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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


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.)



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


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.)

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Section 779.107-GOODS DEFINED

goods are transferred puts the goods in interThe term "goods” is defined in section 3(i)

state or foreign commerce. The fact that goods of the Act and has a well established meaning

do move in interstate or foreign commerce is under the Act since it has been contained in the strong evidence that the producer intended, statute from the date of its enactment in 1938.

hoped, expected, or had reason to believe that A comprehensive statement of the meaning of

they would so move. the term "goods" is contained in section 776.20

Section 779.109_AMOUNT OF ACTIVI. of this chapter, which also cites the court cases

TIES WHICH CONSTITUTE ENGAGin which the term was construed. The statu

ING IN COMMERCE OR IN THE tory definition of "goods” is set forth in section

PRODUCTION OF GOODS FOR COM779.14. It will be observed that the term

MERCE "goods” includes any part or ingredient of the goods. Also that "goods” as defined in the Act

The Act makes no distinction as to the perare not limited to commercial goods, or articles centage, volume, or amount of activities of of trade, or, indeed, to tangible property, but either the employee or the employer which coninclude "articles or subjects of commerce of any

stitute engaging in commerce or in the produccharacter.” Thus telegraphic messages have

tion of goods for commerce. However, an been held to be "goods” within the meaning of employee whose in commerce or production the Act (Western Union Tel. Co. v. Lenroot, activities are isolated, sporadic, or occasional 323 U.S. 490). Some of the "articles or sub

and involve only insubstantial amounts of goods

will not be considered "engaged in commerce jects of commerce" which fall within the definition of "goods” include written materials such or in the production of goods for commerce" by

virtue of that fact alone. The law is settled as newspapers, magazines, brochures, pam

that every employee whose activities in comphlets, bulletins, and announcements; written

merce or in the production of goods for comreports, fiscal and other statements and accounts,

merce, even though small in amount are regular correspondence, and other documents; advertis

and recurring, is considered "engaged in coming, motion pictures, newspaper and radio copy; art work and manuscripts for publication; sam merce or in the production of goods for com

merce". ple books, letterheads, envelopes, shipping tags, labels, check books, blank books, book covers,

Section 779.110_EMPLOYEES IN REadvertising circulars, and wrappers and other



The discussion in Sections 779.103-779.109 inCOMMERCE

cluded general references to types of employees Goods are “produced for commerce" if they in the retail or service field whose individual are “produced, manufactured, mined, handled

activities constitute engagement in interstate or in other manner worked on” in any

State any

foreign commerce or in the production of goods for sale, trade, transportation, transmission, for such commerce within the meaning of the shipment or delivery, to any place outside there Act. There are many classes of employees of. Goods are produced for commerce where

customarily employed by retail or service estabthe producer intends, hopes, expects, or has lishments or in enterprises of the type described reason to believe that the goods or any unsegre in section 3(s) (1) and 3(s) (5) whose individual gated part of them will move (in the same or in activities ordinarily constitute engagement in an altered form or as a part or ingredient of commerce or in the production of goods for other goods) in interstate or foreign commerce. commerce within the meaning of the Act. The If such movement of the goods in commerce can groups of employees discussed in the following reasonably be anticipated by the producer when sections 779.111 to 779.118, are illustrative only. the goods are produced, it makes no difference There are other employees whose activities may whether he himself or the person to whom the be covered; also there are other activities per


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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 engage ment “in commerce" within the meaning of the Act.

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.

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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 779.112-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

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 779.118EMPLOYEES PROVID


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).)

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.



ployees are entitled to the minimum wage and BUSINESS UNIT

overtime benefits and to the child labor pro

tection, under sections 6, 7 and 12 of the Act. Section 779.200_COVERAGE EXPANDED

In general, if the "enterprise" comes within any BY 1961 AMENDMENTS

of the five categories described in section 3(s) The 1961 amendments for the first time since

(1) through (5), all employees employed in the enactment of the Fair Labor Standards

the "enterprise" are covered by the Act and,

regardless of their duties, are entitled to the Act of 1938 provide that all employees in a

Act's benefits unless particular business unit are covered by the Act.

a specific exemption Prior to the amendments each employee's cov applies. erage depended on whether that employee's

Section 779.202-BASIC CONCEPTS OF activities were in commerce or constituted the


Now all production of goods for commerce.

(a) General. Under the definition, the "enemployees employed in an “enterprise” described in section 3(s) (1) through (5) of the

terprise” consists of "the related activities per

formed * * * for a common business purpose.” Act are covered. Thus, it is necessary to con

All of the activities comprising the enterprise sider the meaning of the term “enterprise" as

must be "related". Activities which are not used in the Act.

related are not included in the enterprise. Section 779.201-THE PLACE OF THE

(b) Activities which are included. Further, TERM "ENTERPRISE” IN THE ACT

the definition makes clear that the enterprise The term "enterprise” is defined in section includes all such related activities which are 3(r) of the Act (see section 779.21) and, wher performed through “unified operation” or “comever used in the Act, is governed by this def mon control”. This is true even if they are inition. The term is a key in determining the

performed by more than one person, or in more applicability of the Act to these businesses. than one establishment, or by more than one The "enterprise" is the unit for determining corporate or other organizational unit. It spewhether the requisite dollar tests and other con cifically includes, as a part of the enterprise, ditions of section 3(s) (1) through (5) are departments of an establishment

establishment operated met, and the unit for determining which em through leasing arrangements.

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(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", "ESTABLISH. MENT” 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" (a) The single establishment business. In 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

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