on the basis of all the facts in the light of the Section 779.234-ESTABLISHMENTS Section 3(s) contains a provision that any establishment, "if the only employees of such establishment are the owner thereof or persons standing in the relationship of parent, spouse, or child of such owner," shall not be considered an "enterprise" as defined in section 3 (r) or as a part of any other enterprise. Further, the sales of such an establishment are not included in determining the annual gross volume of sales of any enterprise for the purpose of section 3 (s) of the Act. Section 779.235-OTHER "ENTERPRISES" No attempt has been made in the discussion of the term "enterprise", to consider every possible situation which may, within the meaning of section 3 (r), constitute an "enterprise" under the Act. The discussion is designed to explain and illustrate the application of the term in some cases; in others, the discussion may serve as a guide in applying the criteria of the definition to the particular fact situation. COVERED ENTERPRISES Section 779.236-IN GENERAL Sections 779.201-779.235 discuss the various criteria for determining what business unit or units constitute an "enterprise" within the meaning of the Act. Sections 779.237-779.256 will discuss the criteria for determining what constitutes a "covered enterprise" under the Act and the conditions for coverage of those enterprises of interest to retailers. Section 779.237-ENTERPRISE ENGAGED Under section 3 (s) the "enterprise" to be covered must be an "enterprise engaged in commerce or in the production of goods for commerce." This is defined in section 3(s) as follows: Enterprise engaged in commerce or in the produc tion of goods for commerce means any of the following in the activities of which employees are so engaged, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person * * * In order for an enterprise to come within the coverage of the Act it must, therefore, be established that the enterprise has at least two or more employees engaged in the described activities. The activities specified in section 3 (s) are the following: (a) Activities where employees are engaged in commerce or in the production of goods for commerce, including (b) Activities in which employees are engaged in handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person. Section 779.238-ENGAGEMENT IN DE- As set forth in the preceding section an enterprise to be a "covered enterprise" must have at least two or more employees engaged in certain described activities. As in the case of the other conditions for coverage set forth in section 3 (s), this requirement, too, will be determined on an annual basis in order to give full effect to the intent of Congress. Thus, an enterprise will be considered to have at least two or more employees engaged in commerce or in the production of goods for commerce, including the handling, selling or otherwise working on goods that have been moved in or produced for commerce by any person, if during the annual period which it uses in calculating its annual sales for purposes of the other conditions of section 3(s) (1) through (5), it regularly and recurrently has at least two or more employees engaged in such activities. On the other hand, it is plain that an enterprise that has two or more employees engaged in such activities only in isolated or sporadic occasions, will not meet this condition. Section 779.239-MEANING OF "ENGAGED section 3(s) of the Act in reference to "employees who are so engaged," is the same as the term which has been used in the Act for many years. The statutory definitions of these terms are set forth in sections 779.12-779.16. The interpretative bulletin on the General Coverage of the Wage and Hour Provisions (Part 776 of this chapter) contains the Divisions' interpretations as to which employees are "engaged in commerce or in the production of goods for commerce." These interpretations are equally applicable under section 3(s) in determining which employees are "engaged in commerce or in the production of goods for commerce" within the meaning of this section. A brief discussion of the guiding principles in determining which employees of retail or service establishments are “engaged in commerce or in the production of goods for commerce" is set forth in Subpart B of this part. EMPLOYEES HANDLING, SELLING, OR OTHERWISE WORKING ON GOODS THAT HAVE BEEN MOVED IN OR PRODUCED FOR COMMERCE BY ANY PERSON Section 779.240-EMPLOYEES HANDLING *** OR OTHERWISE WORKING ON GOODS (a) "Goods" upon which the described activities are performed. Employees will be considered to be handling, selling or otherwise working on goods within the meaning of section 3(s) if they engage in the described activities on "goods" which "have been moved in or produced for commerce by any person". The term "goods" is defined in section 3 (i) of the Act and the definition is explained in section 779.107. As defined in section 3 (i) of the Act, the term includes any part or ingredient of "goods" and, in general, includes "articles or subjects of commerce of any character". Thus the term "goods", as used in section 3(s), includes all goods which have been moved in or produced for commerce, such as stock-in-trade, or raw materials that have been moved in or produced for commerce. However, the mere fact that employees, in conducting the business of the enterprise or establishment, are using machinery, equipment, work tools, and the like, which may have been moved in or produced for commerce, does not mean that they are handling, selling, or otherwise working on "goods" that have been moved in or produced for commerce within the meaning of section 3(s). (b) Handling *** or otherwise working on goods. The term "handling *** or in any other manner working on *** goods" has been contained in the definition of the term "produced" in section 3(j) of the Act since 1938, and already has a well defined meaning within the context of the existing law. (See section 776.16 of Part 776 of this chapter, the interpretative bulletin on the general coverage of the Act.) The term "handling *** or otherwise working on goods" used in section 3(s) is substantially the same as the term used in section 3(j) of the Act. Both terms will therefore be considered to have essentially the same meaning. Thus, the activities encompassed in the term "handling or in any other manner working on goods" in section 3 (s) is the same as the activities encompassed in the similar term in section 3(j). In general, the term "handling *** or otherwise working on goods" includes employees who sort, screen, grade, store, pack, label, address, transport, deliver, print, type, or otherwise handle or work on the goods. The same will be true of employees who handle or work on "any part or ingredient of the goods" referred to in the discussion of the term "goods" in section 779.107. An employee will be considered engaged in "handling *** or otherwise working on goods," within the meaning of section 3 (s), only if he performs the described activities on goods that "have been moved in or produced for commerce by any person." This requirement is discussed in sections 779.242 and 779.243. Section 779.241—SELLING The statutory definition of the term "sale" or "sell" is quoted in section 779.15. As long as the employee in any way participates in the sale of the goods he will be considered to be "selling" the goods, whether he physically handles them or not. Thus, if the employee performs any work that, in a practical sense is an essential part of consummating the "sale" of Section 779.242-GOODS THAT HAVE For the purpose of section 3 (s), goods will be considered to "have been moved *** in commerce" when they have moved across State lines before they are handled, sold, or otherwise worked on by the employees. It is immaterial in such a case that the goods may have "come to rest" within the meaning of the term "in commerce" as interpreted in other respects, before they are handled, sold, or otherwise worked on by the employees in the enterprise. Such movement in commerce may take place before they have reached the enterprise, or within the enterprise, such as from a warehouse of the enterprise in one State to a retail store of the same enterprise located in another State. Thus, employees will be considered to be "handling, selling, or otherwise working on goods that have been moved in *** commerce" where they are engaged in the described activities on "goods" that have moved across State lines at any time in the course of business, such as from the manufacturer to the distributor, or to the "enterprise," or from one establishment to another within the "enterprise". Section 779.243~GOODS THAT HAVE BEEN "PRODUCED FOR COMMERCE BY ANY PERSON" An employee will be considered to be handling, selling, or otherwise working on goods that have been "produced for commerce by any person" within the meaning of section 3 (s), if he is performing the described activities with respect to goods which have been "produced for commerce" within the meaning of the Act. The term "produced” is defined in section 3(j) of the Act and, as explained above, has a wellestablished meaning under the existing law (see section 779.104). The word as it is used in the context of the phrase "goods *** produced for commerce by any person" in section 3 (s) has the same meaning as in 3(j). Therefore, where goods are considered "produced for commerce" within the meaning of section 3(j) of the Act they also will be considered "produced for commerce" within the meaning of section 3(s). A discussion of when goods are produced for commerce within the meaning of section 3(j) is contained in section 779.108. Of course, within the meaning of section 3 (s), the goods will be considered "produced for commerce" when they are so produced "by any person". THE 3(s) (1) ENTERPRISE Section 779.244-"COVERED ENTERPRISES" OF INTEREST TO RETAIL OR SERVICE INDUSTRY The various enterprises which are covered by the Act are described in section 3(s) (1) through (5). The retail or service industry, however, is primarily concerned with section 3(s) (1) and 3(s) (5). Thus, only the section 3(s) (1) enterprise and the 3(s) (5) enterprise will be considered in this bulletin. The enterprises described in section 3 (s) (2), (3), and (4) will each be discussed in separate bulletins. The statutory definitions of the 3(s) (1) and 3(s) (5) enterprises are quoted in section 779.22. Section 779.245-FIRST CONDITION FOR COVERAGE OF 3(s) (1) ENTERPRISE; ENGAGING IN COMMERCE OR IN THE PRODUCTION OF GOODS FOR COMMERCE The requirement that the enterprise must be "an enterprise engaged in commerce or in the production of goods for commerce", is discussed in sections 779.237-779.243. Section 779.246-SECOND CONDITION OF To come within the scope of section 3 (s) (1) the "enterprise", in addition to the other conditions, must have one or more "retail or service establishments." The statutory definition of the term "retail or service establishment" is contained in section 779.24 and is discussed in Subpart D of this part. Whether composed of one or more establishments, an enterprise will come within the scope of section 3 (s) (1) if it has at least one "retail or service establishment" and if the enterprise meets all the other conditions of that section. Section 779.247-THIRD CONDITION OF A 3(s) (1) ENTERPRISE; HAVING $1,000,000 OR MORE IN ANNUAL GROSS VOLUME OF SALES To come within the scope of section 3(s) (1), the "enterprise", in addition to the other conditions, must have an annual gross volume of sales of not less than $1,000,000 exclusive of excise taxes at the retail level which are separately stated. If the annual gross volume of sales of the enterprise is less than the stated amount it will not come within the scope of section 3(s) (1). Section 779.248-WHAT SALES ARE INCLUDED IN ANNUAL GROSS VOLUME The annual gross volume of sales of an enterprise consists of its gross receipts from all types of sales during a 12-month period. The gross volume of sales means the gross volume derived from all sales transactions including, for example, income from service, credit, or other similar charges. Credits for goods returned or exchanged and rebates and discounts, and the like, are not ordinarily included in the annual gross volume of sales. The gross volume of sales includes the receipts from sales made by the retail or service establishments of the enterprise as well as the sales made by any other establishments of the enterprise. The dollar volume of sales of the entire business in all establishments is added together to determine whether the million dollar test is met. The fact that one or more of the retail or service establishments of the enterprise may have less than $250,000 in annual sales and may meet the other requirements for exemption from the pay provisions of the Act under section 13(a) (2), does not exclude the dollar volume of sales of that establishment from the annual gross volume of sales of the enterprise. Where merchandise is taken in trade when a sale is made, the annual gross volume of sales will include the gross amount of the sale before deduction of the allowance on such trade-in merchandise. When the trade-in merchandise is in turn sold by the enterprise, the amount of that sale will be included in its annual gross volume of sales. The computation of the annual gross volume of sales of the enterprise is made "exclusive of excise taxes at the retail level which are separately stated." The taxes which may be excluded are discussed in sections 779.263-779.266. The methods of calculating the annual gross volume of sales of an enterprise are set forth in sections 779.267-779.273. Section 779.249-FOURTH CONDITION OF 3(s) (1) ENTERPRISE; ENTERPRISE; INFLOW TEST a To come within the scope of section 3(s) (1) the enterprise, in addition to the other conditions, must purchase or receive goods for resale that move or have moved across State lines (not in deliveries from the reselling establishment) which amount in total annual volume to $250,000 or more. To meet this condition, it must be shown that (a) the enterprise purchases or receives goods for resale (section 779.251) and (b) that such goods move or have moved across State lines (section 779.252); and (c) that such purchases and receipts amount in total annual volume to $250,000 or more (section 779.256). Section 779.250-"GOODS" DEFINED The term "goods" is defined in section 3 (i) of the Act. The statutory definition is quoted in section 779.14. Section 779.251-PURCHASE OR RECEIVE "GOODS FOR RESALE" (a) Goods will be considered purchased or received "for resale" if they are purchased or received with the intention of being resold. This includes goods, such as stock in trade which is purchased or received by the enterprise for resale in the ordinary course of business. It does not include machinery, equipment, supplies and other goods which the enterprise purchases to use in conducting its business. This is true even if such capital goods or other equipment, which the enterprise originally purchased for use in conducting its business, are at some later date actually resold. The distinction is to be found in whether the goods are purchased or received by the enterprise with the intention of reselling them in the same form or after further processing or manufacturing, or whether they are purchased with the intent of being consumed or used by the enterprise itself in the performance of its activities. (b) Goods, such as raw materials or ingredients, are considered purchased or received by the enterprise "for resale", even if such goods are purchased or received for the purpose of being processed or used as parts or ingredients in the manufacture of other goods which the enterprise intends to sell. For example, where the enterprise purchases flour for use in baking bread or pastries for sale, the goods will be considered to have been purchased "for resale". It is immaterial whether the goods will be resold by the enterprise at retail or at wholesale. Section 779.252-GOODS WHICH MOVE OR HAVE MOVED ACROSS STATE LINES In order to be included in the annual dollar volume for purposes of this test, the goods which the enterprise purchases or receives for resale must be goods that "move or have moved across State lines." Goods which have not moved across State lines before they are resold by the enterprise will not be included. The movement to which the phrase "move or have moved” has reference is that movement which the goods follow in their journey to the enterprise or within the enterprise to the establishment which sells the goods. Thus, if goods have moved across State lines at some stage in the flow of trade before they are actually sold by the enterprise, they will be considered to have moved across State lines. It is not material that the goods may have "come to rest" at some time before they are purchased or received and sold by the enterprise; nor is it material that some time may have elapsed between the time the goods have moved across State lines and the time they are purchased or received and sold by the enterprise. It is sufficient if at any time such goods have moved across State lines in the ordinary course of trade before resale by the enterprise. Much of the goods purchased by retailers are procured from a local intrastate supplier. In many instances these goods may Section 779.253-GOODS THAT HAVE Goods which are purchased or received by the enterprise from within the State will be considered goods which "have moved across State lines" if they have previously been moved across State lines and have not lost their identity as out-of-State goods before they are purchased or received by the enterprise. Also goods which have been assembled within the State after they were moved across State lines but before they are purchased or received by the enterprise will still be regarded as goods which "have moved across State lines." Such goods are still identifiable as goods brought into the State. This is also true in certain cases where goods are processed to some extent without losing their identity as out-of-State goods. For example, out-ofState furniture or television sets which are put together within the State, or milk from outside the State which is pasteurized and bottled within the State, before being purchased or received by the enterprise, are goods which "have moved across State lines." They have already moved across State lines and they retain their out-of-State identity, despite the assembly or processing within the State. Section 779.254-GOODS (a) Goods which are purchased or received by the enterprise within the State will not be considered goods which have "moved across State lines" if the goods, although they came from outside the State, had been processed or manufactured so as to have lost their identity as out-of-State goods before they are purchased or received by the enterprise. This assumes, of |