 20 or more calendar 
workweeks in the current or preceding calendar year. Employers covered 
by FMLA also include any person acting, directly or

[[Page 780]]

indirectly, in the interest of a covered employer to any of the 
employees of the employer, any successor in interest of a covered 
employer, and any public agency. Public agencies are covered employers 
without regard to the number of employees employed. Public as well as 
private elementary and secondary schools are also covered employers 
without regard to the number of employees employed. (See Sec. 825.600.)
    (b) The terms ``commerce'' and ``industry affecting commerce'' are 
defined in accordance with section 501(1) and (3) of the Labor 
Management Relations Act of 1947 (LMRA) (29 U.S.C. 142 (1) and (3)), as 
set forth in the definitions at Sec. 825.800 of this part. For purposes 
of the FMLA, employers who meet the 50-employee coverage test are deemed 
to be engaged in commerce or in an industry or activity affecting 
commerce.
    (c) Normally the legal entity which employs the employee is the 
employer under FMLA. Applying this principle, a corporation is a single 
employer rather than its separate establishments or divisions.
    (1) Where one corporation has an ownership interest in another 
corporation, it is a separate employer unless it meets the ``joint 
employment'' test discussed in Sec. 825.106, or the ``integrated 
employer'' test contained in paragraph (c)(2) of this section.
    (2) Separate entities will be deemed to be parts of a single 
employer for purposes of FMLA if they meet the ``integrated employer'' 
test. Where this test is met, the employees of all entities making up 
the integrated employer will be counted in determining employer coverage 
and employee eligibility. A determination of whether or not separate 
entities are an integrated employer is not determined by the application 
of any single criterion, but rather the entire relationship is to be 
reviewed in its totality. Factors considered in determining whether two 
or more entities are an integrated employer include:
    (i) Common management;
    (ii) Interrelation between operations;
    (iii) Centralized control of labor relations; and
    (iv) Degree of common ownership/financial control.
    (d) An ``employer'' includes any person who acts directly or 
indirectly in the interest of an employer to any of the employer's 
employees. The definition of ``employer'' in section 3(d) of the Fair 
Labor Standards Act (FLSA), 29 U.S.C. 203(d), similarly includes any 
person acting directly or indirectly in the interest of an employer in 
relation to an employee. As under the FLSA, individuals such as 
corporate officers ``acting in the interest of an employer'' are 
individually liable for any violations of the requirements of FMLA.



Sec. 825.105  Counting employees for determining coverage.

    (a) The definition of ``employ'' for purposes of FMLA is taken from 
the Fair Labor Standards Act, Sec. 3(g), 29 U.S.C. 203(g). The courts 
have made it clear that the employment relationship under the FLSA is 
broader than the traditional common law concept of master and servant. 
The difference between the employment relationship under the FLSA and 
that under the common law arises from the fact that the term ``employ'' 
as defined in the Act includes ``to suffer or permit to work.'' The 
courts have indicated that, while ``to permit'' requires a more positive 
action than ``to suffer,'' both terms imply much less positive action 
than required by the common law. Mere knowledge by an employer of work 
done for the employer by another is sufficient to create the employment 
relationship under the Act. The courts have said that there is no 
definition that solves all problems as to the limitations of the 
employer-employee relationship under the Act; and that determination of 
the relation cannot be based on ``isolated factors'' or upon a single 
characteristic or ``technical concepts,'' but depends ``upon the 
circumstances of the whole activity'' including the underlying 
``economic reality.'' In general an employee, as distinguished from an 
independent contractor who is engaged in a business of his/her own, is 
one who ``follows the usual path of an employee'' and is dependent on 
the business which he/she serves.
    (b) Any employee whose name appears on the employer's payroll will 
be considered employed each working day

[[Page 781]]

of the calendar week, and must be counted whether or not any 
compensation is received for the week. However, the FMLA applies only to 
employees who are employed within any State of the United States, the 
District of Columbia or any Territory or possession of the United 
States. Employees who are employed outside these areas are not counted 
for purposes of determining employer coverage or employee eligibility.
    (c) Employees on paid or unpaid leave, including FMLA leave, leaves 
of absence, disciplinary suspension, etc., are counted as long as the 
employer has a reasonable expectation that the employee will later 
return to active employment. If there is no employer/employee 
relationship (as when an employee is laid off, whether temporarily or 
permanently) such individual is not counted. Part-time employees, like 
full-time employees, are considered to be employed each working day of 
the calendar week, as long as they are maintained on the payroll.
    (d) An employee who does not begin to work for an employer until 
after the first working day of a calendar week, or who terminates 
employment before the last working day of a calendar week, is not 
considered employed on each working day of that calendar week.
    (e) A private employer is covered if it maintained 50 or more 
employees on the payroll during 20 or more calendar workweeks (not 
necessarily consecutive workweeks) in either the current or the 
preceding calendar year.
    (f) Once a private employer meets the 50 employees/20 workweeks 
threshold, the employer remains covered until it reaches a future point 
where it no longer has employed 50 employees for 20 (nonconsecutive) 
workweeks in the current and preceding calendar year. For example, if an 
employer who met the 50 employees/20 workweeks test in the calendar year 
as of September 1, 2008, subsequently dropped below 50 employees before 
the end of 2008 and continued to employ fewer than 50 employees in all 
workweeks throughout calendar year 2009, the employer would continue to 
be covered throughout calendar year 2009 because it met the coverage 
criteria for 20 workweeks of the preceding (i.e., 2008) calendar year.



Sec. 825.106  Joint employer coverage.

    (a) Where two or more businesses exercise some control over the work 
or working conditions of the employee, the businesses may be joint 
employers under FMLA. Joint employers may be separate and distinct 
entities with separate owners, managers, and facilities. Where the 
employee performs work which simultaneously benefits two or more 
employers, or works for two or more employers at different times during 
the workweek, a joint employment relationship generally will be 
considered to exist in situations such as:
    (1) Where there is an arrangement between employers to share an 
employee's services or to interchange employees;
    (2) Where one employer acts directly or indirectly in the interest 
of the other employer in relation to the employee; or,
    (3) Where the employers are not completely disassociated with 
respect to the employee's employment and may be deemed to share control 
of the employee, directly or indirectly, because one employer controls, 
is controlled by, or is under common control with the other employer.
    (b)(1) A determination of whether or not a joint employment 
relationship exists is not determined by the application of any single 
criterion, but rather the entire relationship is to be viewed in its 
totality. For example, joint employment will ordinarily be found to 
exist when a temporary placement agency supplies employees to a second 
employer.
    (2) A type of company that is often called a ``Professional Employer 
Organization'' (PEO) contracts with client employers to perform 
administrative functions such as payroll, benefits, regulatory 
paperwork, and updating employment policies. The determination of 
whether a PEO is a joint employer also turns on the economic realities 
of the situation and must be based upon all the facts and circumstances. 
A PEO does not enter into a joint employment relationship with the 
employees of its client companies when it merely performs such 
administrative functions.

[[Page 782]]

On the other hand, if in a particular fact situation, a PEO has the 
right to hire, fire, assign, or direct and control the client's 
employees, or benefits from the work that the employees perform, such 
rights may lead to a determination that the PEO would be a joint 
employer with the client employer, depending upon all the facts and 
circumstances.
    (c) In joint employment relationships, only the primary employer is 
responsible for giving required notices to its employees, providing FMLA 
leave, and maintenance of health benefits. Factors considered in 
determining which is the ``primary'' employer include authority/
responsibility to hire and fire, assign/place the employee, make 
payroll, and provide employment benefits. For employees of temporary 
placement agencies, for example, the placement agency most commonly 
would be the primary employer. Where a PEO is a joint employer, the 
client employer most commonly would be the primary employer.
    (d) Employees jointly employed by two employers must be counted by 
both employers, whether or not maintained on one of the employer's 
payroll, in determining employer coverage and employee eligibility. For 
example, an employer who jointly employs 15 workers from a temporary 
placement agency and 40 permanent workers is covered by FMLA. (A special 
rule applies to employees jointly employed who physically work at a 
facility of the secondary employer for a period of at least one year. 
See Sec. 825.111(a)(3).) An employee on leave who is working for a 
secondary employer is considered employed by the secondary employer, and 
must be counted for coverage and eligibility purposes, as long as the 
employer has a reasonable expectation that that employee will return to 
employment with that employer. In those cases in which a PEO is 
determined to be a joint employer of a client employer's employees, the 
client employer would only be required to count employees of the PEO (or 
employees of other clients of the PEO) if the client employer jointly 
employed those employees.
    (e) Job restoration is the primary responsibility of the primary 
employer. The secondary employer is responsible for accepting the 
employee returning from FMLA leave in place of the replacement employee 
if the secondary employer continues to utilize an employee from the 
temporary placement agency, and the agency chooses to place the employee 
with the secondary employer. A secondary employer is also responsible 
for compliance with the prohibited acts provisions with respect to its 
jointly employed employees, whether or not the secondary employer is 
covered by FMLA. See Sec. 825.220(a). The prohibited acts include 
prohibitions against interfering with an employee's attempt to exercise 
rights under the Act, or discharging or discriminating against an 
employee for opposing a practice which is unlawful under FMLA. A covered 
secondary employer will be responsible for compliance with all the 
provisions of the FMLA with respect to its regular, permanent workforce.



Sec. 825.107  Successor in interest coverage.

    (a) For purposes of FMLA, in determining whether an employer is 
covered because it is a ``successor in interest'' to a covered employer, 
the factors used under Title VII of the Civil Rights Act and the Vietnam 
Era Veterans' Adjustment Act will be considered. However, unlike Title 
VII, whether the successor has notice of the employee's claim is not a 
consideration. Notice may be relevant, however, in determining successor 
liability for violations of the predecessor. The factors to be 
considered include:
    (1) Substantial continuity of the same business operations;
    (2) Use of the same plant;
    (3) Continuity of the work force;
    (4) Similarity of jobs and working conditions;
    (5) Similarity of supervisory personnel;
    (6) Similarity in machinery, equipment, and production methods;
    (7) Similarity of products or services; and
    (8) The ability of the predecessor to provide relief.
    (b) A determination of whether or not a ``successor in interest'' 
exists is not determined by the application of

[[Page 783]]

any single criterion, but rather the entire circumstances are to be 
viewed in their totality.
    (c) When an employer is a ``successor in interest,'' employees' 
entitlements are the same as if the employment by the predecessor and 
successor were continuous employment by a single employer. For example, 
the successor, whether or not it meets FMLA coverage criteria, must 
grant leave for eligible employees who had provided appropriate notice 
to the predecessor, or continue leave begun while employed by the 
predecessor, including maintenance of group health benefits during the 
leave and job restoration at the conclusion of the leave. A successor 
which meets FMLA's coverage criteria must count periods of employment 
and hours worked for the predecessor for purposes of determining 
employee eligibility for FMLA leave.



Sec. 825.108  Public agency coverage.

    (a) An ``employer'' under FMLA includes any ``public agency,'' as 
defined in section 3(x) of the Fair Labor Standards Act, 29 U.S.C. 
203(x). Section 3(x) of the FLSA defines ``public agency'' as the 
government of the United States; the government of a State or political 
subdivision of a State; or an agency of the United States, a State, or a 
political subdivision of a State, or any interstate governmental agency. 
``State'' is further defined in Section 3(c) of the FLSA to include any 
State of the United States, the District of Columbia, or any Territory 
or possession of the United States.
    (b) The determination of whether an entity is a ``public'' agency, 
as distinguished from a private employer, is determined by whether the 
agency has taxing authority, or whether the chief administrative officer 
or board, etc., is elected by the voters-at-large or their appointment 
is subject to approval by an elected official.
    (c)(1) A State or a political subdivision of a State constitutes a 
single public agency and, therefore, a single employer for purposes of 
determining employee eligibility. For example, a State is a single 
employer; a county is a single employer; a city or town is a single 
employer. Whether two agencies of the same State or local government 
constitute the same public agency can only be determined on a case-by-
case basis. One factor that would support a conclusion that two agencies 
are separate is whether they are treated separately for statistical 
purposes in the Census of Governments issued by the Bureau of the 
Census, U.S. Department of Commerce.
    (2) The Census Bureau takes a census of governments at 5-year 
intervals. Volume I, Government Organization, contains the official 
counts of the number of State and local governments. It includes 
tabulations of governments by State, type of government, size, and 
county location. Also produced is a universe list of governmental units, 
classified according to type of government. Copies of Volume I, 
Government Organization, and subsequent volumes are available from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402, U.S. Department of Commerce District Offices, or 
can be found in Regional and selective depository libraries, or online 
at http://www.census.gov/govs/www/index.html. For a list of all 
depository libraries, write to the Government Printing Office, 710 N. 
Capitol St., NW., Washington, DC 20402.
    (d) All public agencies are covered by the FMLA regardless of the 
number of employees; they are not subject to the coverage threshold of 
50 employees carried on the payroll each day for 20 or more weeks in a 
year. However, employees of public agencies must meet all of the 
requirements of eligibility, including the requirement that the employer 
(e.g., State) employ 50 employees at the worksite or within 75 miles.



Sec. 825.109  Federal agency coverage.

    (a) Most employees of the government of the United States, if they 
are covered by the FMLA, are covered under Title II of the FMLA 
(incorporated in Title V, Chapter 63, Subchapter 5 of the United States 
Code) which is administered by the U.S. Office of Personnel Management 
(OPM). OPM has separate regulations at 5 CFR Part 630, Subpart L. 
Employees of the Government Printing Office are covered by Title II. 
While employees of the Government Accountability Office and the Library 
of Congress are covered by

[[Page 784]]

Title I of the FMLA, the Comptroller General of the United States and 
the Librarian of Congress, respectively, have responsibility for the 
administration of the FMLA with respect to these employees. Other 
legislative branch employees, such as employees of the Senate and House 
of Representatives, are covered by the Congressional Accountability Act 
of 1995, 2 U.S.C. 1301.
    (b) The Federal Executive Branch employees within the jurisdiction 
of this part 825 include:
    (1) Employees of the Postal Service;
    (2) Employees of the Postal Regulatory Commission;
    (3) A part-time employee who does not have an established regular 
tour of duty during the administrative workweek; and,
    (4) An employee serving under an intermittent appointment or 
temporary appointment with a time limitation of one year or less.
    (c) Employees of other Federal executive agencies are also covered 
by this part 825 if they are not covered by Title II of FMLA.
    (d) Employees of the judicial branch of the United States are 
covered by these regulations only if they are employed in a unit which 
has employees in the competitive service. For example, employees of the 
U.S. Tax Court are covered by this part 825.
    (e) For employees covered by these regulations, the U.S. Government 
constitutes a single employer for purposes of determining employee 
eligibility. These employees must meet all of the requirements for 
eligibility, including the requirement that the Federal Government 
employ 50 employees at the worksite or within 75 miles.



Sec. 825.110  Eligible employee.

    (a) An ``eligible employee'' is an employee of a covered employer 
who:
    (1) Has been employed by the employer for at least 12 months, and
    (2) Has been employed for at least 1,250 hours of service during the 
12-month period immediately preceding the commencement of the leave, and
    (3) Is employed at a worksite where 50 or more employees are 
employed by the employer within 75 miles of that worksite. (See Sec. 
825.105(b) regarding employees who work outside the U.S.)
    (b) The 12 months an employee must have been employed by the 
employer need not be consecutive months, provided
    (1) Subject to the exceptions provided in paragraph (b)(2) of this 
section, employment periods prior to a break in service of seven years 
or more need not be counted in determining whether the employee has been 
employed by the employer for at least 12 months.
    (2) Employment periods preceding a break in service of more than 
seven years must be counted in determining whether the employee has been 
employed by the employer for at least 12 months where:
    (i) The employee's break in service is occasioned by the fulfillment 
of his or her National Guard or Reserve military service obligation. The 
time served performing the military service must be also counted in 
determining whether the employee has been employed for at least 12 
months by the employer. However, this section does not provide any 
greater entitlement to the employee than would be available under the 
Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 
U.S.C. 4301, et seq.; or
    (ii) A written agreement, including a collective bargaining 
agreement, exists concerning the employer's intention to rehire the 
employee after the break in service (e.g., for purposes of the employee 
furthering his or her education or for childrearing purposes).
    (3) If an employee is maintained on the payroll for any part of a 
week, including any periods of paid or unpaid leave (sick, vacation) 
during which other benefits or compensation are provided by the employer 
(e.g., workers' compensation, group health plan benefits, etc.), the 
week counts as a week of employment. For purposes of determining whether 
intermittent/occasional/casual employment qualifies as ``at least 12 
months,'' 52 weeks is deemed to be equal to 12 months.
    (4) Nothing in this section prevents employers from considering 
employment prior to a continuous break in service of more than seven 
years when determining whether an employee has met the 12-month 
employment requirement. However, if an employer chooses to recognize 
such prior employment,

[[Page 785]]

the employer must do so uniformly, with respect to all employees with 
similar breaks in service.
    (c)(1) Except as provided in paragraph (c)(2) of this section, 
whether an employee has worked the minimum 1,250 hours of service is 
determined according to the principles established under the Fair Labor 
Standards Act (FLSA) for determining compensable hours of work. (See 29 
CFR part 785). The determining factor is the number of hours an employee 
has worked for the employer within the meaning of the FLSA. The 
determination is not limited by methods of recordkeeping, or by 
compensation agreements that do not accurately reflect all of the hours 
an employee has worked for or been in service to the employer. Any 
accurate accounting of actual hours worked under FLSA's principles may 
be used.
    (2) Pursuant to USERRA, an employee returning from fulfilling his or 
her National Guard or Reserve military obligation shall be credited with 
the hours of service that would have been performed but for the period 
of military service in determining whether the employee worked the 1,250 
hours of service. Accordingly, a person reemployed following military 
service has the hours that would have been worked for the employer added 
to any hours actually worked during the previous 12-month period to meet 
the 1,250 hour requirement. In order to determine the hours that would 
have been worked during the period of military service, the employee's 
pre-service work schedule can generally be used for calculations.
    (3) In the event an employer does not maintain an accurate record of 
hours worked by an employee, including for employees who are exempt from 
FLSA's requirement that a record be kept of their hours worked (e.g., 
bona fide executive, administrative, and professional employees as 
defined in FLSA Regulations, 29 CFR part 541), the employer has the 
burden of showing that the employee has not worked the requisite hours. 
An employer must be able to clearly demonstrate, for example, that full-
time teachers (see Sec. 825.800 for definition) of an elementary or 
secondary school system, or institution of higher education, or other 
educational establishment or institution (who often work outside the 
classroom or at their homes) did not work 1,250 hours during the 
previous 12 months in order to claim that the teachers are not eligible 
for FMLA leave.
    (d) The determination of whether an employee has worked for the 
employer for at least 1,250 hours in the past 12 months and has been 
employed by the employer for a total of at least 12 months must be made 
as of the date the FMLA leave is to start. An employee may be on ``non-
FMLA leave'' at the time he or she meets the eligibility requirements, 
and in that event, any portion of the leave taken for an FMLA-qualifying 
reason after the employee meets the eligibility requirement would be 
``FMLA leave.'' (See Sec. 825.300(b) for rules governing the content of 
the eligibility notice given to employees.)
    (e) Whether 50 employees are employed within 75 miles to ascertain 
an employee's eligibility for FMLA benefits is determined when the 
employee gives notice of the need for leave. Whether the leave is to be 
taken at one time or on an intermittent or reduced leave schedule basis, 
once an employee is determined eligible in response to that notice of 
the need for leave, the employee's eligibility is not affected by any 
subsequent change in the number of employees employed at or within 75 
miles of the employee's worksite, for that specific notice of the need 
for leave. Similarly, an employer may not terminate employee leave that 
has already started if the employee-count drops below 50. For example, 
if an employer employs 60 employees in August, but expects that the 
number of employees will drop to 40 in December, the employer must grant 
FMLA benefits to an otherwise eligible employee who gives notice of the 
need for leave in August for a period of leave to begin in December.



Sec. 825.111  Determining whether 50 employees are employed within 75 miles.

    (a) Generally, a worksite can refer to either a single location or a 
group of contiguous locations. Structures which form a campus or 
industrial park, or separate facilities in proximity with

[[Page 786]]

one another, may be considered a single site of employment. On the other 
hand, there may be several single sites of employment within a single 
building, such as an office building, if separate employers conduct 
activities within the building. For example, an office building with 50 
different businesses as tenants will contain 50 sites of employment. The 
offices of each employer will be considered separate sites of employment 
for purposes of FMLA. An employee's worksite under FMLA will ordinarily 
be the site the employee reports to or, if none, from which the 
employee's work is assigned.
    (1) Separate buildings or areas which are not directly connected or 
in immediate proximity are a single worksite if they are in reasonable 
geographic proximity, are used for the same purpose, and share the same 
staff and equipment. For example, if an employer manages a number of 
warehouses in a metropolitan area but regularly shifts or rotates the 
same employees from one building to another, the multiple warehouses 
would be a single worksite.
    (2) For employees with no fixed worksite, e.g., construction 
workers, transportation workers (e.g., truck drivers, seamen, pilots), 
salespersons, etc., the ``worksite'' is the site to which they are 
assigned as their home base, from which their work is assigned, or to 
which they report. For example, if a construction company headquartered 
in New Jersey opened a construction site in Ohio, and set up a mobile 
trailer on the construction site as the company's on-site office, the 
construction site in Ohio would be the worksite for any employees hired 
locally who report to the mobile trailer/company office daily for work 
assignments, etc. If that construction company also sent personnel such 
as job superintendents, foremen, engineers, an office manager, etc., 
from New Jersey to the job site in Ohio, those workers sent from New 
Jersey continue to have the headquarters in New Jersey as their 
``worksite.'' The workers who have New Jersey as their worksite would 
not be counted in determining eligibility of employees whose home base 
is the Ohio worksite, but would be counted in determining eligibility of 
employees whose home base is New Jersey. For transportation employees, 
their worksite is the terminal to which they are assigned, report for 
work, depart, and return after completion of a work assignment. For 
example, an airline pilot may work for an airline with headquarters in 
New York, but the pilot regularly reports for duty and originates or 
begins flights from the company's facilities located in an airport in 
Chicago and returns to Chicago at the completion of one or more flights 
to go off duty. The pilot's worksite is the facility in Chicago. An 
employee's personal residence is not a worksite in the case of 
employees, such as salespersons, who travel a sales territory and who 
generally leave to work and return from work to their personal 
residence, or employees who work at home, as under the concept of 
flexiplace or telecommuting. Rather, their worksite is the office to 
which they report and from which assignments are made.
    (3) For purposes of determining that employee's eligibility, when an 
employee is jointly employed by two or more employers (see Sec. 
825.106), the employee's worksite is the primary employer's office from 
which the employee is assigned or reports, unless the employee has 
physically worked for at least one year at a facility of a secondary 
employer, in which case the employee's worksite is that location. The 
employee is also counted by the secondary employer to determine 
eligibility for the secondary employer's full-time or permanent 
employees.
    (b) The 75-mile distance is measured by surface miles, using surface 
transportation over public streets, roads, highways and waterways, by 
the shortest route from the facility where the employee needing leave is 
employed. Absent available surface transportation between worksites, the 
distance is measured by using the most frequently utilized mode of 
transportation (e.g., airline miles).
    (c) The determination of how many employees are employed within 75 
miles of the worksite of an employee is based on the number of employees 
maintained on the payroll. Employees of educational institutions who are 
employed permanently or who are under contract are ``maintained on the 
payroll'' during any portion of the year

[[Page 787]]

when school is not in session. See Sec. 825.105(c).



Sec. 825.112  Qualifying reasons for leave, general rule.

    (a) Circumstances qualifying for leave. Employers covered by FMLA 
are required to grant leave to eligible employees:
    (1) For birth of a son or daughter, and to care for the newborn 
child (see Sec. 825.120);
    (2) For placement with the employee of a son or daughter for 
adoption or foster care (see Sec. 825.121);
    (3) To care for the employee's spouse, son, daughter, or parent with 
a serious health condition (see Sec. Sec. 825.113 and 825.122);
    (4) Because of a serious health condition that makes the employee 
unable to perform the functions of the employee's job (see Sec. Sec. 
825.113 and 825.123);
    (5) Because of any qualifying exigency arising out of the fact that 
the employee's spouse, son, daughter, or parent is a covered military 
member on active duty (or has been notified of an impending call or 
order to active duty) in support of a contingency operation (see 
Sec. Sec. 825.122 and 825.126); and
    (6) To care for a covered servicemember with a serious injury or 
illness if the employee is the spouse, son, daughter, parent, or next of 
kin of the servicemember (see Sec. Sec. 825.122 and 825.127).
    (b) Equal application. The right to take leave under FMLA applies 
equally to male and female employees. A father, as well as a mother, can 
take family leave for the birth, placement for adoption, or foster care 
of a child.
    (c) Active employee. In situations where the employer/employee 
relationship has been interrupted, such as an employee who has been on 
layoff, the employee must be recalled or otherwise be re-employed before 
being eligible for FMLA leave. Under such circumstances, an eligible 
employee is immediately entitled to further FMLA leave for a qualifying 
reason.



Sec. 825.113  Serious health condition.

    (a) For purposes of FMLA, ``serious health condition'' entitling an 
employee to FMLA leave means an illness, injury, impairment or physical 
or mental condition that involves inpatient care as defined in Sec. 
825.114 or continuing treatment by a health care provider as defined in 
Sec. 825.115.
    (b) The term ``incapacity'' means inability to work, attend school 
or perform other regular daily activities due to the serious health 
condition, treatment therefore, or recovery therefrom.
    (c) The term ``treatment'' includes (but is not limited to) 
examinations to determine if a serious health condition exists and 
evaluations of the condition. Treatment does not include routine 
physical examinations, eye examinations, or dental examinations. A 
regimen of continuing treatment includes, for example, a course of 
prescription medication (e.g., an antibiotic) or therapy requiring 
special equipment to resolve or alleviate the health condition (e.g., 
oxygen). A regimen of continuing treatment that includes the taking of 
over-the-counter medications such as aspirin, antihistamines, or salves; 
or bed-rest, drinking fluids, exercise, and other similar activities 
that can be initiated without a visit to a health care provider, is not, 
by itself, sufficient to constitute a regimen of continuing treatment 
for purposes of FMLA leave.
    (d) Conditions for which cosmetic treatments are administered (such 
as most treatments for acne or plastic surgery) are not ``serious health 
conditions'' unless inpatient hospital care is required or unless 
complications develop. Ordinarily, unless complications arise, the 
common cold, the flu, ear aches, upset stomach, minor ulcers, headaches 
other than migraine, routine dental or orthodontia problems, periodontal 
disease, etc., are examples of conditions that do not meet the 
definition of a serious health condition and do not qualify for FMLA 
leave. Restorative dental or plastic surgery after an injury or removal 
of cancerous growths are serious health conditions provided all the 
other conditions of this regulation are met. Mental illness or allergies 
may be serious health conditions, but only if all the conditions of this 
section are met.



Sec. 825.114  Inpatient care.

    Inpatient care means an overnight stay in a hospital, hospice, or 
residential medical care facility, including any period of incapacity as 
defined in

[[Page 788]]

Sec. 825.113(b), or any subsequent treatment in connection with such 
inpatient care.



Sec. 825.115  Continuing treatment.

    A serious health condition involving continuing treatment by a 
health care provider includes any one or more of the following:
    (a) Incapacity and treatment. A period of incapacity of more than 
three consecutive, full calendar days, and any subsequent treatment or 
period of incapacity relating to the same condition, that also involves:
    (1) Treatment two or more times, within 30 days of the first day of 
incapacity, unless extenuating circumstances exist, by a health care 
provider, by a nurse under direct supervision of a health care provider, 
or by a provider of health care services (e.g., physical therapist) 
under orders of, or on referral by, a health care provider; or
    (2) Treatment by a health care provider on at least one occasion, 
which results in a regimen of continuing treatment under the supervision 
of the health care provider.
    (3) The requirement in paragraphs (a)(1) and (2) of this section for 
treatment by a health care provider means an in-person visit to a health 
care provider. The first (or only) in-person treatment visit must take 
place within seven days of the first day of incapacity.
    (4) Whether additional treatment visits or a regimen of continuing 
treatment is necessary within the 30-day period shall be determined by 
the health care provider.
    (5) The term ``extenuating circumstances'' in paragraph (a)(1) of 
this section means circumstances beyond the employee's control that 
prevent the follow-up visit from occurring as planned by the health care 
provider. Whether a given set of circumstances are extenuating depends 
on the facts. For example, extenuating circumstances exist if a health 
care provider determines that a second in-person visit is needed within 
the 30-day period, but the health care provider does not have any 
available appointments during that time period.
    (b) Pregnancy or prenatal care. Any period of incapacity due to 
pregnancy, or for prenatal care. See also Sec. 825.120.
    (c) Chronic conditions. Any period of incapacity or treatment for 
such incapacity due to a chronic serious health condition. A chronic 
serious health condition is one which:
    (1) Requires periodic visits (defined as at least twice a year) for 
treatment by a health care provider, or by a nurse under direct 
supervision of a health care provider;
    (2) Continues over an extended period of time (including recurring 
episodes of a single underlying condition); and
    (3) May cause episodic rather than a continuing period of incapacity 
(e.g., asthma, diabetes, epilepsy, etc.).
    (d) Permanent or long-term conditions. A period of incapacity which 
is permanent or long-term due to a condition for which treatment may not 
be effective. The employee or family member must be under the continuing 
supervision of, but need not be receiving active treatment by, a health 
care provider. Examples include Alzheimer's, a severe stroke, or the 
terminal stages of a disease.
    (e) Conditions requiring multiple treatments. Any period of absence 
to receive multiple treatments (including any period of recovery 
therefrom) by a health care provider or by a provider of health care 
services under orders of, or on referral by, a health care provider, 
for:
    (1) Restorative surgery after an accident or other injury; or
    (2) A condition that would likely result in a period of incapacity 
of more than three consecutive, full calendar days in the absence of 
medical intervention or treatment, such as cancer (chemotherapy, 
radiation, etc.), severe arthritis (physical therapy), or kidney disease 
(dialysis).
    (f) Absences attributable to incapacity under paragraph (b) or (c) 
of this section qualify for FMLA leave even though the employee or the 
covered family member does not receive treatment from a health care 
provider during the absence, and even if the absence does not last more 
than three consecutive, full calendar days. For example, an employee 
with asthma may be unable to report for work due to the onset of an 
asthma attack or because

[[Page 789]]

the employee's health care provider has advised the employee to stay 
home when the pollen count exceeds a certain level. An employee who is 
pregnant may be unable to report to work because of severe morning 
sickness.



Sec. Sec. 825.116-825.118  [Reserved]



Sec. 825.119  Leave for treatment of substance abuse.

    (a) Substance abuse may be a serious health condition if the 
conditions of Sec. Sec. 825.113 through 825.115 are met. However, FMLA 
leave may only be taken for treatment for substance abuse by a health 
care provider or by a provider of health care services on referral by a 
health care provider. On the other hand, absence because of the 
employee's use of the substance, rather than for treatment, does not 
qualify for FMLA leave.
    (b) Treatment for substance abuse does not prevent an employer from 
taking employment action against an employee. The employer may not take 
action against the employee because the employee has exercised his or 
her right to take FMLA leave for treatment. However, if the employer has 
an established policy, applied in a non-discriminatory manner that has 
been communicated to all employees, that provides under certain 
circumstances an employee may be terminated for substance abuse, 
pursuant to that policy the employee may be terminated whether or not 
the employee is presently taking FMLA leave. An employee may also take 
FMLA leave to care for a covered family member who is receiving 
treatment for substance abuse. The employer may not take action against 
an employee who is providing care for a covered family member receiving 
treatment for substance abuse.



Sec. 825.120  Leave for pregnancy or birth.

    (a) General rules. Eligible employees are entitled to FMLA leave for 
pregnancy or birth of a child as follows:
    (1) Both the mother and father are entitled to FMLA leave for the 
birth of their child.
    (2) Both the mother and father are entitled to FMLA leave to be with 
the healthy newborn child (i.e., bonding time) during the 12-month 
period beginning on the date of birth. An employee's entitlement to FMLA 
leave for a birth expires at the end of the 12-month period beginning on 
the date of the birth. If state law allows, or the employer permits, 
bonding leave to be taken beyond this period, such leave will not 
qualify as FMLA leave. See Sec. 825.701 regarding non-FMLA leave which 
may be available under applicable State laws. Under this section, both 
the mother and father are entitled to FMLA leave even if the newborn 
does not have a serious health condition.
    (3) A husband and wife who are eligible for FMLA leave and are 
employed by the same covered employer may be limited to a combined total 
of 12 weeks of leave during any 12-month period if the leave is taken 
for birth of the employee's son or daughter or to care for the child 
after birth, for placement of a son or daughter with the employee for 
adoption or foster care or to care for the child after placement, or to 
care for the employee's parent with a serious health condition. This 
limitation on the total weeks of leave applies to leave taken for the 
reasons specified as long as a husband and wife are employed by the 
``same employer.'' It would apply, for example, even though the spouses 
are employed at two different worksites of an employer located more than 
75 miles from each other, or by two different operating divisions of the 
same company. On the other hand, if one spouse is ineligible for FMLA 
leave, the other spouse would be entitled to a full 12 weeks of FMLA 
leave. Where the husband and wife both use a portion of the total 12-
week FMLA leave entitlement for either the birth of a child, for 
placement for adoption or foster care, or to care for a parent, the 
husband and wife would each be entitled to the difference between the 
amount he or she has taken individually and 12 weeks for FMLA leave for 
other purposes. For example, if each spouse took 6 weeks of leave to 
care for a healthy, newborn child, each could use an additional 6 weeks 
due to his or her own serious health condition or to care for a child 
with a serious health condition. Note, too, that many State pregnancy 
disability laws specify a period of disability either before or after 
the birth

[[Page 790]]

of a child; such periods would also be considered FMLA leave for a 
serious health condition of the mother, and would not be subject to the 
combined limit.
    (4) The mother is entitled to FMLA leave for incapacity due to 
pregnancy, for prenatal care, or for her own serious health condition 
following the birth of the child. Circumstances may require that FMLA 
leave begin before the actual date of birth of a child. An expectant 
mother may take FMLA leave before the birth of the child for prenatal 
care or if her condition makes her unable to work. The mother is 
entitled to leave for incapacity due to pregnancy even though she does 
not receive treatment from a health care provider during the absence, 
and even if the absence does not last for more than three consecutive 
calendar days. For example, a pregnant employee may be unable to report 
to work because of severe morning sickness.
    (5) The husband is entitled to FMLA leave if needed to care for his 
pregnant spouse who is incapacitated or if needed to care for her during 
her prenatal care, or if needed to care for the spouse following the 
birth of a child if the spouse has a serious health condition. See Sec. 
825.124.
    (6) Both the mother and father are entitled to FMLA leave if needed 
to care for a child with a serious health condition if the requirements 
of Sec. Sec. 825.113 through 825.115 and 825.122(c) are met. Thus, a 
husband and wife may each take 12 weeks of FMLA leave if needed to care 
for their newborn child with a serious health condition, even if both 
are employed by the same employer, provided they have not exhausted 
their entitlements during the applicable 12-month FMLA leave period.
    (b) Intermittent and reduced schedule leave. An eligible employee 
may use intermittent or reduced schedule leave after the birth to be 
with a healthy newborn child only if the employer agrees. For example, 
an employer and employee may agree to a part-time work schedule after 
the birth. If the employer agrees to permit intermittent or reduced 
schedule leave for the birth of a child, the employer may require the 
employee to transfer temporarily, during the period the intermittent or 
reduced leave schedule is required, to an available alternative position 
for which the employee is qualified and which better accommodates 
recurring periods of leave than does the employee's regular position. 
Transfer to an alternative position may require compliance with any 
applicable collective bargaining agreement, federal law (such as the 
Americans with Disabilities Act), and State law. Transfer to an 
alternative position may include altering an existing job to better 
accommodate the employee's need for intermittent or reduced leave. The 
employer's agreement is not required for intermittent leave required by 
the serious health condition of the mother or newborn child. See 
Sec. Sec. 825.202 through 825.205 for general rules governing the use 
of intermittent and reduced schedule leave. See Sec. 825.121 for rules 
governing leave for adoption or foster care. See Sec. 825.601 for 
special rules applicable to instructional employees of schools.



Sec. 825.121  Leave for adoption or foster care.

    (a) General rules. Eligible employees are entitled to FMLA leave for 
placement with the employee of a son or daughter for adoption or foster 
care as follows:
    (1) Employees may take FMLA leave before the actual placement or 
adoption of a child if an absence from work is required for the 
placement for adoption or foster care to proceed. For example, the 
employee may be required to attend counseling sessions, appear in court, 
consult with his or her attorney or the doctor(s) representing the birth 
parent, submit to a physical examination, or travel to another country 
to complete an adoption. The source of an adopted child (e.g., whether 
from a licensed placement agency or otherwise) is not a factor in 
determining eligibility for leave for this purpose.
    (2) An employee's entitlement to leave for adoption or foster care 
expires at the end of the 12-month period beginning on the date of the 
placement. If state law allows, or the employer permits, leave for 
adoption or

[[Page 791]]

foster care to be taken beyond this period, such leave will not qualify 
as FMLA leave. See Sec. 825.701 regarding non-FMLA leave which may be 
available under applicable State laws. Under this section, the employee 
is entitled to FMLA leave even if the adopted or foster child does not 
have a serious health condition.
    (3) A husband and wife who are eligible for FMLA leave and are 
employed by the same covered employer may be limited to a combined total 
of 12 weeks of leave during any 12-month period if the leave is taken 
for the placement of the employee's son or daughter or to care for the 
child after placement, for the birth of the employee's son or daughter 
or to care for the child after birth, or to care for the employee's 
parent with a serious health condition. This limitation on the total 
weeks of leave applies to leave taken for the reasons specified as long 
as a husband and wife are employed by the ``same employer.'' It would 
apply, for example, even though the spouses are employed at two 
different worksites of an employer located more than 75 miles from each 
other, or by two different operating divisions of the same company. On 
the other hand, if one spouse is ineligible for FMLA leave, the other 
spouse would be entitled to a full 12 weeks of FMLA leave. Where the 
husband and wife both use a portion of the total 12-week FMLA leave 
entitlement for either the birth of a child, for placement for adoption 
or foster care, or to care for a parent, the husband and wife would each 
be entitled to the difference between the amount he or she has taken 
individually and 12 weeks for FMLA leave for other purposes. For 
example, if each spouse took 6 weeks of leave to care for a healthy, 
newly placed child, each could use an additional 6 weeks due to his or 
her own serious health condition or to care for a child with a serious 
health condition.
    (4) An eligible employee is entitled to FMLA leave in order to care 
for an adopted or foster child with a serious health condition if the 
requirements of Sec. Sec. 825.113 through 825.115 and 825.122(c) are 
met. Thus, a husband and wife may each take 12 weeks of FMLA leave if 
needed to care for an adopted or foster child with a serious health 
condition, even if both are employed by the same employer, provided they 
have not exhausted their entitlements during the applicable 12-month 
FMLA leave period.
    (b) Use of intermittent and reduced schedule leave. An eligible 
employee may use intermittent or reduced schedule leave after the 
placement of a healthy child for adoption or foster care only if the 
employer agrees. Thus, for example, the employer and employee may agree 
to a part-time work schedule after the placement for bonding purposes. 
If the employer agrees to permit intermittent or reduced schedule leave 
for the placement for adoption or foster care, the employer may require 
the employee to transfer temporarily, during the period the intermittent 
or reduced leave schedule is required, to an available alternative 
position for which the employee is qualified and which better 
accommodates recurring periods of leave than does the employee's regular 
position. Transfer to an alternative position may require compliance 
with any applicable collective bargaining agreement, federal law (such 
as the Americans with Disabilities Act), and State law. Transfer to an 
alternative position may include altering an existing job to better 
accommodate the employee's need for intermittent or reduced leave. The 
employer's agreement is not required for intermittent leave required by 
the serious health condition of the adopted or foster child. See 
Sec. Sec. 825.202 through 825.205 for general rules governing the use 
of intermittent and reduced schedule leave. See Sec. 825.120 for 
general rules governing leave for pregnancy and birth of a child. See 
Sec. 825.601 for special rules applicable to instructional employees of 
schools.



Sec. 825.122  Definitions of spouse, parent, son or daughter, next
of kin of a covered servicemember, adoption, foster care, son or

daughter on active duty or 
          call to active duty status, son or daughter of a covered 
          servicemember, and parent of a covered servicemember.

    (a) Spouse. Spouse means a husband or wife as defined or recognized 
under State law for purposes of marriage in the State where the employee 
resides,

[[Page 792]]

including common law marriage in States where it is recognized.
    (b) Parent. Parent means a biological, adoptive, step or foster 
father or mother, or any other individual who stood in loco parentis to 
the employee when the employee was a son or daughter as defined in 
paragraph (c) of this section. This term does not include parents ``in 
law.''
    (c) Son or daughter. For purposes of FMLA leave taken for birth or 
adoption, or to care for a family member with a serious health 
condition, son or daughter means a biological, adopted, or foster child, 
a stepchild, a legal ward, or a child of a person standing in loco 
parentis, who is either under age 18, or age 18 or older and ``incapable 
of self-care because of a mental or physical disability'' at the time 
that FMLA leave is to commence.
    (1) ``Incapable of self-care'' means that the individual requires 
active assistance or supervision to provide daily self-care in three or 
more of the ``activities of daily living'' (ADLs) or ``instrumental 
activities of daily living'' (IADLs). Activities of daily living include 
adaptive activities such as caring appropriately for one's grooming and 
hygiene, bathing, dressing and eating. Instrumental activities of daily 
living include cooking, cleaning, shopping, taking public 
transportation, paying bills, maintaining a residence, using telephones 
and directories, using a post office, etc.
    (2) ``Physical or mental disability'' means a physical or mental 
impairment that substantially limits one or more of the major life 
activities of an individual. Regulations at 29 CFR 1630.2(h), (i), and 
(j), issued by the Equal Employment Opportunity Commission under the 
Americans with Disabilities Act (ADA), 42 U.S.C. 12101 et seq., define 
these terms.
    (3) Persons who are ``in loco parentis'' include those with day-to-
day responsibilities to care for and financially support a child, or, in 
the case of an employee, who had such responsibility for the employee 
when the employee was a child. A biological or legal relationship is not 
necessary.
    (d) Next of kin of a covered servicemember. ``Next of kin of a 
covered servicemember'' means the nearest blood relative other than the 
covered servicemember's spouse, parent, son, or daughter, in the 
following order of priority: Blood relatives who have been granted legal 
custody of the covered servicemember by court decree or statutory 
provisions, brothers and sisters, grandparents, aunts and uncles, and 
first cousins, unless the covered servicemember has specifically 
designated in writing another blood relative as his or her nearest blood 
relative for purposes of military caregiver leave under the FMLA. When 
no such designation is made, and there are multiple family members with 
the same level of relationship to the covered servicemember, all such 
family members shall be considered the covered servicemember's next of 
kin and may take FMLA leave to provide care to the covered 
servicemember, either consecutively or simultaneously. When such 
designation has been made, the designated individual shall be deemed to 
be the covered servicemember's only next of kin. See Sec. 
825.127(b)(3).
    (e) Adoption. ``Adoption'' means legally and permanently assuming 
the responsibility of raising a child as one's own. The source of an 
adopted child (e.g., whether from a licensed placement agency or 
otherwise) is not a factor in determining eligibility for FMLA leave. 
See Sec. 825.121 for rules governing leave for adoption.
    (f) Foster care. Foster care is 24-hour care for children in 
substitution for, and away from, their parents or guardian. Such 
placement is made by or with the agreement of the State as a result of a 
voluntary agreement between the parent or guardian that the child be 
removed from the home, or pursuant to a judicial determination of the 
necessity for foster care, and involves agreement between the State and 
foster family that the foster family will take care of the child. 
Although foster care may be with relatives of the child, State action is 
involved in the removal of the child from parental custody. See Sec. 
825.121 for rules governing leave for foster care.
    (g) Son or daughter on active duty or call to active duty status. 
``Son or daughter on active duty or call to active duty status'' means 
the employee's biological, adopted, or foster child, stepchild, legal 
ward, or a child for whom

[[Page 793]]

the employee stood in loco parentis, who is on active duty or call to 
active duty status, and who is of any age. See Sec. 825.126(b)(1).
    (h) Son or daughter of a covered servicemember. ``Son or daughter of 
a covered servicemember'' means the servicemember's biological, adopted, 
or foster child, stepchild, legal ward, or a child for whom the 
servicemember stood in loco parentis, and who is of any age. See Sec. 
825.127(b)(1).
    (i) Parent of a covered servicemember. ``Parent of a covered 
servicemember'' means a covered servicemember's biological, adoptive, 
step or foster father or mother, or any other individual who stood in 
loco parentis to the covered servicemember. This term does not include 
parents ``in law.'' See Sec. 825.127(b)(2).
    (j) Documenting relationships. For purposes of confirmation of 
family relationship, the employer may require the employee giving notice 
of the need for leave to provide reasonable documentation or statement 
of family relationship. This documentation may take the form of a simple 
statement from the employee, or a child's birth certificate, a court 
document, etc. The employer is entitled to examine documentation such as 
a birth certificate, etc., but the employee is entitled to the return of 
the official document submitted for this purpose.



Sec. 825.123  Unable to perform the functions of the position.

    (a) Definition. An employee is ``unable to perform the functions of 
the position'' where the health care provider finds that the employee is 
unable to work at all or is unable to perform any one of the essential 
functions of the employee's position within the meaning of the Americans 
with Disabilities Act (ADA), as amended, 42 U.S.C. 12101 et seq., and 
the regulations at 29 CFR 1630.2(n). An employee who must be absent from 
work to receive medical treatment for a serious health condition is 
considered to be unable to perform the essential functions of the 
position during the absence for treatment.
    (b) Statement of functions. An employer has the option, in requiring 
certification from a health care provider, to provide a statement of the 
essential functions of the employee's position for the health care 
provider to review. A sufficient medical certification must specify what 
functions of the employee's position the employee is unable to perform 
so that the employer can then determine whether the employee is unable 
to perform one or more essential functions of the employee's position. 
For purposes of FMLA, the essential functions of the employee's position 
are to be determined with reference to the position the employee held at 
the time notice is given or leave commenced, whichever is earlier. See 
Sec. 825.306.



Sec. 825.124  Needed to care for a family member or covered 
servicemember.

    (a) The medical certification provision that an employee is ``needed 
to care for'' a family member or covered servicemember encompasses both 
physical and psychological care. It includes situations where, for 
example, because of a serious health condition, the family member is 
unable to care for his or her own basic medical, hygienic, or 
nutritional needs or safety, or is unable to transport himself or 
herself to the doctor. The term also includes providing psychological 
comfort and reassurance which would be beneficial to a child, spouse or 
parent with a serious health condition who is receiving inpatient or 
home care.
    (b) The term also includes situations where the employee may be 
needed to substitute for others who normally care for the family member 
or covered servicemember, or to make arrangements for changes in care, 
such as transfer to a nursing home. The employee need not be the only 
individual or family member available to care for the family member or 
covered servicemember.
    (c) An employee's intermittent leave or a reduced leave schedule 
necessary to care for a family member or covered servicemember includes 
not only a situation where the condition of the family member or covered 
servicemember itself is intermittent, but also where the employee is 
only needed intermittently--such as where other care is normally 
available, or care responsibilities are shared with another member

[[Page 794]]

of the family or a third party. See Sec. Sec. 825.202 through 825.205 
for rules governing the use of intermittent or reduced schedule leave.



Sec. 825.125  Definition of health care provider.

    (a) The Act defines ``health care provider'' as:
    (1) A doctor of medicine or osteopathy who is authorized to practice 
medicine or surgery (as appropriate) by the State in which the doctor 
practices; or
    (2) Any other person determined by the Secretary to be capable of 
providing health care services.
    (b) Others ``capable of providing health care services'' include 
only:
    (1) Podiatrists, dentists, clinical psychologists, optometrists, and 
chiropractors (limited to treatment consisting of manual manipulation of 
the spine to correct a subluxation as demonstrated by X-ray to exist) 
authorized to practice in the State and performing within the scope of 
their practice as defined under State law;
    (2) Nurse practitioners, nurse-midwives, clinical social workers and 
physician assistants who are authorized to practice under State law and 
who are performing within the scope of their practice as defined under 
State law;
    (3) Christian Science Practitioners listed with the First Church of 
Christ, Scientist in Boston, Massachusetts. Where an employee or family 
member is receiving treatment from a Christian Science practitioner, an 
employee may not object to any requirement from an employer that the 
employee or family member submit to examination (though not treatment) 
to obtain a second or third certification from a health care provider 
other than a Christian Science practitioner except as otherwise provided 
under applicable State or local law or collective bargaining agreement;
    (4) Any health care provider from whom an employer or the employer's 
group health plan's benefits manager will accept certification of the 
existence of a serious health condition to substantiate a claim for 
benefits; and
    (5) A health care provider listed above who practices in a country 
other than the United States, who is authorized to practice in 
accordance with the law of that country, and who is performing within 
the scope of his or her practice as defined under such law.
    (c) The phrase ``authorized to practice in the State'' as used in 
this section means that the provider must be authorized to diagnose and 
treat physical or mental health conditions.



Sec. 825.126  Leave because of a qualifying exigency.

    (a) Eligible employees may take FMLA leave while the employee's 
spouse, son, daughter, or parent (the ``covered military member'') is on 
active duty or call to active duty status as defined in Sec. 
825.126(b)(2) for one or more of the following qualifying exigencies:
    (1) Short-notice deployment. (i) To address any issue that arises 
from the fact that a covered military member is notified of an impending 
call or order to active duty in support of a contingency operation seven 
or less calendar days prior to the date of deployment;
    (ii) Leave taken for this purpose can be used for a period of seven 
calendar days beginning on the date a covered military member is 
notified of an impending call or order to active duty in support of a 
contingency operation;
    (2) Military events and related activities. (i) To attend any 
official ceremony, program, or event sponsored by the military that is 
related to the active duty or call to active duty status of a covered 
military member; and
    (ii) To attend family support or assistance programs and 
informational briefings sponsored or promoted by the military, military 
service organizations, or the American Red Cross that are related to the 
active duty or call to active duty status of a covered military member;
    (3) Childcare and school activities.(i) To arrange for alternative 
childcare when the active duty or call to active duty status of a 
covered military member necessitates a change in the existing childcare 
arrangement for a biological, adopted, or foster child, a stepchild, or 
a legal ward of a covered military member, or a child for whom a covered 
military member stands in loco parentis, who is either under age 18, or 
age 18 or older and incapable of self-

[[Page 795]]

care because of a mental or physical disability at the time that FMLA 
leave is to commence;
    (ii) To provide childcare on an urgent, immediate need basis (but 
not on a routine, regular, or everyday basis) when the need to provide 
such care arises from the active duty or call to active duty status of a 
covered military member for a biological, adopted, or foster child, a 
stepchild, or a legal ward of a covered military member, or a child for 
whom a covered military member stands in loco parentis, who is either 
under age 18, or age 18 or older and incapable of self-care because of a 
mental or physical disability at the time that FMLA leave is to 
commence;
    (iii) To enroll in or transfer to a new school or day care facility 
a biological, adopted, or foster child, a stepchild, or a legal ward of 
the covered military member, or a child for whom the covered military 
member stands in loco parentis, who is either under age 18, or age 18 or 
older and incapable of self-care because of a mental or physical 
disability at the time that FMLA leave is to commence, when enrollment 
or transfer is necessitated by the active duty or call to active duty 
status of a covered military member; and
    (iv) To attend meetings with staff at a school or a daycare 
facility, such as meetings with school officials regarding disciplinary 
measures, parent-teacher conferences, or meetings with school 
counselors, for a biological, adopted, or foster child, a stepchild, or 
a legal ward of the covered military member, or a child for whom the 
covered military member stands in loco parentis, who is either under age 
18, or age 18 or older and incapable of self-care because of a mental or 
physical disability at the time that FMLA leave is to commence, when 
such meetings are necessary due to circumstances arising from the active 
duty or call to active duty status of a covered military member;
    (4) Financial and legal arrangements. (i) To make or update 
financial or legal arrangements to address the covered military member's 
absence while on active duty or call to active duty status, such as 
preparing and executing financial and healthcare powers of attorney, 
transferring bank account signature authority, enrolling in the Defense 
Enrollment Eligibility Reporting System (DEERS), obtaining military 
identification cards, or preparing or updating a will or living trust; 
and
    (ii) To act as the covered military member's representative before a 
federal, state, or local agency for purposes of obtaining, arranging, or 
appealing military service benefits while the covered military member is 
on active duty or call to active duty status, and for a period of 90 
days following the termination of the covered military member's active 
duty status;
    (5) Counseling. To attend counseling provided by someone other than 
a health care provider for oneself, for the covered military member, or 
for the biological, adopted, or foster child, a stepchild, or a legal 
ward of the covered military member, or a child for whom the covered 
military member stands in loco parentis, who is either under age 18, or 
age 18 or older and incapable of self-care because of a mental or 
physical disability at the time that FMLA leave is to commence, provided 
that the need for counseling arises from the active duty or call to 
active duty status of a covered military member;
    (6) Rest and recuperation. (i) To spend time with a covered military 
member who is on short-term, temporary, rest and recuperation leave 
during the period of deployment;
    (ii) Eligible employees may take up to five days of leave for each 
instance of rest and recuperation;
    (7) Post-deployment activities. (i) To attend arrival ceremonies, 
reintegration briefings and events, and any other official ceremony or 
program sponsored by the military for a period of 90 days following the 
termination of the covered military member's active duty status; and
    (ii) To address issues that arise from the death of a covered 
military member while on active duty status, such as meeting and 
recovering the body of the covered military member and making funeral 
arrangements;
    (8) Additional activities. To address other events which arise out 
of the covered military member's active duty or call to active duty 
status provided that the employer and employee agree that

[[Page 796]]

such leave shall qualify as an exigency, and agree to both the timing 
and duration of such leave.
    (b) A ``covered military member'' means the employee's spouse, son, 
daughter, or parent on active duty or call to active duty status.
    (1) A ``son or daughter on active duty or call to active duty 
status'' means the employee's biological, adopted, or foster child, 
stepchild, legal ward, or a child for whom the employee stood in loco 
parentis, who is on active duty or call to active duty status, and who 
is of any age.
    (2) ``Active duty or call to active duty status'' means duty under a 
call or order to active duty (or notification of an impending call or 
order to active duty) in support of a contingency operation pursuant to: 
Section 688 of Title 10 of the United States Code, which authorizes 
ordering to active duty retired members of the Regular Armed Forces and 
members of the retired Reserve who retired after completing at least 20 
years of active service; Section 12301(a) of Title 10 of the United 
States Code, which authorizes ordering all reserve component members to 
active duty in the case of war or national emergency; Section 12302 of 
Title 10 of the United States Code, which authorizes ordering any unit 
or unassigned member of the Ready Reserve to active duty; Section 12304 
of Title 10 of the United States Code, which authorizes ordering any 
unit or unassigned member of the Selected Reserve and certain members of 
the Individual Ready Reserve to active duty; Section 12305 of Title 10 
of the United States Code, which authorizes the suspension of promotion, 
retirement or separation rules for certain Reserve components; Section 
12406 of Title 10 of the United States Code, which authorizes calling 
the National Guard into federal service in certain circumstances; 
chapter 15 of Title 10 of the United States Code, which authorizes 
calling the National Guard and state military into federal service in 
the case of insurrections and national emergencies; or any other 
provision of law during a war or during a national emergency declared by 
the President or Congress so long as it is in support of a contingency 
operation.
    (i) Employees are eligible to take FMLA leave because of a 
qualifying exigency when the covered military member is on active duty 
or call to active duty status in support of a contingency operation 
pursuant to one of the provisions of law identified in paragraph (b)(2) 
of this section as either a member of the reserve components (Army 
National Guard of the United States, Army Reserve, Navy Reserve, Marine 
Corps Reserve, Air National Guard of the United States, Air Force 
Reserve and Coast Guard Reserve), or a retired member of the Regular 
Armed Forces or Reserve. An employee whose family member is on active 
duty or call to active duty status in support of a contingency operation 
as a member of the Regular Armed Forces is not eligible to take leave 
because of a qualifying exigency.
    (ii) A call to active duty for purposes of leave taken because of a 
qualifying exigency refers to a Federal call to active duty. State calls 
to active duty are not covered unless under order of the President of 
the United States pursuant to one of the provisions of law identified in 
paragraph (b)(2) of this section in support of a contingency operation.
    (3) The active duty orders of a covered military member will 
generally specify if the servicemember is serving in support of a 
contingency operation by citation to the relevant section of Title 10 of 
the United States Code and/or by reference to the specific name of the 
contingency operation. A military operation qualifies as a contingency 
operation if it:
    (i) is designated by the Secretary of Defense as an operation in 
which members of the armed forces are or may become involved in military 
actions, operations, or hostilities against an enemy of the United 
States or against an opposing military force; or
    (ii) results in the call or order to, or retention on, active duty 
of members of the uniformed services under section 688, 12301(a), 12302, 
12304, 12305, or 12406 of Title 10 of the United States Code, chapter 15 
of Title 10 of the United States Code, or any other provision of law 
during a war or during a national emergency declared by the President or 
Congress. 10 U.S.C. 101(a)(13).

[[Page 797]]



Sec. 825.127  Leave to care for a covered servicemember with a serious
injury or illness.

    (a) Eligible employees are entitled to FMLA leave to care for a 
current member of the Armed Forces, including a member of the National 
Guard or Reserves, or a member of the Armed Forces, the National Guard 
or Reserves who is on the temporary disability retired list, who has a 
serious injury or illness incurred in the line of duty on active duty 
for which he or she is undergoing medical treatment, recuperation, or 
therapy; or otherwise in outpatient status; or otherwise on the 
temporary disability retired list. Eligible employees may not take leave 
under this provision to care for former members of the Armed Forces, 
former members of the National Guard and Reserves, and members on the 
permanent disability retired list.
    (1) A ``serious injury or illness'' means an injury or illness 
incurred by a covered servicemember in the line of duty on active duty 
that may render the servicemember medically unfit to perform the duties 
of his or her office, grade, rank or rating.
    (2) ``Outpatient status,'' with respect to a covered servicemember, 
means the status of a member of the Armed Forces assigned to either a 
military medical treatment facility as an outpatient; or a unit 
established for the purpose of providing command and control of members 
of the Armed Forces receiving medical care as outpatients.
    (b) In order to care for a covered servicemember, an eligible 
employee must be the spouse, son, daughter, or parent, or next of kin of 
a covered servicemember.
    (1) A ``son or daughter of a covered servicemember'' means the 
covered servicemember's biological, adopted, or foster child, stepchild, 
legal ward, or a child for whom the covered servicemember stood in loco 
parentis, and who is of any age.
    (2) A ``parent of a covered servicemember'' means a covered 
servicemember's biological, adoptive, step or foster father or mother, 
or any other individual who stood in loco parentis to the covered 
servicemember. This term does not include parents ``in law.''
    (3) The ``next of kin of a covered servicemember'' is the nearest 
blood relative, other than the covered servicemember's spouse, parent, 
son, or daughter, in the following order of priority: blood relatives 
who have been granted legal custody of the servicemember by court decree 
or statutory provisions, brothers and sisters, grandparents, aunts and 
uncles, and first cousins, unless the covered servicemember has 
specifically designated in writing another blood relative as his or her 
nearest blood relative for purposes of military caregiver leave under 
the FMLA. When no such designation is made, and there are multiple 
family members with the same level of relationship to the covered 
servicemember, all such family members shall be considered the covered 
servicemember's next of kin and may take FMLA leave to provide care to 
the covered servicemember, either consecutively or simultaneously. When 
such designation has been made, the designated individual shall be 
deemed to be the covered servicemember's only next of kin. For example, 
if a covered servicemember has three siblings and has not designated a 
blood relative to provide care, all three siblings would be considered 
the covered servicemember's next of kin. Alternatively, where a covered 
servicemember has a sibling(s) and designates a cousin as his or her 
next of kin for FMLA purposes, then only the designated cousin is 
eligible as the covered servicemember's next of kin. An employer is 
permitted to require an employee to provide confirmation of covered 
family relationship to the covered servicemember pursuant to Sec. 
825.122(j).
    (c) An eligible employee is entitled to 26 workweeks of leave to 
care for a covered servicemember with a serious injury or illness during 
a ``single 12-month period.''
    (1) The ``single 12-month period'' described in paragraph (c) of 
this section begins on the first day the eligible employee takes FMLA 
leave to care for a covered servicemember and ends 12 months after that 
date, regardless of the method used by the employer to determine the 
employee's 12 workweeks of leave entitlement for other FMLA-

[[Page 798]]

qualifying reasons. If an eligible employee does not take all of his or 
her 26 workweeks of leave entitlement to care for a covered 
servicemember during this ``single 12-month period,'' the remaining part 
of his or her 26 workweeks of leave entitlement to care for the covered 
servicemember is forfeited.
    (2) The leave entitlement described in paragraph (c) of this section 
is to be applied on a per-covered-servicemember, per-injury basis such 
that an eligible employee may be entitled to take more than one period 
of 26 workweeks of leave if the leave is to care for different covered 
servicemembers or to care for the same servicemember with a subsequent 
serious injury or illness, except that no more than 26 workweeks of 
leave may be taken within any ``single 12-month period.'' An eligible 
employee may take more than one period of 26 workweeks of leave to care 
for a covered servicemember with more than one serious injury or illness 
only when the serious injury or illness is a subsequent serious injury 
or illness. When an eligible employee takes leave to care for more than 
one covered servicemember or for a subsequent serious injury or illness 
of the same covered servicemember, and the ``single 12-month periods'' 
corresponding to the different military caregiver leave entitlements 
overlap, the employee is limited to taking no more than 26 workweeks of 
leave in each ``single 12-month period.''
    (3) An eligible employee is entitled to a combined total of 26 
workweeks of leave for any FMLA-qualifying reason during the ``single 
12-month period'' described in paragraph (c) of this section, provided 
that the employee is entitled to no more than 12 weeks of leave for one 
or more of the following: because of the birth of a son or daughter of 
the employee and in order to care for such son or daughter; because of 
the placement of a son or daughter with the employee for adoption or 
foster care; in order to care for the spouse, son, daughter, or parent 
with a serious health condition; because of the employee's own serious 
health condition; or because of a qualifying exigency. Thus, for 
example, an eligible employee may, during the ``single 12-month 
period,'' take 16 weeks of FMLA leave to care for a covered 
servicemember and 10 weeks of FMLA leave to care for a newborn child. 
However, the employee may not take more than 12 weeks of FMLA leave to 
care for the newborn child during the ``single 12-month period,'' even 
if the employee takes fewer than 14 weeks of FMLA leave to care for a 
covered servicemember.
    (4) In all circumstances, including for leave taken to care for a 
covered servicemember, the employer is responsible for designating 
leave, paid or unpaid, as FMLA-qualifying, and for giving notice of the 
designation to the employee as provided in Sec. 825.300. In the case of 
leave that qualifies as both leave to care for a covered servicemember 
and leave to care for a family member with a serious health condition 
during the ``single 12-month period'' described in paragraph (c) of this 
section, the employer must designate such leave as leave to care for a 
covered servicemember in the first instance. Leave that qualifies as 
both leave to care for a covered servicemember and leave taken to care 
for a family member with a serious health condition during the ``single 
12-month period'' described in paragraph (c) of this section must not be 
designated and counted as both leave to care for a covered servicemember 
and leave to care for a family member with a serious health condition. 
As is the case with leave taken for other qualifying reasons, employers 
may retroactively designate leave as leave to care for a covered 
servicemember pursuant to Sec. 825.301(d).
    (d) A husband and wife who are eligible for FMLA leave and are 
employed by the same covered employer may be limited to a combined total 
of 26 workweeks of leave during the ``single 12-month period'' described 
in paragraph (c) of this section if the leave is taken for birth of the 
employee's son or daughter or to care for the child after birth, for 
placement of a son or daughter with the employee for adoption or foster 
care, or to care for the child after placement, to care for the 
employee's parent with a serious health condition, or to care for a 
covered servicemember with a serious injury or illness. This limitation 
on the total weeks of leave applies to leave taken

[[Page 799]]

for the reasons specified as long as a husband and wife are employed by 
the ``same employer.'' It would apply, for example, even though the 
spouses are employed at two different worksites of an employer located 
more than 75 miles from each other, or by two different operating 
divisions of the same company. On the other hand, if one spouse is 
ineligible for FMLA leave, the other spouse would be entitled to a full 
26 workweeks of FMLA leave.



Subpart B_Employee Leave Entitlements Under the Family and Medical Leave 
                                   Act



Sec. 825.200  Amount of leave.

    (a) Except in the case of leave to care for a covered servicemember 
with a serious injury or illness, an eligible employee's FMLA leave 
entitlement is limited to a total of 12 workweeks of leave during any 
12-month period for any one, or more, of the following reasons:
    (1) The birth of the employee's son or daughter, and to care for the 
newborn child;
    (2) The placement with the employee of a son or daughter for 
adoption or foster care, and to care for the newly placed child;
    (3) To care for the employee's spouse, son, daughter, or parent with 
a serious health condition;
    (4) Because of a serious health condition that makes the employee 
unable to perform one or more of the essential functions of his or her 
job; and,
    (5) Because of any qualifying exigency arising out of the fact that 
the employee's spouse, son, daughter, or parent is a covered military 
member on active duty (or has been notified of an impending call or 
order to active duty) in support of a contingency operation.
    (b) An employer is permitted to choose any one of the following 
methods for determining the ``12-month period'' in which the 12 weeks of 
leave entitlement described in paragraph (a) of this section occurs:
    (1) The calendar year;
    (2) Any fixed 12-month ``leave year,'' such as a fiscal year, a year 
required by State law, or a year starting on an employee's 
``anniversary'' date;
    (3) The 12-month period measured forward from the date any 
employee's first FMLA leave under paragraph (a) begins; or,
    (4) A ``rolling'' 12-month period measured backward from the date an 
employee uses any FMLA leave as described in paragraph (a).
    (c) Under methods in paragraphs (b)(1) and (b)(2) of this section an 
employee would be entitled to up to 12 weeks of FMLA leave at any time 
in the fixed 12-month period selected. An employee could, therefore, 
take 12 weeks of leave at the end of the year and 12 weeks at the 
beginning of the following year. Under the method in paragraph (b)(3) of 
this section, an employee would be entitled to 12 weeks of leave during 
the year beginning on the first date FMLA leave is taken; the next 12-
month period would begin the first time FMLA leave is taken after 
completion of any previous 12-month period. Under the method in 
paragraph (b)(4) of this section, the ``rolling'' 12-month period, each 
time an employee takes FMLA leave the remaining leave entitlement would 
be any balance of the 12 weeks which has not been used during the 
immediately preceding 12 months. For example, if an employee has taken 
eight weeks of leave during the past 12 months, an additional four weeks 
of leave could be taken. If an employee used four weeks beginning 
February 1, 2008, four weeks beginning June 1, 2008, and four weeks 
beginning December 1, 2008, the employee would not be entitled to any 
additional leave until February 1, 2009. However, beginning on February 
1, 2009, the employee would again be eligible to take FMLA leave, 
recouping the right to take the leave in the same manner and amounts in 
which it was used in the previous year. Thus, the employee would recoup 
(and be entitled to use) one additional day of FMLA leave each day for 
four weeks, commencing February 1, 2009. The employee would also begin 
to recoup additional days beginning on June 1, 2009, and additional days 
beginning on December 1, 2009. Accordingly, employers using the rolling 
12-month period may need to calculate whether the employee is entitled 
to take FMLA leave each time that leave is requested, and employees 
taking FMLA leave on

[[Page 800]]

such a basis may fall in and out of FMLA protection based on their FMLA 
usage in the prior 12 months. For example, in the example above, if the 
employee needs six weeks of leave for a serious health condition 
commencing February 1, 2009, only the first four weeks of the leave 
would be FMLA-protected.
    (d)(1) Employers will be allowed to choose any one of the 
alternatives in paragraph (b) of this section for the leave entitlements 
described in paragraph (a) of this section provided the alternative 
chosen is applied consistently and uniformly to all employees. An 
employer wishing to change to another alternative is required to give at 
least 60 days notice to all employees, and the transition must take 
place in such a way that the employees retain the full benefit of 12 
weeks of leave under whichever method affords the greatest benefit to 
the employee. Under no circumstances may a new method be implemented in 
order to avoid the Act's leave requirements.
    (2) An exception to this required uniformity would apply in the case 
of a multi-State employer who has eligible employees in a State which 
has a family and medical leave statute. The State may require a single 
method of determining the period during which use of the leave 
entitlement is measured. This method may conflict with the method chosen 
by the employer to determine ``any 12 months'' for purposes of the 
Federal statute. The employer may comply with the State provision for 
all employees employed within that State, and uniformly use another 
method provided by this regulation for the leave entitlements described 
in paragraph (a) for all other employees.
    (e) If an employer fails to select one of the options in paragraph 
(b) of this section for measuring the 12-month period for the leave 
entitlements described in paragraph (a), the option that provides the 
most beneficial outcome for the employee will be used. The employer may 
subsequently select an option only by providing the 60-day notice to all 
employees of the option the employer intends to implement. During the 
running of the 60-day period any other employee who needs FMLA leave may 
use the option providing the most beneficial outcome to that employee. 
At the conclusion of the 60-day period the employer may implement the 
selected option.
    (f) An eligible employee's FMLA leave entitlement is limited to a 
total of 26 workweeks of leave during a ``single 12-month period'' to 
care for a covered servicemember with a serious injury or illness. An 
employer shall determine the ``single 12-month period'' in which the 26-
weeks-of-leave-entitlement described in this paragraph occurs using the 
12-month period measured forward from the date an employee's first FMLA 
leave to care for the covered servicemember begins. See Sec. 
825.127(d)(1).
    (g) During the ``single 12-month period'' described in paragraph 
(f), an eligible employee's FMLA leave entitlement is limited to a 
combined total of 26 workweeks of FMLA leave for any qualifying reason. 
See Sec. 825.127(d)(2).
    (h) For purposes of determining the amount of leave used by an 
employee, the fact that a holiday may occur within the week taken as 
FMLA leave has no effect; the week is counted as a week of FMLA leave. 
However, if an employee is using FMLA leave in increments of less than 
one week, the holiday will not count against the employee's FMLA 
entitlement unless the employee was otherwise scheduled and expected to 
work during the holiday. Similarly, if for some reason the employer's 
business activity has temporarily ceased and employees generally are not 
expected to report for work for one or more weeks (e.g., a school 
closing two weeks for the Christmas/New Year holiday or the summer 
vacation or an employer closing the plant for retooling or repairs), the 
days the employer's activities have ceased do not count against the 
employee's FMLA leave entitlement. Methods for determining an employee's 
12-week leave entitlement are also described in Sec. 825.205.



Sec. 825.201  Leave to care for a parent.

    (a) General rule. An eligible employee is entitled to FMLA leave if 
needed to care for the employee's parent with a serious health 
condition. Care for parents-in-law is not covered by the

[[Page 801]]

FMLA. See Sec. 825.122(b) for definition of parent.
    (b) ``Same employer'' limitation. A husband and wife who are 
eligible for FMLA leave and are employed by the same covered employer 
may be limited to a combined total of 12 weeks of leave during any 12-
month period if the leave is taken to care for the employee's parent 
with a serious health condition, for the birth of the employee's son or 
daughter or to care for the child after the birth, or for placement of a 
son or daughter with the employee for adoption or foster care or to care 
for the child after placement. This limitation on the total weeks of 
leave applies to leave taken for the reasons specified as long as a 
husband and wife are employed by the ``same employer.'' It would apply, 
for example, even though the spouses are employed at two different 
worksites of an employer located more than 75 miles from each other, or 
by two different operating divisions of the same company. On the other 
hand, if one spouse is ineligible for FMLA leave, the other spouse would 
be entitled to a full 12 weeks of FMLA leave. Where the husband and wife 
both use a portion of the total 12-week FMLA leave entitlement for 
either the birth of a child, for placement for adoption or foster care, 
or to care for a parent, the husband and wife would each be entitled to 
the difference between the amount he or she has taken individually and 
12 weeks for FMLA leave for other purposes. For example, if each spouse 
took 6 weeks of leave to care for a parent, each could use an additional 
6 weeks due to his or her own serious health condition or to care for a 
child with a serious health condition. See also Sec. 825.127(d).



Sec. 825.202  Intermittent leave or reduced leave schedule.

    (a) Definition. FMLA leave may be taken ``intermittently or on a 
reduced leave schedule'' under certain circumstances. Intermittent leave 
is FMLA leave taken in separate blocks of time due to a single 
qualifying reason. A reduced leave schedule is a leave schedule that 
reduces an employee's usual number of working hours per workweek, or 
hours per workday. A reduced leave schedule is a change in the 
employee's schedule for a period of time, normally from full-time to 
part-time.
    (b) Medical necessity. For intermittent leave or leave on a reduced 
leave schedule taken because of one's own serious health condition, to 
care for a parent, son, or daughter with a serious health condition, or 
to care for a covered servicemember with a serious injury or illness, 
there must be a medical need for leave and it must be that such medical 
need can be best accommodated through an intermittent or reduced leave 
schedule. The treatment regimen and other information described in the 
certification of a serious health condition and in the certification of 
a serious injury or illness, if required by the employer, addresses the 
medical necessity of intermittent leave or leave on a reduced leave 
schedule. See Sec. Sec. 825.306, 825.310. Leave may be taken 
intermittently or on a reduced leave schedule when medically necessary 
for planned and/or unanticipated medical treatment of a serious health 
condition or of a covered servicemember's serious injury or illness, or 
for recovery from treatment or recovery from a serious health condition 
or a covered servicemember's serious injury or illness. It may also be 
taken to provide care or psychological comfort to a covered family 
member with a serious health condition or a covered servicemember with a 
serious injury or illness.
    (1) Intermittent leave may be taken for a serious health condition 
of a parent, son, or daughter, for the employee's own serious health 
condition, or a serious injury or illness of a covered servicemember 
which requires treatment by a health care provider periodically, rather 
than for one continuous period of time, and may include leave of periods 
from an hour or more to several weeks. Examples of intermittent leave 
would include leave taken on an occasional basis for medical 
appointments, or leave taken several days at a time spread over a period 
of six months, such as for chemotherapy. A pregnant employee may take 
leave intermittently for prenatal examinations or for her own condition, 
such as for periods of severe morning sickness. An example of an 
employee taking

[[Page 802]]

leave on a reduced leave schedule is an employee who is recovering from 
a serious health condition and is not strong enough to work a full-time 
schedule.
    (2) Intermittent or reduced schedule leave may be taken for absences 
where the employee or family member is incapacitated or unable to 
perform the essential functions of the position because of a chronic 
serious health condition or a serious injury or illness of a covered 
servicemember, even if he or she does not receive treatment by a health 
care provider. See Sec. Sec. 825.113 and 825.127.
    (c) Birth or placement. When leave is taken after the birth of a 
healthy child or placement of a healthy child for adoption or foster 
care, an employee may take leave intermittently or on a reduced leave 
schedule only if the employer agrees. Such a schedule reduction might 
occur, for example, where an employee, with the employer's agreement, 
works part-time after the birth of a child, or takes leave in several 
segments. The employer's agreement is not required, however, for leave 
during which the mother has a serious health condition in connection 
with the birth of her child or if the newborn child has a serious health 
condition. See Sec. 825.204 for rules governing transfer to an 
alternative position that better accommodates intermittent leave. See 
also Sec. 825.120 (pregnancy) and Sec. 825.121 (adoption and foster 
care).
    (d) Qualifying exigency. Leave due to a qualifying exigency may be 
taken on an intermittent or reduced leave schedule basis.



Sec. 825.203  Scheduling of intermittent or reduced schedule leave.

    Eligible employees may take FMLA leave on an intermittent or reduced 
schedule basis when medically necessary due to the serious health 
condition of a covered family member or the employee or the serious 
injury or illness of a covered servicemember. See Sec. 825.202. 
Eligible employees may also take FMLA leave on an intermittent or 
reduced schedule basis when necessary because of a qualifying exigency. 
If an employee needs leave intermittently or on a reduced leave schedule 
for planned medical treatment, then the employee must make a reasonable 
effort to schedule the treatment so as not to disrupt unduly the 
employer's operations.



Sec. 825.204  Transfer of an employee to an alternative position 
during intermittent leave or reduced schedule leave.

    (a) Transfer or reassignment. If an employee needs intermittent 
leave or leave on a reduced leave schedule that is foreseeable based on 
planned medical treatment for the employee, a family member, or a 
covered servicemember, including during a period of recovery from one's 
own serious health condition, a serious health condition of a spouse, 
parent, son, or daughter, or a serious injury or illness of a covered 
servicemember, or if the employer agrees to permit intermittent or 
reduced schedule leave for the birth of a child or for placement of a 
child for adoption or foster care, the employer may require the employee 
to transfer temporarily, during the period that the intermittent or 
reduced leave schedule is required, to an available alternative position 
for which the employee is qualified and which better accommodates 
recurring periods of leave than does the employee's regular position. 
See Sec. 825.601 for special rules applicable to instructional 
employees of schools.
    (b) Compliance. Transfer to an alternative position may require 
compliance with any applicable collective bargaining agreement, federal 
law (such as the Americans with Disabilities Act), and State law. 
Transfer to an alternative position may include altering an existing job 
to better accommodate the employee's need for intermittent or reduced 
schedule leave.
    (c) Equivalent pay and benefits. The alternative position must have 
equivalent pay and benefits. An alternative position for these purposes 
does not have to have equivalent duties. The employer may increase the 
pay and benefits of an existing alternative position, so as to make them 
equivalent to the pay and benefits of the employee's regular job. The 
employer may also transfer the employee to a part-time job with the same 
hourly rate of pay and benefits, provided the employee is not required 
to take more leave than is

[[Page 803]]

medically necessary. For example, an employee desiring to take leave in 
increments of four hours per day could be transferred to a half-time 
job, or could remain in the employee's same job on a part-time schedule, 
paying the same hourly rate as the employee's previous job and enjoying 
the same benefits. The employer may not eliminate benefits which 
otherwise would not be provided to part-time employees; however, an 
employer may proportionately reduce benefits such as vacation leave 
where an employer's normal practice is to base such benefits on the 
number of hours worked.
    (d) Employer limitations. An employer may not transfer the employee 
to an alternative position in order to discourage the employee from 
taking leave or otherwise work a hardship on the employee. For example, 
a white collar employee may not be assigned to perform laborer's work; 
an employee working the day shift may not be reassigned to the graveyard 
shift; an employee working in the headquarters facility may not be 
reassigned to a branch a significant distance away from the employee's 
normal job location. Any such attempt on the part of the employer to 
make such a transfer will be held to be contrary to the prohibited acts 
of the FMLA.
    (e) Reinstatement of employee. When an employee who is taking leave 
intermittently or on a reduced leave schedule and has been transferred 
to an alternative position no longer needs to continue on leave and is 
able to return to full-time work, the employee must be placed in the 
same or equivalent job as the job he or she left when the leave 
commenced. An employee may not be required to take more leave than 
necessary to address the circumstance that precipitated the need for 
leave.



Sec. 825.205  Increments of FMLA leave for intermittent or reduced
schedule leave.

    (a) Minimum increment. (1) When an employee takes FMLA leave on an 
intermittent or reduced leave schedule basis, the employer must account 
for the leave using an increment no greater than the shortest period of 
time that the employer uses to account for use of other forms of leave 
provided that it is not greater than one hour and provided further that 
an employee's FMLA leave entitlement may not be reduced by more than the 
amount of leave actually taken. If an employer accounts for use of leave 
in varying increments at different times of the day or shift, the 
employer may not account for FMLA leave in a larger increment than the 
shortest period used to account for other leave during the period in 
which the FMLA leave is taken. If an employer accounts for other forms 
of leave use in increments greater than one hour, the employer must 
account for FMLA leave use in increments no greater than one hour. An 
employer may account for FMLA leave in shorter increments than used for 
other forms of leave. For example, an employer that accounts for other 
forms of leave in one hour increments may account for FMLA leave in a 
shorter increment when the employee arrives at work several minutes 
late, and the employer wants the employee to begin work immediately. 
Such accounting for FMLA leave will not alter the increment considered 
to be the shortest period used to account for other forms of leave or 
the use of FMLA leave in other circumstances.
    (2) Where it is physically impossible for an employee using 
intermittent leave or working a reduced leave schedule to commence or 
end work mid-way through a shift, such as where a flight attendant or a 
railroad conductor is scheduled to work aboard an airplane or train, or 
a laboratory employee is unable to enter or leave a sealed ``clean 
room'' during a certain period of time, the entire period that the 
employee is forced to be absent is designated as FMLA leave and counts 
against the employee's FMLA entitlement.
    (b) Calculation of leave. (1) When an employee takes leave on an 
intermittent or reduced leave schedule, only the amount of leave 
actually taken may be counted toward the employee's leave entitlement. 
The actual workweek is the basis of leave entitlement. Therefore, if an 
employee who would otherwise work 40 hours a week takes off 8 hours, the 
employee would use \1/5\ of a week of FMLA leave. Similarly, if a full-
time employee who would otherwise work 8-hour days works 4-hour

[[Page 804]]

days under a reduced leave schedule, the employee would use \1/2\ week 
of FMLA leave. Where an employee works a part-time schedule or variable 
hours, the amount of FMLA leave that an employee uses is determined on a 
pro rata or proportional basis. For example, if an employee who would 
otherwise work 30 hours per week, but works only 20 hours a week under a 
reduced leave schedule, the employee's ten hours of leave would 
constitute one-third (\1/3\) of a week of FMLA leave for each week the 
employee works the reduced leave schedule. An employer may convert these 
fractions to their hourly equivalent so long as the conversion equitably 
reflects the employee's total normally scheduled hours. See also, 
Sec. Sec. 825.601 and 825.602, special rules for schools.
    (2) If an employer has made a permanent or long-term change in the 
employee's schedule (for reasons other than FMLA, and prior to the 
notice of need for FMLA leave), the hours worked under the new schedule 
are to be used for making this calculation.
    (3) If an employee's schedule varies from week to week to such an 
extent that an employer is unable to determine with any certainty how 
many hours the employee would otherwise have worked (but for the taking 
of FMLA leave), a weekly average of the hours scheduled over the 12 
months prior to the beginning of the leave period (including any hours 
for which the employee took leave of any type) would be used for 
calculating the employee's leave entitlement.
    (c) Overtime. If an employee would normally be required to work 
overtime, but is unable to do so because of a FMLA-qualifying reason 
that limits the employee's ability to work overtime, the hours which the 
employee would have been required to work may be counted against the 
employee's FMLA entitlement. In such a case, the employee is using 
intermittent or reduced schedule leave. For example, if an employee 
would normally be required to work for 48 hours in a particular week, 
but due to a serious health condition the employee is unable to work 
more than 40 hours that week, the employee would utilize eight hours of 
FMLA-protected leave out of the 48-hour workweek (\8/48\ = \1/6\ 
workweek). Voluntary overtime hours that an employee does not work due 
to a serious health condition may not be counted against the employee's 
FMLA leave entitlement.



Sec. 825.206  Interaction with the FLSA.

    (a) Leave taken under FMLA may be unpaid. If an employee is 
otherwise exempt from minimum wage and overtime requirements of the Fair 
Labor Standards Act (FLSA) as a salaried executive, administrative, 
professional, or computer employee (under regulations issued by the 
Secretary, 29 CFR part 541), providing unpaid FMLA-qualifying leave to 
such an employee will not cause the employee to lose the FLSA exemption. 
See 29 CFR 541.602(b)(7). This means that under regulations currently in 
effect, where an employee meets the specified duties test, is paid on a 
salary basis, and is paid a salary of at least the amount specified in 
the regulations, the employer may make deductions from the employee's 
salary for any hours taken as intermittent or reduced FMLA leave within 
a workweek, without affecting the exempt status of the employee. The 
fact that an employer provides FMLA leave, whether paid or unpaid, and 
maintains records required by this part regarding FMLA leave, will not 
be relevant to the determination whether an employee is exempt within 
the meaning of 29 CFR part 541.
    (b) For an employee paid in accordance with the fluctuating workweek 
method of payment for overtime (see 29 CFR 778.114), the employer, 
during the period in which intermittent or reduced schedule FMLA leave 
is scheduled to be taken, may compensate an employee on an hourly basis 
and pay only for the hours the employee works, including time and one-
half the employee's regular rate for overtime hours. The change to 
payment on an hourly basis would include the entire period during which 
the employee is taking intermittent leave, including weeks in which no 
leave is taken. The hourly rate shall be determined by dividing the 
employee's weekly salary by the employee's normal or average schedule of 
hours worked during weeks in which FMLA leave is not being

[[Page 805]]

taken. If an employer chooses to follow this exception from the 
fluctuating workweek method of payment, the employer must do so 
uniformly, with respect to all employees paid on a fluctuating workweek 
basis for whom FMLA leave is taken on an intermittent or reduced leave 
schedule basis. If an employer does not elect to convert the employee's 
compensation to hourly pay, no deduction may be taken for FMLA leave 
absences. Once the need for intermittent or reduced scheduled leave is 
over, the employee may be restored to payment on a fluctuating work week 
basis.
    (c) This special exception to the ``salary basis'' requirements of 
the FLSA exemption or fluctuating workweek payment requirements applies 
only to employees of covered employers who are eligible for FMLA leave, 
and to leave which qualifies as FMLA leave. Hourly or other deductions 
which are not in accordance with 29 CFR part 541 or 29 CFR 778.114 may 
not be taken, for example, from the salary of an employee who works for 
an employer with fewer than 50 employees, or where the employee has not 
worked long enough to be eligible for FMLA leave without potentially 
affecting the employee's eligibility for exemption. Nor may deductions 
which are not permitted by 29 CFR part 541 or 29 CFR 778.114 be taken 
from such an employee's salary for any leave which does not qualify as 
FMLA leave, for example, deductions from an employee's pay for leave 
required under State law or under an employer's policy or practice for a 
reason which does not qualify as FMLA leave, e.g., leave to care for a 
grandparent or for a medical condition which does not qualify as a 
serious health condition or serious injury or illness; or for leave 
which is more generous than provided by FMLA. Employers may comply with 
State law or the employer's own policy/practice under these 
circumstances and maintain the employee's eligibility for exemption or 
for the fluctuating workweek method of pay by not taking hourly 
deductions from the employee's pay, in accordance with FLSA 
requirements, or may take such deductions, treating the employee as an 
``hourly'' employee and pay overtime premium pay for hours worked over 
40 in a workweek.



Sec. 825.207  Substitution of paid leave.

    (a) Generally, FMLA leave is unpaid leave. However, under the 
circumstances described in this section, FMLA permits an eligible 
employee to choose to substitute accrued paid leave for FMLA leave. If 
an employee does not choose to substitute accrued paid leave, the 
employer may require the employee to substitute accrued paid leave for 
unpaid FMLA leave. The term ``substitute'' means that the paid leave 
provided by the employer, and accrued pursuant to established policies 
of the employer, will run concurrently with the unpaid FMLA leave. 
Accordingly, the employee receives pay pursuant to the employer's 
applicable paid leave policy during the period of otherwise unpaid FMLA 
leave. An employee's ability to substitute accrued paid leave is 
determined by the terms and conditions of the employer's normal leave 
policy. When an employee chooses, or an employer requires, substitution 
of accrued paid leave, the employer must inform the employee that the 
employee must satisfy any procedural requirements of the paid leave 
policy only in connection with the receipt of such payment. See Sec. 
825.300(c). If an employee does not comply with the additional 
requirements in an employer's paid leave policy, the employee is not 
entitled to substitute accrued paid leave, but the employee remains 
entitled to take unpaid FMLA leave. Employers may not discriminate 
against employees on FMLA leave in the administration of their paid 
leave policies.
    (b) If neither the employee nor the employer elects to substitute 
paid leave for unpaid FMLA leave under the above conditions and 
circumstances, the employee will remain entitled to all the paid leave 
which is earned or accrued under the terms of the employer's plan.
    (c) If an employee uses paid leave under circumstances which do not 
qualify as FMLA leave, the leave will not count against the employee's 
FMLA leave entitlement. For example, paid sick leave used for a medical 
condition which is not a serious health condition or serious injury or 
illness

[[Page 806]]

does not count against the employee's FMLA leave entitlement.
    (d) Leave taken pursuant to a disability leave plan would be 
considered FMLA leave for a serious health condition and counted in the 
leave entitlement permitted under FMLA if it meets the criteria set 
forth above in Sec. Sec. 825.112-825.115. In such cases, the employer 
may designate the leave as FMLA leave and count the leave against the 
employee's FMLA leave entitlement. Because leave pursuant to a 
disability benefit plan is not unpaid, the provision for substitution of 
the employee's accrued paid leave is inapplicable, and neither the 
employee nor the employer may require the substitution of paid leave. 
However, employers and employees may agree, where state law permits, to 
have paid leave supplement the disability plan benefits, such as in the 
case where a plan only provides replacement income for two-thirds of an 
employee's salary.
    (e) The Act provides that a serious health condition may result from 
injury to the employee ``on or off'' the job. If the employer designates 
the leave as FMLA leave in accordance with Sec. 825.300(d), the leave 
counts against the employee's FMLA leave entitlement. Because the 
workers' compensation absence is not unpaid, the provision for 
substitution of the employee's accrued paid leave is not applicable, and 
neither the employee nor the employer may require the substitution of 
paid leave. However, employers and employees may agree, where state law 
permits, to have paid leave supplement workers' compensation benefits, 
such as in the case where workers' compensation only provides 
replacement income for two-thirds of an employee's salary. If the health 
care provider treating the employee for the workers' compensation injury 
certifies the employee is able to return to a ``light duty job'' but is 
unable to return to the same or equivalent job, the employee may decline 
the employer's offer of a ``light duty job.'' As a result the employee 
may lose workers' compensation payments, but is entitled to remain on 
unpaid FMLA leave until the employee's FMLA leave entitlement is 
exhausted. As of the date workers' compensation benefits cease, the 
substitution provision becomes applicable and either the employee may 
elect or the employer may require the use of accrued paid leave. See 
also Sec. Sec. 825.210(f), 825.216(d), 825.220(d), 825.307(a) and 
825.702(d)(1) and (2) regarding the relationship between workers' 
compensation absences and FMLA leave.
    (f) Section 7(o) of the Fair Labor Standards Act (FLSA) permits 
public employers under prescribed circumstances to substitute 
compensatory time off accrued at one and one-half hours for each 
overtime hour worked in lieu of paying cash to an employee when the 
employee works overtime hours as prescribed by the Act. This section of 
the FLSA limits the number of hours of compensatory time an employee may 
accumulate depending upon whether the employee works in fire protection 
or law enforcement (480 hours) or elsewhere for a public agency (240 
hours). In addition, under the FLSA, an employer always has the right to 
cash out an employee's compensatory time or to require the employee to 
use the time. Therefore, if an employee requests and is permitted to use 
accrued compensatory time to receive pay for time taken off for an FMLA 
reason, or if the employer requires such use pursuant to the FLSA, the 
time taken may be counted against the employee's FMLA leave entitlement.



Sec. 825.208  [Reserved]



Sec. 825.209  Maintenance of employee benefits.

    (a) During any FMLA leave, an employer must maintain the employee's 
coverage under any group health plan (as defined in the Internal Revenue 
Code of 1986 at 26 U.S.C. 5000(b)(1)) on the same conditions as coverage 
would have been provided if the employee had been continuously employed 
during the entire leave period. All employers covered by FMLA, including 
public agencies, are subject to the Act's requirements to maintain 
health coverage. The definition of ``group health plan'' is set forth in 
Sec. 825.800. For purposes of FMLA, the term ``group health plan'' 
shall not include an insurance program providing health coverage under 
which

[[Page 807]]

employees purchase individual policies from insurers provided that:
    (1) No contributions are made by the employer;
    (2) Participation in the program is completely voluntary for 
employees;
    (3) The sole functions of the employer with respect to the program 
are, without endorsing the program, to permit the insurer to publicize 
the program to employees, to collect premiums through payroll deductions 
and to remit them to the insurer;
    (4) The employer receives no consideration in the form of cash or 
otherwise in connection with the program, other than reasonable 
compensation, excluding any profit, for administrative services actually 
rendered in connection with payroll deduction; and,
    (5) The premium charged with respect to such coverage does not 
increase in the event the employment relationship terminates.
    (b) The same group health plan benefits provided to an employee 
prior to taking FMLA leave must be maintained during the FMLA leave. For 
example, if family member coverage is provided to an employee, family 
member coverage must be maintained during the FMLA leave. Similarly, 
benefit coverage during FMLA leave for medical care, surgical care, 
hospital care, dental care, eye care, mental health counseling, 
substance abuse treatment, etc., must be maintained during leave if 
provided in an employer's group health plan, including a supplement to a 
group health plan, whether or not provided through a flexible spending 
account or other component of a cafeteria plan.
    (c) If an employer provides a new health plan or benefits or changes 
health benefits or plans while an employee is on FMLA leave, the 
employee is entitled to the new or changed plan/benefits to the same 
extent as if the employee were not on leave. For example, if an employer 
changes a group health plan so that dental care becomes covered under 
the plan, an employee on FMLA leave must be given the same opportunity 
as other employees to receive (or obtain) the dental care coverage. Any 
other plan changes (e.g., in coverage, premiums, deductibles, etc.) 
which apply to all employees of the workforce would also apply to an 
employee on FMLA leave.
    (d) Notice of any opportunity to change plans or benefits must also 
be given to an employee on FMLA leave. If the group health plan permits 
an employee to change from single to family coverage upon the birth of a 
child or otherwise add new family members, such a change in benefits 
must be made available while an employee is on FMLA leave. If the 
employee requests the changed coverage it must be provided by the 
employer.
    (e) An employee may choose not to retain group health plan coverage 
during FMLA leave. However, when an employee returns from leave, the 
employee is entitled to be reinstated on the same terms as prior to 
taking the leave, including family or dependent coverages, without any 
qualifying period, physical examination, exclusion of pre-existing 
conditions, etc. See Sec. 825.212(c).
    (f) Except as required by the Consolidated Omnibus Budget 
Reconciliation Act of 1986 (COBRA) and for ``key'' employees (as 
discussed below), an employer's obligation to maintain health benefits 
during leave (and to restore the employee to the same or equivalent 
employment) under FMLA ceases if and when the employment relationship 
would have terminated if the employee had not taken FMLA leave (e.g., if 
the employee's position is eliminated as part of a nondiscriminatory 
reduction in force and the employee would not have been transferred to 
another position); an employee informs the employer of his or her intent 
not to return from leave (including before starting the leave if the 
employer is so informed before the leave starts); or the employee fails 
to return from leave or continues on leave after exhausting his or her 
FMLA leave entitlement in the 12-month period.
    (g) If a ``key employee'' (see Sec. 825.218) does not return from 
leave when notified by the employer that substantial or grievous 
economic injury will result from his or her reinstatement, the 
employee's entitlement to group health plan benefits continues unless 
and until the employee advises the employer that the employee does not 
desire restoration to employment at the

[[Page 808]]

end of the leave period, or the FMLA leave entitlement is exhausted, or 
reinstatement is actually denied.
    (h) An employee's entitlement to benefits other than group health 
benefits during a period of FMLA leave (e.g., holiday pay) is to be 
determined by the employer's established policy for providing such 
benefits when the employee is on other forms of leave (paid or unpaid, 
as appropriate).



Sec. 825.210  Employee payment of group health benefit premiums.

    (a) Group health plan benefits must be maintained on the same basis 
as coverage would have been provided if the employee had been 
continuously employed during the FMLA leave period. Therefore, any share 
of group health plan premiums which had been paid by the employee prior 
to FMLA leave must continue to be paid by the employee during the FMLA 
leave period. If premiums are raised or lowered, the employee would be 
required to pay the new premium rates. Maintenance of health insurance 
policies which are not a part of the employer's group health plan, as 
described in Sec. 825.209(a), are the sole responsibility of the 
employee. The employee and the insurer should make necessary 
arrangements for payment of premiums during periods of unpaid FMLA 
leave.
    (b) If the FMLA leave is substituted paid leave, the employee's 
share of premiums must be paid by the method normally used during any 
paid leave, presumably as a payroll deduction.
    (c) If FMLA leave is unpaid, the employer has a number of options 
for obtaining payment from the employee. The employer may require that 
payment be made to the employer or to the insurance carrier, but no 
additional charge may be added to the employee's premium payment for 
administrative expenses. The employer may require employees to pay their 
share of premium payments in any of the following ways:
    (1) Payment would be due at the same time as it would be made if by 
payroll deduction;
    (2) Payment would be due on the same schedule as payments are made 
under COBRA;
    (3) Payment would be prepaid pursuant to a cafeteria plan at the 
employee's option;
    (4) The employer's existing rules for payment by employees on 
``leave without pay'' would be followed, provided that such rules do not 
require prepayment (i.e., prior to the commencement of the leave) of the 
premiums that will become due during a period of unpaid FMLA leave or 
payment of higher premiums than if the employee had continued to work 
instead of taking leave; or,
    (5) Another system voluntarily agreed to between the employer and 
the employee, which may include prepayment of premiums (e.g., through 
increased payroll deductions when the need for the FMLA leave is 
foreseeable).
    (d) The employer must provide the employee with advance written 
notice of the terms and conditions under which these payments must be 
made. See Sec. 825.300(c).
    (e) An employer may not require more of an employee using unpaid 
FMLA leave than the employer requires of other employees on ``leave 
without pay.''
    (f) An employee who is receiving payments as a result of a workers' 
compensation injury must make arrangements with the employer for payment 
of group health plan benefits when simultaneously taking FMLA leave. See 
Sec. 825.207(e).



Sec. 825.211  Maintenance of benefits under multi-employer health plans.

    (a) A multi-employer health plan is a plan to which more than one 
employer is required to contribute, and which is maintained pursuant to 
one or more collective bargaining agreements between employee 
organization(s) and the employers.
    (b) An employer under a multi-employer plan must continue to make 
contributions on behalf of an employee using FMLA leave as though the 
employee had been continuously employed, unless the plan contains an 
explicit FMLA provision for maintaining coverage such as through pooled 
contributions by all employers party to the plan.

[[Page 809]]

    (c) During the duration of an employee's FMLA leave, coverage by the 
group health plan, and benefits provided pursuant to the plan, must be 
maintained at the level of coverage and benefits which were applicable 
to the employee at the time FMLA leave commenced.
    (d) An employee using FMLA leave cannot be required to use 
``banked'' hours or pay a greater premium than the employee would have 
been required to pay if the employee had been continuously employed.
    (e) As provided in Sec. 825.209(f) of this part, group health plan 
coverage must be maintained for an employee on FMLA leave until:
    (1) The employee's FMLA leave entitlement is exhausted;
    (2) The employer can show that the employee would have been laid off 
and the employment relationship terminated; or,
    (3) The employee provides unequivocal notice of intent not to return 
to work.



Sec. 825.212  Employee failure to pay health plan premium payments.

    (a)(1) In the absence of an established employer policy providing a 
longer grace period, an employer's obligations to maintain health 
insurance coverage cease under FMLA if an employee's premium payment is 
more than 30 days late. In order to drop the coverage for an employee 
whose premium payment is late, the employer must provide written notice 
to the employee that the payment has not been received. Such notice must 
be mailed to the employee at least 15 days before coverage is to cease, 
advising that coverage will be dropped on a specified date at least 15 
days after the date of the letter unless the payment has been received 
by that date. If the employer has established policies regarding other 
forms of unpaid leave that provide for the employer to cease coverage 
retroactively to the date the unpaid premium payment was due, the 
employer may drop the employee from coverage retroactively in accordance 
with that policy, provided the 15-day notice was given. In the absence 
of such a policy, coverage for the employee may be terminated at the end 
of the 30-day grace period, where the required 15-day notice has been 
provided.
    (2) An employer has no obligation regarding the maintenance of a 
health insurance policy which is not a ``group health plan.'' See Sec. 
825.209(a).
    (3) All other obligations of an employer under FMLA would continue; 
for example, the employer continues to have an obligation to reinstate 
an employee upon return from leave.
    (b) The employer may recover the employee's share of any premium 
payments missed by the employee for any FMLA leave period during which 
the employer maintains health coverage by paying the employee's share 
after the premium payment is missed.
    (c) If coverage lapses because an employee has not made required 
premium payments, upon the employee's return from FMLA leave the 
employer must still restore the employee to coverage/benefits equivalent 
to those the employee would have had if leave had not been taken and the 
premium payment(s) had not been missed, including family or dependent 
coverage. See Sec. 825.215(d)(1) through (5). In such case, an employee 
may not be required to meet any qualification requirements imposed by 
the plan, including any new preexisting condition waiting period, to 
wait for an open season, or to pass a medical examination to obtain 
reinstatement of coverage. If an employer terminates an employee's 
insurance in accordance with this section and fails to restore the 
employee's health insurance as required by this section upon the 
employee's return, the employer may be liable for benefits lost by 
reason of the violation, for other actual monetary losses sustained as a 
direct result of the violation, and for appropriate equitable relief 
tailored to the harm suffered.



Sec. 825.213  Employer recovery of benefit costs.

    (a) In addition to the circumstances discussed in Sec. 825.212(b), 
an employer may recover its share of health plan premiums during a 
period of unpaid FMLA leave from an employee if the employee fails to 
return to work after the employee's FMLA leave entitlement has been 
exhausted or expires,

[[Page 810]]

unless the reason the employee does not return is due to:
    (1) The continuation, recurrence, or onset of either a serious 
health condition of the employee or the employee's family member, or a 
serious injury or illness of a covered servicemember, which would 
otherwise entitle the employee to leave under FMLA; or
    (2) Other circumstances beyond the employee's control. Examples of 
``other circumstances beyond the employee's control'' are necessarily 
broad. They include such situations as where a parent chooses to stay 
home with a newborn child who has a serious health condition; an 
employee's spouse is unexpectedly transferred to a job location more 
than 75 miles from the employee's worksite; a relative or individual 
other than a covered family member has a serious health condition and 
the employee is needed to provide care; the employee is laid off while 
on leave; or, the employee is a ``key employee'' who decides not to 
return to work upon being notified of the employer's intention to deny 
restoration because of substantial and grievous economic injury to the 
employer's operations and is not reinstated by the employer. Other 
circumstances beyond the employee's control would not include a 
situation where an employee desires to remain with a parent in a distant 
city even though the parent no longer requires the employee's care, or a 
parent chooses not to return to work to stay home with a well, newborn 
child.
    (3) When an employee fails to return to work because of the 
continuation, recurrence, or onset of either a serious health condition 
of the employee or employee's family member, or a serious injury or 
illness of a covered servicemember, thereby precluding the employer from 
recovering its (share of) health benefit premium payments made on the 
employee's behalf during a period of unpaid FMLA leave, the employer may 
require medical certification of the employee's or the family member's 
serious health condition or the covered servicemember's serious injury 
or illness. Such certification is not required unless requested by the 
employer. The cost of the certification shall be borne by the employee, 
and the employee is not entitled to be paid for the time or travel costs 
spent in acquiring the certification. The employee is required to 
provide medical certification in a timely manner which, for purposes of 
this section, is within 30 days from the date of the employer's request. 
For purposes of medical certification, the employee may use the optional 
DOL forms developed for these purposes (see Sec. Sec. 825.306(b), 
825.310(c)-(d) and Appendices B and H of this part). If the employer 
requests medical certification and the employee does not provide such 
certification in a timely manner (within 30 days), or the reason for not 
returning to work does not meet the test of other circumstances beyond 
the employee's control, the employer may recover 100% of the health 
benefit premiums it paid during the period of unpaid FMLA leave.
    (b) Under some circumstances an employer may elect to maintain other 
benefits, e.g., life insurance, disability insurance, etc., by paying 
the employee's (share of) premiums during periods of unpaid FMLA leave. 
For example, to ensure the employer can meet its responsibilities to 
provide equivalent benefits to the employee upon return from unpaid FMLA 
leave, it may be necessary that premiums be paid continuously to avoid a 
lapse of coverage. If the employer elects to maintain such benefits 
during the leave, at the conclusion of leave, the employer is entitled 
to recover only the costs incurred for paying the employee's share of 
any premiums whether or not the employee returns to work.
    (c) An employee who returns to work for at least 30 calendar days is 
considered to have ``returned'' to work. An employee who transfers 
directly from taking FMLA leave to retirement, or who retires during the 
first 30 days after the employee returns to work, is deemed to have 
returned to work.
    (d) When an employee elects or an employer requires paid leave to be 
substituted for FMLA leave, the employer may not recover its (share of) 
health insurance or other non-health benefit premiums for any period of 
FMLA leave covered by paid leave. Because paid leave provided under a 
plan covering temporary disabilities (including workers' compensation) 
is not unpaid,

[[Page 811]]

recovery of health insurance premiums does not apply to such paid leave.
    (e) The amount that self-insured employers may recover is limited to 
only the employer's share of allowable ``premiums'' as would be 
calculated under COBRA, excluding the 2 percent fee for administrative 
costs.
    (f) When an employee fails to return to work, any health and non-
health benefit premiums which this section of the regulations permits an 
employer to recover are a debt owed by the non-returning employee to the 
employer. The existence of this debt caused by the employee's failure to 
return to work does not alter the employer's responsibilities for health 
benefit coverage and, under a self-insurance plan, payment of claims 
incurred during the period of FMLA leave. To the extent recovery is 
allowed, the employer may recover the costs through deduction from any 
sums due to the employee (e.g., unpaid wages, vacation pay, profit 
sharing, etc.), provided such deductions do not otherwise violate 
applicable Federal or State wage payment or other laws. Alternatively, 
the employer may initiate legal action against the employee to recover 
such costs.



Sec. 825.214  Employee right to reinstatement.

    General rule. On return from FMLA leave, an employee is entitled to 
be returned to the same position the employee held when leave commenced, 
or to an equivalent position with equivalent benefits, pay, and other 
terms and conditions of employment. An employee is entitled to such 
reinstatement even if the employee has been replaced or his or her 
position has been restructured to accommodate the employee's absence. 
See also Sec. 825.106(e) for the obligations of joint employers.



Sec. 825.215  Equivalent position.

    (a) Equivalent position. An equivalent position is one that is 
virtually identical to the employee's former position in terms of pay, 
benefits and working conditions, including privileges, perquisites and 
status. It must involve the same or substantially similar duties and 
responsibilities, which must entail substantially equivalent skill, 
effort, responsibility, and authority.
    (b) Conditions to qualify. If an employee is no longer qualified for 
the position because of the employee's inability to attend a necessary 
course, renew a license, fly a minimum number of hours, etc., as a 
result of the leave, the employee shall be given a reasonable 
opportunity to fulfill those conditions upon return to work.
    (c) Equivalent pay. (1) An employee is entitled to any unconditional 
pay increases which may have occurred during the FMLA leave period, such 
as cost of living increases. Pay increases conditioned upon seniority, 
length of service, or work performed must be granted in accordance with 
the employer's policy or practice with respect to other employees on an 
equivalent leave status for a reason that does not qualify as FMLA 
leave. An employee is entitled to be restored to a position with the 
same or equivalent pay premiums, such as a shift differential. If an 
employee departed from a position averaging ten hours of overtime (and 
corresponding overtime pay) each week, an employee is ordinarily 
entitled to such a position on return from FMLA leave.
    (2) Equivalent pay includes any bonus or payment, whether it is 
discretionary or non-discretionary, made to employees consistent with 
the provisions of paragraph (c)(1) of this section. However, if a bonus 
or other payment is based on the achievement of a specified goal such as 
hours worked, products sold or perfect attendance, and the employee has 
not met the goal due to FMLA leave, then the payment may be denied, 
unless otherwise paid to employees on an equivalent leave status for a 
reason that does not qualify as FMLA leave. For example, if an employee 
who used paid vacation leave for a non-FMLA purpose would receive the 
payment, then the employee who used paid vacation leave for an FMLA-
protected purpose also must receive the payment.
    (d) Equivalent benefits. ``Benefits'' include all benefits provided 
or made available to employees by an employer, including group life 
insurance, health insurance, disability insurance, sick

[[Page 812]]

leave, annual leave, educational benefits, and pensions, regardless of 
whether such benefits are provided by a practice or written policy of an 
employer through an employee benefit plan as defined in Section 3(3) of 
the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1002(3).
    (1) At the end of an employee's FMLA leave, benefits must be resumed 
in the same manner and at the same levels as provided when the leave 
began, and subject to any changes in benefit levels that may have taken 
place during the period of FMLA leave affecting the entire workforce, 
unless otherwise elected by the employee. Upon return from FMLA leave, 
an employee cannot be required to requalify for any benefits the 
employee enjoyed before FMLA leave began (including family or dependent 
coverages). For example, if an employee was covered by a life insurance 
policy before taking leave but is not covered or coverage lapses during 
the period of unpaid FMLA leave, the employee cannot be required to meet 
any qualifications, such as taking a physical examination, in order to 
requalify for life insurance upon return from leave. Accordingly, some 
employers may find it necessary to modify life insurance and other 
benefits programs in order to restore employees to equivalent benefits 
upon return from FMLA leave, make arrangements for continued payment of 
costs to maintain such benefits during unpaid FMLA leave, or pay these 
costs subject to recovery from the employee on return from leave. See 
Sec. 825.213(b).
    (2) An employee may, but is not entitled to, accrue any additional 
benefits or seniority during unpaid FMLA leave. Benefits accrued at the 
time leave began, however, (e.g., paid vacation, sick or personal leave 
to the extent not substituted for FMLA leave) must be available to an 
employee upon return from leave.
    (3) If, while on unpaid FMLA leave, an employee desires to continue 
life insurance, disability insurance, or other types of benefits for 
which he or she typically pays, the employer is required to follow 
established policies or practices for continuing such benefits for other 
instances of leave without pay. If the employer has no established 
policy, the employee and the employer are encouraged to agree upon 
arrangements before FMLA leave begins.
    (4) With respect to pension and other retirement plans, any period 
of unpaid FMLA leave shall not be treated as or counted toward a break 
in service for purposes of vesting and eligibility to participate. Also, 
if the plan requires an employee to be employed on a specific date in 
order to be credited with a year of service for vesting, contributions 
or participation purposes, an employee on unpaid FMLA leave on that date 
shall be deemed to have been employed on that date. However, unpaid FMLA 
leave periods need not be treated as credited service for purposes of 
benefit accrual, vesting and eligibility to participate.
    (5) Employees on unpaid FMLA leave are to be treated as if they 
continued to work for purposes of changes to benefit plans. They are 
entitled to changes in benefits plans, except those which may be 
dependent upon seniority or accrual during the leave period, immediately 
upon return from leave or to the same extent they would have qualified 
if no leave had been taken. For example, if the benefit plan is 
predicated on a pre-established number of hours worked each year and the 
employee does not have sufficient hours as a result of taking unpaid 
FMLA leave, the benefit is lost. (In this regard, Sec. 825.209 
addresses health benefits.)
    (e) Equivalent terms and conditions of employment. An equivalent 
position must have substantially similar duties, conditions, 
responsibilities, privileges and status as the employee's original 
position.
    (1) The employee must be reinstated to the same or a geographically 
proximate worksite (i.e., one that does not involve a significant 
increase in commuting time or distance) from where the employee had 
previously been employed. If the employee's original worksite has been 
closed, the employee is entitled to the same rights as if the employee 
had not been on leave when the worksite closed. For example, if an 
employer transfers all employees from a closed worksite to a new 
worksite in a different city, the employee on leave is also entitled to 
transfer under the

[[Page 813]]

same conditions as if he or she had continued to be employed.
    (2) The employee is ordinarily entitled to return to the same shift 
or the same or an equivalent work schedule.
    (3) The employee must have the same or an equivalent opportunity for 
bonuses, profit-sharing, and other similar discretionary and non-
discretionary payments.
    (4) FMLA does not prohibit an employer from accommodating an 
employee's request to be restored to a different shift, schedule, or 
position which better suits the employee's personal needs on return from 
leave, or to offer a promotion to a better position. However, an 
employee cannot be induced by the employer to accept a different 
position against the employee's wishes.
    (f) De minimis exception. The requirement that an employee be 
restored to the same or equivalent job with the same or equivalent pay, 
benefits, and terms and conditions of employment does not extend to de 
minimis, intangible, or unmeasurable aspects of the job.



Sec. 825.216  Limitations on an employee's right to reinstatement.

    (a) An employee has no greater right to reinstatement or to other 
benefits and conditions of employment than if the employee had been 
continuously employed during the FMLA leave period. An employer must be 
able to show that an employee would not otherwise have been employed at 
the time reinstatement is requested in order to deny restoration to 
employment. For example:
    (1) If an employee is laid off during the course of taking FMLA 
leave and employment is terminated, the employer's responsibility to 
continue FMLA leave, maintain group health plan benefits and restore the 
employee cease at the time the employee is laid off, provided the 
employer has no continuing obligations under a collective bargaining 
agreement or otherwise. An employer would have the burden of proving 
that an employee would have been laid off during the FMLA leave period 
and, therefore, would not be entitled to restoration. Restoration to a 
job slated for lay-off when the employee's original position is not 
would not meet the requirements of an equivalent position.
    (2) If a shift has been eliminated, or overtime has been decreased, 
an employee would not be entitled to return to work that shift or the 
original overtime hours upon restoration. However, if a position on, for 
example, a night shift has been filled by another employee, the employee 
is entitled to return to the same shift on which employed before taking 
FMLA leave.
    (3) If an employee was hired for a specific term or only to perform 
work on a discrete project, the employer has no obligation to restore 
the employee if the employment term or project is over and the employer 
would not otherwise have continued to employ the employee. On the other 
hand, if an employee was hired to perform work on a contract, and after 
that contract period the contract was awarded to another contractor, the 
successor contractor may be required to restore the employee if it is a 
successor employer. See Sec. 825.107.
    (b) In addition to the circumstances explained above, an employer 
may deny job restoration to salaried eligible employees (``key 
employees,'' as defined in Sec. 825.217(c)), if such denial is 
necessary to prevent substantial and grievous economic injury to the 
operations of the employer; or may delay restoration to an employee who 
fails to provide a fitness-for-duty certificate to return to work under 
the conditions described in Sec. 825.312.
    (c) If the employee is unable to perform an essential function of 
the position because of a physical or mental condition, including the 
continuation of a serious health condition or an injury or illness also 
covered by workers' compensation, the employee has no right to 
restoration to another position under the FMLA. The employer's 
obligations may, however, be governed by the Americans with Disabilities 
Act (ADA), as amended. See Sec. 825.702, state leave laws, or workers' 
compensation laws.
    (d) An employee who fraudulently obtains FMLA leave from an employer 
is not protected by FMLA's job restoration or maintenance of health 
benefits provisions.

[[Page 814]]

    (e) If the employer has a uniformly-applied policy governing outside 
or supplemental employment, such a policy may continue to apply to an 
employee while on FMLA leave. An employer which does not have such a 
policy may not deny benefits to which an employee is entitled under FMLA 
on this basis unless the FMLA leave was fraudulently obtained as in 
paragraph (d) of this section.



Sec. 825.217  Key employee, general rule.

    (a) A ``key employee'' is a salaried FMLA-eligible employee who is 
among the highest paid 10 percent of all the employees employed by the 
employer within 75 miles of the employee's worksite.
    (b) The term ``salaried'' means ``paid on a salary basis,'' as 
defined in 29 CFR 541.602. This is the Department of Labor regulation 
defining employees who may qualify as exempt from the minimum wage and 
overtime requirements of the FLSA as executive, administrative, 
professional, and computer employees.
    (c) A ``key employee'' must be ``among the highest paid 10 percent'' 
of all the employees--both salaried and non-salaried, eligible and 
ineligible--who are employed by the employer within 75 miles of the 
worksite.
    (1) In determining which employees are among the highest paid 10 
percent, year-to-date earnings are divided by weeks worked by the 
employee (including weeks in which paid leave was taken). Earnings 
include wages, premium pay, incentive pay, and non-discretionary and 
discretionary bonuses. Earnings do not include incentives whose value is 
determined at some future date, e.g., stock options, or benefits or 
perquisites.
    (2) The determination of whether a salaried employee is among the 
highest paid 10 percent shall be made at the time the employee gives 
notice of the need for leave. No more than 10 percent of the employer's 
employees within 75 miles of the worksite may be ``key employees.''



Sec. 825.218  Substantial and grievous economic injury.

    (a) In order to deny restoration to a key employee, an employer must 
determine that the restoration of the employee to employment will cause 
``substantial and grievous economic injury'' to the operations of the 
employer, not whether the absence of the employee will cause such 
substantial and grievous injury.
    (b) An employer may take into account its ability to replace on a 
temporary basis (or temporarily do without) the employee on FMLA leave. 
If permanent replacement is unavoidable, the cost of then reinstating 
the employee can be considered in evaluating whether substantial and 
grievous economic injury will occur from restoration; in other words, 
the effect on the operations of the company of reinstating the employee 
in an equivalent position.
    (c) A precise test cannot be set for the level of hardship or injury 
to the employer which must be sustained. If the reinstatement of a ``key 
employee'' threatens the economic viability of the firm, that would 
constitute ``substantial and grievous economic injury.'' A lesser injury 
which causes substantial, long-term economic injury would also be 
sufficient. Minor inconveniences and costs that the employer would 
experience in the normal course of doing business would certainly not 
constitute ``substantial and grievous economic injury.''
    (d) FMLA's ``substantial and grievous economic injury'' standard is 
different from and more stringent than the ``undue hardship'' test under 
the ADA (see also Sec. 825.702).



Sec. 825.219  Rights of a key employee.

    (a) An employer who believes that reinstatement may be denied to a 
key employee, must give written notice to the employee at the time the 
employee gives notice of the need for FMLA leave (or when FMLA leave 
commences, if earlier) that he or she qualifies as a key employee. At 
the same time, the employer must also fully inform the employee of the 
potential consequences with respect to reinstatement and maintenance of 
health benefits if the employer should determine that substantial and 
grievous economic injury to the employer's operations will result if the 
employee is reinstated

[[Page 815]]

from FMLA leave. If such notice cannot be given immediately because of 
the need to determine whether the employee is a key employee, it shall 
be given as soon as practicable after being notified of a need for leave 
(or the commencement of leave, if earlier). It is expected that in most 
circumstances there will be no desire that an employee be denied 
restoration after FMLA leave and, therefore, there would be no need to 
provide such notice. However, an employer who fails to provide such 
timely notice will lose its right to deny restoration even if 
substantial and grievous economic injury will result from reinstatement.
    (b) As soon as an employer makes a good faith determination, based 
on the facts available, that substantial and grievous economic injury to 
its operations will result if a key employee who has given notice of the 
need for FMLA leave or is using FMLA leave is reinstated, the employer 
shall notify the employee in writing of its determination, that it 
cannot deny FMLA leave, and that it intends to deny restoration to 
employment on completion of the FMLA leave. It is anticipated that an 
employer will ordinarily be able to give such notice prior to the 
employee starting leave. The employer must serve this notice either in 
person or by certified mail. This notice must explain the basis for the 
employer's finding that substantial and grievous economic injury will 
result, and, if leave has commenced, must provide the employee a 
reasonable time in which to return to work, taking into account the 
circumstances, such as the length of the leave and the urgency of the 
need for the employee to return.
    (c) If an employee on leave does not return to work in response to 
the employer's notification of intent to deny restoration, the employee 
continues to be entitled to maintenance of health benefits and the 
employer may not recover its cost of health benefit premiums. A key 
employee's rights under FMLA continue unless and until the employee 
either gives notice that he or she no longer wishes to return to work, 
or the employer actually denies reinstatement at the conclusion of the 
leave period.
    (d) After notice to an employee has been given that substantial and 
grievous economic injury will result if the employee is reinstated to 
employment, an employee is still entitled to request reinstatement at 
the end of the leave period even if the employee did not return to work 
in response to the employer's notice. The employer must then again 
determine whether there will be substantial and grievous economic injury 
from reinstatement, based on the facts at that time. If it is determined 
that substantial and grievous economic injury will result, the employer 
shall notify the employee in writing (in person or by certified mail) of 
the denial of restoration.



Sec. 825.220  Protection for employees who request leave or otherwise
assert FMLA rights.

    (a) The FMLA prohibits interference with an employee's rights under 
the law, and with legal proceedings or inquiries relating to an 
employee's rights. More specifically, the law contains the following 
employee protections:
    (1) An employer is prohibited from interfering with, restraining, or 
denying the exercise of (or attempts to exercise) any rights provided by 
the Act.
    (2) An employer is prohibited from discharging or in any other way 
discriminating against any person (whether or not an employee) for 
opposing or complaining about any unlawful practice under the Act.
    (3) All persons (whether or not employers) are prohibited from 
discharging or in any other way discriminating against any person 
(whether or not an employee) because that person has--
    (i) Filed any charge, or has instituted (or caused to be instituted) 
any proceeding under or related to this Act;
    (ii) Given, or is about to give, any information in connection with 
an inquiry or proceeding relating to a right under this Act;
    (iii) Testified, or is about to testify, in any inquiry or 
proceeding relating to a right under this Act.
    (b) Any violations of the Act or of these regulations constitute 
interfering with, restraining, or denying the exercise of rights 
provided by the Act.

[[Page 816]]

An employer may be liable for compensation and benefits lost by reason 
of the violation, for other actual monetary losses sustained as a direct 
result of the violation, and for appropriate equitable or other relief, 
including employment, reinstatement, promotion, or any other relief 
tailored to the harm suffered (see Sec. 825.400(c)). ``Interfering 
with'' the exercise of an employee's rights would include, for example, 
not only refusing to authorize FMLA leave, but discouraging an employee 
from using such leave. It would also include manipulation by a covered 
employer to avoid responsibilities under FMLA, for example:
    (1) Transferring employees from one worksite to another for the 
purpose of reducing worksites, or to keep worksites, below the 50-
employee threshold for employee eligibility under the Act;
    (2) Changing the essential functions of the job in order to preclude 
the taking of leave;
    (3) Reducing hours available to work in order to avoid employee 
eligibility.
    (c) The Act's prohibition against ``interference'' prohibits an 
employer from discriminating or retaliating against an employee or 
prospective employee for having exercised or attempted to exercise FMLA 
rights. For example, if an employee on leave without pay would otherwise 
be entitled to full benefits (other than health benefits), the same 
benefits would be required to be provided to an employee on unpaid FMLA 
leave. By the same token, employers cannot use the taking of FMLA leave 
as a negative factor in employment actions, such as hiring, promotions 
or disciplinary actions; nor can FMLA leave be counted under ``no 
fault'' attendance policies. See Sec. 825.215.
    (d) Employees cannot waive, nor may employers induce employees to 
waive, their prospective rights under FMLA. For example, employees (or 
their collective bargaining representatives) cannot ``trade off'' the 
right to take FMLA leave against some other benefit offered by the 
employer. This does not prevent the settlement or release of FMLA claims 
by employees based on past employer conduct without the approval of the 
Department of Labor or a court. Nor does it prevent an employee's 
voluntary and uncoerced acceptance (not as a condition of employment) of 
a ``light duty'' assignment while recovering from a serious health 
condition (see Sec. 825.702(d)). An employee's acceptance of such 
``light duty'' assignment does not constitute a waiver of the employee's 
prospective rights, including the right to be restored to the same 
position the employee held at the time the employee's FMLA leave 
commenced or to an equivalent position. The employee's right to 
restoration, however, ceases at the end of the applicable 12-month FMLA 
leave year.
    (e) Individuals, and not merely employees, are protected from 
retaliation for opposing (e.g., filing a complaint about) any practice 
which is unlawful under the Act. They are similarly protected if they 
oppose any practice which they reasonably believe to be a violation of 
the Act or regulations.



  Subpart C_Employee and Employer Rights and Obligations Under the Act



Sec. 825.300  Employer notice requirements.

    (a) General notice. (1) Every employer covered by the FMLA is 
required to post and keep posted on its premises, in conspicuous places 
where employees are employed, a notice explaining the Act's provisions 
and providing information concerning the procedures for filing 
complaints of violations of the Act with the Wage and Hour Division. The 
notice must be posted prominently where it can be readily seen by 
employees and applicants for employment. The poster and the text must be 
large enough to be easily read and contain fully legible text. 
Electronic posting is sufficient to meet this posting requirement as 
long as it otherwise meets the requirements of this section. An employer 
that willfully violates the posting requirement may be assessed a civil 
money penalty by the Wage and Hour Division not to exceed $110 for each 
separate offense.
    (2) Covered employers must post this general notice even if no 
employees are eligible for FMLA leave.
    (3) If an FMLA-covered employer has any eligible employees, it shall 
also

[[Page 817]]

provide this general notice to each employee by including the notice in 
employee handbooks or other written guidance to employees concerning 
employee benefits or leave rights, if such written materials exist, or 
by distributing a copy of the general notice to each new employee upon 
hiring. In either case, distribution may be accomplished electronically.
    (4) To meet the requirements of paragraph (a)(3) of this section, 
employers may duplicate the text of the notice contained in Appendix C 
of this part or may use another format so long as the information 
provided includes, at a minimum, all of the information contained in 
that notice. Where an employer's workforce is comprised of a significant 
portion of workers who are not literate in English, the employer shall 
provide the general notice in a language in which the employees are 
literate. Prototypes are available from the nearest office of the Wage 
and Hour Division or on the Internet at http://www.wagehour.dol.gov. 
Employers furnishing FMLA notices to sensory-impaired individuals must 
also comply with all applicable requirements under Federal or State law.
    (b) Eligibility notice. (1) When an employee requests FMLA leave, or 
when the employer acquires knowledge that an employee's leave may be for 
an FMLA-qualifying reason, the employer must notify the employee of the 
employee's eligibility to take FMLA leave within five business days, 
absent extenuating circumstances. See Sec. 825.110 for definition of an 
eligible employee. Employee eligibility is determined (and notice must 
be provided) at the commencement of the first instance of leave for each 
FMLA-qualifying reason in the applicable 12-month period (see Sec. Sec. 
825.127(c) and 825.200(b)). All FMLA absences for the same qualifying 
reason are considered a single leave and employee eligibility as to that 
reason for leave does not change during the applicable 12-month period.
    (2) The eligibility notice must state whether the employee is 
eligible for FMLA leave as defined in Sec. 825.110(a). If the employee 
is not eligible for FMLA leave, the notice must state at least one 
reason why the employee is not eligible, including as applicable the 
number of months the employee has been employed by the employer, the 
number of hours of service worked for the employer during the 12-month 
period, and whether the employee is employed at a worksite where 50 or 
more employees are employed by the employer within 75 miles of that 
worksite. Notification of eligibility may be oral or in writing; 
employers may use Appendix D of this part 825 to provide such 
notification to employees. The employer is obligated to translate this 
notice in any situation in which it is obligated to do so in Sec. 
825.300(a)(4).
    (3) If, at the time an employee provides notice of a subsequent need 
for FMLA leave during the applicable 12-month period due to a different 
FMLA-qualifying reason, and the employee's eligibility status has not 
changed, no additional eligibility notice is required. If, however, the 
employee's eligibility status has changed (e.g., if the employee has 
worked less than 1,250 hours of service for the employer in the 12 
months preceding the commencement of leave for the subsequent qualifying 
reason or the size of the workforce at the worksite has dropped below 50 
employees), the employer must notify the employee of the change in 
eligibility status within five business days, absent extenuating 
circumstances.
    (c) Rights and responsibilities notice. (1) Employers shall provide 
written notice detailing the specific expectations and obligations of 
the employee and explaining any consequences of a failure to meet these 
obligations. The employer is obligated to translate this notice in any 
situation in which it is obligated to do so in Sec. 825.300(a)(4). This 
notice shall be provided to the employee each time the eligibility 
notice is provided pursuant to paragraph (b) of this section. If leave 
has already begun, the notice should be mailed to the employee's address 
of record. Such specific notice must include, as appropriate:
    (i) That the leave may be designated and counted against the 
employee's annual FMLA leave entitlement if qualifying (see Sec. Sec. 
825.300(c) and 825.301) and the applicable 12-month period for FMLA 
entitlement (see Sec. Sec. 825.127(c), 825.200(b), (f), and (g));

[[Page 818]]

    (ii) Any requirements for the employee to furnish certification of a 
serious health condition, serious injury or illness, or qualifying 
exigency arising out of active duty or call to active duty status, and 
the consequences of failing to do so (see Sec. Sec. 825.305, 825.309, 
825.310, 825.313);
    (iii) The employee's right to substitute paid leave, whether the 
employer will require the substitution of paid leave, the conditions 
related to any substitution, and the employee's entitlement to take 
unpaid FMLA leave if the employee does not meet the conditions for paid 
leave (see Sec. 825.207);
    (iv) Any requirement for the employee to make any premium payments 
to maintain health benefits and the arrangements for making such 
payments (see Sec. 825.210), and the possible consequences of failure 
to make such payments on a timely basis (i.e., the circumstances under 
which coverage may lapse);
    (v) The employee's status as a ``key employee'' and the potential 
consequence that restoration may be denied following FMLA leave, 
explaining the conditions required for such denial (see Sec. 825.218);
    (vi) The employee's rights to maintenance of benefits during the 
FMLA leave and restoration to the same or an equivalent job upon return 
from FMLA leave (see Sec. Sec. 825.214 and 825.604); and
    (vii) The employee's potential liability for payment of health 
insurance premiums paid by the employer during the employee's unpaid 
FMLA leave if the employee fails to return to work after taking FMLA 
leave (see Sec. 825.213).
    (2) The notice of rights and responsibilities may include other 
information--e.g., whether the employer will require periodic reports of 
the employee's status and intent to return to work--but is not required 
to do so.
    (3) The notice of rights and responsibilities may be accompanied by 
any required certification form.
    (4) If the specific information provided by the notice of rights and 
responsibilities changes, the employer shall, within five business days 
of receipt of the employee's first notice of need for leave subsequent 
to any change, provide written notice referencing the prior notice and 
setting forth any of the information in the notice of rights and 
responsibilities that has changed. For example, if the initial leave 
period was paid leave and the subsequent leave period would be unpaid 
leave, the employer may need to give notice of the arrangements for 
making premium payments.
    (5) Employers are also expected to responsively answer questions 
from employees concerning their rights and responsibilities under the 
FMLA.
    (6) A prototype notice of rights and responsibilities is contained 
in appendix D of this part; the prototype may be obtained from local 
offices of the Wage and Hour Division or from the Internet at 
www.wagehour.dol.gov. Employers may adapt the prototype notice as 
appropriate to meet these notice requirements. The notice of rights and 
responsibilities may be distributed electronically so long as it 
otherwise meets the requirements of this section.
    (d) Designation notice. (1) The employer is responsible in all 
circumstances for designating leave as FMLA-qualifying, and for giving 
notice of the designation to the employee as provided in this section. 
When the employer has enough information to determine whether the leave 
is being taken for a FMLA-qualifying reason (e.g., after receiving a 
certification), the employer must notify the employee whether the leave 
will be designated and will be counted as FMLA leave within five 
business days absent extenuating circumstances. Only one notice of 
designation is required for each FMLA-qualifying reason per applicable 
12-month period, regardless of whether the leave taken due to the 
qualifying reason will be a continuous block of leave or intermittent or 
reduced schedule leave. If the employer determines that the leave will 
not be designated as FMLA-qualifying (e.g., if the leave is not for a 
reason covered by FMLA or the FMLA leave entitlement has been 
exhausted), the employer must notify the employee of that determination. 
If the employer requires paid leave to be substituted for unpaid FMLA 
leave, or that paid leave taken under an existing leave plan be counted 
as FMLA leave,

[[Page 819]]

the employer must inform the employee of this designation at the time of 
designating the FMLA leave.
    (2) If the employer has sufficient information to designate the 
leave as FMLA leave immediately after receiving notice of the employee's 
need for leave, the employer may provide the employee with the 
designation notice at that time.
    (3) If the employer will require the employee to present a fitness-
for-duty certification to be restored to employment, the employer must 
provide notice of such requirement with the designation notice. If the 
employer will require that the fitness-for-duty certification address 
the employee's ability to perform the essential functions of the 
employee's position, the employer must so indicate in the designation 
notice, and must include a list of the essential functions of the 
employee's position. See Sec. 825.312. If the employer handbook or 
other written documents (if any) describing the employer's leave 
policies clearly provide that a fitness-for-duty certification will be 
required in specific circumstances (e.g., by stating that fitness-for-
duty certification will be required in all cases of back injuries for 
employees in a certain occupation), the employer is not required to 
provide written notice of the requirement with the designation notice, 
but must provide oral notice no later than with the designation notice.
    (4) The designation notice must be in writing. A prototype 
designation notice is contained in appendix E of this part; the 
prototype designation notice may be obtained from local offices of the 
Wage and Hour Division or from the Internet at http://
www.wagehour.dol.gov. If the leave is not designated as FMLA leave 
because it does not meet the requirements of the Act, the notice to the 
employee that the leave is not designated as FMLA leave may be in the 
form of a simple written statement.
    (5) If the information provided by the employer to the employee in 
the designation notice changes (e.g., the employee exhausts the FMLA 
leave entitlement), the employer shall provide, within five business 
days of receipt of the employee's first notice of need for leave 
subsequent to any change, written notice of the change.
    (6) The employer must notify the employee of the amount of leave 
counted against the employee's FMLA leave entitlement. If the amount of 
leave needed is known at the time the employer designates the leave as 
FMLA-qualifying, the employer must notify the employee of the number of 
hours, days, or weeks that will be counted against the employee's FMLA 
leave entitlement in the designation notice. If it is not possible to 
provide the hours, days, or weeks that will be counted against the 
employee's FMLA leave entitlement (such as in the case of unforeseeable 
intermittent leave), then the employer must provide notice of the amount 
of leave counted against the employee's FMLA leave entitlement upon the 
request by the employee, but no more often than once in a 30-day period 
and only if leave was taken in that period. The notice of the amount of 
leave counted against the employee's FMLA entitlement may be oral or in 
writing. If such notice is oral, it shall be confirmed in writing, no 
later than the following payday (unless the payday is less than one week 
after the oral notice, in which case the notice must be no later than 
the subsequent payday). Such written notice may be in any form, 
including a notation on the employee's pay stub.
    (e) Consequences of failing to provide notice. Failure to follow the 
notice requirements set forth in this section may constitute an 
interference with, restraint, or denial of the exercise of an employee's 
FMLA rights. An employer may be liable for compensation and benefits 
lost by reason of the violation, for other actual monetary losses 
sustained as a direct result of the violation, and for appropriate 
equitable or other relief, including employment, reinstatement, 
promotion, or any other relief tailored to the harm suffered (see Sec. 
825.400(c)).



Sec. 825.301  Designation of FMLA leave.

    (a) Employer responsibilities. The employer's decision to designate 
leave as FMLA-qualifying must be based only on information received from 
the employee or the employee's spokesperson (e.g., if the employee is 
incapacitated,

[[Page 820]]

the employee's spouse, adult child, parent, doctor, etc., may provide 
notice to the employer of the need to take FMLA leave). In any 
circumstance where the employer does not have sufficient information 
about the reason for an employee's use of leave, the employer should 
inquire further of the employee or the spokesperson to ascertain whether 
leave is potentially FMLA-qualifying. Once the employer has acquired 
knowledge that the leave is being taken for a FMLA-qualifying reason, 
the employer must notify the employee as provided in Sec. 825.300(d).
    (b) Employee responsibilities. An employee giving notice of the need 
for FMLA leave does not need to expressly assert rights under the Act or 
even mention the FMLA to meet his or her obligation to provide notice, 
though the employee would need to state a qualifying reason for the 
needed leave and otherwise satisfy the notice requirements set forth in 
Sec. 825.302 or Sec. 825.303 depending on whether the need for leave 
is foreseeable or unforeseeable. An employee giving notice of the need 
for FMLA leave must explain the reasons for the needed leave so as to 
allow the employer to determine whether the leave qualifies under the 
Act. If the employee fails to explain the reasons, leave may be denied. 
In many cases, in explaining the reasons for a request to use leave, 
especially when the need for the leave was unexpected or unforeseen, an 
employee will provide sufficient information for the employer to 
designate the leave as FMLA leave. An employee using accrued paid leave 
may in some cases not spontaneously explain the reasons or their plans 
for using their accrued leave. However, if an employee requesting to use 
paid leave for a FMLA-qualifying reason does not explain the reason for 
the leave and the employer denies the employee's request, the employee 
will need to provide sufficient information to establish a FMLA-
qualifying reason for the needed leave so that the employer is aware 
that the leave may not be denied and may designate that the paid leave 
be appropriately counted against (substituted for) the employee's FMLA 
leave entitlement. Similarly, an employee using accrued paid vacation 
leave who seeks an extension of unpaid leave for a FMLA-qualifying 
reason will need to state the reason. If this is due to an event which 
occurred during the period of paid leave, the employer may count the 
leave used after the FMLA-qualifying reason against the employee's FMLA 
leave entitlement.
    (c) Disputes. If there is a dispute between an employer and an 
employee as to whether leave qualifies as FMLA leave, it should be 
resolved through discussions between the employee and the employer. Such 
discussions and the decision must be documented.
    (d) Retroactive designation. If an employer does not designate leave 
as required by Sec. 825.300, the employer may retroactively designate 
leave as FMLA leave with appropriate notice to the employee as required 
by Sec. 825.300 provided that the employer's failure to timely 
designate leave does not cause harm or injury to the employee. In all 
cases where leave would qualify for FMLA protections, an employer and an 
employee can mutually agree that leave be retroactively designated as 
FMLA leave.
    (e) Remedies. If an employer's failure to timely designate leave in 
accordance with Sec. 825.300 causes the employee to suffer harm, it may 
constitute an interference with, restraint of, or denial of the exercise 
of an employee's FMLA rights. An employer may be liable for compensation 
and benefits lost by reason of the violation, for other actual monetary 
losses sustained as a direct result of the violation, and for 
appropriate equitable or other relief, including employment, 
reinstatement, promotion, or any other relief tailored to the harm 
suffered (see Sec. 825.400(c)). For example, if an employer that was 
put on notice that an employee needed FMLA leave failed to designate the 
leave properly, but the employee's own serious health condition 
prevented him or her from returning to work during that time period 
regardless of the designation, an employee may not be able to show that 
the employee suffered harm as a result of the employer's actions. 
However, if an employee took leave to provide care for a son or daughter 
with a serious health condition believing it would not count toward his 
or her FMLA entitlement, and

[[Page 821]]

the employee planned to later use that FMLA leave to provide care for a 
spouse who would need assistance when recovering from surgery planned 
for a later date, the employee may be able to show that harm has 
occurred as a result of the employer's failure to designate properly. 
The employee might establish this by showing that he or she would have 
arranged for an alternative caregiver for the seriously-ill son or 
daughter if the leave had been designated timely.



Sec. 825.302  Employee notice requirements for foreseeable FMLA leave.

    (a) Timing of notice. An employee must provide the employer at least 
30 days advance notice before FMLA leave is to begin if the need for the 
leave is foreseeable based on an expected birth, placement for adoption 
or foster care, planned medical treatment for a serious health condition 
of the employee or of a family member, or the planned medical treatment 
for a serious injury or illness of a covered servicemember. If 30 days 
notice is not practicable, such as because of a lack of knowledge of 
approximately when leave will be required to begin, a change in 
circumstances, or a medical emergency, notice must be given as soon as 
practicable. For example, an employee's health condition may require 
leave to commence earlier than anticipated before the birth of a child. 
Similarly, little opportunity for notice may be given before placement 
for adoption. For foreseeable leave due to a qualifying exigency notice 
must be provided as soon as practicable, regardless of how far in 
advance such leave is foreseeable. Whether FMLA leave is to be 
continuous or is to be taken intermittently or on a reduced schedule 
basis, notice need only be given one time, but the employee shall advise 
the employer as soon as practicable if dates of scheduled leave change 
or are extended, or were initially unknown. In those cases where the 
employee is required to provide at least 30 days notice of foreseeable 
leave and does not do so, the employee shall explain the reasons why 
such notice was not practicable upon a request from the employer for 
such information.
    (b) As soon as practicable means as soon as both possible and 
practical, taking into account all of the facts and circumstances in the 
individual case. When an employee becomes aware of a need for FMLA leave 
less than 30 days in advance, it should be practicable for the employee 
to provide notice of the need for leave either the same day or the next 
business day. In all cases, however, the determination of when an 
employee could practicably provide notice must take into account the 
individual facts and circumstances.
    (c) Content of notice. An employee shall provide at least verbal 
notice sufficient to make the employer aware that the employee needs 
FMLA-qualifying leave, and the anticipated timing and duration of the 
leave. Depending on the situation, such information may include that a 
condition renders the employee unable to perform the functions of the 
job; that the employee is pregnant or has been hospitalized overnight; 
whether the employee or the employee's family member is under the 
continuing care of a health care provider; if the leave is due to a 
qualifying exigency, that a covered military member is on active duty or 
call to active duty status, and that the requested leave is for one of 
the reasons listed in Sec. 825.126(a); if the leave is for a family 
member, that the condition renders the family member unable to perform 
daily activities, or that the family member is a covered servicemember 
with a serious injury or illness; and the anticipated duration of the 
absence, if known. When an employee seeks leave for the first time for a 
FMLA-qualifying reason, the employee need not expressly assert rights 
under the FMLA or even mention the FMLA. When an employee seeks leave 
due to a FMLA-qualifying reason, for which the employer has previously 
provided FMLA-protected leave, the employee must specifically reference 
the qualifying reason for leave or the need for FMLA leave. In all 
cases, the employer should inquire further of the employee if it is 
necessary to have more information about whether FMLA leave is being 
sought by the employee, and obtain the necessary details of the leave to 
be

[[Page 822]]

taken. In the case of medical conditions, the employer may find it 
necessary to inquire further to determine if the leave is because of a 
serious health condition and may request medical certification to 
support the need for such leave (see Sec. 825.305). An employer may 
also request certification to support the need for leave for a 
qualifying exigency or for military caregiver leave (see Sec. Sec. 
825.309, 825.310). When an employee has been previously certified for 
leave due to more than one FMLA-qualifying reason, the employer may need 
to inquire further to determine for which qualifying reason the leave is 
needed. An employee has an obligation to respond to an employer's 
questions designed to determine whether an absence is potentially FMLA-
qualifying. Failure to respond to reasonable employer inquiries 
regarding the leave request may result in denial of FMLA protection if 
the employer is unable to determine whether the leave is FMLA-
qualifying.
    (d) Complying with employer policy. An employer may require an 
employee to comply with the employer's usual and customary notice and 
procedural requirements for requesting leave, absent unusual 
circumstances. For example, an employer may require that written notice 
set forth the reasons for the requested leave, the anticipated duration 
of the leave, and the anticipated start of the leave. An employee also 
may be required by an employer's policy to contact a specific 
individual. Unusual circumstances would include situations such as when 
an employee is unable to comply with the employer's policy that requests 
for leave should be made by contacting a specific number because on the 
day the employee needs to provide notice of his or her need for FMLA 
leave there is no one to answer the call-in number and the voice mail 
box is full. Where an employee does not comply with the employer's usual 
notice and procedural requirements, and no unusual circumstances justify 
the failure to comply, FMLA-protected leave may be delayed or denied. 
However, FMLA-protected leave may not be delayed or denied where the 
employer's policy requires notice to be given sooner than set forth in 
paragraph (a) of this section and the employee provides timely notice as 
set forth in paragraph (a) of this section.
    (e) Scheduling planned medical treatment. When planning medical 
treatment, the employee must consult with the employer and make a 
reasonable effort to schedule the treatment so as not to disrupt unduly 
the employer's operations, subject to the approval of the health care 
provider. Employees are ordinarily expected to consult with their 
employers prior to the scheduling of treatment in order to work out a 
treatment schedule which best suits the needs of both the employer and 
the employee. For example, if an employee who provides notice of the 
need to take FMLA leave on an intermittent basis for planned medical 
treatment neglects to consult with the employer to make a reasonable 
effort to arrange the schedule of treatments so as not to unduly disrupt 
the employer's operations, the employer may initiate discussions with 
the employee and require the employee to attempt to make such 
arrangements, subject to the approval of the health care provider. See 
Sec. Sec. 825.203 and 825.205.
    (f) Intermittent leave or leave on a reduced leave schedule must be 
medically necessary due to a serious health condition or a serious 
injury or illness. An employee shall advise the employer, upon request, 
of the reasons why the intermittent/reduced leave schedule is necessary 
and of the schedule for treatment, if applicable. The employee and 
employer shall attempt to work out a schedule for such leave that meets 
the employee's needs without unduly disrupting the employer's 
operations, subject to the approval of the health care provider.
    (g) An employer may waive employees' FMLA notice requirements. See 
Sec. 825.304.



Sec. 825.303  Employee notice requirements for unforeseeable FMLA leave.

    (a) Timing of notice. When the approximate timing of the need for 
leave is not foreseeable, an employee must provide notice to the 
employer as soon as practicable under the facts and circumstances of the 
particular case. It generally should be practicable for the employee to 
provide notice of leave

[[Page 823]]

that is unforeseeable within the time prescribed by the employer's usual 
and customary notice requirements applicable to such leave. See Sec. 
825.303(c). Notice may be given by the employee's spokesperson (e.g., 
spouse, adult family member, or other responsible party) if the employee 
is unable to do so personally. For example, if an employee's child has a 
severe asthma attack and the employee takes the child to the emergency 
room, the employee would not be required to leave his or her child in 
order to report the absence while the child is receiving emergency 
treatment. However, if the child's asthma attack required only the use 
of an inhaler at home followed by a period of rest, the employee would 
be expected to call the employer promptly after ensuring the child has 
used the inhaler.
    (b) Content of notice. An employee shall provide sufficient 
information for an employer to reasonably determine whether the FMLA may 
apply to the leave request. Depending on the situation, such information 
may include that a condition renders the employee unable to perform the 
functions of the job; that the employee is pregnant or has been 
hospitalized overnight; whether the employee or the employee's family 
member is under the continuing care of a health care provider; if the 
leave is due to a qualifying exigency, that a covered military member is 
on active duty or call to active duty status, that the requested leave 
is for one of the reasons listed in Sec. 825.126(a), and the 
anticipated duration of the absence; or if the leave is for a family 
member that the condition renders the family member unable to perform 
daily activities or that the family member is a covered servicemember 
with a serious injury or illness; and the anticipated duration of the 
absence, if known. When an employee seeks leave for the first time for a 
FMLA-qualifying reason, the employee need not expressly assert rights 
under the FMLA or even mention the FMLA. When an employee seeks leave 
due to a qualifying reason, for which the employer has previously 
provided the employee FMLA-protected leave, the employee must 
specifically reference either the qualifying reason for leave or the 
need for FMLA leave. Calling in ``sick'' without providing more 
information will not be considered sufficient notice to trigger an 
employer's obligations under the Act. The employer will be expected to 
obtain any additional required information through informal means. An 
employee has an obligation to respond to an employer's questions 
designed to determine whether an absence is potentially FMLA-qualifying. 
Failure to respond to reasonable employer inquiries regarding the leave 
request may result in denial of FMLA protection if the employer is 
unable to determine whether the leave is FMLA-qualifying.
    (c) Complying with employer policy. When the need for leave is not 
foreseeable, an employee must comply with the employer's usual and 
customary notice and procedural requirements for requesting leave, 
absent unusual circumstances. For example, an employer may require 
employees to call a designated number or a specific individual to 
request leave. However, if an employee requires emergency medical 
treatment, he or she would not be required to follow the call-in 
procedure until his or her condition is stabilized and he or she has 
access to, and is able to use, a phone. Similarly, in the case of an 
emergency requiring leave because of a FMLA-qualifying reason, written 
advance notice pursuant to an employer's internal rules and procedures 
may not be required when FMLA leave is involved. If an employee does not 
comply with the employer's usual notice and procedural requirements, and 
no unusual circumstances justify the failure to comply, FMLA-protected 
leave may be delayed or denied.



Sec. 825.304  Employee failure to provide notice.

    (a) Proper notice required. In all cases, in order for the onset of 
an employee's FMLA leave to be delayed due to lack of required notice, 
it must be clear that the employee had actual notice of the FMLA notice 
requirements. This condition would be satisfied by the employer's proper 
posting of the required notice at the worksite where the employee is 
employed and the employer's

[[Page 824]]

provision of the required notice in either an employee handbook or 
employee distribution, as required by Sec. 825.300.
    (b) Foreseeable leave--30 days. When the need for FMLA leave is 
foreseeable at least 30 days in advance and an employee fails to give 
timely advance notice with no reasonable excuse, the employer may delay 
FMLA coverage until 30 days after the date the employee provides notice. 
The need for leave and the approximate date leave would be taken must 
have been clearly foreseeable to the employee 30 days in advance of the 
leave. For example, knowledge that an employee would receive a telephone 
call about the availability of a child for adoption at some unknown 
point in the future would not be sufficient to establish the leave was 
clearly foreseeable 30 days in advance.
    (c) Foreseeable leave--less than 30 days. When the need for FMLA 
leave is foreseeable fewer than 30 days in advance and an employee fails 
to give notice as soon as practicable under the particular facts and 
circumstances, the extent to which an employer may delay FMLA coverage 
for leave depends on the facts of the particular case. For example, if 
an employee reasonably should have given the employer two weeks notice 
but instead only provided one week notice, then the employer may delay 
FMLA-protected leave for one week (thus, if the employer elects to delay 
FMLA coverage and the employee nonetheless takes leave one week after 
providing the notice (i.e., a week before the two week notice period has 
been met) the leave will not be FMLA-protected).
    (d) Unforeseeable leave. When the need for FMLA leave is 
unforeseeable and an employee fails to give notice in accordance with 
Sec. 825.303, the extent to which an employer may delay FMLA coverage 
for leave depends on the facts of the particular case. For example, if 
it would have been practicable for an employee to have given the 
employer notice of the need for leave very soon after the need arises 
consistent with the employer's policy, but instead the employee provided 
notice two days after the leave began, then the employer may delay FMLA 
coverage of the leave by two days.
    (e) Waiver of notice. An employer may waive employees' FMLA notice 
obligations or the employer's own internal rules on leave notice 
requirements. If an employer does not waive the employee's obligations 
under its internal leave rules, the employer may take appropriate action 
under its internal rules and procedures for failure to follow its usual 
and customary notification rules, absent unusual circumstances, as long 
as the actions are taken in a manner that does not discriminate against 
employees taking FMLA leave and the rules are not inconsistent with 
Sec. 825.303(a).



Sec. 825.305  Certification, general rule.

    (a) General. An employer may require that an employee's leave to 
care for the employee's covered family member with a serious health 
condition, or due to the employee's own serious health condition that 
makes the employee unable to perform one or more of the essential 
functions of the employee's position, be supported by a certification 
issued by the health care provider of the employee or the employee's 
family member. An employer may also require that an employee's leave 
because of a qualifying exigency or to care for a covered servicemember 
with a serious injury or illness be supported by a certification, as 
described in Sec. Sec. 825.309 and 825.310, respectively. An employer 
must give notice of a requirement for certification each time a 
certification is required; such notice must be written notice whenever 
required by Sec. 825.300(c). An employer's oral request to an employee 
to furnish any subsequent certification is sufficient.
    (b) Timing. In most cases, the employer should request that an 
employee furnish certification at the time the employee gives notice of 
the need for leave or within five business days thereafter, or, in the 
case of unforeseen leave, within five business days after the leave 
commences. The employer may request certification at some later date if 
the employer later has reason to question the appropriateness of the 
leave or its duration. The employee must provide the requested 
certification to the employer within 15 calendar days after the 
employer's request, unless it is not practicable under

[[Page 825]]

the particular circumstances to do so despite the employee's diligent, 
good faith efforts or the employer provides more than 15 calendar days 
to return the requested certification.
    (c) Complete and sufficient certification. The employee must provide 
a complete and sufficient certification to the employer if required by 
the employer in accordance with Sec. Sec. 825.306, 825.309, and 
825.310. The employer shall advise an employee whenever the employer 
finds a certification incomplete or insufficient, and shall state in 
writing what additional information is necessary to make the 
certification complete and sufficient. A certification is considered 
incomplete if the employer receives a certification, but one or more of 
the applicable entries have not been completed. A certification is 
considered insufficient if the employer receives a complete 
certification, but the information provided is vague, ambiguous, or non-
responsive. The employer must provide the employee with seven calendar 
days (unless not practicable under the particular circumstances despite 
the employee's diligent good faith efforts) to cure any such deficiency. 
If the deficiencies specified by the employer are not cured in the 
resubmitted certification, the employer may deny the taking of FMLA 
leave, in accordance with Sec. 825.313. A certification that is not 
returned to the employer is not considered incomplete or insufficient, 
but constitutes a failure to provide certification.
    (d) Consequences. At the time the employer requests certification, 
the employer must also advise an employee of the anticipated 
consequences of an employee's failure to provide adequate certification. 
If the employee fails to provide the employer with a complete and 
sufficient certification, despite the opportunity to cure the 
certification as provided in paragraph (c) of this section, or fails to 
provide any certification, the employer may deny the taking of FMLA 
leave, in accordance with Sec. 825.313. It is the employee's 
responsibility either to furnish a complete and sufficient certification 
or to furnish the health care provider providing the certification with 
any necessary authorization from the employee or the employee's family 
member in order for the health care provider to release a complete and 
sufficient certification to the employer to support the employee's FMLA 
request. This provision will apply in any case where an employer 
requests a certification permitted by these regulations, whether it is 
the initial certification, a recertification, a second or third opinion, 
or a fitness for duty certificate, including any clarifications 
necessary to determine if such certifications are authentic and 
sufficient. See Sec. Sec. 825.306, 825.307, 825.308, and 825.312.
    (e) Annual medical certification. Where the employee's need for 
leave due to the employee's own serious health condition, or the serious 
health condition of the employee's covered family member, lasts beyond a 
single leave year (as defined in Sec. 825.200), the employer may 
require the employee to provide a new medical certification in each 
subsequent leave year. Such new medical certifications are subject to 
the provisions for authentication and clarification set forth in Sec. 
825.307, including second and third opinions.



Sec. 825.306  Content of medical certification for leave taken because
of an employee's own serious health condition or the serious health 

condition of a 
          family member.

    (a) Required information. When leave is taken because of an 
employee's own serious health condition, or the serious health condition 
of a family member, an employer may require an employee to obtain a 
medical certification from a health care provider that sets forth the 
following information:
    (1) The name, address, telephone number, and fax number of the 
health care provider and type of medical practice/specialization;
    (2) The approximate date on which the serious health condition 
commenced, and its probable duration;
    (3) A statement or description of appropriate medical facts 
regarding the patient's health condition for which FMLA leave is 
requested. The medical facts must be sufficient to support the need for 
leave. Such medical facts may include information on symptoms, 
diagnosis, hospitalization, doctor visits, whether medication has been 
prescribed, any referrals for evaluation or

[[Page 826]]

treatment (physical therapy, for example), or any other regimen of 
continuing treatment;
    (4) If the employee is the patient, information sufficient to 
establish that the employee cannot perform the essential functions of 
the employee's job as well as the nature of any other work restrictions, 
and the likely duration of such inability (see Sec. 825.123(b) and 
(c));
    (5) If the patient is a covered family member with a serious health 
condition, information sufficient to establish that the family member is 
in need of care, as described in Sec. 825.124, and an estimate of the 
frequency and duration of the leave required to care for the family 
member;
    (6) If an employee requests leave on an intermittent or reduced 
schedule basis for planned medical treatment of the employee's or a 
covered family member's serious health condition, information sufficient 
to establish the medical necessity for such intermittent or reduced 
schedule leave and an estimate of the dates and duration of such 
treatments and any periods of recovery;
    (7) If an employee requests leave on an intermittent or reduced 
schedule basis for the employee's serious health condition, including 
pregnancy, that may result in unforeseeable episodes of incapacity, 
information sufficient to establish the medical necessity for such 
intermittent or reduced schedule leave and an estimate of the frequency 
and duration of the episodes of incapacity; and
    (8) If an employee requests leave on an intermittent or reduced 
schedule basis to care for a covered family member with a serious health 
condition, a statement that such leave is medically necessary to care 
for the family member, as described in Sec. Sec. 825.124 and 
825.203(b), which can include assisting in the family member's recovery, 
and an estimate of the frequency and duration of the required leave.
    (b) DOL has developed two optional forms (Form WH-380E and Form WH-
380F, as revised) for use in obtaining medical certification, including 
second and third opinions, from health care providers that meets FMLA's 
certification requirements. (See Appendix B to this Part 825.) Optional 
form WH-380E is for use when the employee's need for leave is due to the 
employee's own serious health condition. Optional form WH-380F is for 
use when the employee needs leave to care for a family member with a 
serious health condition. These optional forms reflect certification 
requirements so as to permit the health care provider to furnish 
appropriate medical information. Form WH-380E and WH-380F, as revised, 
or another form containing the same basic information, may be used by 
the employer; however, no information may be required beyond that 
specified in Sec. Sec. 825.306, 825.307, and 825.308. In all instances 
the information on the form must relate only to the serious health 
condition for which the current need for leave exists.
    (c) If an employee is on FMLA leave running concurrently with a 
workers' compensation absence, and the provisions of the workers' 
compensation statute permit the employer or the employer's 
representative to request additional information from the employee's 
workers' compensation health care provider, the FMLA does not prevent 
the employer from following the workers' compensation provisions and 
information received under those provisions may be considered in 
determining the employee's entitlement to FMLA-protected leave. 
Similarly, an employer may request additional information in accordance 
with a paid leave policy or disability plan that requires greater 
information to qualify for payments or benefits, provided that the 
employer informs the employee that the additional information only needs 
to be provided in connection with receipt of such payments or benefits. 
Any information received pursuant to such policy or plan may be 
considered in determining the employee's entitlement to FMLA-protected 
leave. If the employee fails to provide the information required for 
receipt of such payments or benefits, such failure will not affect the 
employee's entitlement to take unpaid FMLA leave. See Sec. 825.207(a).
    (d) If an employee's serious health condition may also be a 
disability within the meaning of the Americans with Disabilities Act 
(ADA), as amended, the FMLA does not prevent the employer from following 
the procedures

[[Page 827]]

for requesting medical information under the ADA. Any information 
received pursuant to these procedures may be considered in determining 
the employee's entitlement to FMLA-protected leave.
    (e) While an employee may choose to comply with the certification 
requirement by providing the employer with an authorization, release, or 
waiver allowing the employer to communicate directly with the health 
care provider of the employee or his or her covered family member, the 
employee may not be required to provide such an authorization, release, 
or waiver. In all instances in which certification is requested, it is 
the employee's responsibility to provide the employer with complete and 
sufficient certification and failure to do so may result in the denial 
of FMLA leave. See Sec. 825.305(d).



Sec. 825.307  Authentication and clarification of medical certification
for leave taken because of an employee's own serious health condition

or the serious 
          health condition of a family member; second and third 
          opinions.

    (a) Clarification and authentication. If an employee submits a 
complete and sufficient certification signed by the health care 
provider, the employer may not request additional information from the 
health care provider. However, the employer may contact the health care 
provider for purposes of clarification and authentication of the medical 
certification (whether initial certification or recertification) after 
the employer has given the employee an opportunity to cure any 
deficiencies as set forth in Sec. 825.305(c). To make such contact, the 
employer must use a health care provider, a human resources 
professional, a leave administrator, or a management official. Under no 
circumstances, however, may the employee's direct supervisor contact the 
employee's health care provider. For purposes of these regulations, 
``authentication'' means providing the health care provider with a copy 
of the certification and requesting verification that the information 
contained on the certification form was completed and/or authorized by 
the health care provider who signed the document; no additional medical 
information may be requested. ``Clarification'' means contacting the 
health care provider to understand the handwriting on the medical 
certification or to understand the meaning of a response. Employers may 
not ask health care providers for additional information beyond that 
required by the certification form. The requirements of the Health 
Insurance Portability and Accountability Act (``HIPAA'') Privacy Rule 
(see 45 CFR parts 160 and 164), which governs the privacy of 
individually-identifiable health information created or held by HIPAA-
covered entities, must be satisfied when individually-identifiable 
health information of an employee is shared with an employer by a HIPAA-
covered health care provider. If an employee chooses not to provide the 
employer with authorization allowing the employer to clarify the 
certification with the health care provider, and does not otherwise 
clarify the certification, the employer may deny the taking of FMLA 
leave if the certification is unclear. See Sec. 825.305(d). It is the 
employee's responsibility to provide the employer with a complete and 
sufficient certification and to clarify the certification if necessary.
    (b) Second opinion. (1) An employer who has reason to doubt the 
validity of a medical certification may require the employee to obtain a 
second opinion at the employer's expense. Pending receipt of the second 
(or third) medical opinion, the employee is provisionally entitled to 
the benefits of the Act, including maintenance of group health benefits. 
If the certifications do not ultimately establish the employee's 
entitlement to FMLA leave, the leave shall not be designated as FMLA 
leave and may be treated as paid or unpaid leave under the employer's 
established leave policies. In addition, the consequences set forth in 
Sec. 825.305(d) will apply if the employee or the employee's family 
member fails to authorize his or her health care provider to release all 
relevant medical information pertaining to the serious health condition 
at issue if requested by the health care provider designated to provide 
a second opinion in order to render a sufficient and complete second 
opinion.

[[Page 828]]

    (2) The employer is permitted to designate the health care provider 
to furnish the second opinion, but the selected health care provider may 
not be employed on a regular basis by the employer. The employer may not 
regularly contract with or otherwise regularly utilize the services of 
the health care provider furnishing the second opinion unless the 
employer is located in an area where access to health care is extremely 
limited (e.g., a rural area where no more than one or two doctors 
practice in the relevant specialty in the vicinity).
    (c) Third opinion. If the opinions of the employee's and the 
employer's designated health care providers differ, the employer may 
require the employee to obtain certification from a third health care 
provider, again at the employer's expense. This third opinion shall be 
final and binding. The third health care provider must be designated or 
approved jointly by the employer and the employee. The employer and the 
employee must each act in good faith to attempt to reach agreement on 
whom to select for the third opinion provider. If the employer does not 
attempt in good faith to reach agreement, the employer will be bound by 
the first certification. If the employee does not attempt in good faith 
to reach agreement, the employee will be bound by the second 
certification. For example, an employee who refuses to agree to see a 
doctor in the specialty in question may be failing to act in good faith. 
On the other hand, an employer that refuses to agree to any doctor on a 
list of specialists in the appropriate field provided by the employee 
and whom the employee has not previously consulted may be failing to act 
in good faith. In addition, the consequences set forth in Sec. 
825.305(d) will apply if the employee or the employee's family member 
fails to authorize his or her health care provider to release all 
relevant medical information pertaining to the serious health condition 
at issue if requested by the health care provider designated to provide 
a third opinion in order to render a sufficient and complete third 
opinion.
    (d) Copies of opinions. The employer is required to provide the 
employee with a copy of the second and third medical opinions, where 
applicable, upon request by the employee. Requested copies are to be 
provided within five business days unless extenuating circumstances 
prevent such action.
    (e) Travel expenses. If the employer requires the employee to obtain 
either a second or third opinion the employer must reimburse an employee 
or family member for any reasonable ``out of pocket'' travel expenses 
incurred to obtain the second and third medical opinions. The employer 
may not require the employee or family member to travel outside normal 
commuting distance for purposes of obtaining the second or third medical 
opinions except in very unusual circumstances.
    (f) Medical certification abroad. In circumstances in which the 
employee or a family member is visiting in another country, or a family 
member resides in another country, and a serious health condition 
develops, the employer shall accept a medical certification as well as 
second and third opinions from a health care provider who practices in 
that country. Where a certification by a foreign health care provider is 
in a language other than English, the employee must provide the employer 
with a written translation of the certification upon request.



Sec. 825.308  Recertifications for leave taken because of an employee's
own serious health condition or the serious health condition 

of a family member.

    (a) 30-day rule. An employer may request recertification no more 
often than every 30 days and only in connection with an absence by the 
employee, unless paragraphs (b) or (c) of this section apply.
    (b) More than 30 days. If the medical certification indicates that 
the minimum duration of the condition is more than 30 days, an employer 
must wait until that minimum duration expires before requesting a 
recertification, unless paragraph (c) of this section applies. For 
example, if the medical certification states that an employee will be 
unable to work, whether continuously or on an intermittent basis, for 40 
days, the employer must wait 40 days before requesting a 
recertification. In all cases, an employer may request a recertification 
of a medical

[[Page 829]]

condition every six months in connection with an absence by the 
employee. Accordingly, even if the medical certification indicates that 
the employee will need intermittent or reduced schedule leave for a 
period in excess of six months (e.g., for a lifetime condition), the 
employer would be permitted to request recertification every six months 
in connection with an absence.
    (c) Less than 30 days. An employer may request recertification in 
less than 30 days if:
    (1) The employee requests an extension of leave;
    (2) Circumstances described by the previous certification have 
changed significantly (e.g., the duration or frequency of the absence, 
the nature or severity of the illness, complications). For example, if a 
medical certification stated that an employee would need leave for one 
to two days when the employee suffered a migraine headache and the 
employee's absences for his or her last two migraines lasted four days 
each, then the increased duration of absence might constitute a 
significant change in circumstances allowing the employer to request a 
recertification in less than 30 days. Likewise, if an employee had a 
pattern of using unscheduled FMLA leave for migraines in conjunction 
with his or her scheduled days off, then the timing of the absences also 
might constitute a significant change in circumstances sufficient for an 
employer to request a recertification more frequently than every 30 
days; or
    (3) The employer receives information that casts doubt upon the 
employee's stated reason for the absence or the continuing validity of 
the certification. For example, if an employee is on FMLA leave for four 
weeks due to the employee's knee surgery, including recuperation, and 
the employee plays in company softball league games during the 
employee's third week of FMLA leave, such information might be 
sufficient to cast doubt upon the continuing validity of the 
certification allowing the employer to request a recertification in less 
than 30 days.
    (d) Timing. The employee must provide the requested recertification 
to the employer within the timeframe requested by the employer (which 
must allow at least 15 calendar days after the employer's request), 
unless it is not practicable under the particular circumstances to do so 
despite the employee's diligent, good faith efforts.
    (e) Content. The employer may ask for the same information when 
obtaining recertification as that permitted for the original 
certification as set forth in Sec. 825.306. The employee has the same 
obligations to participate and cooperate (including providing a complete 
and sufficient certification or adequate authorization to the health 
care provider) in the recertification process as in the initial 
certification process. See Sec. 825.305(d). As part of the information 
allowed to be obtained on recertification for leave taken because of a 
serious health condition, the employer may provide the health care 
provider with a record of the employee's absence pattern and ask the 
health care provider if the serious health condition and need for leave 
is consistent with such a pattern.
    (f) Any recertification requested by the employer shall be at the 
employee's expense unless the employer provides otherwise. No second or 
third opinion on recertification may be required.



Sec. 825.309  Certification for leave taken because of a qualifying exigency.

    (a) Active Duty Orders. The first time an employee requests leave 
because of a qualifying exigency arising out of the active duty or call 
to active duty status of a covered military member (as defined in Sec. 
825.126(b)(2)), an employer may require the employee to provide a copy 
of the covered military member's active duty orders or other 
documentation issued by the military which indicates that the covered 
military member is on active duty or call to active duty status in 
support of a contingency operation, and the dates of the covered 
military member's active duty service. This information need only be 
provided to the employer once. A copy of new active duty orders or other 
documentation issued by the military shall be provided to the employer 
if the need for leave because of a qualifying exigency arises out of a 
different active duty or call to active duty status of

[[Page 830]]

the same or a different covered military member;
    (b) Required information. An employer may require that leave for any 
qualifying exigency specified in Sec. 825.126 be supported by a 
certification from the employee that sets forth the following 
information:
    (1) A statement or description, signed by the employee, of 
appropriate facts regarding the qualifying exigency for which FMLA leave 
is requested. The facts must be sufficient to support the need for 
leave. Such facts should include information on the type of qualifying 
exigency for which leave is requested and any available written 
documentation which supports the request for leave; such documentation, 
for example, may include a copy of a meeting announcement for 
informational briefings sponsored by the military, a document confirming 
an appointment with a counselor or school official, or a copy of a bill 
for services for the handling of legal or financial affairs;
    (2) The approximate date on which the qualifying exigency commenced 
or will commence;
    (3) If an employee requests leave because of a qualifying exigency 
for a single, continuous period of time, the beginning and end dates for 
such absence;
    (4) If an employee requests leave because of a qualifying exigency 
on an intermittent or reduced schedule basis, an estimate of the 
frequency and duration of the qualifying exigency; and
    (5) If the qualifying exigency involves meeting with a third party, 
appropriate contact information for the individual or entity with whom 
the employee is meeting (such as the name, title, organization, address, 
telephone number, fax number, and e-mail address) and a brief 
description of the purpose of the meeting.
    (c) DOL has developed an optional form (Form WH-384) for employees' 
use in obtaining a certification that meets FMLA's certification 
requirements. (See appendix G to this part 825.) This optional form 
reflects certification requirements so as to permit the employee to 
furnish appropriate information to support his or her request for leave 
because of a qualifying exigency. Form WH-384, or another form 
containing the same basic information, may be used by the employer; 
however, no information may be required beyond that specified in this 
section.
    (d) Verification. If an employee submits a complete and sufficient 
certification to support his or her request for leave because of a 
qualifying exigency, the employer may not request additional information 
from the employee. However, if the qualifying exigency involves meeting 
with a third party, the employer may contact the individual or entity 
with whom the employee is meeting for purposes of verifying a meeting or 
appointment schedule and the nature of the meeting between the employee 
and the specified individual or entity. The employee's permission is not 
required in order to verify meetings or appointments with third parties, 
but no additional information may be requested by the employer. An 
employer also may contact an appropriate unit of the Department of 
Defense to request verification that a covered military member is on 
active duty or call to active duty status; no additional information may 
be requested and the employee's permission is not required.



Sec. 825.310  Certification for leave taken to care for a covered 
servicemember (military caregiver leave).

    (a) Required information from health care provider. When leave is 
taken to care for a covered servicemember with a serious injury or 
illness, an employer may require an employee to obtain a certification 
completed by an authorized health care provider of the covered 
servicemember. For purposes of leave taken to care for a covered 
servicemember, any one of the following health care providers may 
complete such a certification:
    (1) A United States Department of Defense (``DOD'') health care 
provider;
    (2) A United States Department of Veterans Affairs (``VA'') health 
care provider;
    (3) A DOD TRICARE network authorized private health care provider; 
or
    (4) A DOD non-network TRICARE authorized private health care 
provider.
    (b) If the authorized health care provider is unable to make certain 
military-related determinations outlined

[[Page 831]]

below, the authorized health care provider may rely on determinations 
from an authorized DOD representative (such as a DOD recovery care 
coordinator). An employer may request that the health care provider 
provide the following information:
    (1) The name, address, and appropriate contact information 
(telephone number, fax number, and/or email address) of the health care 
provider, the type of medical practice, the medical specialty, and 
whether the health care provider is one of the following:
    (i) A DOD health care provider;
    (ii) A VA health care provider;
    (iii) A DOD TRICARE network authorized private health care provider; 
or
    (iv) A DOD non-network TRICARE authorized private health care 
provider.
    (2) Whether the covered servicemember's injury or illness was 
incurred in the line of duty on active duty;
    (3) The approximate date on which the serious injury or illness 
commenced, and its probable duration;
    (4) A statement or description of appropriate medical facts 
regarding the covered servicemember's health condition for which FMLA 
leave is requested. The medical facts must be sufficient to support the 
need for leave. Such medical facts must include information on whether 
the injury or illness may render the covered servicemember medically 
unfit to perform the duties of the servicemember's office, grade, rank, 
or rating and whether the member is receiving medical treatment, 
recuperation, or therapy;
    (5) Information sufficient to establish that the covered 
servicemember is in need of care, as described in Sec. 825.124, and 
whether the covered servicemember will need care for a single continuous 
period of time, including any time for treatment and recovery, and an 
estimate as to the beginning and ending dates for this period of time;
    (6) If an employee requests leave on an intermittent or reduced 
schedule basis for planned medical treatment appointments for the 
covered servicemember, whether there is a medical necessity for the 
covered servicemember to have such periodic care and an estimate of the 
treatment schedule of such appointments;
    (7) If an employee requests leave on an intermittent or reduced 
schedule basis to care for a covered servicemember other than for 
planned medical treatment (e.g., episodic flare-ups of a medical 
condition), whether there is a medical necessity for the covered 
servicemember to have such periodic care, which can include assisting in 
the covered servicemember's recovery, and an estimate of the frequency 
and duration of the periodic care.
    (c) Required information from employee and/or covered servicemember. 
In addition to the information that may be requested under Sec. 
825.310(b), an employer may also request that such certification set 
forth the following information provided by an employee and/or covered 
servicemember:
    (1) The name and address of the employer of the employee requesting 
leave to care for a covered servicemember, the name of the employee 
requesting such leave, and the name of the covered servicemember for 
whom the employee is requesting leave to care;
    (2) The relationship of the employee to the covered servicemember 
for whom the employee is requesting leave to care;
    (3) Whether the covered servicemember is a current member of the 
Armed Forces, the National Guard or Reserves, and the covered 
servicemember's military branch, rank, and current unit assignment;
    (4) Whether the covered servicemember is assigned to a military 
medical facility as an outpatient or to a unit established for the 
purpose of providing command and control of members of the Armed Forces 
receiving medical care as outpatients (such as a medical hold or warrior 
transition unit), and the name of the medical treatment facility or 
unit;
    (5) Whether the covered servicemember is on the temporary disability 
retired list;
    (6) A description of the care to be provided to the covered 
servicemember and an estimate of the leave needed to provide the care.
    (d) DOL has developed an optional form (WH-385) for employees' use 
in obtaining certification that meets

[[Page 832]]

FMLA's certification requirements. (See appendix H to this part 825.) 
This optional form reflects certification requirements so as to permit 
the employee to furnish appropriate information to support his or her 
request for leave to care for a covered servicemember with a serious 
injury or illness. WH-385, or another form containing the same basic 
information, may be used by the employer; however, no information may be 
required beyond that specified in this section. In all instances the 
information on the certification must relate only to the serious injury 
or illness for which the current need for leave exists. An employer may 
seek authentication and/or clarification of the certification under 
Sec. 825.307. However, second and third opinions under Sec. 825.307 
are not permitted for leave to care for a covered servicemember. 
Additionally, recertifications under Sec. 825.308 are not permitted for 
leave to care for a covered servicemember. An employer may require an 
employee to provide confirmation of covered family relationship to the 
seriously injured or ill servicemember pursuant to Sec. 825.122(j) of 
the FMLA.
    (e) An employer requiring an employee to submit a certification for 
leave to care for a covered servicemember must accept as sufficient 
certification, in lieu of the Department's optional certification form 
(WH-385) or an employer's own certification form, ``invitational travel 
orders'' (``ITOs'') or ``invitational travel authorizations'' (``ITAs'') 
issued to any family member to join an injured or ill servicemember at 
his or her bedside. An ITO or ITA is sufficient certification for the 
duration of time specified in the ITO or ITA. During that time period, 
an eligible employee may take leave to care for the covered 
servicemember in a continuous block of time or on an intermittent basis. 
An eligible employee who provides an ITO or ITA to support his or her 
request for leave may not be required to provide any additional or 
separate certification that leave taken on an intermittent basis during 
the period of time specified in the ITO or ITA is medically necessary. 
An ITO or ITA is sufficient certification for an employee entitled to 
take FMLA leave to care for a covered servicemember regardless of 
whether the employee is named in the order or authorization.
    (1) If an employee will need leave to care for a covered 
servicemember beyond the expiration date specified in an ITO or ITA, an 
employer may request that the employee have one of the authorized health 
care providers listed under Sec. 825.310(a) complete the DOL optional 
certification form (WH-385) or an employer's own form, as requisite 
certification for the remainder of the employee's necessary leave 
period.
    (2) An employer may seek authentication and clarification of the ITO 
or ITA under Sec. 825.307. An employer may not utilize the second or 
third opinion process outlined in Sec. 825.307 or the recertification 
process under Sec. 825.308 during the period of time in which leave is 
supported by an ITO or ITA.
    (3) An employer may require an employee to provide confirmation of 
covered family relationship to the seriously injured or ill 
servicemember pursuant to Sec. 825.122(j) when an employee supports his 
or her request for FMLA leave with a copy of an ITO or ITA.
    (f) In all instances in which certification is requested, it is the 
employee's responsibility to provide the employer with complete and 
sufficient certification and failure to do so may result in the denial 
of FMLA leave. See Sec. 825.305(d).



Sec. 825.311  Intent to return to work.

    (a) An employer may require an employee on FMLA leave to report 
periodically on the employee's status and intent to return to work. The 
employer's policy regarding such reports may not be discriminatory and 
must take into account all of the relevant facts and circumstances 
related to the individual employee's leave situation.
    (b) If an employee gives unequivocal notice of intent not to return 
to work, the employer's obligations under FMLA to maintain health 
benefits (subject to COBRA requirements) and to restore the employee 
cease. However, these obligations continue if an employee indicates he 
or she may be unable to return to work but expresses a continuing desire 
to do so.

[[Page 833]]

    (c) It may be necessary for an employee to take more leave than 
originally anticipated. Conversely, an employee may discover after 
beginning leave that the circumstances have changed and the amount of 
leave originally anticipated is no longer necessary. An employee may not 
be required to take more FMLA leave than necessary to resolve the 
circumstance that precipitated the need for leave. In both of these 
situations, the employer may require that the employee provide the 
employer reasonable notice (i.e., within two business days) of the 
changed circumstances where foreseeable. The employer may also obtain 
information on such changed circumstances through requested status 
reports.



Sec. 825.312  Fitness-for-duty certification.

    (a) As a condition of restoring an employee whose FMLA leave was 
occasioned by the employee's own serious health condition that made the 
employee unable to perform the employee's job, an employer may have a 
uniformly-applied policy or practice that requires all similarly-
situated employees (i.e., same occupation, same serious health 
condition) who take leave for such conditions to obtain and present 
certification from the employee's health care provider that the employee 
is able to resume work. The employee has the same obligations to 
participate and cooperate (including providing a complete and sufficient 
certification or providing sufficient authorization to the health care 
provider to provide the information directly to the employer) in the 
fitness-for-duty certification process as in the initial certification 
process. See Sec. 825.305(d).
    (b) An employer may seek a fitness-for-duty certification only with 
regard to the particular health condition that caused the employee's 
need for FMLA leave. The certification from the employee's health care 
provider must certify that the employee is able to resume work. 
Additionally, an employer may require that the certification 
specifically address the employee's ability to perform the essential 
functions of the employee's job. In order to require such a 
certification, an employer must provide an employee with a list of the 
essential functions of the employee's job no later than with the 
designation notice required by Sec. 825.300(d), and must indicate in 
the designation notice that the certification must address the 
employee's ability to perform those essential functions. If the employer 
satisfies these requirements, the employee's health care provider must 
certify that the employee can perform the identified essential functions 
of his or her job. Following the procedures set forth in Sec. 
825.307(a), the employer may contact the employee's health care provider 
for purposes of clarifying and authenticating the fitness-for-duty 
certification. Clarification may be requested only for the serious 
health condition for which FMLA leave was taken. The employer may not 
delay the employee's return to work while contact with the health care 
provider is being made. No second or third opinions on a fitness-for-
duty certification may be required.
    (c) The cost of the certification shall be borne by the employee, 
and the employee is not entitled to be paid for the time or travel costs 
spent in acquiring the certification.
    (d) The designation notice required in Sec. 825.300(d) shall advise 
the employee if the employer will require a fitness-for-duty 
certification to return to work and whether that fitness-for-duty 
certification must address the employee's ability to perform the 
essential functions of the employee's job.
    (e) An employer may delay restoration to employment until an 
employee submits a required fitness-for-duty certification unless the 
employer has failed to provide the notice required in paragraph (d) of 
this section. If an employer provides the notice required, an employee 
who does not provide a fitness-for-duty certification or request 
additional FMLA leave is no longer entitled to reinstatement under the 
FMLA. See Sec. 825.313(d).
    (f) An employer is not entitled to a certification of fitness to 
return to duty for each absence taken on an intermittent or reduced 
leave schedule. However, an employer is entitled to a certification of 
fitness to return to duty for such absences up to once every 30 days if 
reasonable safety concerns exist regarding the employee's ability

[[Page 834]]

to perform his or her duties, based on the serious health condition for 
which the employee took such leave. If an employer chooses to require a 
fitness-for-duty certification under such circumstances, the employer 
shall inform the employee at the same time it issues the designation 
notice that for each subsequent instance of intermittent or reduced 
schedule leave, the employee will be required to submit a fitness-for-
duty certification unless one has already been submitted within the past 
30 days. Alternatively, an employer can set a different interval for 
requiring a fitness-for-duty certification as long as it does not exceed 
once every 30 days and as long as the employer advises the employee of 
the requirement in advance of the employee taking the intermittent or 
reduced schedule leave. The employer may not terminate the employment of 
the employee while awaiting such a certification of fitness to return to 
duty for an intermittent or reduced schedule leave absence. Reasonable 
safety concerns means a reasonable belief of significant risk of harm to 
the individual employee or others. In determining whether reasonable 
safety concerns exist, an employer should consider the nature and 
severity of the potential harm and the likelihood that potential harm 
will occur.
    (g) If State or local law or the terms of a collective bargaining 
agreement govern an employee's return to work, those provisions shall be 
applied.
    (h) Requirements under the Americans with Disabilities Act (ADA), as 
amended, apply. After an employee returns from FMLA leave, the ADA 
requires any medical examination at an employer's expense by the 
employer's health care provider be job-related and consistent with 
business necessity. For example, an attorney could not be required to 
submit to a medical examination or inquiry just because her leg had been 
amputated. The essential functions of an attorney's job do not require 
use of both legs; therefore such an inquiry would not be job related. An 
employer may require a warehouse laborer, whose back impairment affects 
the ability to lift, to be examined by an orthopedist, but may not 
require this employee to submit to an HIV test where the test is not 
related to either the essential functions of his or her job or to his/
her impairment. If an employee's serious health condition may also be a 
disability within the meaning of the ADA, the FMLA does not prevent the 
employer from following the procedures for requesting medical 
information under the ADA.



Sec. 825.313  Failure to provide certification.

    (a) Foreseeable leave. In the case of foreseeable leave, if an 
employee fails to provide certification in a timely manner as required 
by Sec. 825.305, then an employer may deny FMLA coverage until the 
required certification is provided. For example, if an employee has 15 
days to provide a certification and does not provide the certification 
for 45 days without sufficient reason for the delay, the employer can 
deny FMLA protections for the 30-day period following the expiration of 
the 15-day time period, if the employee takes leave during such period.
    (b) Unforeseeable leave. In the case of unforeseeable leave, an 
employer may deny FMLA coverage for the requested leave if the employee 
fails to provide a certification within 15 calendar days from receipt of 
the request for certification unless not practicable due to extenuating 
circumstances. For example, in the case of a medical emergency, it may 
not be practicable for an employee to provide the required certification 
within 15 calendar days. Absent such extenuating circumstances, if the 
employee fails to timely return the certification, the employer can deny 
FMLA protections for the leave following the expiration of the 15-day 
time period until a sufficient certification is provided. If the 
employee never produces the certification, the leave is not FMLA leave.
    (c) Recertification. An employee must provide recertification within 
the time requested by the employer (which must allow at least 15 
calendar days after the request) or as soon as practicable under the 
particular facts and circumstances. If an employee fails to provide a 
recertification within a reasonable time under the particular facts and 
circumstances, then the employer may deny continuation of the FMLA

[[Page 835]]

leave protections until the employee produces a sufficient 
recertification. If the employee never produces the recertification, the 
leave is not FMLA leave. Recertification does not apply to leave taken 
for a qualifying exigency or to care for a covered servicemember.
    (d) Fitness-for-duty certification. When requested by the employer 
pursuant to a uniformly applied policy for similarly-situated employees, 
the employee must provide medical certification, at the time the 
employee seeks reinstatement at the end of FMLA leave taken for the 
employee's serious health condition, that the employee is fit for duty 
and able to return to work (see Sec. 825.312(a)) if the employer has 
provided the required notice (see Sec. 825.300(e)); the employer may 
delay restoration until the certification is provided. Unless the 
employee provides either a fitness-for-duty certification or a new 
medical certification for a serious health condition at the time FMLA 
leave is concluded, the employee may be terminated. See also Sec. 
825.213(a)(3).



                    Subpart D_Enforcement Mechanisms



Sec. 825.400  Enforcement, general rules.

    (a) The employee has the choice of:
    (1) Filing, or having another person file on his or her behalf, a 
complaint with the Secretary of Labor, or
    (2) Filing a private lawsuit pursuant to section 107 of FMLA.
    (b) If the employee files a private lawsuit, it must be filed within 
two years after the last action which the employee contends was in 
violation of the Act, or three years if the violation was willful.
    (c) If an employer has violated one or more provisions of FMLA, and 
if justified by the facts of a particular case, an employee may receive 
one or more of the following: Wages, employment benefits, or other 
compensation denied or lost to such employee by reason of the violation; 
or, where no such tangible loss has occurred, such as when FMLA leave 
was unlawfully denied, any actual monetary loss sustained by the 
employee as a direct result of the violation, such as the cost of 
providing care, up to a sum equal to 26 weeks of wages for the employee 
in a case involving leave to care for a covered servicemember or 12 
weeks of wages for the employee in a case involving leave for any other 
FMLA qualifying reason. In addition, the employee may be entitled to 
interest on such sum, calculated at the prevailing rate. An amount 
equaling the preceding sums may also be awarded as liquidated damages 
unless such amount is reduced by the court because the violation was in 
good faith and the employer had reasonable grounds for believing the 
employer had not violated the Act. When appropriate, the employee may 
also obtain appropriate equitable relief, such as employment, 
reinstatement and promotion. When the employer is found in violation, 
the employee may recover a reasonable attorney's fee, reasonable expert 
witness fees, and other costs of the action from the employer in 
addition to any judgment awarded by the court.



Sec. 825.401  Filing a complaint with the Federal Government.

    (a) A complaint may be filed in person, by mail or by telephone, 
with the Wage and Hour Division, Employment Standards Administration, 
U.S. Department of Labor. A complaint may be filed at any local office 
of the Wage and Hour Division; the address and telephone number of local 
offices may be found in telephone directories or on the Department's Web 
site.
    (b) A complaint filed with the Secretary of Labor should be filed 
within a reasonable time of when the employee discovers that his or her 
FMLA rights have been violated. In no event may a complaint be filed 
more than two years after the action which is alleged to be a violation 
of FMLA occurred, or three years in the case of a willful violation.
    (c) No particular form of complaint is required, except that a 
complaint must be reduced to writing and should include a full statement 
of the acts and/or omissions, with pertinent dates, which are believed 
to constitute the violation.



Sec. 825.402  Violations of the posting requirement.

    Section 825.300 describes the requirements for covered employers to 
post a

[[Page 836]]

notice for employees that explains the Act's provisions. If a 
representative of the Department of Labor determines that an employer 
has committed a willful violation of this posting requirement, and that 
the imposition of a civil money penalty for such violation is 
appropriate, the representative may issue and serve a notice of penalty 
on such employer in person or by certified mail. Where service by 
certified mail is not accepted, notice shall be deemed received on the 
date of attempted delivery. Where service is not accepted, the notice 
may be served by regular mail.



Sec. 825.403  Appealing the assessment of a penalty for willful 
violation of the posting requirement.

    (a) An employer may obtain a review of the assessment of penalty 
from the Wage and Hour Regional Administrator for the region in which 
the alleged violation(s) occurred. If the employer does not seek such a 
review or fails to do so in a timely manner, the notice of the penalty 
constitutes the final ruling of the Secretary of Labor.
    (b) To obtain review, an employer may file a petition with the Wage 
and Hour Regional Administrator for the region in which the alleged 
violations occurred. No particular form of petition for review is 
required, except that the petition must be in writing, should contain 
the legal and factual bases for the petition, and must be mailed to the 
Regional Administrator within 15 days of receipt of the notice of 
penalty. The employer may request an oral hearing which may be conducted 
by telephone.
    (c) The decision of the Regional Administrator constitutes the final 
order of the Secretary.



Sec. 825.404  Consequences for an employer when not paying the penalty 
assessment after a final order is issued.

    The Regional Administrator may seek to recover the unpaid penalty 
pursuant to the Debt Collection Act (DCA), 31 U.S.C. 3711 et seq., and, 
in addition to seeking recovery of the unpaid final order, may seek 
interest and penalties as provided under the DCA. The final order may 
also be referred to the Solicitor of Labor for collection. The Secretary 
may file suit in any court of competent jurisdiction to recover the 
monies due as a result of the unpaid final order, interest, and 
penalties.



                  Subpart E_Recordkeeping Requirements



Sec. 825.500  Recordkeeping requirements.

    (a) FMLA provides that covered employers shall make, keep, and 
preserve records pertaining to their obligations under the Act in 
accordance with the recordkeeping requirements of section 11(c) of the 
Fair Labor Standards Act (FLSA) and in accordance with these 
regulations. FMLA also restricts the authority of the Department of 
Labor to require any employer or plan, fund, or program to submit books 
or records more than once during any 12-month period unless the 
Department has reasonable cause to believe a violation of FMLA exists or 
the Department is investigating a complaint. These regulations establish 
no requirement for the submission of any records unless specifically 
requested by a Departmental official.
    (b) No particular order or form of records is required. These 
regulations establish no requirement that any employer revise its 
computerized payroll or personnel records systems to comply. However, 
employers must keep the records specified by these regulations for no 
less than three years and make them available for inspection, copying, 
and transcription by representatives of the Department of Labor upon 
request. The records may be maintained and preserved on microfilm or 
other basic source document of an automated data processing memory 
provided that adequate projection or viewing equipment is available, 
that the reproductions are clear and identifiable by date or pay period, 
and that extensions or transcriptions of the information required herein 
can be and are made available upon request. Records kept in computer 
form must be made available for transcription or copying.
    (c) Covered employers who have eligible employees must maintain 
records that must disclose the following:
    (1) Basic payroll and identifying employee data, including name, 
address, and occupation; rate or basis of pay

[[Page 837]]

and terms of compensation; daily and weekly hours worked per pay period; 
additions to or deductions from wages; and total compensation paid.
    (2) Dates FMLA leave is taken by FMLA eligible employees (e.g., 
available from time records, requests for leave, etc., if so 
designated). Leave must be designated in records as FMLA leave; leave so 
designated may not include leave required under State law or an employer 
plan which is not also covered by FMLA.
    (3) If FMLA leave is taken by eligible employees in increments of 
less than one full day, the hours of the leave.
    (4) Copies of employee notices of leave furnished to the employer 
under FMLA, if in writing, and copies of all written notices given to 
employees as required under FMLA and these regulations (see Sec. 
825.300(b) through (c)). Copies may be maintained in employee personnel 
files.
    (5) Any documents (including written and electronic records) 
describing employee benefits or employer policies and practices 
regarding the taking of paid and unpaid leaves.
    (6) Premium payments of employee benefits.
    (7) Records of any dispute between the employer and an eligible 
employee regarding designation of leave as FMLA leave, including any 
written statement from the employer or employee of the reasons for the 
designation and for the disagreement.
    (d) Covered employers with no eligible employees must maintain the 
records set forth in paragraph (c)(1) of this section.
    (e) Covered employers in a joint employment situation (see Sec. 
825.106) must keep all the records required by paragraph (c) of this 
section with respect to any primary employees, and must keep the records 
required by paragraph (c)(1) with respect to any secondary employees.
    (f) If FMLA-eligible employees are not subject to FLSA's 
recordkeeping regulations for purposes of minimum wage or overtime 
compliance (i.e., not covered by or exempt from FLSA), an employer need 
not keep a record of actual hours worked (as otherwise required under 
FLSA, 29 CFR 516.2(a)(7)), provided that:
    (1) Eligibility for FMLA leave is presumed for any employee who has 
been employed for at least 12 months; and
    (2) With respect to employees who take FMLA leave intermittently or 
on a reduced leave schedule, the employer and employee agree on the 
employee's normal schedule or average hours worked each week and reduce 
their agreement to a written record maintained in accordance with 
paragraph (b) of this section.
    (g) Records and documents relating to certifications, 
recertifications or medical histories of employees or employees' family 
members, created for purposes of FMLA, shall be maintained as 
confidential medical records in separate files/records from the usual 
personnel files, and if the ADA, as amended, is also applicable, such 
records shall be maintained in conformance with ADA confidentiality 
requirements (see 29 CFR 1630.14(c)(1)), except that:
    (1) Supervisors and managers may be informed regarding necessary 
restrictions on the work or duties of an employee and necessary 
accommodations;
    (2) First aid and safety personnel may be informed (when 
appropriate) if the employee's physical or medical condition might 
require emergency treatment; and
    (3) Government officials investigating compliance with FMLA (or 
other pertinent law) shall be provided relevant information upon 
request.



       Subpart F_Special Rules Applicable to Employees of Schools



Sec. 825.600  Special rules for school employees, definitions.

    (a) Certain special rules apply to employees of ``local educational 
agencies,'' including public school boards and elementary and secondary 
schools under their jurisdiction, and private elementary and secondary 
schools. The special rules do not apply to other kinds of educational 
institutions, such as colleges and universities, trade schools, and 
preschools.
    (b) Educational institutions are covered by FMLA (and these special 
rules) and the Act's 50-employee coverage test does not apply. The usual 
requirements for employees to be ``eligible''

[[Page 838]]

do apply, however, including employment at a worksite where at least 50 
employees are employed within 75 miles. For example, employees of a 
rural school would not be eligible for FMLA leave if the school has 
fewer than 50 employees and there are no other schools under the 
jurisdiction of the same employer (usually, a school board) within 75 
miles.
    (c) The special rules affect the taking of intermittent leave or 
leave on a reduced leave schedule, or leave near the end of an academic 
term (semester), by instructional employees. ``Instructional employees'' 
are those whose principal function is to teach and instruct students in 
a class, a small group, or an individual setting. This term includes not 
only teachers, but also athletic coaches, driving instructors, and 
special education assistants such as signers for the hearing impaired. 
It does not include, and the special rules do not apply to, teacher 
assistants or aides who do not have as their principal job actual 
teaching or instructing, nor does it include auxiliary personnel such as 
counselors, psychologists, or curriculum specialists. It also does not 
include cafeteria workers, maintenance workers, or bus drivers.
    (d) Special rules which apply to restoration to an equivalent 
position apply to all employees of local educational agencies.



Sec. 825.601  Special rules for school employees, limitations on 
intermittent leave.

    (a) Leave taken for a period that ends with the school year and 
begins the next semester is leave taken consecutively rather than 
intermittently. The period during the summer vacation when the employee 
would not have been required to report for duty is not counted against 
the employee's FMLA leave entitlement. An instructional employee who is 
on FMLA leave at the end of the school year must be provided with any 
benefits over the summer vacation that employees would normally receive 
if they had been working at the end of the school year.
    (1) If an eligible instructional employee needs intermittent leave 
or leave on a reduced leave schedule to care for a family member with a 
serious health condition, to care for a covered servicemember, or for 
the employee's own serious health condition, which is foreseeable based 
on planned medical treatment, and the employee would be on leave for 
more than 20 percent of the total number of working days over the period 
the leave would extend, the employer may require the employee to choose 
either to:
    (i) Take leave for a period or periods of a particular duration, not 
greater than the duration of the planned treatment; or
    (ii) Transfer temporarily to an available alternative position for 
which the employee is qualified, which has equivalent pay and benefits 
and which better accommodates recurring periods of leave than does the 
employee's regular position.
    (2) These rules apply only to a leave involving more than 20 percent 
of the working days during the period over which the leave extends. For 
example, if an instructional employee who normally works five days each 
week needs to take two days of FMLA leave per week over a period of 
several weeks, the special rules would apply. Employees taking leave 
which constitutes 20 percent or less of the working days during the 
leave period would not be subject to transfer to an alternative 
position. ``Periods of a particular duration'' means a block, or blocks, 
of time beginning no earlier than the first day for which leave is 
needed and ending no later than the last day on which leave is needed, 
and may include one uninterrupted period of leave.
    (b) If an instructional employee does not give required notice of 
foreseeable FMLA leave (see Sec. 825.302) to be taken intermittently or 
on a reduced leave schedule, the employer may require the employee to 
take leave of a particular duration, or to transfer temporarily to an 
alternative position. Alternatively, the employer may require the 
employee to delay the taking of leave until the notice provision is met.



Sec. 825.602  Special rules for school employees, limitations on leave
near the end of an academic term.

    (a) There are also different rules for instructional employees who 
begin leave more than five weeks before the

[[Page 839]]

end of a term, less than five weeks before the end of a term, and less 
than three weeks before the end of a term. Regular rules apply except in 
circumstances when:
    (1) An instructional employee begins leave more than five weeks 
before the end of a term. The employer may require the employee to 
continue taking leave until the end of the term if--
    (i) The leave will last at least three weeks, and
    (ii) The employee would return to work during the three-week period 
before the end of the term.
    (2) The employee begins leave during the five-week period before the 
end of a term because of the birth of a son or daughter; the placement 
of a son or daughter for adoption or foster care; to care for a spouse, 
son, daughter, or parent with a serious health condition; or to care for 
a covered servicemember. The employer may require the employee to 
continue taking leave until the end of the term if--
    (i) The leave will last more than two weeks, and
    (ii) The employee would return to work during the two-week period 
before the end of the term.
    (3) The employee begins leave during the three-week period before 
the end of a term because of the birth of a son or daughter; the 
placement of a son or daughter for adoption or foster care; to care for 
a spouse, son, daughter, or parent with a serious health condition; or 
to care for a covered servicemember. The employer may require the 
employee to continue taking leave until the end of the term if the leave 
will last more than five working days.
    (b) For purposes of these provisions, ``academic term'' means the 
school semester, which typically ends near the end of the calendar year 
and the end of spring each school year. In no case may a school have 
more than two academic terms or semesters each year for purposes of 
FMLA. An example of leave falling within these provisions would be where 
an employee plans two weeks of leave to care for a family member which 
will begin three weeks before the end of the term. In that situation, 
the employer could require the employee to stay out on leave until the 
end of the term.



Sec. 825.603  Special rules for school employees, duration of FMLA leave.

    (a) If an employee chooses to take leave for ``periods of a 
particular duration'' in the case of intermittent or reduced schedule 
leave, the entire period of leave taken will count as FMLA leave.
    (b) In the case of an employee who is required to take leave until 
the end of an academic term, only the period of leave until the employee 
is ready and able to return to work shall be charged against the 
employee's FMLA leave entitlement. The employer has the option not to 
require the employee to stay on leave until the end of the school term. 
Therefore, any additional leave required by the employer to the end of 
the school term is not counted as FMLA leave; however, the employer 
shall be required to maintain the employee's group health insurance and 
restore the employee to the same or equivalent job including other 
benefits at the conclusion of the leave.



Sec. 825.604  Special rules for school employees, restoration to 
``an equivalent position.''

    The determination of how an employee is to be restored to ``an 
equivalent position'' upon return from FMLA leave will be made on the 
basis of ``established school board policies and practices, private 
school policies and practices, and collective bargaining agreements.'' 
The ``established policies'' and collective bargaining agreements used 
as a basis for restoration must be in writing, must be made known to the 
employee prior to the taking of FMLA leave, and must clearly explain the 
employee's restoration rights upon return from leave. Any established 
policy which is used as the basis for restoration of an employee to ``an 
equivalent position'' must provide substantially the same protections as 
provided in the Act for reinstated employees. See Sec. 825.215. In 
other words, the policy or collective bargaining agreement must provide 
for restoration to an ``equivalent position'' with equivalent employment 
benefits, pay, and other terms and conditions of employment. For 
example, an employee may not be restored to a position requiring 
additional licensure or certification.

[[Page 840]]



   Subpart G_Effect of Other Laws, Employer Practices, and Collective 
           Bargaining Agreements on Employee Rights Under FMLA



Sec. 825.700  Interaction with employer's policies.

    (a) An employer must observe any employment benefit program or plan 
that provides greater family or medical leave rights to employees than 
the rights established by the FMLA. Conversely, the rights established 
by the Act may not be diminished by any employment benefit program or 
plan. For example, a provision of a CBA which provides for reinstatement 
to a position that is not equivalent because of seniority (e.g., 
provides lesser pay) is superseded by FMLA. If an employer provides 
greater unpaid family leave rights than are afforded by FMLA, the 
employer is not required to extend additional rights afforded by FMLA, 
such as maintenance of health benefits (other than through COBRA), to 
the additional leave period not covered by FMLA.
    (b) Nothing in this Act prevents an employer from amending existing 
leave and employee benefit programs, provided they comply with FMLA. 
However, nothing in the Act is intended to discourage employers from 
adopting or retaining more generous leave policies.



Sec. 825.701  Interaction with State laws.

    (a) Nothing in FMLA supersedes any provision of State or local law 
that provides greater family or medical leave rights than those provided 
by FMLA. The Department of Labor will not, however, enforce State family 
or medical leave laws, and States may not enforce the FMLA. Employees 
are not required to designate whether the leave they are taking is FMLA 
leave or leave under State law, and an employer must comply with the 
appropriate (applicable) provisions of both. An employer covered by one 
law and not the other has to comply only with the law under which it is 
covered. Similarly, an employee eligible under only one law must receive 
benefits in accordance with that law. If leave qualifies for FMLA leave 
and leave under State law, the leave used counts against the employee's 
entitlement under both laws. Examples of the interaction between FMLA 
and State laws include:
    (1) If State law provides 16 weeks of leave entitlement over two 
years, an employee needing leave due to his or her own serious health 
condition would be entitled to take 16 weeks one year under State law 
and 12 weeks the next year under FMLA. Health benefits maintenance under 
FMLA would be applicable only to the first 12 weeks of leave entitlement 
each year. If the employee took 12 weeks the first year, the employee 
would be entitled to a maximum of 12 weeks the second year under FMLA 
(not 16 weeks). An employee would not be entitled to 28 weeks in one 
year.
    (2) If State law provides half-pay for employees temporarily 
disabled because of pregnancy for six weeks, the employee would be 
entitled to an additional six weeks of unpaid FMLA leave (or accrued 
paid leave).
    (3) If State law provides six weeks of leave, which may include 
leave to care for a seriously-ill grandparent or a ``spouse 
equivalent,'' and leave was used for that purpose, the employee is still 
entitled to his or her full FMLA leave entitlement, as the leave used 
was provided for a purpose not covered by FMLA. If FMLA leave is used 
first for a purpose also provided under State law, and State leave has 
thereby been exhausted, the employer would not be required to provide 
additional leave to care for the grandparent or ``spouse equivalent.''
    (4) If State law prohibits mandatory leave beyond the actual period 
of pregnancy disability, an instructional employee of an educational 
agency subject to special FMLA rules may not be required to remain on 
leave until the end of the academic term, as permitted by FMLA under 
certain circumstances. (See subpart F of this part.)
    (b) [Reserved]



Sec. 825.702  Interaction with Federal and State anti-discrimination
laws.

    (a) Nothing in FMLA modifies or affects any Federal or State law 
prohibiting discrimination on the basis of race, religion, color, 
national origin, sex, age, or disability (e.g., Title VII of

[[Page 841]]

the Civil Rights Act of 1964, as amended by the Pregnancy Discrimination 
Act). FMLA's legislative history explains that FMLA is ``not intended to 
modify or affect the Rehabilitation Act of 1973, as amended, the 
regulations concerning employment which have been promulgated pursuant 
to that statute, or the Americans with Disabilities Act of 1990 [as 
amended] or the regulations issued under that act. Thus, the leave 
provisions of the [FMLA] are wholly distinct from the reasonable 
accommodation obligations of employers covered under the [ADA], 
employers who receive Federal financial assistance, employers who 
contract with the Federal government, or the Federal government itself. 
The purpose of the FMLA is to make leave available to eligible employees 
and employers within its coverage, and not to limit already existing 
rights and protection.'' S. Rep. No. 103-3, at 38 (1993). An employer 
must therefore provide leave under whichever statutory provision 
provides the greater rights to employees. When an employer violates both 
FMLA and a discrimination law, an employee may be able to recover under 
either or both statutes (double relief may not be awarded for the same 
loss; when remedies coincide a claimant may be allowed to utilize 
whichever avenue of relief is desired (Laffey v. Northwest Airlines, 
Inc., 567 F.2d 429, 445 (D.C. Cir. 1976), cert. denied, 434 U.S. 1086 
(1978)).
    (b) If an employee is a qualified individual with a disability 
within the meaning of the ADA, the employer must make reasonable 
accommodations, etc., barring undue hardship, in accordance with the 
ADA. At the same time, the employer must afford an employee his or her 
FMLA rights. ADA's ``disability'' and FMLA's ``serious health 
condition'' are different concepts, and must be analyzed separately. 
FMLA entitles eligible employees to 12 weeks of leave in any 12-month 
period due to their own serious health condition, whereas the ADA allows 
an indeterminate amount of leave, barring undue hardship, as a 
reasonable accommodation. FMLA requires employers to maintain employees' 
group health plan coverage during FMLA leave on the same conditions as 
coverage would have been provided if the employee had been continuously 
employed during the leave period, whereas ADA does not require 
maintenance of health insurance unless other employees receive health 
insurance during leave under the same circumstances.
    (c)(1) A reasonable accommodation under the ADA might be 
accomplished by providing an individual with a disability with a part-
time job with no health benefits, assuming the employer did not 
ordinarily provide health insurance for part-time employees. However, 
FMLA would permit an employee to work a reduced leave schedule until the 
equivalent of 12 workweeks of leave were used, with group health 
benefits maintained during this period. FMLA permits an employer to 
temporarily transfer an employee who is taking leave intermittently or 
on a reduced leave schedule for planned medical treatment to an 
alternative position, whereas the ADA allows an accommodation of 
reassignment to an equivalent, vacant position only if the employee 
cannot perform the essential functions of the employee's present 
position and an accommodation is not possible in the employee's present 
position, or an accommodation in the employee's present position would 
cause an undue hardship. The examples in the following paragraphs of 
this section demonstrate how the two laws would interact with respect to 
a qualified individual with a disability.
    (2) A qualified individual with a disability who is also an 
``eligible employee'' entitled to FMLA leave requests 10 weeks of 
medical leave as a reasonable accommodation, which the employer grants 
because it is not an undue hardship. The employer advises the employee 
that the 10 weeks of leave is also being designated as FMLA leave and 
will count towards the employee's FMLA leave entitlement. This 
designation does not prevent the parties from also treating the leave as 
a reasonable accommodation and reinstating the employee into the same 
job, as required by the ADA, rather than an equivalent position under 
FMLA, if that is the greater right available to the employee. At the 
same time, the employee would be entitled under FMLA to have the 
employer maintain group health

[[Page 842]]

plan coverage during the leave, as that requirement provides the greater 
right to the employee.
    (3) If the same employee needed to work part-time (a reduced leave 
schedule) after returning to his or her same job, the employee would 
still be entitled under FMLA to have group health plan coverage 
maintained for the remainder of the two-week equivalent of FMLA leave 
entitlement, notwithstanding an employer policy that part-time employees 
do not receive health insurance. This employee would be entitled under 
the ADA to reasonable accommodations to enable the employee to perform 
the essential functions of the part-time position. In addition, because 
the employee is working a part-time schedule as a reasonable 
accommodation, the FMLA's provision for temporary assignment to a 
different alternative position would not apply. Once the employee has 
exhausted his or her remaining FMLA leave entitlement while working the 
reduced (part-time) schedule, if the employee is a qualified individual 
with a disability, and if the employee is unable to return to the same 
full-time position at that time, the employee might continue to work 
part-time as a reasonable accommodation, barring undue hardship; the 
employee would then be entitled to only those employment benefits 
ordinarily provided by the employer to part-time employees.
    (4) At the end of the FMLA leave entitlement, an employer is 
required under FMLA to reinstate the employee in the same or an 
equivalent position, with equivalent pay and benefits, to that which the 
employee held when leave commenced. The employer's FMLA obligations 
would be satisfied if the employer offered the employee an equivalent 
full-time position. If the employee were unable to perform the essential 
functions of that equivalent position even with reasonable 
accommodation, because of a disability, the ADA may require the employer 
to make a reasonable accommodation at that time by allowing the employee 
to work part-time or by reassigning the employee to a vacant position, 
barring undue hardship.
    (d)(1) If FMLA entitles an employee to leave, an employer may not, 
in lieu of FMLA leave entitlement, require an employee to take a job 
with a reasonable accommodation. However, ADA may require that an 
employer offer an employee the opportunity to take such a position. An 
employer may not change the essential functions of the job in order to 
deny FMLA leave. See Sec. 825.220(b).
    (2) An employee may be on a workers' compensation absence due to an 
on-the-job injury or illness which also qualifies as a serious health 
condition under FMLA. The workers' compensation absence and FMLA leave 
may run concurrently (subject to proper notice and designation by the 
employer). At some point the health care provider providing medical care 
pursuant to the workers' compensation injury may certify the employee is 
able to return to work in a ``light duty'' position. If the employer 
offers such a position, the employee is permitted but not required to 
accept the position (see Sec. 825.220(d)). As a result, the employee 
may no longer qualify for payments from the workers' compensation 
benefit plan, but the employee is entitled to continue on unpaid FMLA 
leave either until the employee is able to return to the same or 
equivalent job the employee left or until the 12-week FMLA leave 
entitlement is exhausted. See Sec. 825.207(e). If the employee 
returning from the workers' compensation injury is a qualified 
individual with a disability, he or she will have rights under the ADA.
    (e) If an employer requires certifications of an employee's fitness 
for duty to return to work, as permitted by FMLA under a uniform policy, 
it must comply with the ADA requirement that a fitness for duty physical 
be job-related and consistent with business necessity.
    (f) Under Title VII of the Civil Rights Act of 1964, as amended by 
the Pregnancy Discrimination Act, an employer should provide the same 
benefits for women who are pregnant as the employer provides to other 
employees with short-term disabilities. Because Title VII does not 
require employees to be employed for a certain period of time to be 
protected, an employee employed for less than 12 months by the

[[Page 843]]

employer (and, therefore, not an ``eligible'' employee under FMLA) may 
not be denied maternity leave if the employer normally provides short-
term disability benefits to employees with the same tenure who are 
experiencing other short-term disabilities.
    (g) Under the Uniformed Services Employment and Reemployment Rights 
Act of 1994, 38 U.S.C. 4301-4333 (USERRA), veterans are entitled to 
receive all rights and benefits of employment that they would have 
obtained if they had been continuously employed. Therefore, under 
USERRA, a returning service member would be eligible for FMLA leave if 
the months and hours that he or she would have worked for the civilian 
employer during the period of military service, combined with the months 
employed and the hours actually worked, meet the FMLA eligibility 
threshold of 12 months and 1,250 hours of employment. See Sec. 
825.110(b)(2)(i) and (c)(2).
    (h) For further information on Federal antidiscrimination laws, 
including Title VII and the ADA, individuals are encouraged to contact 
the nearest office of the U.S. Equal Employment Opportunity Commission.



                          Subpart H_Definitions



Sec. 825.800  Definitions.

    For purposes of this part:
    Act or FMLA means the Family and Medical Leave Act of 1993, Public 
Law 103-3 (February 5, 1993), 107 Stat. 6 (29 U.S.C. 2601 et seq., as 
amended).
    Active duty or call to active duty status means duty under a call or 
order to active duty (or notification of an impending call or order to 
active duty) in support of a contingency operation pursuant to Section 
688 of Title 10 of the United States Code, which authorizes ordering to 
active duty retired members of the Regular Armed Forces and members of 
the retired Reserve who retired after completing at least 20 years of 
active service; Section 12301(a) of Title 10 of the United States Code, 
which authorizes ordering all reserve component members to active duty 
in the case of war or national emergency; Section 12302 of Title 10 of 
the United States Code, which authorizes ordering any unit or unassigned 
member of the Ready Reserve to active duty; Section 12304 of Title 10 of 
the United States Code, which authorizes ordering any unit or unassigned 
member of the Selected Reserve and certain members of the Individual 
Ready Reserve to active duty; Section 12305 of Title 10 of the United 
States Code, which authorizes the suspension of promotion, retirement or 
separation rules for certain Reserve components; Section 12406 of Title 
10 of the United States Code, which authorizes calling the National 
Guard into federal service in certain circumstances; chapter 15 of Title 
10 of the United States Code, which authorizes calling the National 
Guard and state military into federal service in the case of 
insurrections and national emergencies; or any other provision of law 
during a war or during a national emergency declared by the President or 
Congress so long as it is in support of a contingency operation. See 
also Sec. 825.126(b)(2).
    ADA means the Americans With Disabilities Act (42 U.S.C. 12101 et 
seq., as amended).
    Administrator means the Administrator of the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, and 
includes any official of the Wage and Hour Division authorized to 
perform any of the functions of the Administrator under this part.
    COBRA means the continuation coverage requirements of Title X of the 
Consolidated Omnibus Budget Reconciliation Act of 1986, as amended (Pub. 
L. 99-272, title X, section 10002; 100 Stat. 227; 29 U.S.C. 1161-1168).
    Commerce and industry or activity affecting commerce mean any 
activity, business, or industry in commerce or in which a labor dispute 
would hinder or obstruct commerce or the free flow of commerce, and 
include ``commerce'' and any ``industry affecting commerce'' as defined 
in sections 501(1) and 501(3) of the Labor Management Relations Act of 
1947, 29 U.S.C. 142(1) and (3).
    Contingency operation means a military operation that:

[[Page 844]]

    (1) Is designated by the Secretary of Defense as an operation in 
which members of the armed forces are or may become involved in military 
actions, operations, or hostilities against an enemy of the United 
States or against an opposing military force; or
    (2) Results in the call or order to, or retention on, active duty of 
members of the uniformed services under section 688, 12301(a), 12302, 
12304, 12305, or 12406 of Title 10 of the United States Code, chapter 15 
of Title 10 of the United States Code, or any other provision of law 
during a war or during a national emergency declared by the President or 
Congress. See also Sec. 825.126(b)(3).
    Continuing treatment by a health care provider means any one of the 
following:
    (1) Incapacity and treatment. A period of incapacity of more than 
three consecutive, full calendar days, and any subsequent treatment or 
period of incapacity relating to the same condition, that also involves:
    (i) Treatment two or more times, within 30 days of the first day of 
incapacity, unless extenuating circumstances exist, by a health care 
provider, by a nurse under direct supervision of a health care provider, 
or by a provider of health care services (e.g., physical therapist) 
under orders of, or on referral by, a health care provider; or
    (ii) Treatment by a health care provider on at least one occasion, 
which results in a regimen of continuing treatment under the supervision 
of the health care provider.
    (iii) The requirement in paragraphs (1)(i) and (ii) of this 
definition for treatment by a health care provider means an in-person 
visit to a health care provider. The first in-person treatment visit 
must take place within seven days of the first day of incapacity.
    (iv) Whether additional treatment visits or a regimen of continuing 
treatment is necessary within the 30-day period shall be determined by 
the health care provider.
    (v) The term ``extenuating circumstances'' in paragraph (1)(i) of 
this definition means circumstances beyond the employee's control that 
prevent the follow-up visit from occurring as planned by the health care 
provider. Whether a given set of circumstances are extenuating depends 
on the facts. See also Sec. 825.115(a)(5).
    (2) Pregnancy or prenatal care. Any period of incapacity due to 
pregnancy, or for prenatal care. See also Sec. 825.120.
    (3) Chronic conditions. Any period of incapacity or treatment for 
such incapacity due to a chronic serious health condition. A chronic 
serious health condition is one which:
    (i) Requires periodic visits (defined as at least twice a year) for 
treatment by a health care provider, or by a nurse under direct 
supervision of a health care provider;
    (ii) Continues over an extended period of time (including recurring 
episodes of a single underlying condition); and
    (iii) May cause episodic rather than a continuing period of 
incapacity (e.g., asthma, diabetes, epilepsy, etc.).
    (4) Permanent or long-term conditions. A period of incapacity which 
is permanent or long-term due to a condition for which treatment may not 
be effective. The employee or family member must be under the continuing 
supervision of, but need not be receiving active treatment by, a health 
care provider. Examples include Alzheimer's, a severe stroke, or the 
terminal stages of a disease.
    (5) Conditions requiring multiple treatments. Any period of absence 
to receive multiple treatments (including any period of recovery 
therefrom) by a health care provider or by a provider of health care 
services under orders of, or on referral by, a health care provider, 
for:
    (i) Restorative surgery after an accident or other injury; or
    (ii) A condition that would likely result in a period of incapacity 
of more than three consecutive full calendar days in the absence of 
medical intervention or treatment, such as cancer (chemotherapy, 
radiation, etc.), severe arthritis (physical therapy), kidney disease 
(dialysis).
    (6) Absences attributable to incapacity under paragraphs (2) or (3) 
of this definition qualify for FMLA leave even though the employee or 
the covered family member does not receive treatment from a health care 
provider

[[Page 845]]

during the absence, and even if the absence does not last more than 
three consecutive full calendar days. For example, an employee with 
asthma may be unable to report for work due to the onset of an asthma 
attack or because the employee's health care provider has advised the 
employee to stay home when the pollen count exceeds a certain level. An 
employee who is pregnant may be unable to report to work because of 
severe morning sickness.
    Covered military member means the employee's spouse, son, daughter, 
or parent on active duty or call to active duty status. See also Sec. 
825.126(b).
    Covered servicemember means a current member of the Armed Forces, 
including a member of the National Guard or Reserves, who is undergoing 
medical treatment, recuperation, or therapy, is otherwise in outpatient 
status, or is otherwise on the temporary disability retired list, for a 
serious injury or illness incurred in the line of duty on active duty. 
See also Sec. 825.127(a).
    Eligible employee means:
    (1) An employee who has been employed for a total of at least 12 
months by the employer on the date on which any FMLA leave is to 
commence, except that an employer need not consider any period of 
previous employment that occurred more than seven years before the date 
of the most recent hiring of the employee, unless:
    (i) The break in service is occasioned by the fulfillment of the 
employee's National Guard or Reserve military service obligation (the 
time served performing the military service must be also counted in 
determining whether the employee has been employed for at least 12 
months by the employer, but this section does not provide any greater 
entitlement to the employee than would be available under the Uniformed 
Services Employment and Reemployment Rights Act (USERRA)); or
    (ii) A written agreement, including a collective bargaining 
agreement, exists concerning the employer's intention to rehire the 
employee after the break in service (e.g., for purposes of the employee 
furthering his or her education or for childrearing purposes); and
    (2) Who, on the date on which any FMLA leave is to commence, has 
been employed for at least 1,250-hours of service with such employer 
during the previous 12-month period, except that:
    (i) An employee returning from fulfilling his or her National Guard 
or Reserve military obligation shall be credited with the hours-of-
service that would have been performed but for the period of military 
service in determining whether the employee worked the 1,250 hours of 
service (accordingly, a person reemployed following military service has 
the hours that would have been worked for the employer added to any 
hours actually worked during the previous 12-month period to meet the 
1,250-hour requirement);
    (ii) To determine the hours that would have been worked during the 
period of military service, the employee's pre-service work schedule can 
generally be used for calculations; and
    (3) Who is employed in any State of the United States, the District 
of Columbia or any Territories or possession of the United States.
    (4) Excludes any Federal officer or employee covered under 
subchapter V of chapter 63 of title 5, United States Code.
    (5) Excludes any employee of the United States House of 
Representatives or the United States Senate covered by the Congressional 
Accountability Act of 1995, 2 U.S.C. 1301.
    (6) Excludes any employee who is employed at a worksite at which the 
employer employs fewer than 50 employees if the total number of 
employees employed by that employer within 75 miles of that worksite is 
also fewer than 50.
    (7) Excludes any employee employed in any country other than the 
United States or any Territory or possession of the United States.
    Employ means to suffer or permit to work.
    Employee has the meaning given the same term as defined in section 
3(e) of the Fair Labor Standards Act, 29 U.S.C. 203(e), as follows:
    (1) The term ``employee'' means any individual employed by an 
employer;
    (2) In the case of an individual employed by a public agency, 
``employee'' means--
    (i) Any individual employed by the Government of the United States--

[[Page 846]]

    (A) As a civilian in the military departments (as defined in section 
102 of Title 5, United States Code),
    (B) In any executive agency (as defined in section 105 of Title 5, 
United States Code), excluding any Federal officer or employee covered 
under subchapter V of chapter 63 of Title 5, United States Code,
    (C) In any unit of the legislative or judicial branch of the 
Government which has positions in the competitive service, excluding any 
employee of the United States House of Representatives or the United 
States Senate who is covered by the Congressional Accountability Act of 
1995,
    (D) In a nonappropriated fund instrumentality under the jurisdiction 
of the Armed Forces, or
    (ii) Any individual employed by the United States Postal Service or 
the Postal Regulatory Commission; and
    (iii) Any individual employed by a State, political subdivision of a 
State, or an interstate governmental agency, other than such an 
individual--
    (A) Who is not subject to the civil service laws of the State, 
political subdivision, or agency which employs the employee; and
    (B) Who--
    (1) Holds a public elective office of that State, political 
subdivision, or agency,
    (2) Is selected by the holder of such an office to be a member of 
his personal staff,
    (3) Is appointed by such an officeholder to serve on a policymaking 
level,
    (4) Is an immediate adviser to such an officeholder with respect to 
the constitutional or legal powers of the office of such officeholder, 
or
    (5) Is an employee in the legislative branch or legislative body of 
that State, political subdivision, or agency and is not employed by the 
legislative library of such State, political subdivision, or agency.
    Employee employed in an instructional capacity. See the definition 
of Teacher in this section.
    Employer means any person engaged in commerce or in an industry or 
activity affecting commerce who employs 50 or more employees for each 
working day during each of 20 or more calendar workweeks in the current 
or preceding calendar year, and includes--
    (1) Any person who acts, directly or indirectly, in the interest of 
an employer to any of the employees of such employer;
    (2) Any successor in interest of an employer; and
    (3) Any public agency.
    Employment benefits means all benefits provided or made available to 
employees by an employer, including group life insurance, health 
insurance, disability insurance, sick leave, annual leave, educational 
benefits, and pensions, regardless of whether such benefits are provided 
by a practice or written policy of an employer or through an ``employee 
benefit plan'' as defined in section 3(3) of the Employee Retirement 
Income Security Act of 1974, 29 U.S.C. 1002(3). The term does not 
include non-employment related obligations paid by employees through 
voluntary deductions such as supplemental insurance coverage. (See Sec. 
825.209(a).)
    FLSA means the Fair Labor Standards Act (29 U.S.C. 201 et seq.).
    Group health plan means any plan of, or contributed to by, an 
employer (including a self-insured plan) to provide health care 
(directly or otherwise) to the employer's employees, former employees, 
or the families of such employees or former employees. For purposes of 
FMLA the term ``group health plan'' shall not include an insurance 
program providing health coverage under which employees purchase 
individual policies from insurers provided that:
    (1) No contributions are made by the employer;
    (2) Participation in the program is completely voluntary for 
employees;
    (3) The sole functions of the employer with respect to the program 
are, without endorsing the program, to permit the insurer to publicize 
the program to employees, to collect premiums through payroll deductions 
and to remit them to the insurer;
    (4) The employer receives no consideration in the form of cash or 
otherwise in connection with the program, other than reasonable 
compensation,

[[Page 847]]

excluding any profit, for administrative services actually rendered in 
connection with payroll deduction; and,
    (5) The premium charged with respect to such coverage does not 
increase in the event the employment relationship terminates.
    Health care provider means:
    (1) The Act defines ``health care provider'' as:
    (i) A doctor of medicine or osteopathy who is authorized to practice 
medicine or surgery (as appropriate) by the State in which the doctor 
practices; or
    (ii) Any other person determined by the Secretary to be capable of 
providing health care services.
    (2) Others ``capable of providing health care services'' include 
only:
    (i) Podiatrists, dentists, clinical psychologists, optometrists, and 
chiropractors (limited to treatment consisting of manual manipulation of 
the spine to correct a subluxation as demonstrated by X-ray to exist) 
authorized to practice in the State and performing within the scope of 
their practice as defined under State law;
    (ii) Nurse practitioners, nurse-midwives, clinical social workers 
and physician assistants who are authorized to practice under State law 
and who are performing within the scope of their practice as defined 
under State law;
    (iii) Christian Science Practitioners listed with the First Church 
of Christ, Scientist in Boston, Massachusetts. Where an employee or 
family member is receiving treatment from a Christian Science 
practitioner, an employee may not object to any requirement from an 
employer that the employee or family member submit to examination 
(though not treatment) to obtain a second or third certification from a 
health care provider other than a Christian Science practitioner except 
as otherwise provided under applicable State or local law or collective 
bargaining agreement.
    (iv) Any health care provider from whom an employer or the 
employer's group health plan's benefits manager will accept 
certification of the existence of a serious health condition to 
substantiate a claim for benefits; and
    (v) A health care provider listed above who practices in a country 
other than the United States, who is authorized to practice in 
accordance with the law of that country, and who is performing within 
the scope of his or her practice as defined under such law.
    (3) The phrase ``authorized to practice in the State'' as used in 
this section means that the provider must be authorized to diagnose and 
treat physical or mental health conditions.
    Incapable of self-care means that the individual requires active 
assistance or supervision to provide daily self-care in several of the 
``activities of daily living'' (ADLs) or ``instrumental activities of 
daily living'' (IADLs). Activities of daily living include adaptive 
activities such as caring appropriately for one's grooming and hygiene, 
bathing, dressing and eating. Instrumental activities of daily living 
include cooking, cleaning, shopping, taking public transportation, 
paying bills, maintaining a residence, using telephones and directories, 
using a post office, etc.
    Instructional employee: See the definition of Teacher in this 
section.
    Intermittent leave means leave taken in separate periods of time due 
to a single illness or injury, rather than for one continuous period of 
time, and may include leave of periods from an hour or more to several 
weeks. Examples of intermittent leave would include leave taken on an 
occasional basis for medical appointments, or leave taken several days 
at a time spread over a period of six months, such as for chemotherapy.
    Mental disability: See the definition of Physical or mental 
disability in this section.
    Next of kin of a covered servicemember means the nearest blood 
relative other than the covered servicemember's spouse, parent, son, or 
daughter, in the following order of priority: Blood relatives who have 
been granted legal custody of the covered servicemember by court decree 
or statutory provisions, brothers and sisters, grandparents, aunts and 
uncles, and first cousins, unless the covered servicemember has 
specifically designated in writing another blood relative as his or her 
nearest blood relative for purposes of military caregiver leave under 
the FMLA. When no such designation is made, and there are multiple 
family members

[[Page 848]]

with the same level of relationship to the covered servicemember, all 
such family members shall be considered the covered servicemember's next 
of kin and may take FMLA leave to provide care to the covered 
servicemember, either consecutively or simultaneously. When such 
designation has been made, the designated individual shall be deemed to 
be the covered servicemember's only next of kin. See also Sec. 
825.127(b)(3).
    Outpatient status means, with respect to a covered servicemember, 
the status of a member of the Armed Forces assigned to either a military 
medical treatment facility as an outpatient; or a unit established for 
the purpose of providing command and control of members of the Armed 
Forces receiving medical care as outpatients. See also Sec. 
825.127(a)(2).
    Parent means a biological, adoptive, step or foster father or 
mother, or any other individual who stood in loco parentis to the 
employee when the employee was a son or daughter as defined below. This 
term does not include parents ``in law.''
    Parent of a covered servicemember means a covered servicemember's 
biological, adoptive, step or foster father or mother, or any other 
individual who stood in loco parentis to the covered servicemember. This 
term does not include parents ``in law.'' See also Sec. 825.127(b)(2).
    Person means an individual, partnership, association, corporation, 
business trust, legal representative, or any organized group of persons, 
and includes a public agency for purposes of this part.
    Physical or mental disability means a physical or mental impairment 
that substantially limits one or more of the major life activities of an 
individual. Regulations at 29 CFR part 1630, issued by the Equal 
Employment Opportunity Commission under the Americans with Disabilities 
Act (ADA), 42 U.S.C. 12101 et seq., as amended, define these terms.
    Public agency means the government of the United States; the 
government of a State or political subdivision thereof; any agency of 
the United States (including the United States Postal Service and Postal 
Regulatory Commission), a State, or a political subdivision of a State, 
or any interstate governmental agency. Under section 101(5)(B) of the 
Act, a public agency is considered to be a ``person'' engaged in 
commerce or in an industry or activity affecting commerce within the 
meaning of the Act.
    Reduced leave schedule means a leave schedule that reduces the usual 
number of hours per workweek, or hours per workday, of an employee.
    Secretary means the Secretary of Labor or authorized representative.
    Serious health condition means an illness, injury, impairment or 
physical or mental condition that involves inpatient care as defined in 
Sec. 825.114 or continuing treatment by a health care provider as 
defined in Sec. 825.115. Conditions for which cosmetic treatments are 
administered (such as most treatments for acne or plastic surgery) are 
not ``serious health conditions'' unless inpatient hospital care is 
required or unless complications develop. Restorative dental or plastic 
surgery after an injury or removal of cancerous growths are serious 
health conditions provided all the other conditions of this regulation 
are met. Mental illness or allergies may be serious health conditions, 
but only if all the conditions of Sec. 825.113 are met.
    Serious injury or illness means an injury or illness incurred by a 
covered servicemember in the line of duty on active duty that may render 
the servicemember medically unfit to perform the duties of the member's 
office, grade, rank, or rating. See also Sec. 825.127(a)(1).
    Son or daughter means a biological, adopted, or foster child, a 
stepchild, a legal ward, or a child of a person standing in loco 
parentis, who is either under age 18, or age 18 or older and ``incapable 
of self-care because of a mental or physical disability'' at the time 
that FMLA leave is to commence.
    Son or daughter of a covered servicemember means a covered 
servicemember's biological, adopted, or foster child, stepchild, legal 
ward, or a child for whom the covered servicemember stood in loco 
parentis, and who is of any age. See also Sec. 825.127(b)(1).
    Son or daughter on active duty or call to active duty status means 
the employee's biological, adopted, or foster child,

[[Page 849]]

stepchild, legal ward, or a child for whom the employee stood in loco 
parentis, who is on active duty or call to active duty status, and who 
is of any age. See also Sec. 825.126(b)(1).
    Spouse means a husband or wife as defined or recognized under State 
law for purposes of marriage in the State where the employee resides, 
including common law marriage in States where it is recognized.
    State means any State of the United States or the District of 
Columbia or any Territory or possession of the United States.
    Teacher (or employee employed in an instructional capacity, or 
instructional employee) means an employee employed principally in an 
instructional capacity by an educational agency or school whose 
principal function is to teach and instruct students in a class, a small 
group, or an individual setting, and includes athletic coaches, driving 
instructors, and special education assistants such as signers for the 
hearing impaired. The term does not include teacher assistants or aides 
who do not have as their principal function actual teaching or 
instructing, nor auxiliary personnel such as counselors, psychologists, 
curriculum specialists, cafeteria workers, maintenance workers, bus 
drivers, or other primarily noninstructional employees.



              Sec. Appendix A to Part 825--Index [Reserved]

[[Page 850]]



   Sec. Appendix B to Part 825--Certification of Health Care Provider 
                        (Forms WH-380E & WH-380F)
[GRAPHIC] [TIFF OMITTED] TR17NO08.003


[[Page 851]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.004


[[Page 852]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.005


[[Page 853]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.006


[[Page 854]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.000


[[Page 855]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.001


[[Page 856]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.002


[[Page 857]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.007


[[Page 858]]





 Sec. Appendix C to Part 825--Notice to Employees Of Rights Under FMLA 
                          (WH Publication 1420)
[GRAPHIC] [TIFF OMITTED] TR17NO08.008


[[Page 859]]





    Sec. Appendix D to Part 825--Notice of Eligibility and Rights & 
                     Responsibilities (Form WH-381)
[GRAPHIC] [TIFF OMITTED] TR17NO08.009


[[Page 860]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.010


[[Page 861]]





  Sec. Appendix E to Part 825--Designation Notice to Employee of FMLA 
                           Leave (Form WH-382)
[GRAPHIC] [TIFF OMITTED] TR17NO08.011



                 Sec. Appendix F to Part 825 [Reserved]

[[Page 862]]



 Sec. Appendix G to Part 825--Certification of Qualifying Exigency for 
                   Military Family Leave (Form WH-384)
[GRAPHIC] [TIFF OMITTED] TR17NO08.012


[[Page 863]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.013


[[Page 864]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.014


[[Page 865]]





Sec. Appendix H to Part 825--Certification for Serious Injury or Illness 
    of Covered Servicemenber for Military Family Leave (Form WH-385)
[GRAPHIC] [TIFF OMITTED] TR17NO08.015


[[Page 866]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.016


[[Page 867]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.017


[[Page 868]]


[GRAPHIC] [TIFF OMITTED] TR17NO08.018


[[Page 869]]



                  SUBCHAPTER D_GARNISHMENT OF EARNINGS





PART 870_RESTRICTION ON GARNISHMENT--Table of Contents



                            Subpart A_General

Sec.
870.1 Purpose and scope.
870.2 Amendments to this part.

              Subpart B_Determinations and Interpretations

870.10 Maximum part of aggregate disposable earnings subject to 
          garnishment under section 303(a).
870.11 Exceptions to the restrictions provided by section 303(a) of the 
          CCPA and priorities among garnishments.

          Subpart C_Exemption for State-Regulated Garnishments

870.50 General provision.
870.51 Exemption policy.
870.52 Application for exemption of State-regulated garnishments.
870.53 Action upon an application for exemption.
870.54 Standards governing the granting of an application for exemption.
870.55 Terms and conditions of every exemption.
870.56 Termination of exemption.
870.57 Exemptions.

    Authority: Secs. 303, 305, 306, 82 Stat. 163, 164; 15 U.S.C. 1673, 
1675, 1676, unless otherwise noted.

    Source: 35 FR 8226, May 26, 1970, unless otherwise noted.



                            Subpart A_General



Sec. 870.1  Purpose and scope.

    (a) This part sets forth the procedures and any policies, 
determinations, and interpretations of general application whereby the 
Secretary of Labor carries out his duties under section 303 of the CCPA 
dealing with restrictions on garnishment of earnings, and section 305 
permitting exemptions for State-regulated garnishments in certain 
situations. While the Secretary's duties under section 303 include 
insuring that certain amounts of earnings are protected, such duties do 
not include establishing priorities among multiple garnishments, as such 
priorities are determined by other Federal statutes or by State law.
    (b) Functions of the Secretary under the CCPA to be performed as 
provided in this part are assigned to the Administrator of the Wage and 
Hour Division (hereinafter referred to as the Administrator), who, under 
the general direction and control of the Assistant Secretary, Wage and 
Labor Standards Administration, shall be empowered to take final and 
binding actions in administering the provisions of this part. The 
Administrator is empowered to subdelegate any of his duties under this 
part. Any legal advice and assistance required for administration of 
this part shall be provided by the Solicitor of Labor.

[35 FR 8226, May 26, 1970, as amended at 44 FR 30684, May 29, 1979]



Sec. 870.2  Amendments to this part.

    The Administrator may, at any time upon his own motion or upon 
written request of any interested person setting forth reasonable 
grounds therefor, amend any rules in this part.



              Subpart B_Determinations and Interpretations



Sec. 870.10  Maximum part of aggregate disposable earnings subject to 
garnishment under section 303(a).

    (a) Statutory provision. Section 303 (a) of the CCPA provides that, 
with some exceptions,

the maximum part of the aggregate disposable earnings of an individual 
for any workweek which is subjected to garnishment may not exceed
    (1) 25 per centum of his disposable earnings for that week, or
    (2) the amount by which his disposable earnings for that week exceed 
thirty times the Federal minimum hourly wage prescribed by section 
6(a)(1) of the Fair Labor Standards Act of 1938, in effect at the time 
the earnings are payable.

whichever is less. In the case of earnings for any pay period other than 
a week, the Secretary of Labor shall by regulation prescribe a multiple 
of the Federal minimum hourly wage equivalent in effect to that set 
forth in paragraph (2).


[[Page 870]]


    (b) Weekly pay period. The statutory exemption formula applies 
directly to the aggregate disposable earnings paid or payable for a pay 
period of 1 workweek, or a lesser period. Its intent is to protect from 
garnishment and save to an individual earner the specified amount of 
compensation for his personal services rendered in the workweek, or a 
lesser period. Thus:
    (1) The amount of an individual's disposable earnings for a workweek 
or lesser period which may not be garnished is 30 times the Fair Labor 
Standards Act minimum wage. If an individual's disposable earnings for 
such a period are equal to or less than 30 times the minimum wage, the 
individual's earnings may not be garnished in any amount. (When the 
minimum wage increases, the proportionate amount of earnings which may 
not be garnished also increases.) On April 1, 1991, the minimum wage 
increased to $4.25. Accordingly, the amount of disposable weekly 
earnings which may not be garnished is $127.50 effective April 1, 1991. 
(For the period April 1, 1990 through March 31, 1991, the amount that 
may not be garnished is $114 (30x$3.80).)
    (2) For earnings payable on or after April 1, 1991, if an 
individual's disposable earnings for a workweek or lesser period are 
more than $127.50, but less than $170.00, only the amount above $127.50 
is subject to garnishment. (For earnings payable during the period April 
1, 1990, through March 31, 1991, when the Fair Labor Standards Act 
minimum wage was $3.80, this range computes to more than $114.00, but 
less than $152.00.)
    (3) For earnings payable on or after April 1, 1991, if an 
individual's disposable earnings for a workweek or lesser period are 
$170.00 or more, 25 percent of his/her disposable earnings is subject to 
garnishment. (The weekly figure was $152.00 (40x$3.80) for the period 
April 1, 1990 through March 31, 1991.)
    (c) Pay for a period longer than 1 week. In the case of disposable 
earnings which compensate for personal services rendered in a pay period 
longer than 1 workweek, the weekly statutory exemption formula must be 
transformed to a formula applicable to such earnings providing 
equivalent restrictions on wage garnishment.
    (1) The 25 percent part of the formula would apply to the aggregate 
disposable earnings for all the workweeks or fractions thereof 
compensated by the pay for such pay period.
    (2) The following formula should be used to calculate the dollar 
amount of disposable earnings which would not be subject to garnishment: 
The number of workweeks, or fractions thereof, should be multiplied 
times the applicable Federal minimum wage and that amount should be 
multiplied by 30. For example, for the period April 1, 1990 through 
March 31, 1991 when the Federal minimum wage was $3.80 per hour, the 
formula should be calculated based on a minimum wage of $3.80 ($3.80 
multiplied by 30 equals $114; $114 multiplied by the number of workweeks 
(or fractions thereof) equals the amount that cannot be garnished). As 
of April 1, 1991, the $4.25 Federal minimum wage replaces $3.80 in the 
formula (and the amount which cannot be garnished would then be $127.50 
multiplied by the number of workweeks (or fractions thereof)). For 
purposes of this formula, a calendar month is considered to consist of 
4\1/3\ workweeks. Thus, during the period April 1, 1990 through March 
31, 1991 when the Federal minimum hourly wage was $3.80 an hour, the 
amount of disposable earnings for a 2-week period is $228.00 
(2x30x$3.80); for a monthly period, $494.00 (4\1/3\x30x$3.80). Effective 
April 1, 1991, such amounts increased as follows: for a two-week period, 
$255.00 (2x30x$4.25); for a monthly period, $552.50 (4\1/3\x30x$4.25). 
The amount of disposable earnings for any other pay period longer than 1 
week shall be computed in a manner consistent with section 303(a) of the 
act and with this paragraph.
    (3) Absent any changes to the rate set forth in section 6(a)(1) of 
the Fair Labor Standards Act, disposable earnings for individuals paid 
weekly, biweekly, semimonthly, and monthly may not be garnished unless 
they are in excess of the following amounts:

[[Page 871]]



----------------------------------------------------------------------------------------------------------------
                                                                                           Semi-
                      Date                         Minimum       Weekly      Biweekly     monthly      Monthly
                                                    amount       amount       amount       amount        rate
----------------------------------------------------------------------------------------------------------------
Jan. 1, 1981...................................        $3.35      $100.50      $201.00      $217.75      $435.50
Apr. 1, 1990...................................         3.80       114.00       228.00       247.00       494.00
Apr. 1, 1991...................................         4.25       127.50       255.00       276.25       552.50
----------------------------------------------------------------------------------------------------------------

    (4) Absent any changes to the rate set forth in section 6(a)(1) of 
the Fair Labor Standards Act, if the disposable earnings are less than 
the following figures, only the difference between the appropriate 
figures set forth in paragraph (c)(3) of this section and the 
individual's disposable earnings may be garnished.

----------------------------------------------------------------------------------------------------------------
                                                                                           Semi-
                      Date                         Minimum       Weekly      Biweekly     monthly      Monthly
                                                    amount       amount       amount       amount        rate
----------------------------------------------------------------------------------------------------------------
Jan. 1, 1981...................................        $3.35      $134.00      $268.00      $290.33      $580.67
Apr. 1, 1990...................................         3.80       152.00       304.00       329.33       658.67
Apr. 1, 1991...................................         4.25       170.00       340.00       368.33       736.67
----------------------------------------------------------------------------------------------------------------

    For example, in April of 1990, if an individual's disposable 
earnings for a biweekly pay period are $274.00, the difference between 
$228.00 and $274.00 (i.e., $46.00) may be garnished.
    (5) If disposable earnings are in excess of the figures stated in 
paragraph (c)(4) of this section, 25% of the disposable earnings may be 
garnished.
    (d) Date wages paid or payable controlling. The date that disposable 
earnings are paid or payable, and not the date the Court issues the 
garnishment order, is controlling in determining the amount of 
disposable earnings that may be garnished. Thus, a garnishment order in 
November 1990, providing for withholding from wages over a period of 
time, based on exemptions computed at the $3.80 per hour minimum wage 
then in effect, would be modified by operation of the change in the law 
so that wages paid after April 1, 1991, are subject to garnishment to 
the extent described in paragraphs (b) and (c) of this section on the 
basis of a minimum rate of $4.25 per hour. This principle is applicable 
at the time of the enactment of any further increase in the minimum 
wage.

(Sec. 2, Pub. L. 93-259, 84 Stat 55)

[35 FR 8226, May 26, 1970, as amended at 40 FR 52610, Nov. 11, 1975; 43 
FR 28471, June 30, 1978; 43 FR 30276, July 14, 1978; 44 FR 30685, May 
29, 1979; 56 FR 32254, July 15, 1991; 56 FR 40660, Aug. 15, 1991]



Sec. 870.11  Exceptions to the restrictions provided by section 303(a)
of the CCPA and priorities among garnishments.

    (a)(1) Section 303(b) of the Consumer Credit Protection Act provides 
that the restrictions in section 303(a) do not apply to:
    (i) Any debt due for any State or Federal tax, or
    (ii) Any order of any court of bankruptcy under Chapter XIII of the 
Bankruptcy Act.
    (2) Accordingly the Consumer Credit Protection Act does not restrict 
in any way the amount which may be withheld for State or Federal taxes 
or in Chapter XIII Bankruptcy Act proceedings.
    (b)(1) Section 303(b) provides the following restrictions on the 
amount that may be withheld for the support of any person (e.g. alimony 
or child support):

    (A) Where such individual is supporting his spouse or dependent 
child (other than a spouse or child with respect to whose support such 
order is issued), 50 per centum of such individual's disposable earnings 
for that week; and
    (B) Where such individual is not supporting such a spouse or 
dependent child described in clause (A), 60 per centum of such 
individual's disposable earnings for that week; except that, with 
respect to the disposable earnings of any individual for any workweek, 
the 50 per centum specified in clause (A) shall be deemed to be 55 per 
centum and the 60 per centum specified in clause (B) shall be

[[Page 872]]

deemed to be 65 per centum, if and to the extent that such earnings are 
subject to garnishment to enforce a support order with respect to a 
period which is prior to the twelve week period which ends with the 
beginning of such workweek.

    (2) Compliance with the provisions of section 303(a) and (b) may 
offer problems when there is more than one garnishment. In that event 
the priority is determined by State law or other Federal laws as the 
CCPA contains no provisions controlling the priorities of garnishments. 
However, in no event may the amount of any individual's disposable 
earnings which may be garnished exceed the percentages specified in 
section 303. To illustrate:
    (i) If 45% of an individual's disposable earnings were garnished for 
taxes, and this garnishment has priority, the Consumer Credit Protection 
Act permits garnishment for the support of any person of only the 
difference between 45% and the applicable percentage (50 to 65%) in the 
above quoted section 303(b).
    (ii) If 70% of an individual's disposable earnings were garnished 
for taxes and/or a Title XIII Bankruptcy debt, and these garnishments 
have priority, the Consumer Credit Protection Act does not permit 
garnishment either for the support of any person or for other debts.
    (iii) If 25% of an individual's disposable earnings were withheld 
pursuant to an ordinary garnishment which is subject to the restrictions 
of section 303(a), and the garnishment has priority in accordance with 
State law, the Consumer Credit Protection Act permits the additional 
garnishment for the support of any person of only the difference between 
25% and the applicable percentage (50-65%) in the above quoted section 
303(b).
    (iv) If 25% or more of an individual's disposable earnings were 
withheld pursuant to a garnishment for support, and the support 
garnishment has priority in accordance with State law, the Consumer 
Credit Protection Act does not permit the withholding of any additional 
amounts pursuant to an ordinary garnishment which is subject to the 
restrictions of section 303(a).

[44 FR 30685, May 29, 1979]



          Subpart C_Exemption for State-Regulated Garnishments



Sec. 870.50  General provision.

    Section 305 of the CCPA authorizes that Secretary to ``exempt from 
the provisions of section 303(a) garnishments issued under the laws of 
any State if he determines that the laws of that State provide 
restrictions on garnishment which are substantially similar to those 
provided in section 303(a).''



Sec. 870.51  Exemption policy.

    (a) It is the policy of the Secretary of Labor to permit exemption 
from section 303(a) of the CCPA garnishments issued under the laws of a 
State if those laws considered together cover every case of garnishment 
covered by the Act, and if those laws provide the same or greater 
protection to individuals. Differences in text between the restrictions 
of State laws and those in section 303(a) of the Act are not material so 
long as the State laws provide the same or greater restrictions on the 
garnishment of individuals' earnings.
    (b) In determining whether State-regulated garnishments should be 
exempted from section 303(a) of the CCPA, or whether such an exemption 
should be terminated, the laws of the State shall be examined with 
particular regard to the classes of persons and of transactions to which 
they may apply; the formulas provided for determining the maximum part 
of an individual's earnings which may be subject to garnishment; 
restrictions on the application of the formulas; and with regard to 
procedural burdens placed on the individual whose earnings are subject 
to garnishment.
    (c) Particular attention is directed to the fact that subsection (a) 
of section 303, when considered with subsection (c) of that section, is 
read as not requiring the raising of the subsection (a) restrictions as 
affirmative defenses in garnishment proceedings.



Sec. 870.52  Application for exemption of State-regulated garnishments.

    (a) An application for the exemption of garnishments issued under 
the laws of a State may be made in duplicate by a duly authorized 
representative of the State. The application shall be filed

[[Page 873]]

with the Administrator of the Wage and Hour Division, Department of 
Labor, Washington, DC 20210.
    (b) Any application for exemption must be accompanied by two copies 
of all the provisions of the State laws relating to the garnishment of 
earnings, certified to be true and complete copies by the Attorney 
General of the State. In addition, the application must be accompanied 
by a statement, in duplicate, signed by the Attorney General of the 
State, showing how the laws of the State satisfy the policy expressed in 
Sec. 870.51(a) and setting forth any other matters which the Attorney 
General may wish to state concerning the application.
    (c) Notice of the filing of an application for exemption shall be 
published in the Federal Register. Copies of the application shall be 
available for public inspection and copying during business hours at the 
national office of the Wage and Hour Division and in the regional office 
of the Wage and Hour Divison in which the particular State is located. 
Interested persons shall be afforded an opportunity to submit written 
comments concerning the application of the State within a period of time 
to be specified in the notice.

[35 FR 8226, May 26, 1970, as amended at 35 FR 14315, Sept. 11, 1970]



Sec. 870.53  Action upon an application for exemption.

    (a) The Administrator shall grant or deny within a reasonable time 
any application for the exemption of State-regulated garnishments. The 
State representative shall be notified in writing of the decision. In 
the event of denial, a statement of the grounds for the denial shall be 
made. To the extent feasible and appropriate, the Administrator may 
afford to the State representative and to any other interested persons 
an opportunity to submit orally or in writing data, views, and arguments 
on the issue of whether or not an exemption should be granted and on any 
subsidiary issues.
    (b) If an application is denied, the State representative shall have 
an opportunity to request reconsideration by the Administrator. The 
request shall be made in writing. The Administrator shall permit 
argument whenever the opportunity to do so has not been afforded under 
paragraph (a) of this section, and may permit argument in any other 
case.
    (c) General notice of every exemption of State-regulated 
garnishments and of its terms and conditions shall be given by 
publication in the Federal Register.



Sec. 870.54  Standards governing the granting of an application for
exemption.

    The Administrator may grant any application for the exemption of 
State-regulated garnishments whenever he finds that the laws of the 
State satisfy the policy expressed in Sec. 870.51(a).



Sec. 870.55  Terms and conditions of every exemption.

    (a) It shall be a condition of every exemption of State-regulated 
garnishments that the State representative have the powers and duties
    (1) To represent, and act on behalf of, the State in relation to the 
Administrator and his representatives, with regard to any matter 
relating to, or arising out of, the application, interpretation, and 
enforcement of State laws regulating garnishment of earnings;
    (2) To submit to the Administrator in duplicate and on a current 
basis, a certified copy of every enactment by the State legislature 
affecting any of those laws, and a certified copy of any decision in any 
case involving any of those laws, made by the highest court of the State 
which has jurisdiction to decide or review cases of its kind, if 
properly presented to the court; and
    (3) To submit to the Administrator any information relating to the 
enforcement of those laws, which the Administrator may request.
    (b) The Administrator may make any exemption subject to additional 
terms and conditions which he may find appropriate to carry out the 
purposes of section 303(a) of the Act.



Sec. 870.56  Termination of exemption.

    (a) After notice and opportunity to be heard, the Administrator 
shall terminate any exemption of State-regulated garnishments when he 
finds that the laws of the State no longer satisfy the purpose of 
section 303(a) of the Act

[[Page 874]]

or the policy expressed in Sec. 870.51(a). Also, after notice and 
opportunity to be heard, the Administrator may terminate any exemption 
if he finds that any of its terms or conditions have been violated.
    (b) General notice of the termination of every exemption of State-
regulated garnishments shall be given by publication in the Federal 
Register.



Sec. 870.57  Exemptions.

    Pursuant to section 305 of the CCPA (82 Stat. 164) and in accordance 
with the provisions of this part, it has been determined that the laws 
of the following States provide restrictions on garnishment which are 
substantially similar to those provided in section 303(a) of the CCPA 
(82 Stat. 163); and that, therefore, garnishments issued under those 
laws should be, and they hereby are, exempted from the provisions of 
section 303(a) subject to the terms and conditions of Sec. Sec. 
870.55(a) and 870.56:
    (a) State of Virginia. Effective June 30, 1978, garnishments issued 
under the laws of the State of Virginia are exempt from the provisions 
of sections 303(a) and 303(b) of the CCPA under the following additional 
conditions: (1) Whenever garnishments are ordered in the State of 
Virginia which are not deemed to be governed by section 34-29 of the 
Code of Virginia, as amended, and the laws of another State are applied, 
sections 303(a) and 303(b) of the CCPA shall apply to such garnishments 
according to the provisions thereof; and (2) whenever the earnings of 
any individual subject to garnishment are withheld and a suspending or 
supersedeas bond is undertaken in the course of an appeal from a lower 
court decision, sections 303(a) and 303(b) of the CCPA shall apply to 
the withholding of such earnings under this procedure according to the 
provisions thereof.

[35 FR 18527, Dec. 5, 1970, as amended at 43 FR 28472, June 30, 1978]

                        PARTS 871	899 [RESERVED]

[[Page 875]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 877]]



                    Table of CFR Titles and Chapters




                      (Revised as of June 23, 2000)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2--[Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)
        II  Federal Claims Collection Standards (General 
                Accounting Office--Department of Justice) (Parts 
                100--299)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
       VII  Advisory Commission on Intergovernmental Relations 
                (Parts 1700--1799)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)

[[Page 878]]

     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)
    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                          Title 6--[Reserved]

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture

[[Page 879]]

         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
      XIII  Northeast Dairy Compact Commission (Parts 1300--1399)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)

[[Page 880]]

    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Justice (Parts 1--599)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)

[[Page 881]]

        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

[[Page 882]]

        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Export Administration, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

[[Page 883]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board Regulations (Parts 
                900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Board for International Broadcasting (Parts 1300--
                1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

[[Page 884]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--999)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

[[Page 885]]

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Part 1001)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--799)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Bureau of Alcohol, Tobacco and Firearms, Department of 
                the Treasury (Parts 1--299)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)

[[Page 886]]

       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
        VI  Bureau of Mines, Department of the Interior (Parts 
                600--699)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)

[[Page 887]]

       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 
                200--399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

[[Page 888]]

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
       XIV  Assassination Records Review Board (Parts 1400--1499)
        XV  Oklahoma City National Memorial Trust (Part 1501)

             Title 37--Patents, Trademarks, and Copyrights

         I  Patent and Trademark Office, Department of Commerce 
                (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
         V  Council on Environmental Quality (Parts 1500--1599)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)

[[Page 889]]

        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans 
                Employment and Training, Department of Labor 
                (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300.99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)
       304  Payment from a Non-Federal Source for Travel Expenses 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Health Care Financing Administration, Department of 
                Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)

[[Page 890]]

       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

[[Page 891]]

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)

[[Page 892]]

        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Part 
                5452)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)

[[Page 893]]

        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR

[[Page 895]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of June 23, 2000)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Commission on Intergovernmental          5, VII
     Relations
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Alcohol, Tobacco and Firearms, Bureau of          27, I
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 896]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Assassination Records Review Board                36, XIV
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Board for International Broadcasting              22, XIII
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Export Administration, Bureau of                15, VII
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office                     37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII

[[Page 897]]

  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                25, III, LXXVII; 48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
       States
Export Administration, Bureau of                  15, VII
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV

[[Page 898]]

Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               4, II
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
     Expenses
[[Page 899]]

  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Health Care Financing Administration            42, IV
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Health Care Financing Administration              42, IV
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Inspector General, Office of                    24, XII
  Multifamily Housing Assistance Restructuring,   24, IV
       Office of
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Intergovernmental Relations, Advisory Commission  5, VII
     on
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II

[[Page 900]]

  Mines, Bureau of                                30, VI
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             4, II
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration and Naturalization Service          8, I
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training, Office of    41, 61; 20, IX
       the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Management and Budget, Office of                  5, III, LXXVII; 48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Mines, Bureau of                                  30, VI
Minority Business Development Agency              15, XIV

[[Page 901]]

Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Multifamily Housing Assistance Restructuring,     24, IV
     Office of
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Dairy Compact Commission                7, XIII
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office                       37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII

[[Page 902]]

  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V

[[Page 903]]

  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Statistics Brureau                 49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV
  Alcohol, Tobacco and Firearms, Bureau of        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training, Office of the  41, 61; 20, IX
     Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 905]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations that were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000'' published in 
11 separate volumes.

                                  2001

29 CFR
                                                                   66 FR
                                                                    Page
Chapter V
578 Authority citation revised.....................................63502
578.1 Revised......................................................63503
578.3 Heading and (a) revised......................................63503
579 Authority citation revised.....................................63503
579.1 Heading revised; (b) redesignated as (c); new (b) added......63503
579.5 Heading and (a) revised; (e) amended.........................63503
580 Authority citation revised.....................................63503
580.5 Amended......................................................63503
697 Authority citation revised.....................................44968
697.1 Revised......................................................44968
697.2 Redesignated as 697.3; new 697.2 added.......................44969
697.3 Redesignated as 697.4; new 697.3 redesignated from 697.2.....44969
697.4 Redesignated from 697.3......................................44969

                                  2002

29 CFR
                                                                   67 FR
                                                                    Page
Chapter V
500 Authority citation revised.....................................76986
500.170 Revised....................................................76986

                                  2003

29 CFR
                                                                   68 FR
                                                                    Page
Chapter V
697.2 Revised......................................................46950
697.4 Revised......................................................46951

                                  2004

29 CFR
                                                                   69 FR
                                                                    Page
Chapter V
541 Revised; eff. 8-23-04..........................................22260
570.5--570.27 (Subpart B) Authority citation revised...............75402
570.5 Heading revised..............................................75402
570.6 Heading, (b)(1) and (2) note revised.........................75402
570.7 Heading revised..............................................75402
570.8 Heading revised..............................................75402
570.9 Heading revised..............................................75402
570.10 Heading revised.............................................75402
570.11 Heading revised.............................................75402
570.12 Heading revised.............................................75402
570.25 Heading revised.............................................75402
570.27 Heading revised.............................................75402
570.31--570.38 (Subpart C) Authority citation revised..............75402
570.31 Heading revised.............................................75402
570.32 Heading revised.............................................75402
570.33 Heading revised.............................................75402
570.34 Heading, (a)(7) and (b)(5) revised..........................75402
570.35 Heading revised.............................................75403
570.35a Heading revised............................................75403
570.36 Heading revised.............................................75403
570.37 Heading revised.............................................75403
570.38 Heading revised.............................................75403
570.50--570.68 (Subpart E) Authority citation revised..............75403
570.51 (b)(2) revised..............................................75403
570.52 (b) revised; (c)(5) and (6) added...........................75403
570.63 Heading, (a)(1)(i), (b) and (c) revised.....................75403
570.67 (a) and (b) revised.........................................75404
579 Authority citation revised.....................................75405

[[Page 906]]

579.1 Heading. (a) introductory text, (1), (6) and (c) revised.....75405
579.3 Heading and (a)(5) revised...................................75405
579.5 Heading revised..............................................75405
579.6 Removed......................................................75405
579.7 Removed......................................................75405
579.8 Removed......................................................75405
580 Authority citation revised.....................................75405
580.5 Revised......................................................75405
580.6 (a) revised..................................................75405
580.13 Revised.....................................................75405
580.14 Removed.....................................................75406
580.16 Revised.....................................................75406
580.18 (a) revised.................................................75406

                                  2005

29 CFR
                                                                   70 FR
                                                                    Page
Chapter V
697.2 Revised......................................................57723
697.4 Revised......................................................57724

                                  2006

29 CFR
                                                                   71 FR
                                                                    Page
Chapter V
500.212 (a) amended................................................16665
501.33 (a) and (c) amended.........................................16665
516.0 Table amended (OMB numbers)..................................16665
519.10 Removed.....................................................16665
519.20 Removed.....................................................16665
531.8 Removed......................................................16665
536 Authority citation revised.....................................16665
536.1 Removed......................................................16666
536.2 Removed......................................................16666
536.3 Heading and (a) introductory text amended....................16666
536.4 Removed......................................................16666
547.1 Amended (OMB numbers)........................................16666
547.3 Removed......................................................16666
548.5 Removed......................................................16666
549.1 Amended (OMB numbers)........................................16666
549.4 Removed......................................................16666
550.3 Removed......................................................16666
552.7 Removed......................................................16666
570.27 Removed.....................................................16666
570.38 Removed.....................................................16666

                                  2007

                       (No regulations published)

                                  2008

29 CFR
                                                                   73 FR
                                                                    Page
Chapter V
501 Revised........................................................77229
780 Authority citation revised.....................................77238
780.115 Revised....................................................77238
780.201 Revised....................................................77238
780.205 Revised....................................................77239
780.208 Revised....................................................77239
788.10 Revised.....................................................77239
825 Revised........................................................68073

                                  2009

29 CFR
                                                                   74 FR
                                                                    Page
Chapter V
501 Redesignated as Part 502 and suspended; new Part 501 added.....26008
502 Redesignated from Part 501 and suspended.......................26008
780 Authority citation revised.....................................26014
780.115 Redesignated as 780.159 and suspended; new 780.115 added 
                                                                   26014
780.159 Redesignated from 780.115 and suspended....................26014
780.201 Redesignated as 780.215 and suspended; new 780.201 added 
                                                                   26014
780.205 Redesignated as 780.216 and suspended; new 780.205 added 
                                                                   26015
780.208 Redesignated as 780.217 and suspended; new 780.208 added 
                                                                   26015
780.215 Redesignated from 780.201 and suspended....................26014
780.216 Redesignated from 780.205 and suspended....................26015
780.217 Redesignated from 780.208 and suspended....................26015
788.10 Redesignated as 788.18 and suspended; new 788.10 added......26015
788.18 Redesignated from 788.10 and suspended......................26015
825 Regulation at 73 FR 68073 confirmed.............................2862

[[Page 907]]

                                  2010

   (Regulations published from January 1, 2010, through July 1, 2010)

29 CFR
                                                                   75 FR
                                                                    Page
Chapter V
501 Revised.........................................................6978
    Meeting.........................................................7367
570.31--570.37 (Subpart C) Authority citation revised..............28448
570.31 Revised; eff. 7-19-10.......................................28448
570.32 Revised; eff. 7-19-10.......................................28448
570.33 Revised; eff. 7-19-10.......................................28448
570.34 Revised; eff. 7-19-10.......................................28448
570.35 Revised; eff. 7-19-10.......................................28448
570.35a Redesignated as 570.36; eff. 7-19-10.......................28452
570.36 Redesignated as 570.38; new 570.36 redesignated from 
        570.35a; (c)(3) introductory text revised; eff. 7-19-10....28452
570.37 Redesignated as 570.39; new 570.37 added; eff. 7-19-10......28452
570.38 Redesignated from 570.36; eff. 7-19-10......................28452
570.39 Redesignated from 570.37; eff. 7-19-10......................28452
570.54 Revised; eff. 7-19-10.......................................28453
570.55 (b) revised; eff. 7-19-10...................................28455
570.58 (a) and (b) revised; eff. 7-19-10...........................28455
570.59 Heading revised; eff. 7-19-10...............................28455
570.61 Heading, (a)(4), (7), (b) and (c)(1) revised; eff. 7-19-10 
                                                                   28455
570.62 (a)(2) revised; (b) added; eff. 7-19-10.....................28456
570.63 Heading, (a)(2), (b) and (c)(1)(iv)(A) revised; (a)(3) and 
        (4) added; eff. 7-19-10....................................28456
570.65 Heading, (a)(2) and (b) revised; (a)(3) added; eff. 7-19-10
                                                                   28457
570.102 Revised; eff. 7-19-10......................................28458
570.103 (c) revised; eff. 7-19-10..................................28458
570.111 Footnote 21 revised; eff. 7-19-10..........................28458
570.118 Revised; eff. 7-19-10......................................28458
570.119 Revised; eff. 7-19-10......................................28458
570.120 Revised; eff. 7-19-10......................................28458
570.122 Revised; eff. 7-19-10......................................28459
570.127 Undesignated center heading removed; section revised; eff. 
        7-19-10....................................................28459
570.128 Redesignated as 570.141; new 570.128 added; eff. 7-19-10 
                                                                   28459
570.129 Redesignated as 570.142; new 570.129 added; eff. 7-19-10 
                                                                   28459
570.130 Added; eff. 7-19-10........................................28460
570.140 Undesignated center heading and section added; eff. 7-19-
        10.........................................................28460
570.141 Redesignated from 570.128; eff. 7-19-10....................28459
570.142 Redesignated from 570.129; eff. 7-19-10....................28459
579 Authority citation revised.....................................28460
579.1 (a) revised; eff. 7-19-10....................................28460
579.2 Revised; eff. 7-19-10........................................28461
579.5 (a) and (e) revised; eff. 7-19-10............................28461


                                  [all]