considered manufacturing and will not affect the applicability of the section 13 (a) (2) exemption to the establishment or to the employees who perform them. However, whenever lumber is cut or dressed for sale, or fabricated products are manufactured for sale (for example, windows, door frames, benches, pig troughs, pallets, molding, sashes, cabinets, boxes), there is no exemption under section 13(a)(2). Employees performing such manufacturing activities at the establishment are exempt only if all the tests set forth in section 13(a) (4) are met (see paragraphs (b), (c), and (d) of section 779.354a). Employees engaged in such activities at a manufacturing plant, central yard, or other place not qualifying as an exempt establishment under sections 13 (a) (2) and 13(a) (4) are not exempt.

(c) Employees serving exempt and nonexempt operations. In lumber and building materials establishments which qualify for exemption under section 13 (a) (2) but engage in some activities in which their employees are not exempt, such as construction or the making or processing of materials for sale where no exemption under section 13(a) (4) is applicable, there may be auxiliary employees of the establishment whose duties relate to both the exempt sales portion of the business and the nonexempt operations. For example, office workers may keep records of both the retail sales and construction or manufacturing activities; custodial workers may clean the entire premises, including portions devoted to nonexempt manufacturing; and warehousemen, messengers, and stock clerks may handle material for all departments, including material used in the nonexempt operations. These employees do not qualify for the exemption except when they are primarily engaged in the sales portion of the business and only incidentally perform clerical, custodial, or messenger service for the other operations. As an enforcement policy, such an employee will not be considered to be engaged in nonexempt activities which render him ineligible for exemption under section 13(a) (2) if, in the particular workweek, an insubstantial amount of his time (20 percent or less) is allocable to the clerical, custodial, or messenger services per

formed by him which relate to such nonexempt operations of the employer.

CODIFICATION: Centerhead and sections 779.354a, 779.354b, and 779.354c added 27 F.R. 2093, Mar. 3, 1962. COAL DEALERS

Section 779.355-MAY QUALIFY AS EXEMPT 13(a) (2) ESTABLISHMENT; CLASSIFICATION OF COAL SALES

(a) General. A coal dealer's establishment may qualify as an exempt retail or service establishment under section 13 (a) (2) of the Act if it meets all the requirements of that exemption. In determining for purposes of the 13 (a) (2) exemption, whether 75 percent of the establishment's sales are recognized as retail in the particular industry, all sales of coal to the consumer from a dealer's yard storage, where bulk is broken, are recognized as retail except the following sales which are not so recognized even if made from a dealer's yard storage:

(1) Sales where the delivery is made by railroad car or cargo vessel.

(2) Sales in a carload quantity or more for continuous delivery by truck from a dock, mine or public railroad facility.

(3) Sales of coal at a wholesale price. A wholesale price is a price comparable to or lower than the establishment's price in sales described in subparagraphs (1) and (2) of this paragraph or in sales to dealers (but not peddlers) for resale. If the establishment makes no such sales, the wholesale price is the price comparable to or lower than the price prevailing in the immediate area in sales described in subparagraphs (1) and (2) of this paragraph or in sales to dealers (but not peddlers) for resale.

(4) Sales of coal for use in the production of a specific product to be sold in which coal is an essential ingredient or the principal raw material, such as sales of coal for the production of coke, coal gas, coal tar, or electricity.

(b) “Sales for resale." In determining for purposes of the 13(a) (2) exemption, whether 75 percent of the establishment's sales are not made for resale, "sales for resale" will include sales of coal to other dealers, to peddlers, and sales of coal for use in the production of a specific product to be sold, in which coal is an es

emption. (It should be noted, however, that employees of certain enterprises engaged in the wholesale or bulk distribution of petroleum products may be exempt from the overtime provisions of the Act under section 13(b) (10). This overtime exemption is discussed in a separate bulletin.) Liquefied-petroleum-gas means butane, propane and mixtures of butane and propane gases.

Section 779.361-CLASSIFICATION OF LIQUEFIED-PETROLEUM-GAS SALES (a) General. In determining, under the 13 (a) (2) exemption, whether 75 percent of the establishment's sales are not for resale and are recognized as retail sales in the industry, all sales to the ultimate consumer of liquefied-petroleum-gas, whether delivered in portable cylinders or in bulk to the customer's storage tanks, are recognized as retail in the industry except the following:

(1) Sales in single lot deliveries exceeding 1,000 gallons;

(2) Sales made on a competitive bid basis (this term covers sales made pursuant to an invitation to bid, particularly sales to Federal, State and local governments; sales made in a like manner to commercial and industrial concerns and institutions are also included); and

(3) Sales for use in the production of a specific product in which the gas is an essential ingredient or principal raw material, such as sales of liquefied-petroleum-gas for the production of chemicals and synthetic rubber.

(b) Sales or repairs of tanks. Sales or repairs of tanks for the storage of liquefied-petroleum-gas is recognized as retail in the industry, except: (1) Any tank exceeding 1,000 gallons in capacity; (2) any tank sold or repaired on the basis described in subparagraph (2) of paragraph (a) of this section or for the purposes described in subparagraph (3) of paragraph (a) of the section; and (3) sales in quantity larger than involved in the ordinary sales to a farm or household customer.

(c) Conversion units. Sales and installation of units for converting tractors, trucks, pumps, stoves, furnaces and other equipment and appliances to the use of liquefied-petroleum-gas, are recognized as retail sales except: (1) Sales

of the installation of such conversion units which involve substantial modification of the appliance or equipment; (2) sales and installations of such units to be used in industrial machinery or equipment; and (3) sales and installations made on the basis described in subparagraph (2) of paragraph (a) of this section or in quantity as described in subparagraph (3) of paragraph (a) of this section. FEED DEALERS

Section 779.362-MAY QUALIFY AS EXEMPT 13(a)(2). OR 13(a)(4) ESTABLISHMENT

An establishment engaged in selling feed may qualify as an exempt retail or service establishment under section 13(a) (2) of the Act if it meets all the requirements of that exemption. Similarly an establishment making and processing the feed it sells may qualify as an exempt establishment under section 13 (a) (4) of the Act if it meets all the requirements of that exemption.

Section 779.363-CLASSIFICATION OF FEED SALES; CUSTOM GRINDING AND MIXING

In determining whether, under the 13(a) (2) exemption, 75 percent of the establishment's sales are not for resale and are recognized as retail sales in the industry, all sales of feed to feeders will be considered to be retail sales except any sale of feed for shipment by rail car direct to the feeder and sales made at a quantity discount which results in a price comparable to or lower than the establishment's price to dealers for resale or, if the establishment makes no sales to other dealers, at a price comparable to or lower than the price prevailing in the immediate area in sales by similar establishments to dealers for resale. The custom grinding and mixing of feed (including the addition of supplements) for feeders from the grain they themselves bring in will be regarded as the performance of a service, and not the making or processing of goods under section 13(a)(4). Such services are recognized as retail services in the industry and the revenue derived therefrom will be included with the retail receipts of the establishment.

Section 779.364-GRINDING AND MIXING FEED FOR SALE UNDER SECTION 13(a)(4)

Employees employed in the grinding and mixing of feed for sale (as distinguished from the grinding and mixing services discussed in section 779.363) are engaged in the making or processing of goods and are therefore not exempt under section 13 (a) (2). In order for these employees to be exempt, the establishment by which they are employed must meet all the requirements of section 13 (a) (4). One of the requirements of the section 13(a) (4) exemption is that the establishment must be recognized as a retail establishment in the particular industry. The typical small feed mill engaged in selling goods to farmers appears to be recognized as retail in the industry. There are, of course, large mills which are essentially factories which are not so recognized. As an enforcement policy an establishment will be considered to have met this requirement (a) if less than 50 percent of its sales are composed of feed manufactured at the establishment; (b) if its sales of feeds manufactured at the establishment constitute more than 50 percent of the total sales of the establishment but do not exceed 2,000 tons a year. In determining these tests for the applicability of the exemption, the computation of the sales of feed manufactured will be made on an annual basis in the same manner as set forth in sections 779.267 to 779.273 for the computation of sales.

MONUMENT DEALERS

Section 779.365-MAY QUALIFY AS EXEMPT 13(a) (2) OR 13(a) (4) ESTABLISHMENT

An establishment engaged in the sale of monuments and memorials may qualify as an exempt retail or service establishment under section 13(a) (2) of the Act if it meets all the requirements of that exemption. Similarly, an establishment making or processing the monuments it sells may qualify as an exempt establishment under section 13(a) (4) of the Act if it meets all the requirements of that exemption.

Section 779.366-TYPES OF MONUMENT DEALER ESTABLISHMENTS Monument dealers' establishments may be roughly divided into four types:

(a) Establishments which are engaged exclusively in selling monuments and memorials from designs. They receive their monuments from a manufacturer completely finished and lettered and they then erect the monuments.

(b) Establishments which purchase finished monuments from manufacturers, display them, carve or sand-blast lettering or incidental decoration to order, and set them in cemeteries or elsewhere.

(c) Establishments which purchase finished and semi-finished work. The semi-finished work consists of sawed, steeled, or polished granite slabs or sand-rubbed marble. In such a case the establishments will cut ends, tops, or joints on dies and may shape a base.

(d) Establishments which purchase stone in rough form and perform all the fabricating operations in their own plants. In such a case the establishments may saw or line-up the rough stones, machine surface and polish the stone and then perform the other operations necessary to complete the monument. They may finish the monuments for display or on special order and then erect them.

Section 779.367-CLASSIFICATION OF MONUMENT SALES AND PROCESS

ING ACTIVITIES