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established in good faith for like work performed in nonovertime hours on other days; or

(7) extra compensation provided by a premium rate paid to the employee, in pursuance of an applicable employment contract or collective bargaining agreement, for work outside of the hours established in good faith by the contract or agreement as the basic, normal, or regular workday (not exceeding eight hours) or workweek (not exceeding the maximum workweek applicable to such employee under subsection (a)), where such premium rate is not less than one and one-half times the rate established in good faith by the contract or agreement for like work performed during such workday or workweek. This definition, which is discussed at length in Part 778 of this chapter, also governs the computation of "regular rate" for purposes of the special overtime exemption of certain coramission employees of retail or service establishments which is contained in section 7(h) of the Act and is discussed in Subpart E of this part. Section 779.19-EMPLOYER, EMPLOYEE,

AND EMPLOY

their overtime work in any workweek as provided in the Act not less than one and one-half times their regular rates of pay. Section 7(d) of the Act defines "regular rate” in the following language:

(d) As used in this section the "regular rate" at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf of, the employee, but shall not be deemed to include

(1) sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occasions, as a reward for service, the amounts of which are not measured by or dependent on hours worked, production, or efficiency;

(2) payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause; reasonable payments for traveling expenses, or other expenses, incurred by an employee in the furtherance of his employer's interests and properly reimbursable by the employer; and other similar payments to an employee which are not made as compensation for his hours of employment;

(3) sums paid in recognition of services performed during a given period if either, (a) both the fact that payment is to be made and the amount of the payment are determined at the sole discretion of the employer at or near the end of the period and not purstant to any prior contract, agreement, or promise causing the employee to expect such payments regularly; or (b) the payments are made pursuant to a bona fide profitsharing plan or trust or bona fide thrift or savings plan, meeting the requirements of the Secretary of Labor set forth in appropriate regulation which he shall issue, having due regard among other relevant factors, to the extent to which the amounts paid to the employee are determined without regard to hours of work, production, or efficiency; or (c) the payınents are talent fees (as such talent fees are defined and delimited by regulations of the Secretary) paid to performers, including announcers, on radio and television programs;

(4) contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old age, retirement, life, accident, or health insurance or similar benefits for employees;

(5) extra compensation provided by a premium rate paid for certain hours worked by the employee in any day or workweek because such hours are hours worked in excess of eight in a day or in excess of the maximum workweek applicable to such employee uuder subsection (a) or in excess of the employee's normal working hours or regular working hours, as the case may be;

(6) extra compensation provided by a premium rate paid for work by the employee on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek, where such premium rate is not less than one and one-half times the rate

The Act's major provisions impose certain requirements and prohibitions on every "employer” subject to their terms. The employment by an employer" of an "employee” is, to the extent specified in the Act, made subject to minimum wage and overtime pay requirements and to prohibitions against the employment of oppressive child labor. The Act provides its own definitions of "employer", "employee", and "employ”, under which "economic realty“ rather than "technical concepts" determines whether there is employment subject to its terms (Goldberg v. Whitaker Ilouse Cooperative, 366 U.S. 28; United States v. sink, 331 U.S. 704; Rutherford Food Corp. v. McComb, 331 U.S. 722). An "employer", as defined in section 3(d) of the Act, "includes any person acting directly or indirectly in the interest of an employer in relation to an employee but shall not include the United States or any State or political subdivision of a State, or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization”. An "employee", as defined in section 3(e) of the Act, "includes any individual employed by an employer” and "employ”, as used in the Act, is defined in section 3(g) to include "to suffer or permit to

group of

work”. It should be noted, as explained in the collective purchasing, or (c) that it will have interpretative bulletin on joint employment, 29 the exclusive right to sell the goods or use the CFR Part 791, that in appropriate circum brand name of a manufacturer, distributor, or stances two or more employers may be jointly advertiser within a specified area, or by reason responsible for compliance with the statutory of the fact that it occupies premises leased to it requirements applicable to employment of a

by a person who also leases premises to other particular employee. It should also be noted

retail or service establishments.” The scope and that "employer", "enterprise", and "establish

application of this definition is discussed in Subment" are not synonymous terms, as used in the

part C of this part. Act. An employer may have an enterprise with more than one establishment, or he may have

Section 779.22_ENTERPRISE ENGAGED more than one enterprise, in which he employs

IN COMMERCE OR IN THE PRODUCemployees within the meaning of the Act.

TION OF GOODS FOR COMMERCE Also, there may be different employers who employ employees in a particular establishment or The portions of the definition of "enterprise enterprise.

engaged in commerce or in the production of Section 779.20_PERSON

goods for commerce" (Act, section 3(s)) which

are important to a determination of the appliAs used in the Act (including the definition

cation of provisions of the Act to employees of "enterprise" set forth in section 779.21),

employed by retailers are as follows: "person” is defined as meaning "an individual,

(s) "Enterprise engaged in commerce or in the propartnership, association, corporation, business

duction of goods for commerce" means any of the trust, legal representative, or any organized

following in the activities of which employees are so of persons.” (Act, section 3(a).)

engaged, including employees handling, selling, or

otherwise working on goods that have been moved in Section 779.21-ENTERPRISE

or produced for commerce by any person : It is provided in section 3(r) of the Act that (1) any such enterprise which has one or more re

tail or service establishinents if the annual gross vol"enterprise” as used in the Act, “means the re

ume of sales of such enterprise is not less than lated activities performed (either through uni

$1,000,000, exclusive of excise taxes at the retail level fied operation or common control) by any

which are separately stated and if such enterprise person or persons for a common business pur

purchases or receives goods for resale that move or pose, and includes all such activities whether have moved across State lines (not in deliveries from

the reselling establishment) which amount in total performed in one or more establishments or

annual volume to $250,000 or more; by one or more corporate or other organizational units including departments of an

(5) any gasoline service establishment if the annual establishment operated through leasing ar

gross volume of sales of such establishment is not less rangements, but shall not include the related

than $250,000, exclusive of excise taxes at the retail activities performed for such enterprise by an level which are separately stated : independent contractor: Provided, That, within

Provided, That an establishment shall not be conthe meaning of this subsection, a retail or sery

sidered to be an enterprise engaged in commerce or ice establishment which is under independent in the production of goods for commerce, or a part of ownership shall not be deemed to be so operated an enterprise engaged in commerce or in the producor controlled as to be other than a separate and tion of goods for commerce, and the sales of such

establishment shall not be included for the purpose distinct enterprise by reason of any arrange

of determining the annual gross volume of sales of ment, which includes, but is not necessarily

any enterprise for the purpose of this subsection, if limited to, an agreement, (a) that it will sell,

the only employees of such establishment are the owner or sell only, certain goods specified by a particu thereof or persons standing in the relationship of lar manufacturer, distributor, or advertiser, or parent, spouse, or child of such owner. (b) that it will join with other such establish The application of this definition is fully conments in the same industry for the purpose of sidered in Subpart Cof this part.

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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. 12503, 12579, 14877; II. 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.

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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 70 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 const itute a "retail or service establishment" within the meaning of the Act.

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Subpart B-EMPLOYMENTS TO WHICH THE ACT MAY AP-
PLY; BASIC PRINCIPLES AND INDIVIDUAL COVERAGE

GENERAL PRINCIPLES

Section 779.100_BASIC COVERAGE IN

GENERAL

1

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

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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.

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

EMPLOYEES ENGAGED IN

COMMERCE OR IN THE PRO-
DUCTION OF GOODS FOR COM-

MERCE
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; cleri-
cal and other workers who regularly use the
mails, telephone or telegraph for interstate com-
munication; 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

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