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any part or ingredient thereof, but does not in definition is also important in determining clude goods after their delivery into the actual whether goods "for resale” purchased or rephysical possession of the ultimate consumer ceived by an enterprise move or have moved thereof other than a producer, manufacturer, or across State lines within the meaning of section processor thereof." The interpretative bulletin 3(s) (1) of the Act, and whether sales of goods on general coverage of the Act, Part 776 of this or services are made within the State" within chapter, contains a detailed discussion of the

ap the meaning of the retail or service establishplication of this definition and what is included ment exemption in section 13(a) (2), as disin it.

cussed in Subpart D of this part. Section 779.15-SALE AND RESALE

Section 779.17--WAGE Section 3(k) of the Act provides that “sale” Section 3(m) of the Act provides that, as or “sell”, as used in the Act, “includes any sale, used in the Act, "wage” paid to any employee exchange, contract to sell, consignment for sale, “includes the reasonable cost, as determined by shipment for sale, or other disposition.” Since the Secretary of Labor, to the employer of fur"goods”, as defined, includes any part or ingre nishing such employee with board, lodging, or dient of goods (see section 779.14), a "resale” other facilities, if such board, lodging, or other of goods includes their sale in a different form facilities are customarily furnished by such emthan when first purchased or sold, such as the ployer to his employees: Provided, That the cost sale of goods of which they have become a com of board, lodging, or other facilities shall not be ponent part (Arnold v. Kanowsky, 361 U.S.

included as a part of the wage paid to any em388). The Act, in section 3(n), provides one ployee to the extent it is excluded therefrom exception to this rule by declaring that “resale”, under the terms of a bona fide collective-baras used in the Act, “except as used in subsection gaining agreement applicable to the particular (s) (1), shall not include the sale of goods to be employee: Provided further, That the Secretary used in residential or farm building construc is authorized to determine the fair value of such tion, repair, or maintenance: Provided, That board, lodging, or other facilities for defined the sale is recognized as a bona fide retail sale in classes of employees and in defined areas, based the industry.” A resale of goods is not confined

on average cost to the employer or to groups of to resale of the goods as such, but under section employers similarly situated, or average value 3(k) may include an “other disposition" of the to groups of employees, or other appropriate goods in which they are disposed of in a trans measures of fair value. Such evaluations, where action of a different kind; thus the sale by a applicable and pertinent, shall be used in lieu restaurant to an airline of prepared meals to be of actual measure of cost in determining the served in flight to passengers whose tickets en wage paid to any employee.” As explained in title them to a “complimentary” meal is a sale of the interpretative bulletin on method of paygoods "for resale”. (Mitchell v. Sherry Corine ment of wages, Part 777 of this chapter, it is the Corp., 264 F 2d 831 (C.A. 4), cert. denied 360 above provision of the Act which governs the U.S. 934.)

payment, otherwise than in cash, of wages which

the Act requires. Regulations under which the Section 779.16 STATE

reasonable cost or fair value of such facilities As used in the Act, “State” means "any State

furnished may be computed for inclusion as part of the United States or the District of Colum

of the wages required by the Act are contained bia or any Territory or possession of the United

in Part 531 of this chapter. States” (Act, section 3(c)). The application of

Section 779.18_REGULAR RATE this definition in determining questions of cov

under the Act's definition of "commerce" As explained in the interpretative bulletin erage and "produced” (see sections 779.12, 779.13) is on overtime compensation, Part 778 of this discussed in the interpretative bulletin on gen chapter, employees subject to the overtime pay eral coverage, Part 776 of this chapter. This provisions of the Act must generally receive for

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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 pursuant 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 payments 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 under 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

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 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 House Cooperative, 366 U.S. 28; United States v. Sik, 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

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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, partnership, association, corporation, business (s) “Enterprise engaged in commerce or in the pro

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

following in the activities of which employees are so group 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"enterprise" as used in the Act, "means the re tail or service establishments if the annual gross vol

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 serv

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 produc

tion of goods for commerce, and the sales of such or controlled as to be other than a separate and

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

parent, spouse, or child of such owner. lar manufacturer, distributor, or advertiser, or (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. 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.

GED DIG CE

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.

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

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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

or

if the establishment is a part of an enterprise tion directly essential to such production. (See that is covered by the Act. This exemption and sections 779.12-779.16 for definitions governing other exemptions of particular interest to re the scope of this coverage.) Prior to the 1961 tailers and their employees are discussed in amendments a retailer was not generally conSubparts D and E of this part. The child labor cerned with the coverage provisions as they approvisions as they apply to retail or service plied to his individual employees because retail businesses is discussed in Subpart F of this part. service establishments ordinarily were

exempt. However, in some cases such coverage Section 779.101-GUIDING PRINCIPLES

was applicable as where employees were emFOR APPLYING COVERAGE AND

ployed in central offices or warehouses of retail EXEMPTION PROVISIONS

chain store systems and, therefore, were not It is clear that Congress intended the Fair exempt. (See section 779.118.) As a result of Labor Standards Act to be broad in its scope. the 1961 amendments the exemptions for retail "Breadth of coverage is vital to its mission." or service establishments have been narrowed (Powell v. U.S. Cartridge Co., 339 U.S. 497.) and a discussion of these coverage provisions of An employer who claims an exemption under the Act becomes pertinent. This subpart, therethe Act has the burden of showing that it ap fore, will discuss briefly the principles of covplies (Walling v. General Industries Co., 330 erage of such employees with particular refU.S. 545; Mitchell v. Kentucky Finance Co., erence to employment in the retail or service 359 U.S. 290; Fleming v. Hawkeye Pearl Button trades. A more comprehensive discussion with Co., 113 F. 2d 52.) Conditions specified in the respect to employees engaged in commerce or in language of the Act are "explicit prerequisites the production of goods for commerce may be to exemption”. (Arnold v. Kanowsky, 361 U.S. found in Part 776 of this chapter, the general 388.) "The details with which the exemptions coverage bulletin. in this Act have been made preclude their enlargement by implication.” (Addison v. Holly EMPLOYEES ENGAGED IN Hill, 322 U.S. 607; Maneja v. Waialua, 349 U.S. COMMERCE OR IN THE PRO254.) Exemptions provided in the Act “are to

DUCTION OF GOODS FOR COMbe narrowly construed against the employer

MERCE seeking to assert them” and their application

Section 779.103_EMPLOYEES “ENGAGED limited to those who come plainly and unmis

IN COMMERCE” takably within their terms and spirit; this restricted or narrow construction of the exemp Employees are “engaged in commerce” within tions is necessary to carry out the broad objec the meaning of the Act when they are performtives for which the Act was passed. (Phillips ing work involving or related to the movement v. Walling, 324 U.S. 490; Mitchell v. Kentucky of persons or things (whether tangibles or inFinance Co., supra.; Arnold v. Kanowsky, tangibles, and including information and insupra; Calaf v. Gonzalez, 127 F.2d 934; Bowie

telligence) among the several States or between v. Gonzalez, 117 F. 2d 11; Mitchell v. Stinson, any State and any place outside thereof. (The 217 F. 2d 210; Fleming v. Hawkeye Pearl statutory definition of commerce is contained in Button Co., 113 F. 2d 52.)

section 3(b) of the Act and is set forth in sec

tion 779.12.) The courts have made it clear that Section 779.102-SCOPE OF THIS

this includes every employee employed in the SUBPART

channels of such commerce or in activities so The Act has applied since 1938 and continues closely related to this commerce, as to be conto apply to all employees, not specifically sidered a part of it as a practical matter. exempted, who are engaged (a) in interstate or (Court cases are cited in the discussion of this foreign commerce or (b) in the production of term in sections 776.9-776.13 of this chapter.) goods for such commerce, which is defined to Typically, but not exclusively, employees eninclude any closely related process or occupa

gaged in interstate or foreign commerce, in

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