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tion directly essential to such production. (See sections 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

service establishments ordinarily were exempt. However, in some cases such coverage was applicable as where employees were employed in central offices or warehouses of retail chain store systems and, therefore, were not exempt. (See section 779.118.) As a result of the 1961 amendments the exemptions for retail or service establishments have been narrowed and a discussion of these coverage provisions of the Act becomes pertinent. This subpart, therefore, will discuss briefly the principles of coverage of such employees 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.

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 is discussed in Subpart F of this part. Section 779.101-GUIDING PRINCIPLES


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. 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; 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.) Section 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 occupa



Section 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 place outside thereof. (The statutory definition of commerce is contained in section 3(b) of the Act and is set forth in section 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 sections 776.9-776.13 of this chapter.) Typically, but not exclusively, employees engaged in interstate or foreign commerce, in

clude employees in distributing industries, such Section 779.105-EMPLOYEES ENGAGED as wholesaling or retailing, who sell, handle or IN ACTIVITIES "CLOSELY RELATED" otherwise work on goods moving in interstate AND “DIRECTLY ESSENTIAL” TO commerce as well as workers who order, receive, THE PRODUCTION OF GOODS FOR pack, ship, or keep records of such goods; cleri- COMMERCE cal and other workers who regularly use the

Some employees are covered because their mails, telephone or telegraph for interstate com

work, although not actually a part of such promunication; and employees who regularly travel

duction, is "closely related" and "directly esacross State lines while working.

sential” to it. This group of employees includes Section 779.104-EMPLOYEES “ENGAGED

bookkeepers, stenographers, clerks, accountIN THE PRODUCTION OF GOODS

ants and auditors and other office and white FOR COMMERCE”

collar workers, and employees doing payroll,

timekeeping and time study work for the proThe activities constituting "production" ducer of goods; employees in the personnel, within the meaning of the phrase "engaged labor relations, advertising, promotion, and in ** * the production of goods for com- public relations activities of the producing enmerce” are defined in section 3(j) of the Act. terprise; work instructors for the producer; (The statutory definition is set forth in section

employees maintaining, servicing, repairing or 779.13.) The handling or otherwise working improving the buildings, machinery, equipon goods intended for shipment out of the State, ment, vehicles or other facilities used in the directly or indirectly, is engagement in the production of goods for commerce, and such "production” of goods for commerce. Thus,

custodial and protective employees as watchemployees in retail stores who sell, pack, or

men, guards, firemen, patrolmen, caretakers, otherwise work on goods which are to be shipped

stockroom workers, and warehousemen; and or delivered outside of the State are engaged

transportation workers bringing supplies, matein the production of goods for commerce. Typi- rials, or equipment to the producer's premises, cally, but not exclusively, employees engaged in removing waste materials therefrom, or transthe production of goods for interstate or foreign

porting materials or other goods, or performcommerce, include those who work in manufac

ing such other transportation activities, as the turing, processing and distributing establish

needs of production may require. These examments, including wholesale or retail establish

ples are illustrative, rather than exhaustive, of ments, that produce goods for interstate or for- the group of employees of a producer who are eign commerce. This includes everyone, includ- "engaged in the production of goods for coming office, management, sales and shipping merce” by reason of performing activities personnel, and maintenance, custodial and pro- closely related and directly essential to such tective employees, whether they are employed production. by the producer or an intermediary. Employees Section 779.106-EMPLOYEES EMPLOYED may be covered even if their employer does not BY AN INDEPENDENT EMPLOYER ship his goods directly in such commerce. The

Where the work of an employee would be goods may leave the State through another firm.

closely related and directly essential to the proThe workers may produce goods which become

duction of goods for commerce if he were ema part or ingredient of goods shipped in inter

ployed by a producer of the goods, the mere state or foreign commerce by another firm. Also

fact that the employee is employed by an incovered are workers who are engaged in a closely dependent employer will not justify a different related process or occupation directly essential answer. (See sections 776.17(c) and 776.19 of to such production. (See section 779.105.) this chapter.)

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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.


Section 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 section 776.20 of this chapter, which also cites the court cases in which the term was construed. The statutory definition of "goods” is set forth in section 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, check books, blank books, book covers, advertising circulars, and wrappers and other packaging materials. Section 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

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"


The discussion in Sections 779.103-779.109 included general references 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 est ablishments or in enterprises of the type described in section 3(s) (1) and 3(s) (5) whose individual activities 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 sections 779.111 to 779.118, are illustrative only. There are other employees whose activities may be covered; also there are other activities per

formed by the groups discussed which would goods for their employer; or who regularly and result in coverage under the Act.

recurrently pick up at rail heads, air, bus or Section 779.111-BUYERS AND THEIR

other such terminals goods originating out-ofASSISTANTS

State, or deliver to such terminals goods des

tined to points out-of-State; and dispatchers Buyers and their assistants, employed by re- who route, plan or otherwise control such outtail businesses, as a regular part of their duties, of-State deliveries and pick ups, are engaged generally travel across State lines, or use the in interstate commerce within the meaning of mails, telegraph or telephone for interstate com- the Act. munication to order goods; or they regularly send or receive, across State lines, written re

Section 779.115--WATCHMEN AND

GUARDS ports, messages or other documents. These activities of such employees constituto engage Watchmen or guards employed by retail busiment "in commerce" within the meaning of the nesses who protect the warehouses, workshops, Act.

or store premises where goods moving in interSection 779.112-OFFICE EMPLOYEES

state or foreign commerce are kept or where

goods are produced for such commerce, are covSimilarly office employees of retail businesses

ered under the Act. who regularly and recurrently check records of and make payments for goods shipped to

Section 779.116_CUSTODIAL AND their employer from outside of the State, or

MAINTENANCE EMPLOYEES regularly and recurrently keep records of or Custodial and maintenance employees who otherwise work on the accounts of their em

perform maintenance and custodial work on the ployer's out-of-State customers, or who regu- machinery, equipment, or premises where goods larly and recurrently prepare or mail letters, regularly are produced for commerce or from checks, reports or other documents to out-of

which goods are regularly shipped in interState points, are engaged both in commerce and state commerce,

are engaged in covered in the production of goods for commerce within activities. the meaning of the Act. Likewise, timekeepers who regularly and recurrently prepare and

Section 779.117-SALESMEN AND SALES

CLERKS maintain payrolls for and pay employees who are engaged in commerce or in the production A salesman or a sales clerk who regularly and of goods for commerce are themselves engaged recurrently takes orders for, or sells, or selects in covered activities.

merchandise for delivery to points outside the Section 779.113_WAREHOUSE AND

State or which are to be shipped or delivered STOCK ROOM EMPLOYEES

to a customer from a point outside the State,

i.e. drop shipments; or who wraps, packs, adWarehouse and stock room employees of re- dresses or otherwise prepares goods for out-oftail businesses who regularly and recurrently State shipment, is performing covered activities. engage in the loading or unloading of goods moving in commerce, or who regularly and

Section 779.118 EMPLOYEES PROVIDrecurrently handle, pack or otherwise work on

ING CENTRAL SERVICES FOR goods that are destined to out-of-State points

MULTI-UNIT ORGANIZATIONS are engaged in covered activities.

Employees providing central services for a Section 779.114_TRANSPORTATION

multi-unit organization may be engaged both

“in commerce” and “in the production of goods EMPLOYEES

for commerce” within the meaning of the Act. Transportation employees of retail busi- For example, employees engaged in work renesses, such as truck drivers or truck drivers'

lating to the coordinated purchasing, warehoushelpers, who regularly and recurrently cross ing and distribution (and in the administrative State lines to make deliveries or to pick up 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 (CA5); 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 outof-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).) Section 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.





ployees are entitled to the minimum wage and overtime 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 five categories described in section 3(s) (1) through (5), 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.


BY 1961 AMENDMENTS The 1961 amendments for the first time since the enactment of the Fair Labor Standards Act of 1938 provide that all employees in a particular business unit are covered by the Act. Prior to the amendments each employee's coverage depended on whether that employee's activities were in commerce or constituted the production of goods for commerce. Now all employees employed in an “enterprise” described in section 3(s) (1) through (5) of the Act are covered. Thus, it is necessary to consider the meaning of the term “enterprise” as used in the Act.

Section 779.202-BASIC CONCEPTS OF


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The term "enterprise" is defined in section 3(r) of the Act (see section 779.21) and, wherever used in the Act, is governed by this definition. The term is a key in determining the applicability of the Act to these businesses. The "enterprise” is the unit for determining whether the requisite dollar tests and other conditions of section 3(s) (1) through (5) are met, and the unit for determining which em

(a) General. 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 which are not related are not included in the enterprise.

(b) Activities which are included. Further, 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 are performed by more than one person, or in more than one establishment, or by more than one corporate or other organizational unit. It specifically includes, as a part of the enterprise, departments of an establishment operated through leasing arrangements.

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