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vator, its employees may come within the section 13(a) (17) 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 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.

Section 780.613 Determining the number of employees generally.

The number of employees referred to in section 13(a) (17) 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.

Section 780.614 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 of a restaurant who bring food and beverages to the elevator employees, and employees of other employers who make deliveries to the establishment.

Section 780.615 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 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 preforming their duties. This has been the consistent interpretation of similar language in other sections of the Act.

EMPLOYEES "EMPLOYED * ** BY" THE COUNTRY
ELEVATOR ESTABLISHMENT

Section 780.616 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 section 780.620), any employee "employed *** by" such establishment will come within the section 13 (a) (17) 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 sections 780.612-780.615.)

Section 780.617 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 em

ployer 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.

Section 780.618 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 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 estab

lishment 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 engage 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. Section 780.619 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(a) (17) 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"

Section 780.620 "Area of production" requirement of exemption.

In addition to the requirements for exemption previously discussed, section 13(a)(17) 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)". This is a requirement similar to that contained in certain other exemptions in the Act (see Subparts H and J of this Part 780). Regulations defining employment within the "area of production" for purposes of section 13(a) (17) are, together with the regulations defining the term as used in other exemptions contained in Part 536 of this chapter. All the requirements of the applicable regulations must be met in order for the exemption to apply. Under the regulations, an employee is considered to be employed within "the area of production" within the meaning of section 13 (a) (17) 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 United States 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. 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 or marketing of farm products. The commodities, 95 percent of which are required by definition to come from specified distances, are those agricultural commodities received by the elevator with respect to which it performs the primary concentration, storage, and marketing functions of a country elevator as previously explained (see section 780.608). 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 section 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 Section 780.621 Employment in the particular workweek as test of exemption. The period for determining whether the "area of production" requirement of section 13(a) (17) 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 re-examination 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 sections 780.612-780.615). Nor is any employee within the exemption in a workweek when he is not employed "by" the establishment within the meaning of section 13(a) (17) (see sections 780.616-780.619). 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. 572; 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 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 the workweek for the purpose of escaping the requirements of the Act is not permitted.

Section 780.622 Exempt workweeks.

An employee performing work for an establishment commonly recognized as a country elevator is exempt under section 13(a) (17) in any workweek when he is, for the entire work week, 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.

Section 780.623 Exempt and nonexempt employment.

Under section 13(a) (17), 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).

Section 780.624 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(a) (17) if it continued throughout the workweek, and the remainder of his workweek is spent in employment 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 section 13 (a) (17) and the rest is exempt only from the overtime pay provisions under section 7(c), the employee is exempt that week from the overtime provisions, but not from the minimum wage requirements. In this connection, attention is directed to two other exemptions in the Act which relate to work in grain elevators, which may apply in appropriate circumstances, either in combination with section 13

(a) (17) or to employees for whom the requirements of section 13 (a) (17) cannot be met. These other exemptions are those provided by sections 7(b) (3) and 13(a) (10). Section 7(b) (3), which is discussed in Subpart J of this Part 780, 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, non

elevator bulk storing establishments and flat warehouses. Section 13 (a) (10), which is discussed in Subpart H of this Part 780, grants a complete exemption from the Act's minimum wage and overtime requirements for individuals employed within the area of production in "handling" or "storing" agricultural or horticultural commodities for market. Grain is an agricultural commodity under the section 13 (a) (10) exemption.

SUBPART H-EMPLOYMENT WITHIN AREA OF PRODUCTION OF INDIVIDUALS ENGAGED IN SPECIFIED OPERATIONS ON PRODUCTS OF AGRICULTURE, EXEMPTED FROM MINIMUM WAGE AND OVERTIME PAY REQUIREMENTS UNDER SECTION 13(a)(10)

SOURCE: Sections 780.700 to 780.776 appear at 26 F.R. 10407, Nov. 3, 1961.

INTRODUCTORY

Section 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(a) (10) of the Fair Labor Standards Act of 1938, as amended. 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. This subpart deals specifically with the provisions of section 13 (a) (10) which exempt from both the minimum wage and the overtime pay requirements of the Act certain individuals employed within "the area of production" who are engaged in specified operations performed on products of agriculture. Other subparts of this Part 780 discuss certain related exemptions. Such exemptions, which include the section 13 (a) (6) exemption (see Subpart B of this part) for agriculture and certain irrigation workers, and the overtime exemptions contained in sections 7(c) and 7(b) (3) dealing with certain employment relating to agriculture commodities and in seasonal industries (see Subpart J of this part), are not discussed in this subpart except in their relation to section 13(a) (10). Questions relating to the ginning of cotton, previously named as an opera

tion which could qualify for exemption under section 13(a) (10) of the Act but now deleted from this section and made the subject of a separate exemption under section 13 (a) (18) by the 1961 amendments, are considered in Subpart F of this Part 780.

Section 780.701 Statutory provision.

Section 13 (a) (10) of the Fair Labor Standards Act exempt from the minimum wage requirements of section 6 and from the overtime provisions of section 7:

any individual employed within the area of production (as defined by the Secretary), engaged in handling, packing, storing, compressing, pasteurizing, drying, preparing in their raw or natural state, or canning of agricultural or horticultural commodities for market, or in making cheese or butter or other dairy products.

As recognized by the Supreme Court in Maneja v. Waialua, 349 U.S. 254 (see section 780.155), the legislative history of the Act indicates that it was intended by this provision to complement or supplement the exemption applicable to employment in "agriculture" so as to assure more nearly equal treatment as between farmers who rely on independent establishments to perform the named operations and those who perform such operations with their own employees.

Section 780.702 What determines the application of the exemption.

It is apparent from the language of section 13 (a) (10) that the application of this exemption depends upon the engagement by the individual employee in the operations named in the statute and his employment "within the area of produc

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