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) for various retail units of a chain are covered under the Act. (See Phillips Co. v. Walling, 324 U.S. 490; Walling v. Jacksonville Paper Co., 317 U.S. 564, affirming, 128 F.2d 935 (CA5); Mitchell v. C. & P. Stores, 286 F. 2d 109 (CA-5); Mitchell v. E. G. Shinner & Co., Inc., 221 F. 2d 260 (CA-7); Donovan v. Shell Oil Co., 168 F. 2d 776 (CA-8). In addition, employees who regularly and recurrently correspond and maintain records of activities of outof-State stores and such employees as traveling auditors, inventory men, window display men, etc., who regularly travel from State to State in the performance of their duties are covered under the Act. (See Mitchell v. Kroger Co., 248 F.2d 935 (CA-8).) Section 779.119-EXEMPT OCCUPATIONS Of course, it should be noted that although employees may be engaged in commerce or in the production of goods for commerce within the meaning of the Act, they may be exempt from the Act's minimum wage or overtime provisions (or both). For a complete list of such exemptions the Act should be consulted. Those exemptions, however, which are of particular interest to employers and employees in the retail field are discussed in Subparts D, E, and F of this Part. Subpart C-EMPLOYMENTS TO WHICH THE ACT MAY ENTERPRISE; THE ACT'S NEW Section 779.200-COVERAGE EXPANDED The 1961 amendments for the first time since the enactment of the Fair Labor Standards Act of 1938 provide that all employees in a particular business unit are covered by the Act. Prior to the amendments each employee's coverage depended on whether that employee's activities were in commerce or constituted the production of goods for commerce. Now all employees employed in an "enterprise" described in section 3 (s) (1) through (5) of the Act are covered. Thus, it is necessary to consider the meaning of the term "enterprise" as used in the Act. Section 779.201-THE PLACE OF THE The term "enterprise" is defined in section 3(r) of the Act (see section 779.21) and, wherever used in the Act, is governed by this definition. The term is a key in determining the applicability of the Act to these businesses. The "enterprise" is the unit for determining whether the requisite dollar tests and other conditions of section 3(s) (1) through (5) are met, and the unit for determining which em ployees are entitled to the minimum wage and overtime benefits and to the child labor protection, under sections 6, 7 and 12 of the Act. In general, if the "enterprise" comes within any of the five categories described in section 3(s) (1) through (5), all employees employed in the "enterprise" are covered by the Act and, regardless of their duties, are entitled to the Act's benefits unless a specific exemption applies. Section 779.202-BASIC CONCEPTS OF DEFINITION (a) General. Under the definition, the "enterprise" consists of "the related activities performed ***for a common business purpose.' All of the activities comprising the enterprise must be "related". Activities which are not related are not included in the enterprise. (b) Activities which are included. Further, the definition makes clear that the enterprise includes all such related activities which are performed through "unified operation" or "common control". This is true even if they are performed by more than one person, or in more than one establishment, or by more than one corporate or other organizational unit. It specifically includes, as a part of the enterprise, departments of an establishment operated through leasing arrangements. (c) Activities which are excluded. The definition excludes from the "enterprise" activities performed "for" the enterprise by an independent contractor even if they are related to the activities of the enterprise. Also, it makes clear that a truly independent retail or service establishment does not become a part of a larger enterprise merely because it enters into certain types of franchise or collective purchasing arrangements or because it has a common landlord with other such retail establishments. Section 779.203-DISTINCTION BETWEEN "ENTERPRISE", "ESTABLISHMENT" AND "EMPLOYER" (a) The coverage, exemption and other provisions of the Act depend, in part, on the scope of the terms "employer," "establishment," or "enterprise." The term "employer" has been defined in the Act since its inception and has a well established meaning. As defined in section 3(d), it includes, with certain stated exceptions, any person acting directly or indirectly in the interest of an employer in relation to an employee. (See section 779.19.) The term "establishment" means a "distinct physical place of business" rather than "an entire business or enterprise." (See section 779.23.) (b) The term "enterprise" has not previously been used in the Act, but the careful definition and the legislative history of the 1961 amendments provide guidance as to its meaning and application. As defined in the Act, the term "enterprise" is roughly descriptive of a business rather than of an establishment or of an employer although on occasion the three may coincide. The enterprise, however, is not necessarily co-extensive with the entire business activities of an employer. (c) The enterprise may consist of a single establishment (see section 779.204 (a)) which may be operated by one or more employers; or it may be composed of a number of establishments which may be operated by one or more employers (see section 779.204(b)). On the other hand, a single employer may operate more than one enterprise (see section 779.204 (c)). The Act treats as separate enterprises different businesses which are unrelated to each other even if they are operated by the same employer. Section 779.204-COMMON TYPES OF "ENTERPRISE" In (a) The single establishment business. the simplest type of organization—the single business unit, owned and operated by one person-the "enterprise" is readily identifiable. The entire business ordinarily is one enterprise. In many cases the entire business activity of the single owner-employer is performed in one establishment. An example is the typical independently owned and controlled retail store. In that case the establishment and the enterprise are one and the same. All of the activities of the store are "related" and are performed for a single business purpose and there is both unified operation and common control. The entire business is the unit for applying the statutory tests. If the coverage tests are met, all of the employees employed by the establishment are employed in the enterprise and will be entitled to the benefits of the Act unless otherwise exempt. (b) The multi-unit business. The enterprise also is readily identifiable in many cases where one company conducts its single business in a number of establishments. An example of such an enterprise is the typical chain of retail stores. All of the activities ordinarily are related and performed for one business purpose. The single company which owns the chain also controls the entire business. In such circumstances, the entire business is a single enterprise. The dollar volume of the entire business from all of its establishments is added together to determine whether the requisite dollar volume tests are met. If the coverage tests are met, all of the employees employed in the business will be entitled to the benefits of the Act unless otherwise exempt. (c) Complex business organizations. In complex business organizations, questions may arise as to whether certain activities are a part of a particular enterprise. In some cases one employer may operate several separate enterprises; in others, several employers may conduct their business activities in such a manner that they are part of a single enterprise. The answer, in each case, as to whether or not the "enterprise" includes certain activities will depend upon whether the particular activities are "related" to the business purpose of the enterprise and whether they are performed through "unified operation" or "common control," or whether, on the other hand, they are performed for a separate and distinct business. As the Senate Report states, "related activities conducted by separate business entities will be considered a part of the same enterprise where they are joined either through unified operation or common control into a unified business system or economic unit to serve a common business purpose." (S. Rept. 145, 87th Cong., 1st Sess., p. 41.) Sections 779.205 through 779.211 discuss the terms of the definition and may aid in making these determinations. RELATED ACTIVITIES Section 779.205-ENTERPRISE MUST CONSIST OF "RELATED ACTIVITIES" The enterprise must consist of certain "related activities"; activities which are not "related" are not a part of the enterprise even if performed by the same employer. Moreover, even if activities are "related" they may be excluded from the enterprise if they are performed "for" the enterprise by an independent contractor. This is discussed separately in section 779.206. Section 779.206-WHAT ARE "RELATED ACTIVITIES" (a) The Senate Report on the 1961 amendments states as follows, with respect to the meaning of related activities: Within the meaning of this term, activities are "related" when they are the same or similar, such as those of the individual retail or service stores in a chain, or departments of an establishment operated through leasing arrangements. They are also "related" when they are auxiliary and service activities such as central office and warehousing activities and bookkeeping, auditing, purchasing, advertising and other services. Likewise, activities are "related" when they are part of a vertical structure such as the manufacturing, warehousing, and retailing of a particular product or products under unified operation or common control for a common business purpose. (Senate Report No. 145, 87th Cong., 1st Sess., Page 41.) Thus, activities will be regarded as "related" when they are the same or similar or when they are auxiliary or service activities such as ware housing, bookkeeping, purchasing, advertising, including, generally, all activities which are necessary to the operation and maintenance of the particular business. So also, all activities which are performed as a part of a unified business operation will be "related," including, in appropriate cases, the manufacturing, warehousing and distribution of its goods, the repair and maintenance of its equipment, machinery and its premises, and all other activities which are performed for the common business purpose of the enterprise. (b) Generally, the answer to the question whether particular activities are "related" or not, will depend in each case upon whether the activities serve the business purpose of the enterprise, or whether they serve a separate and unrelated business. For example, where a company operates retail or service establishments, and also engages in a separate and unrelated construction business, the construction activities will not be "related" and will constitute a separate enterprise if they are conducted independently and apart from the retail operations. Where, however, the retail and construction activities are conducted for a common business purpose, they may be "related", and if they are performed through unified operation or common control, they will be a part of a single enterprise. Thus, a retail store enterprise may engage in construction activities to serve its retail operations. It may act as its own contractor in constructing or reconstructing its own stores and related facilities. In such a case, the construction activities will be "related" activities and the construction employees who are employed by the retail enterprise will be covered if the retail enterprise is covered. Other examples may also be cited. The answer in each case will necessarily depend upon all the facts. Section 779.207-RELATED ACTIVITIES IN RETAIL OPERATIONS In the case of an enterprise which has one or more retail or service establishments, all of the activities which are performed for the furtherance of the common business purpose of operating the retail or service establishments are "related activities." It is not material that the enterprise sells different goods or provides dif ferent services, or that it operates separate retail or service establishments. As stated in the definition, the enterprise includes all related activities whether performed "in one or more establishments." Since the activities performed by one retail or service establishment are the "same or similar" to the activities performed by another, they are, as such, "related activities." For example, a drug store may sell a large variety of different products, and a grocery store may sell clothing and furniture and other goods. Clearly all of these activities are "related." Similarly it is clear that all activities of a department store are "related activities", even if the store sells a great variety of different types of goods and services and even if, as in some cases, the departmentalized business is conducted in more than one location, as where the department selling garden supplies or electrical appliances is located on separate premises. Whether on the same premises or at separate locations, the retail selling of goods or services, of any type, are related activities and they will be considered one enterprise where they are performed, through unified operation or common control, for a common business purpose. Section 779.208-AUXILIARY ACTIVITIES WHICH ARE "RELATED ACTIVITIES" As stated in the Senate Report cited in section 779.206, auxiliary and service activities, such as central office and warehousing activities and bookkeeping, auditing, purchasing, advertising and other similar services, also are "related activities." When such activities are performed through unified operation or common control, for a common business purpose, they will be included in the enterprise. The following are some additional examples of auxiliary activities which are "related activities" and which may be included in the enterprise: (a) credit rating and collection services; (b) promotional activities including advertising, sign painting, display services, stamp redemptions, and prize contests; (c) maintenance and repair services of plant machinery and equipment including painting, decorating, and similar services; (d) store or plant engineering, site location and related survey activities; (e) detective, guard, watchmen and other protective services; (f) delivery services; (g) the operation of employee or customer parking lots; (h) the recruitment, hiring and training activities and other managerial services; (i) recreational and health facilities for customers or employees including eating and drinking facilities (note that employees primarily engaged in certain food service activities in retail establishments may be exempt under section 13 (a) (20) of the Act if the specific conditions are met; see sections 779.389-779.394); (j) the operation of employee benefit and insurance plans; and (k) repair and alteration services on goods for sale or sold to customers. Section 779.209-VERTICAL ACTIVITIES WHICH ARE "RELATED ACTIVITIES" (a) The Senate Report also states (see section 779.206) that activities are "related" when they are "part of a vertical structure such as the manufacturing, warehousing, and retailing of a particular product or products." Where such activities are performed through unified operation or common control for a common business purpose they will be regarded as a part of the enterprise. (b) Whether such activities as manufacturing, warehousing, wholesaling and retailing of a particular product or products are "related" activities and part of a single enterprise, or whether they constitute separate businesses and separate enterprises, depends upon the facts in each case. In all of these cases of so-called "vertical operations," the determination whether the activities are "related", depends upon the extent to which the various business activities, such as wholesaling and retailing or manufacturing and retailing, are interrelated and interdependent. The mere fact that they are under common ownership is not, by itself, sufficient to bring them within the same enterprise. Thus, where a manufacturing business is carried on separately from and wholly independently of a retail business, and not to supply the retail business with merchandise, they are separate businesses even if they are under common ownership. Where the manufacturing operations are performed in substantial part for the purpose of distributing the goods |