Section 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(b), 7(h), 13(a), and 14 of the Act.

Section 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 spe

cial definition for purposes of the Act. The legislative history of the 1961 amendments to the Act, which use the same term in a number of the new 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 re-enacted in section 13(a) (2) of the Act as amended, 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.

GENERAL PRINCIPLES

Section 779.100-BASIC COVERAGE IN

GENERAL

Except as otherwise provided in specific exemptions, the minimum wage, overtime and child labor provisions of the Act have applied since 1938, and continue to apply, to employees who individually are engaged in interstate or foreign commerce or in the production of goods for such commerce as these terms are defined in the Act. Beginning September 3, 1961, these provisions will extend to additional employees because of their employment in certain enterprises. These enterprises are described in section 3(s) as enterprises engaged in commerce or in the production of goods for commerce and further described in section 3(s) (1) through (5). A detailed discussion of the coverage of employees in those enterprises 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 engaged in commerce or in the production of goods for commerce" as described in section 3(s) 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 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 is discussed in Subpart F of this part. Section 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. 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

or

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. EMPLOYEES

ENGAGED IN COMMERCE OR IN THE PRODUCTION OF GOODS FOR COMMERCE

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 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.

Section 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 section 779.13.) The handling or otherwise working on goods intended for shipment out of the State, directly or indirectly, is 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 section 779.105.)

Section 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.

Section 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 producer of the goods, the mere fact that the employee is employed by an independent employer will not justify a different answer. (See sections 776.17 (c) and 776.19 of this chapter.)

635882-62- -3

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

16

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 779.109-AMOUNT OF ACTIVI TIES 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".

Section 779.110-EMPLOYEES IN RETAILING WHOSE ACTIVITIES MAY BRING THEM UNDER THE ACT

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 establishments 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 result in coverage under the Act.

Section 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.

Section 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-ofState 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.

Section 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.

Section 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-ofState, or deliver to such terminals goods destined to points out-of-State; and dispatchers who route, plan or otherwise control such outof-State deliveries and pick ups, are engaged in interstate commerce within the meaning of the Act.

Section 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.

Section 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.

Section 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-ofState shipment, is performing covered activities. Section 779.118-EMPLOYEES PROVIDING CENTRAL SERVICES FOR MULTI-UNIT ORGANIZATIONS

Employees providing central services for a multi-unit organization may be engaged both "in commerce" and "in the production of goods for commerce" 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)