(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; or

(c) An enterprise may use the following method of calculating its annual gross volume of sales: At the beginning of each calendar quarter (Jan. 1– Mar. 31; Apr. 1-June 30; July 1-Sept. 30; Oct. 1Dec. 31), the gross receipts from all 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.

Section 794.138 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 section 794.137 (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.

Section 794.139 Grace period of one month for compliance.

Where it is not practicable to compute the annual gross volume of sales under section 794.137 or sec

tion 794.138 in time to determine obligations under the Act for the current quarter, an enterprise may use a one-month grace period. If this one-month grace period is used, the computations made under those sections will determine its obligations under the Act for the 3-month period commencing one 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.

Section 794.140 Computations for a new busi

ness.

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 12month period as described in sections 794.137 and 794.138. 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 $1,000,000 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 13(b) (10) of the Act in workweeks falling in the current 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 sections 794.137 and 794.138.

Section 794.141 Exemption conditioned on making 75 percent of sales within the State.

A further requirement of the section 13 (b) (10) 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.

Section 794.142 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-ofState customer, some specific relationship between him and the seller has to exist to indicate his outof-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 outof-State customer and therefore, is not a sale made

SALES MADE TO OTHER

Section 794.144 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 13 (b) (10) 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. Thus an enterprise to be exempt may not make more than 25 percent of its annual dollar volume of sales to the customers described in the exemption. 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 13(b) (10), can be characterized as one "engaged in the bulk distribution of such products for re

"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. Section 794.143 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 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 his use in interstate or foreign commerce or in the production of goods for such commerce.

BULK DISTRIBUTORS

sale". 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, or to any other customers except those specified in the exemption in section 13 (b) (10). Who is a "customer engaged in the bulk distribution of such products for resale" is discussed in sections 794.145 to 794.148.

Section 794.145 "Customer * ** bulk distribution".

engaged in

others who engage 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 13 (b) (10). 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 sections 794.146 to 794.148.

Section 794.146 Petroleum products.

What constitutes petroleum products is explained in section 794.121. 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 of such products. Sales to customers who are not engaged in the distribution of petroleum products will not be included in the 25 percent limitation.

Section 794.147 "Bulk distribution".

The term "bulk distribution" means distribution to customers' storage tanks or, in the case of packaged lubricating oil, to the customers' storage facility, as distinguished from delivery of an

amount necessary to service a motor vehicle, into the tank of such vehicle for use in the propulsion of the vehicle. Typically, bulk distribution deliveries are made in tank trucks, motor carriers, or motor transports.

Section 794.148 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 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 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".

Section 794.149 Employees who are exempt.

Section 13 (b) (10) provides that the exemption from the overtime requirements of the Act shall be applicable to "any employee of" a distribution enterprise which meets its requirements. As was pointed out in sections 794.104 and 794.119 to 794.124, an enterprise which meets the requirements of section 13(b) (10) may engage in activities other than the wholesale or bulk distribution of petroleum products, such as the sale of coal, ice, feed or the recapping of tires. It is clear, as was pointed out in section 794.104, that it was not intended that the exemption provided by section 13(b) (10) should be applicable to employees who engage in these other activities which may be a part of the enterprise but which do not constitute engagement in the wholesale or bulk dis

tribution of petroleum products. Where an exemption was intended to be applicable to such other employees, it was specifically provided in other sections of the Act. Thus, for example, under appropriate circumstances, there are exemptions under section 13 (a) (2) of the Act for employees engaged in the sale of ice, lumber, feed or the recapping of tires. (These exemptions are explained in sections 779.355 through 779.359, sections 779.362 through 779.364, and sections 779.372 through 779.375 of this chapter.) Whether the wholesale or bulk distribution of petroleum products in such cases constitutes the major activity of the enterprise or is only a minor part of the enterprise's business operations, it is clear that it was intended that the overtime exemption under section 13(b) (10) should be applicable to those

employees of the enterprise who are engaged in the wholesale or bulk distribution of petroleum products. Thus, the exemption from the overtime pay requirements of the Act under section 13 (b) (10) will be applicable, in any case where the enterprise meets the requirements of section 13 (b) (10), to all the employees of the enterprise who are engaged in the storage and delivery of petroleum products for the enterprise, and to those employees whose work is required for the performance of the activities in the wholesale or bulk distribution of the petroleum products. The exemption is applicable not only to such employees as drivers, helpers, loaders, dispatchers, and warehousemen who engage in the activities of the 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 activities which are required for the performance of the functions of the wholesale and bulk distribution of the petroleum products.

Section 794.150 Effect of activities other than "wholesale or bulk distribution of petroleum products".

In some cases, as noted in section 794.104, enterprises engaged in the wholesale or bulk distribution of petroleum products also engage in other activities. Examples are the operation of tire recapping establishments or gasoline service establishments, the sale and servicing of oil burners, and the distribution of coal, ice, feed, building supplies, paint, etc. While these activities, in appropriate cases, may be included in an enterprise engaged in the wholesale or bulk distribution of petroleum products as "related activities" (see sections 794.119 through 794.124), they are not the type of activities for which the section 13 (b) (10) exemption was intended. In such cases, the employees who are exclusively engaged in the wholesale or bulk distribution of petroleum products would nonetheless be entitled to exemption under 13(b) (10), assuming all the requirements for exemption are met. The employees engaged in activities other than the wholesale or bulk distribution of petroleum products would, of course, not come within the scope of the section 13(b) (10) exemption. For example, employees of separate gasoline service establishments are not exempt under section 13(b) (10); however, they may be ex

empt from the minimum wage and overtime pay provisions of the Act under section 13 (a) (2), or from the overtime pay provisions of the Act under section 13(b) (8). Where an employee who is otherwise engaged in the wholesale or bulk distribution of petroleum products including activities which are a necessary part thereof, devotes an insubstantial amount of time (for administrative purposes, not more than 20 percent in a workweek to these other activities, the section 13 (b) (10) exemption will not for that reason be considered inapplicable to him.

Section 794.151 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 7 consecutive 24hour 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.

Section 794.152 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 of section 13(b) (10), the employee is exempt that week from the overtime pay provisions, but not from the minimum wage requirements. Section 794.153 Other exemptions which may be applicable to employees of enterprises engaged in the wholesale or bulk distribution of petroleum products.

The Act contains other exemptions which may have applicability to certain employees of enterprises engaged in the wholesale or bulk dis

tribution of petroleum products. Section 13(b) (8) grants an overtime exemption for employees of gasoline service stations (see Part 779 of this chapter interpreting the Act as it applies to retailers of goods and services). Section 13(a)(1) provides a minimum wage and overtime exemption for employees employed in a bona fide "executive," "administrative," or "professional" capacity or in the capacity of an "outside salesman" (see Part 541 of this chapter, defining and delimiting the quoted terms and interpreting generally section 13(a) (1)). Section 13 (a) (2) also grants a minimum wage and overtime exemption for any employee employed by certain retail or service establishments (see Part 779 of this chapter, interpret

ing the Act as it applies to retailers of goods or services). Section 13(b) (1) provides an overtime exemption for certain drivers, drivers' helpers, loaders, or mechanics of motor carriers meeting specified requirements (see Part 782 of this chapter interpreting this exemption). Section 13(b)(11) provides an overtime exemption for 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 a 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) of the Act.

March 1962 Issue

U.S. GOVERNMENT PRINTING OFFICE: 1962

O-660767