and dry cleaning services during a 12-month period. Where there may be doubt as to whether the establishment qualifies under the percentage tests for the exemption, analysis of its gross receipts for such annual period must be made before the employer can know whether or not he is required, when he pays his employees, to observe the minimum wage and overtime pay standards of the Act with respect to employees covered by the Act.

Section 781.16 Calculation on a calendar year basis.

For purposes of determining the applicability of the exemption to an establishment during any calendar quarter (Jan. 1-March 31; Apr. 1-Jun. 30; July 1-Sept. 30; Oct. 1-Dec. 31), analysis of the gross receipts from the various types of sales of laundry and dry cleaning services will be made on the basis of the annual (12 calendar months') period which immediately precedes the current calendar quarter. In this manner the employer by analyzing the sales of his establishment for the twelve months immediately preceding any current quarter will know whether or not to comply with the requirements of the Act in the workweeks ending in such quarter-year period. Of course, in applying this rule, the gross receipts of an establishment for such 12-month period will constitute its annual dollar volume for that period even though the establishment did not operate throughout the entire year.

Section 781.17 Computation on a fiscal year basis.

Some establishments 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 establishments, in applying the method of computation in section 781.16 may use the four quarters of the fiscal year period, instead of the four quarters of the calendar year, to determine whether the requirements of the exemption have been met in the work-weeks ending in the current fiscal year quarter. Once adopted, the same basis must be used in subsequent computations.

Section 781.18 Computation for new business. When a new business is commenced in an establishment, the employer will necessarily be unable

for a time to determine its annual dollar volume on the basis of the preceeding annual period described in section 781.16 or 781.17, because the establishment will have no gross receipts during such period. In such cases, for purposes of determining the applicability of the exemption in workweeks falling within the calender quarter in which the establishment commenced operations, the gross receipts of such new business during the period in which it has been in operation will be taken as representative of the establishment's an nual dollar volume in applying the statutory percentage tests. Similarly, for purposes of determining whether or not it has met the requirements for exemption under section 13 (a) (3) in workweeks falling within the ensuing quarter year periods, the sales of laundry and dry cleaning services for the completed quarter year periods will be taken as representative of its annual dollar volume. After the establishment has been in operation a full year, the analysis can be made as described in section 781.16 or 781.17.

EMPLOYMENT "BY" AN EXEMPT ESTABLISHMENT Section 781.19 Employment "by" establishment required for exemption.

Section 13 (a) (3) exempts any employee "employed by" any establishment described in this exemption. Thus, where it is found that the laundry or dry cleaning establishment meets the tests for exemption, all employees "employed by" that establishment will be exempt from the minimum wage and overtime provisions of the Act, whether such employees perform their activities inside or outside the establishment. Thus, such employees as repair and service men and delivery men actually employed by an exempt laundry or dry cleaning establishment are exempt from the minimum wage and overtime provisions of the Act even if they perform the work of the establishment away from the premises.

Section 781.20 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 in the work of the exempt establishment itself in activities within the scope of its business (see Davis v. Good

man Lumber Co., 133 F. 2d 52; Northwest Airlines v. Jackson, 185 F. 2d 74; Walling v. Connecticut Co., 154 F. 2d 522, certiorari denied, 329 U.S. 667; and Wabash Radio Corp. v. Walling, 162 F. 2d 391).

Section 781.21 Employed "in" but not "by".

Since the exemption by its terms applies to employees "employed by" the exempt establishment, it follows that the exemption will not extend to other employees who although actually working in the establishment are not "employed by" the exempt establishment. Thus, traveling auditors, repairmen and others who are not "employed by" the exempt establishment in which they work will not be exempt merely because they happen to be working in such an exempt establishment (Mitchell v. Kroger Co., 248 F. 2d 945).

Section 781.22 Central offices and warehouses.

Employees in offices, warehouses, garages, etc., which service a single exempt laundry or dry cleaning establishment are regarded as "employed by" such exempt establishment and are within the section 13 (a) (3) exemption. They will be exempt whether the office, warehouse or garage in which they work is part of the premises of such exempt establishment or is a separate establishment, and whether the exempt laundry or dry cleaning establishment by which they are employed performs on its premises all the operations (of receiving clothing or fabrics from customers, laundering, cleaning and repairing the articles, and redelivering the articles to the customers), or is served through separate establishments which receive and return the clothing or fabrics laundered, cleaned, or repaired to the customers. On the other hand, where a business organization operates a chain of laundry or dry cleaning establishments in which laundering, cleaning or repairing operations are performed on clothing or fabrics for the customers of such establishments, the employees working for the central offices and warehouses of such a chain of laundries or dry cleaning establishments will not qualify for the section 13 (a) (3) exemption. Such central offices and warehouses, as separate and distinct establishments within the meaning of the exemption, perform no laundering, cleaning or repairing services and have no customers. Under such circumstances, the two tests of the section

13(a) (3) exemption cannot be applied to them. Moreover, employees of such central offices and warehouses are not "employed by" any laundry or dry cleaning establishment but rather "by" the chain itself.

WORKWEEK APPLICATION OF EXEMPTION

Section 781.23 Workweek is used 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 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 168 hours-7 consecutive 24-hour periods. It may begin at any hour of any day 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 engages exclusively in work which is exempt under section 13 (a) (3), 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. Employees may thus be exempt in one workweek and not in the next. Section 781.24 Exempt and noncovered work during the same workweek.

The wage and hour requirements of the Act do not apply to an employee during any workweek in which a portion of his activities fall within the exemption in section 13(a) (3) if all the remainder of his activities during that week are not covered by the Act.

Section 781.25 Exempt and nonexempt work during the same workweek.

Where an employee in the same workweek performs work which is exempt under section 13 (a) (3) and also engages in work to which the Act applies, and which is not exempt under this or any other section of the Act, he is not exempt during that work 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).

Section 781.26 Work exempt under another

section of the Act.

The combination ("tacking") of exempt work under section 13 (a) (3) with exempt work under another section of the Act is permitted. The wage and hour requirements are not considered applicable to an employee who does work within section 13(a) (3) for only part of a work

week 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. In such a case, each activiity is tested separately under the applicable exemption as if it were the sole activity of the employee for the whole workweek in question. The availability of a combination exemption depends upon whether the employee meets all the requirements of each exemption which is sought to be combined.

U.S. GOVERNMENT PRINTING OFFICE 1965 0-770-777